India @ 75

C.K. PrahaladPaul and Ruth McCracken Distinguished University Professor

The University Of Michigan

My Vision for India @ 75

Actively Shape the Emerging World Order

Through

Economic StrengthTechnological Vitality

Moral Leadership

The Potential of India

What India can be in 2022

1. World’s largest Pool of Trained Manpower:200 million college graduates (16%)500 million trained, skilled workforce (40%)Universal literacyEducation : Stretch that allows us to innovate

2. World’s Leaders in Industry and Commerce30 of Fortune 100 from India25% of yester years we have lost

3. India Accounts for 10% of World TradeA broad scope of products and services

4. India as a Source of Global InnovationsNew Businesses , New Forms of Organization, New Technologies

What India can be in 2022

5. Focus on the Bottom of the Pyramid as aSource of Innovations for the World(Leaders in Health, Education, Energy, Transportation, Sustainable Development for all)

6. A Flowering of Art, Literature, and Science( 10 Nobel Prize Winners from India)

7. A New Moral Voice for People Around the World India as a country where Universality and Inclusiveness is widely practiced. India

becomes the most Benchmarked country for its capacity to accept and benefit from its diversity

Principle Number #1

The Essence of Entrepreneurial Transformation

Situation A Situation B

Resources Low HighAspirations High Low

Principle Number #2: “Fold the Future In”

2007

Extrapolation Budgeting Orientation

2017 / 22

Fold the Future in Innovation Orientation

Principle Number #2: “Fold the Future In”

20072017 / 22

Clarity to DirectionWillingness to DiscoverClear MilestonesSpeed and Stamina: 400 meters at a time but a Marathon

Principle #3: Focus on Next Practices

Well Known Practices

Best Practices

Next Practices

Amplify Weak Signals

Focus on Here and Now:Tactical , Blocking and Tackling

Focus on New Opportunities:Aspiration > ResourcesFolding the Future in,

Focus on Next PracticesThinking Differently about the Here and Now

India: Potential Vs. Reality

1. Incrementalism will not work. We need a Radical Rethink of Policies and Practices

2. Key to becoming a Developed Nation :Shared Commitment to GoalsCreativity and InnovationFocus on Entrpreneurship

3. The essence of Entrepreneurship Aspiration > Resources

The Emerging Context: 2005 – 2017/22

Agenda for the Session :

1. The Emerging Issues : 2007 – 2022a. Abject Poverty to Income Inequalityb. Income levels to Life Style Measuresc. Unique needs to Universality of Aspirationsd. Affordability to BOP to impact on Price-Perf.e. Low Tech. to Universal Access to High Tech.f. From BOP to “ Straddle the Pyramid”g. Provisioning Products and Jobs to Environment

2. The Emergence of a New Model of Development?

The Paradox of Rapid Economic Development.

Rapid Movement of people away from

Abject Poverty ($1 / Day)

China India

Increasing Income Inequalities

(e.g. G – Coeff.)

China India

The Emergence of Social Tensions

Measures of Inequality: Gini coefficient

USA China India Brazil South Africa

1985- 1986 + 22.4 32 59.3

1989- 1991 42.7 34.1 32.1 64

1995- 1996 45 39 33.8 60.2

1999- 2001 46.3 42 36 59.6

2006 46.9 47 39.5 57.2 59 +

Inclusive Growth Means…

1. Elimination of Abject Poverty ( $ 1 / day?)2. Reducing Income Inequalities ( G- coeff.?)3. Eliminating Unequal access to opportunities4. Changing Life Style inequalities5. Reducing inequalities in Choice6. Reducing inequalities in Share of Voice

Inclusive Growth Means…

1. Elimination of Abject Poverty ( $ 1 / day?)2. Reducing Income Inequalities ( G- coeff.?)3. Eliminating Unequal access to opportunities4. Changing Life Style inequalities5. Reducing inequalities in Choice6. Reducing inequalities in Share of Voice

Redistribution of Wealth Vs. Wealth Creation ?Public Policy Focus Vs. Entrepreneurship/ Market Focus ?

The Changing Value Equation

BOP

Rich

Middle classPrice

Performance (Functional + Emotional)

The Changing Value Equation

BOP

Rich

Middle classPrice

Performance (Functional + Emotional)

$ 30 Cataract Surgery$ 35 DVD Player$ 30 Cell Phone$0.01 Shampoo in a sachet$ 2000 car$ 20 hotel Room

What are the Implications…

BOP Market New Price Perf. Levels

for All

Explosive Growth in Market Size,

Scale of Operations.

Environmental Demands.

Access to High Tech for all

Straddle the Pyramid?

The Focus on Price-Perf. Forces…

1. Scale : Local Responsiveness and Global Standards2. Focus on Costs3. Access to New Markets : Knowledge and Trust4. Technical and Social Insights

Emergence of a New Social Compact for Business: Collaboration with CSO; Private- Public Partnerships

Let us Look at Data From Around the World

1. GDP/ Capita in PPP terms(Source : World fact Book,2002)

2. Human Development Index (Source : UNDP, 2003)

3. Quality of Governance : Corruption (Source: Transparency International, 2002)

Selected 25 countries from very rich to very poor

My Takeaways:

• Human Development is not about More Resources but less corruption in the Deployment of Resources.

• Good Governance (less corruption) leads to High Levels of GDP/Capita; not the other way around.

• Focus on Human Development (Focus on Individuals) and not Groups’ Rights Leads to Rapid Economic Development (GDP/Capita)

India as a Developed Nation : What is the Trajectory?

2003

GDP/ Capita$2500 (PPP)

2020

GDP/ Capita$25000 (PPP)

Rank in HDI

127/175

Rank in HDI

20/175

CPI Rank

2.7/ 10

CPI Rank

7/ 10

How do we Correct the Trajectory?

High

Commitment to Rights of the Individual, National Character, Universal Principles

Low

2007

2022

1947

?

Low High

What are the Prerequisites:

1. Change in Mental Models2. Data Driven not Dogma Driven Debate3. Individual Rights not Group Rights4. Principles not Rituals5. Corruption is treated as Treason6. Focus on Performance, Accountability7. Imagination not Resources

What Impact Does Poverty Alleviation have on the Environment?

1 Billion Micro ConsumersUrbanization

Creation of New Jobs- Micro producers

Sustainability is multi-dimensional:

BOP Experiences Environmental Impacts First

Many Dimensions of Eco Systems will become Stressed…

1. Water:Quality of WaterAvailability, accessUsage Mix: Agriculture, Industry, home

2. EnergyFossil Fuel and SubstitutesRegressive to progressive Fuels

3. Health

Phase II of India’s Development

The Emerging Issues : 2007 – 2020a. Abject Poverty to Income Inequalityb. Income levels to Life Style Measuresc. Unique needs to Universality of Aspirationsd. Affordability to BOP to impact on Price-Perf.e. Low Tech. to Universal Access to High Tech.f. From BOP to “ Straddle the Pyramid”g. Provisioning Products and Jobs to Environment

The Emergence of a New Development Paradigm?

What are the Dominant Themes:2007-2015/2022

1. Primary Market Based Solutions2. Social Equity in Development3. Rule of Law, Individual Rights4. Scale5. New Price-Performance Levels6. Ecologically Sustainable Development

The “Sandbox” for Economic Development

Innovation within These Constraints

Global Scale

Rule of Law’

Individual RightsSocial Equity

Focus

Market Based

New

Pric

e-Pe

rfor

man

ce

Leve

lsEn

viro

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tally

Sust

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The “Sandbox” for Economic Development

Accountability for

Performance Business,

Politicians, Civil Society,

Bureaucrats

Global Scale

Rule of Law’

Individual RightsSocial Equity

Focus

Market Based

New

Pric

e-Pe

rfor

man

ce

Leve

lsEn

viro

nmen

tally

Sust

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The Emerging World Order:C.K Prahalad’s view in 1989

USA,Europe,

(2000) JapanChinaIndia

ChinaIndia,Brazil

S.Korea,TaiwanFinland

Switzerland

World Scale Domestic Market

Small Domestic Market

Local Firms Global Firms

?

The Poor of India are Ready for this Journey:

Are the Leaders Ready?