|
Introduction
I am delighted to be
here this morning at the 11th National Conference of the National
HRD Network. At the outset, I must compliment you, Mr Busral, and
your team for envisioning a very relevant theme for this Conference.
I must also express
my deepest appreciation to the HR Fraternity present here today for
another reason. India's growth story is about brilliant minds, who
have been given the opportunity, the environment, exposure and
training not only to become world-class managers, but to hone a
spirit of entrepreneurship that endeavours to make the impossible
happen. I pay tribute to all of you today for enabling this change,
and for helping create the India of tomorrow - a confident young
generation capable and passionate to take on the world on equal
terms. Congratulations, ladies and gentlemen.
Indeed, this century
belongs to India. We stand today at the threshold of India Unlimited
- unlimited in terms of opportunities, unlimited in terms of
capabilities, and unlimited in the spirit which is indomitably
Indian. Enriched with the heritage and tradition of the past, the
values enshrined in our DNA, enlightened by the knowledge of
generations, we have commenced today a march to assume our rightful
place in the global economy.
India's Pride
There is reason to be
proud. Early this year, India joined the ranks of the 12 countries
with a Trillion dollar GDP in nominal terms. The World Bank, I
believe, has already posted figures that make us the third largest
economy in the world in PPP terms, surpassing Japan, and just behind
the superpowers of US and China. India Inc., the backbone of the
nation's business and industry, doubled the number of companies to
200 with a market cap of over $ 1 billion, in a span of just one
year. The Forbes list has the highest number of billionaires in Asia
living in India. A sustained 9 % GDP growth is showing up visible
signs in India's landscape. Per capita income has moved from $ 200
in 1990 to $ 800 today. The prospect of world class Highways and
modern new airports, a wireless revolution in telecom, state-of-art
construction, a huge retail explosion, an army of outstanding IT
professionals indeed shape a new India of the 21st century today.
Predictions for the
future are even more encouraging. Goldman Sachs predict that India's
economy will move ahead of several G6 countries by 2032. India will
continue to reap the demographic dividend with declining dependency
rations for the next four decades. Entrepreneurs will have larger
access to resources, in terms of technology and capital. Already,
current & capital account flows have risen from 40 % of GDP in 1991
to around 80 % now. India is today attracting the largest flow of
private equity in Asia. A recent AT Kearney study says that India
has displaced the US to become the second-most favoured destination
for FDI after China. Gross inflows of FDI touched nearly $ 20
billion last year, up two and a half times since 2001. In the first
five months of the current year, FDI went up 97 % over the same
period last year.
The entrepreneurial
ability and appetite in India has not only fuelled this spectacular
trajectory of growth, but has spread wings and crafted some
big-ticket acquisitions across the world. If Indian capital is now
infusing life into corporations across the world, our diaspora is
one of the key reasons for the success of several advanced nations.
Even India's gourmet skills and the entertainment industry are
bowling over foreign palates and hearts. Clearly, we are going
places, and this is only the beginning.
There is no doubt
that India's cautious and calibrated liberalization has paid off.
Despite successive Governments, India has not only demonstrated
resilience but a continuance of policies since 1991. Unfettered,
Indian industry rose to the challenge and has today demonstrated
what it is capable of. India's people skills in managing adversity,
deep analytical insights, a tradition of scientific temper and
technological adaptation has given us the competitive edge in a
challenging global economy. India's manufacturing sector, exposed to
competition, has redefined competitiveness and earned for itself
respect in the world arena. We are today matching strength with
strength. Be it in asserting our position by even staking a seat in
the expanded UN Security Council or as a nuclear power. India
commands a new respect in the world today, and all of us can truly
lift our heads and say to the world that we are proud to be Indians.
The other face of
India
Even as we celebrate
this success, there is a large millstone on our conscience that
reminds us of a dark reality that also defines India. Co-existing
with a prosperous 300 million middle class, firing consumption in
malls and real estate, there is a silent, but dangerously frustrated
300 million people living in abject poverty without even a proper
roof over their heads. More than half our population live on less
than $ 2 a day. Despite the advancements and glory, India's poor
give us reason to hang our heads in shame. This is still a country
where 1 in 3 people remain illiterate, where 1.1 million infants die
within the first month of their birth, and one mother is dying every
seven minutes due to complications related to childbirth.
Unemployment figures among the educated run into millions, and a
majority of children in this country go without food, leave alone a
nutritional diet.
Is this what we won
freedom for, 60 years ago ? Can we revel in our economic successes,
when there is so much instability in the social fabric ? Something
has gone terribly wrong in the model of development that the world
has adopted, and we have followed. A recent UNDP Report states that
10 % of the richest adults in the world own 85 % of the world's
household wealth, while the bottom 50 % of adult population have
just 1 % of the total household wealth. The situation in India will
not be very dissimilar.
Between the glossy
advertisements that exult the consumer boom in TV and print, are
everyday stories of a rising discontent. Streets after streets
across the country, farms after farms across the nation are
violently displaying the rage and anger of this growing inequity. At
the slightest provocation, people's frustrations find expression in
violent acts. Highways have been laid to siege, and village after
village are becoming victims of barbaric acts. Somewhere between the
scripts written for Davos and Vidharbha, there lies a story of our
collective failure.
An unsustainable
future
The question is :
have we created a model of growth that is unsustainable? Over the
years, there has been a massive depletion of natural capital and
bio-diversity. We have now a new threat of global warming that can
impact India more adversely than any other country, according to a
recent study by Lehman Brothers. There is a persistent growth in
population adding to the challenge of poverty. Indeed, we face
enormous challenges and can ignore them only at our own peril. While
we can rightfully take pride in India's spectacular growth story,
the foreseeable future is already throwing up warning signals of a
possible natural resource disaster. We must remember that we do not
possess infinite natural capital to provide fuel to this growth
engine. With 17 % of the world's population, we have only 2.4 % of
the world's land mass, 4 % of the available water resources and 1%
of the global forest resources. Unless we replenish and conserve
precious resources, specially soil and water, this spectacular
journey will hit a roadblock sooner than later.
We - the privileged,
the educated and the resourceful - therefore have a greater
responsibility, because society and the environment have given us in
generous abundance relative to many. And it is now payback time. The
bottomline is that future economic growth will be severely
constrained if it is not inclusive. And business can only be
sustainable if we consciously build natural and social capital.
Unless the millions of disadvantaged get the opportunity to earn,
save, spend and invest, India's growth story will be restricted by
limited markets, limited skill availability and limited natural
resources.
A sustained level of
high growth is indeed crucial for eliminating poverty. As good
corporate citizens, we have a responsibility to create and secure a
better future for the coming generations and this is a challenge
that we must rise to.
Finding a
sustainable solution
Businesses do not
operate in an economy in isolation. They are organs of society, and
will have to harmoniously coexist with the natural and social
environment. It is my firm belief that the primary purpose of
business is to serve society. Be it by providing goods and services
to consumers, and continuously enhancing returns to the
shareholders, businesses can create value for society, beyond the
market, in innovative ways that are sustainable and inclusive. We
draw heavily on societal resources in the form of both natural and
social capital. It is therefore incumbent on us that we also find
innovative solutions to build and augment social and natural
capital.
We may not be able to
accomplish all this entirely on our own. We will have to forge
public-private and community partnerships and craft business models
that synergise shareholder value creation with the super-ordinate
goal of ensuring inclusive and sustainable growth. My own experience
at ITC gives me the conviction to be able to tell you today, that it
is eminently possible to achieve this synergy through innovative
strategies with a deep commitment that goes beyond the market.
Corporate India's
commitment will only take a meaningful shape if we measure our
businesses in terms of their contribution to the triple bottom line
objectives of building economic, ecological and social capital. To
my mind, this is the only way we can secure long term sustainability
for our organizations, for the stakeholders, the society and the
nation. Sustainability of business and its long-term growth
prospects are entirely dependent on societal well being and growing
markets.
Challenges ahead
The challenges ahead
in our common task to contribute to the triple bottom line balance
sheet of the nation are many and varied. Given that 75 % of our
population reside in India's rural areas, future economic growth
will depend critically on finding solutions to rural India's unique
problems. Agriculture is the mainstay for almost 60 % of the
workforce in India. Unfortunately, it only contributes to 18 % of
GDP. This clearly points out the disparity and the potential in
rural India.
The lack of
opportunities in rural India have also led to a huge migration of
workforce to urban areas, further adding to an already over-stressed
infrastructure. In its wake, it has also created a large mass of
urban poor. It is therefore critical to create productive capacity
and employment in rural areas, so that this segment is able to live
a life of dignity in their own habitats and can be spared the pains
of displacement.
The Rural
Challenge
Given the overarching
importance of raising incomes and the standard of living in rural
areas, it is necessary to understand the nature of problems that
plague India's villages.
-
India's 6,40,000
villages are not equally dispersed in terms of population. 60 %
of the villages have population fewer than 1000, 35 % have a
population base between 1000-5000 people and only 0.7 % have a
base of over 10,000 people. As a result, individual village
market size is very small and does not lend itself to organized
market interventions.
-
Farm size on an
average is smaller than 1 hectare, and 10 % of India's rural
households are reported to be landless. Fragmented holdings do
not provide the farmer with economic scales of operation, and
add to the problems of lower productivity in the farm sector.
-
Rural
Infrastructure is extremely poor, with acute shortages of
electricity, absence of all-weather roads, and poor irrigation
facilities.
-
Farmers, by and
large, are at the mercy of the vagaries of nature and are worst
affected by floods and droughts. Future climate change will
impact them even further.
-
Agriculture
extension services are poor and the farmer has little or no
access to know-how or technology.
How do corporates
intervene in such a diverse landscape with multiple deficiencies ?
While there is no single "one-size-fits-all" solution, let me share
with you, very briefly, ITC's own example of engagement with rural
India.
I must seek your
pardon in being somewhat immodest in presenting examples from ITC. I
am aware that there are several companies who have done laudable
work, and I share with you our own experience more because I have a
deeper understanding of these initiatives.
The ITC Story
Evolving from our
abiding vision to pursue a triple bottom line contribution for
sustainable and inclusive growth, we have fashioned our CSR
strategies in two distinct areas. One, where the business model
itself is so fashioned as to make the triple bottom line objectives
an integral part of business strategy. These are exemplified in
ITC's e-Choupal operations and our Social and Farm forestry
programmes. The other interventions are purely of a philanthropic
nature. These create sustainable livelihoods in the catchment areas
of our operating units, aided by our managerial and financial
resources. These interventions are in watershed development,
livestock enhancement, supplementary education, and women's
empowerment.
I have immense
satisfaction that our endeavours to embrace a larger context of
sustainability has today given us many reasons to be proud of. For
five years in a row, we have achieved and sustained our status as a
'water positive' organization, creating water resources four times
in excess of what we consume. We have also been 'carbon positive'
for the last two years, sequestering twice the amount of carbon than
what we emit from our operations. We continue to strive towards
recycling 100 % of the solid waste produced, and have already come
very close to this milestone during the past year. This makes us, to
the best of my knowledge, the only business enterprise in the world,
of our size and complexity, to accomplish these three dimensions of
environmental excellence - an extremely challenging task given the
fact that we are continuously growing our manufacturing operations.
In addition, through
a concerted effort to develop innovative value-chains across our
diverse business segments, we have created sustainable livelihoods
for nearly 5 million people, many of who represent the weakest
sections in rural India. It is a matter of deep satisfaction that
these endeavours of ITC have earned us significant global
recognition as an exemplar in Triple Bottom Line Performance.
Let me now share with
you a few highlights of our initiatives :
E-choupal
ITC's e-choupal is
the world's largest rural digital network that empowers nearly 4
million farmers. By providing digital connectivity, and by training
lead farmers who we call sanchalaks, we provide farmers customized
information on prices, best practices in farming, a competitive
channel to procure quality inputs and a choice to sell their produce
at the farm gate. By eliminating wasteful intermediation, farmers
become a part of an efficient supply chain and secure higher
margins, and also gain from a two-way flow of goods and services
procured through the e-choupal network. Sanchalaks today offer
insurance policies, and are also placed well to offer other rural
services. Currently there are around 6,400 choupals serving nearly
40,000 villages which we are endeavouring to scale up to meet the
needs of 10 million farmers in time to come.
Creation of physical
infrastructure in the form of Choupal Saagars, not only provide an
effective collection and storage facility, but also bring the
benefits of modern retailing to the doorstep of the rural community
bringing benefits of convenience and choice.
We have not only
gained from an efficient supply chain and identity preserved
procurement, which in turn adds value to our packaged foods
business, but in the process have also created an inclusive model of
business that empowers small and marginal farmers by giving them the
power of digital connectivity and access to markets.
Social and Farm
Forestry
In the Social and
Farm Forestry initiative, ITC has invested in extensive R & D to
create clonal saplings which apart from being disease resistant,
grow much faster and in harsher conditions. A large number of
tribals and marginal farmers have benefited by growing these
saplings on their private wastelands. ITC is a willing buyer of such
produce, whilst the growers are free to sell to the highest bidder
in the open market. Today, this programme covers over 75,000
hectares and has provided 35 million man days of employment.
ITC could have taken
the easier route by importing pulp, rather than a more difficult
route of mobilizing tribals and marginal farmers, involving long
gestation and substantial investment exposure. However, adoption of
this more challenging route has brought about a multiplicity of
benefits -- creation of a green cover for carbon sequestration,
ground water recharge and soil conservation and a source of
sustainable livelihoods to a large number of disadvantaged sections
of our society.
Committed engagement
with the farming community, over time, has led to capacity building
and higher productivity. This in turn has provided ITC with a
sustainable source of quality and cost competitive pulp wood for its
paperboard business. As a result, a business which was nearly sick a
decade ago, is today a world class producer of environmentally
friendly, state-of-the-art elemental chlorine free paperboard - the
only one of its kind in India. This, in my view, exemplifies the
integration of triple bottom line objectives as a part and parcel of
business strategy.
Other CSR
Initiatives
Recognising the vital
role that irrigation and water play in the rural economy, ITC has
helped create watershed projects covering 30,000 hectares in
water-stressed areas, providing precious water resources for
agriculture, rural communities and livestock. In addition, our
integrated animal husbandry services have been launched benefiting
over 1,25,000 milch animals in 1900 villages. Over 88,000 children
attend our supplementary education centers, and 7000 women
entrepreneurs have been created through 1000 self-help groups. These
are philanthropic programmes that are, in the short run, a drag to
the financial bottom line. It is my belief, however, that
shareholders of ITC, in the long run, would greatly benefit from the
support and trust of the communities where we operate.
Sustainable and
Inclusive Growth
Our experience
encourages us to believe that corporate strategies can indeed be
designed to meet a larger goal of social inclusiveness and
sustainability. We believe that these interventions, by securing
competitiveness across the entire value chain of the businesses that
ITC is engaged in, also enhance our business sustainability and
create more enduring value for the nation and our shareholders.
Making Markets
work for CSR
The big question is :
how do we make such success stories replicable, and also inspire
other innovative models for greater corporate contribution to social
and environmental capital ?
In our experience,
financial markets do not necessarily reward such long-term
orientation. I am, therefore, convinced that it is only when market
forces make CSR a crucial component of shareholder value creation
that new competitive forces will emerge in favour of responsible
corporate action. It is then that CSR will assume a new dimension -
one that is defined by market forces, and not inspired by corporate
conscience alone.
At the heart of this
lies the immense power of consumer franchise. Consumers, by
exercising an enlightened choice in favour of socially responsible
enterprises, can unleash a powerful force of market incentives. It
will be this commanding force exercised by consumers that will
energise corporates to make CSR a unique value proposition for
winning markets and bring about a dimensional change in social
intervention.
I have advocated that
Government support the development of a 'CSR Sustainability
Trustmark', or a series of Trustmarks defined by Industry segments,
which can be displayed on products and services to convey to the
consumer that the enterprise follows a strong commitment to building
natural and social capital. The Trustmarks could also be
supplemented with Ratings, based on the extent of the individual
company's involvement in creating societal capital. It will be
important to create an institutional framework that will develop,
measure, and award displayable Ratings for corporate social
initiatives which can help the consumers make an informed choice. In
the future, we may even be able to move towards trading in such
Trustmarks, so that organizations who are not able to directly
intervene in social projects can also contribute to the effort much
like the Carbon Trading across the world today.
I am sure with an
innovative mindset, we will not only be able to meet our corporate
aspirations, but unleash a multipler impact on the development of
societal capital for long term sustainability of the nation and its
people.
A movement for
economic freedom
While focusing on
India's poor and the upliftment of the rural economy, I recognize
that India also has other challenges that it must meet, to achieve
sustainable growth. The unprecedented surge in manufacturing and
services will unleash a war for talent, and much more will have to
be done to educate, train and develop our human resources. The
quality and capability of our people will drive India's future, and
every investment must be made to prepare our human capital for the
challenges of tomorrow. Again, this must be an inclusive process, so
that the disadvantaged have an opportunity to participate in India's
growth story. I am sure, with a concerted effort to forge a
partnership among Government, Academia and the Corporate sector, we
can achieve much more in this critical area.
There are serious
infrastructural deficiencies as well, which need to be addressed
lest we should choke our already over-burdened infrastructure. Prime
Minister's Bharat Nirman programme and the 11th plan proposals to
invest $ 500 billion will hopefully create a new super structure
that will aid a 10 % GDP march, and also build the fortunes of the
rural economy.
However, India's
economic progress needs a much larger support - a support that is
intangible but is the bedrock on which we can grow our wings to
shape a new future for our nation. More than a century ago, India
launched a movement for political freedom. The nation rallied
together with a shared vision and a common purpose. We fought
against the mighty with determination and leadership committed to
freedom. We need another movement now to define the new Indian
century. And this time for economic freedom of our people. To take
those who live at the margin out of poverty. To give them the
freedom to exercise a choice for a better future. And to empower
them to live a life of dignity.
It is important that
we believe in ourselves, have faith in our capabilities and the
courage to carry out our convictions. Like every drop that makes an
ocean, each one of us have within ourselves, the capability to make
a difference. We must give wings to our dreams, content to our
aspirations, and move with confidence to grasp a new world of
opportunities. We must do this with the faith that change will begin
with each one of us. We do not need to wait for others to move so
that we can follow.
Never before in our
history have we come to a juncture where we have been blessed with
so much. Technology, resources, world class entrepreneurship, human
capital, and global respect. Yet, we as a society, unwittingly
fragment our efforts and fail to demonstrate our common will to
achieve a new future for those who have been left out of the race.
It is time that we get together again to forge a new movement that
will not only take our nation to even greater heights but ensure
that the fruits of growth and development reach the most
disadvantaged. We can certainly do it. And we must do all that we
can to achieve this transformation.
As I conclude today,
let me recall what Rabindranath Tagore said many years ago, :
"Into that heaven of
Freedom, my father, Let my Country Awake"
Thank you, ladies and
gentlemen.
|
