Perspectives from ISB

Prof. D.V.R. Seshadri in discussion with Dr. Shailendra Kumar Joshi, IAS (Retd.), Advisor, Government of Telangana, and Chief Secretary (Retd.), Government of Telangana on Wednesday, April 29, 2020

Introduction about the Speaker by D.V.R. Seshadri:

Dr. Shailendra Joshi is an IAS (Retd.) officer and former Chief Secretary of the Government of Telangana. He is one of the leading environmental experts in the country. He advises many mega infrastructure projects that are being implemented by the Government as well as those being implemented in the PPP model. Dr. Joshi had the time and again demonstrated his unique strength of taking up the responsibility for the conceptualization and implementation of extremely complicated projects and execute them in time, with quality and within budget. He has represented our country in many International forums on the environment. He has spent over forty years in the Indian civil services, working closely with the top political leadership of the state of Telangana as well as the central government. Dr. Joshi is a graduate from IIT Roorkee and IIT Delhi and a Ph.D. from the TERI School of Advanced Studies on intergovernmental and fiscal transfers and the environment. Dr. Joshi joined civil services in 1984 and has had a stellar career of 36 years in the Civil services. I would like to thank him for joining this discussion to share his views with us.

D.V.R. Seshadri: In this session, we will discuss how the country should respond once the lockdown, which has been for a lot of people very unexpected and devastating in the short run, gets over. What we are mainly going to talk about are the concepts and ideas that Dr. S.K. Joshi has developed on how the country should respond, going forward. He has vast experience in the government, having headed the bureaucracy of the State of Telangana as its Chief Secretary, until very recently. While the whole world is going through an “emergency” situation, and every country is grappling with this crisis in its own way, Dr. Joshi’s responses will be focused on what India should be doing.

It will be beneficial to hear your views on State, and of course, you have a much broader picture of the country. Our focus in today’s discussion with you will be on ways by which the country bounce back from here. One would agree that India has fared far better than even many of the advanced countries in terms of coping with COVID-19. On the economic front, however, we have taken a considerable beating like every other affected country. We would like to understand from you the recovery path for the country post-COVID-19.
Dr. S. K. Joshi: Thank you, Prof. Seshadri, for your generous introduction, I am privileged to be with you today to share some of my views. I am happy to respond to your questions.

Question 1:
D.V.R. Seshadri: You have been a proponent of Swadeshi-2 as the mantra for the country to get out of the current crisis. Before we get to Swadeshi-2, for the benefit of our viewers, kindly explain what the original concept of ‘Swadeshi’ was? This concept has been around for a long time. Please explain to us about its origin, and what it meant to the people of India. Please give us a historical perspective of this movement and what it has achieved for the country?
Dr. S. K. Joshi: It started with our Independence struggle, Mahatma Gandhi and leaders of that time were asking for two things:
1. Swaraj – self-governance
2. Su-raj – good governance
In 1905, the concept of was Swadeshi floated, and the immediate provocation was the bifurcation of the Bengal state into East and West Bengal. It was a socio-economic movement, and Mahatma Gandhi gave the call for boycotting foreign goods. He did this symbolically by promoting the use of Charkha (or spinning wheel) and use Khadi. There were many other initiatives that were launched, all of which were meant to help revive the Indian villages and lead to the growth of cottages industries. Charkha became the symbol of Swadeshi. Over the past seventy years, Swadeshi had taken many avatars. The idea started with the concept of self-reliance. Unfortunately, in my view, Swadeshi has, by and large, remained symbolic. Our cottage and village industries have not been able to compete with larger enterprises in terms of quality or prices. Subsequently, some governments in the country gave swadeshi the flavor of import substitution, with a view to making the country self-reliant.
In 2014 when the present Government came into power, they came up with the idea of attracting foreign companies to set up operations in India and consequently promoted ‘Make in India’ aggressively, as a way to revive the Indian economy. To make this a reality, the government launched a slew of initiatives that were intended to enable ‘Ease of doing business.’ Mahatma Gandhi envisaged that Swaraj and Swadeshi to work hand-in-hand. We now have before us, the opportunity to make these ideas a reality.

Question 2:
D.V.R. Seshadri: What is the future of globalization in the post-COVID-19 world? What will happen to existing agreements between countries on matters of bilateral trade through organizations such as WTO? How is the new global order likely to unfold?
Dr. S. K. Joshi: My take is that countries would first pay attention to handle their national economies. There were many open-ended issues before the crisis, such as Brexit and its implications on the EU. WTO agreements were also not concluded. My take is that these agreements will take a back seat or maybe renegotiated or discussions relating to them initiated afresh once again. First and foremost, all the countries will set right their own house in order. China will also suffer because their entire export market depends on the economic health of other countries. So eventually, the whole world will have to share the burden. I also believe that the present crisis will make countries insular. Some countries in the West are worried about takeovers by Chinese companies. Consequently, they are setting their own house in order. They are likely to pass regulation to minimize such takeovers. Similarly, India should also set its own home in order.
D.V.R. Seshadri: Do you expect nations to punish China, or is that not going to happen?
Dr. S. K. Joshi: You can punish a person who is weaker in power. If someone is stronger in power than you, then you cannot punish; you can only accommodate, and you can adjust. You cannot punish a more powerful economy. China, with its billions & trillions of dollars of reserves, is a powerful country. There could be some exodus of industries from China. There may be an exodus of capital, but I do not think that international communities are in any position to punish China. Also, China has a phenomenal military might, which is probably the strongest in the world.

Question 3:
D.V.R. Seshadri: What opportunities can India leverage for its advantage in this new world order? To put things in context, from around the 1990s, India has been flexing its muscle in the services sector, especially in the IT and ITES space, and that has taken us quite a distance. Going forward, what are the opportunities that India can leverage? The question assumes all the more important in the current context as the world seeks a new world order post the Covid-19 crisis, and given the fact that our Prime Minister has been talking about ‘Make in India’ since 2014? Has the time now come for ‘Make in India’ to be a reality?
Dr. S. K. Joshi: I remember what Sir Winston Churchill said after the Second World War: never to let a good crisis go waste. From that perspective, it is a good crisis for India at this juncture. India is one of the largest economies in the world, and its major strength lies in its population as well as its internal markets. We cannot say the same thing for Bangladesh, Nepal, or Sri Lanka. We have the critical mass, and we can seize the opportunity that is presenting itself. So, instead of Swadeshi 2.0, I will call it ‘Swadeshi+’ because Swadeshi versions 2.0, 2.1, and 2.2 will come and go. Instead, Swadeshi+, must take an ecosystem-based approach. In the past, as a country, we failed to leverage opportunities that presented themselves to us because of the lack of such an ecosystem. We were focusing on Individual initiatives, and we never gave attention to the “Ecosystem”. Let us say you were to start a company. Where you will get the raw material from? Where you will get the people from? How will the supply chains be developed? The Ecosystem-based concept was missing in our past approach. In my view, therefore, Swadeshi+ will have the following five main ingredients:
1. Follow an ecosystem-based approach.
2. Self-reliance in as many sectors as possible, not just in one or two industries. Critical assessment should be made about the sectors that we want to and can be self-reliant in.
3. Economies of scale
4. Cost competitiveness
5. Quality Consciousness
If one cannot compete in terms of cost, one should compete in terms of quality. Otherwise, I will say that it is not a fit candidate for Swadeshi+. What we want is a paradigm shift in governance. That is the essential point; otherwise, we will miss this wave too, just the same way that we lost many opportunities in the past.

Question 4
D.V.R. Seshadri: You are saying Swadeshi 2.0 should be referred to as ‘Swadeshi +.’ Could you talk a little bit about two related issues?
a. How did you zero on this concept and come up with this intriguing idea?
b. Also, does the country, at all levels of political and bureaucratic realms, have the political will to envision this concept of Swadeshi + that you have so nicely articulated, and implement it with flawless precision?
Dr. S. K. Joshi: I will start by addressing the second question. I have already addressed the first one earlier, namely that the idea of Swadeshi+ came to me by simply learning from the Swadeshi movement of Mahatma Gandhi. There are certain situations which you can overlook, during the progress of a nation. However, the present circumstances in the world and in our own country are such that you cannot overlook them any longer. You must take drastic measures. My take is that the socio-economic steps India should take are as necessary as the medical emergency that the country is that we are facing right now. For this to become a reality, a separate task force is essential. I am sure at the national level; this must already have been planned. They must already be working on how to revive the economy, with focus on specific sectors. Except for Video Conferencing and some other areas, everything other industry has taken a beating during the current crisis. Every industry, from top to bottom has taken an adverse turn. Take for example, the construction industry in our State. It was one of the fastest-growing sectors, and there was a focus on the development of commercial properties. Now my take is that there will be a spurt in activities related to residential properties, due to the surge in working from home, a phenomenon that is here to stay long after the crisis ends. Residential property development must now factor in office-cum-residential set-up, which in the government parlance is called the “Camp Office”, which will have an office room with network and conferencing facilities, as part of the home. The entire world, the way we knew before Jan-Feb 2020, will go through a radical change.

Question 5
D.V.R. Seshadri: That is a brilliant insight: there will probably be a considerable slowdown of commercial real estate development and pickup of residential real estate development.
What will be the future of the high-tech industry in India in the emerging scenario? How do you see the high-tech industry in the scenario when every country is trying to become self-reliant, self-dependent?
Dr. S. K. Joshi: Traditional argument was India is a manpower surplus country, and we need not invest in the High-tech sector. However, the COVID-19 crisis has come as an opportunity, where for most of the industries, we must go for automation to ensure social distancing. In high-tech, robotics is going to be a very promising area. The migratory labor that was working in industrial belts such as Surat and Hyderabad will be reluctant to come back to work. We must come up with an innovative approach to leverage our resources, talent, labor quality, and labor supply.
Before the current crisis, every child used to go to school. Now schooling could be offered in a very different format. Whether it is schooling or medical facilities, more and more automation is inevitable.
Historically, there had been reluctance in automation in manufacturing. Swadeshi+ should go for an ecosystem approach where manufacturing, as well as high-tech industries, should both co-exist in harmony. Instead of just focusing on the low-end software services industry, we should focus on high-end product companies. It is a pity that worldwide all the major companies have Indian CEOs. However, we do not have any large home-grown company of similar scale within the country. We should integrate our scientists and IT experts into a network to explore new forms of innovation to enable the launch of new products in the country.
D.V.R. Seshadri: You had raised some very interesting issues. You mentioned that the migratory labor from distant parts of North or Northeast regions will not be very excited to come back to Surat or Hyderabad or other industrial hubs once the crisis abates. What will be the way that they will earn their livelihoods to stay afloat if they choose to stay in their native town or regions?
Dr. S. K. Joshi: These people will have to find other opportunities for livelihood. Programs such as MNREGA must be rolled out on a massive scale in those areas. People who have been away from their homes for the last 2-3 months would like to go back to their native places once the lockdown gets over. Once they reach their homes, they would stay put long durations of six to twelve months or more. We will have to look for alternative arrangements on both sides, namely, the supply of labor or its equivalent through automation in the industrial centres, and livelihoods for the labor that opts to stay back in their homes. No government can afford to ignore this kind of situation.
D.V.R. Seshadri: You mentioned that there is a possibility to engage with some of the Indians, who are heading large corporations, in the developed countries. Do you see a lot of xenophobia growing in the western worlds such as in the European Union or the USA? Is that likely to happen as everybody tries to protect their skin and turf?
Dr. S. K. Joshi: That brings me to the ‘Son of the Soil’ theory that is prevalent in many parts of the country as well as internationally. It is a normal human tendency, but as the economy grows and as there is money, the local populations will not mind the influx of foreigners. It is only when the local population feels that the presence of outsiders in their state or country is causing problems of reduced opportunities for the local population, that xenophobia starts taking roots. It is in this context that it is even more important that we must focus on Swadeshi+.

Question 6
D.V.R. Seshadri: What are the other industries that will benefit from the new world order? Which industries will be badly bruised in the post-COVID-19 world?
Dr. S. K. Joshi: There is more negative news than positive news. Sectors that will benefit are the ones that are in the space of communication and digital technologies, as well as sanitization. Industries such as tourism, public transport, and the low-end IT sector will be affected negatively. Our IT professionals must get ready to be sitting on benches because low-end IT services sector demand will also go down. I see more of a negative trend then a positive direction unless as a nation, we are extremely agile and quickly reconfigure to capitalize on the new opportunities. Those companies that ride this new wave will prosper; the others will perish.

Question 7
D.V.R. Seshadri: What are the barriers and challenges that India must address to gain from the new opportunities stemming from the new world order?
Dr. S. K. Joshi: India had been considered as a favorable destination for a long time. However, when an investor or manufacturer comes to set up shop in India, they soon get disillusioned. What is the reason for this? We must undergo a complete image makeover: the way we have been running business at the national, state, and even organizational level cannot continue any longer. We must build an agile institution network that can make quick decisions and implement those decisions with lightning speed. The existing system of governance must undergo a sea change. At the government level, we must create Special Purpose Vehicles (SPVs) for implementing high-priority initiatives. In these SPVs, the CEO must have a guaranteed tenure of three or five years, subject to good performance. We must change our political thinking. The next big challenge before India is to transform governance to leverage the tremendous opportunities that are opening for the country.

Question 8
D.V.R. Seshadri: What should be the institutional support and governance mechanisms at the country and state levels, for the country to benefit from these opportunities?
Dr. S. K. Joshi: I would like to say that institutions such as yours (ISB) are going to be the trend-setters. The partnership between central and state governments, private and public sector organisations should intensify. The Prime Minister has talked about this. However, the time has now come for following up on this at an operational level. Similarly, industry-academia partnerships should come up with massive innovations at all levels: technologies, business models, management, etc. I think our most significant strength as a nation is innovation. We must encourage widespread innovation. We also must promote acceptance of failure; there must be a change of mindset in this regard. As a society, we have not been good at accepting and celebrating well-intentioned failure. Unless we do this, our attempts to foster innovation will flounder.
D.V.R. Seshadri: I request you to share your final advice that encapsulates your idea of Swadeshi+, for youngsters, managers, and senior leaders in various organisations, both in the government and private sector, that can help them to internalize the idea and take forward for implementation.
Dr. S. K. Joshi: My message is to go for “out-of-box thinking” and put in your best efforts to give back to the society and nation. If we work consistently on the path I have articulated in this discussion, the nation can progress. In our country, the mindset is to consider the government as omnipotent and omnipresent, next only to God. That mindset should change. The government should be a facilitator and each one of us, whether we are a common laborer or highly qualified technician, must do our job perfectly. We must bring “out-of-the-box” thinking in all that we do. That is the summary of my message.
In summary, call it Swadeshi Plus or as the Prime Minister announced during his subsequent speech on Tuesday, May 12, 2020, “Atmanirbhar”, the following are prerequisites:
1. Plan for a complete ecosystem
2. Set up separate missions on focused areas
3. Production at the most efficient cost
4.Ensure the highest quality and safety standards
5. Mass innovations with improvisation.

D.V.R. Seshadri: On behalf of ISB-CBM and ISB, I would like to sincerely thank you for joining this discussion.

Compiled by Ms. Minal Agarwal, ISB-Centre for Business Markets

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