Let me add my heartiest felicitation to Mrs. Smita Shirgaokar, not only for receiving this award but also for the Today we are observing the Birth Anniversary of Col. Leslie Sawhny after whom this Programme has been named. Col. Sawhny had some great attributes, the courage and daring of a military officer and the vision and the abiding faith in democracy of an enlightened citizen. He was deeply committed to freedom in all walks of life and was convinced that if our nascent democracy was to survive and thrive, citizens in all walks of life should be trained and inducted into its basic tenets. In this endeavour he received unstinted support from his colleague and one of our greatest citizens MR. J.R.D.TATA. Mr. Tata till his very last continued to take live interest in the working of this programme. However, as we well know idealism by itself does not carry us very far in life and the concept required a man with great motivation and commitment to freedom and democracy to bring it to fruition. Col. Sawhny was most fortunate in this regard that Minoo Masani, one of India’s greatest liberals and a man of enormous intellectual integrity, undertook the entire organisational responsibility and which he shouldered for almost three decades with great distinction. In this task they could persuade Mr. Nani Palkhivala, an intrepid champion of liberty and freedom, to be the Chairman. This activity was after Mr. Palkhivala’s heart and he steered the LSP with rare dedication till1999. It is a great shame that he had to retire from the Chairmanship two years ago in view of his failing health. We miss his presence in our midst today.

Mercifully democracy does function in our country, though there are several shortcomings. While one may not agree with the verdict of the electorate in all cases, the fact remains that citizens are afforded a free choice to elect their representatives. It is often cited that caste, emotions, populism, money, play a major part in our polls. Talking about impact of money power in elections let me recount a news item I read in an American paper recently – "It is possible that officers are corrupt and still act wisely as a Negro did in the American elections. When he (The Negro) received a 5-dollar bribe from the Democratic candidate and took a 10-dollar bribe from the Republican and voted Democrat, he was asked "Why ?" He said, "The rascal who gave me 10-dollars has apparently to answer for a lot more than the man who gave me five".

Whatever may be our personal views about the current political environment, it is a stark fact of life that it is a mirror reflection of society at large.

Adlai Stevenson, elder American Statesman put it succinctly – "Government is like a pump, what it pumps is just what we are, a fair sample of intellect, the ethics and morals of the people, no better no worse." How true this is of India today.

In recent years there has been a live debate on need for improved corporate governance. As a result of market compulsions, shareholder activism and recently the mandatory provisions imposed by SEBI on all listed companies there is certainly growing recognition in corporate circles that good corporate governance is in fact "good business". This recognition is bound to gather momentum in years to come. However, the governance of national undertakings i.e. those which are directly or indirectly controlled/ administered by state and central governments and quasi government authorities, and which probably account for over five times the total investments in the entire private sector is by any standard very poor and leaves a lot to be desired.

It is now almost universally recognised that to tackle India’s myriad socio economic problems, we require sustained growth of over 8% of GDP per annum, for at least 15 to 20 years, as against the average of 6% of GDP we have attained in the last decade. This would call for an annual investment of a minimum of 30% of GDP. Past experience of other countries in Asia - South Korea, Taiwan, Malaysia, Thailand and now China, which have achieved spectacular growth for almost 30 years - reveal that these countries have consistently invested annually anywhere between 32% to 40% of their GDP. Out of this 85% to 90% have come from domestic savings, foreign savings constituting the balance, amounting to 3% to 5% of GDP. India’s record in this regard has been lackluster. The maximum gross domestic savings and investments we have achieved was in 1995-96 25.1% and 26.8% of GDP respectively reflecting foreign savings inflow of only 1.7% GDP at its peak. Thereafter there has been a decline and in 1999-2000 the respective figures were 22.3% and 23.3% of GDP, inflow of foreign investments declining to only 1% of GDP. The conclusion is obvious that to attain GDP annual growth of 8% of GDP over a long period we need to step up investments each year to over 30%.

In this respect it is imperative that not only savings, both domestic and foreign, be stepped up but the overall national productivity should to be improved substantially through far better governance. This would involve ruthlessly reducing all wasteful expenditure and the incredibly high level of non-merit subsides, speedy privatisation of several public enterprises and closure of others which are terminally sick. The impact of sheer mismanagement in one area alone, the power sector, is mindboggling. In a very perceptive book "India and the New Millennium" by P.C. Alexander, Governor of Maharashtra, there are pertinent references to this. I will read out some excerpts. "Improving production and productivity is no doubt one of the important objectives. However, the importance of avoiding wastage and pilferage does not appear to have received as much attention. The most conspicuous case of avoidable losses is in the power sector which probably today is the most crucial sector for economic progress.

One can understand the problem of shortage of power because of inadequate installed capacity. What is produced is no doubt far below what is required. But the most serious problem is the inefficiency in management. The State Electricity Undertakings were expected to ensure return of 3% of the capital invested but in 1991-92 when economic reforms were introduced it was minus 14%. The Plant Load Factor in India is one of the lowest even compared to other developing countries. The PLF in many SEUs is even lower than 50% while some private electricity undertakings have succeeded in achieving 80%.

Another area of wastage is transmission losses which is as much as three times that of China and Thailand. Very often theft is the reason for large transmission losses. While many developing countries are able to manage with 5% to 6%. In India the average is 25%. Hence the problem in this crucial sector is equally one of mismanagement as one of shortage.

This is just one but a critical area where strong political will and affirmative action on numerous reports already submitted can ensure enormous savings.

I mentioned earlier about inadequate investments. The example of China is often cited. China has to date attracted over $ 350 billion foreign direct investment in the aggregate, the bulk in the 1990s i.e. a decade after the reforms got under way. Currently it attracts over $ 45 billion a year, roughly 5% of GDP. It is reckoned that about two-thirds come from the large Chinese diaspora abroad. This is despite the fact that China is still a Communist country with all the attendant constraints. It is contended, and rightly so, that the overseas Chinese estimated at 50 million (as against 20 million NRIs) are far more affluent than Indians. Even allowing for this there is no doubt that overseas Indians have enormous investible surpluses and despite this the FDI flow into India is annually even below $ 500 million. Is it that the NRIs are not as patriotic as the overseas Chinese ? I am not convinced that this is so. Very probably they do not find the investment climate in India attractive enough and more so they are not genuinely made welcome.

A major area of concern for overseas Indians is the very poor state of infrastructure. The most important lesson to be learnt from our past experience is that no appreciable progress in manufacturing is possible without significant improvement in infrastructure. If Indian industry has advanced to its current level, it was despite severe infrastructural bottlenecks. It is a tribute to the tenacity on the part of the industrialists in India that they have been able to achieve a fair degree of competitive strength in spite of many adverse factors like frequent power shedding, poor roads, inefficient communication systems, congested ports and other handicaps. Industry forges ahead of infrastructure in all other countries but we seem to have gone ahead with the establishment of industries expecting that infrastructure will follow in due course.

Infrastructural problems in the infrastructure sector in India are mainly of three kinds:
gross inadequacies in supply,
sub optimal utilisation of capacities already created and poor maintenance,
lack of both resources and management skills on the part of government, which has been the main provider of infrastructure, to create and manage an infrastructural network needed for a modern economy.

At present investment in infrastructure is only 5.5 % of the GDP while the targeted growth rate in GDP is 8% per annum. If infrastructure is to play the role expected of it in economic development, investment in it has to remain ahead of the expected growth rate of GDP. Government resources obviously are inadequate to meet the demands of growth of these proportions and this is an area where government has unreservedly welcomed foreign capital and technology. However the inflow has been woefully inadequate because of lack of transparency, frequent changes in policy, lack of an effective regulatory mechanism and of course the enormous red tape.

While infrastructural shortfalls are understandable because of shortage of capital, what is unpardonable is the failure to utilise optimally the capacity already created. The most glaring example of underutilisation of capacity and its misutilisation is in the power sector to which I have referred to earlier. There is a mistaken impression in India that investment in infrastructure benefits mainly industry and services and has very little relevance to the development of agriculture. The truth is that the agricultural sector suffers as much as the other sectors because of inadequate and inefficient infrastructure for production, transport, storage and distribution. It is a well established fact that over a third of our ample production of fruits and vegetables is lost because of this.

Besides economic reforms what is equally crucial is reforms in areas like judicial system, law and order enforcement, the electoral system and proper functioning of the local self-governing institutions. Inordinate delays in the judicial system, breakdown of law and order in some states, inefficiency and corruption at all levels of administration, weaknesses in the electoral system which threatens the very foundation of our democratic polity. These have in turn created major roadblocks in India’s economic progress. No reform package can work effectively in a developing country like India unless it is a comprehensive package covering both economic and administrative problems and unless both are tackled simultaneously.

An equally important area of worry is that it has not been possible for us to develop a healthy work ethos. Indians have no doubt a high degree of awareness of their rights as citizens of a free country, but are not equally conscious of their respsonsibilities as citizens. This obvious contradiction in work culture manifests itself conspicuously in every sphere of activity and it will be no exaggeration to say that it has become a major impediment in the realisation of our full potential.

While we Indians are quite keen and ready to absorb capital and technology from the advanced countries of the world, we have not shown the same degree of alacrity to follow the example of these countries regarding strong commitment to discipline and duty. The practice of stoppage of work at the slightest provocation has become a part of the work culture in the country. Strikes have no doubt their place in a democracy, but duty to do work is often considered less important than the right to stop work. No excuse appears to be needed for stoppage of work, whether it be to celebrate victory or protests against arrests by declaring a holiday for public offices and educational institutions and even legislatures. Holidays are also declared in order to express grief and condolences on the passing away of an eminent person or even for a natural calamity. Probably the number of holidays which the employees in government offices and public sector corporations enjoy in India is a world record.

Let me cite some personal examples
– I was trainee in a factory in England when King George VI passed away in late 1951. We were asked to await the announcement on the public address system by the Managing Director of the company. "I regret to announce the death of His Majesty King George VI. Long live the Queen. Please observe silence for two minutes." We all went back to work exactly in three minutes.
b) When Sanjay Gandhi died in 1981 in an air crash we were hosting a business delegation from Japan. As it was declared a national holiday, a senior member of the Japanese team sent me a slip to the effect that even if the Japanese Emperor had died there would be no holiday declared whereas Sanjay Gandhi had no official status whatever. He went on to add that in such an event if there was stoppage of work, the Emperor would have turned in his grave deeply regretting the loss of national output of around 500 million dollars.
Another disturbing trend in the country is the increasing demand for free services by all categories of users or even by the providers of services. Farmers demand free electricity and heavily subsidised fertilisers and irrigation facilities as their right, transport employees demand free travel by public transport and telephone employees insist on the right to have free telephones. Everybody wants a free lunch totally oblivious of who is going to foot the bill.
India is certainly richly endowed both in terms of national resources and human skills. We have also displayed rare ability in various fields of technology, as also managing global sized enterprise not only in India but now worldwide. We can certainly achieve far higher rates of growth, if we can get our act together. Uppermost is the need for greater discipline in all walks of life and a feeling of sense of nationhood. My visits to Japan, China and South Korea have convinced me that the great strides they have made is in a good measure due to their national pride and innate discipline. What is sorely needed in India is a strong public opinion against sloth, inefficiency, greed and fraud in favour of discipline and accountability. I am here reminded of the words of Emerson, the noted philosopher and poet :

"No horse gets anywhere unless he is harnessed
No steam or gas ever drives anything until it is confined
No Niagara is ever turned into light and power until it is tunneled
No life ever grows until it is focussed, dedicated and disciplined".

It would be facile to fault the government for all the present maladies we are facing. We educated citizens must assume our share of blame. Most of us are pretty comfortable with our privileged positions and do little, barring expressing our displeasure in private. Often when I urge my friends and colleagues to spare some of their time for public or civic service, the standard response invariably is "WE HAVE NO TIME". I am convinced in most cases this is just a lame excuse for apathy and inaction. Democracies cannot be run by proxy and requires active involvement of intelligent citizens in professional, social and community activities. We can ignore this at our peril.

Let me conclude with the famous words of Edward Gibbons about the people of ancient Athens :
"For more than they wanted freedom they wanted security. They wanted a comfortable life and they lost it all - security, comfort and freedom. When the Athenians wanted not to give to society but society to give to them and the freedom they wanted most was freedom from responsibility then Athens ceased to be free."

Mr. Minoo Shroff is Chairman of the Leslie Sawhny Programme. This is an extensive extract of his speech at the annual function of the LSP in Bombay on 16th May, 2001. Mr.Shroff is a member of the Indian Liberal Group.
He can be contacted on minoo@liberalsindia.com