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The Rediff Business Interview/Rahul Bajaj

'A country of 900 million people is not going to be pushed around'

Rahul Bajaj, chairman and managing director, Bajaj Auto Limited, the most vocal proponent of swadeshi among Indian industrialists and chairman of the World Economic Forum, spoke to Sunita Wadekar-Bhargava a few days before the Davos WEF summit.

The full-length interview, conducted at Bajaj's sprawling office at BAL's headquarters in Pune, features wide-ranging issues and focuses on India's place in the global business scenario of the New Millennium. And, perhaps for the first time, the sexagenarian reveals his thoughts on retirement and succession.

What, according to you, are the critical issues for the global economy at this point in time, when there is talk of the New Millennium?

As far as the world is concerned, one thing comes to mind: economically and technologically, the world is becoming a much smaller place. It's one of the things we mean by globalisation. We have regional pacts like NAFTA, SAARC, ASEAN or whatever, but unfortunately, politically, there is still a dispersal tendency. There are more countries in the UN today than there were 20 or 30 years ago.

But economically, for self-interest, one likes to get together. Economic strength is what matters. So we have a European Union to counter, not in a negative sense, the US economic strength. Of those [in the European Union], 11 have got the new currency euro, and now these 11 have a GDP, a population and a share of world trade comparable to that of the US.

Otherwise, the US dollar was the only reserve currency. Obviously with time, the euro will be the other currency. Japan has already declared that it will keep part of its reserves in Europe. And I am sure India will look at the implications of that.

Simultaneously, I find an undercurrent in the world in all my travels, which is a little bit of a dichotomy. On the one hand, there is tremendous admiration for the US and its undoubted military and economic strength. But on the other hand, there is a feeling that America is becoming a bully, there is a feeling that it is assigning to itself the role of world policeman.

In that context, I hope it doesn't go too far. Because people like me don't like to be told what is right, and to be told to follow what [they] say. I don't mind bearing that as long as you also listen to me, and by me, I mean my country. But if it's going to be a one-way traffic, then a country of 900 million people is not going to be pushed around.

Today we have a knowledge-based world, a world of instant communications and partnerships and networking, of mergers and acquisitions. Where does this world leave India? I think India and Indian companies have to recognise that the forces of globalisation are irreversible. I think the agenda for India is not whether globalisation is on, but what do we do about it, what are the implications of networking and alliances.

What global developments are particularly relevant for India? In other words, what are the critical issues of the global economy that India should imbibe?

In the developing world, we have had the stupid socialism that has kept us behind for 40 years. Talking very broadly, I believe that in the '50s and '60s, the policies we followed were not very wrong. But we should have started liberalisation in the '60s. Instead we started the process in 1991. The '70s and '80s were disastrous decades for India in terms of technology and growth. And that is when the south-east Asian countries like Korea, Taiwan, Malaysia, Singapore and Thailand and countries like Brazil, Mexico and China left us far behind.

Even in 1970, we were not behind the rest of the developing world. Now, on per capita income basis, even on the basis of purchasing power parity, we are nowhere, not even in the first 50. Why can't I be in the top 10? Because I don't want to be over-ambitious. On the basis of PPP, if I were the prime minister of this country -- and thank goodness I am not -- I would aim, by the year 2020, to be in the top 10 in the world. That may be a very ambitious target, but as a very proud Indian, I don't know why I should aim at anything less.

Well, how can India go about it? So much has been talked and written about what ails India, but somehow the right prescription never comes along.

Unfortunately, based on our track record, I can only hope for it, I cannot expect it. In India we know what needs to be done. We don't need any more workshops or taskforces to tell us what to do. Yes, we have had a lot to learn in the last six years. Everybody knows the basics. But no one wants to do it. There is no political will.

When Indians go abroad, they are the tops, whether it is a plumber or carpenter in the Middle East or a doctor or engineer in the US. But what happens in India? There are three problems here.

One, we don't work hard. Two, we only keep shouting slogans, we don't know how to work as a team here. And three, in every field, especially politics, we lack leadership. Then, we lack the basic infrastructure, whether it is in power, telecom, or roads. How can we make two-wheelers or cars if there are no roads to ply them on?

Has the setting up of various taskforces by the PM or the PM's Council been of any help?

It won't hurt. But of the things to be done, the easy things will get done. The difficult things will be left alone. The labour policy won't get done.

Where does that leave India? Is it in danger of becoming a submerged market from being an emerging market like some of the South Asian or the Mexican economies?

Let's talk of the South-East Asian countries like Malaysia, Thailand and Korea, which have been, in different degrees, success stories. For the last 12 months, we say that our rate of growth has been better than their growth. But what happened in the last 20 years? Did we ever compare our rate to theirs, when we said that they are growing at a rate of six or seven or 10 per cent and we are growing at the Hindu rate of 3.6 per cent? No, no, we said, we can't compare ourselves to them. So why then are we suddenly comparing ourselves to them after 20 years? Because it suits us. It is all bullshit. And I am sorry to say for India that they will recover and again do much better than India.

There were four or five factors that created their downfall and those factors we have to be careful of. One is crony capitalism. The other is that the more liberalisation you have, the more regulation you want. But you can't have controls. You have to have something in place, whether it is in the power-sector reform or elsewhere.

Then, in these countries, they started borrowing from abroad, as distinct from foreign direct investment, and that too short-term borrowing. So the government did not know what the foreign borrowing quantum was, and what percentage of it was short-term.

As far as India is concerned, we are not as bad as them because everything was nationalised in the banking sector, only the corruption goes on. So short-term foreign borrowing has been very much under control in India.

The other thing, which is not a good thing, but where we were lucky, is not to make the rupee convertible also in the capital account. And there were some of us stupid idiots called the Bombay Club and called protectionists who said there is no hurry. And we agreed subsequently with what the Tarapore Committee said that do these four or five things and then become a convertible capital account.

Whether you match your inflation rate or match the fiscal deficit or certain benchmarks with those of the rest of the world or your trading partners, till then it doesn't make sense.

The rupee in the capital account, it was de facto convertible for the foreigner anyway. It was not for me. This is discrimination against me, lack of a level playing field for which I have been criticised enough. I can't buy a fixed asset abroad, but with government approval I can [although] it will take three months. Today I don't want the fully convertible rupee on capital account, but eventually it will come, three to five years from now.

In the past, you have often mentioned the lack of a level playing field in India. How do you define a level playing field, especially keeping in mind your experiences like the Ashok Leyland episode where you lost out to the Hindujas who were pitted against you on their home turf, London?

'We are not fools, we know there is no such thing as a perfect level playing field'

Part II

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