Building Virtuous Cycles Securing Our Future - MyCII

1INDIA INCLUSIVE

Building Virtuous Cycles

Securing Our Future

November-December 2010

INCLUSIVE GOVERNANCETo Vote Is to Voice The Force of FranchiseRemarkable Scorecard Irreversible Roadmap

INCLUSIVE DEVELOPMENTUnlocking India’s Potential Bridging the Divide Maximum Impact Right ObjectiveOpportunity, Not Obligation Poor? Yes. Bankable? Yes.

INCLUSIVE ENTERPRISEBuilding the Universal Brand Revamp, Redistribute, Ruralise Innovate or Perish Innovate To GrowThe Lego of Development Ride the Cloud

INCLUSIVE SOCIETYPlaying Together In the Right SpiritThe Indian Salad Bowl Include or Be Damned

3INDIA INCLUSIVE

In the words of a US-based strategic think-tank, India is a country of ‘endless unrealised potential’. Nothing bore this out better than the resilience of the world’s largest democracy in the face of the global financial crisis. If proof were required about its hidden strengths, this was it. As US President Barack Obama rightly said, India is no longer an emerging power. It has arrived.

India today is on the cusp of an immense new era, the magnitude of which is hard to grasp right away. But take a country of a billion people, throw in technology, resources (human, financial, natural), and a fierce longing to get ahead, and what you have is a potent cocktail for success.

The obvious signpost that indicates this is the software industry and its icons, which has given the country tremendous soft power across the globe. Less obvious but equally significant signposts dot the landscape. Fashion icons like Ritu Beri and Azeem Khan; Bollywood yes, but also a Mira Nair and Manoj Shyamalan; Rehman but also a little-known choir from Shillong. Whether food, wine, literature, or Hussain and Souza, India is selling.

Yes, India has left the Hindu rate of growth far behind and is striding ahead. But the India story is about much more than just GDP.

To surge ahead economically would have been easier if oft-discordant democratic ideals had been sacrificed. If a noisy press had been silenced, or irksome non-governmental bodies put away. India, however, chose to take the long and difficult path. This path picked up every wayfarer and limping pedestrian and allowed him or her to join the race to progress.

What adds colour to India’s emergence is its mind-boggling diversity. From costumes to languages to food to customs, each region is a nation unto itself. Every Indian grew up with the motto of ‘unity in diversity’ dinned into her head. It is this unity, this inclusiveness, which, for all its clichéd repetitiveness, is at the core of India’s resurgence.

Given her existing social inequities, India is admittedly finding the road challenging. Education, job creation, infrastructure building, and poverty elimination continue to be key priorities. Rapid strides are required in these areas and the process is on. We are winning significant battles along the way.

Fundamental changes have been made to regulatory regimes. Banking is more accessible. Investment in markets and infrastructure has been eased, while the Right to Information Act has given every Indian a voice. In job

Incredible. Inclusive. Inviting.creation, the rural employment guarantee scheme has thrown up some phenomenal successes. Technology has been harnessed in no small way. From mobile phones for Kerala fishermen to ATMs at every street corner to Project Adhaar, which will bring unique identification numbers to every citizen, India as we know it is set to change rapidly.

All this is not limited to large cities; small towns and villages are now participating in wealth creation. Rural markets have become more accessible and more lucrative as disposable rural incomes grow. This is nowhere more obvious than when you see that the setting for most mobile phone ads is a village. Or when the hero of a scooter commercial is clearly a small town guy.

When Professor Klaus Schwab, Founder and Executive Chairman of WEF described India “as a country of hope which is combining democracy, strong economic growth and social development”, he was spot on. This is what we want to convey in Davos.

That India, with all its contradictions is a working story. That India is a Bollywood wedding—colourful and chaotic—but happy, happening and successful. India is cool.

This all-embracing, dynamic vision is India’s vision. And when the world buys the India brand, it buys the ‘Inclusive Growth’ brand. India is getting ready to set a global agenda and direction. And that is what Davos must prove.

Chanda Kochhar, Chairperson, CII National Committee on Banking, and Managing Director & CEO, ICICI Bank Limited and Co-Chair, WEF Annual Meeting 2011; Mukesh D Ambani, Chairman, Reliance Industries Limited; Sunil Bharti Mittal, Group Managing Director, Bharti Enterprises and Hari S Bhartia, President, CII and Co-Chairman, Jubilant Life Sciences will be joined by other stalwarts of India Inc in setting India’s “Delhi to Davos” agenda of sharing successes and showcasing opportunities in the challenges of our Inclusive Growth.

Accomplished Indians from different walks of life will take part in the conversation with the world at Davos. We will talk to the world through newspapers, billboards and transport media. Engage with domain experts at panel discussions Give the world’s leaders a taste of our cuisine and invite them to join in the festivities at The Grand Soiree.

Free to aspire, achieve, excel and celebrate. We will take every Indian’s dreams to the global stage at Davos. Join us. Share our vision for the future. Be one with India.

PRemIum PaRTneRS

PRInCIPal PaRTneRS

aSSOCIaTe PaRTneRS

For more information, please write to [email protected]

Public Diplomacy DivisionMinistry of External Affairs

Government of India

26 – 30 January 2011 • Davos, switzerlanD

5INDIA INCLUSIVE

INCLUSIVE ENTERPRISERevamp, Redistribute, Ruralise 38The mantra for marketers if they want to touch the consumer at the bottom of the pyramid. HarisH Bijoor

Innovate To Grow 42Innovations must power inclusive growth to cater to lower-end customers. arvind saHay

Ride the Cloud 46How technology can deliver solutions to the millions in India who fall below the development radar. aravind sitaraman

INCLUSIVE SOCIETYIn the right spirit 52Inclusive sport can be an effective instrument to bridge the gaps between the societies that we live in. Hemant dua

LAST WORD Include Or Be Damned 56Really, there is little choice today but to be inclusive. India shows how, but much remains to be done. sandipan deB

INCLUSIVE GOVERNANCEThe Force of Franchise 10 For Nehru and Sukumar Sen, a fully inclusive electoral process was an act of faith. roHit Bansal

Irreversible Roadmap 14 For a democratic country, and especially a developing one such as ours, inclusive governance is unavoidable if the democratic set up is to survive. professor manoj pant

INCLUSIVE DEVELOPMENTBridging the divide 22Be it in urban housing, education or financial services, the nation is chanting the mantra of prosperity for all and adopting unique solutions to its daunting social and economic challenges. jayant sinHa

Right objective 26Infrastructure plays a critical role in ensuring that growth is inclusive, and that its benefits trickle down to all sections of the society. ricHard rekHy

Poor? Yes. Bankable? Yes. 30Financial inclusion can be profitable, if banks see the opportunity quickly and start to innovate. janmejaya sinHa

ESSAY India’s economic moment 02 Growing emphasis on inclusive development will aid India’s dynamism nandan m nilekani

published by Confederation of Indian Industry (CII) research, content and editing: design and production: photographs: corbis, Gettyimages, uzma mohsinprinted at dot vision print

3INDIA INCLUSIVE

In the last few years, India has emerged as an economic force to be reckoned with. Since liberalisation, the country’s extremely young, entrepreneurial population has helped sustain a high growth rate for the economy – growth that has continued at an impressive pace despite the global economic crisis and recessionary forces across the world. As a young country in an aging world, India’s surging productivity, combined with high returns on investments, has attracted funds from across developed markets. This has made India’s growth story an important part of global recovery and development. The country’s role as a ‘Goldilocks economy’, where growth is high yet stable and sustainable, makes it an attractive investment destination. And its growing emphasis on inclusive development will aid India’s dynamism in the decades to come.

Growth has enabled inclusionIndia’s growth, coupled with technology-led reforms, has contributed to a significant surge in the country’s revenues. Reforms, such as the Tax Information Network, led to a growth in India’s direct tax revenue from $16.2 billion in 2001 to $83.9 billion in 2010 and the move to the Value Added Tax and a unified Goods and Services Tax will further sustain the rise in tax collections.

The surge in revenues has, in turn, enabled an increased focus on inclusive development. Since the early part of this decade, India’s government has made inclusive growth – ‘development that is of, for and by the people’ – an explicit priority and has, accordingly, allocated funds to a variety of welfare programs in education, health, employment and food. The Sarva Shiksha Abhiyan and the Right to Education Act aim to bring education to all Indian children. Maternal and child health have been prioritised through the direct benefit scheme Janani Suraksha Yojana (JSY), while overall health investments have received a boost through the Rashtriya Swasthya Bima Yojana. The government has also introduced the Right to Employment through the National Rural Employment Guarantee Act (NREGA) and pensions for the aged and disabled. The foundation for better food security for the poor is being laid through the Food Security Act.

Other broad-ranging efforts have aided the cause of inclusion. One example is the Right to Information Act, which has helped identify denial of services among the poor as well as diversions of funds. Another is the project to issue unique identity numbers (Aadhaar numbers) to residents across India. This is expected to improve the functioning and accountability of India’s welfare schemes and make basic services, such as banking, more accessible to the poor.

The results of these efforts are now becoming apparent. In education, enrolment rates in schools across India have soared and drop-out rates have fallen even as schools have seen higher percentages of students move to upper grades. It’s been assessed that the NREGA has already helped reduce distress migration of the poor from rural to urban India and has helped raise the minimum wage for workers across the country. Schemes like JSY have increased the number of poor women delivering children in hospitals and helped provide them with funds for nutrition and care for themselves and their children.

The objective of enabling inclusive growth is also reflected more broadly in India’s investments and its changes in market regulation. As India’s market economy has matured, it has witnessed the rise of institutions that enable millions more to participate in its development. Technology-led reforms have made India’s trading markets more accessible and highly transparent. India’s commodity exchanges have built a large, rural network, enabling farmers to transact and discover prices. The opening up of banking and telecom services has expanded access to these services to people across the country.

India’s investments in infrastructure have also expanded at a fast pace. Capital formation in infrastructure is estimated to rise from 3.5% in 2001 to 7.5% by 2012. The cumulative investment in infrastructure between 2007 and 2012 is expected to touch $500 billion, thereby bringing more people across India’s cities, small towns and villages into the economy.

Other emerging regulations reiterate the emphasis on inclusive growth. India’s emerging Direct Tax Code is expected to make tax collection fairer and more transparent; the introduction of ‘one person’ companies in the new Companies Bill is set to make it easier for innovators and small entrepreneurs to operate; and reforms set to expand investments in higher education will give more people across the country the chance to get a college degree.

Inclusion has helped drive growthThe focus on inclusion has, in turn, helped drive growth across India. The spread of infrastructure across India’s small towns and villages is aiding industry expansion and wealth creation. These smaller towns and poorer states have now become the fastest growing sources of tax revenue in India. As rural markets become more accessible thanks to infrastructure and welfare investments, Indian businesses have reached out to the poor through low-cost service models, innovative products and affordable purchase sizes.

India is creating a virtuous cycle of inclusion and growth. A cycle that is critical for sustained progress and for the country’s transition

The common man is creating markets, driving investments and firing up the engines of the economy

The Rise Of Inclusive India

NANDAN NILEKANI is chairman,

unique identification authority

of india and c0-founder of

infosys technologies

ESSAY

FaRm TO maRKeT: Commodity exchanges are building large rural networks for farmers to discover prices and transact

5INDIA INCLUSIVE

In telecom, India has become the country with the lowest tariff rates in the world, driven by a market where it has become profitable to target the poor consumer: Ninety nine per cent of India’s new telecom consumers buy prepaid SIM cards and the typical recharge rate is a mere 20 cents. This has expanded the telecom market to 700 million telecom connections in 2010 from less than 5 million in 1997. Similar pro-poor innovations across the country are contributing to growth: including the Tata Nano, the cheapest car in the world; the 10-cent detergent and shampoo sachets that have become a mainstay of India’s FMCG market; and low-cost healthcare through hospitals, such as Aravind Eye and Narayana Hrudayalaya.

Building a virtuous cycle of growthAcross India, significant economic growth is thus being driven by people emerging out of poverty. This growth, in turn, is funding programs and initiatives that will bring even more of the poor out of poverty. India is thus creating a virtuous cycle of inclusion and growth: a cycle that is critical for sustained progress and for the country’s transition into a developed nation.

The benefits of enabling a more inclusive economy will continue into the coming years. The push from the millions of people escaping poverty, combined with efforts to bring banking and other basic services and infrastructure to the poor, will drive productivity growth. It will also foster entrepreneurial forces within poor communities, helping create and sustain a wave of innovative and grassroots business.

The need for urgent actionLike all opportunities, however, India’s chance to build a growing, inclusive economy will not last. As the country ages, investments in welfare, infrastructure and industry will have slower returns and the country’s present, impressive growth rates will be difficult to sustain. India is now experiencing a favourable economic moment—a time when the country has a significant demographic dividend it can leverage. The access to television, the mobile phone and increasing migration have allowed people to witness the promise of growth from afar and aspirations have accordingly surged.

The benefits of these trends, however, can falter if the promise of development is not realised and India is unable to provide people the chances they crave in education, employment and income growth. If India does not implement the right programs now, its strengths will turn into weaknesses – its demographic dividend will result in millions more unemployed as well as a rise in inequality. Then, the country’s diversity will fuel new divides and discontent as people’s aspirations are frustrated. The benefits of growth must, therefore, be made quickly accessible to India’s billions, if development is to be stable and sustainable.

The rise of inclusive India is a heartening shift in the country’s development. It is an approach with democratic roots and one that leverages the massive demographic dividend the country is beginning to experience. The locus of this growth is the ‘everyman’, India’s common man, who is helping create and invest in markets and fire up the engines of the economy. In the coming few decades, India will continue to experience a rare window of opportunity, which it can take advantage of to drive such growth. The opportunity for inclusion is uniquely now and is waiting to be fully realised.

The benefits of growth must be made quickly accessible to India’s billions, if development is to be stable and sustainable

ESSAY

COnSumPTIOn STORY: a surge in incomes and consumption is buoying Government’s revenues and enabling inclusive growth

9INDIA INCLUSIVE

Inclusive Governance

Governing a multicultural nation of 1.1 billion people, spread across 3.3 million square kilometres of land isn’t an easy task. Yet in the 63 years since Independence, India has not swayed from its democratic agenda, only deepened it.

Progress has been achieved not rapidly, but steadily—keeping the interests of the less privileged in mind. This section paints a vivid picture of India’s inclusive, vibrant democracy.

BY THe PeOPle: a belief in the right of every individual to stand up and be counted is what lies at the core of India’s democracy

11INDIA INCLUSIVE

In his magisterial narrative on the story of modern India, historian Ramachandra Guha describes the young nation’s first elections as an act of faith.

Less than five years after its birth, here was ‘a nation meaning only two things to the world, famine and Nehru’, “choosing to move straight into universal adult suffrage, rather than-as has been the case in the West – at first the right to vote to men of property, with the working class and women excluded from the franchise until much later.”

Surely, the world couldn’t think of this as a serious enterprise. Bluntly stated, out of an electorate of 176 million (women and men over the age of 21) about 85 per cent couldn’t even read or write. Even if they were ever to be identified and registered, how would one design party symbols that they could fathom. How would one find the material where 224,000 polling booths needed to be constructed, 2 million steel ballot boxes had to be made, 380,000 reams of paper had to be compressed just to print the rolls, which 16,000 temporary clerks had to spend 6 months merely to collate and type, not to mention training an army of 56,000 presiding officers, 280,000 helpers, and 224,000 policemen to guard against violence and intimidation.

But Nehru and his able Chief Election Commissioner Sukumar Sen seemed never in doubt whether “a task of such colossal proportions” (Richard L Park, Far Eastern Survey) was worth the trouble. In his inspiring prose one year before Independence, the young leader had written, “We are little men serving great causes, but because the cause is great, something of that greatness falls upon us also.”

To Sen, inclusion was that cause.

Herculean laboursThis was easier said. As Guha painstakingly collates from Park, Irene Tinker, Mil Walker and Sen’s own ‘Report on the First General Elections in India’, the huge, diverse and horrendously difficult terrain was spread over a million square miles. In the case of remote hill villages, bridges had to be specially constructed across rivers. To reach small islands in the Indian Ocean, naval vessels had to be used to transport the electoral rolls. “In northern India, many women wouldn’t give their own names, but wanted to register as A’s mother or B’s wife.” In this ‘curious senseless relic of the past’, Sen and his men had to swim against the tide of social tradition. But they remained adamant to get the names of the women “in place of mere descriptions of such voters”. Nonetheless, some 2.8 million women voters had to be finally struck off the list. Furore erupted. But Sen

considered this to be a “good thing”, “for it would help banish the prejudice before the next elections, by which time the women could be reinstated under their own names.” Clearly, the larger cause of inclusion was met thanks to steel and early seeds of conviction.

A nation committed to including its women couldn’t leave behind the illiterate. In Western democracies, most voters would recognise political parties by name. Here, pictorial symbols were employed to make the task easier. “Drawn from daily life, these symbols were easily recognisable: a pair of bullocks, a hut, an elephant, an earthenware lamp.”

Just so that the illiterate wouldn’t get confused at the last mile, each party was granted a separate ballot box, so that the voters could simply drop their papers into it. This would be unimaginable and hugely wasteful in the multi-party scenario today, but in that context, this was the right thing to do. On their part and in their conviction for the need

of authenticity, Indian scientists worked out a variety of indelible inks. Ink from a total of 389,816 phials was applied to the voters’ fingernails; it stayed there for a week, denying mischief makers and impersonators a second chance. The PM had wanted the elections (4,500 seats including state assemblies) in the spring of 1951. But Sen viewed this understandable haste with some alarm. He and his men first spread the message of the novel exercise. A documentary on franchise and its functions, and the duty of the electorate, was shown in more than 3,000 cinemas.

More were reached via All-India Radio, with discussions of the ideas in the constitution, the purpose of adult franchise, the preparation of electoral rolls and the process of voting. While India was undertaking this grand enterprise, Guha reminds us that the French were fighting the Viet-Minh and UN troops were thwarting a North Korean offensive. In South Africa, the Afrikaner National Party had disenfranchised the Cape Coloureds, the last non-white group to have the vote. The year had witnessed three political assassinations: the king of Jordan, the prime minister of Iran, and Nehru’s opposite number in Pakistan, Liaqat Ali Khan, nine days before the first votes

Mind-boggling statistics, but the elections are pulled off each time. And successfully

INCLUSIVE GOVERNANCE

IDenTITY FOR all: an Indian villager looks at a web camera as he is photographed for an ID card during a pilot project of the unique Identification authority of India (uIDaI)

ensuring that every single Indian gets a voice has been the democracy’s single most powerful act of inclusion

To Vote is To Voice

ROHIt BANSAL is ceo and

co-founder, india strategy

Group, Hammurabi & solomon

consulting. He is an alumnus

of st stephen’s college and

Harvard Business school.

were cast in India. India’s former colonial masters were staging an essentially two-party general election, with Churchill seeking to bring the Conservatives back. Nehru, in turn, faced a variety of political ideas and greatly gifted opponents. The genius of the Indian elections ensured inclusion of a dazzling kind: J B Kripalani’s KMPP and the Socialist Party, best known for its leading light Jayaprakash Narayan; BR Ambedkar, who had resigned from Nehru’s cabinet to revive the Scheduled Caste Federation; and the Jan Sangh, which claimed that the Indian Muslim was a problem minority, which has “not learnt to own this land and its culture and treat them as their first love” and that Nehru was appeasing these certainly unpatriotic Muslims! (Craig Baxter, The Jana Sangh)

Fiercely inclusiveIt is comforting that a proud patriot, S Y Qureshi, a Muslim, now leads India’s Election Commission in its diamond jubilee celebrations. Speaking at Yale recently, the erudite, self-confessed music buff had little trouble explaining why his organisation has to be “fiercely autonomous”. The word ‘inclusion’ means a world here: in a conversation with this writer, Qureshi’s face lights up and he breaks into a rich account of anecdotal evidence.

Surely, inclusion is the mission to reach the last voter. Inclusion is when in an electorate of 714 million (Europe has 449 million, Africa has 566 million, North and South America together have 560 million) you go after the 37 voters in Ladakh at 16,000 feet after two days of walking. You don’t care if 37 votes (13 in one polling booth and 24 in another) would perhaps make no difference to the ultimate result. Your walking party uses satellite phones to stay connected to the headquarters. They cannot return in time

for the results of the General Elections to be declared (2009). So, a special legal arrangement is invoked and a counting system is evolved then and there before the community, and the results are transmitted before any others in the entire country. Inclusion is when every Indian who turns 18 on 1 January 2011 won’t have to wait for a year in registration formalities. Instead, she will have a new voter ID card in simultaneous functions across 900,000 polling stations before the 25th of that month.

Inclusion is about the weaker sections. Here, India has ensured that several constituencies are reserved. We use helicopters and elephants to ferry electronic voting machines (EVMs). In a country where the differently-abled run into millions, ramps are provided in each polling station. There are separate queues for women. Women officers check their identity. In some areas, women have separate polling stations. Those in burqa have special arrangements. The infirm are included, thanks to a companion being allowed inside the polling booth.

To ensure the elderly have it easier, polling is invariably on the ground floor. EVMs have Braille strips and Braille Ballot papers. For linguistic inclusion, the rolls and ballot are in multiple languages. Recently, transgender voters were given the option to describe themselves as ‘other’ in the electoral roll. The entire country is mapped on the vulnerability quotient. In one place, the electoral officer found that an entire sheet of voters hadn’t turned up. He didn’t have to do it, but he visited them personally and convinced them to step out en masse and be included.

On a grander scale, this isn’t just about including examination schedules, harvests or holidays or even the monsoon and heat waves. Qureshi’s mission is the inclusion of those who don’t have the same financial muscle. Starting with the elections in Bihar, he now has a full-time director-general, a no-nonsense taxation revenue specialist, locked on electoral expenses. A parallel machinery of Indian Revenue Service officers now stands as a registry for expenses. They track banking channels and seize even small packets of suspicious cash. There is no legal requirement to disclose the source of funds. But it helps that limits have been imposed on expenditure by candidates (Representation of the People Act, 1951 under Section 123[6]) along with their friends and supporters. Surely, some shining examples of anti-corruption purges are based on threats and fears. One seized bag contained an innocuous Rs 28,000 (about $600). The man denied he had anything to do with the elections, but the apparent giveaway was a receipt of an electoral expense.

Surely, there is a stark case of regional hegemonies in hundreds of constituencies. There is no state funding of elections. Debarring of candidates with criminal records is nearly impossible, even fraught with the danger of bogus cases. The process itself induces fatigue, halts development, and often raises questions of sustainability of such micro management. Before and after the elections, the process of inclusion rests with political institutions. In fact, so does rule-making in electoral matters. But the world now likes what it sees. An Indian Institute of Election Management will train any country that wants to be included.


riGHt to vote: initially most women wished to register as wives or daughters of men, today they vote under their own names

15INDIA INCLUSIVE

This year the annual meeting of the World Economic Forum (WEF) will be held on a somewhat more positive note as the world seems to be heading towards recovery from the recession that hit all countries about three years ago. What will certainly be a focus is how the fulcrum of world economic growth seems to be shifting decisively towards developing economies and, in particular, large economies like China, India and Brazil. This is particularly important as the current world currency crisis indicates that there is still a possibility of another recessionary impact in the developed world of the Organisation for Economic Cooperation and Development (OECD) countries. Even if this ‘double dip’ recession is avoided it is almost certain that a structural change is taking place in the world with a re-distribution of production and income towards the emerging economies.

It is a fact that in the last decade or so growth in output and trade has been fastest in Asia and hence future investors can hardly ignore growth nodes like India and China. The last three meetings of the WEF were held in the shadow of the world recession. Hence, suitable investment destinations were hardly uppermost in most minds. How to maintain the status quo was then the dominant concern. This will change this year. In addition, in evaluating investment decisions in India, the issue will not only be one of investment but of the sustainability of such investment over time. It is this issue that this article is intended to address.

Sustainable investmentIt seems to me that the investment issue is often wrongly posited as India vs China. It is clear that while China is the manufacturing giant in Asia, India is clearly emerging as the leading producer of services, especially of the value-added kind. In any case, as the countries of the West contract, the emerging gap in world demand will be sufficient to support investment in both India and China. From a longer term point of view, however, even the demographic dynamics favour India as the main source of demand for manufacturing output. In 2007, 32% of the population in India was in the age group 0-14 and 63% in the age group 15-64. The corresponding figures for China were 20% and 72%, respectively. The Chinese population is clearly ageing. In this article, however, I will focus on the Indian story. In particular I will try to argue that in most policy issues (internal and external) the focus has been on inclusive governance.

Most commentators on the Indian economy date the beginning of the current reforms as 1991. This is certainly

true in that all the legislation freeing industrial licensing and foreign exchange transactions began in 1991. However, contrary to popular perceptions, the ground for many reforms was laid earlier. In other words, 1991 was not just a ‘big bang’ reform year. The focus was on inclusive governance in that care was taken that reforms did not unduly impact any one section of the population.

To take an example, consider the reforms in the external or trade sector. This mainly took the form of freeing the rupee exchange rate to find the market level while at the same time removing quantitative restrictions on imports and rationalising tariffs. Yet, in one sense, the freeing of the exchange rate was a logical culmination point after some steps taken in the 1980s. In the 1980s, the system of subsidies to exports (called CCS, or cash compensatory support) and import controls had led to a cumbersome system of multiple exchange rates which had to be rationalised. This is what the reforms after 1991 did.

Even after 1991, caution was the buzzword as the freeing of the exchange rate was done piecemeal over a period of 3 years or so to watch out for any extreme impact on any sector. Change had to be inclusive.

The same caution is evident in tariff reforms. In 1991, the average tariff rate was around 300 %. This has been brought down to about 10 % today, a dramatic change not seen in many other countries. Yet, inclusive governance required that the sectors hurt by world competition after tariff reductions got time to adjust and the tariff cutting was done in a series of steps between 1991 and 2005. Once again, inclusive governance dictated that the most vulnerable small and tiny industrial sectors needed more time to adjust to the

Inclusive governance in fact is dictated by economic theory which argues that the market (in most cases) delivers efficient outcomes if supported by an appropriate regulatory apparatus


The pace of India’s reforms may have been slow, but it has ensured inclusiveness, with concerns regarding income distribution, unfair competition and environmental degradation adequately addressed

Remarkable Scorecard

PROFESSOR MANOj PANt is

with the centre for interna-

tional trade and development,

school of international studies,

jawaharlal nehru university.

TRaDe TRaFFIC: external trade got a boost with reduction in tariff from 300% in 1991 to 10% now. Inclusive governance ensured that the weaker sectors got time to adjust and grow

DISCOVER TALENTGROWTHMARKETSOPPORTUNITY

For updated news-analysis on Indian business and economylog on to www.ibef.org

global economy and consequently quantitative restrictions on imports of some items were only removed a few years back.

How successful was this strategy? The success is seen in the fact that, contrary to budget presentations in the 1980s and early 1990s, today we do not hear industrialists lobbying for protectionism in the months prior to budget presentation. The industrial sector has come to accept that undue protectionism is not possible. India’s tariff reforms are now irreversible.

The need for inclusive governance has also dictated caution in industrial reforms. It is well known that the industrial policy from 1950 to 1990 had established a monopolistic sector with some select private sector firms partnering the huge public sector in controlling production. The Industrial Policy of 1993 freed up entry in the industrial sector to all private firms. However, this was also done in a phased manner with some sensitive sectors restricted until recently. Even more important, economics dictated that the state had no business being in production. Yet, the lack of a comprehensive social security system has implied that no dramatic privatisation program was envisaged (as was the case in Latin America and the states of the erstwhile USSR).

The withdrawal of the state from production was done by allowing the private sector to grow in relative size while piecemeal strategic sales of equity in state owned companies exposed them gradually to market competition.

Efficient regulatorsInclusive governance in fact is dictated by economic theory which argues that the market (in most cases) delivers efficient outcomes if supported by an appropriate regulatory apparatus. Some one has to establish the rules of competition given that the text book conditions of perfect competition rarely exists. In addition, in a competitive environment direct government regulation has to be replaced by an independent regulator. Hence the reforms of 1991 were followed by setting up such regulators like the Securities Exchange Board of India (SEBI) in the stock market, the Telecom Reform Authority of India (TRAI) in the telecom sector, sectoral regulators in areas like health and electricity and the competition regulator, the Competition Commission of India (CCI). In some areas like banks and education, full liberalisation will have to wait for the setting up of such regulators.

It is interesting that even in foreign policy governance has been pragmatic in that short run rhetorical responses have taken a back seat to the perspective of long run regional

economic reform. To take a few examples, India’s troubled political relations with Pakistan have not deterred the country from striving to make South Asian Association for Regional Cooperation (SAARC) a success. Despite Pakistan violating World Trade Organisation (WTO) rules in not giving most favoured nation (MFN) status to Indian exports, India has preferred not to file for dispute settlement.

SAARC is as much a part of India’s regional foreign policy statement as an economic arrangement. Even more important, in recent months China has made some rather provocative statements on India’s border areas. Yet, India has avoided any rhetoric and China remains India’s biggest trade partner. This despite the fact that China’s huge trade surplus with India has generated rumblings in the Indian industrial sector. As one Indian Prime minister said, India cannot change its neighbours.

Commentators often complain (even within india) of the slowness of reforms as compared to say China. Yet, in a democratic setup the slowness also ensures irreversibility. In addition, the slowness ensures inclusiveness as the government can factor in and address concerns on income distribution, unfair competition and environmental degradation among many others. In fact, it may be reasonable to say that inclusive (and hence slow) governance has strengthened democracy.

Despite the slowness, India has averaged 8 % growth over the last few years and growth rate is likely to reach 10 % in the next few years. At the same time, some kind of constituency for reforms has been built up in areas like foreign investment, financial sector liberalisation, tariff reforms etc. so that it is unlikely that any of the reform legislation will ever be retracted.

The bottomline? For a democratic country, and especially a developing one, inclusive governance is unavoidable if the democratic set up is to survive. It should be a sobering thought that India is one of the few developing countries where a true democracy has survived with a free press, an independent judiciary and a growing non-governmental sector acting as checks on arbitrary government actions. These pillars of any democracy have acted together with government policies to ensure a reform process which is inclusive and therefore sustainable. That itself is a remarkable scorecard.

These views are personal.


Commentators often complain (even within india) of the slowness of reforms as compared to say China’s. Yet, in a democratic setup the slowness also ensures irreversibility

19INDIA INCLUSIVE

21INDIA INCLUSIVE

Inclusive Developmenteconomic improvement in India has ridden on many horses. Farms, factories and services have all shouldered the burden. Growth today is over 8%, but a larger part of India is still poor. welfare schemes remain an interim solution.

The State needs to provide greater impetus to two key inclusion drivers, infrastructure development and micro-credit. In other areas, private enterprise is already demonstrating the power of innovation by creating a hybrid model of development. This unique model is the Indian way.

FaST TRaCK: The Indian economy is humming away at a growth rate of over 8%, but speedy action is needed to ensure inclusion for the momentum to sustain

23INDIA INCLUSIVE

India’s social and economic challenges are daunting. A young population has to be educated, tens of millions of new jobs have to be created every year, a massive urban migration has to be absorbed without social disruption, and a financial safety net has to be created for all. And yet, despite a faltering global economy, India is making progress against these challenges. Families are moving into booming new cities built by real estate companies, parents are scraping together their savings to educate their children in private universities, and the unbanked are now equipped with smart cards provided by micro-finance players.

Many of these successful solutions are being designed and applied by the country’s most talented entrepreneurs. This is the Indian way of development: not a state-driven or top-down approach, but a market-based approach that begins with entrepreneurship and innovation.

While advancement is happening across sectors, there are three in particular – urban housing, education, and financial services – that demonstrate how India is tackling its challenges.

Big changesConsider urban housing. Until a few years ago, most Indian cities were woefully lacking in affordable housing and were unable to absorb the millions of migrants flocking to large cities. Between 1998 and 2004, the National Democratic Alliance (NDA) government reduced real interest rates, introduced the mortgage interest tax deduction, and lifted urban land ceiling restrictions. State governments implemented slum rehabilitation policies. The United Progressive Alliance (UPA) government’s Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is now improving transportation, roads, and other infrastructure.

India’s real estate entrepreneurs recognised the market opportunity and took action. DLF, Unitech, Orbit, DB Realty, Sobha and others are developing major projects. There are cranes everywhere as millions of new flats are constructed, and entirely new cities (such as Gurgaon and Lavasa) are being created. The capital markets are playing a critical role, enabling real estate companies to raise equity capital quickly and efficiently. India’s real estate companies now account for about $30-50 billion in market capitalisation, creating a host of real estate billionaires.

The education sector is being similarly transformed. There are about 500 million children in India; half of the population is under 25 years of age. Parents recognise that education is the best way to secure for their children a steady job and lift themselves out of poverty. Both the UPA

and NDA governments have pushed universal education and instituted programs to improve the quality of government schools. The UPA government is now looking to improve quality standards across educational institutes, provide student loans, and enable foreign universities to enter the education market.

India’s entrepreneurs have also seized upon opportunities in the education sector. A wide variety of private schools, colleges, universities, and vocational institutes are flourishing, while the most remote villages are plastered with advertisements for English language and computer training programmes.

Entire education cities have emerged in Kota and Manipal. Educomp, Everonn, and Heymath! are working in government schools to offer computer-assisted learning and improve teacher capabilities. The Manipal Group, Amity, and ICFAI have established large private universities. The

Indian School of Business is now ranked 12th globally and is opening another campus in Mohali. Pratham, one of India’s most admired non-governmental organisations (NGOs), is running the national Read India program to develop reading skills for 60 million children. Another NGO, Prayas, is working with abandoned children in urban slums and the poorest rural areas to provide shelter and vocational training. Each of these entrepreneurs is backed by a variety of financing sources including venture capital, private equity, the stock market, and various philanthropies.

Government must continue to cede economic space to the private sector, establish appropriate regulatory frameworks, and provide essential infrastructure such as the national identity system and urban transportation

INCLUSIVE DEVELOPMENt

The adoption of a market-based approach, rather than a state-driven one, is reshaping the country and driving inclusive growth, especially in its core sectors

Unlocking India’s Potential

jAYANt SINHA is managing

director, omidyar network

india, a philanthropic

investment firm.

uRBanISaTIOn: Regulatory moves have given a fillip to affordable housing and urbanisation by providing houses in cities for migrants to live in

MiCro-CreDit: women in far flung areas, like sadasivpet in andhra Pradesh here, are registering for small loans with micro-financiers

Advancing India’s conversation with the World


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Affordable financingLike education, the micro-finance industry is reaching India’s rural villages, bringing affordable financial services to an enormous unbanked population. The Reserve Bank of India (RBI) has allowed banking agents, mobile payments, and no-frills bank accounts. Public sector banks have to set up branches in rural areas and set aside sufficient capacity for high-priority lending such as in agriculture and student loans. Most importantly, a biometrics-based national identity system is being rolled out by the Unique Identification Authority, which will massively streamline financial transactions.

These changes have enabled the micro-finance industry to explode in India. For-profit players such as SKS Microfinance, Ujjivan, Janaalakshmi, and Equitas have grown rapidly with backing from venture capital and private equity firms. On the nonprofit side, there are thousands of NGOs operating self-help groups. Fino has issued over 10 million smart cards to the unbanked.

Finally, several socially-conscious investors including Omidyar Network, Unitus, Sandstone Capital and Legatum, have funded for-profit and nonprofit players in micro-finance to bring financial services to millions more people across India.

The dramatic growth of these sectors in the last decade highlights the uniquely Indian approach to economic and social development. Rather than relying on government-directed investment, growth is driven by unlocking latent end user demand. India’s highly innovative entrepreneurs deliver affordable products and services to tap this

demand. A wide variety of financiers, ranging from early stage venture capital funds to global equity funds to a fast-growing banking system, stand ready to provide risk capital to successful firms.

In managing Indian investments for Omidyar Network India, I see firsthand the continued innovation by our entrepreneurs. We have already invested close to $60 million in India, and like other investors, see our commitment increasing dramatically with the rise of talented entrepreneurs developing solutions to address India’s social challenges.

What will it take to sustain this entrepreneurial, market-based development? First, government must continue to cede economic space to the private sector, establish appropriate regulatory frameworks, and provide essential infrastructure such as the national identity system and urban transportation systems. Second, an entrepreneurial economy must be protected from entrenched players that can manipulate the political system and thwart competition. Third, if the state is unable to efficiently operate large-scale welfare programs, poorer sections of society can be left behind creating enormous social pressure and even violent uprisings. Finally, wise macro-prudential regulation is required to prevent destructive boom-bust cycles.

The great Indian experiment is on. Only by fully unleashing the entrepreneurial energy of our nation can we solve our biggest challenges and build a more prosperous, secure, and successful future for India.

These are the author’s personal views.


27INDIA INCLUSIVE

“Our strategy today is not just to deliver rapid growth, but to deliver rapid and inclusive growth, a growth that will provide productive employment to our young population and raise living standards in rural areas across the country.”PRIme mInISTeR manmOHan SInGH

The central vision of the Eleventh Plan of the government is to trigger a development process which ‘ensures broad-based improvement in the quality of life’ of people across categories. The government has seriously considered the problems of growing income disparities, employment challenges, need for access to essential services, and sustainable growth. However, under traditional modes of service delivery and budgetary constraints, these social goals were perceived to be divergent with one another, as well as with the overall economic objectives. In fact, judicious infrastructure planning is one of the most powerful levers available with the government and policy makers – one that can ensure that the choice between growth and equity does not become binary.

Ever since India entered the high growth era powered by economic reforms, public discussion has often been skewed on the question of physical infrastructure. While the debate has primarily focussed on the need for large investments in infrastructure that is required to keep pace with the growing demands of the economy, lesser attention is paid to the critical role that infrastructure plays in ensuring that the growth remains equitable, and that its benefits trickle down to all sections of the society. Let us look at three important infrastructure thrust areas – energy, transportation and telecommunications – which hold the promise of maximum impact on all sections of the society

Reliable indicatorsEnergy availability is one of the most straightforward indicators of inclusive growth. Access to reliable power shows a strong positive correlation with both the country’s overall growth and human development indicators. According to the International Energy Agency, one of the prime challenges that India faces as a country is in terms of its energy sufficiency. While it has been estimated that in 2009, 64.5% of India has been electrified, only 52.5% of the Indian rural population, which is the largest in the world, has access to power, leading to one of the lowest per-capita electricity consumption rates in the world.

The problem, traditionally attributed to inadequate generation capacity and weak distribution network, was also compounded by unsustainable fuel choices, regional

disparities in generation, poor institutional structures and inefficient operations. However, commendable political will, far-reaching policy choices, legislative and institutional reforms set in force in the last decade has ensured a significant turnaround of this much maligned sector.

While ensuring that the top-line challenges will be met through an Integrated Energy Policy and through a focussed approach in successive five-year plans, the government has also set for itself tough targets to ensure that the benefits trickle down to the lowest level through specific programmes. The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), launched in 2005, is aimed at 100% availability of power of minimum defined quality for all households by 2012. Grid extension on a massive scale to nodal villages and augmentation of the rural network to the nearby areas are the central pieces of this scheme.

Renewable energy sources also play a key role under the Remote Village Electrification (RVE) scheme, a complementary scheme to provide interim power access for inaccessible areas, launched by the Ministry of New and Renewable Energy. At a broader scale, both these plans are expected to work in tandem with the Jawaharlal Nehru National Solar Mission (JNNSM), launched in 2009, that aims at exploiting solar power for rural electrification.

While even availability of power for domestic use is a significant step for a rural citizen, this cannot be the sole objective of these initiatives. The impact of these comprehensive reforms to the energy sector can be far-reaching, if supported by aligned strategy and roadmap for promoting productive end-uses of delivered power. Agriculture, accounting for more than 60% of employed labour, but for less than one-fifths of its productive output and declining, can become the major beneficiary. Usage of irrigation pump sets can be a major initiative to boost productivity trends. In the coming decade, the bottleneck is likely to shift to the softer aspects, including sustainable cost recovery and payment structures and requirement of a definite strategy to promote responsible and efficient end-use of power in a way that enhances the economic multiplier effects at the grassroots level. Meeting these softer challenges in conjunction with the state governments and local communities will be a key determinant in ensuring that the benefits remain truly inclusive.

Transportation infrastructure is an important lifeline for India, given its vast geographical expanse and an ever increasing population. Empirical analysis of developing countries indicates that improvements in transport infrastructure have the greatest apparent returns on poverty


Judicious infrastructure planning is a powerful policy lever, one that can prevent the choice between growth and equity from turning binary

Maximum Impact

RICHARD REKHY is Head

of advisory, kpmG, india.

BuIlDInG uP: The execution pace of major transportation infrastructure projects is being accelerated to drive inclusive development

reduction. Among multiple modes of transportation, while railways, airports and ports have seen a promising investment pipeline, the Indian road network remains the critical lifeline of connectivity and the most important determinant of equitable growth.

While the road density in India is technically on par with the best in the world, the quality of roads has been traditionally poor and inadequate to meet the growing freight demand and riddled with multiple bottlenecks. Ambitious plans including the National Highway Development Project (NHDP), in its several phases have given a fillip to the road sector. While development of national highways is primarily focused on facilitation of freight movement, they also play key role in dissipating key multiplier effects in the regions that they transit. There is already empirical evidence that improved national highways in India have benefited proximal rural households through increased connectivity, mobility and access to opportunities.

Several states like Gujarat, Maharashtra and Rajasthan have also embarked on large scale programs to improve the intra-state connectivity through State highways and rural roads. The beneficial impact of these localised programmes is much more apparent and immediate. Greatly reduced travel time and costs across newly developed or improved roads help remote communities get improved access to major health centres and markets in bigger towns and cities. With improved connectivity, rural communities also get access to organised road transport services that further enhance the mobility of the population. Road infrastructure helps to spawn commercial enterprises.

Connecting IndiaThe third important area where India has made tremendous progress in the last decade is in the domain of telecommunication networks, especially on the wireless front. While India is one of the fastest growing telecommunications market in the world, the tele-density of coverage is still one of the lowest in the world, lagging even comparable developing countries. This fact, compared

with the increasing saturation of the mobile markets in the urban centres, points to the huge potential of the rural areas, giving the crucial economic cue to the market forces in the telecommunication industry.

According to recent statistics released by the Telecom Regulatory Authority of India (TRAI), close to a third of all mobile connections are in rural India, and every fourth person in the rural areas has access to a mobile phone. The state-run operator Bharat Sanchar Nigam Limited (BSNL) is at the forefront of providing rural connectivity and in installing common use networks. While the entry of private operators has been limited due to high revenue differential when compared with urban areas, market forces will eventually drive them to seek value in the rural areas. Optimisation of physical networks, shared access and innovative marketing and pricing are signals that these physical challenges will soon be surmounted.

However, telecommunication infrastructure is an area where the benefits to the marginalised segments are likely to be much deeper than telephone usage in the long run. The bigger impact will be on account of the delivered services through the physical infrastructure. This is evident through the successful launch of e-governance programs in many states of the country that aims to provide transparent and cheaper access to basic civic services. Several other top-down policies of the government, including the Unique Identification Scheme, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Right to Information Act (RTI), specifically aimed at ensuring inclusiveness and transparency of services will stand to benefit increasingly by the electronic infrastructure. Interestingly, Indian corporate houses have also developed unique models based on the information backbone that enhances the quality of life of their downstream customers. ITC’s e-choupal concept, pioneered in the last decade was a hugely successful pilot that demonstrated that an important method to drive inclusion in rural society lay in information availability.

The above examples serve to highlight an important fact that the country’s traditional lack of physical infrastructure is only the visible end of the iceberg. Developments over the last decade have demonstrated that with a focussed strategy for improvement in infrastructure in multiple sectors, the direct benefits for inclusive growth are already becoming apparent. India should capitalise on its late mover advantage and look to urbanise across the country. While the challenges of capacity augmentation and implementation exist across sectors, these are to be viewed as smaller hurdles on the path of important long gestation investments with definite positive impact for equitable growth.

In order to sustain and add to these developments we need to create a homogeneous eco-system of inter-dependable cities. We need to develop innovative solutions using technology. The Prime Minister’s Office (PMO) must identify the top 20 infrastructure projects and ensure that they are executed as per plan. This nation will thrive if passion is involved. The authors’s views are personal.


Developments over the last decade have demonstrated that with a focussed strategy for improvement in infrastructure in multiple sectors, the direct benefits for inclusive growth are already becoming apparent

31INDIA INCLUSIVE

The bare statistics of financial exclusion in India, even in 2010, are depressing. This, despite India actually being a pioneer in attempting to solve the problem. Initially, under the influence of Mahatma Gandhi, India sought to push cooperatives to provide financial services to the rural population. An elaborate structure of state, district and primary agricultural credit societies was set up for this sector. Yet, in 1969, when Indira Gandhi nationalised banking, the level of exclusion in the provision of banking services was still dismal. The period after nationalisation saw a rush to open bank branches in rural and semi-urban areas and, by 1990, the increased thrust had led to a significant increase in the number of branches.

Thus, from about 8,262 branches in 1969, India had by 1990 created as many as 44,968 branches, of which 21,257 were in rural areas. Around the same time, India introduced priority sector lending to groups that were traditionally neglected by banks–farmers, micro-entrepreneurs, as well as the unemployed who could be given loans to set up businesses. Banks were also expected to develop credit plans for specifically allotted districts with the Lead Bank scheme of 1969, which was further refined in 1989 with the Service Area Approach, under which rural and semi-urban branches were allocated specific villages in geographical contiguous areas for credit servicing.

In 1975, the central government, in partnership with nationalised banks and state governments, created the Regional Rural Banks, mandated to operate in rural areas with manpower recruited from the same place so as to better serve the local population. In 1982, the National Bank for Agriculture and Rural Development was set up, incorporating a few departments of the Reserve Bank of India (RBI), as a separate agency to foster rural development.

Even after liberalisation in 1991, this rural focus was not lost. More recently, the Kisan Credit Card scheme and the No Frill accounts for the poor show that the focus persevered.

Despite all this, however, the extent of financial exclusion in India is bleak. Though there is not yet an official exclusion index, most studies show that as much as 65% of households do not have access to financial services, a level unacceptable in any equitable society.

Good intentions, bad ideasThe reason the problem could not be resolved quickly was not for lack of trying but because it was an inherently intractable problem, stemming from India’s deep poverty. People were too poor to be served by organised business models. Their income levels were too low to foster any

savings. The basic financial need was for credit and, in some parts, for remittances. The organised sector, with its existing business models, found that the expense of laying out a distribution network to reach a rural population spread across 600,000 villages could not be justified on commercial grounds. The low ticket sizes of transactions and balances, the large information gaps, poorly defined property rights, and weak contract enforcements made the cost of serving this population impossibly high.

Unfortunately, the government’s approach to the problem was one of push. It saw the provision of better life chances to this population as an obligation for which it could use the instrumentality of the state, and thus meet social objectives. Till 1991, to the extent that it could, the government forced its banking system to serve these objectives. The problem with such a social agenda was that the banking system found that the mandate to grow without worrying about

quality of growth led to very poor accountability. Profit was not seen as a key business objective, and in tune with the accompanying political rhetoric of the period, banks were seen as a vehicle of social transformation. As a result, financial accountability was severely diluted and a vast machinery of supervision – Central Vigilance Commission, Comptroller and Auditor General, Central Bureau of Investigation – had to be created. But the fact remains that bank managers who are set strong growth goals without quality concerns build poor balance sheets. Also, as winning elections are important in a democracy, credit reached the powerful rather than the poor. This led to high levels of non-performing assets (NPAs) which the system could not sustain.

In 1991, with the start of liberalisation came change. Profits and NPAs were brought back into the reckoning. But even after ten years, until 2000, the level of NPAs in the system remained very high. It was only after public listing and the resultant pressure of the market that the Indian banking system made robust strides towards a healthy balance sheet by providing for and clearing out its NPAs.

Since 2004, I believe India has actually commenced its take-off into financial inclusion. Substantial changes have

It’s no longer a question of if the poor get bankable, but when


Financial inclusion is poised to happen not because it is politically correct but because it will soon be economically correct

Opportunity, Not Obligation

jANMEjAYA SINHA is

chairman–asia pacific for

The Boston consulting Group.

CreDit wortHy: women of weaker sections are taking to banking, as seen at the shree Mahila sewa sahakari (sewa) Bank in ahmedabad

33INDIA INCLUSIVE

happened and, for the first time, the task of addressing financial exclusion is tractable. What is even more wonderful and perhaps the single greatest cause for optimism is this: inclusion can be addressed by seeing large swathes of the financially excluded population as a commercial opportunity rather than a painful obligation.

Spot the opportunityWhy is this so? India’s 9% growth rate is one that is seeing per capita growth of over 6% in the population. The number of people under the poverty line is reducing, and the age demographics make their commercial prospects viable. Given that 570 million people in India are under the age of 25, and that they will be customers for the next five to six decades, makes this an opportunity that it would be a mistake to ignore.

Further, given the oft-repeated fact that over 60% of India’s population is in rural areas, many telecom companies (telcos) and FMCG companies have rolled out a distribution net that reaches previously untouched villages. For some of these, the percentage of sales coming from rural areas has now become significant. Together with this change in the GDP growth trajectory, there have

been some important accompanying technological breaks. Four must be mentioned: First, all banks in India today are on the Core Banking System (CBS). Ten years ago, none were on the CBS. Second, the number of ATMs has grown from 1,102 in 2000 to 42,436 in 2010. We all recognise that ATM transactions are a lot cheaper than transactions from a branch. Third, mobile phone ownership and connectivity has grown from less than a million to 600 million with all the benefits that come from this connectivity. And finally, the government has announced an ambitious programme to provide every Indian with a unique identity number with biometric authentication. Together, these changes allow real business potential to thrive in a large customer group, who therefore become accessible.

The RBI has also fostered enabling regulation by allowing for-profit business correspondents to partner banks, thereby bringing into play an extensive network that reaches customers hitherto inaccessible to banks.

It is important to recognise that though the conditions have turned favourable, financial exclusion will not be addressed just because the conditions permit it. What is required is a new approach with a new mindset. Banking CEOs need to see the massive degree of financial exclusion as an opportunity worth exploring, in spite of the rather rapid growth of their normal business. Just focussing on business-as-usual would be a mistake for two reasons. First, the size of the opportunity is such that any player who takes a position in this segment now will be a future leader. The opportunity will, of course, take a few years to fully mature and will require some innovation. Second, given that the size of the opportunity is so large, other industries, especially telcos already serving this customer segment, may seek to extend into financial services as well. Banks will find that if they are not ready and waiting, the government and the regulator may, in frustration, permit other interested players entry into the financial sector. Bankers need to start seeing the long-term business opportunity here and go after it in earnest.

The informal sector that at present meets the credit needs of this segment is well entrenched and is making a lot of money. With their current business models, banks cannot serve this segment profitably. They may need to create focused subsidiaries, hiring people at lower salaries from the service area. They will need to innovate and adapt present business models. They need to use emerging technology and customise their product offering, possibly introducing pay-for-use models rather than their existing float-based models. They need to experiment with different approaches and collaborate across industry verticals to get access to the distribution that others have built up. How soon India will address financial exclusion depends upon how bankers see the challenge. Do they see financial inclusion as a loss-making obligation or a long-term opportunity for market leadership?

As with so many things in India, we are at a tipping point in this aspect as well. Whoever goes after this growing segment with sincerity can become the market leader for a long time to come. The views expressed in this column are personal.


FInanCIal lITeRaCY: lenders like ICICI Bank are reaching out to farmers, in villages like navara, and educating them

Banks must move quickly or lose the rural poor to other interested players

37INDIA INCLUSIVE

Inclusive Enterprise

Innovate or perish. Build brands for tomorrow’s consumer or shrivel. The sages of marketing and branding envision a future where enterprise will have to bend down to reach the hands at the lower end of the pyramid.

Some have innovated and gained. more will follow. a sense of responsibility will also drive some to share their gains from growth with their less fortunate sisters and brothers. enterprises will evolve. markets will force them to.

GeaR SHIFT: market forces are driving innovation by enterprises to reach the farms and villages

39INDIA INCLUSIVE

The late Dr C K Prahalad, in more ways than one, gave us the pyramid again. The pyramid that is India. A pyramid that has small self-actualising niches of the population at the top, large masses in the middle, and even larger impoverished, under-nourished, and totally ignored populations at the bottom.

The other thinker who gave us a pyramid all his own, Abraham Maslow, was totally right in hindsight. Those at the top of the pyramid are really self-actualising folk. Folk who think a lot more about others than about themselves. In many ways, this thinking class right atop the pyramid is the class that represents the thought leader paving the way for the India that is to be in 2020. This niche is, however, not be confused with the real India.

I read Dr. Prahalad’s picture of the pyramid that is India in tandem with the very notion of the ‘Next 2 Billion’ (IFC). While the top four billion of the world population are the haves, the next 2 billion are the have-nots. The market is, therefore, right here with the have-nots. With the ones who sit at the bottom of the pyramid of every country. In the parts of the world still being defined as the ‘developing world’, the size of these have-nots at the bottom is really, really big, and in the case of the developed nations, the real worry is that the size of the bottom niche is growing. Growing thanks due to the recession that hit the developed economies of the world not so long ago.

Sitting under my own Peepul tree, I come up with not one but two pyramids for India. When asked to describe India, I do not use Dr. Prahalad’s One Pyramid. I draw two on my I-Pad. (As an aside, India sure has moved in its symbolism of technology for the people: From the sanitary pad of the 1950s to the I-Pad of 2010!)

I draw two pyramids. One is a small, another big. The bigger pyramid is three times the size of the smaller one. The big is RURAL and the small is URBAN. On each, I draw three wedges as segments – the top of the pyramid, the middle and bottom. At the end of the exercise, when I put numbers in the tiers of people, the shocker really is that the size of the Top of the Pyramid in Rural is 2.6 times the size of the Urban top. And the size of the middle of the Rural pyramid is some 6 times that of the Urban, just as the Bottom of the pyramid is about 2.3 times that of the Urban bottom.

The point then: BOP or Bottom of the Pyramid is a reality of both urban and rural markets. It is a myth to look only at rural for the BOP manna that most marketers have rushed to receive. There’s more to the concept of BOP than rural alone.

Having said and established that for a start, I do believe that the story of India Inclusive is really all about knitting the BOP into the mainstream that is India and Indian. Marketing to the BOP is both an art and a science. Most important, it’s a philosophy. A philosophy that corporate organisations need to ingrain into their DNA.

New look at branding The most important fact that needs to be bought into is the fact that marketing in the future is all about inclusive approaches and not the old exclusive approaches. In many ways, the concept of the brand and its very definition swims against this new need. The brand in many ways is a premium; a premium extracted from the exclusive masses of its consumers. This notion needs to be re-jigged now. The brand cannot be exclusive to its exclusive masses or niches. The brand needs to belong to all. And belong in an inclusive and all-encompassing manner.

The key question then is whether marketing can change the world. And can marketing change India for a start?

I do believe it can. It can, provided we re-jig the way we look at markets and consumers at large. From the 47-odd theories I have built in this realm over the last two decades, let me pick three key thoughts, one each from the realm of the Art, the Science, and the Philosophy that is marketing. Key thoughts that will help re-jig marketing at large, and help re-orient the way we want to open the can that is BOP and the can that is India Inclusive in its orientation.

The art: Gandhian marketing versus marketing the ‘Honest Shirt’ Brand India has seen two kinds of brands emerge over the decades that marketing has touched the nation and its produce. At one end is the brand that is Mahatma, the biggest and most recognised brand that represents India nationally and overseas. Mahatma Gandhi has emerged to be the most durable brand of them all.

Gandhiji never needed to take a full-page ad in the papers saying ‘Gandhi Shining’. Brand Gandhi happened as a function of the hard and dedicated work he did at the

Build bottom-up brands. ‘Honest Shirts’ or ‘Healthy TVs’ won’t work anymore

INCLUSIVE ENtERPRISE

To succeed in the new world, brands can no longer be exclusive but must talk to everybody

Building The Universal Brand

HARISH BIjOOR is a brand-

strategy specialist and ceo,

Harish Bijoor consults inc., a

strategy consulting firm with

a presence in india, se asia, uk

and dubai.

ClOSeR lOOK: The bottom-of-the-pyramid consumer isn’t swayed by hyperbole, she looks for real utility, real value

grassroots that is really India. Every action of his that focused on upliftment of the under-privileged, and every icon he gave to India became a durable representation of this ethos. Whether it was Khadi, the Dandi Salt Yatra or Non-violence, Gandhiji reigns as a thought even today. Across the world. This was true-blue bottom-up branding.

The second and more common marketing format in India today is the format of top-down marketing. This format is all about taking a shirt and making it honest, and taking a television and making it healthy and, of course, taking the humble toothpaste and adding oxygen to it. Around all these offerings, advertising has added further allure. Top-down branding is a format that has touched every segment of the pyramid and still attempts to touch the BOP. Sadly, it does not work here. The BOP is the most intelligent and most untouched-by-hyperbole segment of the Indian economy. This cannot be taken for granted and played with.

If you need to succeed here, simply adopt the bottom-up branding ethos. Do a Gandhi on the market, and stop putting oxygen in the toothpaste. The BOP disbelieves advertising fluff far more than the de-sensitised, marketing-anaesthetised top-of-the pyramid market.

When brands finally get to think of the BOP markets, both urban and rural, it is time to put together what I call and practise as ‘Conscious De-branding’. A process where you sit and peel off the slick and the glib from your brand and advertising offering. Make the brand offering real. As real as the consumer.

The Science: Democratic distribution systems versus autocratic top-down onesDistribution is a demon in India – reaching masses of people who live across different terrains and at distances difficult to reach with consistency is a big challenge even today. The three tenets of a good distribution system are the width of reach, the depth of reach in terms of product and service offerings, and the consistency of reach, week after week, if not more frequently.

I believe there are three types of consumers emerging in India today. The first is a consumer who buys products and services for self-use – for herself and family of four. The second type of consumer buys partly for self and partly to distribute. This consumer is 70 per cent consumer and 30 per cent re-distributor. You find these mostly in Tier 2 and Tier 3 towns. They make a margin on what they sell and partly defray the costs of what they buy for themselves. These are savvy consumers and savvy business people as well.

The marketer needs to recognise this consumer and make offerings that are relevant, original and innovative.

The third type of consumer is the one that buys possibly 5% for self and 95% for re-distribution. I find these in the smallest of villages in India. The most efficient system of reaching out to the land that is India is really this. Millions of entrepreneur-distributors who make a living doing just this. This is a win-win for the marketer and consumer alike. A win-win combination that is totally under-leveraged today. This is the way to reach the pie that is the urban and rural BOP.

The Philosophy: Creeping urbanisation versus creeping ruralisationSince independence, India has witnessed a creeping process of morphing where masses of people have moved from rural mindsets and consumption to aggressively urban mindsets. The marketer at large has been responsible for this. The movement that was a crawl became a literal gallop in the early and mid-eighties when television knitted the nation as one, pumping urban imageries of the modern Indian to rural audiences. Television and all the advertising it carried threw up and pushed down rural throats and stomachs and bladders the urban way of life. In more ways than one, India became an Instant Urban society.

This I believe is an un-doing. An un-doing that needs to be corrected. In many ways marketing is hegemony in India. The urban-educated and privileged marketer markets to the rural person. Never mind that rural is three times bigger than urban. The imagery that consumers emote with in India today is the urban imagery.

Turn this approach turtle, and emote with real India. Emote with the imagery that is rural. Put a programme that is rural in your marketing mix. Go one step further and show the archetypical brand hero in your TV commercials to be a rural person. See what it does.

I do believe India is ready to upturn its marketing imagery. The BOP market will admire this. And will certainly reward this effort. With market share. Money. And more than that, consumer affection.

Marketers should tap the millions of rural entrepreneur-distributors—that is where the customer is. It is a win-win situation that has been left totally untapped


43INDIA INCLUSIVE

Ninety nine per cent of innovations and new products fail; many because they are not the right product for the right market, especially a market like India’s. The second most populous country in the world, India is home to 1.15 billion people, 5% of whom are aged 65 or above. Its democratic framework makes it critical for the country to have inclusive growth powered by innovations that cater to the needs of people with lower levels of income – people who would not normally have access to many products and services that are initially developed for high-end customers with higher costs.

Such an inclusive pattern of innovation and growth would also be beneficial to large swathes of the developing economies around the world that cannot really use high-priced products and innovations from the developed economies. Can a person in India with an annual income of Rs 90,000 ($2,000) afford an ECG that costs $100? Not really. Can he buy a personal vehicle that costs $6,000? Absolutely not! However, bring down the price point for the ECG to $10 and that of the personal vehicle to less than $1,000 and suddenly we have included a whole new segment in the market.

Hand on the nation’s pulseConsider the case of heart disease in India. ECG testing is the first step in early detection. While testing can be performed by anyone with the right technical training, results can be interpreted only by a cardiologist. General Electric (GE), India, has come up with the MAC 400 and the MAC i, innovations that now make it possible to move ECG testing from the cardiologist’s domain to that of a general physician anywhere in the country. This makes heart disease detection and treatment now accessible to many more patients at a cost that is affordable – a patient can get an ECG done for Rs 300 (about $8) or less. GE believes that this inclusive innovation creates a new marketing opportunity.

GE has also made significant investment in its infrastructure in India by consolidating its healthcare engineering, which was scattered across the country, to the facility within the John F. Welch Technology Centre in Bangalore. By mid-2010, 6 Indian products were in the project stage. The target over the next 3 years is to come out with an Indian product in each of more than 30 product categories.

GE Healthcare has sold 7,500 MAC 400s. Of these, 2,000 have been sold in India. Even as it rolls out the Mac i, GE is working on the machine’s next variant. Other products

developed over the last few years for the Indian market include baby warmers, X-ray and ultrasound systems. The focus is to innovate as per the requirements of the nation and subsequently create market segment for the products developed in other nations. These innovations will bring healthcare to many more patients not only in India, but in other developing countries that cannot afford the high cost of normal ECG machines.

Expensive machines make most tests unaffordable for most of the population. For instance, if a clinic spends Rs 1 crore on a CT (computed tomography) unit, it needs to shell out Rs 3-4 lakh every month on loan repayment and consumables. This, in turn, results in increasing the cost of treatment along with the unethical practice of pressure on doctors to prescribe unnecessary usage of expensive equipment. Thus, innovations are required to make healthcare available to more people.

By 2015, the country will have 1.3 billion residents. As the aging population continues to grow, the underlying demand for healthcare is also expected to increase. Even today, the majority of India’s population cannot afford anything better than the most basic healthcare. It is only the middle class and those in the richer social classes – approximately 90 million – who form the medical device consumer base. This segment of the population is, however, forecast to grow by 17% annually for the next 7 years to exceed 268 million by 2015 – an opportunity too large to ignore.

Wheels of changeConsider also Bajaj Auto (BAL), one of the most popular and oldest brands in the country. It was an undisputed leader

Can a person with an annual income of $2,000 afford an ECG that costs $100? Not really. But, bring down the price to $10 and we have included a whole new segment in the market


nothing is more powerful than an idea whose time has come. The time for inclusion is now

Innovate Or Perish

ARVIND SAHAY is professor

of marketing strategy at the

indian institute of mangement,

ahmedabad.

wHeels oF innovation: a focus on developing low-cost, fuel-efficient technologies has seen india emerge as the largest market for two-wheelers in the world

45INDIA INCLUSIVE

in scooters and the largest manufacturer of automobiles in India. With economic reforms in the early Nineties, the complacent market leader having near monopolistic market structure got severely mauled by companies like Hero Honda and TVS. This was the time when consumer preference shifted from scooters to motorcycles.

While Bajaj had a huge market share in the geared scooter market (hence in two-wheelers till 1990), the changes in tastes of consumers were tapped successfully by Hero Honda and TVS Suzuki. They tied up with foreign majors to bring in the latest in terms of aesthetics and technology.

Traditionally, Bajaj Auto was seen as a scooter manufacturer that also produced some models of motorcycles. To survive and grow in a market which was rapidly switching to motorcycles, the company had to change its strategy; it had to innovate. It had to show that it could consistently introduce motorcycles that combined the traditional Bajaj Auto qualities of ruggedness, fuel economy and price competitiveness with style, high-end features and riding comfort. For a country that was looking for a personal means of transportation at an affordable cost, the market opportunity was huge.

The turnaround came through several changes, such as a new plant set up at Chakan, Maharashtra, with around 800 employees whose average age was 24. The step to let go of the older workers Bajaj had was taken to change the mindset of workers. The company also focused on vendor development and rationalistion. By 2002, Bajaj Auto was not only the clear number 2 in motorcycles after Hero Honda, but also showed growth rates that were faster than that of the overall motorcycle market. By 2004, from a

position where all the two-wheelers of the company made a loss around 5 years ago, Bajaj had an operating profit margin of around 15%, which is one of the highest in the automobile industry.

Critical to the success of Bajaj was the innovation and development of the DTSi (Digital Twin Spark Ignition), a fuel-efficient engine. This innovative ExhausTEC technology helped improve the mid/low range torque in the mono-cylinder 4-stroke engine. Improved ExhausTEC ensured reduced emissions, better mileage and overall better performance of motorcycles. Ever since its innovation in August 2004 and with subsequent improvements in the engine, Bajaj has used the technology in all its models. It was hereafter that Bajaj Auto applied for a patent on this innovation.

Bajaj Auto has finally been granted a patent by The Indian Patents’ Office on March 5, 2009 for the ExhausTEC invention technology. Importantly, the innovation and development related to the making of the engines was all done in India by Bajaj. This has been so successful that, by 2010, Bajaj is an acknowledged world leader in the making of small internal combustion engines in the 100-250 cc category.

Along the way, India has today become the largest market for two-wheelers in the world with more than 8 million two-wheelers sold in the country annually. This is providing individual mobility to a large new swathe of the population that did not have access to this benefit before. The entry-level bikes from the Bajaj stable are sold at Rs 27,000 (about $600) – another inclusive innovation for a growing India and the world. These views are personal.


MaKinG teCHnoloGy worK: Mobile phones and telemedicine are taking healthcare to rural india like never before

47INDIA INCLUSIVE

Even as India makes giant strides in the world, nearly 70 per cent of her population still remains outside the ambit of the global economy. It is not easy to accelerate the inclusion of these people into economic activity. Education and healthcare remain daunting challenges. If India wants to reach the levels of the United States in about 20 years, it has to nurture 10 times more teachers and 6 times more doctors.

Sadly, even if India is able to achieve this impossible target, it is unrealistic to expect these newly qualified personnel to move to the rural areas, where most of India lives. And the rural populace does not have access to urban services. The absence of adequate infrastructure in our over 630,000 villages precludes the availability of urban services. Even in the cities, there are large sections of the population who do not receive these services; mass urbanization, therefore, is clearly not the answer.

India, therefore, needs to look at inorganic ways through which to achieve inclusive growth.

Trickle-down economics and organic means of developing skills will fail on the counts of scale and volume. Inclusive growth promotes economic growth and, in turn, creates social and political stability that are essential ingredients to sustain economic growth.

Building blocks for growthAs shown in the figure Inclusive Growth Architecture, the main ingredients that enhance the capabilities of the non-enabled population are education, healthcare, public services, and the availability of a marketplace. Often, these ingredients are non-existent or non-optimal in a heavily rural economy. At the same time, large-scale migration of rural populations to urban centers places a huge burden on the cities, often causing them to crumble under the magnitude of the demands. Therefore, it is essential for us to build up certain essential infrastructure that will enable a distributed model of development, where services normally available in urban areas are also accessible to those living in rural areas.

While enabling a single village is advantageous to that community, it does not contribute to inclusive growth. We have to look at making this model scalable, replicable, granular, modular, and measurable so that the entire nation can benefit from this architecture. Additionally, we also need to create a new ecosystem of partnerships and human resources, which can then be delivered in an affordable manner. For example, there are over 343 million children in the school-going age group (5-19 years) in India . With

a teacher-student ratio of 456 teachers per million people, compared to 3,200 teachers for a million people in the United States, India faces a tough challenge to compete in a global world .

Similarly, a doctor-patient ratio of 1:1700 versus the optimal 1:600 dissuades even the motivated healthcare professional from moving to the villages .

A sustainable modelCisco has demonstrated the inclusive growth model through Project Samudaya , a flood relief project in Karnataka. Samudaya is already harnessing technology to deliver services based on the Inclusive Growth Architecture. This project is a public-private partnership with the task of creating a sustainable society that receives urban amenities through technology. In Project Samudaya, an ecosystem of commercial, non-government, and local partners came

together under Cisco’s leadership to partner with the state government to deliver about 3,600 homes, 2 schools, and 1 hospital. Companies have participated in both the for-profit and not-for-profit modes.

Beyond rehabilitation, networking technology is being used to deliver urban amenities to rural areas as part of this project. Leveraging the power of the network, these villages have access to remote classrooms, doctors, and diagnoses from the cities. Students in these remote villages can now connect to teachers in another state to attend remote classrooms. Specialist healthcare has also become more accessible with Cisco HealthPresence Solution. Furthermore, this architecture is replicable and can easily be used in other areas of the nation or the world.

Similarly, Cisco has also deployed technology to deliver essential services like education in the Chhindwara district of Madhya Pradesh. Cisco created an ecosystem of social entrepreneurs keen on setting up an online education service for rural high school students. Teachers now come to the central office where they connect to several satellite

Trickle-down economics is impractical. It’s time to look at inorganic ways to achieve inclusive growth


Technology-driven architecture could be the only way to accommodate those who fall outside the reach of development

The Lego Of Development

ARAVIND SItARAMAN is

president, inclusive Growth,

cisco systems.

relieF linK: technology is being harnessed by Cisco for providing flood relief in Karnataka under Project samudaya

DistanCe eDuCation: networks are being used to provide education to children in far flung areas by teachers in cities

classrooms via Cisco WebEx technology. All students can see and hear their teacher as well as view their presentation slides on electronic display boards. More importantly, teachers can see and understand body language and questions from the students.

As shown above, adoption of technology is the only available tool to bridge these gaps and Public-Private Partnerships the only viable vehicle to deliver these services to the underserved. Cisco is now moving these models on to cloud-based network architecture to increase viability and scalability. Many start-up organisations in India are creating new applications and employing different models to deliver services.

Cloud technology is scalable because it allows rapid aggregation of solutions and addition of participants. Because of the intrinsic nature of cloud technology, the solutions are available ubiquitously and are, therefore, replicable. Since the participants of a cloud can choose the services they desire, it is granular. Based on the requirements of countries, the services can easily be modular. Most important, since the technology is focused on delivering customised and personalised solutions, it becomes measurable.

The network is also an easy vehicle that allows governments, non-governmental organisations, global entities, and private companies to partner. It enables the massive infusion of human capital to achieve time-to-market goals. Cloud technology becomes very affordable for large deployments since it scales seamlessly to add or reduce capabilities as required by demand patterns.


AffordableModels

Cloud based Services

Patrnerships Human Capial

Inclusive Growth Architecture

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51INDIA INCLUSIVE

Inclusive Societya populous nation housing over a billion people, a melody of contradictions, a tune strung together with different cultural notes, a society diverse yet unified, that is India. a land where festivals and celebration are an integral part of living, where a festival has ceased to be the domain of a community, where Id is celebrated by Hindus, Diwali by muslims and Christmas by Sikhs.

a nation on the rise; where a new found conviction in its abilities to compete not only in business and trade but in a variety of sports is driving change. India is poised to emerge as a sporting nation on the world map. Sport is set to drive inclusion. and this journey has just begun.

InDIan RaGa: a composition of varied cultures, tastes and beliefs is what makes the country unique and inclusive

53INDIA INCLUSIVE

Sport in India dates back to the Vedic Era. Rich descriptions of sport as a tool for development of physique and for the art of war can be found. It was also actively used as a mode of recreation, which played a vital role in the development of a man’s personality. Sport was seen as a vehicle to promote solidarity, team spirit, equality and ethos of tolerance and fair play. In modern era the Olympic charter adapted the same ideologies in its constitution and has used sport as a vehicle to promote equality and peace and education of youth.

Even though sports was widely used worldwide as a vehicle to promote equality amongst society and fight gender bias, in India it lost its significance as the nation struggled to control its ever-growing population and poverty index. Sport in India became the domain of the privileged and few. During the Raj this phenomenon gained momentum and it was only a good 20 years after Independence that the government realized the potential of sport and starting investing in it. Of late sport has gained importance and is in the limelight with the success of Indian athletes against all odds in the recently concluded Commonwealth Games in Delhi.

Sport is now being seen as a social leveler and a beacon of hope. It is being viewed as a vehicle that has enormous potential for bringing people together, reaching out to all, regardless of age or social origin. However, less than 10 % of Indian citizens have access to sporting activities on a regular basis. The vast majority of sporting activity takes place in amateur structures. Professional sport is of growing importance and contributes equally to the societal role of sport. In addition to improving the health of Indian citizens, sport has an educational dimension and plays a social, cultural and recreational role. It is the simplicity of Sport that makes it such an effective tool in the Indian cultural backdrop.

Sport is a universal language that is understood, respected and practiced around the world. It is the practice of physical activities which can be conducted by the whole population, without any discrimination of age, sex, physical, social, cultural or ethnic condition. Sport is diverse in its manifestations, and creates environments where inclusion takes place.

Bridging frontiersInclusive sport can be a way to bridge the gap between societies we live in. It provides citizens with opportunities to interact and join social networks; it helps immigrants to develop relations with other members of society and it

constitutes a tool for reaching out to the underprivileged or groups at risk of or facing discrimination. Through its contribution to economic growth and job creation, it can also help to revitalise disadvantaged areas and help fight crime.

Sport can play an important role in the development of the Indian society. It can make contributions to economic and social cohesion and more integrated societies. Special attention needs to be paid to the under-represented groups such as women and the backward class. Sport can also help integrate people with disabilities and people from less privileged backgrounds into mainstream society. Sport can also facilitate inter-cultural dialogue that is of paramount importance in India considering its cultural and linguistic disparity.

Women in India have been suppressed for centuries and still face discrimination in the hinterland. Female foeticide

is common and the girl child is often deprived of education and right to play. The success of women athletes at the currently concluded Commonwealth games in Delhi has had some positive effect and might result in changing the way elders in the society think about them.

Deepika Mahato, eldest daughter of an auto rickshaw driver Shivnarayan Mahato and nurse Geeta Mahato, hailing from a village 12 km from Ranchi, became the first Indian individual gold medal winner in archery in the recently concluded CWG Games in Delhi. Her rise to success was not easy; she had to battle poverty and initial family resistance. The teenager even had to practice with handmade bamboo

Sport is now being seen as a social leveler and a beacon of hope. It is being viewed as a vehicle with enormous potential for bringing people together, reaching out to all, regardless of age or social origin

“Sport is part of every man’s and woman’s heritage and its absence can

never be compensated for.” PIERRE DE COUBERtIN

Father of modern Olympics

Through its contribution to economic growth and job creation, sport can help revitalise disadvantaged areas and combat the threat of crime

Playing Together

HEMANt DUA is promoter

and ceo of inspiranti sports.

TaKInG aIm: Sportspersons like archer Deepika mahato, a village girl from Jharkhand, symbolise India’s aspirations and the emergence of rural folk on the national and international sports stage

INCLUSIVE SOCIEtY

bows and arrows. If it was not for her determination and her family’s support by way of cutting short their family budget, and fighting against the societal norms, India would have never seen this star.

The success story of Deepika and many like her have given hope to the women that sport can be their ladder to success and fight discrimination in daily life. They believe sport can bring a positive social change in the worst of environments where even politicians and administration have failed.

Positive linkSport creates a link between success, job and fame which works like a youth magnet. A visit to Haryana will showcase how every young person now wants to be a wrestler or a boxer. The recent success of athletes from Haryana in CWG 2010 has only fuelled the aspirations of the youth and given them a purpose to go to school. Youth in rural India skip education to assist their parents in the farm or with jobs that can contribute to their livelihood. Marginalized youth in big cities take to crime ad drugs because they lose hope. Sports can bring a change and provide a ray of light.

“Magic Bus” an internationally recognised program is helping youth through high-quality sports coaching. The program focuses on mentoring and fostering empowerment through football and rugby coaching. Magic Bus has helped change lives of many underprivileged youth in Mumbai, Andhra Pradesh and Maharashtra.

India’s economic boom is changing the way its people die. Diseases linked to affluence, especially heart problems, are overtaking poverty-related illnesses such as tuberculosis

and diarrhoea as the biggest killers. A new government study shows heart disease accounted for about 25 % of all deaths of those aged between 25 and 69. The Indian Council for Research on International Economic Relations has estimated that ‘lifestyle related’ diseases such as heart diseases, strokes and diabetes could cut national income by US$ 200 billion in the period 2005-2015.

A healthy and active life style has positive benefits for economic productivity. Physical inactivity is linked to obesity and back pain related to an increase in the loss of working days and job performance. Prevention is better than cure. With the costs of healthcare increasing, investment in the preventive health benefits of sport will save both lives and money.It is, therefore, all the more important to promote an inclusive approach to sport. All residents of the country should have access to sport. This is a huge resource, largely untapped by government, which could do far more to promote social inclusion. It can be a ‘win-win’ situation wherein government gains a valuable policy tool, which appeals directly to people who can be hard to reach using traditional methods; sport gains from increased diversity, higher participation and thereby greater inclusion. Government needs to work on policies keeping in mind the Indian environment and create programs with panchayats and non governmental organisations that help deliver the following messages:

Sport for all• Opportunities to participate and develop life skills

and education• Positive behavior change• Environment to succeed and develop and access

to livelihoods for youth• Inclusion of disadvantageous communitiesIf sport is to help deliver these objectives, sustained financial support is required at the bloc level in the remotest villages, not only from the government but also with active support and participation from the private sector.

A revolution is in the making with emergence of sport at the national scene and a small step has been taken with the current success at the world stage. Let’s hope it will become the giant leap that will redefine India forever!

These views are personal.

Inclusive sport can be a way to bridge the gap between societies we live in. It provides citizens with opportunities to interact and join social networks

INCLUSIVE SOCIEtY

ROOTeD aGIlITY: Sports is ingrained in the local culture, Kushti, a traditional form of wrestling on red soil, has ensured a talent pool for international wrestling

Throughout its history, India has shown an inclusiveness that is perhaps unique in the world. It has absorbed outside influences, accommodated rebellion, made invaders choose it as their home.

When Gautama Buddha rebelled against a Hinduism that was growing moribund, India turned him into an avatar of Lord Vishnu and made ample room for his philosophy. Muslims from Arabia and Central Asia first came to India as invaders, in search of riches, but stayed on and became an integral part of the national fabric, enriching India with their architecture, their music, their ways of life. The British came to India first as merchants, then as invaders, but India took their best from them – the scientific temper, Western reason, all the fruits of the Industrial Revolution – shaped it all in its own image, and made all of it its own.

The basis of inclusiveness is an open mind, and India has always had that. For much of its history, there was no sense of ‘the other’. Perhaps it was the salubrious climate and fertility of the Indo-Gangetic plain or something even more basic than that, but India has always been more hospitable to outsiders than any other country in history. Hinduism, after all, is the only religion whose sacred texts refer to God as a poet.

Of course, Indian society has been inequitable in many ways, the most obvious being caste. The curse of the caste system still holds sway even as we think of landing a man on the moon, even as we flex our muscles at the cutting edge of technologies. When we speak of ‘inclusive growth’, there remains much to be done, and hundreds of years of history to be undone. There are choices to be made, and every choice will make someone unhappy.

How do you choose between a rich vein of iron under a mountain and the fact that the mountain has been worshipped for centuries by the local tribals? How do you choose between building a dam that will benefit thousands and the displacement of people who have lived on the site of the dam for a thousand years?

How do you reach the poorest of the poor, the truly

marginalised and disenfranchised, who do not even show up in a census? How do you protect the inalienable rights of a people from the greed of rapacious businessmen?

All these questions need to be answered as we move towards inclusive growth. Many of these answers will not be easy, and many of the choices will not be painless. But answered they will have to be. There is no choice there.

Vive la différenceYet, at its core, Indian society has always been inclusive, willing to negotiate and adjust according to the prevailing circumstances. We are survivors and we are peace-loving. We recognize the vast melting pot that India is. What is common to the Mizo and the Tamilian? Hardly anything other than the shared identity of being Indian. We are the most genetically diverse people in the world – a wonderland of quirks and unlikely resemblances. Our food habits cover the entire spectrum of possibilities, from eating dogs to pure vegetarianism. Even our physical characteristics change dramatically as we travel across the country.

Our President is Hindu, our Vice-President Muslim, our Prime Minister Sikh, and the most powerful person in the country Christian. Contrary to popular belief, secularism is not such a popular concept in the world. Yet the founding fathers of our nation understood that India could never be a nation based on one religion, and allowed freedom of belief, an astonishingly visionary move when you think about it. The founding fathers also propagated universal voting rights, something unheard of in so young a nation. This was inclusion at its most far-reaching, giving every adult the power to choose a government or to bring down one. And we have seen the Indian wield that power sanely and clinically again and again.

India is about celebrating differences, it is about giving everyone his or her little place in the sun. Nothing could be more inclusive than a country where whatever truth you encounter, the opposite is also equally true. India is that country.

LASt WORD

myriad ingredients but each retaining its flavour—india’s response to diversity has been unique and successful

The Indian Salad Bowl

SANDIPAN DEB is a former

editor of The financial express

and founder-editor of open

magazine.

On-ground measures and complementary legislative initiatives like the Right to education will soon see 11.2 million students pass out of India’s higher secondary schools every year. The national Rural employment Guarantee act has created 9 billion man-days of employment over the past four years. education and employment offer hope in face of challenges. SHARE A VISION FOR tHE FUtURE. BE ONE WItH INDIA.

EqUALItY FOR ALL EDUCAtION FOR ALL EMPLOYMENt FOR ALL

Design in India

THE WORLD IS COMING TOGETHER TO SHAPE THE FUTURE OF CHANGECOmPeTe. COllaBORaTe. Co-Create witH inDia.

BUSINESS PLAN JURY ANIL MENON president, Globalisation and smart+connected communities, cisco systems BHARAt GOENKA co-founder & md, tally solutions CLAS NEUMANN senior vice president & Global Head, sap labs jERRY RAO member, indian angel network trustee, nasscom foundation LESA MItCHEL vice president, kauffmann foundation NIRMALYA KUMAR professor of marketing, director of centre for marketing and co-director, aditya v. Birla india centre, london Business school PAtRICK tURNER affiliate professor of entrepreneurship, insead SAMIR BARUA director, iim-ahmedabad SANjEEV BIKHCHANDANI founder & executive vice chairman, naukri.com SURENDRA jAIN managing director, sequoia capital WILFRIED AULBUR managing director & ceo, mercedes Benz india DESIGN JURY ABHIMANYU KULKARNI Head, philips design india ANIL SAINI director, design studio, General motors india BILL MOGGRIDGE director, smithsonian’s cooper-Hewitt, national design museum, usa COLLIN COLE senior vice president, frog design, usa jOHN tHACKARA director, doors of perception, The netherlands SAtISH GOKHALE managing director, design directions, india VALERIE CASEY founder, The designers accord, usa ESSAY JURY DAVID PILLING asia editor, financial times INDRA NOOYI chairman & ceo, pepsico ISHER AHLUWALIA vice chairperson, planning Board, punjab jAMES LAMONt new delhi Bureau chief, financial times LORD MEGHNAD DESAI, professor emeritus of economics, london school of economics RAMACHANDRA GUHA author & commentator MARtIN WOLF associate editor & chief economics editor, financial times POSTER DESIGN JURY ACHYUt PALAV calligrapher, india ERIK SPIEKERMANN creative director & managing partner, edenspiekermann Berlin FELIPE tABORDA professor, univercidade, rio de janeiro, Brazil IVAN CHERMAYEFF principal, chermayeff & Geismar, usa jEHANGIR jANI contemporary artist, india KEN CAtO chairman, cato purnell partners, australia SAGI HAVIV principal, chermayeff & Geismar, usa SUDHARSHAN DHEER Graphic communication concepts, india tOM GEISMAR principal, chermayeff & Geismar, usa PHOTOGRAPHY JURY ADRIAN FISK uk ARKO DAttA india DAN CHUNG uk GARY KNIGHt usa IAN tEH uk OLIVIA ARtHUR uk PRASHANt PANjIAR india

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CII has taken up the agenda of “Business for livelihood” for the year 2010-11. Businesses are part of civil society and creating livelihoods is the best act of corporate social responsibility. looking ahead, the focus for 2010-11 would be on the four key enablers for Sustainable enterprises: education, employability, Innovation and entrepreneurship. while education and employability help create a qualified and skilled workforce, Innovation and entrepreneurship would drive growth and employment generation.

with 64 offices and 7 Centres of excellence in india, and 8 overseas offices in australia, China, France, Germany, Singapore, South africa, uK, and uSa, as well as institutional partnerships with 223 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community.

Confederation of Indian Industry, The mantosh Sondhi Centre 23 Institutional area, lodi Road, new Delhi-110003, India

Phone: 91-11-24629994 - 7 • Fax: 91-11-24626149 • Email: [email protected] • www.cii.in

Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244CII Helpline toll free No: 1800-103-1244

Building Virtuous Cycles Securing Our Future - MyCII

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