R.C. BHARGAVA ON THE ART OF COMPETITION
Prime Minister Narendra Modi’s call for an ‘Atmanirbhar Bharat’ that would also serve as a factory to the world raises the allimportant question: how did India fail to become a manufacturing powerhouse like China, Japan or Korea despite our natural advantages and the stated goals of several prime ministers? That is the query R.C. Bhargava’s new book, Getting Competitive: A Practitioner’s Guide for India, seeks to answer.
Bhargava, chairman of Maruti Suzuki India Ltd, has excellent insights. He was in the Indian Administrative Service (IAS), had a stint as director (commercial) of Bharat Heavy Electricals Ltd and then joined what was Maruti Udyog Ltd when it had just been formed. He was its second managing director, playing a hands-on role in setting up the supply chain ecosystem and handling worker-management issues. He has both the policymaker’s perspective as well as the practical insights that come from building a giant manufacturing firm. He points out that despite our first prime minister Jawaharlal Nehru’s vision for India as an industrial powerhouse and equitable society, the country could manage neither. The issue was the way the goal was pursued— centralised planning, a minimal role for the private sector, the infamous Licence Raj and giant public sector undertakings that did not function on commercial principles.
In April 1948, the first Industrial Policy Resolution had envisaged a mixed economy with a sizeable role for the private sector. But by 1951, the Industrial Policy Resolution had brought in licensing to regulate the growth of the private sector and police its role. Businessmen were looked upon with suspicion lest they became too powerful.
The government treated manufactured goods as luxuries, to be produced in limited quantities. The idea that competition would allow cheaper and better goods for customers never occurred to the government. This led to long waiting lists, shoddy products, shortages and corruption.
PSU chairmen had no incentive to run their companies competitively. Nor did civil servants. The approach was to avoid mistakes and follow precedents rather than try out anything new.
Foreign capital was also frowned upon. There was a focus on saving jobs rather than creating new ones. Though it had become apparent by 1960 that the plan was not working, no one wanted to disturb the status quo. In Indira Gandhi’s era, in fact, the government was all-pervasive in business.
The biggest problem, Bhargava points out, was the throttling of competition (the Chinese allowed competition despite being a communist country and that was one reason for their better and cheaper products). Rajiv Gandhi tried to bring in domestic competition, but things would change only in 1991, when India opened up the economy after the balance of payments crisis. Even then, India did not become an easier country to do business in. The number of permissions required at central, state and district levels would drive manufacturers mad. Bhargava looks at the current problems that hamper manufacturing despite efforts to improve the ease of doing business. States have a big role in local regulations, incentives and labour and the Union government can only do so much. He talks about his experiences in building Maruti and its vendor base. He is inspired by the Japanese and advocates that the government and Indian society at large adopt some of their best practices, not the least their disposition to shun ostentation and create a more equitable society. He recognises that it might be difficult: Indian businessmen do love to flaunt the good things in life.
The book’s main weakness is that it skips the role of many leaders between Nehru and Modi. Also, Bhargava barely touches upon the various models adopted by manufacturing powerhouses outside Japan.
It is an interesting book. But it could have done with more examples, better editing and an exploration, even if tangential, of whether and how our national character affects productivity. That said, it contains some good suggestions and insights that the government should consider. ■