IIMK Students’ Papers in China ConferenceWill the growing Chinese Whispers Find their Voices?Lean Thinking in India and China-A Comparative Study

Social entrepreneurship in China

GEOPOLITICS

INTERVIEWSAshok Kantha

Indian Ambassador Designate to China

V O L U M E 1 N O . 3 | | D E C E M B E R 2 0 1 3

6 T H A L L I N D I A C O N F E R E N C E O F C H I N A S T U D I E SS P E C I A L E D I T I O N

E D I T O R I A LI IM Kozhikode successful ly hosted the 6th Al l India Conference on China Studies , a f lagship event of the Inst itute of Chinese Studies ( ICS) , Delhi during 12th to 14th December 2013. The theme of this year ’s conference was “Reforms, Management and Soc ia l T ransformat ion in China”.EPS, being the economic , pol i t ical and social interest group of I IM Kozhikode, hosted al l the student act iv it ies and part ic ipat ion in the conference. This came out to be an important conf luence of learn ing , management and init iat ives for al l the students. The interact ion between the students of I IMK and the students who came from al l over India to attend the conference c reated a un ique p lat form of exchange for intel lectual minds. Students also got the opportunity to interact with some of the eminent d ignitar ies . The quintessent ia l outcome of al l these is the special edit ion of EPS magazine “Pragati” .We are very happy to present you this special edit ion of “Pragati” , magazine from Economics , Po l i t i cs and Soc ia l sc iences (EPS) Interest Group of I IM Kozhikode. This edit ion contains the br ief versions of papers presented by I IMK students in the China summit and some br ief interviews of some of the dignitar ies. This is a result of t i re less effort and dedicat ion from the student members of the group and endless inspirat ion and help from the faculty.Hope al l of you wi l l enjoy the magazine!!

Sincerely ,Team EPSeps@iimk.ac. in

E D I TO R I A L B O A R D

B I S WA P R AT E E M DA S

D E B TA NU D U T TA

DE S I G N

S A N J E E T K U MA R

FA C U LT Y A D V I S O R

D R . G . V E N K AT R A MA N

E P S C O O R DI N ATO R S

A J I N K Y A L O K A R E

D E B TA NU D U T TA

MA N J U N AT HA B E L G E R E

S U R B H I V E R MA

indian institute of managementkozhikode

C O N T E N T SP A P E R S B Y I I M K S T U D E N T S I N T H E C H I N A C O N F E R E N C E

Will the groWing Chinese Whispers Find their VoiCes?by Somya Barpanda

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soCial entrepreneurship in China

by Sreevas SahasranamamPage 3

lean thinking in india and China-a ComparatiVe study

by Anand Gurumurthy and Gopalakrishnan NarayanamurthyPage 4

I N T E R V I E W S F R O M T H E C H I N A C O N F E R E N C E

raVi Bhootalingam An industry veteran and professional, sharing his insights about his experiences from china

page 5manoranjan mohanty Chairperson Institute of China Studies(ICS), a Political Scientist and a China scholar.

page 5sanjay ChaturVedi An expert in Geo-politics, he takes us into the depth of the contemporary Geo-politics and its multi fold dimensions unfolding throughout the world

page 6ashok kantha Secretary (East), Ministry of External Affairs & Ambassador-Designate to the People’s Republic of China

page 6alka aCharya

Director & Senior Fellow, ICS, an eminent foreign policy expert on Sino-Indian relations & East Asian region and a former member on the National Security Advisory Board

page 7proF Vamsi VakulaBharanam An eminent economist, working on changing dynaics of inequality in contemporary economies of India and China

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BY SOMYA BARPANDAPGP STUDENT, 2013-15 BATCH (IIM KOZHIKODE)

those of 2010. With the middle class now forms a major chunk (around 40%) of the Chinese urban population and the problem of rural-urban migration going worse, CCP has reason enough to be wary of this trend.

ii)The Struggle against State’s Land Grabs: Given the weak legislation on private-property rights and alliances of the government with the developers, the inhabitants of the land under consideration for acquisition hardly get any due compensation. Civil unrest expert Yu Jianrong from CASS wrote in 2010 that land-disputes were the reason for over 60% of social disturbances in rural China.As per some media reports, Xianghe County in Hebei province bordering the Chinese capital Beijing has had local officials taking away hundreds of acres of land from farmers to make way for construction of luxury-villas by developers. The compensation given in this case was less than 50% of the market-value.

iii)Against Environmental Destruction: China’s three decades of stupendous economic growth hasn’t come sans a heavy price. Environment is fast emerging as the most sensitive issue in China. With Beijing-pedestrians beginning to wear anti-toxin masks, pollution especially is known to soon replace land-disputes as the main cause of social-unrest. The recent success of a protest against a para-xylene plant in South-western provincial capital city of Kunming received significant international attention.

INTRODUCTIONPopular media across the globe always loves speculating about the political-implications of the rising social unrest in China. The academia however has a more researched and balanced view on the issue. This article puts forth the views of both soothsayers who

vouch for the imminent overthrowal of Chinese Communist Party (CCP) in the near future and of the proponents of the continued resilience of the Party in the face of the brewing social storm.

PRO-BREAKDOWN STAND: THE WHISPERS ARE GROWING LOUDERThe mainly cited sources of social-unrest are:

Marches and DemonstrationsPost-Tiananmen, no stone was left unturned by the CCP in hushing up all anti-government voices. Of late however, the protestors seem to be returning to the streets. 2011 alone saw an estimated 180,0001 “mass incidents”. That amounts to an average of 400 instances of public disorder every single day in that particular year. The major areas of street-protests are:i)Worker Protests: In the face of dipping wages and worsening worker-conditions, the worker-strikers are growing militant. As per the report of Chinese Academy of Social Sciences (CASS), the strikes of 2011 were bolder and better organised as compared to

W I L L T H E G R O W I N G C H I N E S E W H I S P E R S F I N D T H E I R V O I C E S ?

THE RISING POWER OF SOCIAL MEDIAThis is the newest serious source of threat to social-stability in China. Horizon, a Beijing-based polling company, reported a “big drop” (by ten percentage points) in confidence quotient of the public in the government in 2010. According to Victor Yuan, this decline has been a result of the rising prominence of microblogs- Sina Weibo. While it was easy downplaying or belittling outbreak of protests three to four years back, today any incident of public disturbance, the cause behind it and the measures undertaken by police to contain it become a matter of intense debate and discussion on Weibo. Weibo has proven itself as a good platform to uncover cases of political-corruption. And online-regulation doesn’t deter micro-bloggers who often cleverly circumvent rules. Weibo for instance saw the usage of May 35 to refer to the Tiananmen massacre-date of “June 4” (a banned term on internet).

Silent and Subtle Protest ArtLack of liberty, thrusting of a propagandist attitude by the state and a constant fear of being put into “re-education centres”, are some of the many problems faced by Chinese artists. Against this backdrop, Chinese protest-art depicts how personal expression of dissent can take shape under a draconian-regime. Yue Minjun’s famous painting Execution clearly incorporates elements of Tiananmen Square massacre. Yet Yue refuses to accept Tiananmen as the motivation behind the masterpiece. So, though there is anguish, its open expression has mostly been restrained. Having said that, a handful of artists turned artist-activists have been very vocal about their anger against the government. Liu Bolin’s 2006 painting-series Hiding in The City features a painted Bolin camouflaged into various urban-settings in Beijing and comments on the vulnerability of Chinese artists. His Shadow-series highlights the environmental repercussions of unscrupulous urbanisation. Such muted but impactful form of protest has generated a lot of interest.

ANTI-BREAKDOWN STAND: THE WHISPERS CAN’T GRADUATE TO STRONG VOICESWhile prominent intellectuals like Zhang Musheng describe present day China to be “playing pass the parcel with a time bomb”, there is another set of academics that derides such ideas. They mainly support their side of the argument by citing mainly the following reasons:

a)Systematic and Strict Domestic Control: Chinese State by now seems to have acquired unrivalled mastery over managing public outrage and nipping protests at their budding stages. Over ten government ministries Ministry of Public Security, Ministry of State Security, Ministry of Supervision and Ministry of Justice, are responsible for averting the spread of social-disturbance. The muscle-power to these ministries is provided by the People’s Armed Police, local militias and even hired goons. These “Big Brothers”, have been accused of torturing human rights activists in “re-education camps”. The government’s internet-censorship mechanism called the Great Firewall or the Golden Shield Project keeps a tab on online-activities of all internet-users. Banned words like “Ferrari”2 , “sex”, “six four”3 , “blind man”4 , “Egypt” etc. when typed into search engines return no results. Controls on social

media, mass messaging make it difficult for people to coordinate amongst themselves to collectively protest at larger scales.

b)Inherent Weaknesses of Protests: Protests are few in number, primarily about local issues, mostly concentrated in the countryside (where protesters are poorly organised and easy to manage). Hardly have instances of nation-wide, synchronised protests, regarding the larger national-political-cause, emerged. Opinion polls5 suggest that though people look forward to a more corruption-free, accountable and empathetic state, they don’t really want a major restructuring of the politics in the country. Hence, it seems that the pre-conditions are just not perfectly right for a full-scale social and political revolution.

POSSIBLE FUTURE SCENARIO The government of the day in China understands well that it can only ill-afford to ignore the rising dissatisfaction and resentment of the public against it. However, the Chinese leadership is unlikely to borrow from Western notions of political reform. The present generation leadership especially comes across as confident and adaptive and presents hope for greater political reform. Steps undertaken to promote intra-party democratisation in Chinese Communist Party and the conduct of local elections show that the government is ready to go slow and steady on reforms. Thus, what one could expect is a more pluralistic political system and a more open Chinese society in the future with better state-public equations. However, it is highly unlikely for China to see a sudden change in power arrangements or a direct plunge into democracy. What might be likely, in the given socio-political scenario, is “democratisation with Chinese characteristics” which will be characterised by the government trying to balance ‘maintenance of party’s political-control’ with ‘gradual conferring of greater rights to citizens in order to appease them and avert their ire’.

REFERENCES1.Basu, Kaushik(2009), “China and India: Idiosyncratic Paths to High Growth”, Economic and Political Weekly2.The Tiananmen Papers: The Chinese Leadership’s Decision to Use Force Against Their Own People—In Their Own Words, Zhang Liang, comp., Andrew J. Nathan and Perry Link, eds. (New York: Public Affairs Books, 2001)3.Wong J (2009), Better Governance, not Democracy, as China’s Immediate Development Challenge, East Asia Policy4.Lai H (2010), Uneven Opening of China’s Society, Economy, and Politics: pro-growth authoritarian governance and protests in China, Journal of Contemporary China

1As per Chinese Academy of Social Sciences (CASS)2To suppress rumours about the son of a high-ranking government official caught in a high-speed car crash3Shorthand for June, 6 i.e. the Tiananmen Square Massacre Anniversary4Refers to civil rights activist lawyer Chen Guangcheng who had been put under house-arrest in 20115As per survey results published in Political Research Quarterly and the survey results of 6th Wave World Values Survey (2012-13)

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SREEVAS SAHASRANAMAMFPM STUDENT, STRATEGIC MANAGEMENT AREA (IIM KOZHIKODE)

article, I would like to portray the evolution of the social enterprise sector in China.

EVOLUTION OF SOCIAL ENTERPRISE SECTOR IN CHINAThe period 1949-78, saw a political distrust of social autonomy and non-profits in China. Social organisations were not allowed to exist except those few that had been fully integrated into the governing regime as de facto state agencies. After a reform in 1978, social organization with a formal structure independent of government emerged. However, these Government Organised Non-Governmental Organisations (GONGOs), were initiated, financed, and directed by their sponsoring governmental agencies, featuring a model of organisational extension of the state. This practise was institutionalised by two State Council bylaws issued in 1998 that stipulated a Dual Management System (DMS) of non-profit organisations. This DMS required the non-profit to register with the Ministry of Civil Affairs or its local branch and at a professional supervisory agency (also a government office) to get a legitimate social organization status. And to be eligible for registration, there needs to be a sponsoring governmental agency to serve as its business supervisor. It was difficult for ordinary citizens to first initiate a non-profit, then get the support from a relevant supervisory agency, and finally get it registered. Unregistered non-profits on the other hand, faced insurmountable legal barriers. Over the past decade, the government support is

Transitional economies like India and China having an estimated combined population of 2.4 billion people, face similar developmental challenges like poverty, illiteracy, poor healthcare, and unemployment. Social entrepreneurship

is considered as a means for catering to these developmental challenges. Social entrepreneurship combines the passion of a social mission with an image of business-like discipline, innovation, and determination. One of the most comprehensive definition of social entrepreneurship comes from Professor Dees’s paper which states, “Social entrepreneurship combines the passion of a social mission with an image of business-like discipline, innovation, and determination. It includes not just not-for-profit ventures, but also social purpose business ventures, such as for-profit community development banks, and hybrid organizations mixing not-for-profit and for-profit elements, such as homeless shelters that start businesses to train and employ their residents.”India is considered as one of the world’s largest breeding grounds for mission-driven companies called “social enterprises”. In the top ten most innovative companies’ in India rankings by Fast Company, 3 social enterprises are featured. In contrast, the social enterprise sector is still nascent in neighbouring country China. In this

S O C I A L E N T R E P R E N E U R S H I P I N C H I N A

increasing. The first time the term ‘start-up’ appeared in the premier’s government work report was in 1997. Support for private business start-ups became a consistent part of the government work report for 2001 to 2005, 2009, and 2010. In 2001, the Ministry of Labour and Social Security and eight other central administrative organs issued a new policy, titled “Opinions on Promoting Community-based Employment”. The aim of this policy was to channel the growing demand for community-based services into a new solution for meeting large-scale urban unemployment needs. This re-employment model is referred to as work integration social enterprise (WISE). In June 2002, the standing committee of the National People’s Congress signed the Law on the Promotion of Small- and Medium-Sized Enterprises, officially endorsing private business start-ups for the first time in modern Chinese history. In January 2004, China Social Work Research published the first academic journal article to introduce the idea of a social enterprise. In July 2004, the Global Links Initiative, the first membership organization that promotes social enterprises in China, was founded in the United Kingdom. The concept began to gain popularity from 2006, after two internationally bestselling books about social entrepreneurship were translated into Chinese: How to Change the World by David Bornstein and Banker to the Poor by Mohammed Yunus. In 2007, two influential social enterprise support agencies were founded: the China Social Entrepreneur Foundation and the Non-Profit Incubator. The disaster response and relief provided by social entrepreneurs during the Sichuan earthquake in 2008 led to greater prominence of social entrepreneurship.

In May 2010, the State Council introduced a policy to boost the role of non-state agencies in various public sectors, such as urban facilities, welfare housing, health care, education, services for the elderly and the disabled, culture and entertainment. The Chinese government also acknowledged the importance of social entrepreneurship as a vehicle of socio-economic development and is taking more steps to cultivate momentum of social entrepreneurship in China recently. More social enterprises are making an impact in China in recent period like Shenzen’s Canyou which won the UK social enterprise award for 2012.The central government’s role clearly hampered the large scale development of social enterprise sector in China. However, over the past decade a number of pro-policies is aiding the sector’s growth. The results are also evident from the case of Shenzen’s Canyou group and others.

For references and a detailed draft of the article, kindly view the paper titled “Conceptual business model framework for nascent social entrepreneurs in transitional economies” available in the proceedings of 6th All India Conference of China Studies held at Indian Institute of Management Kozhikode, pp. 72-86.

Participants of the 6th All India Con-ference of China Studies

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GOPALAKRISHNAN NARAYANAMURTHYFPM STUDENT-QM & OM AREA

(IIM KOZHIKODE)addressed using primary data from Indian industries and secondary data from research publications on Chinese industries that have embraced LT:RQ 1: What are the lean practices adopted in the organizations in China?RQ 2: What are the lean practices adopted in the organizations in India?RQ 3: How are practices adopted differing across these two countries and what are the underlying reasons for it?43 Indian case organizations and 14 papers published in the context of implementing LT in China were used as source of data for answering the research questions. Various factors such as Organization type, Organization business, Methodology adopted and Lean practices employed were used as the structural attributes to perform the review process. An extensive set of lean tools and practices were obtained from the literature and same was checked for implementation in these two country contexts. The results revealed that companies in India implement more tools and practices from the armoury of lean than that of China. Apart from this, it also provided

Lean Thinking (LT) has been widely adopted by several organizations across the globe to attain competitive advantage which would in turn help firms to minimize cost and maximize profit. As India and China are emerging as manufacturing hubs

for automotive components and plastic & electronic components respectively, many business organizations in these countries are attempting to transform through LT to stay competitive. For example, a study by Taj (2008) revealed that Chinese companies have adopted LT and on the other hand, a study by Eswaramoorthi et al. (2011) revealed that many Indian companies – especially from the machine tool sector has implemented lean. Both these countries are seen as potential manufacturing hubs by the Western industries and the auto component industries in both these countries are competing to outwit each other to increase their business. Hence, it becomes imperative to understand how the industries in both these countries implement lean practices to achieve significant competitive advantage over another apart from probing the reasons for the similarities and differences noticed in the implementation. Hence in this study, the following three research questions are being

L E A N T H I N K I N G I N I N D I A A N D C H I N AA C O M PA R AT I V E S T U D Y

ANAND GURUMURTHY ASSOCIATE PROFESSOR - QM & OM AREA (IIM KOZHIKODE)

the list of practices of LT that are being implemented and not implemented widely in India and China. Also, the study showed that in India, lean practices adoption is highly skewed towards manufacturing and very few services company is found to implement them. However, not many companies are implementing LT in China especially across different industrial sectors in comparison to implementation of LT in India. Therefore the manufacturing industries in China should attempt to study more about implementing LT, while in the case of India the managers should be attempting to implement LT in service organizations to achieve significant competitive advantage thereby answering the research questions 1 and 2. The differences in implementation across firms in India and China (to answer the research question 3) can also be attributed to various factors such as Demographic and Cultural Impact (Bollbach, 2012; Aycan et al. 2000; Cagliano et al. 2011; Lo & Liu, 2009), Public Policy and Government Impact (Keshava, 2008; Huang & Khanna, 2003), Human Resource Know-How (Lo & Liu, 2009), Impact of FDI and the Impact of International Company’s Market Entry (Sutton, 2004), to name a few. Finally, it is believed that this preliminary study is unique in terms of its contribution, as hardly any studies are available in the literature that attempts to understand the practices that are adopted and not adopted in India and China with few possible reasoning’s. Furthermore, extension of the current study can be carried out to also compare the performance measures adopted in these two countries while implementing lean. One of the limitations of this piece of work is the non-accessibility and non-availability of the real time data from Chinese organizations and hence comparison inferences might change when real time data are collected from both the countries. However, this can be considered as future scope of this work.

REFERENCESAycan, Z., Kanungo, R., Mendonca, M., Yu, K., Deller, J., Stahl, G., & Kurshid, A. (2000). Impact of culture on human resource management practices: A 10‐country comparison. Applied Psychology, 49(1), 192-221.

Bollbach, M. (2012). Transfer of Lean Manufacturing to China–lessons from two German-Chinese production plants. Applied Mechanics and Materials, 110, 2087-2093.

Cagliano, R., Caniato, F., Golini, R., Longoni, A., & Micelotta, E. (2011). The impact of country culture on the adoption of new forms of work organization. International Journal of Operations & Production Management, 31(3), 297-323.

Eswaramoorthi, M., Kathiresan, G. R., Prasad, P. S. S., and Mohanram, P. V. (2011). A survey on lean practices in Indian machine tool industries. The International Journal of Advanced Manufacturing Technology, 52 (9), 1091-1101.

Huang, Y., & Khanna, T. (2003). Can India overtake china?. Foreign Policy, 137, 74-81.

Keshava, S. R. (2008). The effect of FDI on India and Chinese economy: A comparative analysis. In Second Singapore International Conference on Finance 2008, Singapore, 17-18 July 2008.

Lo, C. P., & Liu, B. J. (2009). Why India is mainly engaged in offshore service activities, while China is disproportionately engaged in manufacturing?. China Economic Review, 20(2), 236-245.

Sutton, J. (2004). The auto-component supply chain in China and India: A benchmarking study. Suntory and Toyota International Centre for Economics and Related Disciplines, The London School of Economics and Political Science. Available at http://eprints.lse.ac.uk/2292/1/The_Auto-component_Supply_Chain_in_China_and_India_-_A_Benchmark_Study.pdf (accessed on 19 October 2013).Taj, S. (2008). Lean manufacturing performance in China: Assessment of 65 manufacturing plants. Journal of Manufacturing Technology Management, 19(2), pp. 217-234.

Artists performing during the cultural event foe the guests.Photograph by: Sharada P. Seth (PGP Student, IIMK)

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INTERVIEWS M R . R AV I B H O O T H A L I N G A MF o r m e r P r e s i d e n t o f T h e O b e r o i G r o u p o f H o t e l s

I n t e r v i e w e d b y M a n j u n a t h a B e l g e re & P u r b i t a M u n s i

Mr. Ravi Bhoothalingam has served as the President of The Oberoi Group of Hotels, the Head of Personnel Worldwide with BAT, the Managing Director of VST Industries Ltd, and the Director, ITC Limited. He has spent a significant amount of time in the field of Human Resource Development, during his professional career. He has been a member of the govt. committee, Joint Study Group of India, China and Myanmar. He has also served as a member of Confideration of Indian Industry for Mongolia and Myanmar.Apart from his professional excellence Mr. Bhoothalingam is an easily approachable, unassuming and disciplined person. He is a strong believer of spirituality and believes in its co-existence with business. Influenced by the works of Sri Sri Ravishankar, he attended the ‘Art of Living’ workshop which according to him has helped him to prosper as a professional and also as an individual.Mr. Bhoothalingam developed immense interest on China, when he was the CEO and President of Oberoi Hotels during which he had to make frequent business trips to China. He like to involve with youngsters more often, which according to him benefits mutually, he draws the energy from the youth and provides his

invaluable guidance to them. Mr. Bhoothalingam has visited China more than 25 times. He started learning Mandarin in 2005 and now he has mastered the Chinese language.

On behalf of the students’ fraternity, we asked him what he has to say about ‘right career choice’, as most of us would be standing in the cross-roads to make a wise career choice.One of his interesting suggestions to the interviewing panel of students was to always have multiple options in life and to make every attempt to develop required skills for those op-tions. Multiple options makes one develop multiple skills and the cross-points of these skillsets become the selling-point in career. One should make a wise forecast of the future and master multiple skillsets that would differentiate him/her from the rest. It is very crucial to make a prudent study of the environment and map ones mastered skillsets to the reality.He acknowledges that learning is a continuous process and he suggested to the students that education also should be a continuous process rather than being a heap of education during the initial stages of life and none later.

Why is China important to India or rather Indian companies?China is the most populous country and no other country can afford to turn a blind eye to such huge market (almost 20% of the to-tal world population). If we do not find China interesting, then we are just shrugging off the opportunity. It is wise to start finding out the facts about China and try fig-uring out where the opportunity exists to enter Chinese mar-ket. It is of course a challenging task, but worth putting effort.

How does he see China as a job-market?China being the second largest economy of the world, is a lucrative market for employment. It is conspicuous that the growth of US economy has considerably slowed down, where-as on the other hand China is picking up quite fast. In such a scenario, it is imperative for India to establish a proper busi-ness link with China. With the increasing job demand in China, it is essential for the students to get familiar with the Chinese culture, geo-

political structure and make a detailed study about China so that it becomes relevant for them to go and work in the coun-try without hesitation. Their pre-attained sound knowledge about China would help them to be in a better position as a professional.In the next 5-7 years many Indian companies will find its presence in China and subsequently job opportunities would surge and people with relevant skillsets would have a higher demand for employment.The Chinese companies have started to imbibe employee re-taining methodologies. This in turn implies these companies would offer a better working environment and hence a con-ducive work place.

What structural and social changes are needed to create a connection between China & India?Apart from re-establishing proper trade relationship with Chi-na, it is necessary for us to get acquainted with the Chinese culture. We need to develop interest in the language, movies,

art and literature of the country. Cultural acquaintance would prob-ably help India to bridge the gap with China and utilize the upcom-ing scope of higher job demand and

establish a close knitted business relationship.

What additional things can India export to China?India can make a detailed study to penetrate the Chinese market. It has been observed that Indian restaurants, Indian form of yoga is doing very well in China. Out of the present 100,000 yoga-teachers only 20,000 are Indians. India can look into these avenues to improve their presence in China. Apart from that India can export semi-processed goods, sub-as-semblies etc.

What do you have to say about India’s support to Tibet? Is there a fear factor in not being vocal about Tibetian issue or

it is necessary for us to get acquainted with the chinese culture. we need to develop interest in the language, movies, art and literature of the country.

INTERVIEWS

large dams constructed across river Brahmaputra?China’s plan to build runoff-the-river dams in the upstream of Brahmaputra would anyways not affect inflows to India be-cause 90% of water that flows through India comes from this side of the Himalayas and rest 10% from Tibet. And talking of Tibetian issue, India is an open country, so when Dalai Lama came to stay in India, the country welcomed him. But he has been barred from carrying out any political activity within the country, as that would hurt the bilateral relations of India with China.

What is your opinion about the differences in the Industrial Relations between India and China? Do you think Industrial Relations in China are sustainable as it pro-employers?China has been more open a country than India, culturally and industrially. Their Industrial Relations has delivered results and we are still trying to catch up with them. Of late there has been considerable amount of changes in the Industrial Rela-tions policies and they are determined to make their policies employee friendly.

M R . M A N O R A N J A N M O H A N T YC h a i r p e r s o n I n s t i t u t e o f C h i n a S t u d i e s ( I C S )

I n t e r v i e w e d b y A k a s h B a s a k & R a v i K u m a r

Prof. ManoranjanMohanty (b.1942) is a Political Scientist and a China scholar with many publications on theoretical and empirical dimensions of social movements, human rights, development experience and regional role of India and China. He is the Editor of Social Change and a former Editor of China Report. His recent publications include Grass-roots Democracy in India and China (Co-ed. 2007), India: Social Development Report 2010 ( Ed. 2010) , Weapon of the Oppressed: An Inventory of People’s Rights in India ( Co-author, 2011), Land, Equity and Democracy ( Co-ed, 2012), and China’s Success Trap: Lessons for World Development ( Forthcoming), also the entry on Marxism and Neo-Marxism in the Sage Encyclopaedia on Global Studies (2012) and the entry on Maoism in the Macmillan Reference Encyclopaedia on Race and Racism (2013).

Can you share with us your experience of studying China. We understand you have been working on Wuxi, does India need a Wuxi ?I have researched extensively on China; its life, people, cul-ture, economy and trade. What particularly fascinated me and I spent over 20 years studying the phenomenon was the story of the Chinese town of Wuxi. It started off as a textile hub and went on to grow into an automobile and software hub in the subsequent years. The traditional silk producers used to receive village support to carry on their business. Soon agriculture and fisheries sector be-gan to emerge and business turned more commercial. Tourism too began to flourish with the development of the Tai Hu lake. However, widespread pollution in the last few decades to due to rapid development of chemical industries in this town has led to algal infestation in the lake. In the last 15 years Wu Xi has transformed into an IT hub. In short, the death of rural enter-prise has been a direct consequence of rapid urbanization in Wuxi which is now an industrial marvel. The entrepreneurial ventures in the model of co-operative societies can no longer be seen in Wuxi which is disappointing. Wuxi is an example of rapid growth at the expense of traditional rural enterpris-es, hence India need not have a Wuxi.

What is your view on the China growth story?While the China story is one of great fascination and excite-ment to talk about, one must look closely at the way this growth has come about. Some of the pillars of this growth have not been on very solid foundations. The housing market for instance reflects a deep divide between the urban and rural areas. Wide income disparity adds to a few owing many houses and yet several struggling to afford a basic dwelling. China’s population has perhaps been its strength when it came to the large workforce at its disposal. However, the

underlying issues of ownership, the growing demographic divide between the China’s young and the old is a cause of concern. The pace of industrialization and urbanization has not been sustainable with a mixed sequence of growth being seen with shifting emphasis from agricul-ture to services and then manufacturing.

What is the attitude of the Chinese towards India and De-mocracy?The Chinese view India as a place with “too much democ-racy”. But fight for democracy is slowly cropping up in China with labour strikes and groupism within the party being rampant. What is interesting to note is that recently multi-candidate elections took place at the township level. In short, there is conflict and desire for change.

the underlying issues of own-ership, the growing demographic divide between the China’s young and the old is a cause of concern

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INTERVIEWS S A N J AY C H AT U RV E D IP r o f e s s o r o f P o l i t i c a l S c i e n c e a t P u n j a b U n i v e r s i t y

I n t e r v i e w e d b y S a n d e s h P a t i l & S a m y a R a yThe interview started with a very innocuous which on first stance seemed to be an introductory question of our interview but rather it took us into the depth of the contemporary Geo-politics and its multi fold dimensions unfolding throughout the world.

What is Geo-politics? It is a new system of political sci-ence where states are considered as different spatial entities. The study of the natural environment of the state has led to the intro-duction of organic theory of the state. This is where the state keeps on evolving and adjusting itself into new spaces according to the internal requirements and the dynamics of its neighbour-hood. The concept of Geo-politics

was given at the beginning of the twentieth century by Rudolf Kjellén, a Swedish political scientist, who was inspired by the German geographer Friedrich Ratzel. Thus contemporary to that period social Darwinism also played a role when Ratzel postulated the organic nature of the states. Later the theories of geo politics were further expanded by great geo strategists of our age namely Alfred Thayer Mahan and Halford Mackind-er. Their works at that time had also given pseudo scientific explanation for imperialism and had influenced the working of the states.

How do you position the theories of Mahan and Mackinder which were given hundred years ago in this information age?I would say the theories of Mackinder have become more prominent nowadays owing to several international factors which include the component of global climatic change. Be-sides that both the concepts of Mackinder and Mahan are central to the studies of geo politics which is being actively used by the countries to strategize their foreign policies.I would like to start with the heartland theory of Mackind-er where he envisaged as per his famous quote- “Who rules East Europe commands the Heartland; Who rules the Heart-land commands the World Island; Who rules the World Island com-mands the World”Mackinder basically divided the world into the core World island which included Eurasia and Africa and the other continents like Amer-icas, Australia and Western Europe as the peripheral islands. According to him the peripheral islands would be using sea transport to communicate and trade with each other but ow-ing to the distance factor amongst themselves the heartland country would have the potential to easily terminate those transports and thus effectively control the entire world.Application of this theory became quite visible when during the world war Hitler’s primary objective behind operation Bar-barossa was to establish control over Ukraine and Caucasus and thus gaining resources in form of food grains and petro-leum reserves which would have been very important to es-

tablish autarky for the Third Reich. Secondly the emergence of USSR led to the establishment of a world power on the exact heartland area of the world. This zone replete with all the natural and human resources cat-apulted the Soviets as the most powerful land power in the history.

But at the same time countries like USA and British Empire had defied this logic and have maintained their prominent po-sition in the world?This is where Mahan steps in and most of his theories are quite conspicuous on the international geo politics. British Empire ruled over a quarter of the world just on the back of the strength of its navy. He believed that national supremacy is closely associated with the control of the seas, especially in terms of trade and commerce. Just citing the example of Suez Canal the British Empire effectively controlled the sea born trade of Europe with Asia. Even at this particular moment Mackinder’s geo politics remains relevant American’s have got their carrier fleet as the central instru-ment to promote and protect international interests through-out the globe. The naval bases of USA have remained opera-tional for the same strategic reasons for controlling sea lines of trade and hence protecting the sovereignty of its allies and commercial interests. In a sense I would say that Mackinder’s influence on the geo-politics of today has become highly rel-evant.

Then how do we relate Geo-politics to the current situation in East and south Asia?The American policy of pivot to Asia is heavily influenced through the current economic and political rise of China who is emerging over as one of the heartland powers and trying to spell dominance over the peripheral states. This is a classic

case of how a sea power would be using its assets and diplomacy to negotiate stability in internation-al equilibrium and simultaneously creating provisions to contain me-teoric rise of China in the Asia Pa-cific. China has also started deploy-ing naval assets in Indian ocean

and thus declaring its stake over the Indian ocean region. The Indian ocean and Pacific are increasingly getting integrated into a single interest zone for the contesting parties owing to the trade volumes this region handles and the presence of major powers like Japan, China and India in this region.Secondly an interesting phenomenon that is going to change the dimensions of navigation in coming times is the open-ing up of the Arctic ice sheet. As the arctic melts away due to global warming a new trade route to the Europe will be opened up and thus reducing the dependence of China on Suez and straits of Malacca. Thus American pivot to Asia makes log-

this is a classic case of how a sea power would be using its assets and diplomacy to negotiate stability in inter-national equilibrium and at the same creating provisions to contain meteoric rise of china in the region

INTERVIEWS

ical sense in order to maintain presence over this new sea route. Further the energy reserves of Arctic might lead to a new rush for resources towards the Arctic region. Further we can also speculate about the emergence of another heartland state namely Russia which gains the most on opening of such sea links over the Arctic.

Which books would you recommend for students interested to know more about Geopolitics?Land of the Seven Rivers: A Brief History of India’s Geography authored by Sanjeev SanyalMonsoon: The Indian Ocean and the Future of American Pow-er by Robert Kaplan K m panikkar – “India’s Mahan” wrote a book in 1945: India and Indian Ocean : an essay on the influence of sea power on Indian history.

M R . A S H O K K A N T H AA m b a s s a d o r - D e s i g n a t e t o t h e P e o p l e’s R e p u b l i c o f C h i n a

I n t e r v i e w e d b y S u r b h i Ve r m a & D e b t a n u D u t t aMr. Ashok Kantha, Secretary (East), Ministry of External Affairs and the Ambassador-Designate to the People’s Republic of China joined the Indian Foreign Service in July 1977 and studied Chinese Language at Nanyang University, Singapore from 1979 to 1981. He assumed the post of Secretary (East) on 24th May, 2013 on completion of his assignment as High Commissioner of India in Sri Lanka. Before the assignment in Sri Lanka, he was India’s High Commissioner to

Malaysia from April 2007 to November 2009. During the period 2003-2007, Mr. Kantha headed the East Asia Division of the Ministry of External Affairs. Earlier, he served as the Deputy Chief of Mission at the Indian Embassy in Kathmandu, Nepal from 1997-2000 and as the Consul General of India to Hong Kong and Macau from 2000 to 2003. Before 1997, Mr. Kantha worked in different capacities at Indian Missions in Singapore, China and the USA; and in the Ministry of External Affairs in New Delhi dealing with India’s relations with China, Pakistan, Afghanistan and Iran. In the mid-1980s, he served as Special Assistant to Chairman, Policy Planning Committee. Mr. Kantha was invited as the Chief Guest at the Inaugural function of the 6th All India Conference on China Studies.His speech on the strategic relationship of India and China and how both countries can leverage this relation to become dominant powers resonated with all the delegates and the audience. Mr. Kantha was very enthusiastic when EPS asked for a brief interview with him regarding the role the students of management schools can play in this evolution of global superpowers and his aspirations regarding his upcoming role to act as a successful communication channel between these two nations.

Sir, what are the outcomes do you expect from your stint in China?The role that I have been considered for has immense responsibilities and simultaneously has a huge potential as well. China is one of the most important countries in this continent and the world is patiently looking over the dynam-ics shared between these two nations. My main policy would be to foster more transparency and increase the collabora-tion of these nations in all fronts like trade and commerce, entertainment and education. Our economic and political re-lations have been cordial up to now and I hope these remain in the future as well.

Any specific issues do you have in your mind? There are many structural issues which we are facing as of today. For example, we have a huge trade deficit with China which is not sustainable. Actions must be taken to bridge this gap. FDI’s from China should be encouraged which will also help in capping our Fiscal Deficit. We should take steps which will step up our relations with them and help us

understand Chia better. Apart from the bilateral trade rela-tions, both these countries should engage together on many convergent issues such as world trade negotiations, proto-cols regarding climate change and various other regional and global issues. The contentious issues regarding the national boundaries should also be discussed so that peace prevails in these conflict areas.

Do you see more collaboration in the education sector (such as this academic conference) happening in the future?Yes, definitely. Right now, there are 10,000 students in China but most of them are pursuing a medical degree. But when these medical students come back to India they again have to answer an eligibility test which in a way negates all the qualifications acquired abroad. We must look into these ar-eas so that more students are encouraged to study in China. Also, there are a limited number of Chinese students in India. We can help in this by encouraging collaboration of educa-tional institutions which stand very limited as of today.

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INTERVIEWS A L K A A C H A RYAD i r e c t o r & S e n i o r F e l l o w, I C S

I n t e r v i e w e d b y S i m r a n P r a d h a n & M r i t y u n j a y B a s a kAlka Acharya served as a member on the National Security Advisory Board and was a nominee of Indian Government for the India-China Eminent Persons group. She is the author of China & India: Politics of Incremental Engagement in addition to contributing important chapters to several other books. A regular feature in the Economic and Political Weekly, she is also the Editor of China Report, and the joint editor of the book Crossing A Bridge of Dreams: 50 years of India-China. She is a Professor and the former Chairperson of the Centre for East Asian Studies, Jawaharlal Nehru University(JNU). Presently she is on deputation as Director and Senior Fellow of the ICS.

We started exploring about the role of National Security Adviso-

ry Board and the role of NSA on foreign and security policies of the country.This is basically an advisory panel to the NSA and the impact of its advisory role depends on the equation of the NSA with the PMO. The panel consisted with notable academicians, re-tired security experts.

Then the question drifted towards the foreign policy at the beginning of 21st century with Atal Bihari Vajpayee at its helm with Brajesh Mishra being the NSA at that period.Him being the inaugural holder of the office and the powers attached to the position his presence and strategy led to ma-jor tactical changes being implemented by the government at that time.

About the relevance of Look East policy and its implementa-tion during those days of looming nuclear threats and internal political turnmoilAfter two decades of continuous growth China has emerged as one of the most powerful nations on the international scale whose impact would be surely felt in the coming few decades.For the first time after few years of political uncertainty India had a stable government with a powerful PM who had the liberty to implement decision at his discretion besides being bogged down by intensive electoral politics. It was at this time initiatives to solve boundary disputes which culminated in Lahore bus journey to Pakistan. Even the same could be integrat-ed to the renewed vigour of the government to test its ballistic missile technology along with the nuclear tests in Pokhran.Secondly since Vajpayee not be-ing burdened by the Nehruvian legacy of functioning of diplo-macy, took forward the unilateral relationship building with the neighbours that has been started by PM I.K.Guzral to a new level.

About the string of pearlsIt is neither an Indian strategic formulation nor an explicit Chinese theory and has been rather been a widely accepted topic of discussion on media and strategist. Secondly these rhetoric has primarily originated from the west where they would like to prop up India and China as potential adversaries.

But as far she was concerned even with this type of policies of containment owing to the potential of two countries and the strategic depth that they possess it will be difficult for either of two countries to control each other in that respect. China definitely is not the enemy number one as portrayed in String of pearls. It will most likely be a short term objective by China to create pressure on India and unfortunately India has mostly responded to this developments without any strate-gic planning. Most of our actions has been to mitigate and mellow down any negative repercussion that might become visible in the near future

What do you think that Chinese leadership might be planning about India’s growth and and its implications on their own rise and dominance of the region ?Chinese have been much concerned about their own growth trajectory and have been planning to ensure its smooth tran-sition to a developed state considering the fact that the com-ing two decades are the decades of biggest opportunity. At the same time the interests of both the countries aren’t di-rectly inimical to each other

Have we got our security issues much more complicated due to the presence of unstable neighbours ?This issue has been further aggravated when the internation-al diplomacy has been shaped taking in concern the coalition parties in government where they had repeatedly as of late tried to assert their points and it seems continuing into the

foreseeable future. Thus as re-forms unfold the regional parties will remain important and it will become more interesting how the central government is able to han-dle such situations. The point of concern is what sort of impression

it’s going to give to the world as a country which is trying to project itself as a world power hasn’t been able to control its internal political constituent and was unable to push through a major landmark deal

About the awareness of China studies among the studentsThis is definitely the agenda of Institute of China Studies to spread the awareness among the students. Students, schol-ars and enthusiasts can check the website www.icsin.org for regular updates. We are also planning to open internship and short visiting fellowship for the students and scholars.

Students, scholars and enthusiasts can check the website www.icsin.org for regular updates. We are also planning to open internship and short visiting

fellowship for the students and scholars.

INTERVIEWS

P R O F. VA M S I VA K U L A B H A R A N A MA s s o c i a t e P r o f e s s o r o f E c o n o m i c s , U o H

I n t e r v i e w e d b y Ve n k a t e s h B & D i v y a E l i z a b e t h T h o m a s

Can you tell us about the de-velopment of the workforce in China? The Chinese workforce has a dual structure, like the Indian workforce: formal and informal. The formal workforce primarily comes from cities while the in-formal workforce is largely com-

prised of the rural urban migrants. Over the last 30 years, China has urbanized very significantly, which means that both the formal as well as informal sections of the workforce have increased vastly in numbers but there is a huge dif-ferential in terms of the pay, the earnings of the formal and the informal workforce and that is one of the main cause of rising inequality.

How is urbanization different in India and China?One major difference is that the Chinese economy has created lots of jobs- they have increased tremendously in manufacturing that is a known thing- whereas in the Indian case, we haven’t created enough employment because our growth has been service sector oriented and manufactur-ing jobs haven’t grown in large numbers. That’s the primary difference, which basically means that migrants coming in from rural areas in China can hope to find employment when they come to urban spaces, typically factory or manufactur-ing jobs, even if they are low paying and low quality- that is something to keep in mind about the Chinese jobs. In the Indian case, migration rates have picked up, but people come in without the expectation of finding factory jobs

Right now the Chinese manufacturing sector is slowing, with the rising of wages. Also, the urban population is expected to rise to about 1 billion in the next 30-40 years, so how do you see extra jobs being created there for another 400 million people?Post the 2008 crisis, everything is uncertain. We’re not sure which way the global economy is about to move. As of now, they have made only temporary fixes to the global econo-my. They have brought back the financial markets to some state of working which resembles the pre-crisis kinds of profit making in that sector. If you look at the real econo-mies across the world, they haven’t shown the same kind of growth rates, including the two economies of India and China, so it’s not at all clear whether China and India will con-tinue to perform the way they did before the crisis. This also means that all the numbers that have been forecast based on the previous trends in China will have to be revisited, so it’s not at all clear whether China will be able to create 400 million more jobs in the urban spaces. This also raises the question of what you want to do with the rural popula

tion. Do you want them to migrate continuously or do you want to take up policies of various kinds which support the rural population at source, so there is no impetuous, no push factor for migration. If you also reduce the pull factors by equalizing income between rural and urban areas, the same kind of patterns may not continue.

Aren’t they actually doing that-pulling in funds towards the rural market economy and subsidizing..True, but again it’s not very clear because the agricultur-al terms of trade are flip-flopping, so it’s not a consistent movement towards or away from agricultural producers. I think the main factor here is not what happens within China and India: the global economy hasn’t solved the crisis yet and depending on how they do that, China and India will have to re-adapt. One of the key things that we have to keep in mind is that China and India will have to look a lot more inward. So far they have been following strategies that depend a lot on exports- China more than India, but Indian exports have also increased tremendously over the last 20 years, if you look at the numbers. They have to create internal aggregate de-mand. How do you do this? You have to reduce inequalities in both these countries.

What do you suggest for the agricultural sectors in India and China and how are they different? What different policies can each follow?One major difference is that ownership of land in China is vested in the village communes. No individuals own land in rural China. What this means is that we still have a lot more hierarchy in the Indian setting, something like the caste system works through land hierarchies even today. In the Chinese case, some of these hierarchies were eliminated in the 1950s. So when you come to the present, one key similarity is that the rural-urban gap is rising rapidly in both countries- in China much faster than India. Rural incomes have just not kept pace with urban incomes. This is partly coming out of the slow growth of agricultural productivity in both countries. In India I know the story reasonably well, having done a lot of work in the Indian case. It’s partly the slowdown of the Green revolution which started in the 60s and 70s and the diffusion of the process in the 80s and 90s across the country. Partly it is that and partly it is the slowdown of public investments in Indian agriculture post economic reforms. The data are well-established on this. You also have the slow growth of institutional credit or banking credit which basically has not kept pace with the growing needs of farmers, as agriculture becomes more and more capital intensive. What it then means is that farmers who are adopting capital intensive crops are thrown into the hands of informal moneylenders or microfinance-there’s not too much of a difference between these two.

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So what do you think of microfinance?They are similar in terms of the interest rates and the re-covery rates in the case of microfinance are brutal. The peer pressure-the fact that it’s collective collateral- creates a structural process of pressure for recovery which can be bru-tal. I was doing field research in Telangana in the 90s when I was doing my PhD in the US. I lived in two villages for a year and I saw two suicides. This was early micro-credit. These were women who were members of two or three groups and had over borrowed. You know, you cannot just face the larger community. With the informal moneylender it’s a very differ-ent situation. They don’t push you to suicide typically-they push you into a cycle of credit bondage-a debt trap. Farmers begin to lose their autonomy over their cropping pattern, over the way they produce things who they sell to. So mi-crofinance and informal moneylending come with their own problems. The solution to this in the Indian case would be to find an answer to the slowdown on the Green Revolution.

Do you also attribute the slowdown of the Green revolution to unsustainable cropping patterns? A case in point is Pun-jab, which now has vast tracts of land lying waste because of excessive use of fertilizer or for that matter, Maharashtra, where sugarcane cropping has destroyed the water table. Somewhere we have to rethink the way we do our agricul-ture. One of the issues is the use of high yield variety of seeds, what it has also done is encouraged a lot of mono-cropping. You depend on MNCs to get seeds and you have to deliver in terms of profitability so you go in for mono-croppping, which is really bad for the soil. The Green Revo-lution has also brought in a lot of dependence on tubewell irrigation. If you look at the irrigation sources, until the 1970s, we were mainly dependent on canals, traditional wells and tanks. 90% of the growth after the 80s has come from tubewells, which is what you were pointing out. You begin to exploit groundwater and this has to be rethought.

The free electricity given by the Government has also en-couraged farmers to depend on tubewells..Absolutely correct. The Government has also created per-verse incentives. The point is how you conceptualise proper-ty rights for such a resource as groundwater? You can lay the well in our own field and treat it as private property but it’s actually not because it’s a commonly shared resource. The logic of dealing with a common property resource is com-pletely different, so that has to be reframed. Then you have excessive use of fertilizers and pesticides, other components of the green revolution process. Then we have heavy market dependence on credit, which doesn’t pick up. One solution, one could argue in the short run, is that institutional cred-it levels ought to go up. But then, you keep going back to the Green revolution process, so somewhere there has to be a fundamental rethinking about how we do our agricul-ture. There is a catch here though: if you move away from the Green Revolution, can you reach the productivity levels needed to feed such a large population. A lot of people are working on organic forms of agriculture, but can you replicate

small experiments that are successful for an entire country across multiple crops? These are issues that don’t have sim-ple solutions but these are the problems, at least.

We can talk about storage and distribution in this regard: we have high reserves of food grains but a lot gets wasted, which is a problem so do you see the Food Security Bill and these kind of measures helping to bridge the gap? I do believe that the Food Security Bill is a good thing. I broadly belong to the Amartya Sen camp not the Bhagwati Panagariya camp, I don’t like them! I think there is a series of errors that the Government committed over the last 15 years; we had a very decently developed PDS where there was good procurement and universal distribution. All of us come from families which had access to the PDS. In the 90s under the influence of World Bank, they started targeting. Targeting, as you know, can create two kinds of errors: Type 1 and type 2. You could exclude the people who actually belong to the group and you could include people who don’t deserve it. There could be various measurement or identification errors. Given that, the paradox that you’re talking about – we seem to have plenty of food grains but there is hunger and malnutrition at the same time-so that is the paradox of hunger amongst plenty. It’s a human paradox which can be averted. Something like the Food Security Bill, since it targets a much larger population, and involves a much larger role for the State will probably do better at absorbing the excess food grains that are in the country and distributing them to people who deserve them.

Do you think that will be sustainable in the long run? As of now, we have an excess supply of food grains. But as you were saying, if we don’t have an increase in our agricultural productivity without pesticides, we’re not going to have that level of outputSo these are problems that need to be solved simultane-ously. It’s not just the problem of excess food grains that is being addresses by Food Security-what the bill is addressing primarily is the food security needs of the poor in India, that’s the objective of the Bill. Whether it’s sustainable or not is how we solve the problem of production. This Bill is primarily about distribution- there is a production set of issues and issues around distribution of food grains which have to be solved simultaneously. They’re different problems.

China and India have seen two different kinds of political regimes? Do you see a difference in the way class equality has moved?When I started looking at inequality in India, what is fasci-nating is and I’m sure Management students know this, that we actually started growing rapidly in 1980, not 1991. I hope this point was made clear by your economics teachers here. 1980 was the break point when the Hindu rate of growth ended. Post 1980, you had an era of around 10 years where there was rapid growth which went with equality. Inequality levels did not rise in the 80s. In fact, rural wages picked up tremendously, rural poverty levels declined, urban workers’

INTERVIEWS

wages increased. The profitability of the capitalist class in India also picked up. Early 90s, with the introduction of eco-nomic reforms, you see the continuation of high growth with rapid escalation of inequality. When you analyze the inequal-ity, you get the following features: these are not explana-tions but a way of explaining inequality. The interpersonal inequality has risen in India. The rural urban gap has risen in India. Intra urban inequality has risen too. If you actually bring in an analysis of classes in Indian society, you get the best understanding-the entire increase in Indian inequality over the last 20 years- if you measure it in terms of the Gini coefficient can be explained by the increased distance among classes. Classes could be defined in simplified ways, like elites and workers in urban areas, rural elite, small farmers, landless workers and nonagricultural workers in rural areas. So a simple set of six classes or you can come out with a very detailed set. So what you see is that, when you look at class, what has happened to the relative gains in growth process-es, urban elites-owners of various firms, whether formal or informal, managers- people like all of you-, urban profes-sionals engineers, doctors, have captured the entire gains from the growth process. It’s remarkable, when you look at the numbers. When you come to China, and this is where the comparison becomes fascinating. Although they’re under very different political regimes, the story of China is remarkably similar to the story of India. This is what I presented yesterday. Urban elites in China have compared the entire gains of growth, compared to urban workers, compared to rural farmers(they don’t have many distinctions between farmers, given land reforms)rural professionals and elites and rural workers. Urban elites have garnered the entire relative gains from growth.

Since China is more capitalist than communist in its way of dealing with the world, do you think it’s possible to have equality along with capitalism?This is a complicated question. I’m actually writing a book about this right now, it’s called Economic Development and Inequality in Capitalist Countries. I’m looking at 5 Asian economies. To give you a short answer, there are phases. Capitalism is not an unchanging system and it’s not the same across the world, there are lots of spatial differences: Indian capitalism is very different from American capitalism which is very different from British capitalism, which are all different form Japanese capitalism. China has capitalism, too which is again very different. Temporally too we have a lot of difference, I call this a process of ‘moulting’, like snakes shedding their skin from time to time. Similarly, capitalist countries shed their institutional skin from time to time and regrow a new kind of skin. If you look at the last 150 years, there have been 4 major crises, 1873-1896 it’s called the long depression. 1929- the Great Depression , the 1970s which economists have called stagflation which is a profitability crises of the late 60s that gets accentuated by hyperinfla-

tion and further accentuated by oil shocks in the early 70s and then the recent global crises of 2007-08. So every deep global crisis brings about a pattern of moulting. The pattern of the last 150 years has shown that there’s an oscillation between profitability crisis and an aggregate demand crisis in the global system. You solve the profitability crisis by creating profits in the global system, by repressing work-ers and getting rid of a welfare state, like what Reagan or Thatcher did or what Manmohan Singh did when he became Finance Minister in the early 90s. When you repress workers in the State, you’re creating an aggregate demand crisis by removing the fallback position in the State, which means their wages are going to decline. If people don’t have pur-chasing power, who do the capitalists sell the good to? You could create credit or asset bubbles like the housing boom or stock market boom or dot-com boom, but bubbles don’t last, all bubbles burst. To then solve the aggregate demand problem, you empower the workers, create a welfare state and workers’ wages and purchasing power improves. Then though, it’ll begin to erode profits unless productivity growth can be consistently high and it can’t be high since no one controls technological innovations. It’s almost like a ‘gift of Athena’. Innovation is not-although management workers think they understand- very well understood by anybody.

The point is that when the system is solving the aggregate demand crisis, it becomes more equal and when it is solving the profitability crisis, it becomes more unequal. Hence in 1896-1929, many countries became more

unequal. Between the 1940s and 1970s, across the world, many countries became more equal when they were solving the aggregate demand crisis because workers were empow-ered. After the 70s till today, most countries became more unequal. So now, I’ve given you the secret of my book! So the answer to your question is that capitalism may create great-er equality for a certain period of time, but it can’t last.

What is your journey into this life as an academic?Well, I was not a Marxist for a long time. My first interest in this came when I was doing my engineering in NIT – Waran-gal. At that time the Mandal Commission issue came up and college was shut for two months. At that time, I was broadly anti- reservation. Then I saw people killing each other over caste- I thought there must be something beyond. So I asked my father, “How do I make sense of this?” He told me I needed to read books to understand these issues. I started and that was the spark. I did an MBA in XLRI not knowing what to do with my life. I was placed in HUL. There, in an introduction session for us management trainees, a HR em-ployee announced that the company had been successful in breaking the two largest trade unions in their Maharashtra factories. Without thinking, I asked why management was so proud about breaking an organization of employees that was perfectly legal. When I saw the shocked expressions of the other management trainees, I realized I was in the wrong place and the corporate life was not for me. I quit in one year and left for the US to do economics, and here I am.

i broadly belong to the amartya sen camp not the bhag-wati panagariya camp, i don't like them!

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Prof. Vamsi’s Interview continued

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