“IF I had to make a busi-ness card and writesomething under myname,” says renownedIndian author and com-mentator GurcharanDas , “ i t would be‘cheerleader for India’s

reforms’.”In 1995, this former CEO for India and

Southeast Asia of Procter and Gamble decid-ed to quit his job after a 30-year career withthe consumer goods giant and devote himselffull-time to writing.

“I asked myself, ‘How long can an adultlook at the market share of Vicks Vaporuband Pampers?’ ” he said during our conversa-tion at the Singapore Civil Service Institute,where he was to deliver a lecture. “So I felttime to do something else. The economic re-forms were taking place in India and I wasvery excited by that.”

Mr Das has since established himself asone of the canniest observers of India’s econo-my and society, writing three non-fictionbooks including the highly acclaimed “IndiaUnbound” in 2000, which was translated into17 languages and turned into a BBC documen-tary. He has also written a novel and threeplays, one of which was performed off Broad-way, as well as scores of articles and essays.

Having studied moral philosophy at Har-vard, Mr Das has a knack for synthesis, draw-ing on multiple disciplines – history, econom-ics, ethics and sociology – and mixing them to-gether with a strong dose of practical corpo-rate wisdom.

He has been a consistent and eloquentproselytiser for India’s economic and social re-forms, debunking various myths put out – of-ten for political reasons – by opponents.

One of them, for instance, is the idea thatIndia’s reforms and modernisation are lead-ing to Westernisation and are therefore unwel-come.

“There is a lot of confusion about this,” hepoints out. “For instance, some people in theBJP (the Bharatiya Janata Party, India’s larg-est opposition party) think modernisationequals Westernisation. But they forget that200 years ago, the West was also pre-mod-ern. The category of modernity is very differ-ent from the category of Westernisation. Mo-dernity stands for liberty and equality of hu-man beings. It’s a universal category. It hasnothing to do with eating McDonald’s ham-burgers or drinking Coke. That may be West-ernisation. But it’s not modernisation.”

He concedes, though, that to the extentmodernisation is associated with economicopenness, it will entail a degree of Westernisa-tion. “But that goes back to how secure youare and your self-assuredness.”

He explains that for many Indians, West-ernisation is more a means than an end. “In‘India Unbound’, I wrote about a young boy inTamil Nadu who said he wanted to be BillGates. He was a low-caste, 14-year-old boy.He was earning 450 rupees a month – aboutS$14 – waiting on tables. In the evenings hewould get on his bicycle and go to the neigh-bouring village to take computer classes. Hetold me he had discovered the secret of suc-cess. I asked him what it was and he said, ‘I

need to learn 400 words of English’. I asked,‘Why 400?’ He said, ‘Oh, to pass TOEFL (TheTest of English as a Foreign Language, a pre-requisite for US university admission)’. “Sothat’s the attitude to the English language –this is just another skill, for God sake.

Mr Das adds: “I don’t worry about the ef-fects of foreign investment either. It brings inmanagerial and technological skills. And Indi-ans are quite happy to take all that technologywithout losing their souls. Whether becauseof its religion or its society, India is a very root-ed culture.”

Talking about foreign investment, manyforeign companies have found the goingtough in India. Even iconic brands, such as Co-ca-Cola, did not find it easy taking on Indiancompetitors, and in some cases (like Coke),were forced to buy them out. Mr Das’s owncompany, Procter and Gamble, did not havean easy time of it either, competing againstlow-cost Indian manufacturers of so-called“fast-moving consumer goods” like soaps anddetergents.

“In any country with a strong tradition ofentrepreneurship, a multinational companywill always find it has a battle on its hands,”says Mr Das. “If you give Indian entrepre-neurs half a chance, they are quite capable ofbecoming very competitive.

“And where does this come from? I knowwe are always negative about the whole issueof caste. But caste can also be very positive.We have had a merchant caste for thousandsof years. Now the merchants have had lots ofproblems, but one thing they know is how toaccumulate capital. So when you open aneconomy and you have a large group of peo-

ple who really know how to accumulate capi-tal, it’s a big advantage.

“If you look at the Forbes billionaire list,you might be surprised to see that two-thirdsof the Indians on the list are ‘banias’ (tradi-tionally India’s merchant caste). So for India,having a merchant caste is a national competi-tive advantage.” (Indeed, most Indian billion-aires, including the Ambani brothers Mukeshand Anil, the steel tycoon Lakshmi Mittal, tele-com magnate Sunil Bharti Mittal and the met-als mogul Anil Agarwal, hail from the mer-chant caste.)

In the future, Mr Das believes India’s entre-preneurs will increasingly focus their atten-tion on manufacturing.

“What will drive India to become a manu-

facturing nation – I don’t like to use the word‘power’ – is the SEZ policy,” he points out, re-ferring to the Special Economic Zones thatare now proliferating in India and wheremore business-friendly laws and regulationsapply.

“Kamal Nath (India’s Commerce Minister)may not realise it, but he has let the genie outof the bottle. And now, what the SEZ policy isdoing is creating world-class infrastructure. Itis a flawed policy in some ways. There did nothave to be so many financial incentives, for ex-ample. There should have been open biddingfor SEZs. And some SEZs are too small.

“But life is never perfect. And often, theperfect is the enemy of the good. So it’s betterto have a second-class policy that’s in theright direction than wait for a first-class poli-cy.

“So 10 years from now, we will no longerbe describing India as the back office of theworld and China as the shop floor. Both willresemble each other more. Services are goingto come up in China and manufacturing willcome up in India.”

But despite some convergence, the twocountries operate in totally different ways –and will continue to do so, says Mr Das. “Thetwo systems are very, very different, so thereare limits to what each can take from the oth-er,” he explains. “It’s very easy for people tosay, let us have the infrastructure of China.But in China, the government can say ‘Wewant a road’, and it’s built in one year. In In-dia, it takes five years, because people go tocourt, they want to protect their property,they want to be compensated, which slowsthings down. That’s one factor.

“China also has a different history. Therewere the emperors, the mandarins, there wasmore discipline. In India, every villagethought it was independent, no matter whoruled in Delhi. I remember a Catholic ladyonce asked me, ‘Don’t you have a hierarchythe equivalent of your church in Hinduism’? Isaid, ‘No – first of all, there is no equivalent,and then every village priest in 500,000 villag-es across India believes he’s the Pope’.”

The ineffectiveness of government in Indiais a particularly pressing problem. Mr Dashas often spoken out in favour of private provi-sion of services such as health and education.He sometimes gets flak for that.

“Some people ask me, ‘Are you a neo-liber-al? Are you suggesting a minimalist state?’ Isay, it’s not an ideological issue. If the stateprovided good education and good hospitals,who would be against it? My position is, whocares if it’s public or private? We want goodschools and hospitals.”

But he concedes that making the statemore effective is one of India’s more urgentchallenges.

“Frankly, it is not going to be as easy aseconomic reform,” he says. “For a start, itwould help to have a stronger leader. Chinawas lucky to have Deng Xiaoping. Englandhad Margaret Thatcher. These leaders madeenormous changes in their societies. Unfortu-nately, we can’t wait to have a Deng or aThatcher. We have to live with whoever ourdemocracy throws up.”

One crucial administrative reform, he sug-gests, would be to reward people in govern-ment on the basis of performance rather thanseniority – and without fear of favour.

“Today, we have a situation where one outof four primary school teachers in govern-ment schools just doesn’t show up,” he says.“The Secretary of Education should be hauledup and asked, ‘Why are your teachers notshowing up?’ It’s an issue of the secretary’sperformance.”

Mr Das is hopeful, though, that India’s in-creasingly demanding middle classes will as-sert themselves and make a difference.

He explains: “In 1980, India’s middle classwas only about 8 per cent of the population.Today it’s 28 per cent, and in 2020 it will be50 per cent. That means politics will change.Those middle-class mothers are going to de-mand good schools. Change will be driven

from the bottom up, and it is already happen-ing.”

But while India’s middle class is growing,so is income inequality. The gini coefficient –the classic measure of inequality – has steadi-ly risen since the launch of reforms in 1991 –although it is lower than in China. Economistsworry that rising inequality points to growththat is not broad based and also threatens so-cial cohesion – as evidenced by rising ruralprotests in China and sporadic insurgenciesin parts of India.

Mr Das rubbishes concerns about inequali-ty. “The issue is not inequality, the issue ispoverty,” he says. “One statistic that not manypeople know is that every year for the past 25years, one per cent of people in India havebeen coming out of poverty. If you add themall up, it comes to 200 million people. Admit-tedly it’s a low poverty line, one US dollar aday. But the point is, the percentage of poorhas come down since 1980, from around 45per cent of the population to around 20 percent of a much larger population.”

As for the rural insurgencies, Mr Dasclaims they are the result not of inequality butof poor governance. “When a car company ad-vertises one of its beautiful cars on TV, mostpeople in India cannot buy that car,” he says.“But you don’t get a revolution because ofthat. What you get is an aspiration.

“So the big issue for India is what takespeople out of poverty. A large part of the an-swer is equality of opportunity. If you give peo-ple good schools and healthcare and leavethem alone, you won’t need employment guar-antee schemes and other such rubbish that

the government is trying to push through.Just make sure schools are good and peoplehave access to them. Then they’ll rise on theirown.

“Today’s Indian middle class did not waitaround for entitlements and so on. Theypulled themselves up by their bootstraps.They even take education into their ownhands. What do they do when the govern-ment doesn’t provide good schools? Theystart private schools in the slums. Theycharge just $4 a month. But they still makemoney and still give a better education thangovernment schools.

“So for me, all this talk about inequality isjust a lot of hot air. Just make sure there ishigh growth, provide education and healthand equality of opportunity, and people willautomatically rise up the ladder. That’s a sim-ple answer.”

India’s high growth, at least, will continue,says Mr Das. “It won’t matter much who’s inpower. If we are lucky and have a real reform-er, we can raise our growth rate very quicklyto 9-10 per cent and we’ll save 20 years. But ifwe bumble along, I would still say it won’tmatter too much. Because the Indian econo-my grows at night, when the government isasleep.”

India’s reforms will be “excruciatinglyslow”, he feels, but they too will continue.That’s just how it is in India’s noisy and chaot-ic democracy, and how it will be.

On the latter issue, Mr Das says: “Youknow, my mother asks me, ‘You keep sayingChina is growing at 10 per cent and India isgrowing at 8 per cent. What big differencedoes this 2 per cent make?’

“I say to her, ‘Well, 2 per cent means youcan advance your progress by 20 years and awhole generation can be lifted out of poverty.’And then she says, ‘Look, we’ve already wait-ed 3,000 years for this moment. So let’s justdo it the Indian way – let’s do it with our de-mocracy’.

“In fact, I suspect that’s how the averageIndian also feels. I don’t think anybody wouldwant to give up our democracy for a slightlyhigher growth rate.”

The Raffles Conversation is broughtto you through a specialarrangement with Raffles Hotels &Resorts. A collection of luxuryhotels, Raffles Hotels and Resortsdistinguishes itself through thehighest standards of hospitality,service and cuisine. Its hotels inSingapore, Beijing, Cambodia,Beverly Hills, Dubai and theCaribbean are rated among the verybest in the world. Underdevelopment are Raffles in Tianjin,Maldives, Macau, Moscow, Jakarta,Marrakech, Manila, Bali, Seychellesand St Lucia.

‘All this talk aboutinequality is just a lot ofhot air. Just make surethere is high growth,provide education andhealth and equality ofopportunity, and peoplewill automatically riseup the ladder.’

– Gurcharan Das

‘Modernity stands forliberty and equality ofhuman beings. It’s auniversal category; it’sgot nothing to do witheating McDonald’shamburgers or drinkingCoke.’

– Gurcharan Das

Author Gurcharan Das talks to VIKRAM KHANNA about what makes India’s economy tick

ARTHUR LEE

Cheerleader for India’s reforms

4 THE RAFFLES CONVERSATION The Business Times, Weekend Edition, August 16-17, 2008