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12 ISSUES AND INSIGHTS

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MUMBAI | FRIDAY, 11 MAY 2018

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Seven Ds for independent directors

her view being recorded as having ‘expressed reservations’, a mild form. In another case, the ID wished his view recorded as ‘disagreement’, stronger form. Depart: There could be an unintended consequence of disagreeing or distancing. The ID could be seen by the management or by the promoter group as obstructive. If this circumstance develops, it is time to depart. The departure should be quiet if the disagreements and distancing are not material for the company. Disclose: If there is a substantive disagreement, or the minority shareholders' interests are materially affected, then the ID must — and is legally mandated — to disclose to the regulator the reasons for departing. Those reasons may find their way into the public domain, so be it. These concepts are elementary and are born out of my experiences over 30 years of board work. However, I do wonder why they are breached in a visible way frequently. To quote what JRD Tata said (may be Gandhi-inspired), “In deciding on a complex issue, think of the frail and elderly pensioner, who attended your last AGM, and consider how this proposal would impact him or her.”

All know the seven Ds but frequently fall prey to groupthink and fail to act

THE WISE LEADER R GOPALAKRISHNAN

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n army officer once faced several yet unproven charges. General Sam Maneckshaw reportedly advised him, “How can you now lead your men? If I were you, I would shoot myself or resign.” Such is the dilemma faced today by board independent directors (IDs). Smoky controversies about CEOs and directors envelope important institutions. Like the wild Californian fires, public commentaries scald reputations and careers, sometimes legitimately.

Amidst such corporate realities, I had a breakfast meeting with an independent director. His discussion question to me was, “When an independent director disagrees, is it adequate to merely record his disagreement? Is that independent?” Governance has two aspects: Cognitive and behavioural. A competent ID needs to combine both aspects. Only then will his or her actions be seen as wise. The efficient ID must definitely be comfortable with the cognitive-like product or market domain, finance and law. The effective ID must also act with the behavioural vector of governance. This second aspect, which is cultural, is not sufficiently recognised while framing regulation. Indian governance is modelled on AngloSaxon practices, rather than local cultural characteristics. An ID’s role is to protect the interest of the minority shareholder. To do so, the ID must form a distinctive view and be an advocate of the view. If an ID’s view fails to find acceptance of the IDs within the board, it cannot be assumed that the board or management is obstinate. The ID must reexamine his or her view and also the

effectiveness of its advocacy. All IDs know the seven D’s that appear below; they intuitively follow them. Amazingly and too frequently, IDs also fall prey to groupthink and fail to act per the seven D’s. Descry: Derived from the French descrire, it means ‘to discover’. The ID develops a point of view by absorbing the subject, listening deeply, by observing behavior and appreciating the context. The context is very important, especially in judging conflict of interest, related party matters, mergers and acquisitions. For example, the fit of a target acquisition may be sound, but its risk profile may be too high for a particular company’s balance sheet. Debate: The ID must demonstrate flexibility to consider alternative viewpoints. To paraphrase nuclear scientist Niels Bohr, the opposite of a truth is not always a falsehood. It may well be another truth. In one company, the management strategy was to shift product focus from business-tobusiness to business-to-consumer. One ID had firmly made up his mind before even listening to others’ views. His behaviour became obstreperous. Demur: If the ID feels persuaded to

accept, then he or she defers to the consensus, no issues. However, if two conditions occur simultaneously-first, the ID has a lurking concern, and second, the subject has adequate materiality for the institution — then the ID must constructively demur before strongly disagreeing. Disagree: Indians demur so politely that the message is lost! In one board, an overseas investment proposal was debated at board meetings for 18 months before being rejected. After the rejection, directors privately opined that they had consistently demurred. Others had not picked up others’ discreet act of demurring. Distance: If the ID has advocated, and the debate has been professional and constructive, then the ID needs to consider whether the subject has sufficient materiality for the company. In some cases, no great principle is involved — it is one opinion versus another — or management may seek a bound freedom to experiment. Such proposals can be supported. However, if the proposal has a material impact or a matter of principle is involved, then he or she should distance from the decision. How? In one company, an ID insisted on

> CHINESE

The author is a corporate advisor, author and distinguished professor of IIT Kharagpur. Email: [email protected]

Building on the signs of economic recovery

RASHESH SHAH

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s we enter into FY2019, the upturn in the economy coupled with stability in other macro parameters point towards a broader economic recovery. The latest IIP data (7.5 per cent and 7.1 per cent growth in January and February respectively) also show that the economy is bouncing back strongly. It is in line with the growth that has been witnessed since August last year in the core sectors of the economy, such as cement, steel and automobiles among others. Early earnings indicators for the fourth quarter of 2017-18 also signal at an uptick which we anticipate will turn into a sustained earnings rise in the new financial year. It can be reasonably safe to assume that 2018-19 is all set to signal the start of a distinct recovery in the corporate performance — improvement in numbers, better capacity utilisation and emergence of investment appetite — leading to a significant increase in the GDP growth in the next few quarters. At the same time, the insolvency and bankruptcy process at the National Company Law Tribunal is gaining traction and we

expect some big-ticket resolutions to come through this year. With all these headwinds, we can expect the GDP growth would be back to the 8 per cent growth phase in the next financial year. The challenge, though, would be to sustain the recovery and higher growth for a longer period of time than just a few years, which has been the case in the past. A sustained GDP growth rate in excess of 8 per cent could truly harness the power of compounding and transforming the landscape of the country, creating the third largest economy in the world by 2030. While it is a difficult objective, it is definitely not unreasonable. Growth has been fairly good in the last few years, barring the short-term impact from the long-term structural reforms. It is now hoped that these reforms will help boost economic growth and achieve a consistent 8 per cent-plus growth rate will not be a Herculean task. In fact, in the long-term, we should actually target a growth closer to 10 per cent. There are three key aspects that the government will need to focus on refine and simplify existing reforms like GST, fresh reforms in critical areas like taxation and finally, the NPA clean-up should be given the same push as it has been in the last 18 months. Unless banks clean up completely, it will be difficult to justify credit growth even when there might be demand for the same. GST: What next? GST was a seminal reform in the history of taxation in India. However, like with other industry-changing reforms, creating a political consensus was a difficult and onerous task. Even the current Goods and Services Tax (GST)

ILLUSTRATION BY BINAY SINHA

GST stabilisation, DTC implementation and banking reforms are crucial for sustaining high growth for a long period

regime that could be implemented only from last July after a long delay saw a few compromises as the government was keen to push through the bill. Going ahead, the GST regime has to move towards minimum number of slabs with reasonable rates, which would be possible with the required expansion of GST base through administrative measures and inclusion of almost all items in the GST net, especially petroleum products. The GST council has succeeded in moving forward in the implementation of e-way bills and simplification in return filing, but a lot still needs to be done in terms of administrative simplification. The GoM on simplification of returns working under the chairmanship of Bihar deputy chief minister Sushil Modi is expected to take this to its logical conclusion in consultation with the industry. Reforms: Wave II While the last wave of reforms brought in significant changes like GST, Rera, IBC among others, the government must not drop the ball on the issue. The reforms agenda must continue in the right earnest.

Alexa & Siri can hear this command. You can’t Researchers can now send secret audio instructions undetectable to the human ear

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any people have grown accustomed to talking to their smart devices, asking them to read a text, play a song or set an alarm. But someone else might be secretly talking to them, too. Over the past two years, researchers in China and the United States have begun demonstrating that they can send hidden commands that are undetectable to the human ear to Apple’s Siri, Amazon’s Alexa and Google’s Assistant. Inside university labs, the researchers have been able to secretly activate the artificial intelligence systems on smartphones and smart speakers, making them dial phone numbers or open websites. In the wrong hands, the technology could be used to unlock doors, wire money or buy stuff online — simply with music playing over the radio. A group of students from University of California, Berkeley and Georgetown University showed in 2016 that they could hide commands in white noise played over loudspeakers and through YouTube videos to get smart devices to turn on airplane mode or open a website. This month, some of those Berkeley researchers published a research paper that went further, saying they could embed commands directly into recordings of music or spoken text. So while a human listener hears someone talking or an orchestra playing, Amazon’s Echo speaker might hear an instruction to add something to your shopping list. “We wanted to see if we could make it even more stealthy,” said Nicholas Carlini, a fifth-year PhD student in computer security at U C Berkeley and

one of the paper’s authors. Carlini added that while there was no evidence that these techniques have left the lab, it may only be a matter of time before someone starts exploiting them. These deceptions illustrate how artificial intelligence — even as it is making great strides — can still be tricked and manipulated. Computers can be fooled into identifying an airplane as a cat just by changing a few pixels of a digital image, while researchers can make a self-driving car swerve or speed up simply by pasting small stickers on road signs and confusing the vehicle’s computer vision system. With audio attacks, the researchers are exploiting the gap between human and machine speech recognition. Speech recognition systems typically translate each sound to a letter, eventually compiling those into words and phrases. By making slight changes to audio files, researchers were able to cancel out the sound that the speech recognition system was supposed to hear and replace it with a sound that would be transcribed differently by machines while being nearly undetectable to the human ear. The proliferation of voice-activated

NPAs: Nearing the endgame Like GST, IBC has been a deep-root-

Whose baby?

For over a year now, the social media teams of Opposition parties have worked in synergy to counter the Bharatiya Janata Party (BJP). This unofficial alliance threatened to come apart in the last 24 hours. On Wednesday, Congress social media chief Divya Spandana posted a video appeal to crowdfund the election campaign of a Congress candidate in Karnataka. She said Congress was the first party in India to launch such a campaign. AAP's social media head Ankit Lal contested this, pointing out that AAP had crowdfunded its campaigns since November 2012. “It's good that you are following us. Would have been better if you hadn't lied about being the first to do so,” he tweeted. Spandana responded the Congress effort was indeed a “first”. Trinamool Congress Rajya Sabha leader Derek O'Brien (pictured), who has acted as a catalyst for cooperation among Opposition social media teams, tweeted to Spandana and Lal: “Peace out guys. There is a match to be won.” Lal responded the match “cannot be won by lying and claiming what AAP has done for more than five years was a Congress innovation”.

Mamata as PM? Hours after Congress President Rahul Gandhi indicated he was not averse to taking up the role of India's Prime Minister, a campaign was discreetly launched on Facebook pitching West Bengal Chief Minister Mamata Banerjee as a prime ministerial candidate. Launched by supporters of Banerjee, the campaign urges supporters "cholo bodlai, ebaar bangali pradhan mantri chai" (let us bring change; let us root for a Bengali Prime Minister this time). A huge photograph of a smiling Mamata Banerjee above the slogan makes it amply clear who the Bengali Prime Minister in question is. While the page has been up and running for about six years, the posts calling for "didi as PM" were put up on Tuesday.

Patna’s air A recent World Health Organisation (WHO) report has put Patna ahead of Delhi in the list of Indian cities with most air pollution, causing much consternation in the Bihar government. Casting doubts over the findings, deputy chief minister Sushil Kumar Modi said, while the air quality in Patna was poor, there was no reason to panic. While addressing a workshop on air pollution jointly organised by the Centre for Environment, Energy and Climate Change and Bihar State Disaster Management Authority, he claimed “the state Pollution Control Board figures are different” and that “we have written to the Central Pollution Control Board, asking it to share details about the statistics given to the WHO”.

The author is president, FICCI

> LETTERS

BUSINESS LIFE

CRAIG S SMITH

A simple and stable direct tax law with reasonable rates and minimal exemptions is paramount. The Arbind Modi committee is now drafting a new Income Tax Law with the report expected to be out in a few months. It is hoped that its recommendations will provide a longterm roadmap for direct tax reform in the country. Although, the current government will not be in a position to implement the suggestions made by the committee, it must initiate a larger debate on this to garner public opinion that may lead to at least the beginning of the much-needed reform in the direct taxes also, as quickly as possible. The industry is also keenly waiting for the reduction of the corporate tax rate to 25 per cent from the existing 30 per cent across the board. Ditto with the personal income tax with the top marginal rate of 30 per cent getting imposed at a lower ~1 million limit, which needs to be increased. With GST in place now, a similar pro-active approach is required in the direct tax domain also.

ed structural reform which has changed the way how bankruptcy works in India. We are now nearing the endgame for what has been a process that started a few years back with Reserve Bank of India’s asset quality review. It is now time to take this to the logical conclusion, not just for the existing NPA challenges but also set a marker for the future. Although constant concerns have been raised on the IBC’s capability, there is no doubt about its long-term impact on growth like the GST. It has already emerged as a strong tool for stressed asset resolution and the higher bids placed clearly shows that if supported with patience, it will yield desired results. At the same time, there needs to be a strong governance and structural change at the base, to ensure that we don’t see this situation again in the future. The government also needs to make its intentions clear on the rationalisation and privatisation of public sector banks as a banking ecosystem with few strong PSU banks would be more capable of handling NPAs than what it is right now with 21 PSU banks. Even if a decision in this regard is not possible at present, the expression of intent to discuss such a strategy before going into the elections may not be a bad idea. This is not the time to sit back and rejoice. It is time of action. The economy is now starting to recover and things are expected to only get better. If we grab the opportunity with both hands and work together to continue our reformist agenda, we are on our way to seeing a new and improved India in the near future.

WHISPERS

gadgets amplifies the implications of such tricks. Smartphones and smart speakers that use digital assistants such as Amazon’s Alexa or Apple’s Siri are set to outnumber people by 2021, according to the research firm Ovum. And more than half of all American households will have at least one smart speaker by then, according to Juniper Research. Amazon said that it doesn’t disclose specific security measures, but it has taken steps to ensure its Echo smart speaker is secure. Google said security is an ongoing focus and that its Assistant has features to mitigate undetectable audio commands. Apple said its smart speaker, HomePod, is designed to prevent commands from doing things like unlocking doors, and it noted that iPhones and iPads must be unlocked before Siri will act on commands that access sensitive data or open apps and websites, among other measures. The technique, which the Chinese researchers called DolphinAttack, can instruct smart devices to visit malicious websites, initiate phone calls, take a picture or send text messages. While DolphinAttack has its limitations, experts warned that more powerful ultrasonic systems were possible. That warning was borne out in April, when researchers at the University of Illinois at Urbana-Champaign demonstrated ultrasound attacks from 25 feet away. While the commands couldn’t penetrate walls, they could control smart devices through open windows from outside a building. Carlini said he was confident that in time he and his colleagues could mount successful adversarial attacks against any smart device system on the market. © 2018 The New York Times

War theory After the recent massive air exercise, the Air Chief declared that the air force was prepared for a two front war. Is the Indian Army similarly prepared? A conventional war is unimaginable. Take Pakistan first. What is their capacity in terms of number of days to carry on an intensive conventional war? We need to have 150 per cent of that capacity and demonstrate that also so that they think twice before starting a war. What is China’s capacity for a conventional war? We need at least 50 per cent of that since close to that level even China will need to think of the consequences it will have on its objective of being the number one economy of the world. Not only arms and ammunition, we also need to have an SPR (strategic petroleum reserve) for transportation and other essential functions during the war and for some time more, till things cool down. A nuclear deterrent must come internationally. Apart from this, we need to reformulate our nuclear policy. In the 1960s, at the height of the Cold War, the Soviet think tank headed by Marshal Vasily Danilovich Sokolovsky stated that its nuclear “only second strike” response will include civilian targets as only such a threat will dissuade a first strike from the other side. What is our stated policy? The readiness for a two-front war must include educating and informing the population of what it entails and its consequences. T R Ramaswami Mumbai

India falling behind This is with reference to “Why Walmart's Flipkart acquisition is its admission of defeat in India” (May 10). I agree with what the author Mihir Sharma has written about the Walmart-Flipkart deal — it is the second-best solution for Walmart. This solution is neither helpful to farmers who could have gotten an access to the modern supply chain like the multibrand retail trade of Walmart, nor is it

forward looking for India Chandrashekhar G Ranade Washington DC

Not the right move

helpful to consumers who could get highquality farm fresh produce. India is falling behind on all fronts. The potential of biogas in India is 29-48 billion m3/year, while the actual utilisation is 2 billion m3/year. As the energy prices are going to rise, biogas could provide a healthy alternative. India has refused to accept GM crops, even its own indigenously developed GM mustard. GM crops can raise agriculture productivity by using less chemical inputs and avoiding the pollution of soil and water. With its massive cattle population, India is not helping the meat sector by banning cow slaughter. The country has also fallen behind on girls' education. This year is the 200th birth anniversary of Karl Marx that was celebrated by some activists who will call for a revolutionary change if the present-day politicians from the Congress to Bharatiya Janta Party do not wake up and do something

> HAMBONE

Apropos Anjuli Bhargava’s piece “Making a mountain out of a mole hill” (May 10), it is not a good news that corporate bodies are being allowed to ‘adopt’ historical monuments. The maintenance of historical and heritage sites is the duty of the governments. If the government takes its hands off from all spheres of its responsibility, what are they supposed to do? I find no reason to support such a move. She is correct to state that the government has failed miserably to maintain historical sites and heritage buildings. But the cure to failure is to do the job properly, not to allow them to run away. If we really give up and want the corporate sector to step in, we must not forget that the corporate sector also does not cover itself in great glory. They might just look at it as a real estate acquisition. Next they would seek mileage for their ‘investment’ and start covering up the whole building with advertisements! DP Ghatak Durgapur Letters can be mailed, faxed or e-mailed to: The Editor, Business Standard Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 Fax: (011) 23720201 · E-mail: [email protected] All letters must have a postal address and telephone number

BY MIKE FLANAGAN

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OPINION 13

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Volume XXII Number 193

MUMBAI | FRIDAY, 11 MAY 2018

ILLUSTRATION BY BINAY SINHA

The IT jobs crisis Hiring deceleration bodes ill even for the broader economy

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n what must be considered deeply worrying news for both the sector and the Indian economy overall, the four largest information technologyenabled services (ITeS) companies have reduced hiring in the just completed financial year by as much as three-fourths. Tata Consultancy Services, Wipro, Infosys and HCL Technologies added 13,972 employees in the year ending March 2018, as opposed to 59,427 in 2016-17. This is in spite of the fact that the companies showed solid revenue growth in the same year. One optimistic way of looking at this is that Indian ITeS companies are finally succeeding in altering their legacy manpower-heavy business models. The IT world has entered an age of digital business, artificial intelligence and automation, and the big four would have been remiss if they did not do so as well. Revenue growth accompanied by hiring reductions suggests that they are on a route of increasing productivity, which is the broader industry trend. On the other hand, the forward implications of this trend are not entirely good news for the Indian economy, however overdue the shift may appear from the point of view of the companies’ shareholders. One implication is for hiring; thanks to increasingly restrictive visa conditions in the countries in which these companies do business, it is possible that future additions to the Indian ITeS companies’ workforce will happen in developed countries. Infosys, for example, has announced that it will hire 10,000 American professionals. At the recent ceremony to open its technology and innovation hub in Indianapolis — the capital of a state that Donald Trump won by a nearly 20-point margin in 2016 — Infosys had reannounced its hiring of 2,500 US engineers in 2017, and pledged to continue that process. Some industry experts have suggested that every American that Infosys hires will cost four Indians their jobs. Thus the implications of this on-shoring process for the workforce in Indian ITeS are massive. Some estimates of the number of Indian ITeS jobs lost in total over 2017 are in excess of 50,000. Yet there are implications beyond the sector as well. Every IT job in India creates other jobs, and revenue growth in allied or associated sectors. For one, reduced employment prospects in the ITeS sector has impacted the supply chain of engineers – which means that there is now an over-supply of engineering colleges. Many have already shut down, and more will in the coming years. Meanwhile, the commercial real estate sector has grown on the notion that IT companies will have a massive workforce that must be accommodated. That is no longer as likely. The consequences for growth prospects in realty, as well as for the profitability of office and commercial parks overall, will be significant. Services sectors geared to providing for those in ITeS jobs will also shrink — worse, perhaps, this negative growth may be as regionally concentrated as was the original boom, in the new exurbs and suburbs of Gurugram, Hyderabad’s Cybercity, and near Bengaluru. The government should not be caught unawares by this trend, and should have contingency plans to deal with the overcapacity and unemployment that lies just around the corner.

Farm distress Poor post-harvest management is the key problem

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eports of farmers destroying their crops of tomato, cabbage, cauliflower, garlic and other vegetables in the field or dumping them on the road because of abysmal returns is a disquieting commentary on the management of agricultural prices. Potatoes and onions had met with the same fate earlier. Milk farmers in Maharashtra, who last year poured their produce on roads, are now distributing it free outside offices in towns to draw the government’s attention towards unremunerative prices that do not cover even the production cost. Unsurprisingly, the Rashtriya Kisan Mahasangh, an umbrella body of over 100 farmers’ organisations, has threatened to stop supplying vegetables, milk and other farm goods to cities across the country for 10 days from June 1 to protest against the government’s policy of keeping inflation under check at the expense of farmers. Unabated economic distress in rural areas ahead of polls in states such as Karnataka and general elections due next year are worrisome indications for Prime Minister Narendra Modi. It is poor post-harvest management of farm produce, and not bumper production that is the real culprit. It is reflected in paucity of facilities for storage, processing, value-addition and shelf-life enhancement; poor and inefficient marketing; want of linkage between producers, retailers and consumers; mismatch between production and demand; and absence of market intelligence and price hedging mechanisms for farmers. The need, therefore, is a multi-pronged approach to address these issues simultaneously in a holistic manner. Piecemeal price stabilisation measures of the kind the government normally adopts to hold the price line of relatively more durable agricultural commodities may prove ineffective for perishable goods. For instance, procurement-based price support cannot be an option for products such as tomato or fresh vegetables. The needed multi-faceted strategy has to include facilities for scientific and commodity-specific storage for farm goods to allow their deferred and non-peak season sales; gainful utilisation of surplus produce through processing and value-addition; and creation of alternative marketing outlets like exports. Produce like tomato, garlic, onion and others can easily be preserved for offseason use through simple means like dehydration or conversion into puree and paste. Small scale enterprises located within the producing areas are more suitable for such tasks than the giant food parks being promoted by the government. The emergence of organised retail chains with backward linkages with farmers can also ensure better prices to growers and reasonable rates for consumers. Promotion of cooperatives or farmers’ companies, which can serve as aggregators of farm produce for its marketing, can also be helpful. Setting up exclusive mandis for sale of farm goods by farmers directly to consumers can be yet another way of protecting the interests of both. Equally important are measures to grant farmers access to market intelligence through agricultural universities or specialised agencies to enable them to take judicious sowing decisions. But no price stabilisation strategy, however well conceived, can succeed without stable government policies regarding the internal and external trade of agricultural produce. Knee-jerk reactions to emerging situations will do more harm than good.

World leaders and their writings Narendra Modi is the most popular PM since Jawaharlal Nehru and yet we know so little about him

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n January 3, 2014, as it became clear that Narendra Modi would do well in the general election, the then prime minister Manmohan Singh said the following in his last press conference: “I do believe, that having Mr Modi, whatever his merit, as the prime minister, will be a disaster for India”. What did Mr Singh mean? He did not elaborate and wasn’t asked to. The two men would have worked together, as chief minister and prime minister, reasonably closely over the 10 years between 2004 and 2014. Certainly Mr Singh would have had occasion to observe Mr Modi, his manner of functioning and his performance. And so Mr Singh was presumably predicting this on the basis of both what he thought a PM’s job required and his knowledge of Mr Modi. But unfortunately all we have is this one line. Earlier this week, on the campaign trail in Karnataka, Mr Singh repeated that Mr Modi had introduced “disastrous policies”, listing demonetisation and the implementation of the Goods and Services Tax as his evidence. But this is nothing new, and it AAKAR PATEL doesn’t tell us why Mr Singh predicted what he did in 2014. So has Mr Modi’s term been a disaster, a word meaning total failure? It would be difficult for a neutral observer to say that it has. It is true that the ruling party is pushing a particularly nasty majoritarianism in which its leader is complicit, but one can be repelled by it and still be attracted to the man (as I am, having known him for long personally).

It would have been fascinating to know what Mr Singh thought were the requisite qualities to lead a nation and where he felt Mr Modi fell short in the decade that he had known him. The larger point I am trying to make is about opacity, which is unhealthy in a democracy and particularly one of India’s size. There is only one way in which transparency of the sort being referred to happens, and it is when leaders reveal their perspective at length. This is not possible in interviews on television or even in print, but through memoir and autobiography. This is where we have fallen short. The leaders of liberal democracies, particularly the United Kingdom and the United States, usually leave a record of their term in office. Even those actually thought to be a disaster, including by their own party, have done this. George W Bush wrote Decision points (quite unreadable) as his apologia. Barack Obama already has two books out from before his term and is readying a third. Across the pond, British prime ministers, especially since Churchill who was the most prolific writer of any leader in history, have been particular about doing this. Even Blair, another disaster according to his own party, wrote his autobiography. In our parts of the world, the tradition has actually been one of decline. Students of Pakistan will know that the finest period in terms of such materi-

REPLY TO ALL

al was the 1970s, when Z A Bhutto’s lieutenants like Rafi Raza, Mubashir Hasan and Iqbal Akhund recorded their reflections. Bhutto himself wrote quite a bit, including his final book from jail, If I am assassinated (which he was, of course). The two decades since have produced poorer material. Benazir wrote some self-serving stuff but Nawaz Sharif had no interest in writing. Manmohan Singh’s daughter has written a book on her parents, Strictly personal: Manmohan and Gursharan, but it ends tantalisingly at 2004 and so that period we are referring to is absent again. Before Mr Singh, Mr Vajpayee wrote mostly Hindi poetry (quite banal verse, to be honest) and his keeping poor health now for several years means that we will be denied his perspective on his term also, unless something has been kept in storage for publishing later. Mr Vajpayee also had to encounter Mr Modi in the critical 2001-2004 period and it would be very unfortunate if we are to be denied this view. Vinay Sitapati wrote an excellent biography of P V Narasimha Rao, although Rao himself wrote quite a bit, both on the period of the demolition of the Babri mosque and a fictionalised account of a politician. He is the exception to this sorry list. Before Rao, I K Gujral wrote a book, Matters of discretion (a modest work) describing itself as “the first autobiography written by a prime minister”, which itself is a remarkable fact to consider. Rajiv Gandhi was not a particularly literary individual (so far as one knows), having failed to secure a degree at Cambridge, just as his mother failed to secure one at Oxford (brother Sanjay was a high school dropout) and did not write much. Indira has been written about quite a bit, most recently by Sagarika Ghose and also Jairam Ramesh (who reveals that Indira had read one of the great works of natural history, Maurice Maeterlinck’s The life of the bee). But she did not write much herself, again unfortunate given that she straddled the pre-Independence era, knew its great figures, and herself presided over the partition of Pakistan, far-reaching economic policies and great communal disharmony. I have the three volumes of Morarji Desai’s autobiography (hard to get and very detailed but otherwise unremarkable) but these again stop before the period in which he was prime minister. Nehru’s three great works, including his autobiography, came much before 1947, but we are lucky to have his “selected works”, which are still being released slowly, which reveal his correspondence and therefore much of the man and his observations as a leader. In Mr Modi we have a prime minister who in my opinion is the most popular we have had since Nehru, and entirely on merit. He has written quite a bit in Gujarati, which I have translated. This is hagiographies of the RSS leaders who mentored him and some poetry, which I found ordinary. His decade as chief minister was transformative for Gujarat in many ways, including socially. And his years as prime minister also promises and/or threaten to be that. It would be a favour to all of us if he were to reveal himself not through oratory and rhetoric as he does now, but in text.

Fraternity and economic transformation T

he preamble of the Constitution resolves to “constitute India into a republic” and to securejustice, liberty and equality for all its citizens. These can be secured by law and policy action. But the preamble also seeks to promote fraternity amongst its citizens. Fraternity is secured in society, not by government. Fraternity is an often overlooked challenge. Until we see Indian society demonstrating much more fraternity than I have seen in my life, there will always be authoritarian and sectarian voices that justify limiting liberty and equality. Low fraternity societies are low trust societies and this is then reflected in curbs on individual and collective initiative. It necessitates state action that would not be required, were there greater fraternity. The Delhi Police caught one million two-wheeler riders last year for not wearing helmets as prescribed by law. This is a staggering number. However, helmet-less travel is the norm in Delhi. This collective disdain for a protective law reflects low fraternity, as society does not accept its validity, and violates law in numbers that make enforcement impossible. This is true of countless other laws. As a consequence, we are a high litigation society. The load of litigation results in justice RATHIN ROY delayed and, hence, justice denied. This has immediate economic consequences in raising the cost of doing business, by necessitating expenditure on micro level state interventions that would not be necessary, were laws to have fraternal acceptance. Thus, lack of fraternity promotes exceptionalism, which raises the cost to society of working together, with hugely negative consequences for the economy. The independent houses of the Delhi of my youth had separate “service lanes” for use by garbage collectors, vendors etc. Contemporary high-rises mimic this. This is satirically captured in a recent cartoon in which a family is on holiday in Egypt, while their flat is being renovated. They decry the inhuman treatment of slaves

carrying heavy stones to build the pyramids. At the same time, workers renovating their high-rise flat are not allowed to use the elevator and climb steep staircases with 50 kg cement bags on their backs. A renovation that should take a few days, takes weeks. Workers on construction sites are routinely forced to defecate in the open. Construction workers build roads for SUVs and live in deplorable conditions with their little children in roadside shanties. Society is unmoved, and has no fraternal feeling for these fellow citizens. As a consequence, the built environment is violated, productivity of construction is low, and needless environmental damage is caused. Think how routine it is for thefts to occur in school mid-day meal schemes. In a low fraternity society, there is little guilt in such theft as there is no fraternal feeling for children other than those in one’s family or kin. There is no social sanction when such egregious theft occurs, but such social sanction is the only effective way such morally reprehensible theft can be prevented. No amount of law making and enforcement will compensate for the lack of social fraternity that has allowed this to happen in India for decades. I have deliberately chosen “small” examples of the consequences of low fraternity but I will point to its systemic manifestations — low levels of trust within the government leading to poor decision making, caste and religious barriers preventing effective implementation of government programmes, lack of fraternal feeling for the girl child resulting in lack of opportunities for women. All this ultimately lowers productivity, raises costs of doing business, and necessitates the deployment of costly legal and executive manpower. People often aver that the Indian economy is

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complex. I disagree. There is nothing inherently complex about the Indian economy. It is complexity of the Indian society that generates economic complexity. Low fraternity prevents things from working when brought from pilot-level to mass scale. It forces us to think of manufacturing as possible only in industrial estates and special economic zones, where the cost of low fraternity can be bypassed by creating a bubble. The rich bemoan the poor quality of services provided by plumbers, waiters and carpenters, not realising that, unlike in other emerging economies, these workers do not use the services that they produce. They do not use anything like the same sanitary facilities, eateries or furniture that the rich do. How, without fraternity, can they be expected to comprehend what it is that they must deliver in the modern world of consumption? Other than civil war and violent revolution, the question of fraternity is best addressed through social reform movements. Advances in health, education, sanitation and women’s equity have not been historically spearheaded by government fiat, but through social movements to lower unacceptable societal barriers to development. The genesis of Kerala’s human development was a social movement, as was the case with advancement of education in the Bombay and Bengal presidencies, and the Punjab. Conversely, lack of fraternity with our tribal citizens has led to disempowerment and, ultimately, expression of violent resistance across almost all of India’s tribal population. The fact that political competition has reinforced sectarian lack of fraternity has compounded the problem, but is not a root cause. As an economist, I cannot claim to understand the root causes of this lack of fraternity. But, as a social scientist and thinking citizen, I realise this is an important binding constraint to the success of India’s development transformation. The writer is director, National Institute of Public Finance and Policy and member, Economic Advisory Council to the Prime Minister. Views are personal

The anatomy of brand crises BOOK REVIEW AMBI PARAMESWARAN

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t is easy to write about brand successes. CEOs and CMOs happily speak about what they managed to do under “demanding” circumstances. But approach the same people to speak about handling brand failures or brand crises, and you face an uphill battle. Almost ten years ago, Ivan Arthur and Kurien Mathew conducted a two-day retreat to mine crowdsourced wisdom on handling brand crises. The session held at a B School near Mumbai saw a gathering of thinkers from marketing, advertising, marketing research, strategy consulting, social sciences and so on. The result was published as a book Brands Under Fire.

This reviewer was part of the group that brainstormed at the retreat. So, it was interesting to see that a follow-up study on that book is now ready for consumption. The author, Ramya Ramamurthy, was one of the people who was involved in curating the last session on brands under crisis. Rebuild: How Brands in India Overcame Crisis and Emerged Stronger. Better. Wiser looks at a large number of brands that have withstood crisis. Many have managed to come back stronger, but the book also speaks of a few brands that have not been able to withstand the shock. The author’s research is meticulous and she has reached out to numerous branding experts for their views. Where possible company spokespeople, too, have been approached for their views. Twenty-two brands or typologies have been featured in the book, 11 of them are multinational brands, so it is not fair to say that in India only foreign brands come under attack. The arrangement of the 22 brand cas-

es is something that needs discussion. showcases Facebook, Old Monk, HMT, The author has worked on the hypothesis Tata Nano and BPL Mobile. that a brand could face a crisis from five As you would have realised by now, different forces. The most written about a number of interesting brands have is “Crisis Factor #1: Environmental been analysed and experts have been Hazards and spoken to (full discloContamination”. Brands sure: this reviewer was that feature in this section Each story is also sought out for his include the colas [two interspersed with views on some of the brands], Cadbury, opinion from subject brand crises). Some of Unilever and Maggi. matter experts. So this the brands are Indian “Crisis Factor #2: book is a valuable facing unique challenges Mismanagement” include in the Indian market. addition to marketing Uber, IPL, Kingfisher knowledge base that is Some of them are multiAirlines, Satyam and nationals facing chalbeing developed in the Sahara Group. “Crisis country lenges in India and a Factor #3: Product Recall handful are global and Related Issues” feabrands that faced intertures Samsung Note 7, Sanofi, Flipkart national heat (Uber and Kodak, for and Automobile Recall (a broad classifi- example). cation where many brands are menThe author should be commended tioned). “Crisis Factor #4: Shorter for the way she has dug up the details Innovation Cycles in Technology” cov- and put them together into cogent brand ers Nokia, Kodak, Shoppers Stop, stories. Each story is interspersed with Landmark. The last is “Crisis Factor #5: opinion from subject matter experts. So Misguided Consumer Strategies”, which this book is a valuable addition to mar-

keting knowledge base that is being developed in the country. The book suffers a few lacunae, however. The categorisation of crises into various “Factors” is subject to interpretation. Why should Old Monk be in the “Misguided Consumer Strategies” section and not in the “Mismanagement” section? Similarly, isn’t a factor like “Product Recall” a little too broad an issue to look at? I also wish the publisher had done a better job of editing. For instance, Crisis Factor #5 does not find mention in the contents page, though it does appear in the body of the book. Some facts such as Bhaskar Bhat being referred to as “Former Managing Director of Titan” in the chapter on HMT is an obvious mistake. There may be a few other such mistakes that better editing could have weeded out. These are tiny complaints in the larger scheme of things. The effort to select 22 brands/typologies, examine published information about their crisis,

contact relevant people in the company and outside for their views and string it all together into a cohesive story is not easy. It is here that Ms Ramamurthy’s many years of media experience, especially covering the world of marketing, has come into play. I believe the book is a very valuable addition to the small body of knowledge we have documented about brand crises in India. I for one would be happy to use some of the stories presented in the book as a “live case” in a marketing management course or management development programme. If your company does not have a brand crisis playbook, you may well want to start by reading this book for some valuable lessons. (The reviewer is an independent brand strategist and founder, Brand-Building.com a brand advisory)

REBUILD How Brands in India Overcame Crisis and Emerged Stronger. Better. Wiser Author: Ramya Ramamurthy Publication: Hachette Price: ~599 352 pages