Work in progress

Written by Madan Sabnavis | Updated: Nov 24 2013, 09:20am hrs
Mckinsey's re-imagining India comes just at a time when controversy has been stoked by Goldman Sachs comments on Indias polity. McKinsey brings together independent views of several reputed authors and celebrities. There is the general tendency to hammer the government, which has become a fad these days, as the concept of a government is not an entity that responds. There is a proclivity to private enterprise, praise for the Gujarat model and hope in the middle class (also the favourite of McKinsey). The general drift at times is towards self-eulogy and critiques of the present form of governance, which is not unexpected. There is little credit given to the government for anything positive that has happened and hence it is refreshing to read Bill Gates, who puts India on top when it comes to eradicating polio using its own resources, something that wasnt expected, given the size and population of the country.

There is also a good word from Eric Schmidt, who said that the next Google could come from India. While the senior Google official laments that Internet exposure is low in India at 150 million, he is sanguine that this will pick up to a penetration level of 60-70% in the next five years. He sees the Internet holding stage in education, banking and financial services, lifestyle, e-trading and even better governance, but is wary of censorship.

Most of the views are based on experience or impressionistic views, which read well in newspapers, but may not be based on sound research. Take, for instance, Ruchir Sharma, who runs down Indias performance on the grounds of benefiting from an overflow of global funds and low base, and not due to the managerial genius of New Delhi. Yet he contradicts himself when he praises some of the BIMARU states that shine, forgetting that they, too, have benefited from the low-base effect. Or a sweeping statement that we go in for reforms only in a crisis. While the 1991 crisis was the trigger, historical experience shows that reforms are spread out across time to enable absorption. It would be facetious to say we went for reforms only in 1991 and then sat back. Similarly, he shows disdain for the government, saying it should abandon the tendency to be self-satisfied and make excuses. This borders on hubris and arrogance, something that is rarely displayed by even foreign entities. One may assume it is the authors personal view and not of the companys.

Government bashing is also highlighted by Gurcharan Das. For people like him who espouse that India Inc did well notwithstanding the government, the question to be posed is why anyone is complaining now when the government has supposedly come to a standstill. Real entrepreneurship should reveal itself. The fact remains that nothing would have happened if the government had not provided support not just through reforms, but also sops in various fiscal and structural forms. The power of the private sector is further extolled by Mukesh Ambani, who traces the story of Reliance Industries and shifts to education, where the best quality is provided. A point missed, however, is that the education he speaks of is elitist and out of reach of the common man. On this subject, Madhav Chavan has an interesting take: social spending on education tends to look at volumes rather than quality, which does not help disadvantaged students. Srinath Reddy explains the irony in Indian healthcare, where foreigners come to India for the best and cheapest treatment, while basic health facilities are not available for the domestic masses.

There are some positive stories told, though they are confined to specific pockets of this vast country. Sonia Falerio gives examples of lady sarpanches in remote villages who are trying their best. Muhtar Kent has Cokes trysts with empowering women and villages, and how they do it by providing access to water, electricity and even property rights, which fit into their own business model of spreading their product to rural areas. Howard Shultz shares the Starbucks experience with Tatas, which is again a positive for Indian enterprise.

Nandan Nilekani has faith in his UID, but laments the leakages. The problem with the entire system is one of scale and, more importantly, identification. As it is based on personal declaration, the system is flawed when used for a distribution programme because it cannot exclude beneficiaries based on facts. However, being the pioneer of this project, he does not admit the faults in the system and argues that it will help plug leakages in the system.

It is always engaging to read what foreign authors and journalists write about India. There are four interesting pieces here that are appealing. Patrick French talks of the polity and is positive about the electorate, which actually rejects non-performing governments. In fact, he is all admiration for the countrys free press and the fact that everyone feels they have a stake in the countrys governance. Let us see where he gets critical. Democracy functions, but governance does not. Once elected, one gets protection from legal proceedings and is really unaccountable. The rule of law does not apply and if you complain, there is a backlashso true when anyone tries to oppose the government, when raids are a corollary. Often, politicians get elected to protect them from convictions. Besides the money power, French talks a lot of dynastic politics, where one has five times better chance in case one is connected. This works more than business, but the two are interlinked as funding comes from business. This is not so in countries like Britain, where Tony Blairs offspring cannot become the Labour Party leader, unlike India, where it is hereditary.

Edward Luce draws parallels with the US democratic systems. Both of them are in disarray and are national bywords for dysfunction and inertia. According to him, the UPA has a chief problem of a diarchy, where there is power without responsibility and responsibility without power. Second, caste and religion have taken the zing out of the system and third, after 2010, the UPA has not been able to function on account of the multiple scams. The US is no better a state, as the Congress has not been able to pass critical bills since 2009.

On the issue of India and China, Yasheng Huang rebuts the theory that China can because of the absence of democracy, while India cant because of this freedom. He asks why China could not under Mao, while Taiwan did under similar dictatorial regimes. Similarly, Singapore has done what India cannot and South Korea, with laissez faire, also did, while North Korea couldnt. Or for that matter, Pakistan, with an authoritarian style, has made limited progress. Victor Mallet warns of the concept of demographic dividend, which we tout as being the big one for us. He cautions that this could be a misnomer because while the private sector produces 10 million jobs a year and 12 million enter the workforce, if there are no jobs and hence no income, then it is a recipe for disaster.

There are four other good, thought-provoking articles. The first is by Zia Mody, who sounds exasperated at the time taken by our legal processes and cites the examples of Ajmal Kasab, where it took four years for the case to finish, and Sanjay Dutt, whose case went on for 20 years. Interestingly, there are 31.2 million cases pending, of which 80% are in the lower courts and four million in the high courts (of these, one million lie with the Allahabad High Court). Rajiv Lall talks of the contrasts in our systems, where we manage a huge monstrosity like the Kumbh Mela involving 30 million people superbly, but are not able to manage the process of collecting garbage in the same city. This sort of sums up our mindset towards infrastructure and its development. Suhel Seth, in his uninhibited way, blasts the media for its cozy relations with both business houses and politicians due to a strong symbiotic relation. At a more intellectual level, Ashutosh Varshney talks well of our federal system, where people are still proud to be an Indian first. It has failed in the north-eastern states due to our own neglect. But there is a lot of crossing of such regional barriers, with the IPL being an outstanding case of diversity. Giving more power to the states has helped a lot.

Of particular impact is the last piece by Christopher Graves of Ogilvy PR, where he works on the term Incredible India as the brand to be used by the country, and to get over the propaganda by the states. Interestingly, he distinguishes between a branded house and a house of brands. We have started as a branded house and are moving to a house of brands.

What does the book achieve Nothing significant as the problems are well-known and only articulated by celebrities. McKinsey has its own staff writing articles on the way forward, which are also often bromides reiterated by practitioners. Besides, the consultants view on reshaping any economy is well-researched and appreciated. The title may sound out of place, as there is not much really on what the new India should be and a practical way forward. However, if one assumes that a writer has the right to express opinions with the usual human prejudices, then the book is interesting. But, more importantly, it is highly readable.

Madan Sabnavis is chief economist, CARE Ratings