India’s economic success rests in its deep rooted ethos, community and bonding—none of which the West could understand, says Mr S Gurumurthy, Corporate Advisor & Commentator on Economics, Finance & Politics.
The world today is characterized by a short-term approach. Previously, we used to think of growth in the next five years. Now everything has been reduced to quarterly results. The short-term approach is now sweeping the world. One of my studies is on why China is rising and the US declining. In 2011, strategic thinkers in the US began studying the decline of the US. Unlike India, which has a history of 5000 years, the US was a new country and it succeeded. It did not face any of those problems that we faced but it created new problems for itself which it didn’t solve, and its problems became universalized for others also. An objective assessment about our results has been lacking so much in our society. The most tragic thing is that we know very little about ourselves. This has been my finding in the last 40 years of my understanding of this country and the world from different perspectives—business, finance, corporate, national and global economics, journalism, politics, philosophy, and social practices.
I travelled to London in 1986 when I was a fairly well-known corporate advisor in India. I had been invited by one of the most important NRIs at that time—Mr. Swaraj Paul. He had called me for some discussions. I had gone with a business class return ticket for only one day’s discussion. At the immigration, they asked me the purpose of my visit. I said I am a consultant, gave them my credentials and also the invitation letter. The officer said, “Every Indian says this.”
That was my first understanding about how Indians are viewed by the white people. He asked me, “What is the guarantee that you will go back?” I said I have a return British Airways Business Class Ticket. He retorted, “That’s what everybody does.” I told him, “Do you think I’m going to stay here? That is the last desire I have. Since you were so offensive to me, I’m not going to enter your country. Please advance my ticket and send me back.” As he had not seen any Indian responding like that, he didn’t know what to do. He said, “Sir, I’m sorry.” I insisted on a written apology because he had defamed not just me, but my country. Some senior officer came and tendered an oral apology.
How others view us is a very important lesson and it opened me to think about the world—not from a very narrow perspective of business profit or investment but in a much larger perspective. I began studying very deeply about India. My ideas became more macro than micro. It helped me in dealing with my clients in a better way. My mind was open to challenges, issues, and problems which this country is facing and which the media, the political leadership, the intellectuals, and academicians failed to handle or speak about.
In fact, I spoke about India at the Shailesh J Mehta School of Management in IIT Bombay in 2010. After my lecture, all the students and the faculties came and said, “Sir, we know nothing about what you are talking about.” IIT is supposed to be the window of India to the world. I was speaking about India, not in the context of philosophy or culture but in the context of economics and entrepreneurial development. They didn’t even see the nexus between Indian development and India. They thought that India was growing because NRIs and FIIs are putting money into India. That was the entire American thinking which failed in China. They thought it was their money which was developing China. The fact was that it was US money that was developing China to develop in the Chinese way. But our intellectualism, our experts, political thinkers, bureaucrats, and economists never thought we are developing because we have something in us. I acquired this thought when I started travelling across the country. Right from Ludhiana, Rajkot, and up to Thoothukudi, I travelled to 42 industrial clusters and I found something very different happening in those places, which you will not find in business magazines or in the researches or studies about India.
I found that most of the employees in India are educated and most of the entrepreneurs are uneducated. Tirupur is probably the knitwear export capital of the world. Today, their export almost touches 7 to 8 billion dollars. 67% of the exporters are less than tenth standard educated. Only 7% are graduates. Out of the five top diamond exporters, three are educated only up to the fifth standard. Education has nothing to do with entrepreneurship. This is what I spoke at IIT. I advised the students against attending campus interviews, so they can think of running businesses.
The Two Indias
There are two Indias—one, in the perspective of the world, and two, in our own perspective. How many of you have heard about Max Weber? The modern West owes its entire philosophy and practical background to Max Weber. He said that only if you have Protestant Christian values, you can develop a market economy. He was right because all the Catholic nations were lagging behind and all the Protestant nations were moving up, even within Christendom. He had studied that society for 30 years.
But he didn’t really study our society or China. He wrote in a book that the Hindu and Buddhist societies would never come up in modern economy because they believe in karma and rebirth. If you believe in karma and rebirth, you don’t have the capacity to develop risk-bearing tendencies and leave everything to fate. It was such a superficial view of India. Max Weber wrote this book in 1897 or 1900 and it was published in India somewhere in the 1950s. That became the Bible for the Indian development thinkers, Government, and policymakers.
Before that, in 1853, Karl Marx wrote a couple of articles in New York Tribune that India is some kind of a primitive socialist society and it has a very big problem—It has not changed for the last 2000 years. This society worships cows and monkeys. How can a barbaric society develop? He asked. He opined that the British were doing the right thing by destroying the society, its economy, trade, and education. ‘It is a very painful destruction, but there is a pleasurable part to it and that India will be prepared for revolution,’ he remarked. Karl Marx and Max Weber became the intellectual masters of India and in a sense for the world too.
‘The Hindu Rate of Growth’
India was growing at 3%. In 1978, Prof Raj Krishna who was a socialist, economic thinker and an adviser to the Government of India was asked, “Sir, we are following the same socialist policies which Europe, Russia and other countries are following, but they are growing at 5% to 7% but we are growing only at 3%. What is the cause?” He said that whatever policies we follow, we will have only Hindu rate of growth. That is how this ‘Hindu rate of growth’ came into our dictionary and has become part of our psyche, public discourse and the brand of India.
Robert McNamara, an American businessman and a former US Secretary of Defence said that India was a burden on the world and he was begging for assistance for the poor people of India. The Aid India Consortium was formed. This was how India was branded. This is the perspective which dominated us and this is how we understood India, let alone how others understood India.
I will give another perspective from the same West about India, from scientists and historians—not ordinary people, but Nobel laureates. They spoke of India in the 1920s and 30s. Nobel Science Prize winner Werner Heisenberg writes thus: “At a conversation about Indian philosophy, some of the ideas of quantum physics that seemed so crazy suddenly made much more sense.” Erwin Schrodinger, Nobel Prize winner for his work on quantum mechanics writes: “Some blood transfusion from the east to the west is a must to save Western science from spiritual anaemia…. Vedanta teaches that consciousness is singular, all happenings are played out in one universal consciousness and there is no multiplicity of selves.”
He also says: “In the entire world, there is no kind of framework within which we can find consciousness in the plural. This is simply something which we construct because of the temporal plurality of individuals. But this is a false construction. The only solution to this conflict insofar as any is available to us at all lies in the ancient wisdom of the Upanishad.”
Niels Bohr, the Bohr model of atom inventor, nuclear physicist and Nobel Prize winner of physics says: “The Vedanta and the Sankhya hold the key to the laws of mind and thought process which are co-related to the Quantum Field.”
The list of such scientists who spoke highly of India includes Brian David Josephson, the youngest Nobel laureate, and Robert Oppenheimer, the father of the atomic bomb.
Historians Root for Indian Ending
Historians have also heaped tributes on India.
Will Durant said, “India will teach us tolerance and gentleness of mature mind, understanding spirit and a unifying, pacifying love for all human beings.”
Arnold Toynbee, Nobel Laureate said, “It is already becoming clear that a chapter which had a western beginning in business management will have to have an Indian ending when the world adopts rich thoughts of Indian ethos and wisdom, if it is not to end in the self-destruction of the human race.”
This is another perspective which we do not even know. It is the sociologists and economists who presented India in a manner that no Indian will feel proud or rather every Indian will be ashamed. The perspective of scientists and historians is different. They say that things which are not clear to science are clear in the ancient Vedas and Upanishads, which our students, academics, economists, policymakers, and the media do not know.
The Origin of World Order
Where did the world order begin? Order means there is a system, a leader, a governance model, and that there are rules and regulations. This was conceived after the Second World War. The United Nations was constituted and the undeclared leader of this whole order was the US. An expert committee of the United Nations for the development of underdeveloped nations came out with a document in which it said, ‘There is a sense in which rapid economic progress is impossible without painful adjustments. Ancient philosophies have to be scrapped and all the social institutions have to disintegrate… Bonds of caste, creed, and race have to burst… ” This was a global advisory for all developed nations.
Our eminent thinkers, officials, and policymakers began saying, “If you are what you are, you can never develop. You have to cease to be what you are, if you want to develop.” This has been ingrained into the Indian psyche and public discourse. India is now moving away from this kind of intellectually oppressive thoughts. We followed the sociologists and economists and ignored the historians and scientists. We believed that we were a semi-barbaric race and we have to be turned into a modern nation by the Western understanding of our nation.
In 1990, when globalization happened, we accepted the West. The entire world accepted that the West was the best because Francis Fukuyama wrote a book titled, ‘The End of History and the Last Man’, and that is supposed to be the Bible of globalization. He said that, finally, the West has won against the rest of the liberal democracy and has become the final victors. It is the best for the rest to follow the West as the best. That was the simple formulation and the world began believing him. When you believe that you are a permanent victor and all others are losers, there’s something seriously wrong in history. There is no perpetual victor in history and that is what history teaches the whole world.
Samuel Huntington said that civilizational consciousness is deep in the mind and DNA of people, and there will be civilizational clashes in the world, which you cannot ignore. He was pilloried and called as someone who would destroy the liberal world. However, when the 2001 terror attack took place, everybody silently accepted in the global strategic discourse that there was merit in what Huntington said. I am part of a large strategic community and I am now the Chairman of The Vivekananda International Foundation.
Economists Rule the World
In 2008, when the financial collapse occurred, everyone in the West knew that the Western financial model was not sustainable. Economists became more powerful than politicians. Alan Greenspan ruled the world for 20 years. No American President ruled for more than eight years. The US Federal Reserve was the most permanent institution in deciding the fate of all economies.
After 2008, the one-size-fits-all model was questioned. The EU also discussed and said that the model should be thrown out lock, stock, and barrel. Not a single word was heard in the Indian media, in public discourse, or among Indian academics, and certainly not in the government. On 2 January 2015, Niti Aayog was created, and the Prime Minister Modi insisted on putting four sentences. He said we will follow only what works in and for India. The second was that we need a Bhartiya model for development. With the rise of Asia and later the rise of India, the West is clueless even today as to why India is rising. They are certainly clear that it is not because of FIIs and that there is something more to it.
In this situation, the decline of America and of the West, coupled with the rise of Asia, has created a new debate. The world began understanding the difference between what is market economy and a market society. Market economics talks about how goods and services are bought and sold and pricing is determined based on supply and demand. But a market society extends beyond economic principles and encompasses broader social values and norms that emphasize market-oriented behaviours and relationships.
India operates within a market economy framework but the country’s social fabric and cultural ethos are deeply rooted in familial and community relationships. While India participates in market economics, it does not fully embody a market society in the same way as some Western nations where market-oriented behaviours permeate various aspects of life to a greater extent.
World Order Changes with the Pandemic
Between 2020 and now, the whole world order is standing on its head. In a lecture to the Administrative Staff College of India in 1995, I explained how globalization is not sustainable. One person stood up and warned me that I would take the country 500 years behind. In 200 years, merchant capitalism was finished. In 100 years, capitalism has been finished. In 50 years, communism has been finished, and in 25 years, globalization is over. The shelf life of all the ideas that govern the world has crashed because they were all based on one size—the Western size and the Western leadership’s dominating role.
That came to be completely questioned in 2020 when the pandemic came. No one knew how to handle it. No one ever thought India would handle it. There were estimates that 30 crore people would be infected and three crore people would die in one year. We decided that we will make our own vaccine. People thought PM Narendra Modi is a madman. He understood that the country has the capacity, with the result that we came up with our vaccine and even supplied the vaccine to the world. It had nothing to do with FII or FDI or English education or the media. It had to do with the potentiality of the Indians. Day and night, people worked, and the Prime Minister was on the phone, encouraging them and saying, ‘Do it. Do it. Do it.’ This is faith plus promotion, and he is changing the perception of the world about India, in spite of the political propaganda that is going on. The world understood that something very different is happening in India.
The man who fashioned the Old World order, Henry Kissinger, wrote a 625-word article in his blog, in which he said that the world order will change forever. He gave no other explanation. He is the man who conceptualized, constructed, built, and evangelized China in the world order. The US put so much money in China, turning it into a dirty factory and wrongly thought that a prosperous China would abandon communism. How much intellectual inadequacy that was!
In 2022, when Russia attacked Ukraine, the world did not know what was happening. Russia thought it was a one-month game. If they had not attacked Ukraine, in 10 years, there would be no Russia. Even American strategic thinkers accepted it. Kissinger said that it is not a risk that Russia could have accepted. NATO was expanding into the stomach of Russia.
At the time, our Prime Minister did not have much time to decide on staying neutral between Russia and America, which otherwise means favouring Russia. America immediately thought of sanctions, which they did in 1998. There is a scholarly work done by an Australian that every sanction has been a failure in the world, except that it is propaganda. If the Prime Minister had not taken that decision, the oil prices would have hit 150, 160, or 200$ per barrel. When India took the decision, the entire oil-producing countries felt that they should not get into the game of high oil prices because unreasonable oil prices will destroy the oil-producing countries themselves. Oil prices went up to 120. It began crashing, and it is now normal. We are buying oil from Russia, refining it, and exporting it to Europe.
The world order is that there is no hegemonic power today. The Centre for Foresight of the European Union, in a very important study, says that in the next five years, all middle powers will rise. By 2030, there will be no hegemonic power.
Might is Right
When India exploded the Pokhran atom bomb, everybody wondered what was happening in India. The world began to deal with us, negotiate with us, and engage with us. The world respects power. Indians did not understand this, because we always have a civilizational conflict between power and our values. This was happening even from the Vedic days. It is only Chanakya who shifted it.
India changed in 1998 and again in 2014. Now everyone says India has changed. India’s landscape is only 2.4% of the global land area. We have 18% of the world’s human population, 30% of the world’s bovine population, 40% of the world’s cattle population, 8% of the world’s animals, and 21% of the world’s forest cover. If you tell these stats, the world will be shaken. Our boys’ population is 535 million, that of America is 89 million and China 90 million. Only Brazil comes somewhere at 235 million. We use our agricultural land for crop production. We have world’s 1% agricultural land. Only 10.3% is farmland. Out of this, 2.4% is used. That is, less than 1/4th is used for crop production. The balance is used for meat production. If crops emit 1% CO2, meat extraction gives 10 to 100%.
In the Paris summit, they wanted one-day meat-free holiday to be declared. That would have been the solution for the world’s environmental and global warming problems. Now, nobody talks about global warming. They all talk about 1.5 degrees, and the discourse is reduced to economics. The West cannot talk about the environment at all. The amount of CO2 gas emission they have pumped in the last 300 years is 90%. Having done that, they say they are going back. It is about the supply side of the discourse.
Manage Demand, the Indian Way
I am going to talk about the demand side or the lifestyle. With 1% of the global land area, we are able to extract 83% of the calories. Our meat consumption is 3.1 kg per head per annum. America’s is 124, and that of Europe is something like 110 or 120. South Africa, 180. A month back, a well-known ecologist gave an interview and he said that the world is being bombed every day. The only country which is mitigating it is India. It is not that we don’t eat non-veg. But it is very less. It is not that non-vegetarian is bad. There is a stage at which people even give up non-vegetarian food. For example, people do not eat non-veg on some of the days like Fridays or other religious days. These are all restraints we have that India has been able to maintain its population by a cultured food habit. This was the position even in the 1960s.
We follow an environmentally compatible lifestyle. This is what the Prime Minister’s G20 message was. We have a model for the world and for the future. India is a country for the future—not for itself but for the whole world. The environmental paradigm is now sweeping the world. The only answer is through lifestyle. It cannot be done through controlling how much power you produce or how much fossil fuel you use.
We have to think as Indians. Let us begin thinking about Indians because Indians are not respected everywhere. Because you are not respected everywhere, you are not respecting yourself, your country, your forefathers, or your philosophy. Now the reverse is happening. We are a market economy and not a market society. In India, buying is not an individual decision. It’s a family decision. The family collectively decides and orders. An individual may buy some pen or something like that. But when it comes to substantial buying, it’s a market economy and not a market society.
Indians accommodate others. We follow a relation-based lifestyle and take care of elders and the infirm people. This has nothing to do with economics or Indian laws. In India, there is no law requiring you to take care of your parents. America went with the paradigm of Universal Social Security. In India, it is culturally arranged, and 90% of the parents are being taken care of by their families. This is the impact of culture and society on macroeconomics.
In India, if someone dies, you go there uninvited, and for marriages, you are invited. It is because we share our pleasure with others and want to voluntarily share others’ sorrows. This is how our society is built. This is the difference between a contract-based society and a relationship-based society. This has a huge impact on your own company.
I have advised many corporates that they must build a relations-based culture, even at the cost of efficiency. Efficiency will give you immediate returns, while loyalty will give you long-term returns. The promoters should go to the top vertical managers’ houses at least once a year. He may have a spastic child. You don’t know the man. You only see his dress. The vertical managers should go to the houses of at least 10 people below them. The whole organization must be linked by personal touch. There will be no attrition at the higher level. Once you know that your sales manager has a problem, the way you look at him will be very different. You must apply the western model of HR to suit Indian conditions. I am not against contracts. But we don’t function only on contracts.
Agency vs. Promoter Capitalism
We must also know the difference between the agency capitalism of the West and the promoter capitalism of India. Agency capitalism means the shareholders are represented by agents. The companies are managed by agents who are CEOs. One doesn’t own the capital and the other doesn’t represent the capital. This leads to huge frauds because nobody has any stake. This is a lack of shareholder oversight.
97.5% of the Indian corporates are family-managed. The entire management education system is against family management. Our economy is promoter-led while their economies are promoter-less. This is a paradigm difference. Therefore, robust thinking is needed in the corporate sector, management, and professional institutions on all these important areas. We need to study every aspect in which we deal with the world. The Indian perspective is very important because the world would like to know how the Indian corporates function. When Japan began succeeding, the West went and saw their total quality management model. We should expound our own global models.
