Monday, 5 November 2018

What can you do for India?

Nandan Nilekani, in his book ‘Imagining India’, published in 2008, talks about ‘demographic dividend’ in India.
Demographic dividend, in simple words, is the advantage a country gets during a period of time, when the people in the working age group are much more than its population that doesn’t work like children and old persons.
For example, in India the population between 15 to 59 years is about 65%, children 27% and above 60 years is 8%. (As per data of 2015). This would mean we have 6 persons earning to support 4 persons! This is a clear advantage, as we will have less expenditure and more savings. This saving can be invested in markets leading to fast growth of the economy, putting the country in a positive cycle.
So, what happened? Are we in the positive cycle? The answer is No. Because, as you would have guessed, the savings will come ONLY if all the 6 are employed! They are not! The market didn’t grow as we expected. We still have huge unemployment. Clearly, we failed Nandan’s predictions. Why?
Enter Professor Tarun Khanna, who has travelled around the world, intimately observed both the developed world and developing world, and who teaches at Harvard Business school. In his just published book, ‘Trust: Creating the Foundation for Entrepreneurship in Developing Countries’, he tackles this question.
And he hits the bull’s eye.
Prof Khanna convinces us, beautifully, how India and other many other developing countries are not able to show expected robust economic growth, due to the absence of a very critical component. That is, the ‘Eco-system of Trust’. It’s interesting that we hardly notice this bedrock on which the market and the society operates.
Think about it for a minute.
Think how developed countries do their business. They do it on Trust. Millions of credit cards are swiped daily trusting that nobody will take their money away. Amazon just leaves the package at your door, and doesn’t call you, trouble you and demands your signature on the invoice. If you have an emergency when you travel, all you need is to call 911. You don’t need to hesitate to call the local police. You don’t think ten times before filing a case in the court. You simply trust that there is a system that stands by you, when you need it.
Such a system is either absent or dysfunctional in India. And still we expect the people to be more productive, transact more business and push the economy up! We don’t have the basic foundation, but expect a building to come up fast! How naïve!
Prof Khanna quotes from Adam smith, on the importance of trust in the eco-system.
“Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay. Commerce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government “(WN, p. 910).
This explains why India is not able to perform. There is no eco-system of trust here. Whom do we trust? I remember reading a survey on whom the people of India trust. Apart from the Army, they don’t seem to trust any other institution!
So, we need to build trust. It can be thru building institutions that we trust. Prof Khanna talks about the institutions that build trust. He gives examples form both, private entrepreneurs and the govt. He calls entrepreneurs to ‘create conditions to create’.
He quotes the phenomenal growth of Alibaba, which actually created an environment of trust between the buyers and sellers in China. Or take the case of Amul, the brand people trust in India, or Narayana Hrudalaya of Dr. Devi Shetty, which has earned the trust of the common man. These are entrepreneurial solutions to the socio-economic problem of mistrust.
But, what is the govt doing? Prof Khanna talks about Aadhar, which tried to bridge the trust deficit. He also talks about the 'Oportunidades', the Mexican govt direct cash support programme to the poor families in Mexico. (It’s my pure guess that such programme may soon come to India too!)
But, the question remains. Why the govt is not able to invest and set right the system? Why can’t our institutions become trust worthy, and thus create an environment of trust? Why should our govt wait for the entrepreneurs, when the Chinese govt is fast making its institutions trust worthy?
That brings me to what I have been suspecting all along. The govt is not working on this problem, because, the people are not demanding it! Remember, a democratic govt has to listen to the voice of the people, when it is loud and persistent. Even noble laurate Amartya Sen said the same, that a democratic govt can’t afford to be silent to the voice of the people.
So, why the people are not demanding something, that will ultimately make them better? Why even a movement like India Against Corruption fizzled out soon. Even if 0.01% of the population, demand the govts for good governance, wont the govts be forced to make amends? Remember how the govt changed it new policy on garment workers in Bangalore? The roll-back happened in a day, after lakhs of people raised their voice. But such unity doesn’t sustain itself.
In my twenty years of govt service, I have observed one thing. People in India hardly unite! They almost never come together! Bad things continue to happen because, people never question it, together. Why is it so? How come we never had an uprising in India against bad governance, when it happened world over, even in partial democracies?
The answer seems to be in our sociology. The way our society works. Feudal, hierarchical. Though we live in one country, we are passionate about our different identities, based on religion, language and caste. These divide us crisscross, leaving very chance to unite.
Particularly caste, which Dr Ambedkar called as the original sin. His words in 1936 sound so apt even now, “Turn in any direction you like, caste is the monster that crosses your path. You cannot have political reform; you cannot have economic reform, unless you kill this monster.”
We need to tackle these complex issues. Prof Khanna in his earlier books talks about billions of entrepreneurs from India and China who will change the world. Will these entrepreneurs change our country for better? Will they create systems that connect the people crisscross, instead of dividing them, and raise a strong ecosystem of trust? Will they slay the monsters and liberate our nation from the chains?
Read Prof Khanna’s book. Who knows, you could be the next Kurian or Nandan or jack Ma or Dr Devi Shetty. The nation awaits entrepreneurs who can ‘create conditions to create’!


  1. Absolutely true, nailed it. Living in Korea and see the 'trust' factor clearly at play. Packages are left at doorsteps for days together and go untouched, call 119 (not 911 here), even by mistake in the phone and the relevant contact center reaches your location via GPS to support you.

    I truly wish things this factor of trust and unity brings in the much needed development we so badly crave.

    Thank you. It was indeed a good read.

  2. It was great article to read. Got many food for brain

  3. Sir can U send it to leading local news paper ie EENADU for editorial