CHAIRMAN'S SPEECHES

INDIAN SCHOOL OF BUSINESS

Hyderabad, April 9, 2017

My friend Adi, Dean Raj Shrivastava , Faculty and Students.

I am happy to be here today. I have been associated with ISB since its conception and have watched it become an international institution with great satisfaction and pride. It is its faculty and students who have brought it so far. We in governance roles have done our bit by supporting it.

I congratulate all those receiving their degrees today. You represent some of the best talent in the country. You have crossed a significant milestone in your life. Your future has a firm foundation. Now build on it.

I also congratulate your parents. At the root of the global competitiveness of the Indian people as individuals, is the strength of the institution of the 'family' in our society. The resilience of our personalities is rooted in the unconditional love that we receive at home. I especially congratulate your mothers. Indian fathers may be passé but Indian mothers are something very special.

My salutations to the ISB faculty. If one asks a successful person about the turning points in his life, often a teacher is involved with it.

You are now moving from a reasonably logical and predictable world to a world in which nothing moves in a straight line. The future has rarely been an extrapolation of the past. Disruption is the order of the day. It is in the very nature of an open economy that the forces of change will accelerate. The world is open for business. It values innovation and competitiveness. Where have Google, Apple and Alibaba come from? You are better geared for this environment than most people are, as you have been trained to be pro-change and pro-continuous learning in your outlook.

INDIA'S 2.0 RECLAIMING TRYST WITH DESTINY

Indore Management Association, February 6, 2015

I am thankful to the Indore Management Association for bestowing on me its Life Time Achievement Award. I accept it with all humility on behalf of my colleagues and associates in the Bajaj group. Business is a team game.

Indore has been the centre of enterprise in Madhya Pradesh. What it owes to geography and what it owes to history is something I leave to you to decide. I am a believer in the important role of our past in fashioning us. We should seek inspiration from it to create the future, but we must not wallow in it.

Be it an individual or an institution or a nation, its destiny is made essentially by itself, though the grace of God upon it is essential. When Jawaharlalji spoke about our tryst with destiny, at the stroke of midnight on August 15, 1947, he spoke at the culmination of the freedom struggle. Freedom was a destiny which we had achieved.

Currently, though we have proved the Cassandras wrong, and have some achievements to our credit, we still have a long way to go. The list of things we need to get right, be it growth, infrastructure, employment or income levels or good governance or health services or education, is a long one.

After a decade we are reviewing our options and promising reform. This is a good thing. Let me quickly and roughly lay out what we have going for us and what issues we need to tackle.

What we have going for us is our democratic system, the large size of our market, our entrepreneurs, our being a nation of the young and the willingness of our people to work hard for a better tomorrow. This willingness stems from the strength of our families and our social values.

If this is so, why is our per capita income so low? Why have other nations, be they Singapore or South Korea or even China, who were at our levels in the early 70s, gone so far ahead of us in the last 40 years?

It is because of our mistake in pursuing a misdirected socialist pattern of industrialization between 1956-90. We wasted resources on the public sector and stymied the private sector. We developed a language of rights, not responsibilities and created a huge burden of distortions and subsidies in the economy. From the early 1970s, the quality of our governance declined and the governments became increasingly corrupt and ineffective in providing even basic services to the people.

In terms of mentality we replaced the British with an administration and political apparatus which mimicked the British pattern of administration. We still have the designation of a Collector as the head of district administration. Collector of what?

Added to this, we banished the notion of merit from the government and introduced a notion of seniority and entitlement. No one in the world is entitled to anything besides human dignity and equality of opportunity. The rest he or she has to earn for herself. Unless we have this mindset we cannot progress. If the private sector has progressed it is because it functions on the basis of merit.

No, I am not advocating a jungle raj, but a fair and humane society. Also, we have to seek to be fit and strong and not run after survival of the weakest, beyond a point.

We have created a lot of unhealthy practices in our society. Unless we confront them we will not be able to create a decent destiny for ourselves.

Ineffective, corrupt governance has created widespread tax evasion and an anti-people political and administrative structure. It has created a disincentive to be honest and an incentive to be dishonest. It has created a maze of strangulating controls. It has created distortions in almost every market. The huge and misdirected subsidies and scams like 2G and Coalgate are symptoms of this malaise.

The collapse of the public education and health systems at all levels has hurt us deeply. The private sector cannot fully substitute the government in these areas. If our 5th standard students cannot do 2nd standard stuff, as repeated surveys of Pratham show, then how can we talk of a demographic dividend?

Our labor and tax laws have moved 90% of the employment in private industry into the unorganized sector resulting in lack of competitiveness, poor quality and low wages.

Our huge government and high wages at lower levels in the government with poor productivity and work culture, have resulted in fiscal deficits and no money for investment in badly needed infrastructure.

Public sector banks have been repeatedly looted by politicians and businessmen in collusion with bank officials to create bad loans, whose cost is ultimately borne by the honest tax payer.

As can be seen we have repeatedly chosen wealth distribution, not wealth creation and political expediency over doing the right thing, and now our wrong policies have come home to roost.

Since 1991, however we have been changing, even if unevenly and not fast enough. The liberalization of 1991 removed some fundamental constraints on business and gave it freedom to trade, freedom to upgrade and freedom to start a new business. The ensuing change has shown in stark terms what private enterprise can achieve.

The development of the IT sector has been an eye opener. It has created global respect for our skills. It has created a large number of well-paying jobs. Well in excess of 3 million in Indian companies alone.

Even in other sectors the change has been dramatic. In 1991 Bajaj Auto produced 1 mn vehicles per year and exported 3% of them. Now it produces over 4 mn vehicles and exports 40% of them.

Meanwhile, the old system has been disintegrating. Thankfully so.

For quite some time, voters have been rooting for Bijli, Sadak and Paani rather than subsidies. It started in Madhya Pradesh, and has even affected Bihar. Change has been in the air. In 2014, the nation voted for growth and development rather than narrow caste or communal considerations. And this has happened now in state after state, be it Maharashtra or Haryana or Jharkhand. I believe that this process will and should continue. It is incumbent on politicians and businessmen to ensure that it continues.

Let me now outline what I believe politicians, businessmen and civil society should do and how this can be facilitated?

Politicians should realize the damage done by the socialist clap trap and essentially dismantle the system.

They should focus the government on efficient provision of services in health, education, agriculture, infrastructure and a light but effective regulation of the private sector. Right now we are over regulated and under governed. We should move to being lightly regulated and well governed. Where the efficient and honest are encouraged and inefficient and dishonest are punished.

For this it is necessary to minimize the role of black money and criminals in elections. Public funding of elections is a necessary step in this regard. Also, we need elections only once in 5 years simultaneously to the Lok Sabha and all the Vidhan Sabhas.

It is also necessary for business and civil society to put pressure on politicians to do the right thing.

Businessmen should run their businesses well and with integrity. Growing in size, reach and capability. Creating and sharing wealth.

They have to be ambitious for their companies. But must set for themselves the high standards of governance they expect from the government.

For this it is necessary to establish a meritocracy in our companies. Easier said than done. If there is a failing in our business, the reason often is that we are lenient with our children. We have to judge them by the same standard as we would judge a professional executive. Too many companies have been ruined by incompetent sons or brothers being allowed to take the company to the cleaners.

We have to ask whether the family is for the company or is the company for the family. Only if we practice the former will we even survive in today’s competitive market, let alone prosper.

Family businesses are a reality in India and most parts of the world. They have their strengths and weaknesses. The challenge is to capitalize on their long termism and the natural incentive available and groom succession in a way that the son is better than the father to run the business.

Businessmen need to be ethical. No large business can be successfully run without an ethical under pinning. No self-respecting professional will work for an unethical company today.

Businessmen need to be fair to their stakeholders, be it employees, associates like dealers and suppliers, customers and shareholders. Please note that I have mentioned shareholders last. For it is employees and associates who create most of the value in a company and customer, of course, is king.

I do not support the mandatory 2% CSR spend, but businessmen should do their due in society. We have a tradition of doing so in our country. And now that the 2% CSR spend is here, we should engage in doing what the government has been unable to do. Supporting schools, hospitals and basic infrastructure for an inclusive society.

There are inherent limitations of government, business and the electoral system. Unfortunately, its pillars like the Judiciary & the media too have lost credibility to some extent.

The world is open for business. It values innovation and competitiveness. Where have Google, Apple and Alibaba come from? So, the fault is not in our stars but in ourselves. If we see this clearly, we can begin to progress.

What this broad sweep survey should make clear is that in any system management is important. Management is what is responsible for the present and future prosperity of an institution. It sets the direction and makes sure that the objectives are achieved. As Peter Drucker said a long time ago, Management is a task. It is not embodied in any position or degree. One grows into a management role. One essentially learns from doing management tasks. It does not come with a coat and a tie.

Humility, willingness to listen, empathy for people, help us in doing our job better. This is usually not taught in business schools. But life teaches us this. A business career is a marathon and not a sprint. We are in it for the long haul.

I have been going to the Annual Meeting of the World Economic Forum in Davos, Switzerland now for the last 35 years. I was there again this year from January 20 – 25.

In conclusion, I would like to mention to you 14 major global problems which have been discussed in Davos during the last couple of years including this year. These are:

1. Lack of Leadership
2. Weakening of representative democracy
3. Intensifying nationalism leading to terrorism
4. Intensifying nationalism leading to terrorism
5. Profound political and social instability
6. Fiscal crisis in key economies
7. Persistent jobless growth resulting in high unemployment
8. Severe income inequality
9. Rising pollution and increasing incidence of severe weather events
10. Water crisis
11. Rising geo-strategic competition
12. International trade issues
13. Future of the internet and
14. Gender parity

World leaders including our leaders will have to be ready to tackle these problems.

Indian management professionals are good. The heads of world’s biggest companies come from their ranks. Satya Nadella of Microsoft, Indra Nooyi of Pepsico, Anshu Jain of Deutsche Bank and many more. But the task ahead of us needs thousands of outstanding leaders. Leaders are not those who occupy offices, but who deliver. In whatever fields they may be.

I have great faith in our people. I have great hopes from the young. I am the President of Shiksha Mandal, an educational trust with 9,000 students in my hometown, Wardha, and the energy and vitality of the students invigorates me.

Most of those present here today are from the privileged sections of our society. It is our opportunity and obligation to do something big with our lives. I wish you all fulfilling lives.

Thank you and Jai Hind.

ROTARY CLUB OF TILAK ROAD

Pune – Revival of the Indian Economy, April 30, 2015

I am thankful to the Rotary Club for providing me an opportunity to share my thoughts with this distinguished gathering.

Why will I be talking of the need for revival of our economy? For 2 reasons. First, we need the Indian economy to grow on a sustained basis for at least 1 to 2 decades for our people to have a decent living standard. Today, a large percentage of our people have incomes inadequate for providing even the necessities of life like food, shelter, education and health services.

Secondly, the economy was spluttering for the last 3 years of the previous government. With low GDP growth, high inflation, infrastructural inadequacies and serious issues of governance which had created structural constraints for the economy. The global economic climate too has cooled. Unless we address these issues we run the risk of economic stagnation and social dislocation, as also gross underutilization of our economic potential.

Currently, though we have proved the Cassandras wrong, and have some achievements to our credit, we still have a long way to go. The list of things we need to get right, be it growth, infrastructure, employment or income levels, good governance, health services or education, is a long one.

The new government is reviewing its options and promising reform. This is good. Let me quickly and broadly lay out what we have going for us and what issues we need to tackle.

If this is so, why is our per capita income so low? Why have other nations, be they South Korea or even China, who were at our levels in the early 70s, gone so far ahead of us in the last 40 years?

It is because of our mistake in pursuing a misdirected socialist pattern of industrialization especially between 1970-90. We wasted resources on the public sector and stymied the private sector. We developed a language of rights, not responsibilities and created a huge burden of distortions and subsidies in the economy. From the early 1970s, the quality of our governance declined and the governments became increasingly corrupt and ineffective in providing even basic services to the people.

Added to this, we banished the notion of merit from the government and introduced a notion of seniority and entitlement. Friends, no one in the world is entitled to anything besides human dignity and equality of opportunity. The rest he or she has to earn for herself. Unless we have this mindset we cannot progress. If the private sector has progressed it is because it functions on the basis of merit.

Ineffective and corrupt governance has created widespread tax evasion and an anti-people political and administrative structure. It has created a disincentive to be honest and an incentive to be dishonest. The huge and misdirected subsidies and scams like the 2G and Coalgate are symptoms of this malaise.

Our labor laws have moved 90% of the employment in private industry into the unorganized sector resulting in lack of competitiveness, poor quality and low wages.

Our huge government and high wages at lower levels in the government with poor productivity and work culture, have resulted in fiscal deficits and little money for investment in badly needed infrastructure.

Public sector banks have been repeatedly looted by politicians and businessmen in collusion with bank officials to create bad loans, whose cost is ultimately borne by the honest tax payer.

As can be seen, we have repeatedly chosen wealth distribution over wealth creation, and political expediency over doing the right thing. Now our wrong policies have come home to roost.

Meanwhile, the old system has been disintegrating. Thankfully so.

For some time now, voters have been rooting for Bijli, Sadak and Paani rather than doles. It started in Madhya Pradesh, and has even affected Bihar. In 2014, the nation voted for growth and development rather than narrow caste or communal considerations. And this has happened now in state after state, be it Maharashtra, Haryana or Jharkhand. I believe that an aspirational India, urbanization and the re-engagement of the middle classes with politics, have much to do with this trend. I believe that this process will and should continue.

Let me now outline what I believe politicians and businessmen should do and how this can be facilitated?

Politicians should realize the damage done by the socialist clap trap and essentially dismantle the old system.

It is necessary to minimize the role of black money and criminals in elections. Government funding of elections is a necessary step in this regard.

Businessmen should first and foremost run their businesses well. Growing in size, reach and capability. Creating and sharing wealth. They have to be ambitious for their companies. They must set for themselves and achieve the high standards of governance they expect from the government.

Businessmen need to be fair to their stakeholders, be it employees, associates like dealers and suppliers, customers and shareholders. It is employees and associates who create most of the value in a company and customer, of course, is king.

Businessmen need to be ethical. No large business can be successfully run without an ethical under pinning. No self-respecting professional will work for an unethical company today.

The global economic scenario is of stagnation. Barring some growth in the US and Germany, most other developed countries are barely growing. Growth in China is slowing. The resultant decrease in oil and commodity prices is a major assistance we are getting from the global economy. The drop in oil prices is helping in lowering our trade deficit and inflationary pressure and is reducing our oil and fertilizer subsidies.

We need to answer the question “where is growth going to come from?”

I believe, it is primarily going to come from structural changes in the domestic economy. By the government investing in required infrastructure and significantly easing the doing of business in the country to allow business to do its job.

When this happens, domestic and foreign manufacturers will invest in India for the Indian and global markets.

To my mind the key structural changes required are:

1. A sensible labor policy
2. A new land acquisition Act
3. General Goods and Services Tax
4. Disinvestment in Public Sector banks and their professionalization
5. Running the power sector, coal mines, ports and railways on commercial lines
6. Gradual elimination of non-merit subsidies, especially to those above the poverty line and financial help to the weaker sections directly to their bank accounts through their Aadhar cards
7. End of an aggressive tax collection regime.

The Central government has come to power on the development platform. Its intentions are good. But in the first year its performance is a mixed bag. Rajya Sabha is an obstacle. Some constraints have been tackled vigorously like Environmental clearances and the Coal allocation issue. However, the changes I have just mentioned are required sooner rather than later. On top of this, non-issues are absorbing disproportionate energies and vitiating the social climate.

The result is tepid growth, low demand and hence inadequate investment by business.

It is still early days and I would give the central government the benefit of doubt. The Congress party or coalitions do not yet inspire confidence. But BJP should realize that they have been given a rare opportunity. The next time around they may not get it unless they have a track record to show.

To conclude, despite my realism, or maybe because of my realism, I am optimistic about the future of our country. I have great faith in the good sense of our people. But, it will not happen by itself. We will all have to play our part.

These are challenging times. Exciting times. The rewards for those who get it right will be enormous. But let us remember, there is no substitute for excellence, there should be no tolerance of mediocrity and ofcourse we should never compromise with integrity. When we compete with the best, whether in India or abroad, we not only bat for ourselves, we bat for our country. This is our privilege. But this is also our responsibility.

Thank you and Jai Hind.