INTERVIEW: Adi B. Godrej of India
Published by Daily Davos on 2000-01-01
Adi B. Godrej, 55, is chairman of India's Godrej Group, which employs nearly 20,000 people and has annual revenues of more than $1.1 billion. The Godrej Group--formed more than 100 years ago--is among the world's largest manufacturers of soaps, and of office equipment. With production plants in India, Singapore, Malaysia, Vietnam and the Middle East, Godrej is among the best known brand names in Asia. Godrej, who holds a master's degree in management from the Massachusetts Institute of Technology, is widely regarded as an entrepreneur who emphasizes social as well as economic development. He promotes public discussion of issues such as globalization. Godrej spokewith Newsweek's Pranay Gupte recently. Excerpts:
GUPTE: Do you feel that India, the world's largest democracy, has benefitted from globalization?
GODREJ: Globalization in the Indian context to me means the integration of the Indian economy, which unfortunately has been very isolated from the rest of the world, from getting really enmeshed into the world economy. And to my mind, it's of great macroeconomic advantage to India to become more integrated into the world economy as rapidly as possible. What is really required for India to get out of its poverty is rapid economic growth over a sustained period of time, over generations--as it happened in, let's say, newly industrialized countries like Taiwan, Singapore, Hong Kong. While globalization might lead to certain entities of the economy getting hurt--it may affect some businesses, some industries, some part of untrained labor--overall for India it is very good.
Concepts such as globalization often tend to be viewed as foreign in traditional societies. How do you change that?
It's really a matter of better communication. I think there must be more and more communication of how opening up will really benefit economic growth and won't hurt economic growth. This been proven again and again--any economist of any standing will clearly confirm that. Yet politicians sometimes will play up globalization as damaging to the economy. To my mind, what we really need is increasingly good communication from leaders, whether they are business leaders, political leaders, even trade union leaders, to the general constituency.
Do you see globalization as being better understood now in developing countries such as India?
I think increasingly there are fewer and fewer opponents of globalization. Yet, whenever there is even slight setback in any field, globalization seems to become the target. For example, the meltdown in Southeast Asia was taken up as a major reason not to globalize in India. The meltdown had nothing to do with globalization of those economies. It had to do with the excesses in those economies, which need to be curbed in any case, whether an economy is globalized or not.
What has prevented sustained economic growth in the developing world?
What has prevented rapid economic growth is the various changes that are required to be made to sustain rapid economic growth are slowing in the coming. There are political hesitations. There are lobbies with vested interests. We need statesmen--not just ordinary political leadership. Developing countries need leaders like Margaret Thatcher or Lee Kwan Yew or even Ronald Reagan. You must have single-minded statesmen involved in the decision making process. Unfortunately, India has lacked that in the last three years, whereas I would say China has had it. You must move to a regime where governmental, artificial intervention in the economic decision making process is lessened. However, at the same time, we need to have governmental interventions in creating regulatory authorities which don't inhibit the decision making process, but ensure that the system is not misused.
How frustrated are you that the business environment in developing countries seems to be improving only fitfully?
Well, till 1991, when the Indian economy started liberalizing, it was most depressing. Unfortunately, after 1995--while there was no going back--the process of opening up the economy, the process of liberalization or globalization or any of those semantics, has been decelerated. It's still moving forward, but not accelerating as it was in the first few years. Hopefully we have a more stable political situation. It must change. Generally I'm very optimistic for India's future, and very convinced that 20 years from today India will be a very big economic power. You know, in Purchasing Power Parity (PPP) terms, India is already the sixth largest economy in the world. And to my mind, in 20 years, it should be third largest after the United States and China.
With recent setbacks such as the Asian economic meltdown, what will it take to jump-start development in poor countries?
Two things come to mind. One, in order to really spur development there must be powerful collective will. But that's been lacking--it's a lack of collective will to clearly put forth an objective for say 15 or 20 years from now and go after it, you know, without any diversion. That has been successfully done in countries like Singapore, Taiwan, even Korea. Korea, despite its economic downturn for the last couple of years, I think has very effective overall development. So you must have that vision. The other thing is that India and some other countries in South Asia or in Africa, have a tendency to stomp on their own feet a bit too much. In other words, it's just doing a few stupid things, among other good things you might be doing. Stupid things such as on-again, off-again economic liberalization, or lack of coherent economic policy, or political lack of commitment to growth. These things are completely avoidable. For example, once you decide that you're going to privatize, then you cannot say that, "Okay, we'll sell only a couple of poorly performing public sector enterprises." You cannot give in to narrow sort of vested interests--that really should be overruled.
Senior Writer and Global-Affairs Columnist