Forbes firmly believes that the Indian economy can go the trajectory of 8-9% growth in GDP, provided we get certain things in order.
Reading Naushad Forbes’ book The Struggle and the Promise, several cartoons by RK Lakshman and little quotes from the works of PG Wodehouse come as a surprise in a book on economics. Clearly, the author has a great sense of humour that is displayed through the book, which otherwise provides a purely capitalist view on how to push the economy to another level. Being the head of CII for two years and a very successful businessman, the author knows what ails the economy and how to uplift it, so the book is not an academic prescription.
Forbes firmly believes that the Indian economy can go the trajectory of 8-9% growth in GDP, provided we get certain things in order. Manufacturing has to be the driver and this is something that has been acknowledged all along, though little has been done as the services sector has grown disproportionately. Also, we have to stress on education and this is something that has to be the focal point for the government. We need to have well-qualified workforce with expertise in fields that are relevant.
Along with such a workforce we need to have rapid innovation and companies need to focus a lot on research and development, as this is the way to go. Interestingly, he does say that the CII is to start a university soon that will mainly cater to the not-so affluent sections of society. This is good news considering that most institutions of excellence are meant for the privileged in India, be it school or university, which reinforce the self-fulfilling spiral where the better get better-off.
Forbes has some detailed chapters on these aspects where his extensive research from other countries as well as takeaways from accomplished economists provide a lot of food for thought. He is for free trade and does not mince words when he points out the double standards of some of the industry chiefs who seek protection every time they see imports as a threat.
He points to the famous case of the Bombay Club, which welcomed economic reforms but opposed free flow of imports when it affected their industry. Hence, there is ambivalence in the way in which industry views reforms.
One very significant point made by the author in the course of his book, which he says was imbibed when he was young, is that to do well in business one must not be in a field that is not dependent on the government. This is a golden rule for all entrepreneurs who are seeking to get into business because invariably one gets caught up in a maze of bureaucracy. Hence, anything to do with natural resources is prima facie a risky business because one never knows where it will lead to, as was the case with mining or telecommunication. The second is corruption. Coming from an industrialist this is another pointer towards how business should be done. Being in engineering business, Forbes has managed to eschew this pain of doing business. But this may not always be possible as it is felt that speed money is essential in India to get things moving or else one can have capital stuck.
The last few chapters are extremely entertaining as he has a no-holds narration of his time as CII head. He recounts an official party where the chief minister and other dignitaries abstained from liquor, which was instead presented to them as soup with ice floating, which shows the double standards prevalent in society. While having photos of the President and PM in various government offices is understandable, the canvas has expanded with more localised heroes embellishing walls.
Quite interestingly, he points out that the North Block, which has great architecture, is not well maintained, which anyone who has been there will attest to. However, when one enters the ministry of defence in the South Block, things are very different, which begs the question of whether the upkeep is dependent on the ministry? The same distinction holds for the ministries of commerce and external affairs where there is a wide difference. The broader point that he makes here, which is disturbing, is that can ministries that are to implement fairly complex projects be relied on to do so efficiently when they are unable to handle their own premises?
Some other anecdotes that he narrates will have the reader nod in agreement. He did once tell a minister that ideally people like Kanhaiya Kumar of JNU fame should have been ignored by the government. By not doing so, the media came in and made him a hero and finally a politician. There was agreement on this view. He also is critical of industrialists who on a one-on-one basis are highly critical of the government, but act different once in a public forum. One of them called the FM the greatest in Indian history, which evinced the biggest surprise on the face of the FM!
One can have some differences of opinion with Forbes as he argues that foreign-grown Indian economists have not been favoured by the government. Here, the alternative view is that they may not have excelled and lacked ground knowledge which domestic nurtured economists have. He does not mince words when he says that the government is not tolerant with opposing views and this was also voiced by a couple of industrialists in the past. The media also gets targeted by the establishment for carrying articles that criticise the government and hence there is no scope for brainstorming.
Quite clearly, this book has been written from a capitalist’s point of view as it is believed that industry will be the driver of the economy. Not surprisingly, the narrative does not really have anything to say about agriculture, which some may argue is the basic pillar of future growth. Similarly, while the CII view is of large industry in general, the role of SMEs which will have a lot to do in fulfilling the promise has been underplayed here. This, one may say, is the author’s prerogative.
Forbes must be credited for this amazing book which is very well written and he has done a lot of work to make it readable and insightful.
Madan Sabnavis is chief economist, Bank of Baroda
The Struggle and the Promise: Restoring India’s Potential
Pp 375, Rs 699