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P R E S E N T S

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5VISIONPART

DECEMBER 2011

TT RAM MOHAN PRASOON JOSHI PERCY S MISTRY MEGHNAD DESAI

C RAJA MOHAN JANMEJAYA SINHA R GOPALAKRISHNAN

SURINDER KAPUR G MADHAVAN NAIR K SUBRAMANYARAJESH SHUKLA

AMITABH KANTAJAY DUA DR PRAHLADAVR FEROSE NILESH SHAH

CHANDRA BHAN PRASAD SOM MITTAL PAWAN GOENKA RAGHAV BAHL

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06 INDIAS OWN HARVARDBY TT RAM MOHAN

10 INDIAN BRAND AMONG TOP 10BY PRASOON JOSHI

14 MUMBAI AS A GLOBAL FINANCIAL CENTREBY PERCY S MISTRY

16 CAN WE CATCH UP WITH CHINA?BY MEGHNAD DESAI

18 WILL INDIA BECOME A PERMANENT UNSCMEMBER?BY C RAJA MOHAN

20 CAN WE GROW AT 9 PER CENT?BY JANMEJAYA SINHA

22 INDIAN FIRM AMONG FORTUNE 10BY R GOPALAKRISHNAN

24 INDIA AS A SMALL-CAR HUBBY SURINDER KAPUR

26 INDIA AS A SPACE LEADERBY G MADHAVAN NAIR

28 RISING WITH THE SUNBY K SUBRAMANYA

30 A MIDDLE-CLASS INDIA

BY RAJESH SHUKLA

32 OUR OWN SHANGHAIBY AMITABH KANT

34 MEGA MANUFACTURERBY AJAY DUA

36 THE R&D DEFICITBY DR PRAHLADA

38 AN APPLE FROM INDIABY V R FEROSE

40 WILL THE SENSEX TOUCH 30,000?BY NILESH SHAH

42 WILL RESERVATIONS STOP?BY CHANDRA BHAN PRASAD

44 WILL UID DRIVE ALL TRANSACTIONS?BY SOM MITTAL

46 AN INDIAN AUTO GIANTBY PAWAN GOENKA

48 AN INDIAN MEDIA MOGHULBY RAGHAV BAHL

THE FUTURE OF INDIA

BY RISHI RAJ

PAGE 4

CONTENTS

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EDITORIAL: Rishi Raj DESIGN: Bivash Barua, Bipin Sharma ILLUSTRATIONS: C R Sasikumar, Shyam Kumar

ASSOCIATE SPONSORS

VISION

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4 REFORMS 2020 | DECEMBER 2011

20Reforms 20L A S T 2 0 Y E A R S , N E X T 2 0 Y E A R S

The future

of India

According to English poet Lord Tennyson, change is the essence of lifethe

old order changes yielding place to new. However, all changes are not his-

toric in the impact they have on society, economy or polity. The economic

reforms which India adopted in 1991 is one such change that transformed

the way the country grew in the years ahead, which, in turn, changed the

global perception of India. The nation that was perceived to be strong on spirituality also

proved to the world its material prowess. From being a recipient of aid to tackle its pover-

ty, today India provides aid in times of global catastrophes. Whether it is in terms of

brands, talent or wealth, Indians can be seen on the global stage.

It is this change that we have tracked in four parts of the series on 20 years of

economic reforms. From key reforms to reformers, brands, personalities and trends, all

have been captured in the four volumes. However, no nation can rest on its laurelsandwho knows it better than we Indians! If 1991 was historic, the growth momentum it

began needs to be continued. Sure, in the past 20 years, the entire environment has

changed. From a nation for which growth and prosperity once meant owning a Bajaj

scooter by the time one retired or, if lucky enough, a second-hand Ambassador car,

today be it automobile, telecom or FMCG products, India ranks among the fastest-grow-

ing markets. Once Indias finest technical brains went abroad to work in multinational

companies; today, those very companies are busy setting up shop in India.

If 20 years have brought about such radical changes, it is natural to speculate where

we would be as a nation 20 years on. All discussion today about the growth of our society,

economy and polity centres on the fact that we started late in the growth story, that the

decades of 60s, 70s and 80s were lost, and therefore we need time to demonstrate to the

world what we can achieve given the right environment and policy framework. This is

what the fifth and the last part of the series aims to bring to you. We have come a longway from the days of Ambassador cars, but will we be able to produce in the next 20 years

an automobile company that ranks among the top five in the world? The growth of

mobile telephony in India is the fastest, and all the global biggies are present in India, but

do we have the ecosystem to produce an equivalent of Apple in the next 20 years? India's

growth rate of around 8 per cent is only next to Chinas, so will we be able to overtake Chi-

na? Will we see Sensex touch 30,000? Will Mumbai look like an international financial

centre? Will the booming Indian media scene be able to produce a media baron like

Rupert Murdoch?

These questions have been answered in this volume by writers who are the finest in

their fieldsfrom economist Lord Meghnad Desai analysing whether India would be able

to overtake China to Percy Mistry examining whether Mumbai could finally become an

international financial centre. What is strikingly common in all the analyses is that we

have the ecosystem and the talentwhat we need is a little speed and the right approach.

And yes, democracy is an opportunity not a limitation. So read on!

Rishi Raj

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ReformsL A S T 2 0 Y E A R S , N E X T 2 0 Y E A R S

2020

Those who wail about Indiaseducational institutions notbeing world-class lack an

appreciation of what it takes toget there T T Ram Mohan

Indiasown

Harvard

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NOand we shouldnt even try. This statementwill, no doubt, come as a big disappointment

to many who believe that India is on its way to

becoming a major world power, if it is not

already one. Let me, therefore, soften the blow

by saying that I cant see second-rung universities in the US

attaining the level of Harvard in the next 20 years either; nor,

for that matter, universities in Europe, China or Japan.

In higher education, as in defence, the US is the worlds sole

superpower. Nothing comparable to Americas top universi-

ties, of which Harvard is one, obtains anywhere in the world.

These marvels, which are to be found in both the government

and private sectors, have been created over hundreds of

years. Harvard itself is 375 years old. They are supported byphilanthropy and government funding on an enormous scale.

Harvard sits on an endowment of $26 billion. Harvard Busi-

ness School alone has a corpus of more than $2 billion; com-

pare that with IIM-As total funds of around $45 million.

Americas top universities have the resources to fund

infrastructure and research on a

scale that others cannot hope to

match. They can also attract the

best minds from all over the world,

whether students who go on to

become faculty at US universities

or academics who have made a

name for themselves elsewhere.Resources and Americas openness

to immigration are among the fac-

tors that underpin the success of

the top American university. But

they do not fully explain it.

A third factor is crucial. The top

American universities have man-

aged to bring the discipline of the

financial marketsand their ruth-

less equation between performance and rewardinto the

university system. The market for higher education is

intensely competitive, unlike in India where there is no

worthwhile competition for, say, the leading IITs and IIMs.Universities, schools and departments are all ranked on per-

formanceand the ranking is taken seriously.

Performance of individual faculty too is measured. Confir-

mation in a tenured position happens on the basis of mea-

surement of output (with research as the key output) over a

period of five to seven years.

Finally, there is a highly developed eco-system for facilitat-

ing research. This comprises generous grants, quality doctor-

al students, seminars at which ideas can be presented and cri-

tiqued before papers are finalised, peer collaboration and

peer review, etc. This combination of resources, culture, strin-

gent performance measurement and incentives has resulted

in something that others can envy but cannot easily emulate.

Those who wail about Indias educational institutions not

being world-class lack an appreciation of what it takes to

get there. We must not aspire to produce the next Harvard:

setting unrealistic targets is not only demoralising, it willcome in the way of achieving what is achievable. What we

can and must do is to seek a substantial improvement in the

performance of our institutions, including those that have

achieved a certain reputation for excellence.

In moving towards this modest objective, we face a num-

ber of choices. Should we focus on universities (that encom-

pass a range of disciplines) or on institutions that specialise

in one discipline? Should we aim at a significant improve-

ment in teaching or at superior teaching as well as research?

Should we aspire for publications in international journals or

should we strive for relevance in research?

To begin with the first question, the Yashpal committee on

higher education wanted the IITs and IIMs to expand theirscope and become universities so that the excellence they

have attained can be brought to bear on disciplines other

than engineering and management. There are practical diffi-

culties in doing so, for instance, the lack of land and other

infrastructure as the existing IITs and IIMs were not intended

for broader purposes.

That apart, the IITs and the IIMs have a long way to go in

their own disciplines, engineering and management, so it

may not be advisable for them to spread their energies thinly.

Our experience so far has been that we are able to produce a

level of excellence in institutions that focus on a particular

disciplinethe Indian Statistical Institute, Indian Institiute of

Science, TIFR and AIIMS are institutions that come to mind.The 14 National Innovation Universities planned may be a

better way to inject higher quality into the university system.

However, finding leaders for these universities, along with

boards of governors and boards of studies will not be easy.

The IITs and IIMs have done a good job of teaching. Should

they scale up their teaching and produce more engineers and

managers or should they try to enhance their research out-

put? The Anil Kakodkar committee on IITs wants both to hap-

pen but this may not be feasible. A compromise may be for the

older IITs and IIMs to aim for a combination of teaching and

research while the newer IITs and IIMs aim at producing large

numbers of undergraduates and graduates of high quality.

Thirdly, in aspiring to become world-class, should Indiasleading institutions aim to improve their record of publica-

tions in leading journals or should they seek to achieve a

superior impact on the Indian environment by applying

ideas to real-life problems? In a number of sectors health,

energy, environment, infrastructure we need research that

benefit practice. Indias academic institutions can become

leaders in research that focuses on emerging market prob-

lems. This may be a more meaningful objective than playing

catch up with the top schools in published research.

There are no easy answers to the questions I have posed.

But these are the questions that we must grapple with as we

strive to improve the quality of higher education. To aspire to

produce the next Harvard is to chase a will-of-the-wisp and

end up nowhere.

T T Ram Mohan is a professor at IIM Ahmedabad

WE MUST NOT

ASPIRE TO

PRODUCE THE NEXT

HARVARD: SETTING

UNREALISTIC

TARGETS IS NOTONLY DEMORALISING,

IT WILL ALSO

COME IN THE WAY

OF ACHIEVING

WHAT IS

ACHIEVABLE

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2020

The brands that will come out of India will beof a different hue. In fact, not just brands butreinterpretation of branding and its newerconcepts will emerge from India Prasoon Joshi

Indian brandamong Top 10

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The cues of the largest mass market, economicgrowth, youngest population and more make it

natural to impatiently conjecture about India

marking territory with a homespun brand that

has global legs. For many the question is not will

but when. Brand consulting firms such as Wolff Olins have

gone on record to predict that the next global brands might

not come from the west. Earlier, to be a global brand, domi-

nating the US market was key. Now Asia is the arena.

This 'seismic shift' away from developed markets has

heightened the cry for the next Chinese or Indian global

brand. India, apart from IT, is recognized for budget automo-

biles, a burgeoning retail and near-global' names such as

Infosys, Tata, Ranbaxy, Airtel and, recently, ICICI. Indiasdemographic dividend, intellectual depth and creative

bandwidth are bulwarks of its legacy of contributing new

ideas to the world. Add global ambition to it and there seems

to be little doubt that the next big thing will be from India.

But is that indeed so simplistic? Has the time come for Indi-

an brands to be heralded across the

globe? Penn Schoen Berlands

study on the most recognised Indi-

an multinationals seems to suggest

differently. Highest unaided recall

for an Indian company was a mere

29 per cent. Additionally, theres

concern that the back-end, brand-less success will not continue as

newer markets are opening and

competition intensifying.

Can an Indian company achieve

peak global positioning by design?

For this, the genesis and concept of

branding itself needs to be exam-

ined. Attributed to the industriali-

sation and mass production histo-

ry of the west from trademarking to infusing the trademark

with a set of imagery, symbols, values and personality the

branding process gathered steam in the early part of the 20th

century. The quest to find newer markets and loyal con-sumers became the battle cry for many.

Global brands and the conquests of the yore, which the west-

ern, especially European, world launched, share similar codes.

Conquest too was about growth, about carrying a set of beliefs

and values, language, architecture, cuisine and supplanting

them in foreign territory. Hoisting your flag on an alien land

was territory-marking and expansionglobal branding.

In the Indian context, though, this is a relatively new phe-

nomenon. The very thought and concept of branding as

defined popularly has an alienness associated with it. I do not

imply pre- and post-liberaliation phase but an aspect much

deeper. Brands emerge from the socio-cultural ethos. The

concept of devising a brand, IP or copyright emerges from a

mindset that is very different from that of India. The facet of

individualism, of self-expression, of the need for a brand loy-

alist to see expansion of self through the brand and manifest

himself through a brand, is not natural for India.It is Collectivism that has seeped deep into the DNA of this

civilisation called India.

If the western world is about Logoslogic, scientific rea-

soning, invention, the personal, progress; India is more about

Mythosorigin, emotion, intuition, purpose and the cyclical.

Creation is often deemed subconsciously as collective and not

individuals alone. In fact, the concept of I is viewed as an

impediment, and it is only when the individual is non-exis-

tent that union with almighty is possible. Jab main tha hari

nahin, ab hari hain to main nahi" (when I was there was no

God, now that God is there I am no more).

The ease with which individualism is let go of reflects in

unique ways. It will be hard to provide examples of film-director pairs or the retinue of music-director duos anywhere

in the quantum that the Indian film industry, a microsm of

our society, has.

In the present context of a global brand, it is imperative to

have its voice and triumphs amplified. In contrast, examine

the manner in which Indians desist from claiming ownership

even that of individual achievement.

If pointed out, they attribute it to the almighty, the guru,

the blessings of elders and perhaps, in a lighter vein, even

share itaapka hi toe hai (this is yours too)never openly

acknowledging achievement as personal accomplishment.

Sangachadwam (let's go together), Vasudhaiva Kutum-

bakam (the whole earth is a family) or Sarve bhavantu sukhina(all stay happy) are not quotes. These are core beliefs that

define the way Indians embrace collectivism vis-a-vis indi-

vidualism. So branding as defined today doesnt seemingly

come natural to India. But if we expand branding into a larger

landscape then the Hare Rama Hare Krishna, Iyengar yoga,

Indian-origin doctor/CEO and to an extent Bollywood could

be considered global brands that have emerged from India.

True, the tenor and nature that these display are not the

same as that of global brands as perceived in a classic capital-

istic model. But this very existing model is struggling to

evolve in order to find a fit in todays world. The so-called

global brands are now seeking to be more participative, col-

lective and are expanding their boundaries to more meaning-ful social fusion.

In fact, the emerging corporate-innovation model is glob-

ally collaborative, with product ideas, customer insights,

money and talent coming from all over.

Reports say that nearly 50 per cent of Procter & Gamble's

innovation initiatives involve collaboration with outsiders.

Will it then be a surprise that India is more conducive to the

new way of looking at global brands? The aspect of collective

ownership that global brands are now seeking is but natural

for India. The brand and the branding we will see emerging

will be consciously or unconsciously in sync with the deeply

entrenched socio-cultural ethoshealthcare, spirituality,

education, hospitality.

Prasoon Joshi is executive chairman

of McCann Worldgroup

BRANDS EMERGE

FROM THE

SOCIO-CULTURAL

ETHOS. THE

CONCEPT OF

DEVISING A BRAND,IP OR COPYRIGHT

EMERGES FROM

A MINDSET THAT

IS VERY DIFFERENT

FROM THAT

OF INDIA

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MIFC would be useless if India does not improvethe sophistication of its financial system and makeMumbai a global city similar to Singapore, London

and New York Percy S Mistry

Mumbai as a global

financial centre

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15REFORMS 2020 | DECEMBER 2011

Four years after the (Mistry) Report on Mumbai asan International Financial Centre (MIFC), the

prospects emerging soon are dim. Seen wrongly

as advocating an IFC, what the report did was to

point out that MIFC would be useless if India did

not: (a) improve the sophistication of its financial system;

and (b) make Mumbai a global city similar to Singapore,

London and New York. Toward that end, the report made

many recommendations that are still being episodically res-

urrected. My pessimism (realism?) about MIFC emerging

anytime soon is based on 11 reasons:

Lack of Commitment to Financial System Reform: Four

years (2007-11) have been wasted. There is no commitment

by central, state or municipal governments to implementwhat was advocated. Reforms are necessary for Indias finan-

cial system to meet the increasingly sophisticated needs of

its real economy. Without them, India cannot undertake

long-term financing for infrastructure, nor cater to simpler

needs of 300-400 million people excluded from credit. An

IFC connects a domestic financial system to the much larger

global system. If disparities between the two are too large, no

IFC can achieve calibrated integration of the domestic with

the global financial system.

Little Progress in Implementing MIFC report:About 80 per

cent of the recommendations made in MIFC report have

been ignored. Currency and interest rate futures have been

introduced, but in a desultory, sub-optimal fashion, guaran-teed to ensure that they would not make the contribution

they should.

Financial system/market regulation and supervision by

RBI remains antediluvian; stuck in command-control,

micro-management mode: Sadly, the 2008 debacle has

convinced Indias knowledge-proof legislators, policy mak-

ers, regulators and public that it is safer to have a primitive,

micro-managed, state-controlled, financial system, with

credit directed by MoF/RBI, rather than allocated by the mar-

ket. What is not appreciated is that so risk-averse and ineffi-

cient a system is ill-suited to meeting Indias gargantuan and

varied financing needs.

Imbalanced Financial System: Indias financial system islop-sided in a way that would disable MIFC. An over-devel-

oped, febrile equity market subject to locally and globally

induced volatility co-exists with an infirm, undeveloped

debt market. There is no real 'debt market to speak of. It

comprises a primitive bond market and a banking market

dominated by SOBs that are inefficient in mobilising and

allocating resources of different tenures, risks and currency

composition at low cost.

No Bond Market: No IFC can function without a wide/deep

domestic bond market at its core which it plugs into the

global debt market. In India, 85 per cent of the paper in the

bond market is issued by GoI and its instrumentalities. On

the other side, 75 per cent of the institutional money in that

market is controlled by institutions owned/directed by

GoI/RBI to buy its own paper. That is pre-emption. The state

controls price, demand, and supply. It controls both sides of

the buy-sell transaction.

No Ancillary Supporting Currency, Derivative & Commodi-ty Markets: The report noted that bond markets do not func-

tion if unaccompanied by markets for currencies, derivatives,

insurance, pensions and commodities. These need to be deep,

liquid, and fluid for funds flows across segments. Each of these

domestic markets is so undeveloped and micro-managed by

regulators, relative to its global counterpart.

Inefficient Risk/Term Financing: Indian policy-makers

seem unaware that the absence of a bond market accompa-

nied by ancillary markets disables Indias ability to finance

infrastructure. They think special institutions can be set up to

finance what they perceive as gaps. Four have been set up so

far. They have accomplished little. Until India has a bond

market worthy of the name, it will not be able to financeinfrastructure nor will it be able to achieve financial inclu-

sion or manage systemic risk properly.

The Relentless Degeneration and Diminution of Mumbai:

State and municipal authorities

seem unable to comprehend that

mindless localisation policies are

resulting in Mumbai becoming a

Maharashtrian village. Mumbai is a

city in which political violence and

thuggery have been legitimised by

convention, despite their criminal-

ity. Local politics is killing the goose

laying golden eggs for so long.Urban-Rural Transfers: Mumbai

is a milch cow for kleptocratic, cor-

rupt state politicians enriching

themselves through an unholy

nexus with slum landlords,

builders and property developers.

They are disabling the city with

unplanned developments that its

infrastructure cannot cope with. Mumbais revenues are

siphoned off to shore up political bases in rural Maharashtra. It

would be better for the state capital to be shifted permanently

to Nagpur. Then Mumbai might get some relief.

Collapsing Infrastructure: Infrastructure is crumbling. Thecity is unpleasant and unlivable. It has pollution, privation

and public filth that should not be tolerated in any civilised

country. That is hardly conducive to the emergence of an IFC.

Cultural Suffocation: Worse, the multi-ethnicity, multicul-

turalism and multilinguality that made Mumbai what it was,

is now under daily attack and suffers mindless cultural suffo-

cation. Mumbai is disadvantaged vis--vis Delhi in not being

a union territory or a state in its own right. For that reason, an

IFC may emerge in NCR rather than Mumbai. Only a truly

Indian city, not a narrow-minded state capital, can be a hos-

pitable home to the broader Indian and international citizen-

ry needed to support an IFC.

Within 20 years India will need an IFC. But it looks unlike-

ly that it will be in Mumbai.

Percy S Mistry is chairman of Expert Group on

Mumbai as an IFC and author of the MIFC report

ONLY A TRULY

INDIAN CITY, NOT A

NARROW-MINDED

STATE CAPITAL,

CAN BE A

HOSPITABLE HOME

TO THE BROADERINDIAN AND

INTERNATIONAL

CITIZENRY

NEEDED TO

SUPPORT AN IFC

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At one level, the question posed is a num-

bers game. I will keep the numbers sim-ple. In 1975, China and India were at the

same income level. Then China broke

out first from the starting block and

began its long growth spurt. If you grow at 8 per cent

per annum, you double your income in nine years, and

if at 10 per cent, in seven years. Chinas total GDP

increased sixteenfold over the next 30 years. So 100 in

1975 was 1,600 in 2010. India hesitated at the start,

being a socialist country, you have to understand. It

grew by about 5 per cent for the next 12 years and

then by 6 per cent for the next 10 and then by 8 per

cent for the decade after. So the income doubled in the

first 14 years and then again in 12 years and perhaps

the next doubling will be over in nine years. So India is

at 800 compared to Chinas 1,600, very roughly. (The

actual ratio is $10 trillion to $4 trillion but let that be.)

To catch up now in the next 20 years, India would

have to grow at, at least, around 3.5 per cent rate fasterthan China. If China continues to grow at 9-10 per cent

India has to grow at 13 to 14 per cent. Only if China fal-

ters in its growth path and begins to grow at some-

thing more modest like 4-5 per cent can India continue

its practice of its own 8-9 per cent growth. What then

are the pluses and minuses of the growth race between

India and China?

To take over China, India must begin by assuming

that China will not slow down by much and raise its

growth rate to double-digit level of 15 per cent. Can

India do this?

It is not impossible, though few economies have

grown at this rate in a sustained fashion over two

decades. Yet there is a first time for everything. Asian

economies have grown at much higher rates than

Western economies throughout the last 50 years.

To take over China, Indiamust begin by assuming that

China will not slow down by much andraise its growth rate to double-digit levelof 15 per cent Meghnad Desai

Can we

catch upwith China?

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What must India do to catch up?Growing faster would require a single-minded consensus

about the primacy of growth with the clear understanding

that with growth, it is possible to remove poverty and

many other deprivations that the majority of Indian people

suffer from. Without growth or with slower growth, those

goals can be achieved only if there is a commitment to

drastic redistribution. Nothing in Indian politics tells us

that any such redistribution will be pursued. So growth is a

necessary condition; for it to be sufficient as well, India has

to choose employment-enhancing rather than job-protec-

tion strategies. It has to radically transform its manufactur-

ing sector by allowing large-scale factories producing

exportable goods with unskilled and semi-skilled manuallabour. This labour will be drained from its rural habitat

where the workers earn semi-starvation wages, or if lucky,

work 100 days a year on make-work NREGA jobs. These

produce little of value but do generate an income for them.

India has only one advantage relative to China and that is

the demographic bulge. Population was regarded as a hand-

icap not all that long ago; now it is an asset. For India to ben-

efit from this, it has to invest massively in skill and educa-

tion infrastructure from childhood up and make sure that

the incoming labour force has literacy, numeracy and cyber

skills. This investment need not be from the public purse.

Private sector investment should be allowed in all these

sectors. India should also use its female population muchmore actively than has been the case so far.

India needs to transform its agriculture. There has been

some investment in GM seedsin Bt cotton for example.

Once surplus labour is removed from the rural areas to

urban manufacturing centres, the radical transformation

will be easier. There has been some push for technological

change in agriculture thanks to higher wages as a

result of NREGA. This should be used to adopt capital-

intensive technology.

To help this focused growth strategy along, India will

also have to raise its percentage savings rate up to the mid-

40s . The first requirement would be a total elimination of

budget deficit and rapid reduction of the debt burden. Thegovernment dissaves upto 8-10 per cent across the Centre

and the states. If eliminated, this dissaving is enough to

boost Indias investment potential. The Union Budget allo-

cates 33 per cent of current revenue to interest payment on

debt. I know of no other country where the debt burden is

ten times the spending on health. Massive disinvestment

of PSUs should lead to reducing the debt.

Could China Falter?

The other side of the coin is that China may not be able to

sustain its growth rate. There are some tell-tale signs of

China faltering. The recent accidents with the high-speed

train showed shoddy workmanship, too much hurry and

wrong investment. China also has much more capital- and

resource-intensive growth strategy than India. If you con-

sider its higher savings rate of nearly 50 per cent plus FDI

its growth rate of 10 per cent implies a much higher ICORthan Indias. China is wasting its capital while India pre-

serves it. China builds infrastructure ahead of demand with

dubious returns on the capital while India has its infras-

tructure supply lag behind demand.

China also has Big Power delusions which India thankful-

ly does not have. Its policy of having a necklace of pearls

ports around the Indian Ocean and then the Mediter-

raneanis a foolish aping of 19th century British Empire.

Such overstretch yields little fruit though it may frighten

nations. India has a worry over its northern border of a

potential war with China which cannot be ignored but even

so it need not follow China in vying to become Middle Earth.

Chinas biggest unsolved problem is governance. TheChinese Communist Party openly acknowledges that its

acceptability depends on sustaining a high growth path. As

it tries to refashion its economy from over-saving and

exporting to domestic market and consumption, there will

be tensions. We have already seen some of these tensions

in matters of workers strikes and

disputes about land deals. These

conflicts are worked out openly in

India but repressed in China.

China is about to have a change

of the top guard. As always the

process is opaque and has no

democratic legitimacy. It also willbe only the second time that

peaceful transfer of power will be

carried out. This is a very fragile

state though it may deploy much

power. A regime which has to

bring out tanks against unarmed

demonstrators as Deng Xiao Ping

did in Tiananmen Square is a

frightened state not a confident

one. With all the errors, UPA only jailed Anna Hazare

for three hours.

Legitimacy of the political system is the shoe which has

yet to drop in Chinas case. All bets are off about continuinggrowth until that issue is resolved. It is not that China has to

adopt Western democracy but it has to have a government

which does not need to hide behind a manufactured una-

nimity and faceless bureaucracy to rule over its people.

Conclusion

In the final analysis, catch-up is a silly game. What is need-

ed is for India to be prosperous enough to eliminate pover-

ty, correct the gender imbalance, provide productive and

rewarding jobs to the bulk of its population while preserv-

ing its free, democratic institutions. China can do what it

likes. Let India show the world that a prosperous caring

democracy is possible.

Meghnad Desai is an eminent economist

and a British parliamentarian

CATCH-UP IS A SILLY

GAME. WHAT IS

NEEDED IS FOR INDIA

TO BE PROSPEROUS

ENOUGH TO ELIMINATE

POVERTY, CORRECT THEGENDER IMBALANCE,

PROVIDE JOBS TO ITS

POPULATION WHILE

PRESERVING ITS

DEMOCRATIC

INSTITUTIONS

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If India acquires thesubstance of power, the

symbols will presentthemselves in the next two

decades C Raja Mohan

Will India

become apermanentUNSC member?

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Apermanent seat at the worlds top table, theUnited Nations Security Council (UNSC), has

been a long-standing aspiration for the Indi-

an foreign policy establishment. That was

just a dream through the Cold War, when

India isolated itself from the global economy and posi-

tioned itself some times as a leader of the third world and

at others as an Asian ally of the Soviet Union.

Indias hopes acquired a little more traction amidst two

important simultaneous developments at the turn of the

1990s. One was the collapse of the Soviet Union and the

end of the Cold War, and the other was the launch of Indias

economic reforms.

The first injected a much-needed flexibility into Indiasforeign policy that was trapped in the East-West and

North-South divisions. The second began to reverse the

relative decline of India through the earlier decades and

allowed Delhi to generate the economic resources neces-

sary to develop what we might call comprehensive

national power.

The end of the Cold War opened up a new debate on

reorganising the United Nations to make it more effective

in dealing with the new global security challenges. Civil

wars in the developing world replaced the great power

rivalries in the developed world as the principal new con-

flict dynamic after the Cold War. That, in turn, opened the

prospect for great power cooperation in transforming theUNSC. With Russia down and China yet to emerge, the

West had a free hand in setting a sweeping new agenda for

the post-Cold War United Nations.

While India had deep reservations about the new West-

ern agenda on issues relating to territorial sovereignty and

intervention, New Delhi knew that the reform of the UN

system would not take place often.

India, then, chose to mount a campaign for the perma-

nent membership of the UNSC in the early 1990s. It was a

dismal failure. While some saw Indias new potential to

become a major power at the end of the Cold War, few

were willing to bet on it; for Indias internal economic

change was yet to manifest itself on the global arena. Thehumiliating end to the Indian campaign came in 1996

when India lost to Japan, by a massive margin, in the con-

test for a rotating non-permanent Asian seat.

When the pressures for UN reform emerged again in the

middle of the last decade, India revived its campaign, this

time in an alliance with three other candidatesBrazil,

Germany and Japan.

The reluctance of the US to back this effort and the deter-

mined opposition of China to any introduction of new

Asian permanent members into the UNSC grounded the

campaign. Yet, there was no denying Indias new diplo-

matic standing amidst its growing economic weight and

deepening political influence around the world. This was

reflected in India winning the Asian seat for non-perma-

nent, two-year membership with resounding, near-unani-

mous support at the end of 2010.

Might India be third-time lucky? Could the next roundof the debate in New York on the UNSC reform see India

realise its objective? On the positive side, the United

States, during the visit of President Barack Obama to India

at the end of 2010, backed Indias case for a permanent

membership of the UNSC. Even as he lent that vital sup-

port, Obama asked if India was indeed ready for such a role.

Will India join the international promotion of democratic

values that it so cherishes at home? Is Delhi willing to con-

front the third-world regimes that oppress their own peo-

ple in the name of territorial sovereignty?

The test for this came pretty soonin the form of the

Arab Spring that continues to shake the Middle East to the

core. And Indias performance at the UNSC in 2011 has dis-appointed many of its supporters in the West.

New Delhi had problems responding to Western calls

for humanitarian intervention in Libya and the interna-

tional condemnation of Syrias treatment of its own citi-

zens. India either abstained from key

votes or found itself on the side of

Russia and China that oppose West-

ern interventions in the name

of sovereignty.

While many of Indias decisions

can be explained in terms of political

prudence and a tradition of avoiding

strategic risk, it is quite clear thatNew Delhi has a long way to go

before asserting a larger role in world

affairs. Many in the Indian security

establishment continue to see India

as a weak third-world nation that

must emphasise autonomy rather

than as a rising power that is willing

to write international rules and con-

tribute to the maintenance of

the global order.

There is no doubt that this transition will eventually

take place; but it could be a prolonged one. Meanwhile, it is

not quite clear if the UN system will survive in the presentform as Chinas rapid rise and the Western decline redefine

the global power hierarchy.

In the next two decades, India must focus relentlessly on

three main objectives. One is to maintain its current high

growth rate to emerge as the worlds third-largest econo-

my. Second is to convert its expanding economic resources

into comprehensive national power. The third is to build

the institutions and instruments to translate national

power into global influence.

If India remains focused on these three objectives, it wont

need to campaign desperately for the permanent member-

ship of the UNSC. If India acquires the substance of power, the

symbols will present themselves in the next two decades.

C Raja Mohan is a senior fellow at

the Centre for Policy Research

WHILE MANY OF

INDIAS DECISIONS

CAN BE EXPLAINED IN

TERMS OF POLITICAL

PRUDENCE AND

AVOIDING STRATEGICRISK, IT IS QUITE CLEAR

THAT NEW DELHI HAS

A LONG WAY TO GO

BEFORE ASSERTING A

LARGER ROLE IN

WORLD AFFAIRS

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Given that we have 570 million peopleunder the age of 25 and that at every agebetween 0 and 25 we have between 20and 27 million people, educating them willgive us such a boost that we can expectgreater than 10 per cent growth rateJanmejaya Sinha

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Given that the 12th five-year plan has sought a 9

per cent per annum growth target, I have beenasked to consider the proposition whether

India can, in fact, grow at 9 per cent. To my mind

the question can has a very simple answer

YES! But the question will has a different answerMaybe!

After the 1991 reforms, succeeding governments have done

well to hold the line on reforms and have not allowed a fall-

back on what was initiated. But the second leg of reforms is

harder, and we havent seen much action on that front yet. So 9

per cent and even 10 or more per cent growth requires real

leadership which is not evident. Some years ago, I had quoted

the Buddha in an article, who had said, I do not believe in a

fate that falls on men however they act, but I do believe in a

fate that falls on them unless they act.So while there is a need for discussion on the second-gen-

eration reforms, my piece today will be different. Yes, there

is a need to highlight the implementation requirements and

speed up infrastructure provisionroads, rail, power distri-

bution are just three that are top of mind. Currently, inflation

and the implications of high interest rates on capital invest-

ment are appropriately getting a lot of airtime. A slowdown

in capital investments does have adverse effects on GDP

growth. But my piece today will discuss a future for educa-

tion which, if we act on, can convert our demography into a

force for an accelerating GDP growth rate over the 9 per cent

level that we seek.

Let me articulate a future scenario for Indian education.Currently, the penetration of digital media in schools is less

than 5 per cent. There are about a million schools in India. Lets

assume each of these schools has four sections per class. Given

the poor level of power supply and the importance of continu-

ous power supply for my argument, lets seek the provision of

1 million generator sets to ensure these schools get uninter-

rupted power. Lets then provide to these schools 50 million

desktops and 50 million large TV sets. Lets then link all the

schools to regional education centres like a banks core bank-

ing solution. We have 16 national languages so we create, say,

16 regional education centres based on spoken languages.

Thereafter what is required is relatively straightforward.

Identify the ten best teachers in every language for every

subject. We could run contests to select these teachers. We

can record lessons from these teachers and air them across

the region. When the lessons are being aired the ten selected

teachers would sit in the computer lab of the regional educa-

tion centre ready to answer any questions that may come inover email or phone from the schools during the class. The

current teachers in these schools will act as tutors. The

uneven quality of teachers will to some extent get corrected.

By hearing the lessons being taught by the best teachers,

they will also get trained. If the calls get too much, we could

even create a regional education call centre where we have

trained teachers (college graduates, volunteers) sit in front of

computers with access to answers to frequently asked ques-

tions. A school Wikipedia, as it were. Likewise problem sets

can be devised by teachers in the regional centre and

emailed to every class room.

Advanced teacher guides on how

to evaluate answers along withthe answers can be provided.

These same lessons can also be

aired at set times on DD so that

there could be adult education

also or at least parents interested

in learning what is being taught

can tune in and see the lesson. All I

am suggesting here is industrialis-

ing education the same way as the

BPO industry has been able to off-

shore backoffice processes. In edu-

cation, the logic is driven not by

cost but by the scarcity of goodquality teachers and good content.

Given that we have 570 million people under the age of 25

and that at every age between 0 and 25 we have between 20

and 27 million people, educating them will give such a boost

that we can expect greater than 10 per cent growth rate. Karl

Marx once wrote, Philosophers have only interpreted the

world The point, however, is to change it. This holds true

for us in India today more than ever. The paradigm shift in

education that I suggest can have profoundly beneficial

results and can ensure 9 per cent growth. The question on

growth rate is not can but will and the difference

depends on some innovative action to address the con-

straints in new ways!

Janmejaya Sinha is chairman, Asia Pacific,

Boston Consulting Group. Views are personal

Can we grow at9 per cent?

ALL I AMSUGGESTING HERE

IS INDUSTRIALISING

EDUCATION THE SAME

WAY AS THE BPO

INDUSTRY HAS BEEN

ABLE TO OFFSHORE

BACKOFFICE

PROCESSES. THE LOGIC

IS DRIVEN NOT BY

COST BUT BY SCARCITY

OF GOOD TEACHERS

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Worlds leading companies were challengedto compete for market share and were compelledto invest strongly in innovation, technology,management and people R Gopalakrishnan

Indian firm amongFortune 10

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Indias rising prominence in the global economic are-na is a reality, but it is not a phenomenon to be taken

for granted. Likewise, for sure, an Indian group or

company could become a very visible global compa-

ny after 20 years, but the subject should not be

viewed in nationalistic terms. The recent ranking of Tata

among global brands by Brand Finance at number 41 with a

brand value of almost $16 billion is heartening.

Global companies joined the Fortune list by being posi-

tioned favourably and doing certain things. They are posi-

tioned in large markets that are growing strongly and sus-

tainably, such as America at the turn of the 20th century

and China since the 1970s. The companies were chal-

lenged to compete for market share, and were compelledto invest strongly in innovation, technology, management

and people. They built a culture of ambition beyond visible

resources and an ethic of persistent pursuit of those ambi-

tions. The same companies that achieved all of these also

lost their position later by not being adaptive to changing

circumstances.

An aspiring Indian company has to replicate all of these to

be in a Fortune 10 list, for example, by 2030. Some champion

companies could have a crack at it.

Positioned in a strongly and sustainably growing market

India is a fast growing and global market with per capita

income growing at 6-7 per cent per annum. Hence, Indiancompanies are well-positioned in a growing and vibrant

consumption market. Equally, India is the only emerging

market which is modernising in a framework where democ-

racy has preceded capitalism and efficient property laws. It is

rare and uncommon for any economy in the world to have

placed full voting franchise ahead of capitalism and constitu-

tional liberty.

Thus the role of government is still quite strong although

the economic liberalisation story began 20 years ago. Indian

companies, therefore, need to engage meaningfully with the

government to create an egalitarian and transparent policy

environment for growth. The administrative system and the

corporate sector have a history of opacity, cronyism and pur-suit of vested interest. These were the characteristics of oth-

er adolescent economies when they were in a similar stage

of development. They initially benefitted, but later withdrew

from these characteristics; India too must do so.

For example, a more efficient and transparent legal sys-

tem to resolve disputes is an essential infrastructure for

commerce and industry to grow. The government itself is a

litigant in two thirds of the cases in commercial disputes. No

chamber of commerce has thought it fit to lobby for and

advocate urgent change in speedier legal systems. It almost

seems that the government, corporations, top lawyers and

the courts have all got into an unhealthy equilibrium of satis-

factory underperformance. Similar, though not identical,

points could be made with respect to power, roads, public

health and primary education. It would be a serious mistake

to take the Indian economic growth story for granted. A lot

more needs to be done diligently.

Investing in innovation, technology, managementand people

At the company level, leadership focus on this agenda is

essential for success. Some companies are leading the way,

though process excellence in the design, adoption and exe-

cution of these is not visible enough. With respect to innova-

tion, for example, Indian executives are creative but not dis-

ciplined. We need a better balance. With regard to

technology, we are accustomed to quick fixes rather than a

ground-up and solid developmental approach. Talent devel-

opment and management systems are evolving, but not

nicely enough to assure a Fortune 10 company by 2030!

Oriented to nurturing ambitions more than theirresources

Indian entrepreneurship is fabulous and legendary with sol-

id cultural roots and evolutionary strengths. However,

entrepreneurial ambition in the past has too often been

advanced through the short cut of

currying social favours rather

than meritocracy. This is an Asian

reality, called guanxi in China,

waastha in Arabia and sifaarish in

India. Our champion companies

have to break the traditional

mould. Bold approaches that have

been deployed by some championcompanies in international mar-

kets augur well for the future.

Hugely adaptive to a dramatical-

ly changing global environment

The champion Indian companies

are able to generate more cash

flows than their capacity to invest

in the domestic market. This is not because the consumption

market is not there, but because there is more frictional time

loss through Indian public policy inadequacies than the rate

at which they are able to generate cash flows. Further some

companies have built up a market capitalisation, which is sig-nificant compared to GDP. In short, champion companies are

well on the path of having enough to invest at home and over-

seas. The challenges of running complex and global opera-

tions will mount as the international economy adjusts to the

shift of economic power from the west to the east. Adaptabil-

ity to different market conditions and cultural adjustments

will become very important. The best example of a sector,

which needs to reinvent itself for the future, is the Indian ITeS

sector. This sector will employ more than 6 million people in

India within the next five yearsa number achieved by the

organised manufacturing industry over 50 years!

These four characteristics are possible for a few of our

champion companies to combine. The precise pathway to

the accomplishment is unclear but the attitude and mindset

to accomplish is clear.

R Gopalakrishnan is a director at Tata Sons


GLOBAL COMPANIES

IN THE FORTUNE

LIST ARE

POSITIONED IN

LARGE MARKETS

THAT ARE GROWING

SUSTAINABLY,

SUCH AS AMERICA

AT THE TURN OF

THE 20TH CENTURY

AND CHINA SINCE

THE 1970S

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Recent models that are liked bothin India and abroad indicate thecountrys potential to become thesmall-car manufacturing hub ofthe world! Surinder Kapur

India as asmall-car hub

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Indian industry has come a long way since the firstMaruti 800 was rolled out to the launch of the Nano

which the entire world watched with interest.

Over these years, Indian industry has imbibed the

ability to create and sustain the eco-system for

building small cars. It has also developed the engineering

and design skills.

India offers a vast market for just right products such as

the Alto, Nano and Micra, which meet the basic needs of the

bottom of the pyramid. In fact, Nano, as is well known, was

developed as a just right vehicle for this market.

Since 1984, when Maruti launched its first car, the

passenger car market has seen seemingly effortless

achievement of many a milestone. The last two-and-halfdecades witnessed very rapid growth in the number of

cars sold every year: from less than a 100,000 to over 2

million. In 2010, India became the sixth largest car mar-

ket of the world, which is expected to rise to the fourth

position by 2014.

India has surpassed China as Asias fourth-largest

exporter of cars in 2009. Today Made in India cars can be

seen whizzing past the streets of Cologne, Colombo, and

Cape Town. Last year, India exported over half a million

passenger cars. Hyundais i10 and i20, Marutis A-star and

Alto and Nissans Micra have been the leading brands being

exported out of India. Nearly 90 per cent of the vehicles

exported are small compact cars.While domestic car markets were growing at a frenetic

pace, the automotive supply chain in India went through a

major quality revolution. Several Deming Application

Prizes, many more TPM excellence awards and strong

quality initiatives by the OEMs (original equipment mak-

ers) saw world class cars being produced in India.

Let me share some lessons I have learnt from the

course that the Indian automobile industry has charted.

Once the leader sets an aggressive target, it can be

realised with the right talent, perseverance and hard

work. This is one of the main reasons for Nanos low cost;

Ratan Tata announced its price long before the car was

taken to the drawing board. The development of theScorpio by Mahindra & Mahindra also offers similar

lessons. This car was designed and developed at a cost of

$90 million compared to a global standard of $500 mil-

lion, by no means a small achievement. The Maruti Alto

has been designed to remain light on the buyers pocket

both in terms of its capital and operational costs.

Secondly, the development of Nano was focused on

manufacturing the core of the vehicle such as the engine,

in India. The Nano team worked to reduce the number of

tools to make components while increasing the life of the

dies by three times the norm. While it made design and

manufacture of dies more complicated, this helped

achieve the cost targets. Tata Motors leveraged their

partnership with Warwick University in UK to conduct

R&D at low costs. Local suppliers were later developed to

manufacture these parts after the initial work was done

at Warwick , thus building skill and capacity in India.Over the last three decades, the Indian auto compo-

nent industry has largely built to print. However, in the

process the country has developed both design and engi-

neering skills. Tata Motors utilised the local design skills

combined with the inherent frugal engineering skills

that Indians have to develop a low-cost vehicle. Cultural-

ly, Indians are used to do with limited resources. This has

fostered a frugal mindset amongst them. This Asian out-

look, coupled with their Indian technical capabilities, has

made it possible for the Indian engineers to design a car

appreciated for its styling, utility and value for money.

While Tata Motors set up a group of engineers tasked

with target cost, Indian suppliers were asked to developparts and sub-assemblies with aggressive cost targets.

The mindset of Indias top management has also

evolved over the years and is encouraging of risk takers;

they are increasingly more tolerant of failures and

rewarding of successes. This is

also perhaps the reason why

we have seen customer orient-

ed vehicles coming out of

almost every vehicle manufac-

turing company in the last 8-10

years; the Mahindras Scorpio,

the Maruti Alto, the Hyundai

i10, the Nissan Micra and theTata Indica, Ace and Nano. Mr

Tata, of course, led his team

from the front for the full dura-

tion, encouraging and motivat-

ing them. This could help the

team to take whatever risks

they had to with full support

from the management.

Finally, while Tata Motors have filed for 34 patents

associated with the design of the Nano, perhaps the most

innovative aspect of the Nano is its modular design. The

Nano is constructed of components that can be built and

shipped separately to be assembled in a variety of loca-tions. In effect, the Nano can be sold in kits that are dis-

tributed, assembled, and serviced by local

entrepreneurs. Recently, Nano might have hit some

roadblocks after the initial euphoria associated with its

launch. These hurdles will be overcome, and Nano will

set a new trend that was expected when it was unveiled

to the world. For now, it has taught the world how to

make an ultra low-cost small car.

Given the growth of the small-car segment in India,

the fact that manufacturers have come up with models

that meet the needs of this segment and are also able to

export to the world, there is very little doubt that India

has the potential to become the small-car manufacturing

hub of the world.

Surinder Kapur is CMD of Sona Koyo Steering


THE MINDSET OF

INDIAS TOP

MANAGEMENT HAS

ALSO EVOLVED OVER

THE YEARS AND IS

ENCOURAGING OF

RISK TAKERS; THEY

ARE INCREASINGLY

MORE TOLERANT OF

FAILURES AND

REWARDING OF

SUCCESSES

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2020


20Reforms 20L A S T 2 0 Y E A R S , N E X T 2 0 Y E A R S

It is essential to set thespace vision for the next

20 years with a focus onareas such as low-costaccess to space,developmentof reusable launchvehicles, earth observationsystems for environmentalmonitoring and disastermanagementG Madhavan Nair

Indian space programme had a late start of nearly 20

years compared with developed countries such as

the US, Russia and Europe. The western countries

had the advantage of military programmes from

where advanced technologies were taken for civilian

space research. However, India is the only country in which

tools for space exploration were developed in the civilian

domain and perfected. Equally important is the societal

application of space technology as demonstrated through

tele-medicine and tele-education and application of satellite

images of the earth for the benefit of farmers, fishermen,

water resource management, disaster management, etc.

Dr Vikram A Sarabhai, the visionary scientist, had initiat-

ed modern space programme in India in 1963 by launching

a sounding rocket from Thumba Equatorial Rocket Launch-

ing Station (TERLS) to study the equatorial electrojet phe-

nomenon. He had the vision that India should become self-

reliant in space technology and apply such technologies to

enrich the quality of life of the common man. This vision

had led to a series of developments in areas such as rocket

systems, satellites systems for earth observation and com-

munication and a variety of application programmes.

Today, India has fulfilled the dreams of Dr Sarabhai. We

have powerful satellite launch vehicles such as PSLV &

GSLV and spacecraft such as Indian Remote Sensing Satel-

lite (IRS) and Indian National Satellite System (INSAT). Due

to the constraints of dual-use technology, practically no

inputs were available from developed countries. Hence,

there was a strong thrust for development of indigenous

technologies associated with rockets and spacecraft. Such

India

as a space leader

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advanced technologies developed in India are proven to becomparable to those developed by advanced nations. India

is able to compete commercially with other global players

for building spacecrafts and providing launch services for

foreign customers. India also has demonstrated that the

development of such high technologies can be carried out

in a cost-effective manner. Most of the time, the amount

spent on developing new systems is hardly one-third of

that in western countries. This places India in a unique posi-

tion to emerge as a global player in the space arena.

The PSLV rocket is the work horse launcher with ability

to orbit up to 1,500 kg in low earth orbit. GSLV is a system

capable of launching about 2.5t in to the geo-transfer orbit.

Already a large number of spacecraft have been carried byPSLV into orbit for various customers and has demonstrat-

ed itself as a reliable space transportation system through

17 consecutive successful missions.

The earth observation satellites such as IRS, Resourcesat

and Oceansat are providing extremely valuable data on

natural resources of the earth. This data is widely utilised

for providing useful information to farmers and fishermen,

weather forecast and planning infrastructure projects. The

data from earth observation satellites has revolutionised

the disaster warning system and helped mitigation mea-

sures after floods, earth quakes, etc.

The INSAT series of satellites is supporting a wide variety

of communication links within the country. The DTH ser-vices being provided through the geostationary spacecraft

have revolutionised the entertainment sector. The commu-

nication connectivity has been taken to far-flung and inac-

cessible locations such as remote villages, mountain

regions, islands, etc. The satellite connectivity has been

effectively put to use for societal applications such as tele-

medicine and tele-education programmes.

Apart from these, India has also demonstrated that space-

craft once launched can be brought back safely to earth at a

designated place through spacecraft recovery experiment.

There are very few countries who have gone to moon. In

2008, India had sent the Chandrayaan-1 spacecraft to moon.

Through Chandrayaan, India has demonstrated that it hasemerged as a space power among the leading countries such

as the USA, Russia, Europe and China.

Space is going to be the next frontier for the human activi-

ty which poses a number of challenges. With the global sce-

nario of the US grounding the space shuttle and the possible

closure of the space station before the end of the decade,

India has a unique opportunity. Russia and China will be left

as the only players with capability to carry human beings to

space. Because of resource constraints, the US, Europe and

Russia are not pursuing further development or investment

in new space transportation in the near future. China is the

only country making investment in this field. This is where

India could position strategically and evolve as a global play-

er with capability to access space at low cost. The develop-

ment of low-cost space transportation systems will demand

looking at issues related to recoverable and reusable launch

vehicles, air breathing propulsion systems and semi-cryo-genic propulsion systems. In addition, the deep space mis-

sions will demand development of electric propulsion and

nuclear propulsion systems.

The human space flight is yet another challenging field

where designing and development of space capsules for

sustaining life in space environment and ensuring safe

return of humans to earth are major challenges. Life support

systems, providing supply of food, water and oxygen in a

controlled manner, shielding against hostile radiation, man-

aging re-entry and safe landing are some of key technologies

to be mastered. Action is also required to improve the relia-

bility of rocket systems. If such initiatives are taken now in

developing the human space flight programme, in about sixto 10 years, India can emerge as a service provider for carry-

ing human beings to outer space and nearby planets.

There are equally challenging tasks in spacecraft technol-

ogy too. With the demand for communication growing day

by day, providing high bandwidth

connectivity to remote areas and

handheld devices will require devel-

opment of high-power satellites

working in high-frequency bands

with large deployable antenna sys-

tems and appropriate switching net-

works. Digital connectivity to remote

areas and handheld devices will bethe emerging services.

In the context of growing concern

over environment and depleting

natural resources, powerful earth

observation systems will have to be

in place. This will require develop-

ment of hyper spectral imaging

technology observation platform

from geostationary orbit,

microwave remote sensing technology and sensors for

looking at carbon emissions and other pollutants in the

atmosphere. A lot of sophisticated sensors, data processing

platforms and advanced techniques for assessing variousmineral deposits will become inevitable. The search for

resources on moon and other planets such as mars will see

the emergence of deep-space missions with robotic plat-

forms and bases.

The last 20 years have seen India emerging as a space

power. To become a global player, it is essential to set the

space vision for the next 20 years which will have major

thrust in areas such as low-cost access to space, develop-

ment of reusable launch vehicles, earth observation sys-

tems for environmental monitoring and disaster manage-

ment. Human presence in space and nearby planets is going

to be a reality and India has got a unique opportunity to take

a lead in developing low-cost access to space and much-

needed human transport system for space exploration.

G Madhavan Nair is a former chairman of ISRO


THE US, EUROPE AND

RUSSIA ARE NOT

PURSUING SPACE

TRANSPORTATION.

CHINA IS THE ONLY

COUNTRY INVESTINGIN THIS FIELD. THIS IS

WHERE INDIA COULD

EVOLVE AS A GLOBAL

PLAYER WITH

CAPABILITY TO ACCESS

SPACE AT LOW COST

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2020


While the economic reforms since 1991have led to the opening up of the

economy in terms of liberalisation,

privatisation, and internationalisa-

tion and impressive strides have been

made in sectors such as telecom, civil aviation and

financial markets, the all-important energy sector has

not been able to keep pace with the rate of economic

development. The yawning gap of 12 per cent between

demand and supply of electricity continues to be an

acute problem.

India is faced with the challenge of sustaining its

rapid economic growth of 8-9 per cent in order to lift

out of poverty one-third of its people who are livingbelow the official poverty line while at the same time

dealing with the threat of climate change and global

warming. India has committed itself to reducing its car-

bon emissions by 2025 per cent by 2020 starting with

2005 as the base year.

Power shortages could be the single biggest factor to

derail the country from its high-growth trajectory.

Around 53 per cent of our electricity is generated from

burning coal. Around 25 per cent of our power supply

comes from hydel resources, which are location-specif-

ic and cannot be seen to provide dramatically more than

what they do right now. This leaves us with nuclear

power and renewable sources of energythe sun, the

wind and biomass.

Even as the countrys energy security is compromised

since it depends so heavily on oil imports, India has

India has realised that a large part of its energysecurity can be achieved by using what it has

free of cost and in abundance all over the country,all round the year and foreversunlightK Subramanya

Rising with the sun

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realised that a large part of its energy security can beachieved by using what it has free of cost and in abun-

dance all over the country, all round the year and forev-

ersunlight.

There are numerous reasons for India to go solar.

Solar energy is clean energy as it emits no effluents or

pollutants into the atmosphere unlike the thermal

energy obtained by the burning of coal or natural gas.

Besides being free, solar energy is forever, unlike fossil

fuels, whose stocks are getting depleted everyday with-

out being replenished and which we will exhaust com-

pletely within a few decades unless fresh sources are

discovered in the meantime. Solar energy is abundantly

available in India. The irony is that Germany does nothave as many sunny days as India does, yet Germany

accounts for 50 per cent of the global market for photo-

voltaic cells which are used to convert sun rays into

electric energy, while India accounts for only 1 per cent

of the global market. Solar energy is modular and scal-

able and can be generated at the point of use, in which

case there is negligible or no loss in transmission and

distribution. It is simple and quickly implementable

requiring no or low gestation period. Importantly, there

are no rehabilitation issues related to solar power pro-

jects as are seen in the case of mega power projects.

Also, solar power projects require virtually very

little maintenance.PV modules exposed to the sun can produce enough

power to run the basic appliances in a home. Solar

street lights, traffic signals, solar water pumps and solar

lanterns are getting readily accepted. Solar water

heaters can save enough electricity to pay back for their

cost in three to five years.

Like universalisation of education the central gov-

ernment should make it a national mission to achieve

universalisation of electrification.

It is estimated that some 14 lakh solar PV systems of

about 110 megawatts peak capacity have been set up in

the country. A total of 33 grid-interactive solar PV

plants have been set up in the country with financialassistance from the Ministry of New and Renewable

Energy. These plants with an aggregate peak capacity of

2.125 megawatts are estimated to generate about 2.5

million units of electricity in a year.

It is under the Jawaharlal Nehru National Solar Mis-

sion that the government has set out an ambitious tar-

get of generating 20,000 MW of grid-connected solar

power by 2022 in addition to 2,000 MW of off-grid

solar installations. Starting from 200 MW today, the

mission targets have set out a huge challenge for the

Indian industry to achieve these targets in a time-

bound manner. The good news is that the first phase of

the mission (2010 -13) is on course and already some

800 MW of solar projects have been allocated and are

currently under execution. As more and more solar

power projects come on stream, larger volumes will be

generated in manufacturing and operations and thewhole supply chain. This will lead to economies of

scale bringing down unit costs. Spurred further by the

economic forces of competition and technical innova-

tions and R&D, the cost of solar power will further

come down. Already solar power plants costs have fall-

en by 30-40 per cent over the last two-three years, and

this trend is likely to continue. The overall aim of the

solar mission is to achieve parity of solar power prices

with conventional power by 2020. Given the current

trends in the gradual rise in cost of conventional power

and the steady fall in solar power prices, the grid pari-

ty target will hopefully be achieved earlier than the

NSM target date.The government has launched the Renewable Ener-

gy Certificates (REC) mechanism which will help

developers sell the power to the local utilities at aver-

age power purchase cost of conventional power and at

the same time sell the RECs generated upon produc-

tion of solar power to the buyers on the energy

exchange within a price band defined by the central

regulator. The REC buyers would

be the entities/utilities obligat-

ed to procure a minimum

amount of solar power (set 0.25

per cent for 2011) to meet their

RPO obligations.On the financing front, Indian

banks are still not fully confident

about financing solar power pro-

jects. Their knowledge and

awareness about the solar power

technology is very limited

which is understandable since

the grid connected solar power

plants are a very new phe-

nomenon in India. The Indian

banks are insisting on financing

the solar power projects on the

strength of the companys balance sheets rather thanthe merits of the project per se. This, and the high rate

of bank finance in India, which is above 12 per cent per

annum, is making it very difficult for the solar power

developers to make the projects viable. This is com-

pounded by the fact that around 150 MW of solar PV

and 470 MW of solar thermal projects were selected

last year on the basis of competitive bidding for the tar-

iff, and the process resulted in unduly low tariffs.

The sun is a great leveller. It shines on the homes of

the poor and the rich with the same intensity. Every-

one, rich or poor, can produce their own electricity with

the necessary set of photovoltaic panels on top of their

roof. Lets therefore implement the 20,000 MW target

in the interest of India.

K Subramanya is CEO of Tata BP Solar India Ltd

THE SUN IS A GREAT

LEVELLER. IT SHINES

ON THE HOMES OF

THE POOR AND THERICH WITH THE SAME

INTENSITY. EVERYONE,

RICH OR POOR, CAN

PRODUCE THEIR OWN

ELECTRICITY WITH

THE NECESSARY SET

OF PHOTOVOLTAIC

PANELS

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By 2025-26, while thedeprived will constitute under

a fifth of the population, themiddle class will account for

around 37 per centRajesh Shukla

A middle-class

India

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If the biggest revolution of post-independence Indiawas the rise of the Great Indian Middle Class and

everything that went with this in political and eco-

nomic terms, the biggest revolution of the next two

decades will be the virtual disappearance of the

poor or deprived. With economic growth of 8-9 per cent,

India is well on its way to become a middle-class haven.

The projections made in the Goldman Sachs Brics reports

are well-knownby 2032, India will be a larger economy

than Japan. What is less known is the NCAER projection

that by 2020-21, there will be as many middle-class house-

holds (defined as those with an annual household income

of between Rs 3.4-17 lakh at 2009-10 prices) as there are

deprived ones (defined as those with an annual householdincome of less than Rs 1.5 lakh at 2009-10 prices). By 2025-

26, while the deprived will constitute under a fifth of the

population, the middle class will account for around 37 per

cent of the population.

How huge the impact of this will be is best seen through

an example. If 10 million new persons buy a mobile phone

every month, as was happening some months ago, this

means a total of 12 crore persons buying a mobile phone in

a year (were not taking into account the replacement

demand which will be much bigger given that India

already has 80 crore mobile phones). Assuming a new

phone costs Rs 1,500 and these new customers spend just

Rs 100 a month on their mobile bill, thats an annual expen-diture of Rs 32,400 crore, an amount which roughly equals

the sales from an automobile plant with a capacity of 1.3

million cars (assuming each car costs Rs 2.5 lakh). Multiply

this many times over to get a sense of the impact of Indias

middle-class revolution. Additionally, as millions more are

added to its ranks, the share of income accruing to the mid-

dle class will rise from the current 35 per cent in 2010-11 to

47 per cent in 2025-26 (assuming that relative level of

earnings by various income categories remains the same).

This is more than the income accruing to the rich category

and more than twice the income accruing to Deprived and

Aspirers category combined.

The deprived, by contrast, will account for approximate-ly 3 per cent of the countrys income, making it quite clear

how Indias consumer power will shift even more.

The political impact of this will be even larger. With 37per cent of the population middle class versus a fifth which

is deprived, the political constituency will shift dramatical-

ly. To the extent the government wants to run social wel-

fare programmes, the emphasis will have to shift from PDS

for the poor to unemployment insurance, from food subsi-

dies to a greater emphasis on education and health facili-

ties which are middle-class priorities. Given the govern-

ment-sponsored education system is hardly deliveringa

fourth of those living in even rural India, the Pratham sur-

veys show, are sending their children to private schools

expect an even larger growth in private education services.

The middle class, needless to say, is not rising in a vacu-

um; it is the product of greater industrialisation and givesrise to greater urbanisation. According to an estimate by

McKinsey Global, in the next two

decades, India will add 260-280

million more persons to its cities. So

as many persons will be urbanised

in the next 20 years as have been

urbanised in the last 60. India will

need to add 700-900 more square

metres of commercial and residen-

tial space in urban areas, which

means two new Mumbais each year

for the next two decades.

This means Indias political debateis less likely to be about caste as it

will be about infrastructure, roads,

metros, skytrains the debate will

be about the benefits of bus rapid

transit corridors versus metros.

Since India is nowhere near fixing

the problem of making the land available for this new rush of

migrants from villages to cities, expect a lot more Dharavis to

bloom. The latest Census data shows this. While the urban

population rose from 286 million to 377 million in the last 10

years, 14-27 per cent of this population got accommodated

in census towns, those that have more than 5,000 persons.

But these are agglomerations that do not have a formalmunicipality and so not likely to have civic amenities such as

sewerage, water and roads.

While politicians will respond to what middle classes

want, perhaps the biggest change will be in terms of the

governance structure. Describing this unique class and its

implications for society and polity, Aristotles words that

The best political community is formed by citizens of the

middle class and Those states are likely to be well-

administered, in which the middle class is large come to

mind. The rising political conscience of this burgeoning

class will act as an agent of the age and as an important sta-

bilising force in India. Their participation in the Lokpal agi-

tation is an indicator of things to come.

Rajesh Shukla is the Director of NCAER Centre for

Macro Consumer Research


SINCE INDIA IS

NOWHERE NEAR

FIXING THE PROBLEM

OF MAKING THE LAND

AVAILABLE FOR THIS

NEW RUSH OF

MIGRANTS FROM

VILLAGES TO CITIES,

EXPECT A LOT MOREDHARAVIS TO BLOOM.

THE LATEST CENSUS

DATA SHOWS THIS

Deprived

Middle class

50.0

40.0

30.0

20.0

10.0

0

Distribution of income by household category

Rich

2010 2012 2020 2025

Aspirers

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Shanghai, Chinas most exciting city, changed at

an unprecedented speed. That transformation

along with the hope, fear, greed and nostalgia of

its citizens is a fascinating case study. Shanghai

rushed into the future even as its inhabitants

struggled to deal with the present. It raced to become a

paragon of modernity, and yet in building a new tomorrowit forgot or even erased its own past.

To my mind, India should not blindly ape Shanghai but

create its own unique model of livable, vibrant cities.

Indias urban challenge is enormous. While meeting this

challenge India must innovate and create cities that focus

on enhancing the quality of life of its citizens. India cities

must reinvent themselves through creative policies and

institutions and emphasise the basic elements of a livable

city. These are attractive public spaces, mixed-use and

higher-density neighbourhoods that support a range of

green infrastructure, public transportation, affordable

housing and vibrant pedestrian experiences. A

livable city lays emphasis on walk-ing, bicycling and mass

transportation. Such cities

meet environment, eco-

nomic and equity goals

and are great cities to live,

work and play.

Recent studies have projected that India will face an

unprecedented scale of urbanisation350 million Indians

will move to cities by 2030. This number is likely to double

to 700 million by 2050. This is 2.5 times the size of the US's

present population and will be the largest urban move-

ment in the world. This implies that every minute duringthe next 20 years, 30 Indians will leave rural India for set-

tling in urban areas. Management guru CK Prahalad had

emphasised the need for India to create 500 new cities to

accommodate and provide a better quality of life to its

migrating people. Otherwise, every existing city will

become a slum when India becomes 75 in 2022.

Cities are centres of growth, innovation and creativi-

ty. In todays world, it is not countries but cities that

compete for resources and investment. The GDPs

of New York and Tokyo are on a par with that of

India. Not a single Indian city figures in the top

100 cities of the world. Mumbai ranks 114th and

Delhi a dismal 214th. The future of Indiasgrowth process lies in the

dynamism and vibrancy of its

cities. In India, farm-

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For China, economic development was, inessence, about shifting people from sustenancefarming to manufacturing, and urbanisation wasthe spatial manifestation of this shift Amitabh Kant

Our own Shanghai

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ing accounts for more than 58 per cent of its workforce butonly 14.2 per cent of GDP. Agriculture can sustain a growth

rate of 3 per cent while the Indian economy must grow at

9-10 per cent to lift vast se

reforms 2020

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