Rewind. New lamps for old

I was fortunate to attend a wonderfully inspiring ‘Marico Innovative Awards’ function at which six companies doing innovative work with social impact were given awards.

The function had an excellent panel of start-up companies, like Ola, PayTM and BookMyShow, which was also adrenalin-inspiring. It concluded with an equally inspiring talk by Amitabh Kant, CEO of Niti Aayog (the erstwhile Planning Commission).

The conclusion one comes to is that there is an exciting future if India nurtures and encourages start-ups doing innovative things, for they will provide the jobs and the economic impetus. Their technology is necessarily disruptive for incumbents, all of whom, stated Kant, are at risk. There will be resistance from incumbents, especially those used to doing things the old way, based on patronage and crony capitalism.

This clash of new and old would need to be managed through strong governance, and upholding of laws. This is where the danger lies.

For a young India, which has more than 65 per cent of its population under the age of 35, the slower pace of job creation provides fodder for angst. Sadly, immature politicians heading irresponsible political parties are myopically feeding this anger.

Sadly, too, upholding of law is far too slow and the judicial system views criminals with benign tolerance. This must stop. One simple solution which can be implemented overnight is to restrict the grant of adjournments to one, (or maximum two), per side.

Irrespective of reason, a second (or third) should not be granted. ‘Justice delayed is justice denied’ has become more of a hackneyed phrase than an intent. Just think – the recovery of loans from Kingfisher Airlines was beleaguered with 500 hearings and 180 adjournments!

In the ‘Ease of Doing Business’ India is near the bottom, while in the category ‘Enforcement of Contracts’ it ranks 178 out of 189 countries. Singapore ranks number one.

This is one reason why Singapore’s per capita GDP on purchasing power parity basis is $83,000 and India’s is $5,800. We can, and do, shirk the comparison by claiming that India is a huge, diverse country, and Singapore is a small nation.

By doing so, and not learning from our errors, we simply perpetuate the problem and widen the gap.

Good governance is thus the key to India achieving its huge potential. India is the only large country in the world to have two-thirds of its population under 35, and able to contribute to growth. It is the only country to have issued biometric identification cards to 994 million citizens! This, combined with disruptive technologies from start-ups such as PayTM will allow people to access banking and will obviate the need for brick and mortar banks to go to remote locations.

Other things are happening too. The Dedicated Freight Corridor being set up only to run freight trains between Delhi and Mumbai, starting 2018, would reduce travel time to just 14 hours, from up to 14 days! This would bring substantial saving in freight costs, which are very high in India. In the same way, inland waterways too, can substantially cut freight costs. The Waterways Bill, cleared by Parliament, seeks to create 101 waterways. Just imagine – 150 horsepower can carry 150 kg by road, 500 kg by rail and four tonnes by water.

All this is at a time when the rest of the world is aging, and the foolish negative interest rate (NIRP) and zero interest rate (ZIRP) policies of central banks are causing a huge problem. NIRP and ZIRP are not giving state-run pension funds an adequate return and there is a $2 trillion underfunding. In Europe, 42 per cent of the workers are over 65 years old, and not working; this will grow to 65 per cent by 2060. Other countries are also similarly aging, except India. So, where will global money flow to?

The caveat, of course, is that we govern ourselves well and create a structure willing to receive the money. We must crack the whip strongly on defaulters. We must speed up the judicial process, and strictly enforce contracts. And we must not go back to divisive vote bank politics and crony capitalism.

To borrow from Martin Luther, I have a dream...

The writer is India Head, EuroMoney Conferences

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