Financial Daily from THE HINDU group of publications
Tuesday, Dec 17, 2002
`India has the potential of becoming a developed nation'
Lord Swraj Paul
LONDON, Dec. 16
LORD Swraj Paul has consistently articulated his firm and unflagging faith in India's potential. As Co-Chairman of the Indo-UK Roundtable and the Ambassador for British Business , he has passionately encouraged British companies to use the huge talent pool and resources possessed by India.
In a long chat with Business Line, Lord Paul spoke on a broad range of issues ending on a sentimental note: "I have absolutely no doubt that India will join the league of developed countries one day. The only disappointment to me is whether it will do so while I am living." Excerpts:
What role do you think India, given its constraints, can play in a globalised environment?
India, in my view, has all the potential of being a developed country, if we decide mentally on what we want to be. I think there is too much hesitation in recognising our own selves as Indians. Indians are highly intelligent people and have done marvellously well wherever they have gone. I had the occasion in October to meet the President of India, Mr Abdul Kalam. He is a remarkable man and his book `Ignited Minds' is one of the greatest blueprint for India.
In my view, everybody should be asked to read that book as a part of the school curricula. I am not a believer in doing anything compulsorily, but I think this is one of the exceptions. And if we can follow 75 per cent of that book, India will be a country which everybody will look up to.
Given the pace of reforms and liberalisation over the past 12 years, how do you think India can make a difference in the global scene?
For the past 12 years, our attitude itself has been half- hearted. Do we want or do we not want reforms? Let us make up our minds once and for all. We must accept the fact that gone are the days when we could play east and west. There is no debate on systems. -There is only one system and that is heading towards globalisation.
In my view, nobody can stop globalisation anymore. The step that we need to take is to decide how we can play an important role in this process and make things better for India. India is not doing anything great by reforms. They have no option left. Three months ago, we were discussing whether we want privatisation or not. I am not a firm believer in privatisation. But I believe that whatever assets you operate, you must get the maximum value out of it. It should not matter who the owner is but whetherwhatever is done, is done efficiently so that it benefits the country.
Don't you think it is a universal phenomenon that dominant corporates in any country have always imposed their vested interests in the shaping of political and economic policy of that country?
It is always a possibility in all countries, including Britain and United States. Fortunately, in Britain it happens less, because our press is very strong and it goes through like a knife into anything it feels is suspicious. In any democracy, a free and vocal press keeps everybody on their toes - be it the politician, bureaucracy or businessmen. We have got to make our system much more transparent. It has become very clear that in any democratic system, politics has become much more transparent than business.
After the Enron and other accounting scandals, the US economy has been shown in very poor light. What is your assessment of trends in corporate governance?
In Britain, we think that the US was far less transparent and that is why they paid this price. We also believe that in the US somehow business managed to have more control over the Government than our system in Britain would allow. There is no way in Britain the business can control the power in the Government. We can have some deviation, but it will be minor and not for long.
Having seen the entire privatisation experience in Britain in the eighties, what lessons do you think the Indian government can learn from the UK experience? My only criticism is, at the moment, what is happening to privatisation in India. The same people are continuing to run the companies. It is the same government (read: financial institutions), which is lending the money to the buyers. So what is privatisation about? If they really want to privatise, they should challenge somebody to go completely public, make sure nobody is a big shareholder and let these companies be run in a proper and professional manner, where if the managements do not perform, they are pushed out by the shareholders. There is no sense in passing on ownership from the government to one individual. If you have to privatise, go for professional management, go for spreading shareholding to the whole country. India has created a very active stock market to absorb the entire shareholding.
Do you think that FDI investments through foreign multinationals can make a difference?
I am not enamoured of this idea of MNC investment. I consider them no different from any other company. After all, in the end it is the management, which makes a big difference. In my view, there is enough good management in India and they ought to be given a free hand. They must also have the fear that if they do not perform, they have no place; only then they will do a marvellous job. The MNCs do not have any magic formula for success.
Do you think that strategic interests have been sacrificed in any way in the privatisation of petroleum or mining companies?
I think the government should do only two things - stay in health and education. In my view, defence comes later. If you cannot keep your population healthy and give them better education, no Government can be said to have succeeded. We have already seen the benefit of education in the IT industry. If anything has sustained India in the last 10 years, it is not great reforms, but it is the IT industry. .
Do you think that infrastructure investments will pick up in the country? How do you improve your infrastructure? You cannot improve power by running your plants at 30-40 per cent capacity. You cannot put decent and productive plants if you make a contract that we will give you a fixed return on your investment. The same holds good for fertiliser plants. Is this a market-driven economy? How can you have a private and free market, and assure the returns of investments? This goes against the grain of free market and competition.
As a Co-Chairman of the Indo-British Roundtable and ambassador of British business, how are you contributing to the growth of India Inc? Increasingly, I have been asking the British companies to go and use the talent pool in India, which we have not been using ourselves. I think the experience of British companies going into partnerships with Indian companies has not been great. Once they start going out on their own, their experience will be better. But that process is slower.
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