Home/Speeches / Ninth Darbari Seth Memorial Lecture

Ninth Darbari Seth Memorial Lecture

New Delhi, September (2010)

Honourable Mr Digvijay Singh, Dr Pachauri, Mr Deepak Parekh, Mr Brij Mohan Lal Munjal, other distinguished members on the dais, ladies, and gentlemen:

I am indeed very privileged to be here today for the ninth Darbari Seth Memorial Lecture. I was truly touched by Dr Pachauri's invitation to come and speak on a very important

matter—the role of business in the development and building of our vital infrastructure, as an overall basis of our nation.

I think that this particular topic has become even more important in the current landscape, where strife is developing between business community and the people at large.There have been recent cases where we have all witnessed a heightened sense of interest in the role of business and how the companies exploit the resources that the nation provides them for nation building. I will, during the course of my talk today, touch upon some such vital issues.

But, before I do so, I think, it is very important for us to recognize that there are three pillars of a society and the symbiotic relationship between these three pillars is extremely important. I believe that there is no better test bed than a country like India, which is diverse in nature; has a huge population; has extreme challenges on the one hand and opportunities on the other; and, more importantly, is a democracy that puts this symbiotic relationship to a great test.

What are these three pillars? The first and foremost is the pillar of legislature, executive, and judiciary. We have amongst us today one of the stalwarts from the first pillar—the pillar of administration and legislature. As we all know, legislature forms the policy regulations and laws, on the basis of which the other two pillars work to take the nation forward.The second very important pillar of our society is the civil society—the people at large, the communities at large, the non-governmental organisations (NGOs), the media, and many other social organisations that work in the civil space. These organisations and citizen's groups, to my mind, form the bedrock of any nation's development.They are, at one level, the watchdogs, and at another level, the electorate that elects the first pillar of our nation, and, more importantly, ensures that everybody is kept on track by providing the necessary checks and balances. The third pillar, which I represent today, is the pillar of business.The job of business is to provide goods and services, and, more importantly, the fuel for the nation to move forward. But, all these three pillars need to have a very coherent and transparent relationship, without which the nation cannot move forward. While business is an important pillar, it can only be as powerful and important as the fi rst two pillars would will it to be.

Mr Digvijay Singh mentioned about my early struggles and my early successes. I very fondly remember the time when, as a young entrepreneur, I was trying to cut in my teeth.We had to face very large corporations and the public-sector incumbent Bharat Sanchar Nigam Limited (BSNL); this was not an easy task. As a member of that first vital pillar, Mr Singh showed us the light. When we broke India's monopoly for the first time by launching fixed line service in Bhopal, Madhya Pradesh, I fondly remember how much time and resources he provided us as the chief minister of the state. After Bhopal, we launched the service in Indore, and then went to Gwalior, Jabalpur, and Raipur. And in all these fi ve places, a very busy chief minister, with all his administrative duties, was always there for the launch of the services.This is because he saw, in those five critical launches, the start of a telecom revolution. I cannot, therefore, thank you enough for having given us, at a very early stage, what not many chief ministers would have given—the time, five vital days. Within a few months of its start, it became what is today a revolution in this country. I am going back 10-12 years, when telecom was not the most fashionable business to be in. It benefited the society by offering telecom services not only at affordable rates but, more importantly, on demand—a dream of many of our earlier leaders in the country who wanted telecom for the masses. But, I will come to telecom in a moment.

The symbiotic relationship between the administrators, the policy-makers, and business is extremely important for the society to move forward. So, these three pillars need to come very close to each other to provide the necessary momentum for any nation. It is usually said that capitalist societies have honed this particular relationship very well. Having said that, we, in the last 24 months, have seen massive problems in this particular relationship. The same holds true for even the most advanced countries. Today, the entire financial world in the US and in many parts of Western Europe is facing the wrath of the political masters. Suddenly, from a very important pillar in their societies, business in the very developed Western world, has become the villain of the piece. They are, today, being held responsible for having created massive meltdowns in many parts of the world. If you go back just 15–18 months, it seemed that the world would go into a crisis, similar to the one witnessed back in 1929. And even now, some people predict that there may be a double dip in the Western world, and, therefore, we are not out of the woods as far as the role of businesses or parts of businesses is concerned.

Do businesses build nations? The answer is an emphatic yes. There is no question in my mind that businesses build nations; both within and beyond the enterprise that they are engaged in. Go back to the post-independence era, when the country was trying to put itself together after a very tragic partition, there were early entrepreneurs. Today, we have amongst us Mr Brij Mohan Lal Munjal, who started a small enterprise of bicycles at that time. And now, he represents the largest bicycle manufacturer in India. The entire country cannot thank him enough for the amount of employment and the amount of taxes, excise duties, Octroi, and sales tax that his enterprise has generated, especially for the benefi t of the district of Ludhiana, Punjab. So, did he play a vital role in contributing towards nation building? The answer is in front of all of us. I, as a school child and, later, in early college days, rode on one of his bicycles!

There are many countries in the world, even today, 62 years after India's independence, which rely solely on import of equipment. Pakistan is a classic example.Very little is produced in that country. Many parts of Africa are reliant upon imports of basic manufactured goods. India, therefore, has done well in creating a climate where businesses can prosper, create employment, generate a lot of activity and momentum, and contribute to nation building in the form of excise and taxes. There are some remarkable businesses that, to my mind, are businesses that serve the nation, particularly that of the infrastructure sector.

Today, building of roads, ports, airports, and various types of logistics and transport serve the vital need of taking this country forward. Billions of dollars are being poured into the infrastructure sector; millions of jobs are being created; and very large amount of taxes are being generated for the government to put these back into social projects, such as those related to education, healthcare, and so on. There are businesses in the field of agriculture, which are trying to take the agricultural sector to the next level.

India used good technologies in the 1960s and 1970s to become self-suffi cient in grain. Today, we are again facing shortages and, thus, a second round of technological revolution is required in the field of agriculture. Work is being done very fervently, both through the private and public sectors, to ensure that the same passion and momentum that we have seen in other industries is produced to take agriculture forward. There is also a need for better post-harvest storage capacities. We are wasting about 37–40 million tonnes of foodgrains and vegetables and fruits, which must be preserved for the nation. Our early experiments show that whenever contract farming is employed through technology, additional yield grows to 64%. Can you imagine if a country, which has the largest irrigated land in the world and the second largest arable land, could raise its production by 50%–60%, how well we could feed our nation? I think that business has a role to play in this.

Other businesses that come to my mind are in some of the new arenas, again. Financial services—a sector represented by Mr Deepak Parekh who is present here. That sector needs, to my mind, a second revolution in the country. Here again, private sector and technology can play a very big role. Financial inclusion is an article of faith with the government. Our political leaders are quite keen that we make financial services available to the masses. I do not know how many of you are aware that in the last 62 years, India has been able to put together only 83 000 bank branches. Today, we have over 600 000 villages, but only 83 000 bank branches. There are tens of thousands of ATMs, but for a country the size of India that is not good enough.

How do you take financial inclusion to the masses? How do you fulfill the dreams of the leaders? I think business has a role to play here. Technology, especially mobile phones, is going to herald the future of financial inclusion in this country. I personally believe that every person who lives in India has the right and the need to be financially included, be it through banking services, insurance policies, micro credits for small needs in the villages, or, more importantly, financial security.We need to roll out fi nancial services across the nation, and in this, the business community has a major role to play.

I now come to my own sector—telecommunication. Not too long ago, telephone, in this country, was a luxury. I come from a town, which had just a few hundred phones. I still remember that there was a very large function organized for an exchange that was set up in Ludhiana for 10 000 lines. That was a very big event in the life of a large city like Ludhiana.When I entered the telecom field in the early 1990s, there were less than one million total phone lines available in the country, concentrated predominantly in the metropolitan cities, and within that, Delhi and Mumbai had the largest share. Today, with over 600 million phone lines available in the country, and, that too, largely in the B- and C-class towns, India has truly turned a leaf. After China, India is the largest country in the world when it comes to the number of telephones. Since the penetration is currently at about 50%, it means that we still have a long way to go. But, the good news is that we are growing at 15–17 million mobile connections every month.

Today, telephones are no more the preserve or luxury of the rich or the business class. Instead, they are meant for the masses. The mobile phone, which was invented as a rich man's tool, has now truly become an enabler for the poor man in the village. He runs his business, connects with his family, and ensures that there is no social strife. And, what is more, it allows him to be politically connected to the respective leadership. More importantly, now, through technology intervention, the administration can also begin providing services. Hopefully, in the not-too-distant future, direct money for projects like the National Rural Employment Guarantee Scheme (NREGS) and food coupons in place of rations are all going to become possibilities. To my mind, these two are massive steps for business towards nation building.

With the introduction of 3G and broadband wireless access services, the possibilities are now going to be endless. If India has to become a knowledge society, it is important that we have the necessary bedrock of technologies which are data and broadband enabled. A revolution is going to start within the next three or four months, and will continue to develop over the next three to four years. I personally believe that in the next 36 months, there will be no corner of this country without access to a broadband connection in one form or the other, mostly through mobiles, and, more importantly, through broadband mobiles. This will allow access to all public and administrative services, and will cut down on the need to approach the district administration, state administration, or others to fulfil needs for basic utilities and administration-related issues.

The good news is that the government is rising to the occasion, and is connecting with the technology providers. The unique identification or UID card project, which is being helmed and taken forward by one of our business colleagues, Nandan Nilekani, is going to rely on a lot of technologies. I think that this will become a very important service, which the two arms of the government and the business will provide the nation. I am hopeful and confident that with the introduction of technologies in various spheres, India will be able to lower the cost of services of all kinds.

Today,TERI is an epitome of success in the realm of alternative energy. For alternative energy resources like solar power to succeed in this country, the private sector will have to play a major role in commercializing these resources. World over, especially in Western countries, alternative energy has become a massive business opportunity. India is going to be no different.Therefore, while these technologies will be pushed through, research and development (R&D) and support of the government, they will be led into the marketplace by the private sector.

The question is what is the role of business in nation building? One school of thought argues that the purpose of the business is only to do business. I think, that time has gone; today, we need to do much more than just business. However, it is absolutely essential for businesses to do well, as this will serve as an encouragement for the people to move beyond businesses. But, businessmen and business houses will have to take responsibilities. These responsibilities come in two forms; one is corporate social responsibility (CSR). So, if, I am running a telecom company, and I have 120 000 towers consuming a massive amount of electricity, it is my responsibility to find sources that are more environment-friendly and efficient. I need to install technologies, which are not energy guzzlers and are good for the business, environment, and nation. A lot of work is being done in this area. For instance, we are engaging with TERI to ensure that all mobile towers in the country are environment friendly.

This is truly an important area, and I think that all corporate houses are working towards alternate sources of energy and making their own production and manufacturing services more energy efficient. Similarly, companies that are engaged in hazardous chemicals, tobacco, and so on are doing a lot of work in the area of CSR in rural India.They are trying to work with communities to produce basic inputs for their particular needs. And, CSR is now being well tracked, well recognized, and, more importantly, well rewarded.

The second form of responsibilities, which is becoming important, is philanthropy. Corporate houses need to go out and do major philanthropic activities. In India, major work needs to be done in the area of education. No government or political party can alone fulfil the requirements in this area. Everybody in the country, from individuals to corporate houses to the government, need to put their heads together to take that momentum forward. Healthcare, especially rural and public healthcare, is in a shambles. We are all aware how poor the application of healthcare is in the country. A lot of work needs to be done in this fi eld. Similarly, there are other areas, such as disease eradication, old age, and AIDS, where work needs to be done. It will be naive for the business houses to think that this is the sole responsibility of the government. I think, we need to combine forces by bringing in the best practices from the private sector and combine them with the governments' will, resulting in the best output.

In this regard, the Western world has done a good job, and very solid foundations have been laid in the last 100 years or so.Andrew Carnegie endowed a lot of his money to the Carnegie Board in Washington, a major think tank. He did a lot of work during his lifetime and the work is still being done with the help of the endowment that he gave. There is Ford Foundation, Rockefeller Foundation, and a number of other big business houses that have donated large amounts of money for social good. Then, there are the recent philanthropists, such as Bill Gates, Warren Buffet, George Soros, and many others, who have donated large sums of money towards philanthropy, so that the society realizes that businesses are working for the benefit of all.

In India, a lot of this happened in the early days. If you go back to the pre-independence and early post-independence time, we had amongst ourselves the Tatas, the Birlas, the Dalmias, many Singhanias, and a number of other large business houses engaging in social good. But, as India moved towards socialism and as taxes went up, we saw philanthropy disappearing, as most of the business houses scrambled back to protect their businesses. There was a period of time of nearly three to four decades when philanthropy was neither talked about nor practised. I think, we are seeing a significant change since the last 10 years.A lot of these changes are also being led by new industries.The one business house that always stands out is the house of Tatas, which has always tried to establish wonderful public institutions and work towards larger social good. Today, there are companies, such as Infosys, Wipro, Bharti, and many others, which are participating in philanthropic activities and trying to change the 34-year track record of businesses. My personal view is that today, society demands that businesses should develop soft edges. Business houses that go for short-term gains will not last, they will not have sustainable business, society will shun them, and their products will not be accepted.Too much of profiteering owing to market forces will not be tolerated either by the political leadership or by the society at large. Business houses need to understand that there is a symbiotic relationship between the three pillars and they are a vital part of this relationship. If the business houses fail to maintain this symbiotic relationship, then they will have to face a severe backlash. And, today, we are witnessing some such backlashes around the globe. I would like to use this medium to urge business houses to take responsibilities beyond business. Do business ethically; do it in a manner, which makes the nation proud of you and takes the nation forward.

We have opened 236 Satyabharati schools across various states and about 35 000 children are studying in these schools today. Our aim is to help enroll 200 000 students in these schools in the next 36 months. It will probably be the single largest intervention in the area of primary and secondary education in the villages for poor children, ever since India's independence.

Can a company like Bharti do it alone. The answer is an emphatic no! There are over 300 million children in the age group of 6–16. In the next 10 years, they will fall within the age bracket of 16–36 years. Each one of them will be knocking at the doors of our society wanting a job. Empirical evidence suggests that 250 million children, out of these 320 odd million, will never go to a school. Some of the fortunate ones who will go to a school will drop out within the first two to three years. Imagine a society, with no skills, no training, and no education, and we are talking about a population of 20–25 crore in the next ten years. Can the society afford such a situation? The answer is no.The government is thinking what they can do. But, we all need to contribute. If we can start to contribute our bit towards the education of children, I think we will create a massive momentum. It is my belief that business houses of today are conscious of their responsibilities; they are more conscious about their obligations. Society is making them aware of the choices that the society will make, and these choices will be made in favour of those companies that would have developed social edges to their business profiles.

I would like to end by citing the exemplary work that is being carried out by Mohammed Yunus in Bangladesh. As many of you are aware, he has developed a unique concept of social business, wherein he does not talk about philanthropy or CSR, but he talks about businesses being done not for the benefit of the shareholder but society at large. I hope to see some of those models developing in this country as well.To my mind, this idea of social business is extremely powerful. Some such ideas are developing in this country too, but it is too early to talk about them. However, I am hopeful that they will show the way to many new and young entrepreneurs and introduce them to the concept of social business, as against philanthropy, because in philanthropy, a rupee has a very short life. Once it is gone for charity, it ends there. But, the way Mohammed Yunus looks at it is that his one rupee that is contributed to social business has an endless life.That one rupee gets regenerated into rupees but the business is done for the society at large. Grameen Bank and Grameen Phone introduced by him, which have gone commercial, are good examples to follow.

So, in summation, I would say that these three pillars need to have a very strong relationship with each other. The political leadership needs to recognize the limitations that the businesses have in moving into the social space and the businesses must know that they will have to ensure that the political leadership wins every time in their constituency, which is the society at large, by being responsible. The model that seems to be developing between the political leadership and a very alive and awakened business community at large holds a great deal of promise for business to participate actively in building a nation.

Thank you.