The poster boy of Indian entrepreneurs of the 21st century, Narayana Murthy, is back in business at Infosys with a renewed mission to reverse the slide that had happened in his absence. Of course, the economic slowdown had its own role to play, but the Infosys slide has been mainly engineered by a rising attrition rate, probably because of eroding values of employee welfare; values that were initially laid down by Murthy himself. The catchword of ‘employees first’ resonating with equal importance to ‘customers first’ was pioneered in India by Infosys, not just as a business strategy to foster higher revenues but also higher happiness levels of its workers. You can call it altruism, but trust me, it is better than the ‘me only’ capitalist doctrines, as was evidenced through the Occupy Wall Street campaign and President Obama’s second term.
An equitable distribution of wealth is as much important in an economy as ‘wealth creation’ per se is. And Narayana Murthy understood this perfectly, an understanding that set the standard for ESOPs in Infosys. He distributed Rs 50,000 crore among his employees and made all of them shareholders of Infosys. That’s socialism at its best — upholding dignity and ownership from the topmost to the lowermost in a flat employee structure.
If it can be done at the micro-level of a firm, is it impossible to do the same at the macro-level of a country? Countries like China, Brazil or even Japan are live examples of more or less successful economies based on the capitalist model but with a socialist face. And that is where India made a mess of it. After liberalization in 1991, India’s economic policies attempted to mimic those in Western economies and thus wholeheartedly were capitalist in nature, redirected towards wealth creation at the expense of the interests of the labour class and farmers. Consequently, the divide between India and Bharat hasn't been more conspicuous, with a rapid influx of rural migrants flocking into the streets of the metropolises.
The Human Development Report (HDR) brought out by the Indian Planning Commission (in the year 2011) admitted that Indian wealth distribution is highly skewed. A research carried out by the government affiliated Institute of Applied Manpower Research (IAMR) revealed that the top 5% of all households in India represent 38% of assets while the bottom 60% represent only 13%. The gap is more vivid in urban centers where the lower 60% of households account for just 10% of wealth. The sustained neglect of agriculture and manufacturing sectors has had its cost, with farmers and casual labourers being at the base of asset possession classes. India’s Gini Coefficient, a factor that measures wealth inequalities, is at a precarious 0.669 as compared to China’s 0.550 and Japan’s 0.547 (the higher the coefficient — which varies from 0 to 1 — greater is the inequality between the rich and poor).
China, for instance, is a classic model of taking the best of capitalism and socialism. It opened up its economy in 1978 to ensure a spur of capitalist ventures, domestically as well as from outside; yet, their policies kept control of the investment patterns geographically and socially. China has, till date, kept the core industries under government control; and even till date, around 41% of the industrial capital is held under SOEs (state owned enterprises).
Often tagged as the long term cure for an economy, China’s spending on education is many light years ahead of us. While in 2010, China spent $12 billion in funding universities alone, India’s corresponding budget was limited to $860 million. In emerging economies, India’s literacy rate is one of the lowest among the countries with high social spending, like China and Brazil, which are quite a distance ahead of us. While India’s literacy rate is pegged at 73% (which too is quite questionably high a figure), China’s rate is hovering around 94% and Brazil’s at 90%. In healthcare too, India’s sordid story continues — Russia spends $1043 per capita (5.6% of GDP) in purchasing power parity terms, South Africa spends $930 (9.2%), China $347 (5.1%) while India languishes at $124 (4.2%) — being at the bottom of the table here as well.
The increasing gap in India between the affluent and underprivileged is bound to create an undercurrent of resentment and deep-down frustration in India’s socio-economic paradigm. A soothing effect of an evenhanded wealth, income and growth spread can leverage long-term sustainability and accountability of our progress graph. As the vision in Infosys percolated from the top, so should our Prime Minister roll down a humane economic model and breed a culture that is just and compassionate. A mad rush towards growth, revenue, profits and bottom lines alone is not going to produce a just and happy society. It is time enough that our main political parties realise the importance of India’s social wellbeing alongside its economic advancement.
— The author is a Management Guru and Honorary Director of IIPM Think tank