The Hindu Business Line : `There has been enlargement of empire of mind'

I CANNOT truly believe that Business Line is 10 years old. The last 10 years have been an extremely eventful decade. So many things have happened. If you look at one single thing that should merit attention, I would think that it is truly the discovery by business of itself, its capabilities. It has truly come of age.

This is not because it has clocked a tremendous rate of growth which is still stuck at a boring, single-digit level, which I think is 5-6 per cent in industrial growth in the last decade. Not because our international trade has suddenly jumped, or that we have a tremendous presence in international trade. We are still at a forgettable decimal level. Not because we have stormed the Fortune 100 list with Indian corporations. We haven't still made it. But I believe what has happened is the enlargement of the empire of the mind. We have truly come to believe that we have the stuff in us to make it.

In the last ten years, clearly, concern has given way to confidence, anxiety when we opened up has yielded to ambition. Like Hanuman, we have now discovered our own strength in crossing the oceans. And, to my mind, this has been partly aided by the fact that we have had some outstanding role models in industry in the last 10 years.

The fact is that we have had businesses that have gone out and established a mark in international quality. People like Mahesh (Mr K. Mahesh, CMD, Sundaram Brake Linings) have gone out and won the Deming Prize (for quality). The last 10 years have also seen that productivity has contributed significantly to growth.

The last decade has also witnessed a number of companies truly making a mark in the international field. Vaman Kamath sounding the gong on the New York Stock Exchange, and Mr Narayana Murthy (Infosys) ringing the bell at Nasdaq. They have signalled the arrival of Indian business. So it is the courage and the conviction we have now come to possess that, to my mind, is a signal development of the last decade.

And I believe that it has also come about because the press has played the cheerleader, the financial press, in particular. It has moved along as a friend of business, has showcased success stories, has given space to all those who have made it big. And, like a true friend, it has also held a mirror whenever there has been a failing on the part of business. I must say that Business Line has certainly been ahead in the last decade in playing this role. And, on behalf of all in business, I thank Business Line for playing this role wonderfully.

That said, I feel there is still an unfinished agenda. While it is true that Indian business has acquired this courage, it is also equally true that a very large part of the economy — that of agriculture — still lags behind. The fact that two-thirds of the population is still producing one-third of our GDP is a fatal flaw in the script of the country's economic development. There is a long way to go, just as there's a long way to go for industry and business, to improve productivity.

Along the last 10 years, there has also been a major change in India's economic philosophy. I think we have seen the quiet burial of Nehruvian socialism, of the planned economy model — probably unhonoured, unwept and unsung. Maybe there is still a remnant of this socialist thinking in some schools, certainly among some parliamentarians. In this decade we have seen the true demise of the planned economy and movement towards a market economy. In this process, there has certainly been a need to redefine the economic philosophy of the country and I think that has been a major achievement.

It is not that we moved into a market economy for the first time in the last decade. That is not quite true. In fact, a lot of trade, all of trade, all of agriculture have been market-facing. And a great deal of industry has been market-facing for several decades. In fact, we have not really celebrated the fact that we have had a flourishing trade and agricultural sector, which has always been privately-held and market-facing.

I recall that just after the first steps of liberalisation were taken, we were all sent out to various countries as part of CII delegations. I had the chance to meet Mme Birgit Breuel, who was presiding over Treuhand in East Germany. I think this piece of statistics would be of interest to our Honourable Minister (Mr Arun Shourie) only because I'm sure that he will beat those statistics soon enough.

Mme Breuel was at that time privatising at the rate of 20 undertakings a day! The day we went to meet her, she said: "You all know that we are now putting through this massive disinvestment programme. And we are privatising at the rate of 20 per day. That means that if I spend one hour with you, you know how many (undertakings) I would not be privatising! And what can you do about it?"

We were at the time very much under the shackles of the Foreign Exchange Regulation Act, and so on. We could not send a dollar out. At that very time I had to go to one of the highest functionaries of the Reserve Bank of India to get his permission to get $2,000 for one of our service engineers to be posted in one of the countries where we had sold a large number of vehicles.

At the time we met Mme Breuel, she asked what we had to contribute to the privatisation process. And I said that what she might want to look at India for was the fact that we have had a great deal of experience in private trade. "You might be privatising your industry," I said, "but I'm not sure if you have given enough thought to privatising all the linkages in terms of trade; probably (this is) where Indians could come in."

I believe, therefore, that we have always had this market-facing history. But what this decade did was not merely to make the rest of the economy market-facing but build institutions to protect that market economy. The fact that we set up regulatory authorities, that we built market-making mechanisms and make sure that they are not going to be manipulated, I think that is a great achievement. That is institutionalising a philosophy of market economics.

There could be critics about the fact that we have been very slow in institutionalising these structures. But if you look back over the last decade, I think they have come fast and furious. That the country has managed to put in place so many institutional mechanisms to protect the market movement is something that is certainly worth celebrating. And all these changes in economic philosophy, in all the changes in terms of re-defining these philosophies, the financial press has stood very well by us, in terms of defining the boundaries of this change.

Business Line has played a signal role in being the philosopher. Not merely a friend, a cheerleader to get business to move forward, but as an anchor-philosopher in defining the goals of this market-making mechanism. This morning's editorial on SEBI is a classic instance of drawing lines, in terms of precisely where the rights of such an institutional mechanism starts and stops. And yet, while I must thank Business Line, on behalf of everybody, for having stood by business as an anchor-philosopher, there is still an unfinished agenda.

On the one hand, we are opening up the market-place and the economy, and getting it linked to the global market-place. We are talking about a tariff-less market, a barrier-less international market but, sadly, we do not have a unitary market in India. It is a contradiction that when we have not got to get a single market in India functioning (we have 30-odd markets in the country), we must be talking so aggressively about linking these markets and making a unitary market at a global level.

It is quite often believed that the problem in creating this unitary market in India is relatable to VAT. May I humbly submit that the issue is not so much VAT, but that we have a federal structure and a certain system of transfer of resources from Centre to States and the fiscal autonomy of the States, all of which need to be tackled.

We should reckon with the fact that there is going to be a problem for a legislator in, say, Karnataka, or any other State, having to answer his constituency for the wealth that its members are creating. In his constituency, he is not being made accountable, or not able to deliver back to the region the kind of infrastructure that is equivalent to the wealth being created there.

And I think that is a central issue that needs to be tackled. I read Mr Shourie's statement in the Press, in the speech he made yesterday, that he talked about looking five to 10 years ahead. May I say that we need to look 20 years ahead in terms of re-drawing the fiscal autonomy structure to make sure that our federal structure does not get disturbed and yet we find a way to move towards a unitary market situation which is not going to be shackled by the fiscal autonomies of the respective States.

Having said that, Business Line and the financial press have played an extremely useful role as a friend and a philosopher. I think this is also now the time when the financial press should play the role of a guide. Because of the fact that we now suddenly feel very `macho', that we can now go on to conquer the world, and given that our own economic model is pushing us towards the outside world, we are now going to be moving in uncharted territories. And this is where we need a guide.

Of course, we have tremendous examples of Indian entrepreneurs having gone and flourished like orchids, not only in alien conditions but also in adverse ones. Yet, I think, the press should don the role of a guide to make sure that we don't make big mistakes which will put us back in terms of this feel-good factor. This is a critical role which I believe the financial press can particularly play.

Today, we lament that India is not occupying sufficient space in Western newspapers. Often, we feel India deserves better mention and coverage. But it is equally true that international business is not getting enough share of space in our business newspapers.

Given the fact that we are now feeling courageous enough to cross our borders and move into unknown territories, perhaps Business Line could look into that aspect a little more aggressively. If it's Tuesday, it must be China, if it's Wednesday, probably Thailand, and so on. There is perhaps a way to move ahead in this Internet age, to go into corridors of countries we choose by a click-and-move process. But there is a role for the press , and I think Business Line will play that.

I must end by saying that this has been a glorious decade for business in India, and alongside, for Business Line, which has stayed white and pure (not gone pink, like its compatriots), and stuck to the path of truth and rectitude. May I join Vaman Kamath in wishing Business Line, in the best Indian traditions: May you live a 100 years, may your fame live a 100 years, and may your glory live a 100 years.

(Edited excerpts of Mr Seshasayee's speech at Business Line's 10th anniversary celebrations.)

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