Thursday, May 5, 2011

On a Learning Curve..

After riding on high hopes for about four-five months finally, the results of IFC are out and  I'm happy that the suspense ended. Although, I didn't make the final list but it was a good experience all together. And it was good to know I still need to polish my writing skills a lot to be able to write an award winning entry.

So, here's yet another entry (theme : Inclusive Growth) which I submitted.
The award winning entries for the category :



The economic scenario has undergone a sea-change in India since Independence. To say that the economic reforms of 90s were the beginning of the change won’t be wrong at all. When India got Independence the feeling was that if we had to progress, the wealth should be controlled by the government and the public sector. The principles of socialism seemed very appealing and it was hoped that India would develop into a socialist state having influence over almost all the companies which would ultimately lead to the betterment of the society. Private sector was viewed with suspicion and contempt probably because it was against the idea of Socialism. It was thought that private sector would lead to the concentration of wealth in a few hands with wicked intent. But unfortunately after persisting with socialist beliefs, say at least till the 90s, these principles have failed to provide upliftment for the Dalits and the downtrodden and now the idea of Socialism has been abandoned and is treated with disdain. The same observation is noted by Infosys co-founder Nandan Nilekani in his book Imagining India.

The shift in the ideas about ‘what is good for the country’ is an amazing story in itself. The mindset of a nation, that was too young and had just got to rule itself by its own, was against Capitalism. It viewed Capitalism as a “dark and evil force” that threatened to destroy the nation's democratic and socialist objectives. Thus, there was no role thought of for the private sector in the growth of the nation, moreover it was kept separate and treated with contempt. It was only after the country faced the 1991 economic crisis - when it finally rolled out large scale economic reforms, did the nation get to see the prowess of the private industry and started looking towards it with a lot of hope. This shows in itself how drastically the situations have changed since Independence.

History has taught us that as a nation we cannot keep ourselves aloof from the rest of the world. There has to be interaction with the outside world and this exposure to the global surroundings has led to a stage where it is being envisaged as to how the private sector can contribute in the growth story of India. In fact, if we have a look at the trusteeship formula- greatly emphasized by the Father of the Nation,Mahatma Gandhi, where he said that every industrialist who sets up his business and reaps profits should give back a certain portion of his profits to the society. Also, in the first Five Year Plan (1951-1956) – a planning process for economic development, recognised the role of private sector. It said
“the initiative and responsibility of private enterprise was indispensable”.

But such intent was lost in the clamour for socialistic policies. Now the situation has changed.
While there have been efforts to sensitise the private sector of their responsibility to the society and concepts like Corporate Social Responsibility (CSR) developed, still more is being expected from the private players in building the society. In the same context it will be interesting to note as to how the masses have started to view the private sector in a better light than the public. Companies/ Corporations earlier were basically family fiefdoms but slowly as more and more entrepreneurial ventures became successful and accountability became the underlying principle of corporate functioning, the face of private sector began to change. To be precise, Infosys lead this change and earned the label of “new economy” company. While the  government functioning was opaque and accountability was an unknown dimension, these novel practices put private sector into bright light. The situation has become such that for any ailing public service at present, the immediate solution cited is privatisation.

It is undoubtedly true that the private sector can play a revolutionising role in changing the society for the better. The prime example where the private sector is contributing at present and can do more is Education. While this is no hidden fact that the government has always been shy of spending a sizeable fraction of the GDP on education and has been citing lack of funds for new, better universities, and this is where the private sector can make the most effective positive impact. India has about 60% of its population that is young and to cater to their ambitions and give wings to their dreams, more quality educational institutions need to be opened. Since the government has its hands tied due to other commitments (which it deems more important), encouraging the private sector to enter the Education scenario will only do more good. And this is what is happening at the moment. Several states have relaxed their regulatory requirements and entered into a Public-Private-Partnership (PPP) model with several private players aiming to build world-class universities on the lines of MIT and Stanford.

It is a good start and what heartens is that finally it is being recognized that to up the Gross-Enrolment-Ratio (GER) at the higher level, private sector needs to be involved actively and their contribution is now being appreciated and viewed in proper light. The GER for the world at the university and college level stands at around 50%, but for India it is a dismal 12.4%.  This figure is an indicator about how many Indian students do not opt for higher education, probably because there aren’t many institutions imparting higher education. For a nation that is being viewed as the next super-power such figure needs to be changed for the better. And this is only possible by loosening the reins in education, inviting the private sector to set up more institutes—but with a rider: less but higher quality institutes and not the other way round.

In a similar fashion, the private sector can handsomely contribute in meeting the dire need of the hour- Infrastructure. While the government has miserably failed in taking development to every corner of the country and providing the citizens with better civic facilities (roads, electricity, water supply) and taking everyone along, the efforts from the private sector can go a long way in bridging this gap. Unequal growth is an ugly truth that is very clearly evident in the country. We have a very effective public transport system in the capital, the Delhi Metro but at the same time in the interiors of the country people spend around half of their travelling time in jams. There are cities in the country with well metalled roads and there are places which are totally cut-off from the other parts of the nation due to sub-standard quality roads.

Though we have provided access to better quality seeds and farming equipments to the farmers but every year they are forced to appease the GODS for sufficient rains. Long and frequent power cuts force them to turn to primitive methods. Such are some of the miseries ordinary people face and this is where the private sector can step in where the government has failed to deliver. The bane of the public sector has been “Accountability” and ironically, this is the shining point of the private industry. And probably this is the reason private players are being handed over the reins of public services. Electricity distribution is being managed by a private service provider in many cities and they are about to start managing it in many more. Resultantly, we have seen a much more pro-active approach from them than the state electricity department in cutting down transmission losses and other common problems. Certainly that's the way ahead!
Another area where the role of private sector has been envisaged is in the building of highways. Highways are a virtual lifeline of a country – impacting the trade, transport in a serious manner. Here, too, the idea of a Public-Private-Partnership (PPP) has been mooted and has been successful in many instances. The role of the government is limited to acquiring and handing over the land, and it is the responsibility of the private party to get it ready within the agreed time. Considering the ambitious Golden Quadrilateral Project - aimed to connect all the four corners of the country, started under the leadership of Shri. Atal Bihari Vajpayee is still not complete after 7 years with an estimated work speed of 10km/month, this model looks very impressive. Moreover, the government allows the private party to recover its losses by letting it manage the toll collection for a certain stipulated time period, giving a new face to the concept -Build, Operate and Transfer (BOT). Similarly this model has also been applied in building new planned cities to meet the rising housing demand. A lot of new planned cities/townships are coming alongside the under-construction highways with full backing of the government. Such huge projects will also effectively tackle the problem of Unemployment, creating lots of jobs fit for people of various skills and abilities. This will help break the vicious cycle of lack of infrastructure-lack of education-unemployment-poverty-social imbalances and unrest. Being able to meet the basic needs of every citizen, every family will provide impetus for inclusive-growth and help build an “open access society” - a concept brought forward by the Nobel Prize winning economist Douglas North. Open access societies provide for easy access to resources for growth and development to every individual irrespective of his background and are self-sufficient in meeting the requirements of an individual and thus, pave the way for his all-round development.

Such real life instances give us an clear indication that probably the policy makers have also realised that they alone cannot do a complete makeover of the country without adequate support from the private industry. Perhaps, they have resigned to the fact that after repeatedly disappointing the public in terms of deliverance and effectiveness they can't win over their goodwill and it would be best to allow the responsible, clear image players to take the centre-stage. In fact, many of corporate houses have taken the lead and adopted few villages with the objective of turning them into model villages while focussing on all aspects of development. There is also a thought of letting the private sector take control over the Health-Care facilities. While this thought is in its infancy but a serious thought over it shows a vast amount of possibilities, potential in bringing about a positive change in the lives of millions who don't have access to quality healthcare facilities. India has a very dismal record in healthcare services for its people, the present structure is simply not good enough and efforts to encourage doctors to work in rural areas have borne little success. Though there are lot of complicated issues involved but perhaps, a private stake in the healthcare system can help develop a robust, effective system that would be able to serve people in far flung areas.

Such efforts can work well to meet the needs of the people in a sustainable way. Also the fact that the private sector is more forthcoming in accepting new changes, new technology than the public, makes for a strong case for the private sector. With a proper balance between technology, man-power and process, it is very much possible that the private sector can help in a long way for meeting the needs of a billion people in this huge nation.

No comments: