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Lal Bahadur Shastri Memorial Lecture

New Delhi, December (2009)

A very good afternoon to all of you, I am indeed glad to be here this afternoon, after having been conferred the prestigious award instituted in the name of the great Shri Lal Bahadur Shastri Ji. I am also delighted that Mr. Anil Shastri and Mr. Mishra have invited me here this afternoon to share some thoughts on why I feel that business has a very important role to play in the nation’s development.

But before we get into that routine just want to say a few words about my own impressions - a young person or young child’s impression - about late Shri Lal Bahadur Shastriji. It was a very short period for which he governed this country. It was much shorter a period than anyone had imagined. But in the very short period, he touched many hearts. He inspired the nation, which was struggling to even put enough food on the table for the country to survive. And I remember during the short period of two years he had appealed, not through the numerous TV channels that we are used to seeing these days, but through regular radio channels appealing to the citizens of this country to start living on one meal a day. Even a young person like me who was not more than eight years old at that time was touched by the speech and for several days I also followed his advice of living on one meal a day. I still remember the slogan of Jai Jawaan, Jai Kisan. Two short sentences, four words but it fired up a nation. The whole nation rose and picked up those valuable two short sentences as very vital for this country’s development. We were having an extreme negative situation on the India’s border with Pakistan and you know the 1965 war, was a very difficult war which India had to fight and more importantly when we had hardly any food left on the table.

So Agriculture through his slogan on Jai Kisan and security through his slogan on Jai Jawan became two vital points for the entire country. The entire nation rose like one. That was the inspiration that Shastriji showed us. He also looked at many other complex issues of the country related to food security which has become very fashionable as we discuss today, but the early seeds of rejuvenation was sown during his short period of Prime Ministership. We saw the benefits of Technology and the Technology Intervention in the area of agriculture. Some of those Initiatives have put India in a very good position as we have grown from being a struggling nation to one which is very important in world politics today. I therefore pay my tribute to the great son of India and as you guys have learned it, as Rakesh (Mittal) mentioned this morning, I am indeed truly privileged to have my name associated with a stalwart like him.

To my mind, there are really three pillars which can claim to provide support to the nation building process. One, the government or called the political leadership, the civil society - all of us representing the civil society here and Business or the businesses. These are the three strong pillars on which the development of a nation rests.

For a long period of time, if you go back into the 60’s, 70’s and pass around the 80’s there was a very clear thinking, a very strong socialistic mindset that nations can be built only by the intervention of the government. Perhaps given the scale of India’s business then which was rather small, there was no other option. If you remember the famous statement of Jawaharlal Nehru, which described the public sector as the ‘leading lights’ of the economy or rather a very strong pillar on which India’s economy rested. He wasn’t far from truth because at that time investment required to develop serious Industrial Infrastructure could only come through Public Sector Units. There were a few initiatives of Tata’s, Birla’s and the Dalmias but principally the economy was written by public sector. But a lot has changed since then - our governments, our politicians and the way we are governed. This has enabled private sector participation in nation building.

Does Business contribute in nation building or is business representing only greed for making money for their share orders? I think this is a debate which is settled in favor of businesses, as it being an important ingredient or have gone to play a very important part in building in a nation.

I grew up in a political family. In fact I do fondly remember, I have brief clips of when I was 7 or 8. I do not remember the date. When I try to go back into the time into some of the family album, I see my father introducing Shastri ji to some people in Ludhiana. I was standing there as well. So maybe you (Anil Shastri) would be able to find out what was the period of his travel to Ludhiana. Very clearly the industrial city drew somebody like Shashtri ji to pay a visit in the first place. In his mind and heart, he believed in the participation of Industry in nation building, howsoever small it might have been at that point of time.

Where is it today?

Let us look at some of data points and I will also talk about telecommunications later which is my industry. But let us look at some of the new developments taking place in nation building.

Mr. Kamal Nath says he needs 20km of roads every day including Saturday and Sunday. Effectively, he needs 7000-8000 km of roads to be built during a year. Several new ports are being developed to develop our export and import capabilities. Power shortages are the order of the day. Despite our growth of the power sector we still face power shortages. Thus if you look at every aspect of our infrastructure there is a lot to be done. In the current five year plan there is a total of US $500 Billion which we have to spend on our infrastructure. It is expected in the next plan to go up to a trillion dollars. So in a span of 10 years this country is going to see US$1.5 trillion of investment on hard infrastructure. India will therefore be one big construction site for about 10 years, if not more. China has gone through that phase and has created robust and marvelous infrastructure in the last 15 odd years.

Who is going to do that in India?

If the government alone could do that on its own, it would have done it by now. I think the answer is very clear. It has got to be a public private partnership. Fifty percent of the 20Km road is going to be built by the private sector. That is a lot. 10Km a day!

Power- most of it is now coming through private sector participation. Many airports - Delhi, Mumbai, Hyderabad, and Bangalore have come up through this mode. Most of the airlines are now run by private sector. Today, more capacity is being delivered to you for travel within the country and abroad at cheaper rates. Private sector has helped in every aspect of our infrastructural services.

If you have observed mobile phones, see from where we started and where we stand today and where we will go from here. 10 Years back we used it scarcely, 5 years back it was still a middle class tool, today it is in the hand of every person. Somebody may not be able to afford to own a phone but needs access to a phone to talk. Five Rupees, 10 rupees, 50 rupees depending upon whatever you can afford you can charge your phone and talk every month. And this is not only in urban; people are being served in deep rural areas. 85% of India’s population is now followed by mobile signal. Billions of dollars have been invested in the industry sector to make this possible.

Some of you are young, but many of you are old enough to remember that Members of Parliament were writing recommendation letters for phones. It was a luxurious privilege. Many of you booked phones hoping that one day when your son grows up, he will have a phone of his own. If you look at this, it was not too long ago. It happened only 15-20 years back. ….. we all forget, we have these short memories.

The telecom infrastructure has been set up. To my mind, it is a very important piece of foundation for nation building.

What we have seen so far is almost nothing. It is just voice communication. Some bit of it being messages for those who know how to send and receive sms. Broadband wireless is going to be the order of the day. Telecom networks would allow money to be transferred within the country and abroad. Today, when millions of migrant labourers from Bihar and other states like Orissa travel to Punjab and Haryana during harvesting seasons, almost on a daily basis, envelopes full of money like 500, 1000 and 3000’s are sent through runners to their native places. There is no need to do that anymore. On mobile network money, five Rupees to 5000 can be sent in a secure manner. The R.B.I has now allowed money transfer up to a limit of 5000 rupees.

Billions of dollars are transferred across the country in the shape of small payments for various reasons - for sickness, for school fees, for child birth, for marriage even for death and this money have to be moved across the country in a quick and timely fashion and there is no other network in the world except telecom which can do it. Telecom and mobile network is the only one which is not only fast but also secure. You can have an example of my own company which has 1.2 million outlets where you can top up your mobile phones. All banks’ ATMs put together won’t even be a shadow of this number, which means technically you can go to any of these top-up points, pass on the money to be sent to someone else or receive the money in a secure manner. This is tested, it is working and we are hoping that the R.B.I, the banks and financial policies give us the go ahead. M-pesa is a similar service running successfully in Kenya, where all the mobile operators are offering this service.

Financial inclusion is very important part of our nation building. Out of the 500 million of mobile customers, over 200 million customers do not have a bank account. Many of them may perhaps never have a bank account and to my mind they might not need a bank account. Through technology you can open an account, literally on the mobile phone. You can do a lot of things with your mobile phone - Music downloads, entertainment clips, emails and many other things. This ubiquitous tool has shown that we have a very important platform to do many other pieces of India’s nation building. So see this industry not only as a telephone and mobile Industry but as one of the ingredients of an important platform for nation building.

Let’s now shift to Agriculture. 35 million tons of India’s fresh produce is going waste every year. 35 million tonnes - If you all put a value to that, that value will be 60-75 thousand crores. For a nation which is poor, which still has 25% to 30% of people living below the poverty line, this is a colossal waste which we cannot afford. Can the government alone manage to ensure that there is no waste? The answer to it is no.

What is required for that?

You require very large scale investment in cold chain and supply chain investment. The government has enabled that. And if you have watched the last few budgets, in every budget government has brought in benefits - tax rebates and exemptions and that’s what the government needs to do. We have made some efforts in this area but they are slow.

India has sunshine throughout the year. It has the second largest arable land in the world, it has the largest irrigated land and yet we are not fully sufficient in food. With all these assets, we should not only be able to feed our 1.5 billion people but should become the bread basket of the world. For that we need a revolution, a revolution not necessarily on farm bed, but post-harvest also.

The Prime Minister was in Washington D.C. recently and he specially asked the American companies to come and invest in the area of post-harvest. So as soon as the harvest is done for fruits, vegetables and general crops, we need to focus on the post-harvest to ensure that they reach the table of our citizens?

To my mind business can play a fantastic role in this particular field. I think, we need more help from the government in terms of resetting some of the archaic laws. It is happening from the central government. Some states have come around to dismantle the APMC Act. Much more needs to be done.

The upcoming GST, which would unify tax rates for goods and services, will assist this process further. But we must build this very important pillar and this is the Jai Kisan pillar. We need to ensure that farmers are remunerated well and the post-harvest piece is taken care off.

One of the important things the government will have to look at in this area is the Foreign Direct Investment in retail. Retail will automatically ensure that supply chains will come into place faster.

Let’s look at some of the other areas of economic activity.

IT is one of the important industries in the country. Millions of jobs, as you know, have been created and many of you are working in the IT and IT services. This is one area for which late Shri Pramod Mahajan used to say had flourished because the government did not intervene in this area. India’s IT story as all you know is a world story. The world is either working with an Indian IT company or the large IT companies of the world like IBM, Accenture are putting up big shops here in India. Thousands of young minds are engaged in this area.

So therefore the question whether business is doing vital work in the area of national building is already put to rest.

And now, how do we move from a business which only looks at profit for the shareholders? I’d like to recall a recent speech given just a few days back by Nobel laureate Mohammed Yunus, from Bangladesh when he was addressing the joint session of the parliament. He spoke about social business. I was very touched with that particular model. He said that Philanthropy is a onetime event. A rupee which is given in philanthropy is a one time event, but a rupee given to a ‘social business’ is sustainable. It keeps generating more jobs, more momentum. He gave a wonderful example of Grameen Bank, which started by lending very small amounts of money to the poorest of the poor and become an iconic success on the basis of which he was awarded the Noble Prize.

I think a lot of businessmen, a lot of youngsters in business must look at social business as well. Can business be purely found on profits and gains for the shareholders? Certainly they are required but social businesses can also be adopted which are not loss making but which are businesses in which the delivery is of satisfaction. I think that this business model has to be developed in this country. And I therefore really urge all of you who are students of management here to listen to the speech of Mohammed Yunus and read through it and you will find that it is very very valuable for your young minds?

So what can businesses do beyond business?

The much touched talked about area is corporate social responsibility. Now that is something which is almost a given now for any good company. A tobacco company will have to do green stuff, they will have to go and provide support to climate change issue, green technology, go into businesses that in some sense compensate for the business they do. You also need to have great corporate governance. That is CSR.

If you are using electricity, consume less power, consume less energy, ensure that all that we do is sustainable in the market place and civil society accepts it. Today civil society gives special attention to those companies who are engaged with CSR activities. But that is really to promote your business and making your business more sustainable and more acceptable in a civil society.

Let us look at Corporate Philanthropy through which you do pieces of Nation building.

There are fantastic examples around the world of Corporate Philanthropy. Bill Gates foundation is one fine example, with which they have dedicated over US$30 Billion of their wealth to programs which have made huge impact on society. They have even gone outside their home country. They have fantastic programs. They are also working on mobile money transfer to ensure that poor people are served. But their main thrust area is Health Care and in India HIV Aids. It is the same in Africa and many other countries.

Warren Buffet has decided to use someone else foundation, in this case Bill & Melinda Gates Foundation to channelize his resources to ensure that more and more work is done in this particular area.

We have set up Bharti Foundation which was mentioned earlier this morning. 237 village schools are already operating and more are being put out. Of the 30,000 children 70% belong to the SC/ST and OBC categories. This is the single largest corporate intervention in the history of India where one company has gone out and taken upon itself to reach out to over 100,000 children, especially the girl children and more importantly from the segments of the society which do not get good education. These 100,000 children who will be admitted in the system, batch after batch, to my mind will contribute to nation building. Some of them will be engineers, some of them scientist or doctors and therefore it is becoming very important that this country in itself and the businesses focus attention on the area of education.

There are 320 million young minds at the age of 6-16 today. i.e. 32 crores. About 75-85% of them will never go to high school. And some of them who will go to school will drop out in one or two years. If out of this 32 crores, 20-25 crores will never complete their education, then what will happen in a 10 years’ time? In 10 years’ time these kids will be in the age group of 16-26. They will either be a productive global work force or be a burden on the civil society. You have already seen the first sight of problems coming up in the areas where we have seen the Maoist movements coming up.

These are all indications of what is coming up in 10 years. If we do not handle this particular area, this nation will be in difficulty. And this is where businesses need to walk shoulder to shoulder with the government. We have Kapil Sibbal, a fantastic minister, a young minister with a very sharp mind who is trying to set the agenda in educational reform. I hope India will see it in the next two years - a major reform for universities and investment in education. Because the window is of 10 years. In these 10 years we will fix this and the good news is that we don’t have to give higher education for all. We can focus on skills growth.

The world needs certified doctors, certified nurses, certified electricians, certified chefs. We will see millions of people going outside for work and send back money to the country adding to our foreign reserves.

Birlas, Infosys, Wipros, Bharti, all of them are moving into this area to make an impact. Are these businesses doing enough in this area? The answer is mixed.

Its still early days. Many people ask why we don’t see stories like Bill Gates or Waren Buffet in India. I have an answer and in fact a very frank answer with all the Indians sitting in the room. Firstly, there is a cultural barrier and a difference between Western and our Cultures as to how we look at philanthropy. If you see after the Independence, there were lot families who saw poverty all around them, and engaged actively in giving. The Tata, the Birlas, the Dalmias, set up colleges, hospitals, clinics. But this stopped suddenly. In the socialistic world, as we developed in the late 60’s, 70’s and early 80’s taxes were high, profit was a bad word, and it was difficult for businesses to do their own business. Today, we are seeing the first signs of change because there is confidence. India is on a permanent economic development path. In the worst case scenario, in the bad year we are seeing 7% growth rate. In good year India will grow at 9-10% which means this will be a country of nearly 35-40 trillion dollar economy by 2040. So in 10 years’ time we will see India rise up to be the third largest economy in the world after China, which will probably be number one by the time. But that’s going to make serious difference to the lives of the Indian people. Each pocket will be growing by 40 times. India’s economy is of trillion dollars today. That’s a massive rise. So now it’s giving the confidence to Indian businesses that they can share some of the profits they have earned. They are becoming surer, more confident that this growth is going to continue. The government needs to ensure that the economic climate is such that people are confident and secure. Corporates will come forward to set up more libraries, more clinics, and more hospitals.

Coming back to the cultural issue, Indians like to do everything for their children. The parents will scrounge, save and live a very difficult life so that their children can get a better life, get better education than what they have got in their lives. That’s why the entire direction is towards saving for the children. Whereas in the western world, children leave home at 15, 16, 17 and parents have very little emotional connect with them later in their lives. The parents start directing their money to causes which they believe in, such as charity. The good part of the Indian family system is that parents take care of their children, and the children take care of their parents. But philanthropy has definitely taken a back seat. That’s a cultural piece; it will definitely take a long time to change.

But as far as businesses are concerned I see a very strong connect in the area of giving because as Churchill said ‘living is about getting, but life is all about giving’.

And in my concluding statement I would like to say what Gandhiji said “I shall pass through this world but once. Any good, therefore, that I can do or any kindness that I can show to any human being, let me do it now. Let me not defer or neglect it for I shall not pass this way again.”

So with these words I would like to say that businesses are an integral part of a nation’s progress. The three pillars - the government and the political leadership without which nothing will move because they are the enablers of the ecosystem, the civil society - consisting of all of us, and of course the businesses themselves will move any nation forward. So I do hope the respect and credibility that the businesses are getting now will continue in the future as well. And more and more people engaged in businesses will be conferred with awards like the one I have received today which is a very important symbol of honor for any individual.

I wish every one of you my very best and urge everyone to participate in your own way in this very important nation building process.

Thank you.