Speech of the Chief Guest

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3rd Annual Convocation 2014

Chief Guest Speech

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IIM Rohtak’s 3rd Annual Convocation Ceremony 2014

Speech of the Chief Guest Mr Arun Maira

Mr. Ravi Kant, Professor Rameshan, Members of the society and Board of Governors of the Indian Institute of Management Rohtak, faculty members, parents and families of the students and the students of this great Institution, other dignitaries and guests.

For the past five years, I have been sitting in India’s cockpit, the National Planning Commission, from where I could get a perspective of the changes sweeping through India. Every year Chief Ministers of all Indian states come to the Planning Commission to explain the progress of their states and the challenges they are facing. The planning commission oversees the central government ministries too and all sectors of the Indian economy. When the planning commission prepared the country’s 12th Five Year Plan in 2012, it deployed a process for the first time to listen widely to the people of the country. Almost a thousand civil society organizations representing all sections of Indian society and dozens of business associations participated in an exercise to gather the views of citizens about what mattered most to them and the opportunities they saw for the change in their country.

With these myriad inputs from many perspectives, and using the techniques of systems analysis and scenario planning, we were able to see the principal forces that were shaping India. And, we could hear the signals beneath the deep rumbling of Indian democracy. The people are yearning for reforms of the country’s institutions, government, political parties and business institutions too. Citizens and businesses want institutions to be more responsive. They want them to deliver results more effectively. They want institutions cleaned up of the rust of corruption that is corroding them.

What will be India’s future? Three plausible scenarios were distilled from this intensive exercise. Scenarios are not predictions, they are projections of what is most likely to emerge if certain actions are taken, and if they are not.

I will describe the three scenarios. Then I will explain the actions that must be taken to produce the scenarios, the citizens want. I will also explain why I am an India optimist.

The first scenario is called ‘Muddling Along’. In the background are pictures of the lives of people. A few have become very wealthy with the opening of the economy in the last twenty years. Like peacocks, they strut around and show off their new wealth. Meanwhile, millions of little birds are scrambling for opportunities to improve their lives. Their sense of inequity in the system is driving people to protest against institutions. Some movements of protest have turned violent. Tigers are growling and wolves prowling. Security of citizens is threatened.

Muddling Along is the scenario of India where the system is crying for reform, and some reforms are initiated. However, these are piecemeal, they do not address core governance issues, and therefore, are not effective. Centralized government systems struggle with demands for decentralization. Small enterprises are sought to be encouraged, but the agenda of big business dominates. The policy conflict between subsidies and financial stability of the economy remains unresolved. The economy grows, but hardly achieves its full potential: insufficient social and political cohesion remains a threatening source of instability. This increases lack of trust in institutions, resulting in continuing protest and political logjam.

The second scenario is called ‘Falling Apart’.

In a picture of this scenario made by a young girl, the leaders are shown as buffaloes wallowing in a pond. The children outside the pond want clean water, better education, opportunities for decent work when they grow up. But the leaders cannot agree what is the solution. When one buffalo has an idea and rises, others will not move. Then another gets an idea and wants to move, but the first says, “You did not cooperate with me so I will not support you.”

This scenario emerges when India remain stuck in a centralized governance system which tries to exert control in the face of demands for devolution, with its centralized mega schemes and projects, and by redistribution of wealth through a system of handouts and subsidies. The impatience and political logjam that result put India under severe stress. In a system where hardly any institutional reforms are made, a vicious cycle emerges which results in the political logjam becoming so severe that government can barely function. Extremism infects more areas of the country. Stand-offs between central government institutions and between the centre and the states become rigid. Civil society protest movements take up non-negotiable stances and the political logjam becomes worse.

Governments try to win popularity in the situation with increasing hand-outs. Hand-outs strain governments’ finances, Investments slacken. Employment needs do not grow rapidly as the workforce; so, India’s demographic changes become a ticking time bomb. Handouts do not incentivize innovation and entrepreneurship, but, instead, create dependency. A cash-strapped government is unable to achieve its goal of poverty alleviation through subsidies.

The third scenario is ‘The Flotilla Advances’

India is a land of democracy and enterprise, India progresses when its people are empowered. When like fireflies they rise up, with their own light, they will together change the darkness around themselves to light. Many fireflies are arising in India, but their growth is hampered by a governance system that smothers their energies.

India is a flotilla of many inter-dependent boats that must move together. We have 28 states, may be 29, many political parties and private enterprises. India is not a uniform monolith. It is racially, linguistically, religiously and politically the most diverse country in the world. All people must want to go in the same direction, and they must learn to cooperate to proceed.

This third scenario of Fireflies Arising and the Flotilla Advancing is the future of India with a federal governance system in which the wheels begin to mesh more smoothly, local governance institutions and small enterprises are nurtured and grow effectively.

Responding to the widespread demand for institutional reforms, the government vigorously takes up necessary reforms in government processes and regulatory systems along with economic reforms. The central government’s financial assistance to the states is altered to give the states more flexibility to devise local solutions. Institutional capacity building, especially in local governance, is given higher priority in government’s rural and urban programmes. People begin to see changes on the ground. They are engaged and not alienated.

Each of these three scenarios is a result of the direction the forces shaping India will take. The planning Commission gave the three scenarios to the National Council of Applied Economic Research to compute what the GDP growth rate and the rate of reduction of poverty would be in each of them.

NCAER computed that India’s GDP growth rate will remain stuck at below 5% if we do not get the flotilla to advance. However, if we get the flotilla to advance together and enable the fireflies to rise, NCAER projected that India’s GDP growth will exceed 9% per annum soon and poverty will reduce much faster.

It is worthwhile to take a step back in time to 2005 when the World Economic Forum (WEF) had prepared three scenarios for India’s future. Then too, the analysis had shown that the principal forces that would determine India’s progress were rising inequalities and weaknesses of India’s institutions. It is noteworthy that the World Economic Forum’s scenarios came out very similar to the scenarios prepared by the Planning Commission more recently. The World Economic Forum’s analysis in 2005 showed that India’s GDP would grow to over 9%, as it did, but then, would decline to below 6% in 6 to 7 years, as it has, if India’s institutions were not fixed in good time. The call to fix the institutions was not heeded. People have been losing faith in the political dispensation and growth has fallen.

The World Economic Forum scenario had revealed then and as the Planning Commission scenarios analysis revealed more recently that India must first reform its institutions to enable the formulation and implementation of economic reforms. There is no point in announcing big reforms if the people do not trust government institutions and will not support the reforms.

I am an optimist because from the loud noise of India’s democracy as it prepares for a momentous election in a few months, I hear some very clear signals. The people are demanding institutions that are responsive to their needs. They are demanding governments that can deliver results. They want political parties that are in touch with people and are internally democratic too. The Congress, the BJP and the new Aam Admi Party, are all responding in their ways to the people’s demand, demands for reforms of institutions.

Let me give some thoughts to the vision: A vision of our Future

The poet Iqbal had described the hope that a new vision can give. I paraphrase his poetic Urdu words. He said, “A vision that gives hope is like the pale light on the horizon that precedes the dawn. It dimly shows a path from where I stand towards the horizon I must reach. As the light strengthens just a little more, I begin to see green shoots of grass beneath the frost on the path before my feet.”

What is our vision of our future? How will we shape our institutions of democracy and business and capitalism to create a just, inclusive, sustainable and economically vibrant society? Let me offer you a vision of our inclusive, democratic and entrepreneurial future. In this vision, democracy will become deep and will become inclusive. Democratic governments are expected to be Governments Of the People, For the People, and By the People.

We have the largest electoral democracy in the world. We conduct elections on a scale that no other country comes close to. Our governments are elected by the people. Therefore, we have governments Of the people in our states and at the national level.

People want their governments to be For the people too. Indians are protesting that their governments are not accountable to the People. They are demanding transparency. They want to know what was done with the money that was supposed to be spent to improve public services and public infrastructure. This is the core demand of the anti-corruption movements. Therefore, governance reforms to make governments accountable to citizens have become imperative.

Deep democracy is Government By the People. A democracy where citizenship is not merely the right to vote members of assemblies and parliaments, but a democracy in which citizenship is also the active management by people of their own affairs in their communities and local bodies. Not an election time democracy, but a deliberative democracy in which citizenship is the right to understand the rules, and to shape the rules by which society governs itself.

Here India has a long way to go. When our elected representatives say, “You have elected us, now keep quiet and leave it to us till we come back for your votes next time”, they kill the very concept of deliberative, deep democracy.

Moreover, deep democracy requires elected and accountable governments in our villages and in our urban bodies. We have passed the 73rd and 74th amendments to our Constitution twenty years ago. But, we have not made much progress in implementing them.

India must become an inclusive Economy. I humbly submit that genuine inclusion is not achieved by handouts and by redistribution. In fact, handing out and charity reinforce the idea of exclusion. Some are In and others are Out, and it is the moral responsibility of the Ins to give to those who are Out.

Those who are excluded become genuinely included only when they have equal opportunities to earn and live dignified lives and to contribute by their efforts too, to the creation of wealth in society. And, just as institutions of government must be reformed to create an inclusive democracy, institutions of business and capitalism must be reformed to create an inclusive economy. Therefore, businesses must be not only For the People, they must also be By the People, and Of the People.

For inclusion, we need innovations to provide affordable and accessible goods and services, especially at the ‘bottom of the economic pyramid’. This is the business opportunity for ‘profit at the bottom of the pyramid’ that Prof. C. K. Prahlad wrote about, and that many entrepreneurs are pursuing. By producing products and services for poorer people, they can expand their customer base. For example, the shampoo sachet enables even poor people to buy a very big company’s product. When people pay, the profit from the bottom of the pyramid goes to the shareholders of the capitalist enterprise. But, this does not address the root cause of poverty. People are poor, and cannot afford to pay much, because they do not have incomes. They need jobs and incomes to lift themselves out of poverty. Therefore, they must be engaged in the processes of producing goods and services for themselves and for others. Therefore, we need innovations in production models that provide more jobs, so that Business is By the People too.

Employees in enterprises that are owned by others have incomes, of course, but do not share in the creation of wealth, the fruits of which go entirely to the owners. For a fuller inclusion in the benefits of growth, we need more enterprises in which the producers and workers share the wealth creation too. This requires innovations in enterprise design and governance models to shape Businesses Of the People.

In my vision of India, India, which is a country of over a billion democrats, will also be a country of hundreds of millions of entrepreneurs and capitalists. Indeed, this was Mahatma Gandhi’s vision. His Charkha was a symbol. In his vision for India, all people would be producers of goods and services that the community and the market need. They would be earners and also owners of their tiny means of productions and their little enterprises.

Finally, in my vision, India will also be what Gurudev Tagore envisioned: a country not divided into fragments by narrow domestic walls. Let us be less argumentative and more cooperative. Let us strive together towards the heaven of freedom: a country in which every citizen has all three freedoms: political freedom, social freedom and economic freedom.

Each of us has work to do to reform the institutions we are in charge of, and in which we work. Some of us must lead and reform business corporations and other capitalist institutions. Others amongst us must lead and reform governments and government institutions, and educational institutions. And many others must lead and reform institutions for democratic representation; political parties, civil society organizations and labour unions too.

But who will lead? We need leaders who have the wisdom and the courage to reform the institutions they are given to lead. As Gandhiji said, “We do not own institutions. We are their trustees. We must build society’s trust in the institutions that we lead.”

And I conclude with my definition of a leader. Leaders come in many shapes and they have many styles. Regardless of their shape, size and style, a real leader is she or he who takes the first steps towards what she or he most deeply cares about.

Leaders are those who take the first steps. Not those who wait for others to lead. Great leaders have many followers because the steps they take are not towards selfish goals, but towards goals that others aspire to.

The heart of leadership is a deep caring for a cause. The awakening of leadership in each of us will arise when we look into ourselves and ask, what we really care about deep down. We must look inside our hearts for what we want to make our world and our country not only for our own sakes, but for our other citizens’ sake and for our children too. And we must stir our human aspirations to take steps now, together, to shape the future we want.

In closing, I want to thank the parents and the families for gifting to our country these young leaders who will move forth today. And to thank the management and the teachers of these young treasures who will step out today. And I want to ask each of you to, every day, shut your eyes for a moment, look inside your heart and ask, what is the world I want to create. And then, through the day, let your thoughts and actions be directed towards that vision.

As you sally forth, may all our prayers be with you.

Thank you