CONFLUENCE FIFTH ANNIVERSARY SYMPOSIUM

 

“Defining India’s Identity in the 21st century”
Prof. Jay Mitra

 

We need to carve out a new entrepreneurial identity to give India what no other identities have provided to date – its strength to create value in a supportive economy and through social empowerment

India is a land with a wealth and diversity of ideas. We see an extraordinary democratisation of politics and culture in India, one that has stood the test of time for centuries. And yet there is an extraordinary poverty of the institutions, our inability to actually enforce through institutional means, whether it be law, or certain social and cultural norms of behaviour and practice in society, those overriding principles of a just and free society and a robust economy. Can we overcome this urge to respond to every little incremental possibility for all our singular lobbies and recognise that we have multiple identities that help us look at the possibility of what makes people work, what makes people identify opportunities and create change?

Our globalised outlook is unquestionable and over the centuries India has gone everywhere!. But why is it that we have a degree of confidence which is far lower than some of the other countries that are developing faster or maybe at the same pace?  I have the good fortune to visit China on a regular basis as part of my work and I compare the levels of confidence both in social terms, economic terms and cultural terms and I see the palpable difference at least in this sphere when I compare that level of confidence with those of Indians, either in India or abroad. I am not saying that one is better than the other but the noticeable differences are well worth taking into account. Somewhere along the line it seems to me we have created a country of extraordinary ideas, of extraordinary contemplation, of an ability to argue and to sort of meditate and mediate between things. But could we also look back in history to move forward with the confidence that we have lost?

It is the failure to recognise what we have done over the ages that is at the heart of our failure. And one of the extraordinary things that we have accomplished historically is our entrepreneurial spirit. And by entrepreneurship I mean everything that is not what the plethora of texts and research findings in that subject domain tell us what it is!
My kind of entrepreneurship abides in India as I will try and demonstrate what form and shape that has taken over the ages.

Rediscovery of Indian entrepreneurial identity

Way back long long ago, almost as far back as 400 BCE, long before any kind of advancements in science in the west, India played and worked with scientific ideas centred round solar eclipses, the motion of the earth, and the force of gravity, thanks to Aryabhata and other mathematicians of unique capability

Fast forward to 2050 and we are talking of an India that is expected to be ranked third among world economies, five times the size of Japan by 2050 and with a per capita income rising by about 35 percent.

So the re-discovery of the Indian entrepreneurial identity, what was then and what is now is fundamental in the way I look at what India can do in the future. We can do it through our economy - of course that is where the foundation lies – in terms of the growth creating technologies and industries that currently exist in India. And very important to the critics is the creation and establishment of sound and robust institutions. Geographically they lie at the heart of those places where we know most of our wealth creation lies - in our cities. Of equal importance is the understanding of our capability for generating social empowerment and that can only happen if our institutions are robust and strong. We don’t have to in a sense adjust ourselves but I think that we need to re-engage ourselves differently with notions of internationalisation. And that is at the core of what I call our global entrepreneurial  identity.

GDP growth, the rise of merchandise trade from a 14 per cent in 1990, are all impressive figures! Very important is total factor of productivity - the way in which we actually make use of the factors of production in India – from about minus 1 percent in the 1990s to about 3.5 percent now. But what is particularly significant is our ability to attract foreign investment and, crucially, our investment outflow, in other words our presence in the global community of business enterprise and economy.

We know that we are one of the world’s fastest growing economies – consistent growth in production and currently lying fourth in terms of purchasing power parity terms, primarily driven by the service sector. We know that the key service sectors are primarily personal services, trade, banking and communications and we can see from the statistics the enormous growth that has taken place in four of those sectors. Interestingly, however, despite all the talk about services, exports of manufactured goods account for more than half of all our exports.

The confluence of the entrepreneurial drive

We are an outward looking nation and that is indeed at the heart of this entrepreneurial identity. Exports have grown but so have imports. And this raises questions of the nature of whether we really do understand what the implications are of this kind of growth, this kind of development? Various consultants are talking in terms of the confidence index that India demonstrates, that India is not going to ride second in terms of foreign direct investment in the near future.  Deals and investments have been made with major companies like BMW, Cisco etc., and we also see the growth in consumer buying power which is primarily supporting the growth in luxury goods, and people with mobile phones not only in urban areas but in rural areas, at more than 2.5 million customers every month., lots of glitzy shopping malls not necessarily in the cities but in urban areas and the biggest TV and movie audiences in the world.

But beyond the consumer interest, beyond the shopping malls which do not necessarily reach out to the many, there are other things happening. The conquest of space – the first mission to the moon that will create 3D maps of moon surface at resolution of between 5 & 10 metres, the first of its kind in the world; 6 remote-sensing (R-S) satellites, the largest in the world and 8 communication satellites forming the biggest civilian system in the Asia-Pacific region to be used by 35,000 commercial customers, providing television coverage to 90% of the population, extending remote healthcare services – linked 69 hospitals in remote areas, and providing education to rural poor – these are signs of extraordinary times!

The important thing to recognise here is that they are affecting the needs potentially at least of rural communities, of remote health care services in India and I think this is where we find the confluence of the entrepreneurial drive and the need for social empowerment.

Look at the way we have transformed our pharmaceutical industries. We are no longer entirely in thrall to larger companies, but with world beating expertise in chemistry and clever use of old patent laws, about 9000 new drug firms have been established. And leading players like Wockhardrt, Dr Reddys, Lupin and others are at the heart of some of the major developments that have been taking place. Leading firms like Astra Zeneca, Nordisk and others have also invested in research.

In terms of research what is impressive is the community of people that are there and the abundance of the use that is being made of stocks of engineers and scientists who are in India, but more so the creative talent and the management capability that is increasing every day. We have Texas Instruments, HP, Microsoft – all involved in research activity, which affect the distribution of products and services round the world. Their work also addresses Indian interests. Indian language versions of the software, applying local solutions to local problems (for example the internet for non English speakers), and collaborations key institutions such as the Indian Institute of Science in Bangalore - .these are at the heart of developments which essentially focus on the interests of India in the world..

It is not just the big players but interestingly all our small farms are at the heart of this identity.  Entrepreneurial activity, in terms of people starting up new businesses, has grown over the years. I have seen also the extent to which small and medium sized enterprises are actually growing every day without over zealous protectionism, and this is a major break from that dreadful, dreadful time of the restricted Raj when so much of protectionism was the bane of Indian industry.

Socially empowering entrepreneurship

But the entrepreneurial identity is not just in industry, not just in small firms, not just in research, not just in science. I think India’s real entrepreneurial identity lies in its social movements. And to my mind the biggest social movement of modern times is probably the discovery of India’s independent form of multiculturalism that drove the  construction of a new state – a kind of political structure for diverse groups giving weight to a single Indian identity. – a citizenship based on civic and universal criteria  where you actually had a lead Party , the Congress Party then with no particular capacity to define a national identity, defining the idea of a state as a binding institution of change . This was a remarkable movement and at a point in time when there were no real antecedents. To create a nation state of that kind, fragile as it may be, challenging what has been there for decades since then, is a remarkable achievement..

Socially empowering entrepreneurship is also to be found in the communities of people like SEWA that not only enable women to overcome economic odds but also the social stigma of deprivation and of ruthless exploitation, by actually making change happen in such a way that you realise that the fortunes of so many people, so many women – 700,000 new members in seven states establishing 76 co-ops looking at salt farming, looking at the milk distribution trade looking at a whole range of functions – is based on the idea of marrying basic needs and economic substitution with social empowerment. This is at the heart of a social movement that gives meaning to the wider interpretation of an entrepreneurial identity. It is in a sense a ‘nurturing of the capacity to aspire’. That to me is the finest definition that I found about entrepreneurship!

But something else is happening as well and this is where I find these peripatetic Indians - the people who move freely and easily across borders and nations, those who have broken the core periphery motion of rich countries and poor countries, who have a sense of creating a new  model of economic growth bypassing to a great extent state controls and bureaucracies. Their actions actually force some of these institutions to change in a way that they could actually support them. Essentially as a result of the fragmentation of production, both in manufacturing and communication and information technologies – limited life cycles of products and the ability of workers amongst different communities of technological interest – immigrants remain in the US primarily but also increasingly in Europe with connections to Silicon Valley, to Cambridge and to various other places. They identify market opportunities everywhere and feel free to move where there is capital in both sorts of global environments. They learn new skills not only amongst themselves but also through networks they have essentially established, and they develop complementary capabilities as a result. There is an extraordinary new democratisation of talent which is not relying on traditional elites anymore. A new entrepreneurial drive is establishing and opening up further windows for change in India.

On the international front there is the relationship between India and China and to point to the level of merchandise exports between India and China in IT and service exports, on the return on capital that is invested in industry, and primarily one of the main indicators of whether wealth is being generated or not on product efficiency – and that is on non performing loans.

Apart from the graph on merchandise exports, India reigns supreme in all other spheres. There is a much greater capacity in India in terms of generating not only wealth through IT and service exports but actually a much more robust financial system which really suggests that if you invest money in India you can get higher returns and if you loan out money in India you can actually get it back .It is a much more difficult proposition to find these sorts of extraordinary work creating opportunities in China despite China’s higher levels of development and growth.

China – India interaction to strengthen global community

When we look at the slide that actually depicts the race between China and India – when we take the old fashioned measure of GDP – the per capita or real GDP, that we find in a sense, China ahead of India.  But when we look at the current so called demographic dividend – the average age of the workforce and indeed the stock of population from which we can draw the wealth of our nation, we find again India ahead of China. And again the sceptics who have memories of 1962 who are concerned about China’s leading manufacturing and India’s leading IT services with abundant opportunities in the West – I make a plea for looking at world class technologies that India and China can bring together, a kind of global standard setting that they can do among themselves for themselves and indeed for the global community. The growth through regional markets, technological and managerial know how which exist in both countries – bringing that together and the great opportunities for new small firms to work in these regional markets.- the low cost labour force. We have numerous examples that are already in place of the relationship between the two countries. based on the collaboration of small firms. Underneath the radar of democracy and underneath the spurious notions of institutional feuds between India and China, we have found ideas of discord and we are suspicious of China’s growth. Ironically, despite the yoke of 200 years of rule we have a great relationship with Britain. Why does the fear of one war and certain other factors that relate to it give us so much concern, when you can actually generate so much wealth out of that interaction.

There are various questions and factors that can impugn my idea of India’s  entrepreneurial identity. But can we be complacent? I don’t think so. Yes we can see a rise in literacy levels, we can also see the demographic dividend that is often talked about, but which I often refer to as a demographic time bomb. The reasons for my scepticism are multifarious. There is capital shortage against abundant labour. There is not enough money in the economy to support the kind of labour we have. And extraordinarily despite the growth of 8 percent we actually have fewer jobs in the economy than we were in the past - 30 million job opportunities on average per year against 35 million added to the workforce every year.  This deficit has to be met. The community of the educated unemployed – this is the biggest demographic time bomb that we have. We also have splendid, world-beating technology centres, but extraordinary regional imbalances in technological capability right across the country. And despite the fact that we have failed in our endeavours to subsidise many industries we still continue to look at the problems of agriculture in terms of subsidies. There is stagnation of employment in agriculture and we find we continue to subsidise the industry in a way that will not bear fruit for that industry.

We need to address the sickness in Indian industry and unfocussed protectionism in a way that unleashes people’s ability to do things rather than to necessarily protect them. There is the stereotype and the problems. We have even now a relatively poor record of education, health care, drinking water, sanitation – all being provided by the state in a way that is not conducive to the betterment of human welfare in our country.

Need for critical international engagement

I think that despite these problems, despite the fact that there are these constraints on us, the fact that we have generated so much over a certain period of time, the fact that this reflects the kind of change which abounded in India way back from the 15th to the 19th century, and which is now beginning to take root post 1991 – this suggests a kind of opportunity for achievement which we must capture. We can capture it firstly through the recognition of the significance of  Indian entrepreneurship.

We need to move in terms of critical international engagements. I talked in terms of an engagement – a proper powerful engagement where we can actually valorise the relationship between China and India and look at the positive advantages of brain circulation. as opposed to brain stagnation or any other kind of deficiency.. We need to strengthen our belief not only in markets but in the way we use the markets in society, so that by and large laws can be enforced to enable social cohesion. For example one of the things I often find rather curious is that people argue yes, we should be subsidising fertilisers over a period of time, and that we should be subsiding various other industries. But what would actually happen if the money is moved away from the subsidisation of these industries and given to producers? This way at least,  pricing will not be distorted and people can operate in a competitive and healthy economy. We should therefore enhance our institutional capacities which allow us to enforce the law in the best possible way. Despite the much vaunted independence of our judiciary which is highly acclaimed, we know of legal cases that have been sitting around for years and years without resolution.

We also need to look at enhanced regional strategies within a national and international framework. What is interesting in terms of the pattern of economic development these days, is that we find the nation state to a great extent less important than regions. That does not mean that we have no need for a national framework. But we need to look at the relationships that regions have with other regions in the world. And we need to inform our social and value systems with the idea of entrepreneurship and social empowerment in those regions.

We need to carve out a new entrepreneurial identity which can give India what no other identities have managed to provide to date – its strength in it capacity to create value in a supportive economy and its power through social empowerment.

Prof. Jay Mitra FRSA is Founding Professor of Business Enterprise and Innovation and Director, Centre for Entrepreneurship Research at the University of Essex

 

Prof. Ifthikar Malik, Professor of History, Bath Spa University, observes:

Lord Parekh has spoken so well. But then there is another India of the Indus Valley and the Lower Gangetic Valley and they have to be defined somehow within this context in reference to rights and responsibilities on all sides. Something like the EU--a broad European identity--allowing diversity and even competition. But South Asia is and should be beyond Europe, as we did not colonise anyone else nor did we convert millions of others. South Asia did not enslave people in millions and so on. Thus, we need to use Europe as a model though not hundred percent and look at our own vitality.