Nation
Nandan Nilekani: From meritocracy to reservation politics!

Nandan Nilekani, while heading Infosys, never had second thoughts on recruiting people other than those who secured the highest grade. However, he is now all for reservations and wooing 'poor' voters

Many people are surprised at the rapid conversion of Nandan Nilekani, the former head honcho of Infosys into a 'typical' political leader of the Congress party. His remarks over the weekend about reservation in the private sector left many people wondering as to why this was not implemented when he was heading Infosys, the country's second largest IT company.

 

Speaking with reporters at Bangalore Press Club, Nilekani said that reservations in private sector are necessary. “In India, certain sections of the society because of historical reasons were handicapped and thus require a leg up through reservations. Even at Infosys we tried encouraging people of all backgrounds," Nilekani was quoted as saying in a report from firstbiz.com.

 

Even in his book, ‘Imagining India’, Nilekani had advocated a 'marks subsidy' for backward classes (page 302, Extra Marks in Exams). The question, however, is what stopped Nilekani from implementing this when he was heading the country's second top IT services company. Interestingly, even today, Infosys employs only people who have scored high(est) grade in first attempt and there is no reservation policy. It is proud to be a merit-based organisation

 

Reacting indirectly on Nilekani's views about reservation in private sector, TV Mohandas Pai, former chief financial officer and head of human resources, tweeted: "selling his soul for power; made his money in the company wedded to meritocracy."

 

What Nilekani has spoken is all his party bosses are trying to use as an election gimmick to woo voters. According to a report from Economic Times, Congress, which goes into the general elections facing a major anti-incumbency wave, is desperate to woo its traditional vote base of dalits and scheduled tribes that has been weaned away by parties such as BSP and BJP.

 

"In the recent assembly elections, Congress has won only six of the 91 reserved seats for scheduled castes, down from 38 seats in 2008. The party hopes the slew of promises in education, employment and quality of life for these groups will help it win back some of their support. A major cornerstone of this approach would be reservation in private sector jobs, a move that was proposed in the 2004 and 2009 manifestos but could not be pushed by UPA," the report says.

 

According to media reports, Congress is trying to include a proposal to legislate job reservations for scheduled class and scheduled tribes (SC/STs) in private companies with investments worth Rs100 crore or employing 1,000 people. It also wants to introduce reservation in private schools for class I admissions, free post-matriculate education and a Rs25,000 voucher for every graduate.

 

Nilekani, who till last week was chairman of the Unique Identification Authority of India (UIDAI) and had been enforcing the Aadhaar number based on biometrics on Indians. On Thursday, he resigned as chief of UIDAI and jumped into 'active' politics on Sunday as Congress candidate from south Bengaluru constituency.

 

While the Supreme Court has ruled that the unique identification (UID) number or Aadhaar is not mandatory to avail essential services from the government, it was Nilekani who was making sure that it is made mandatory by using governmental clout with oil companies and banks. This is because, he was either heading or part of every committee or group that was turning the 'voluntary' Aadhaar number into mandatory one. (Nandan Nilekani is part of every committee and group that is making Aadhaar mandatory )

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COMMENTS

Gaurav Juneja

11 months ago

Its a well known fact that team runs at the pace of its slowest team member, same is applicable for a Nation. If you put weakest section of the society on the top , Nation will fall. as happened once with the Greece ,they were the strongest culture once and now the weakest in Europe , not able to sustain themselves even with the huge aids and favours

Gaurav

11 months ago

Reservation has only slowed and at times stopped the Growth of this country, knowing this , politicians want to further hinder the growth by allowing reservations in private sector!! Govt. will fall , people will fight and kill each other , their will only be chaos and destruction - mark it, bad to worst times are ahead.

MOHAN

3 years ago

EXPOSING THE UNDERBELLY OF AADHAAR - A COBRAPOST INVESTIGATION

http://cobrapost.com/index.php/news-deta...

Narayanaswami Natarajan

3 years ago

It just shows what a deadly virus politics is. The transformation of Nandan as a politician had already begun a couple of years back. he had decided to maintain opacity ( No RTI or Parliamentary disclosures) regarding the financial contracts doled out to private players for thousands of crores to dubious Foreign companies and Indians. Obviously he had cooperated with the manipulators of the Government. . FIRs have been registered against some Indian contractors. Next he gave a certificate of character to ruling politicians. Now he has turned totally local and parochial as if he is fighting a municipal election, forgetting he is standing for Lok Sabha where national priorities have to be furthered. He wants to bat for Bengaluru and its wards! He wants reservations in the private sector based on caste and religion.One only hopes he will be be rejected by the electorate. Otherwise being the richest bidder he may realize his ambitions and it will be bode well for the country.

Satish Bhopale

3 years ago

I pray, he should loose election. AADHAAR is a big burden on Indian economy. He made all the efforts to make profit to Congress govt by introducing this NIRADHAAR scheme. He will not win from Bangalre. Even No man from Busines win the election, if he win he will apply his power to grow his business. During Nandan Nilekani removed more employees from Infosys. He will not allow to make changes in poor labor low of India

Sanjeev

3 years ago

People should come out and vote out the parties which speak of reservation in corporate sector. That's the only solace left after our children secure 99.99% in school exams. Don't let the politicians snatch away this!

Politicians: pls invest to elevate "lower" caste people through right to education bill and not through reservations.

MAHENDRA

3 years ago

Is that what Lessons Nandan got from from IIT?

Surprising really? No.... the environment is made so deeply corrupt, Politicos want to maintain these levels of Sub-casts, Poovery so low that like last 65 years they can rule another 65 decades! Issues systematically brought up before and are closed immediately after elections.
Why do we need this hippocratic Democracy following Leaders?

...& even Nandan has to follow?

M Muralidharan

3 years ago

Disgusting face of Nandan ...

REPLY

B Ramesh Adiga

In Reply to M Muralidharan 3 years ago

. . . Hopefully, he may not enter parliament.

Mahesh Kumar Tennati

3 years ago

Mr. Pai's comment is spot on. No doubt there is a need for reservation, but there should be level playing field for all and merit should be the only criteria for jobs/education/promotion etc. Reservation my means of financial assistance should be adopted rather than killing talent.

AstraZeneca Pharma board approves delisting offer from promoters

AstraZeneca Pharma India board approves delisting offer from its Sweden based promoters AstraZeneca Pharmaceuticals. However, it is yet to obtain approval of its shareholders

AstraZeneca Pharma India Ltd (AZ India) said its board approved delisting proposal received from its parent AstraZeneca Pharmaceuticals AB (AZP). The proposal, however would require approval from shareholders.
 

Sweden-based AZP holds 75% stake while foreign institutional investors (FIIs) holds 15.93% share in AZ India. However, As per SEBI rules on delisting, AZP needs to buy an additional 15% to take its stake 90% to get its Indian unit delisted.
 

A week ago, Moneylife wrote; Insider trading in AstraZeneca Pharma? As One day before AstraZeneca Pharma announced delisting, its volumes spurted and share prices shot up by 9.13%. Earlier, on 5th March, AZ India board asked for additional information from its AZP regarding its voluntary delisting offer. On 15th March, AZ India held board meeting, in which board has approved voluntary delisting offer of AZP AB. 
 

Moneylife earlier wrote about, The deadly delisting itch of AstraZeneca Pharma India,  explaining how AstraZeneca is on course to achieve its decade-long plan to delist its shares from the Indian bourses by hook or by crook.
 

AstraZeneca closed Tuesday 2.8% higher at Rs1,192 on BSE, while the 30-share Sensex ended the day marginally up at 21,832.

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Small Business, Big Troubles
Small businesses contribute 45% to India’s national income and big businesses only 15%. But it is the latter that the media fawns over

Until India embarked on economic liberalisation, government officials, especially in Delhi, took a perverse pleasure in keeping industrialists waiting in their corridors for an appointment. Dhirubhai Ambani had famously said in an interview that he would salaam anybody to get his work done—even a peon—because that is how the government treated industry during the licence-permit-raj. 
 
Post 1992, India Inc has done better. Politicians, especially finance ministers, craved for their approval ratings as Union Budgets turned into televised reality shows. 
 
Over the past decade, a nice crony club of politicians and industrialists have worked together to hatch policies to enable large-scale loot of national resources and bank funds, so much so that many industrialists found it profitable to move right into parliament as elected or nominated members. 
 
Then, instead of waiting in the corridors, they ordered bureaucrats and bankers about, until the massive scams finally began to be exposed by the comptroller & auditor general. 
 
The rapid growth of India Inc, and the fawning media coverage it receives, would lead you to believe that its contribution to national income would be in proportion to the wealth that it flaunted. 
 
Well, here is a shocker. Professor R Vaidyanathan, in his latest book India UnInc says that India Inc contributes only 15% of national income while India Uninc is the real growth engine which contributes 45% of national income. But the treatment meted out to the two could not be more starkly different. Just one example should suffice. The share of bank credit of India UnInc is 36%, while the huge non-performing assets (NPAs) are largely generated by India Inc.
 
Prof Vaidyanathan, who has taught at IIM Bangalore for over three decades and is invariably rated one of its most popular teachers, has coined the term India Uninc for the largest component of the Indian economy comprising small entrepreneurs, household enterprises, proprietorship and partnership firms, small manufacturers, kirana stores and all others.  
 
He has rendered invaluable service to India’s true growth engine by explaining, with facts and numbers, their contribution to the nation. This sector is otherwise mindlessly lumped under the head ‘non-corporate sector’ or unorganised, informal sector or even the household sector, when it comes to data on earning and savings. 
 
Prof Vaidyanathan explores flaws in various classifications, including those of agriculture and service sector, adopted by the national accounts statistics to conclude that most of these terminologies are borrowed from Western experience and are not appropriate in the Indian context. 
 
At a time when India is fed up of scams and exploitation, Prof Vaidyanathan’s book is a timely discussion on how the real contributors to the India’s growth are harassed by ‘taxtortion’ and a plethora of maddening regulation at the local, state and national level which do not attract the attention of planners and policymakers. 
 
In fact, the first four chapters of the book argue, after a clinical analysis, that we need a national debate on how the government compiles and classifies its data, if India wants to get the best out of small entrepreneurs. 
 
Prof Vaidyanathan then goes on to bust some myths about the contribution of the service sector and the post-1992 reforms. He says that the growth in India’s information technology (IT) is largely believed to be the biggest contributor to service sector growth.
In fact, large IT companies, he says, are separately classified under the head ICT (information & communication technology) and contribute around 5% of the national income, but a much bigger chunk of mindshare. It is also important to note that the share of foreign direct investment and foreign institutional investment has only been 8% of national income in any year over the past two decades. 
 
Prof Vaidyanathan establishes how wrong classification leads to policymakers ignoring the contribution of India Uninc to savings or leads to false conclusions about the contribution of retail trade and other businesses. He argues that the neighbourhood kirana shop, which remains open 16 hours a day and 365 days a year (using family labour), has turned highly efficient with the help of mobile phones and is able to service its customers far better than large, organised retail stores. 
 
Sadly, such contributors to growth have been shut out of the market for cheaper bank finance by ever-more onerous KYC (know your customer) requirements, documentation and compliance needs. They are forced to borrow from less regulated and more expensive chit funds and informal financiers. Also, at the lowest end of the chain, entrepreneurs, such as hawkers and street vendors, face harassment and extortion by the police and municipal officers. 
 
Prof Vaidyanathan says that 85% of India is self-employed and does not have any social security, or even products like reverse mortgage, which will allow them to extract value from their physical assets in times of need. Some of these are issues that Moneylife and Moneylife Foundation have tried to highlight over the past four years. The need for a workable, correctly taxed and priced reverse mortgage product is one of them.
Unfortunately, the UPA government has limited its engagement to the crony club and large industry associations. 
 
The many independent regulators that have been set up in the past two decades also took their cue from the government and have chosen not to engage with stakeholders. As a consequence, those who constitute India Uninc, who could have been the biggest beneficiaries of sensible insurance, or inflation-beating mutual fund products or equity, actually shun these products.  
 
The Reserve Bank of India (RBI), while paying lip-service to ‘financial inclusion’, has no plan or strategy to engage with stakeholders, to ensure that such inclusion does not lead to more mis-selling of products or usurious interest extracted by microfinance firms. This is evident from the treatment of non-banking financial companies and the failure to recognise their role. Consequently, the biggest source of exploitation of India Uninc, which is Ponzi schemes that proliferate across India, is only beginning to receive some attention from the government after some mega-scandals such as SpeakAsia, Saradha, QNet and Sahara. 
 
Prof Vaidyanathan points out how many of these, including 160 entities of Saradha, posed as legal chit funds (which, when well-run, are beneficial to people) but were not registered as such. RBI has been reluctant to regulate this sector and plans to phase out ‘deposit-taking’ by non-banking finance companies. But that has not stopped borrowers from being exploited by large microfinance companies which mis-sold loans as well as insurance and caused a globally-infamous scandal under RBI’s watch. 
 
Whether it is enforcement of contracts, fair access to credit at reasonable terms, safe savings and retirement security, taxation or rent-seeking by government officials, the odds are stacked against India Uninc. 
 

The question is: Will a change in government lead to any re-think about framing policies to get the best out of India Uninc? We believe that it will require a lot of public debate and systematic advocacy, based on every chapter of this path-breaking book, before we can nudge the government to even start thinking differently. Prof Vaidyanathan has provided the intellectual framework for this discussion backed by hardcore research. It is now up to us to take the debate forward with his help. 

Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]

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COMMENTS

Ashit Kothi

3 years ago

What Prof Vaidyanathan has brought in focus is the real contributor to National Income and Growth. The problem has been identified by Prof.. What is required now is to identify available possible options to resolve the issue. Here the idea / input from Professor and other like minded people can be of great help and then media and other groups can take it forward.

Identification of problem is half work done.

Ramesh Jaradhara

3 years ago

The apathy of the Govt policy makers is that mostly they value foreign degrees as capable of making policy decisions and look India UnInc from out side India. Until and unless we frame policies based on hard facts and an Indian point of view there is no respite for this sector in terms of policy treatment and growth impetus required by it.There needs to remove the curtain from the eyes of policy makers and govt machinery and make them feel the importance of India UnInc as propounded by Prof. Vaidyanathan.

K G Krupal

3 years ago

In spite of this huge contribution 45% from the uninc sector to the National Income, regulators / Governments focus on 15% contributors. If our retail population is injected with the purchasing power then the National problems will be solved automatically. Inflation loses its negative impact, GDP automatically improves, morethan that public satisfaction will improve the business environment. This elite environment will attract huge foreign investments. THINK OF SMALL BUSINESS, PEOPLE INTEREST FOR THE BIG GROWTH OF THE ECONOMY should be the policy.

Yerram Raju Behara

3 years ago

Out of the 36% of NPAs of the India Uninc the contribution of Government and PSUs through non-payment of bills in time for the goods delivered and accepted by the small businesses, if one were to carefully calculate would come to no less than 20%. Unreleased subsidies or delayed release subsidies contribute another 5% and the rest are willful defaults and managerial inefficiencies. The Companies Act 2000 prescribed that the India Inc declare once in every quarter their dues to the small businesses (include MSMEs-the revised definition) of Rs.2lakhs and above. But the rule is never implemented nor audited. Credit rating agencies do not consider this aspect while giving rating to the India Inc.

REPLY

Dayananda Kamath k

In Reply to Yerram Raju Behara 3 years ago

what purpose does it serve by a company declaring it in annual reports. does any agency, authority in govt scan these and initiate action. rules are made just to show that they have done something on an issue.

Suiketu Shah

3 years ago

Wonderful piece and 100% agree.For instance look at MF industry.Some rule is likely to come into effect which wl make small MF hard to do business having AUM less than a high amount like Quantum.All this wl change once Modi comes in power with Dr Swamy and Jaitly in 1-2 yrs once they correct the wrongdoings of the last few yrs.

Dayananda Kamath k

3 years ago

that is the reason congress and upa wants fdi in retail. they need not pester so many people for moolha

Mahesh S Bhatt

3 years ago

Excellent research & good article.

Keep up the show Ma'am.

Abhijit Gosavi

3 years ago

That the IT sector, which is what India is known for in the West in business circles, contributes so little to the GDP is a v. counter-intuitive and significant finding! And there is much information packed in this article too --- should contribute to a strong case study in a good business school!

REPLY

Abhijit Gosavi

In Reply to Abhijit Gosavi 3 years ago

Also, that 85% are self-employed is another startling statistic! Obviously, the self-employed are on their own but are running almost half the economy!!! The good business schools need to have a vibrant discussions on this and raise awareness!

Seshamani

3 years ago

The biggest problems for small industry are: (1) Usurious government regulations and too many of them, applicable to enterprises starting from 5 people in size. (forcing companies to become smaller to escape from this stranglehold) (2) Their money getting locked up in delayed payments from other companies. The latter they can tolerate, but the former adds zero value and is just a conduit for the government to harass people.

ajay deshpande

3 years ago

Yes all what has been said in this article is true . We all need to wake up and voice our concern about the changes we desire to help the country to operate on real problems .

ajay deshpande

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