The current debate in India about how to trigger a quantum jump in industrial manufacturing activity and thus create large scale employment is largely centered on ways to reduce the role of the State- in allotting land, in environmental clearances, in firing workmen and so on. Yet, the case studies of two industries which came from origins even smaller than where manufacturing is today and have become international success stories, the Indian pharma industry and the Indian information technology services industry, proves the opposite point. Neither would have come to their current stellar role in the Indian economy without the active but largely invisible hand of the Indian State.
The Indian pharma industry has grown from minuscule revenues in the late 1960’s to a world player with an annual revenue of $ 40 billion (of which $ 15bn is in exports) and an activity base of 20,000+ manufacturing units employing over 29 million people. The case of the software services industry is even more striking; it employed just 8,500 people in 1990 and had a revenue of a mere $165m (tiny Ireland had a $185 million software industry at that time). Today its size is $118 billion with $100 billion as exports. The people directly employed in the industry is reported as exceeding 2 million with another 7 million employed indirectly. Both these industries have also created multiplier effects in sectors such as housing construction, transport services, and household goods as young chemists and programmers set up homes and bought cars and home appliances.
What was the magic? Unfortunately, finding the key to these success stories is like that old tale of the blind men of “Hindoostan,” who, when asked to describe an elephant, said that it was like a wall, snake, spear, tree, fan, or rope, depending upon which part of the elephant each touched.
Proponents of the “market economy” will say that the success of these two industries is an example of what energetic Indian entrepreneurs can achieve when the government of India steps aside. Reinforcing this view is India’s business press, which frequently features stories about software and pharma industry millionaires. Proponents of ‘“globalization,” such as New York Times columnist Thomas Friedman in his book The World Is Flat, credit globalization: increased world trade that spreads prosperity around the world. Proponents of “privatization” say that decades of public sector efforts in these industries (Electronics Corporation of India in the case of IT and Hindustan Antibiotics are often quoted as examples) came to nothing until the private sector was “allowed” to participate. To them, this is proof that the government needs to privatize many other industries as well. And of course there are those that say that the State’s only role should be to provide zero-income tax on export incomes, government-sponsored software parks and export zones.
But actual case studies of these two industries tell another story. The rise of the Indian software services industry can be traced back to two mega projects sponsored by the government of India: the computerization of public sector banks and Indian Railways. These two projects, apart from providing an impetus to the startup and growth of hundreds of software development companies, also had another dimension. Far sighted government policymakers like Dr Seshagiri of what was then called the Department of Electronics, the forerunner to the current Ministry of IT, insisted that these applications be built using such technologies as the Unix Operating System and Relational Database systems; the world was then getting ready for a paradigm change that would unleash an insatiable wave of demand for computer programmers well versed in these specific technologies as the world shifted from mainframe computers to client server computers. Thanks to the Banking and Railway projects, Indian companies had a ready stock of thousands of software programmers well-versed in these new technologies who could be immediately deployed on assignments abroad.
The rise of India’s pharmaceutical industry is based on similar visionary moves by the Indian State. In 1970, the government introduced a new Patents Act reforming the 1911, which excluded pharmaceuticals and agrochemical products from eligibility for patents. Patents on molecules, which are products of chemical reactions or on mere admixtures and the like were made non-patentable in India. Only the method of making the product was patentable. This resulted in the Indian pharmaceutical industry developing considerable expertise in reverse engineering of drugs that are patentable as products throughout the industrialized world but not patentable in India.
You need to peer really hard to detect this kind of invisible hand of the State. Professor Marianna Mazzucato, Professor of Science and Technology at the University of Sussex and the author of The Entrepreneurial State – Debunking Public vs. Private Sector Myths did just this and uncovered the role of the American State behind what is generally seen as the ultimate artifact of entrepreneurial vision, the Apple iPhone. “What actually makes the iPhone a smartphone, instead of a stupid phone?” she asks in a recent TED talk. And answers that it is the Internet, the Global Positioning System (GPS), which detects your geographic location, the touchscreen display which makes it also a really easy-to-use phone. She points out that “the very smart, revolutionary bits about the iPhone, are… all government-funded. ….the Internet was funded by the Defense Advanced Research Projects Agency (DARPA) of the United States. The GPS was funded by the [US] military’s Navstar program…the touchscreen display was funded by two public grants by the CIA and the US National Science Foundation”, and in the American pharmaceutical industry, “a full 75 percent of the new molecular entities with priority rating are actually funded in boring, Kafkian [US government] public sector labs”.
When the talk turns to finding jobs for India’s young millions, “manufacturing” is invoked- if only India could manage to build a strong manufacturing sector just as our sibling rival China has done, all our job creation worries would disappear.
But it is perhaps also true that the word “manufacturing” evokes a vision of mindless, repetitive work on an assembly line first caricatured in Charlie Chaplin’s 1936 film Modern Times, poor Charlie plodding away at a relentlessly moving assembly line watched over by a distrusting supervisor.
Thus it is no wonder that solutions proposed for the “manufacturing problem” in India oversimplifies the issue: change labour laws that makes firing of workers easier than it is at present, make land available cheap (preferably free), declare tax holidays and so on. But there is some evidence from scholars who know a thing or two about manufacturing that most of this may be wishful thinking and the real solutions may lie elsewhere. Success in manufacturing is not just about being cheap- cheap labour, cheap land, cheap power and low/no taxes
Prof Suzzanne Berger of the Massachusetts Institute of Technology who co-chaired the blue ribbon Production in the Innovation Economy Commission setup to study this problem for the American economy (yes, they too yearn for more manufacturing jobs) points out that German manufacturing workers are paid 66 percent higher wages than American workers but Germany has $20 billion a month trade surplus in manufacturing whereas the United States for the same month under study, October 2012, had a $14 billion trade deficit. So, even in America, low wages are not the key to manufacturing success. She casts a similar skeptical eye on the popular explanations for China’s rise in manufacturing, most famously symbolized by Foxconn whose factory in Shenzen, China, makes all the iPhones, IPads and other state-of-the art Apple products that we all love. Analyses of Chinese growth, she says, emphasize low wage labour, foreign direct investors bringing capital and manufacturing export experience from Taiwan, Hong Kong and the West, cheap land, cheap loans and a protected and undervalued currency. She says the key to the success of Chinese manufacturers is that they excel at all forms of innovation that incorporate, enable and rapidly deliver products and solutions at the technological frontier even though they do not themselves initiate these technological innovations. An Apple manager, quoted in the New York Times explaining why they make iPhones, iPads and iPods in China says, “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little different? It will take three hours.” It is, she says, the ecosystem that provides the competitive advantage to Chinese manufacturers.
n reality, all “manufacturing” and all manufacturers are not the same. One dimension to see the difference is by the degree of R&D intensity, as a recent study in the European Union did. At the lowest technological edge are units that make furniture, clothing and tobacco products. At the next higher level are units that basic metals, rubber and fabricated metal products. Above them are the car makers and the makers of medical equipment. At the highest technological level are those who make pharmaceutical, computer and optical products. What is needed to nurture and grow each of these types of manufacturing is different.
Unknown to many in India, a Japanese academic, Professor Shoji Shiba, has been working for the past decade to transform Indian manufacturing. He has been trying to sensitize Indian managers and policy makers that success in manufacturing depends mastering how to reduce the time to market from the moment you conceive of a new product or a new feature in an old product, how to reduce frequent interruptions in production and so on. Thinking back over his work, he says the key to solving the Indian manufacturing puzzle is to change the widely held Indian understanding of manufacturing in the limited sense of “production”. This he calls the “small m” mindset. Manufacturing success depends on mastering several related aspects: design, research and development, sales and supply chain. Truly great manufacturing managers also need to understand issues like environmental change, societal change as well as technological change. His clarion call is to change the ‘small m’ mindset among Indian managers and policy makers to ‘BIG M’. Encouraged by people like Sarita Nagpal of CII, industrialists like Surinder Kapur and Jamshed Godrej and Dr Krishnamurthy, Professor Shiba has been driving a management education programme called the Visionary Leaders in Manufacturing in line with its goal of training a new generation of visionary leaders in Indian manufacturing. Students who join this programme spend their first three terms at IIM Calcutta, the next two terms at IIT Kanpur and IIT Madras respectively and return to IIM Calcutta for the final term.
It was William Blake who in his 1804 poem used the term “satanic mills” to describe the factories of the first Industrial Revolution that were springing up around him and thus encouraged many to view factories and factory work as grim and uncreative. May be it is time we left that antiquated notion about manufacturing behind us.
Can all these web businesses that sell mobile phones, books and apparel 10-20% below the cost of what is available at retail shops and delivered free of charges home to you be for real? Will it all come crashing down? Or, perish the thought, is it one of India’s periodic spectacles that start with gushing media accounts of outsized company valuations, hitherto unknown entrepreneurs now being heralded as millionaires, which then leads to a grand denouement in which the same business men are then shown in rumpled clothes, with stoic expressions being led away by the CBI to Tihar jail?
Or, is all this a sign of India being dragged to its long overdue entry into the ecommerce era. Why long overdue? Because the percentage of all retail sales served by “organized” retail, i.e., non-mom-and-pop stores, and is considered a measure of a country’s modernity and by that measure, in India is a tiny 3% compared to our sibling rival China at 13% and European countries and the United States at 50%+. Why dragged? Because the infrastructure that would have naturally led to ecommerce, the companies who could have provided widespread availability of credit and debit cards and reasonably priced broadband access have all being looking the other way while the world transitioned to the new economy.
I should know; it was on Independence Day 1998, that is to say, fifteen years ago, that I grandly declared at a press conference to an audience of puzzled journalists that Indian consumers could from now on, from their PC, “choose from over 40,000 music titles and 100,000 book titles to order online with discounts up to 40%, or make bookings in over a 180 carefully chosen hi-quality reasonably priced hotels”. For the next few years a few of us folks battled a narrow broadband user-base, a steeply depreciating Rupee that made PCs progressively more out of reach every year and poor credit card penetration; even a cash on Delivery payment system we launched in 1999 seemed to be of no avail.
What woke-up a somnolent Indian ecommerce industry that the rest of us had just about given up on was that a clutch of US private equity funds led by Tiger Global, had the vision to note that a consumer ecommerce market could be created in India because India had a per capita consumer expenditure roughly at the level of Brazil and China where ecommerce was flourishing. Since then, this group, and others who joined them, have invested large dollops of capital, by some accounts $2.5 billion, or Rs 15,000 crores in 2012 and 2013, into dozens of Indian ecommerce startups. These investors have then encouraged the ones who lagged behind in growth to merge with the ones which were forging ahead in an attempt to create at least one or two ecommerce companies that could make it to an IPO in the New York stock markets before the current euphoria about Asian ecommerce triggered by the impending IPO in New York of China’s ecommerce company Alibaba, ends.
Alibaba! Its annual revenues are $248 billion, about three times that of eBay worldwide and two-and-a-half times that of Amazon. Alibaba is also hugely profitable, its profit in a recent quarter was in excess of a billion dollars unlike Amazon which reported a loss. The international investors who are investing, merging and shaping India’s new ecommerce startups are betting that if China can produce an Alibaba with an expected market value of $ 170+ billion market value when it does its IPO, India should produce at least one or two with a $5bn+ market value.
There are many reasons why India may go the China path in its adoption of ecommerce. Organized retail companies that have the scale, management expertise and the information technology infrastructure to deliver consistently high quality and low cost goods, have never found a real foothold in China or in India. In China, for instance, such large retailers’ reach, even in urban areas is a mere 10%; in India even smaller. On the other hand, the Internet reaches more than half of China’s population, so selling things online in China makes eminent sense. India’s internet reach is only 11% now, but should it get to even 25%, as it is likely to in the next few years, one can easily imagine more than a handful of multi-billion dollar ecommerce players from India.
Indian ecommerce, so far, has merely taken its first wondrous baby steps.
“Will you still need me, will you still feed me, when I’m 64”, sang the Beatles when they burst into the international music scene. I was in my late teens when I first heard this beautiful refrain. To me, like for all teen agers, asking your girlfriend whether she will care for you at sixty four appeared tantamount to asking her whether she would care for you forever; sixty four seemed so impossibly far away. Then, I woke up one day last year and realized that I had just crossed that milepost.
I quickly turned to Salman Rushdie for answers to the questions that came welling into my mind; after all he had made my age cohort famous worldwide, by casting Saleem Sinai, the protagonist of his novel, Midnight’s Children, as one of us. Saleem Sinai, was born at the stroke of midnight 1947 and his life, like that of the rest of us born in that period is shaped by the tumultuous events in Indian history. We were entering high school when India went to war with China, entering our teens at the time of the war with Pakistan, in our early twenties when Indira Gandhi declared an Emergency and embarked on forced sterilizations and when it looked like the democratic status of India that we had all been taught in our school days to believe in had come to an end. Saleem Sinai, in Rushdie’s novel, dies on his 31st birthday and its just 1978. The rest of us, Midnight’s Children, lived on to see Indira Gandhi defeated in a democratic election and spring back again to power two years later.
Why I asked myself, am I glancing through Rushdie’s novel, yet one more time. Was I trying to find meaning in there for all the years of my life that had run a parallel course to Saleem Sinai’s? Or was I the classic stereotype of a man in his mid-sixties that Erik Erikson, the German-American psychoanalyst, wrote about when he said that the mid-sixties is the age when a person looks back at his life and asks, Was it OK to have been me; period of life when we reflect over all we have achieved so far in our life. If we conclude that we have achieved all that we set out to do, we develop a sense of integrity; if we conclude that our life till now these goals have eluded us, we develop despair which could lead to a sense of depression and hopelessness.
Erikson saw life as having eight stages. The first stage is from birth to the age of 1, during which if we receive maternal love and care, we develop a sense of trust, but if that maternal care is withheld, we go through life seeing the world as unpredictable and inconsistent. The second stage, from the age of 1 to 4 is when we face the challenge of toilet training- success here results in a sense of autonomy, lack of success leads a life-long sense of shame. The stage when we are between 3 and 6 is the pre-school period when the challenge is to take initiative, for example, to dress oneself. Success leads to a sense of being able to do things on one’s own, failure leads to a lack of confidence in one’s own judgment. The age of 6 to 11 is when a sense of personal competence is developed vis-à-vis others in one’s age group. The adolescent years, 12-18 poses the question, who am I? Where am I going in life? The ages of 18 to 35 is the time for dating, marriage, family and friendships- successfully forming loving relationships with other people in this stage leads one to experience intimacy, failure to achieve lasting relationships in this stage leaves one feeling isolated and alone. During the ages of 35-64, one we are either making progress in our career or unsure whether what we are doing is what we want to do for the rest of their working lives. Successful resolution leaves us with a sense of comfortableness with the way our life is progressing; failure leads to a sense of regret. And then we are in our mid-60’s and a time of reckoning for one’s life, if one believes in Erikson.
But, on the other hand, the mid-60s is also the stage for some to achieve their greatest success. When Winston Churchill stood up in the British House of Commons, on 4th June 1940, as Nazi Germany was readying their invasion of England and declared ” … we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender…” he was 67. When Mahatma Gandhi launched that final push for India’s independence, the Quit India Movement in August 1942, he was 63. More recently, Narinder Modi, the man who India has chosen by an overwhelming majority as its new leader, will be turning 64 in a few months from now.
At no time in recent history have journalists and journalism, been as much of a threatened species as they are today. This is true whether they work for a daily newspaper, a magazine, a news radio station, a news TV channel or even an internet news website or whether they are in New York, London, Paris, Bombay or Delhi,
Among private equity and venture investors, news businesses are nowadays referred to as “vanity businesses”, something that men who have made their money in some other business buy for social prestige or to get the ears of powerful politicians.
But all this must sadden those of us who look up to the media to be that institution of society that “the people” depend on to look out for their interests against the transgressions of powerful actors of society like politicians, bureaucrats and businessmen or even sports stars. And also sadden young entrants into journalism who are drawn to the idealism that that the young protagonist of Orson Welles’ classic film Citizen Kane portrayed: pursue a news story doggedly till the truth is finally revealed. But today’s question is what are these truths and to whose benefit will the revelation of these truths be? And most importantly, why does the sincere pursuit of such truths not make the news organization financially successful?
It was Joseph Pulitzer, an Austrian Jewish immigrant newspaper owner, remembered now through the Pulitzer Prizes, who invented the business model that practically all newspapers in the world follow to this day. He arrived in America at the age of seventeen in 1864, got his first job as a soldier in the ongoing Civil War, moved to being a reporter and then an editor and publisher and finally a newspaper owner. In 1883, Pulitzer bought the ailing New York World in New York, dropped its price to a penny (one cent) a copy when his competitors were pricing their newspapers at 6cents and to make up for this loss initiated the practice of selling advertising space at prices fixed in relation to actual circulation: the newspaper business model was born, in which circulation was the driver to profitability. Pulitzer’s model worked wonderfully till the audience started wandering away to other news consuming devices like the TV, the PC and the Mobile Phone.
Indian journalism may be hobbled by an additional factor: Indian journalists imagine themselves as the audience and produce content that they think that they and their families would like according to Dr Somnath Batabyal of the Centre for Media and Film Studies, University of London, and a former journalist, in his recent book, Making News in India, an ethnographic account of Indian TV news practices. This worked as long as advertisers were also seeking the same audience, the so-called SEC A (Socio Economic Class A) made up of families whose chief wage earner has a college degree and works as junior, middle or senior officer or executive or as a self-employed professional or business owner.
Unfortunately, if there is one group that has fallen behind economically and socially in the post-liberalization period it is this group, who are largely in occupations with fixed salary incomes. Skyrocketing real estate prices in city centres (that where SEC A-type jobs are mostly available) have made housing unaffordable for them, prohibitively expensive private medical care darkens their retirement, hyper-competition makes higher education institutions like the IITs and IIMs a long shot for their children. Indian news media, print and TV, particularly the English language versions of it, have tried their best to reflect the anxieties of this SEC A group hoping that this will resonate. It worked up until the end of the 1990’s when the newly liberated Indian industry was satisfied with the minuscule audience (according to a NCAER’s How India Earns, Spends and Saves, less than a sixth of Indian households are headed by a college graduate) that the SEC A group provided. Today’s advertisers, be they financial services, consumer durables or auto companies need to go far beyond the SEC A audience if they are to meet their sales goals. So, they bypass News organizations that still stay focused on SEC A audiences be in print, TV or even the internet.
But, wait, look, a new dawn is breaking and in the early morning light a new world is starting to be revealed: one where 800 million or more Indians gaze at their mobile phones all day. This “audience” barely has a school education and the head of the household is more often than not employed as an unskilled or skilled worker, or in a sales and clerical positions in small shops or are tiny scale traders in the unorganized sector of our economy. Whoever decodes what’s news for them and their children and convinces them it is value for their money to pay, say Rs 10 per month for it on their mobile phone, may be the next winner in News.
A yuppie Bombay couple and their seven-year old son set out in their SUV, across the barren salt marshes of the Rann of Kutch. He, David Shroff, is in his sleeveless olive bomber jacket, American baseball cap and blue jeans, she, Kiran, wears a designer kurta over her cut-off blue jeans, and the child Aditya is in his T-shirt, blue jeans and sneakers. The road that they are on is one of India’s modern multi-lane highways with the white divider lines looking as if they had been painted on that morning.
Where are they going to and why is it taking so long asks the kid Aditya. Athangasa, and it’s only a few hours away, says Dad. Why do they have to drive, asks the bored kid, why can’t they just take a plane like the rest of his friends do whenever they go anywhere mutters the kid as he goes back to playing with his toys.
David, the dad, is feeling macho at the wheel of his SUV. When two goods trucks approach each other ahead of him, he makes a daring maneuver and darts through them irritating his wife.
“Your driving always makes me tense!” she says
“When have I ever had an accident?”
She leans back on her seat with an air of resignation
“Can’t we drive in peace”, she says
“Why do the two of you always bicker?” asks Aditya
They are driving through is the Rann of Kutch, that vast 8000 square kilometers of salt encrusted land that the Kutch District of Gujarat shares with the Sindh province of Pakistan, where daytime temperatures in summers can be as high as 49°C and winter temperatures can go below 0 °C and where the horizon can stretch into nothingness for a hundred miles in every direction without sight of a man or a tree.
There are others on this good road. Pappu, a laconic truck driver and his “cleaner” Shaukat, a teenage boy are making their way in a 6-tonne truck overloaded with marble tiles to 10-tonnes. Pappu drives all day long and all days of the week for twenty-five days at a time. He misses his family and wishes he did not have to stay away from them for such long stretches. But Pappu has a scheme that he is working on to get out of this grind. He is going to stage an accident where his overloaded truck will crash, he will “die” and collect insurance. This is a scheme thought up by a dabha owner Jadeja and Pappu has every reason to believe in Jadeja’s scheme- the dhabha owner’s name, Jadeja, implies that he is a descendant of the clan of Jadejas who have ruled over this part of Gujarat for centuries even though this particular Jadeja’s fortunes have declined to a point that all he does is preside over this dabha and switch at a moment’s notice from chanting praises to the gods Brahma and Vishnu to plotting insurance fraud schemes.
The road may be state-of-the-art but its length is punctuated by traditional dhabha’s, basic diners, where the truck drivers stop for camaraderie, food, cigarettes and cheap sex from the nearby brothel.
The harshness of the environment of the Kutch desert that the film’s director evokes contributes to the tension, like the US-Mexican border desert setting does in the novels of Cormac McCarthy and films made from them like No Country for Old Men.
The action picks up when our yuppie couple in their SUV arrive at the Jadeja dhabha. David sneaks out to get a cigarette hoping that his dozing wife does not catch him. Son, Aditya plaintively asks for water, but not getting a response from his mother, gets off the SUV, goes looking for water, is distracted by a pup and wanders away far from the SUV. Dad David, finishes up gets onto his SUV and drives off. They do not notice that their son is missing from the SUV till some hours and dozens of kilometers later. David Shroff reports his missing son to the local police and pillion rides a police scooter re-tracing the road they came from in search of his son. The headstrong mother, Kiran, drives off on her own in the SUV across the barren Kutch desert, something that even the Indian army hesitates to do because their trucks and jeeps can get stuck in the mud, even in the dry summer season. Jadeja, meanwhile, notices the wandering Aditya and entrusts him to a reluctant Pappu to be dropped off at the next dhabha.
All that stands between the Shroffs and disaster are the inhabitants of this remote area of Gujarat- the wandering gypsies of the desert, the truck driver Pappu and his cleaner boy Shaukat, the itinerant brothel owner and his prostitutes, all stoically marching through their meager lives in a way best exemplified by the song the young brothel inmates sing as they go about doing their daily chores:
If the grain is too fine the wind will blow it away
If the grain is too coarse, no one will eat it
“The Good Road” (92 minutes) is written and directed by first-timer Gyan Correa, the delectable camera work is by Amitabha Singh (Khosla Ka Ghosla and Chillar Party), and the exquisite sound is by Rasul Pookutty (who won the Academy Award for Best Sound Mixing for Slumdog Millionaire). The film is produced by the National Film Development Corporation.
Arjun Appadorai is Goddard Professor of Media, Culture and Communication at New York University. I made these remarks at the Asia Society, Bombay, on July 25th 2013
Arjun’s new book is an attempt to understand what these contending visions of the future each of these parties carry in their heads.. Evangelical Christianity in the United States, for example, he says, emphasizes self-help, commercial enterprise and a view of the family as a moral oasis against the threats of divorce and sexual freedom. This is their concept of “the good life”. The Muslim view of the “good life”, on the other hand, he says, has a different view of the relationship of authority to society, and a different view of the relationship that commerce and profit have to social values.
I first met Arjun in Madras in 1975, when we were both in our twenties. I was busy trying to set up Rediffusion’s first branch outside Bombay, Arjun was there pursuing his doctoral dissertation from the University of Chicago. I was much intrigued when he told me that, as part of his dissertation, he was studying South Indian temples such as the Madurai Meenakshi Temple. I was intrigued because such temples for me were just places to which your parents dragged you off to once every few years, where you had to stand in line for hours to get a fleeting glimpse of the deity. In other words, these grand South Indian temples or me were at best, a focus of people’s religious sentiment and at worst a repository of antiquated beliefs. But no, said Arjun. The religious function of these grand temples was a minor aspect. Their core function in early-modern South Indian society was as “re-distributive networks” of tangible and in-tangible resources and thus were key sites for the constitution and legitimization of political authority in early modern South India. In plain English , if you were an enterprising war-maker and brought vast areas under your control by force you could legitimize your authority by making suitable donations to these temples.
When Arjun moved to New York in 2009, first to the New School and then to NYU I expected something like the book we have before us to happen. How could he, an anthropologist, live and work in lower Manhattan at NYU without casting his anthropological gaze at that other dominant institution in lower Manhattan, Wall Street and the Financial Establishment. This book in one sense is the result of that gaze. The rest of us, including me, look at Wall Street as a place you bought and sold shares and other financial instruments just as people like me view South Indian temples as mere places of worship. But in his new book, Arjun tries to extract meaning from the rituals and artefacts, political and economic actions of these financial actors.. His discussion about the culture of risk there follows the same thread of inquisitiveness as he did in his study of South Indian temples. He tries to illuminate for us the meaning of such risk-taking activity.
He joins Naomi Klein, the Canadian social activist and author, in characterizing as “disaster capitalism”, actions such as the “shock therapy” administered to some countries ( Pinochet’s Chile, Iraq, Poland, Russia…) where the winners in these countries end up living in a world of guarded suburbs in an arrangement that allows them to escape all tax responsibilities for their poorer fellow citizens who have lost out in the shock therapy. He also joins the American financial journalist and the author of “Casino Capitalism”, Michael Lewis, in casting a sceptical eye at modern inventions such as the “catastrophe bond”, financial instruments the buyers of which will lose all their money if a certain disaster event occurs within a certain number of years and the sellers of these “cat bonds”, usually an insurance company seeking to insure itself against extreme losses, pays the buyer a high rate of interest. Such a system, he says, is dependent for its prosperity on a steady stream of disasters ecological, military or financial. Unfortunately, many, many bright and well-educated people are attracted to such businesses and the practice of what Arjun calls “the ethics of probability”- the practice of making their futures betting on natural or man-made disasters. All very well except that 50% or more of the world suffer terminally when such catastrophes happen and no thought is given to such suffering.
He then presents an alternative view about our future- one which is based on a description of what combinations of norms, dispositions, practices and histories that lead to and paths that lead to desired discernible ends.. If such as future can be imagined it becomes possible for us to aspire to this future good life. This is what he calls “the ethics of possibility” as opposed to the ethics of probability.
He says that our generation has abdicated the construction of a vision of our future to econometricians and mathematicians who construct a future which is a mere extrapolation of the present. The alternative he proposes is the construction of a future which factors in our aspirations, our anticipations and our imagination. In using our imagination in this way we are able create a vision of our common future. Our future then becomes not a blank space filled with possible catastrophes but a space which people can democratically design, it becomes “a Cultural Fact”.
My speech introducing the research papers presented at the World Management Conference- Goa 31st May 2013...a conference presented by all the 13 IIMs
It is my pleasant duty today to provide you a quick 10 minute guide that you can use to navigate through the many excellent papers being presented today. When we first thought of organizing this conference it was our fond hope that papers presented would go beyond the mere methodological rigor and would venture to the riskier job of looking at new and emerging issues in management theory. I am glad to report that we have many papers here today that do just that.
Corruption and bribery are daily headlines in India, yet little is known what factors determine why some business entities do these things more than others- is it the values of the people who run these firms or are there industry-related factors?. Malay Biswas (IIM Rohtak) examine a data set of 1106 Indian manufacturing firms to answer this question.
Management scholars are increasingly looking at business organizations not as stand- alone entities but as players in an environment. Saroj Pani (IIM Indore) introduces the concept of “Nodal Power” to explain why some firms are more successful than others in the same economic network of customers, suppliers and rivals. Sandhya Shekar digs into the concept of “virtual organizations” and develops a method of measuring the extent of virtuality in any organization. Saptarshi Purkayastha (IIM Kozhikode) studies 110 business groups in the 1998-2006 period and points out that such conglomerates prosper under conditions of market failures and weak institutional infrastructure but deteriorate when market-based mechanisms emerge. Swarup Dutta Institute of Management, Nirma U) examines how some organizations develop ambidexterity, the skill to pursue apparently contradictory goals such as being globally integrated but still be locally responsive.
The shift to the service economy is acknowledged in several papers. Susanta Mishra (IIM Indore) studies the link between emotional exhaustion and turnover intention among pharmaceutical sales representatives in India, a part of what he calls “emotional labour” and points to our need to get insights about employees in organizations such as call centres who have to constantly “put on” a pleasant demeanor and pacify irate customers who call in. Gilles Wijk (Esec Business School) asks whether service providers such as physiotherapists do what is right by their patient if they are asked by the hospital to measure their work by industrial era clock-time and not in an open-ended way that suits the patient. His unasked question is: will the time-and- motion principles that drove manufacturing productivity hold good in the service economy as well?
As India progressed through a series of cataclysmic changes from the broad-banding of licenses in the late 80′s to opening the economy in the 90′s how have the structural characteristics of Indian business changed? Tripathi Rao (IIM Lucknow) does a step-wise discriminant analysis of 6000 firms in 20 industries to study this. Chandan Sharma (IIM Lucknow) studies the productivity growth of firms who tried to cope with international competition by using imported intermediary inputs.
There are a number of papers on knowledge management in organizations. Amit Jain (National University of Singapore) uses data from US and Canadian biotech firms to study how organizations “forget” valuable accumulated knowledge (the converse of how organizations learn!). KBL Srivastava (IIT Kharagpur) has some pointers on using organization email systems to capture knowledge.
Being responsible to stakeholders other than shareholders is increasingly seen as mandatory, yet how does on measure how businesses perform on these dimensions. A Rajagopal (Adhyaman College of Engineering) compares the largest 200 Indian companies against 100 of their peers develops a sustainability reporting index and Ramendra Singh (IIM Calcutta) examines the CSR practices of 200 of our largest companies and propose a CSR Impact Index
What makes some companies internationalize more than others? Amit Karna (European Business School) studies 174 Indian IT firms in the 1997-2002 period to check what role the adoption of certifications like ISO and CMM Level 3 played in this and Ravindra Chittoor and Deepak Jena (ISB Hyderabad) uses “managerial intentionality” as the independent variable in his study of the internationalization of 226 manufacturing firms.
The characteristic of workforces are changing – no longer are they all-male and permanent or all from the same nationality. Prithviraj Chattopadhyay (HK University examines the “temporary worker”, a group that makes up 10% – 20% of the work force and studies what type of work gets allocated to them versus permanent workers; Rupashree Baral (IIT Madras) has some empirically grounded suggestions to be more family-friendly now that women and dual career couples and more nuclear and 20-somethings make up the bulk of our work force. Elizabeth George (HK University of Science and Technology) has pointers on how to work with internationally diverse teams. Vishal Gupta (IIM Ahmedabad) and his colleagues explore what types of leadership works in R&D settings.
I will end this guide by pointing to two papers who bridge management thinking with political economy. Arun Vaish (BITS Pilani) examines the paradox of many Indian farmers who have bank accounts but still borrow at what we think are “usurious” rates from the local money lender and has an unusual recommendation- the formal banking system has much to learn from the local moneylenders, he says, in designing a loan product which offers ease, promptness & assurance of getting loan as when required repeatedly- such well-designed products results in the borrowers being able and motivated to repay the loan.
Gaurav Chauhan (IIM Indore) analyzes financial data for 20,000 Indian firms for the period 1992 to 2011 and discovers that during this period these firms have steadily de-leveraged themselves ( reduce their debt/equity ratios). Is this a sign that they are capital starved? Is that in turn a result of an under-developed bond market? Has this resulted in these firms paying more taxes than they should have and is this the reason why corporate taxes have increased their share of government receipts from 8% to 30% in this period? And does this mean that Government now has a disincentive to develop bond markets in India?
Examining paradoxes such as these is the starting point for new ideas- many of the papers today do a good job of that.
The comment that our normally mild-mannered and scholarly prime minister was reported to have made in an interview with Science magazine, that “There are NGOs [non-governmental organisations], often funded from the United States and the Scandinavian countries, which are not fully appreciative of the development challenges that our country faces…”, continued to ring in my head for several months. Was there more to NGOs than I had thought so far – at best, an independent third voice in India, bringing specialised expertise to areas such as health care and environment; at worst, idealists clamouring for a way the world ought to be rather than what it was?
I stayed in this stage of puzzlement for a few months till I encountered an article by Professor Nimruji Jammulamadaka of the Indian Institute of Management, Calcutta, in The Critical Review, a scholarly journal devoted to politics and society. The article, “The Needs of the Needy or the Needs of the Donors?”, takes a close look at 5,000 NGOs operating in about a thousand mandals, or administrative divisions, in Andhra Pradesh and running close to 2,000 projects. The focus of her investigation was to establish what factors – or independent variables – explained the number of NGOs in each mandal. In other words, if some mandals had more NGOs than others, what factors explained this. Her first finding was that NGOs begot NGOs – that is, if a mandal already had NGOs operating in the area, there was a greater chance of more NGOs being formed there. Her second finding was that the more extensive the activities of Christian missions in a mandal, the greater the chance of finding other NGOs there. Her third finding was that the easier the availability of funding (mostly from international sources) for some mandals, the greater the chance of NGOs being founded there – the Naxal-prone areas of Andhra Pradesh, for example, do not attract much funding and, thus, have far fewer NGOs. All these findings lead Professor Jammulamadaka to the question in her title: do NGOs get created and sustained to cater to the needs of the needy, or do they exist to cater to the needs of their donors?
A marker of the Indian NGO world is the transnational links that these organisations have forged that offer them increased leverage and autonomy, thereby allowing them to enter into conflicts with governments. But this has its hazards as well, says William Fisher of Harvard in his article titled “Doing Good? The Politics and Antipolitics of NGO Practices” (Annual Review of Anthropology). By depending on this kind of international funding, constituencies become “customers” and members become “clients”. This process of co-option of NGOs by development agencies, he says, is by now so advanced that NGOs may be destined to become little more than the frontmen for such interests.
The classic definition of an NGO is that it is a non-profit, voluntary citizens’ group, driven by people who share a common interest, perform a variety of service and humanitarian functions, and who bring citizens’ concerns to governments’ attention. In this sense, an NGO is merely an organisation form that “civil society” takes, a third voice, distinct from government and business, and includes a range of “intermediary institutions” – professional associations, religious groups and citizen advocacy organisations – that give voice to various sectors of society and, when done right, enrich public participation. But as someone pointed out, this could also include the Ku Klux Klan.
As I reflected on this insight, a sudden and more worrying thought struck me. Is it possible that these large numbers of NGOs (remember that Professor Jammulamadaka’s study had found 5,000 NGOs in just one state, Andhra Pradesh) act as a platform for what Leela Fernandes, professor of political science at Rutgers University, in her book, India’s New Middle Class: Democratic Politics in an Era of Economic Reform, calls the “New Middle Class” – an increasingly assertive group that “began to engage in a form of backlash protest politics against a democratic political field that they perceived as having been captured by previously marginalised social groups”. This newly assertive group, she says, is largely made up of the English-educated urban professionals. Are NGOs in India, then, merely a voice for this group?
A Reader Comment by email
I read your article in the Business Standard “ The Third Voice “, and I think the findings from the papers you quoted are entirely not true or have been arrived at by insufficient research or what we say “ convenient research “. There are 1.2 million NGO’s in the country and only 30,000 of them receive foreign funds . The Prime Minister’s office had retracted the statement after his report was published in Science. The author or the journalist who interviewed the Prime Minister Mr Pallav Bagla had indicated that the PM had only stated it in the context of the nuclear plant at Kudankalam. However the agitation continues there and no foreign funds have been detected. The real issue is that civil society reflects and voices the problems of the people and many such activists have spent years in the rural areas with a vision to transform India. I for one, am an engineer from BITS pilani and have worked for 30 years in rural India for elderly who are neglected by their own children.
I am attached a soft copy of my book on civil society which will help you understand the good work being done in the sector across India even in Naxal areas. When we worked in Chandrapur, Maharashtra even the Naxals never touched us or harassed us. However media is not or never interested in writing on such work and will only cover the negative stories of civil society.
I hope you will write a piece more positive on the work being done by the sector . The bulk of the sector works with out foreign money ( 90 % of the NGO’s do not receive foreign funds or from mission organisations).
Best regards, Mathew
Mathew Cherian, Chief Executive, HelpAge India