hello and welcome you are watching to
the point for a long time now we've got
used to Indian politicians telling us
that the 21st century will be India
century but with it a book published
tomorrow raises challenging questions
and it's quite possible that the answer
it comes to may not necessarily be
reassuring here's the book it's called
the turn of the tortoise and the author
is the former editor of the Business
Standard now chairman of that respected
paper Tian Nylund
now and the title of your book as I said
is the turn of the tortoise and most
people would imagine that this means
India's turn has come I'll come to that
later on because it's an intriguing
conclusion that I think you come to I
want to start instead by exploring with
you the problems and advantages of India
sighs like most people you agree that
India's enormous size gives it
incredible economic clout but you also
believe that India size is responsible
for the fact that democracy has survived
and to my mind that's a new argument so
let's begin with that why has size
contributed to democracy well current
the first point is that many of our
states are as biggest countries Tamil
Nadu was as big as England in geography
but has a 30% larger population and so
on so and the smaller countries around
us have seen them going into the gator
ship and then coming back Pakistan
Bangladesh even Myanmar and so on know
why has is not happened to India them
the many reasons democracy strike struck
dooms early and so on but the point is
that we are a very heterogeneous country
caste ethnicity language religion and
these cut in different ways so people
have different perspectives and they
vote differently Tamil Nadu was
differently from West Bengal which for
different being from UB because cost is
more important in one ideology in the
next ethnicity the third and so on now
for argument seeing you could think of a
possibility that in the Left Front ruled
in Bengal for more than thirty years in
a row if it was an independent country
it might have been declared a one-party
state
similarly if somebody would dominated
state politics like say Gujarat for ten
or fifteen years he might
to perpetuate himself through some
systemic change now India is just too
big for somebody to try and do that so
our size SOI diversity but actually
guaranteed that no one person no one
party can actually do the whole entity
because a center there states there's
federated structure there's
decentralized power so therefore you're
more likely to remain a democracy than
most other country now your book also
talks about two downsides of India's
enormous size and both of those are
equally intriguing first of all you say
because of its size India has committed
policy errors rather than focus on
exports it's developed an inward focus
and then you add I'm quoting you as a
result the country became an economic
prison functioning behind high
protective walls
it therefore evolved into a market for
mostly shoddy
overpriced goods sighs therefore has led
India into various policy cul-de-sacs
from which it has been trying to
extricate itself elaborate that for
those who aren't used to this line of
thinking well if you take two small
countries in East Asia South Korea and
Taiwan both began to try and
industrialize very early on in the 50s
both initially thought they would feed
the domestic market and both realized
very quickly that the domestic market is
simply too small so they had to look
outward export and specialize and what
became manufacturing powers when we
didn't and in India when you have so
much poverty you first want to say let's
feed ourselves not look at export
markets right culture you then say we
want to make things for our people
towards lights of bicycles or whatever
you want to make because as domestic
demand has to be met and you don't want
to focus on exports but once you set
these up and if you don't get scale and
businessmen who start these companies
and you start looking for protection and
if they influence politics you set up
tariff walls and then it becomes a
protected market where there is
restricted competition there's no
incentive for efficiency for technology
change and so on so we made all of these
mistakes and ended up with the kind of
cars that we used to produce before
Maruti came along and it's all due to
the allure of being a large country
which gave us the belief that we have a
huge domestic market we didn't need to
look to the outside world our market at
home was sufficient and the
there's the world market much bigger
than our market so actually you could
have used exports as a vehicle for
growth and global trade was growing so
because we didn't take part in that our
share of world trade dropped 1/5 of what
it was in independence now the second
downside is perhaps in some senses even
more intriguing you say size has led
India into confusion about objectives if
multiple objectives are pursued
simultaneously compromises have to be
made on the main objective the result
has been that none of the objectives was
achieved to any degree of satisfaction
give me an illustration where confusion
about objectives has led to India's
detriment well I think a good example
would be two wheelers scooters Bajaj was
the most efficient scooter manufacturer
he had the longest customer waiting list
he had the lowest price but your
monopoly law because he wanted to not
have concentration of economic power as
an objective you said he can't expand so
instead what did you do you said we will
set up a public sector scooter company
and maybe we set it up in a backward
state like you be in Lucknow and then
you would set up assembly units and
often as in other states so you focused
on trying to set up a company that
eventually was a complete loser and just
couldn't make scooters anymore and would
not let a successful company who could
have led an export thrust in scooters
not allowed to expand in fact you summed
this have been a very interesting
question you write was industry meant to
produce things or develop backward areas
we often use industry particularly when
it was government doing the
decision-making as a way of developing
backward areas and therefore
misunderstanding the critical role of
that company altogether absolutely my
favorite story on this is the chairman
of the andhra pradesh electricity board
his Minister electricity Minister and
the state told him to hire 10 or 20,000
more workers and his reply to him was
electricity generating stations are
meant to generate electricity in our
jobs so you get the point
absolutely and if only state governments
have listened to that because probably
every state company would be more
delicious tea for the wrong purpose and
if you were more efficient you'll create
more jobs this is what you mean about
confusion about objectives as a result
of which nice
objective is achieved yes and the
potential of the country's economy
diminishes yeah the end result is if
you're not a manufacturing power other
countries are niya book has an entry in
chapter called not twins and not alike
which asks the critical question and
it's a question people are constantly
debating in India can India do what
China has done and there's a sentence
from a broken water code you say trying
to make Indians do what the Chinese have
done maybe a bit like the European
experiment of the moment asking the
Greeks to be like the Germans it may
happen but don't bet on it
am i right in interpreting you to
suggest that you believe the Chinese
manufacturing miracle will definitely be
difficult to emulate in India and it
might actually not be possible either
yeah my point current is that we should
focus on our strengths not on trying to
copy somebody else who has different
strengths and I would put to you that we
are not able to compete with them on
mass scale boring manufacture but we are
able to do more creative stuff and more
value-added stuff better than the
Chinese and the example echoed in the
book is of this way well-known text our
leather producer and exporter who's got
a good brand name and he says that he's
tried very hard to produce as many
handbags per day per employee as the
Chinese and he said he just couldn't do
it so the only way he could compete was
to go for better design some change in
Outlook or feel and so you need that
creativity and the same in government's
government exports in China is huge very
much bigger than ours where we can score
is a little extra design element so that
creativity helps you to compete not just
plain rote manufacture of exactly the
same thing over and over again not quite
along the lines of what you're saying
just now but it's not dissimilar either
is something in your book set to you by
RC Bhargav the chairman of Maruti who
said making cars is not going to
generate jobs in India but work will
generate jobs is the fact that we have
cars with drivers and the more cars that
are sold the more jobs that are created
for drivers as that's the sort of
strange way of looking at cars as a
means of creating jobs it's not directly
the manufacture but it's the surface
that the car
provides no driver that creates the jobs
yeah well drive with service stations
sales outlets manufacturers of
components the the the value addition in
all these areas is much more than in
pure car manufacture so there is a whole
ecosystem that's created around
automobiles and in every country we just
succeeded a lot of wheels is created
lots of jobs but to come back to this
key question about whether India can
emulate China's manufacturing miracle
because in a sense that is what the
government strives to do when it talks
about making India your book points out
there are two critical problems that are
holding back Indian manufacturer firstly
the areas where China cornered world
markets garments leather goods toys TVs
air conditioners where areas where at
least until recently the small-scale
sector had a prerogative it was
prioritized for them and as a result of
which scale operation didn't happen in
India and India may have missed the boat
in secondly you point out the other
restriction is India's inflexible but
restrictive labor laws not taken
together what are those these do mean
for mr. Modi's make an India well you
can make a success of making India you
can you have to change labor laws you
cannot get volume manufacture flexible
manufacture people need to adjust
Manning levels for seasons 4 times of
day and weeks sometimes if you don't
allow that flexibility then it's
difficult people to plan more employment
and you then tend to automate much more
so you it's essential that you create
low value appliance all different kinds
of manufacturing you can do high end
manufacturing side lights or fighter
aircraft and they won't create many jobs
but if you want mass scale jobs is what
we need
you need industries of masculine
ployment like next arts and garment and
for that you need labor plant for that
you need labor flexibility in fact you
need higher and 5 in some sort okay but
that's a bullet the government seems
very reluctant about well you know it's
a political battle that they have to
fight some of these chosen not to fight
it any left her to the states now the
state should take the lead one I think
or maybe two have decided to step in but
that's about it
mata Pradesh I believe
and Rajasthan but that's it yeah I mean
and those are not you know on lead
industrial states you it's much better
to have a national law which is will uh
create more jobs which is why on the
India versus China question your
conclusion seems to be and again I'm
quoting you most producers looking for
alternatives to China are not looking to
India this is another boat in a sense
we're about to miss out on the
opportunity was there had we got the
laws in place had we made as a mold
inviting but since we haven't people are
going to leave China but not come to us
that is what is happening you look at
governments Bangladesh is really much
smaller than us as a government exporter
today they nearly twice our size Vietnam
Philippines these are all places where
people who are think China has become
too expensive are going to those
countries and not coming to India Indian
government exporters are investing in
Bangladesh quite right so instead of
people coming to us be ourselves are
opting away from our own country because
it's more inviting to do the same thing
elsewhere absolutely if I connected with
the economic rivalry if I can use that
word between India and China is a very
interesting analysis in your book about
how China's economic dominance casts a
shadow over international relations and
as far as India is concerned over our
immediate neighborhood now that's the
neighborhood where India wants to appear
as if it's the dominant lead state but
you seem to suggest that as long as the
disparity between India and China and
economic terms remains worst it if it
grows China will write a formidable
challenge to India in its own
neighborhood absolutely current to the
point is that China already has more
trade with all I immediate neighbors
than we do barring Nepal it has more
trade with Bangladesh that mantra in Sri
Lanka it was more trade with Pakistan it
supplies military equipment to those
countries in a way that we know under
supplying submarines to Bangladesh Navy
its provide aircraft there
China's investment in infrastructure in
those countries poor development and so
on they talked about forty six billion
in Pakistan all of that overshadows
India's relations with our immediate
neighbors number one number two the
Chinese say India thing said it has a
natural hegemony over here we don't
accept that and they say the Indian
Ocean does not
minutes India's ocean so their ships are
coming in so there is a clear attempt at
undermining India's dominance in our
immediate neighbourhood so find your
solution if I can use that word both to
the economic disparity and the fact that
in the international arena in days
increasingly losing our to China is the
need for more reforms you sort of
suggest in your book that if India can
make itself a more inviting place for
people to invest a more interesting
exciting place for people to come and
manufacture then we will fulfill our
economic potential but if we don't do it
not only will that potential remain
unfulfilled but India will continue to
play a weak international hand
absolutely I mean if you look at what
happened in Myanmar where there was lots
of gas available and we wanted to
develop the gas the Chinese weren't
developed the gas they can bring in
money and resources and clout in a way
that we simply cannot match so you need
economic clout to be able to compete in
these markets in those countries and if
you're overshadowed by China abused to
be roughly equal in size 30 years ago
today China's five times our size
clearly there's an imbalance of power
that's emerged and as that will show in
our neighborhood as well and as you
point out the lessons of China not early
it learnt it in the 1980s and the 1990s
is reform is the way forward that's a
lesson in gesture it has to actually
done yes what is it that stops us
learning it why is it that we can in
theory accept that reform is essential
but in practice shy away from doing it
well we are a democracy it's difficult
to make rapid changes of direction or
law or policy in a democracy because
people get affected they have wards they
have a voice and they will resist in
there is no real labor rights of any
consequence in China you try and go on
strike and you see what happens so the
so the environment here is very
different and people feel constrained
and I'll give you an example
what does industry say the new landlord
it will take up to four years to acquire
land with all the prescriptions that are
there the new land law guess how much
time it took China to build not just buy
the land but build the entire Beijing
Shanghai
Elway's super fast super trends which is
the same distance at any Bombay they
built the whole thing in two and a half
years and it would take us for us just
to buy the land by the land
there's an interesting corollary to what
you're saying
in first world democracies it's the norm
for free market economics right wing
economics liberal economics due to
dominate inside world dictatorships it
happens easily because no one cares
about public opinion but in third world
democracies which is fairly what India
is the logic of your free economics
comes into conflict with the logic of
your free voting and your free politics
and as a result of which they cancel
each other or they contradict each other
that is true and this is the old
argument demand dictatorships
democracies and India's you need because
when a democracy with universal
franchise before most other countries
did at a certain level of income which
is unprecedented and so we made a
success of it in many ways which is I
think a credit point but the fact is
that we have not pushed change hard
enough so two things then are holding
back India a the fact that we are a
democracy and things are more difficult
to do in a democracy reform is
potentially much more difficult in a
democracy and the second thing holding
back India is the lack of political will
the lack of conviction the lack of
commitment to reform we don't have a
generation of politicians like a Sachin
or a Reagan who are single mindedly
committed to reform yeah I'll give you a
sort of example from left field on this
which is something that's not often
pointed to or emphasised which is that
all of the successful East Asian
countries did phenomenal achieve
phenomenal equality very early on
changes in land laws universal education
we failed in those so actually our
failures on the Equality side have also
to do with the kind of democracy we had
there's something else in your book that
also sheds light on what we're calling
the China versus India syndrome and that
in a sense is your analysis of what you
call the anti market mindset of most
Indian politicians you write governments
follow good intentions while being
innocent of market or practical
realities this anti market mindset is an
important part of the story of why India
has underperformed but you know if we
look around
at many levels we are a nation of banyas
we're adept at jugaad we've given that
concept of the world where then does
this anti market mindset spring from it
comes from your old Fabian socialism it
comes from trying to but isn't that an
import of the 1920s and not much older
than that it is but I think it's
sometimes one doesn't realize how deeply
ingrained those thought processes have
become this is a bitter than hero legacy
that's entrenched in us to some degree
to another degree it's also related to
politics when you look at sugar industry
and it talk about sugar there's the
politicians in the States want to
maximize the sugar cane price for
farmers because they want to keep
farmers happy on the other hand you want
to keep sugar cheap so used to have
price control on sugar now you give hike
in prices and then you price control
sugar what happens to the industry and
then that leads to a series of other
distortions and politicization and there
are lots of examples like this where
your price control on cars on cement on
tires on paper capacity constraints you
don't realize that an efficient market
is as much a public good as known order
so your advice to politicians is don't
be entrepreneurs because you're probably
not cut out to be entrepreneurs but
don't be against the market understand
the market has its own requirements it
has its own rules
it works in its own way respect it flow
with it don't try and buck the trend yes
I mean your entire banking sector your
entire literary sector with its huge
subsidies for the first time in our
history we have the capacity to generate
all the electricity we need there should
be no power shortage anywhere in India
today but because power tariffs are low
the electricity both on our the money to
buy the power that's available
absolutely this is once again where an
anti market mindset is holding an active
market mind so that prevents a market
from functioning now your book has a
very insightful set of comments on the
approach of Indian politicians to
governance and this as I suppose
particular relevance to our present
Prime Minister mr. Modi
you write there is no one in Indian
politics who actually believes in making
government focus on the essentials alone
and shed the rest even mr. Modi with his
dental icing slope
minimum government maximum governance
has actually failed to do this does that
suggest that in fact this is just one
step too radical for India I think it is
radical it's hard for a politician to
sell that story but the fact is that we
have only 2/3 of the policemen that the
international benchmark would want you
to have and therefore you don't have
effective coverage for law and order you
don't have enough teachers there are
hundreds of thousands of teachers
positions lying vacant we don't have
public hospitals in fact we now have
more private hospital beds and public
hospital beds all of these show that the
basics which a state should provide law
nor the justice system we don't have
judges thousands of Zaycon judges more
than a thousand High Court judge may
consider there you don't have long you
don't have education you're failing on
public health these are the key
functions of the state so why is the
state spending time and money running
Airlines and hotels and doing a whole
lot of other things when you should
focus on the basics in fact your
conclusion is simple in stock I'm going
to go to you in trying to do too much
the government has ended up achieving
too little or doing things badly it has
to do less of some and more of others
but that is a simple bit of advice that
Indian politicians regardless whether
they're BJP congress or united front
simply can't accept or if they can
understand it they won't implement it
see the whole sense color and the
politicians mind is that people need
jobs
so the unthinking response is you have
to create government jobs and so if you
turn around and say actually shrink
government jobs and make up and leaner
and more efficient and then deliver more
it somehow seems to them a
counterintuitive argument they can't
understand and this in a sense links in
with the anti market mindset because the
belief of politicians is government has
to do everything
rather than facilitate the market to do
it it will do it better to do it faster
more efficiently and that's because
actually politicians think they are the
answer to everything
this is believed they are omnipotent and
omniscient the
makes them believe that their hand is
required rather than the guiding hand of
the market oh absolutely I mean you see
over and over again when they do
intervene in various sectors they
intervene against the market you have a
very telling story in this connection to
do with Jeremy I mentioned dr. Manmohan
Singh when dr. Manmohan Singh was Prime
Minister
jaren Ramesh was trying to implement
environmental concerns of a European
level and European quality at a time
when it was simply unrealistic to do
that in India and he got as you say in
your book a full-scale dressing-down
from dr. Manmohan Singh tell us briefly
because no one knows about that what
actually happened in what prompted dr.
Manmohan Singh to take this course of
action well you know jerem was stopping
all these high-profile industrial and
mining projects one was in a tiger's own
mother was not no go forest area third
was in a tribal area and so on and so
forth so he was as he said simply
implementing the law as it existed and
he said if you want to change the law
change the law but as Minister my job is
to implement the law as it existed I am
implementing it but businessman were
constantly going to the Prime Minister
and complaining saying you're holding up
stuff government is paralyzed business
can't invest and so Manmohan Singh was
being criticized for not doing anything
was trying to get investment going but
he and the best example which is there
the book is this whole bauxite mining
thing in lungi girl which a tribal area
and in in China for instance they would
have gone and done the bauxite mining
but here you go through Supreme Court
hearings local hearings the tribal
population and finally it stopped after
many years so dr. Manmohan Singh had to
step in and say trees environment esta
stop being so narrow stop being so as
you use the Hindi she wanted to be more
flexible and say for God's sake get some
stuff moving and when general didn't
listen if I may change them that is in
fact why Gerald Ramesh was removed
yes let's then come in the context of
all that we've discussed we've gone
through large sections of the analysis
in your book - the title of your book
the turn of the tortoise now the inside
flap of your book says and I'm quoting
it is said of India that it is the
country of the future and will remain so
now you're smiling
but that last phrase and will remain so
suggests to me that you're finding a
subtle way of saying maybe it won't
fulfill its economic potential which is
why it will always be the country of the
future not a country that's made it in
the present yeah well that is what I
said is said about India it's also said
what Brazil the the point the message of
the book is that India's time has come
that's why it's the turn of the tortoise
we've been thus look which is so far
what I've learned has come in fact the
book says that in the last 25 years
India has grown faster than all of East
Asia barring China and marginally
Vietnam but given the problems that
we've discussed just the fact that otter
has gone mean the tortoise will beat the
hare or does it mean our time has gone
but there are question marks whether we
will there are question marks there are
things that you need to do but the main
message of the book is we've now
acquired a certain size not just a speed
but also the size which makes us a third
largest contributor to world growth it
gives heft to our markets it will bring
in more investment so we have a certain
momentum and dynamism that if we just
repeat what we've done in the last
quarter century or the next quarter
century you're there but there are two
intriguing sentences in your book that
perhaps contradict that note of optimism
is which you enter their answer the
first is in 2025 India is almost certain
to still be the poorest large economy in
the world the second sentence is a great
power India might hope to become but it
has the chain of poverty around its
ankles those are two sets of sentiments
that what I call the Modi generation
would find hard to swallow to the facts
I mean the World Bank is just come out
of the latest numbers on global poverty
and India has by far the largest number
it's less than before but it's still the
largest number and when you look at the
40 large economies and account for 90%
of global GDP I point out that India is
by far the poorest and ten years from
now will remain the poorest these are
facts that won't change so then what
does it mean to say that India's times
isn't about size that because you are so
large
you're the seventh largest economy just
seven years ago you were the twelfth
largest you are now seventh in ten years
you'll be the fourth largest and still
growing at a hefty clip that gives you
momentum in a way that only China will
have but it also means and maybe this is
not the perfect analogy that the
tortoise could cross the finishing line
whether the hares crossed it earlier or
not is almost irrelevant but the
tortoise will still be dragging a family
of poor tortoises from behind and what
you need to concentrate on is the
winning daughters in the lead or the
whole family of poverty at the back they
both be there okay let me say that the
poverty will keep coming down it's
already less than half of what it was in
the 1980s it will come down to less than
half if we grow at six and a half seven
percent it will come down dramatically
or the next ten years but in 2025 we
will still be the poorest large economy
in the world but in the last 25 years
we've done six and a half percent growth
despite the poverty poverty is going to
come down the growth element of the
middle class is going to grow so the
story gets better so come back to my
introduction I said to the audience that
the conclusion your book comes to is
intriguing for some I said it may not
necessarily be reassuring for those who
have this belief that in five or ten
years India is going to be an absolute
superpower that we will be the new
America that is not so no not at all and
even when we are the third largest
economy or the second largest economy in
the world with a terrific middle class
doing extremely well we will still have
a very sizable poorer class yes and the
more you look at that poor class the
more we are going to have to say to
ourselves there's an awful lot still to
do plus a Chinese shadow plus the
Chinese shadow so the future may be rosy
there it ain't necessarily Sun bright
you say it better than everyone Qatar
dni on a pleasure talking to you thank
you thank you good
you