COIMBATORE: Valuers should provide inputs on zoning of the city, suggested Jayakumar Ramdass, Head of the Taskforce on Skills and Human Resource of the Confederation of Indian Industry, Tamil Nadu.
Inaugurat'ng a two-day seminar here on Friday on “Quality Assurance in Valuation of Assets in the Changing Scenario”, organised by the Coimbatore Branch of Institution of Valuers, he said zoning was important. When an industry came up in the city outskirts, residential property also developed in that area. This gradually led to implementation of pollution control norms and the industries had to shift to another location. As a result, industries were now developed as clusters. Zoning would help in development.
Valuers could also help by releasing quarterly report on land prices in their respective areas. P.K. Thiagarajan, President of the Institution of Valuers, said that with liberalisation, the profession had also become international.
P. Kanagasabapathi, Director of Tamil Nadu Institute of Urban Studies, Coimbatore, said that migration had been happening world over. Cities were growing because of urbanisation. In 2001, 44 per cent of the State's population lived in urban areas. This was expected to increase to 50 per cent soon. Valuation was a serious issue. In India, the problem was under-valuation at macro level. There were different estimates for economic indicators. The valuation problem should be addressed seriously
State Chairman of the Builders' Association of India K. Viswanathan said valuation was a complex subject. The land prices changed often. Valuation should be managed professionally. Prices of construction raw materials had increased. During the last one year, labour costs had gone up and masons were getting about Rs. 400 a day. Earlier, the labour component in construction cost used to be 25 per cent. Now, it was 30 per cent. Valuers should take this into consideration. S. Pichaiya, convenor of the event, said service sector was driving the country's growth and so professional services such as valuation were gaining importance. Valuers need to introspect and improve the standards of valuation.
Evidences show that the different segments of the Indian economy remained very active since the earlier periods. Apart from agriculture, India was widely known for her crafts, high quality manufacturing, business and trade. Writing on the industrial situation that prevailed more than 2300 years ago, Basham noted that ‘the basis of ancient Indian industry was individual craftsman aided by the members of his own family, though there were larger manufacturers also’. While narrating the situation in the eighteenth century Agarwala notes: “A large proportion of the Indian population was engaged in various industries up to the first decade of the 19th century. Weaving was still national industry of the people; millions of women eked out their family income and their earnings from spinning. Dyeing, tanning and working in metals also gave employment to millions.” It seems that significant proportions of people remained involved in industrial, trade and service sectors, apart from agriculture and related activities.
In this connection it is important to understand that the Indian tradition accorded the highest priority to self- employment. More than five thousand years ago, sage Vidura emphasized in his teachings that self employment was the best status in life. Hence venturing in to something on one’s own or getting engaged in family occupation was considered as the most preferable vocation in life.
Self employment system has several advantages and is a unique feature of the Indian economy. It gives freedom to the individual concerned as one is not under the control of any body. It provides adequate opportunities for those who want to work independently. People with original ideas can try them and undertake newer efforts. Self -employment seems to be an ideal one in many ways, as it avoids the negative effects of both the popular economic systems. In the market system, significant sections of the working class might not get adequate remuneration for their toil or even opportunities to work, while the communist system does not properly recognize entrepreneurship and initiatives. At the macro level, the contemporary market system with mega corporations tries to exploit people at every single opportunity, while the communist system denies people choices and opportunities resulting in restricting the basic freedom to grow.
Self employment system does not mean that all activities remain on a smaller scale. Even in the earlier periods there were big businessmen. Moreover, there were different types of business organizations such as pani and srnei, which were partnership and corporate forms of organizations. Evidences indicate that these forms of organizations were known to have existed at least 2800 years ago.
One major reason for the sustenance of the Indian economic system over thousands of years could probably be her self-employment base and the culture of many people (and families) directly involved in managing their vocations. Even continued invasions and the resultant disturbances for hundreds of years could not destroy the economy. Also the continuous involvements of sections of people in selected vocations over generations have enabled them to specialize in their activities and design suitable systems to make superior output. But the subsequent domination of the British and the colonial rule destroyed the native arrangements, resulting in serious damage to the economy and society. Millions of families had to move away from their vocations due to the destruction of the agricultural, manufacturing, trade and service activities.
As a result when the country got independence, more than three fourth of the population was dependent on land based activities. With their new found political freedom and the burden of history, different groups of people started moving to newer vocations, and as a result millions of initiatives have been taking place during the last sixty years. Till the globalization process started impacting the home made arrangements in the system a few years back, going for jobs and working under somebody was considered low in status among many Indian communities. Even today doing something on one’s own or getting engaged in the case of family business is considered as a superior way of life in different parts of the country. It may be pertinent to note here that people with educational and professional backgrounds are slowly venturing to set up own initiatives during the recent years.
It was estimated that the self employment sector contribute about 35 percent to the GDP of India, the largest share. Along with agriculture, the total contribution of the self –employed segment would be about 55 per cent of output. The balance is shared by the government and the corporate sectors. Also the self employment sector provides the maximum employment opportunities to people. Project OASIS Report 1999 submitted to the Government of India stated that of the total working population, 15.2 percent were regular salaried employees, while over 53 percent were self-employed. We can understand the significance of self-employment in India when we note that the self-employed rates in richer parts of the world are very low, while their salaried populations remain higher. In the US for example, the share of self-employed category was only 6.6 per cent, as against the share of private waged and salaried workers who constituted 78.5 per cent.
The 62nd round of the National Sample Survey Organisation (NSSO) report on the employment situation of India in 2005-06 reinforced the fact that Indians prefer self- employment. The number of self-employed people were high, both in rural and urban areas of the country. The survey revealed that in rural India, more than half of all workers were self-employed, 57 per cent among males and nearly 62 per cent among females. The corresponding figures for urban India were 42 for male and 44 for female.
The self employed sector is a self made one that does not depend on the governments. Moreover this sector is the breeding ground for future enterprises. The major business and industrial centres of the country today were once the initiatives of a few entrepreneurs from this category. In this respect it is pertinent to note that this sector has played a significant role in laying the foundation for the growth of Indian economy after independence.
Self - employed sector has been instrumental in creating millions of enterprises over all these years. Economic Census 2005 (Government of India) states that 41.83 million establishments were functioning in the unorganized sector as smaller units. Of them, more than 70 percent of the total number of enterprises was own-account enterprises. The Third Census of the Small Scale Industries had estimated that there were 1, 05, 21,190 units in the SSI category. About 95.8 percent of them were found to be of the proprietary type, with 10.11 percent of the units managed by women. There were more than 2000 clusters in the country with hundreds of enterprises belonging to the small, medium and even corporate units in each of them. Generally, a venture begun with the initiative of one or two entrepreneurs spearheads the formation of clusters.
The economic development of different regions and states has been driven by the self- employed sections. In many cases, the initiatives of the self- employed sector at the local levels grow into small, medium and big enterprises. What was started as a small cycle shop a few decades ago has grown to be the well known Hero Group today. Hero Honda, one of their group companies, is the largest manufacturer of motor cycles in the world. The economically advanced states of India such as Gujarat, Tamil Nadu and Punjab have many well performing industrial and business centres, initiated by the self-employed segments a few decades back.
Though the self employment based sectors have had to face continuous challenges due to the apathetic attitude of the ruling sections and have undergone changes over the years, they still remain the basis of Indian economy and business. They play their role silently and steadily, without many of us even realising it. It is the culture of self-employment, nurtured by the family and cultural traditions of the country, which has been helping India to grow and emerge as a powerful economy at the global level.
References
Basham, A.L., The Wonder that was India, Rupa and Co., New Delhi, 2001
National Sample Survey Organisation report, 62nd round, Govt. of India
Project OASIS Report 1999, Govt. of India
Third All India Census of Small Scale Industries 2001-02, Govt. of India, 2004
US Bureau of Census – Share of different categories of workers in US in 2000
(Yuva Bharathi - Voice of Youth, Vivekananda Kendra, July 2010)
Foreign Educational Institutions (Regulation of Entry and Operation) Bill 2010 has recently been tabled in the Parliament by the Government. The Bill enables the education providers from foreign countries to set up universities in India and offer degrees. They need not follow the reservation norms and are permitted to fix the fees on their own.
The Bill was in fact prepared earlier and had to be kept in abeyance for more than four years due to opposition from various quarters. It was then sent to a Committee of Secretaries, where modifications were made to certain provisions. The Bill is however facing opposition from different sides, including the major opposition parties, students’ organizations and educationists on different grounds. Reports say that there is no consensus even within the ruling party.
The Union Minister for Human Resource Development says that the entry of foreign universities will “enhance choices, increase competition and benchmark quality.” He also feels that the work force will be able to get the necessary training and increase skills. The present Gross Enrolment Ratio of students in higher educational institutions at 12.4 is lesser in India compared to the developed countries. The Ministry feels that foreign universities will help the country to increase the enrolment ratio and India will have more percentage of people studying in higher educational institutions in future.
We have to remember that education is not just another sector in a country. Education enables the citizens to improve their living standards and plays the critical role in shaping the future of the country. The dream of every parent is to give an education that makes children to grow up imbibing the best values, with the required capabilities for life. Hence the Government and the society should be very careful while deciding policies related to education.
Whenever we think of foreign universities, the countries that come across our minds are generally the US, the UK, Canada, Australia and a few others in Europe. A study of the personal lives of the citizens of these countries, their social and economic conditions and the functioning of their university systems reveal that all is not well with their higher educational systems. The purpose of higher education should be to make students better citizens, resulting in the overall development of their lives and that of the societies around them. We all know that many of the western economies are in a very bad shape. There is no saving habit among people in the countries that are known for higher education such as the US, the UK and Australia. Individualistic attitudes have resulted in the large-scale destruction of families and societies. It was reported that in countries such as the US and Australia, more than forty percent of the children were born out of relationships outside marriages. These countries are forced to spend enormous amounts to take care of their families and societies, without substantial results.
Many of the biggest corporations in the world are from some of these countries. The events during the last few years indicate that many of the senior executives of the corporate sector have been engaged in amassing wealth for themselves through all means, at the cost of the interests of the shareholders, public and the governments. Remember that many of these executives are from the much sought after business schools and reputed institutions of higher learning! It is now widely accepted that the education provided by their B schools is not complete.
Paul Krugman, the well known US economist and 2008 Nobel laureate, openly admitted last year that the economic theories of the western countries developed during the last thirty years have failed and proved to be harmful to the world. When we study the history of the west, we can understand that their social and economic ideologies have been continuously failing. The recent economic crisis has landed them in a situation from which they find it difficult to proceed.
At the same time, India has been continuously moving forward after Independence, in spite of the confusions and contradictions at the top. As a result, India is the second highest growing nation in the world today. India was a poor and underdeveloped country when the British were leaving our motherland. But after sixty years, the entire world is turning its attention towards India. The family and social systems of India are looked upon as models by the rest of the world. Our achievements so far, admired by all including the west, have been with our own system of education and institutional set up.
India is an ancient civilization. Education was given utmost importance in the native Indian system. The purpose of education was to make citizens as better human beings and prepare them to contribute to the best of their abilities for the betterment of the society at large. As we all know the first university in the world was established here in our country about 2700 years back. Evidences show that India remained as the most prosperous nation in the world till almost the beginning of the nineteenth century, with pioneering contributions in diverse fields. The surveys conducted by the Englishmen in the early nineteenth century showed that India had an elaborate and a very good system education in the country. Even at that time India’s literacy rate was most probably the highest in the world. Subsequently, the British introduced the Macaulay system of education which resulted in the destruction of the native systems. The approach of the colonial masters led to the decline of the superior position of India.
This is the reason why people like Mahatma Gandhi, Tagore and Maharishi Aurobindo strongly advocated the ‘Indian system of education’ for the overall development of the nation, even before independence. Many educationists and thinkers have been emphasizing the need for India- centric education system during the last sixty years. But unfortunately, we could not even make some of the basic changes that are urgently required.
But in spite of these fundamental difficulties, the Indian education sector has been showing good progress. Governments and societies have established thousands of institutions in different parts of the country. Universities could not increase to the extent required as there were restrictions on their entry for many years. Now we are witnessing a faster growth in the number of universities after the Governments allowed the private sector to establish them.
It is not that the Government cannot create good institutions in India. Many of the institutions promoted by the Governments such as the Indian Institutes of Management, Indian Institutes of Technology and Indian Institute of Science are producing candidates who are comparable with the best people from the best universities in any other part of the world. So what is required is the change in the attitude and approach of the Government. It is unfortunate that the funds allotted by the Government for higher education and the amount spent for it are not to the extent required for a country like ours.
If the Government feels that it will not be able to provide the necessary facilities, it is better to involve the local societies and the private sector, and then monitor them with the necessary regulatory mechanisms. As for the foreign universities, they will come here with their own motives. It is not sure whether the universities that are well known would prefer to come here now. As for the state universities in countries such as the US, many of them are in serious difficulties, as the governments are finding it difficult to provide them with the required funds after the economic crisis. So the universities are increasing the fees payable by the students. As they face difficulties in payment of salaries, they are taking steps to reduce professors and staff. This has resulted in protests in many universities and colleges since last year. There were instances of arrests of students and imprisonment. March 4th was observed as the ‘Day of Action for Public Education’ in more than thirty states across the US.
Against this background, some of their institutions are reported to be looking for opportunities in other countries to keep them in the business. A country such as India with a huge population and high growth rate would be a fertile ground for them. India’s permission to allow them to function from here would make them survive in the field.
There is one point that keeps crossing our minds. Many western countries such as the US and the UK are facing serious social and economic crisis. Learned experts from their own globally reputed institutions of higher learning have been finding it difficult to provide even basic solutions to their problems. When such is the case, what is going to be the use of their universities here? What type of ‘quality education’ will they provide? It is accepted that they are advanced in fields of science and technology. But unfortunately those developments do not benefit the common man. For example, the medical expenses are very high in the US which has the maximum number of Nobel laureates in medicine. What is the use of newer inventions in science and technology, when they are not able to benefit the larger sections of the society?
India has strong cultural backgrounds with thousands of years of experience. The fundamental reason for India’s achievements is the family and community orientation. If India has to emerge and grow as a powerful nation, her unique strengths have to be nurtured and preserved. Many express doubts as to whether the entry of foreign universities will be suitable to our ethos and values. We have to understand here that sex magazines are allowed to be published by the students in some of the ‘most respected’ universities in the west within their own campuses. They are allowed on demand from the students as theirs is ‘free’ society that would like to give ‘full expression’ to the ‘feelings’ of the youngsters. What kind of impact it will create in our family- based society, when such institutions decide to replicate their ‘initiatives’ here? Indiscipline, misbehavior and criminal activities are reported in large numbers in some of their institutions. Moreover the recent studies undertaken in their countries have revealed that about three fourth of the colleges do not groom their students properly.
In this situation, different options could be explored. Many Indians are working as professors, scientists, engineers, doctors, IT experts and corporate executives in reputed establishments in the developed countries. With their experience in western environments we can involve them to improve our higher education, wherever we feel it is necessary. In the recent years, some of the management professors working abroad have established institutions here. They are doing well. We can encourage such initiatives in other fields also. The Government can provide them the necessary support.
We all know that there is need for training in India at different levels. A latest study by the US professors shows that the Indian corporate sector is many times ahead of the US in providing the required training to their employees (Harvard Business Review, March 2010). The non-corporate sector that contributes the maximum to the national income and growth has its own arrangements to train the required people. But they are not always adequate. The Government can help the industrial and business sectors by providing necessary support to the major clusters, where thousands of people are working. Training can be provided to the maximum number of people at the cheapest cost, when the work is undertaken in collaboration with the local industry/ business associations. We have to remember that in the earlier centuries, the guild system provided the necessary training for different types of vocations. Such systems can also create entrepreneurial opportunities for many unemployed persons, even while providing the required personnel for the industries.
India has a huge pool of skilled manpower that does not have formal education. A few years back the Department of Science and Technology reported that around 30 per cent of the innovations taking place in the country are through illiterates. A certificate by the college/ university would help the uneducated and under educated sections that have skills improve their status and positions and make them recognized by the world. The Government has to take necessary steps to allow educational institutions to certify the uncertified but skilled people, by following proper evaluation methods. We don’t need foreign universities to do this.
The contents of the contemporary education system are largely based on the western experiences and theories. They are not relevant to our conditions and many of these theories have failed in their own countries of origin. It is time we changed them immediately. Moreover, the Indian universities should be given the necessary option to make experiments and innovations, within a broad set of parameters. The Indian private sector seems ready to make investments in education. They are capable also. Hence the Government should take necessary steps to make use of them.
A few basic questions disturb our minds whenever we think of allowing foreign universities in India. What kind of higher education do we expect from the universities of foreign countries, where people are failing in their own personal lives, and their social and economic systems are facing serious crises? Why don’t we make the required changes in the higher education system with our own resources and inputs, when we have the necessary background and fundamentals with us?
Superior agriculture and thrust on food production since ancient times
Food is the basis of life. Mankind requires adequate food for survival and growth. An ideal state is one in which no one suffers for want of food. The first priority of every country is to provide adequate food to all the citizens. The main objective of any economic theory should be to help the societies to plan for providing food to all the people. Unfortunately the “modern” economic theories of the west speak only about markets and competition. Hence we see hunger and poverty on the increase in different parts of the world during the contemporary periods, in spite of the development that has been taking place. So development itself is becoming meaningless to vast sections of people in the world. Modern economic theories and the economists are not able to provide meaningful solutions to reduce poverty and provide food to all.
In this connection, one has to learn from India of the earlier periods when the native systems were in place without the alien influences. Ancient India understood the significance of food much more than any other nation in the world. Mahabharata says: “Food is indeed the preserver of life and food is the source of procreation. When there is no food, the five elements constituting the body cease to be.” Hence the Indian system gave the maximum thrust to production of food in abundance, so that there will be plenty of it available for consumption. Sages and scriptures emphasized the need for growing and producing more and more food. For example, Taittiriya Upanishad said: “Endeavour so that there be a great abundance of food. That is the inviolable discipline of mankind.”
Accordingly agriculture was accorded the primary status in the society. Thiruvalluvar was only echoing this when he said that of all the vocations, agriculture was the most important as the entire world depended on it for their food ( Kural 1031). Hence farmers were given high respect as they engage in producing food for all the others in the society. Bhisma mentioned in the Mahabharata that the cultivators take up the responsibilities of the kings on their shoulders by providing food to the people in the country.
Kings were advised to create and provide the required facilities to the farmers so that crops were grown and food was produced without difficulties. When Bharatha visited Lord Rama during ‘vanavas’, Rama advised him to ensure that all those engaged in agriculture received special attention and help them conduct their vocation. Hence the states took up the responsibility to create the necessary infrastructure and other facilities. Maintenance of water bodies and construction of tanks were undertaken wherever necessary to store water. Even when rains fail, arrangements were there in place to provide water so that farming activities did not suffer. In the Mahabharata Narada asks Yudhistra to ensure that the cultivators had not exhausted their seeds and were offered loans at the rate of one per cent.
As a result agriculture flourished. Due to the antiquity of India and very long years of experience in farming, Indians gained complete knowledge of agriculture in all its respects. Hence they developed suitable methods to get the maximum results. During the period of British domination, they brought an agricultural chemist J A Voelcker from their country to India to recommend improvements to be made in agriculture. In his report of early 1890s, he stated: “Nowhere one would find better instances of keeping land scrupulously clean from weeds, of ingenuity in device of water-raising appliances, of knowledge of soils and their capabilities, as well as the exact time to sow and reap as one would find in agriculture; and this is not at its best alone, but at its ordinary level. ……. Certain it is that, I at least, have never seen a more perfect picture of careful cultivation combined with hard labour, perseverance, and fertility of resource, than I have seen at many of my halting places in my tour.”
After observing Indian farmers and the farming methods, the British agricultural scientist Albert Howard wrote about hundred years back that he could not do better than watching the operations of the Indian farmers regarding them as his ‘professors.’ While mentioning about the indigenously developed natural farming techniques that were in use in India, he noted that the Indian farmers used organic manures that ensured them to continue farming on the same land for more than two thousand years without any drop in yields.
The farmers treated the lands as the Goddess and nourished and nurtured her without causing any disturbance to her long term health. They adopted superior methods and developed their own techniques needed to increase production. The European officials and experts were astonished to see the way agriculture was conducted in different parts of India. After observing the native agricultural methods personally while serving in India, the English official Major General Alexander Walker was amazed to know the use of Drill Ploughs by the farmers and noted around 1820: “ The Hindoos have been long in possession of one of the most beautiful and useful inventions in agriculture. This is the Drill Plough. This instrument has been in use from the remotest times in India. …. It would be just to adduce this, as another proof of ingenuity of this people and of their successful attention to this branch of labour.”
In this connection the noted Gandhian Dharampal who had studied these aspects in detail underlines that: “The Drill Plough is said to have been used in Europe …. .. in 1662. Its first introduction in England dates to 1730. But it took another 50 years before it was used on any scale. It was used in India …. .from time immemorial. Observations of its use, by the British, however could only begin in the last decades of the eighteenth century, …….. .”
The aim of the farmers was to increase the production and productivity levels through natural and harmless methods. They achieved them with hard work and native techniques. Based on the study of inscriptions, Bajaj and Srinivas estimate that the productivity in Thanjavur area in Tamil Nadu amounted to around 15 to 18 tonnes of paddy per hectare, from 900 CE to 1200. In the southern part of Ramanathapuram in the state, the production was 20 tonnes of paddy per hectare in 1325 CE. The British observers and their administrative records show high levels of productivity in different parts of the country even till the early nineteenth century. For example, it was reported in 1803 that the productivity of wheat was about 7.5 tonnes per hectare in the regions around Allahabad.
It is significant to know that the ultimate objective of all these efforts was to provide food to all living beings at all times. About two thousand years back, the Greek historian Diodorous Siculus noted: “ It is …. confirmed that famine has never visited India, and that there has never been a general scarcity in the supply of nourishing food.” Making food available to all is indeed the noblest of all objectives of a society and India remained committed to it since the earliest times, till the Britishers intervened with the native arrangements and began destroying them. This is the reason why a large percentage of the humanity has been living here happily since the earliest times.
References:
Bajaj J.K. and Srinivas, M.D., Annam Bahu Kurvita, Centre for Policy Studies, Madras, 1996.
Bajaj J.K. and Srinivas, M.D., Restoring the Abundance: Regeneration of Indian Agriculutre to Ensure Food for All in Plenty, Indian Institute of Advanced Study, Shimla, 2001.
Dharampal, Indian Science and Technology in the Eighteenth Century, Other India Press, Goa, 2000.
Winin Pereira, Tending the Earth – Traditional and Sustainable Agriculture in India, Earthcare Books, Bombay, 1993.
( Yuva Bharati – Voice of Youth, Vivekananda Kendra, June 2010 )
India is an ancient civilization with thousands of years of history. It is almost impossible to find out the period of birth of the country due to her remote antiquity. This is the reason why the national poet Subramania Bharathi proudly noted: “Even the archeologists who find out what happened during the ancient periods find it difficult to trace as to when India was born; Such is the nature of our motherland.”
We know that India is a great country, where many great rishis and sages lived and where the immortal writings such as the Vedas, the Upanishads, the Mahabharatha and the Ramayana were executed. Many of us also know that for centuries knowledge and wisdom spread out from here to the different parts of the world. Some of us may also know that India was a pioneer in diverse fields such as mathematics, literature, science, medicine, technology, astronomy, philosophy and religion.
But these facts alone cannot explain India. She is much more. Maharishi Aurobindo noted that India possessed abundant energy and creativity in diverse fields over many centuries continuously: “For three thousand years at least, - it is indeed much longer, - she has been creating abundantly and incessantly, lavishly, with an inexhaustible many-sidedness, republics and kingdoms and empires, philosophies and cosmogonies and sciences and creeds and arts and poems and all kinds of monuments, palaces and temples and public works, communities and societies and religious orders, laws and codes and rituals, physical sciences, psychic sciences, systems of Yoga, systems of politics and administration, arts spiritual, arts worldly, trades, industries, fine crafts, - the list is endless and in each item there is almost a plethora of activity. She creates and creates and is not satisfied and is not tired; she will not have an end of it, seems hardly to need a space for rest, a time for inertia and lying fallow. She expands too outside her borders; her ships cross the ocean and the fine superfluity of her wealth brims over the Judea and Egypt and Rome; her colonies spread her arts and epics and creeds in the Archipelago; her traces are found in the sands of Mesopotamia; her religions conquer China and Japan and spread westward as far as Palestine and Alexandria, and the figures of the Upanishads and the sayings of the Buddhists are re-echoed on the lips of Christ. Everywhere, as on her soil, so in her works there is the teeming of a superabundant energy of life……… ”
Not many of us know that India remained a world leader in the fields of economics, business and trade also. Experts note that the IndusValley civilization that flourished between 2800 BCE and 1800 BCE had an advanced and flourishing economic system. Archeological evidences indicate that there were well planned cities during those times.
Studies show that business and trade were vibrant even in the earliest periods. Business historian Agarwala observes: “Even some 53 centuries ago, the people were linked in a vast trade network. Much of Harappa’s trade undoubtedly travelled along the Ravi river, eventually reaching the Indus. And some of it surely went by that main stream river to Mohenjodaro, Harappa’s sister city some 400 miles to the south.” India’s trade was not confined to the borders of the country. It extended beyond the boundaries to many distant lands. Agarwala mentions: “Archeological excavations testify to the existence of the ports of Lothal (Gujarat) and Rann of Kutch, Dholavira which have extensive trade exchanges in the time of the Indus Valley civilization with the Dilmun civilization of Bahrain and Kuwait in 3000 BC and later.”
Historians note that Indians had trade contacts with far off lands like the Middle East, Roman Empire and South East Asia even during the earlier periods. India’s trade relationship extended to different parts of the world with the setting up of trading colonies in other countries.
Most of us have a feeling that economic development, business and trade are all products of modern economic systems, which were born in the western countries after the industrial revolution. But evidences testify that India had her own advanced economic system and India was actively engaged in international trade as early as five thousand years ago. We have to remember here that some of the western countries of the contemporary periods were ‘born’ only in the last few hundred years. The noted economic historian Andre Gunder Frank asserts categorically: “So it is wrong to attribute the birth of capitalism to the European nations. It is even more wrong to assume that the economic development began with ‘the rise of the west.”
Any country cannot evolve an active economic system within a short period. A country cannot engage in international trade with exportable products without the necessary skills and expertise. The country should have had strong fundamentals built over centuries to remain an active economy with heavy presence in international trade.
Hence India must have developed her economic system over many centuries even before the time of the IndusValley civilization. She must have taken necessary steps to cultivate the required expertise to make exportable products through serious efforts for many centuries before that period. Only then could India have had an advanced economic system during those periods.
So the notion that the Indian tradition concentrated only on godly and metaphysical matters concerned with the ‘other world’ and did not take interest in aspects related to the economy and business is totally wrong. India did attach importance to the making of wealth since the earlier times. The scriptures, sages and traditions emphasized people to engage in productive economic activities and create wealth. The Rig-Veda, believed to have been written five thousand years ago and considered as the oldest sacred text in the world, underlines this point through the following words: “Let a man think well on wealth, and strive to win it by the path of Law, and by Worship…..” The popular Tamil scripture Thirukkural, urged everyone to engage in making wealth.
The kings were advised to plan the economic policies and participate continuously in the management of the economy. Arthashastra, the first book of economics in the world, advises the king to be “ever active in the management of the economy because the root of wealth is economic activity; inactivity brings material distress. Without an active policy, both current prosperity and future gains are destroyed” The states were also advised to plan for efficient and diversified economies. Arthashastra noted that “the main guiding principles of the administration of the economy were that the state should run a diversified economy actively, efficiently, prudently and profitably.”
It is important for the modern youth to understand that the Indian tradition emphasized different economic activities for creating wealth and achieving material prosperity.
References
1.P.N.Agarwala, ‘A Comprehensive History of Business in India’, Tata McGraw-Hill Publishing Co. Ltd., New Delhi, 2001
2.Andre Gunder Frank, ‘ Asian-based World Economy 1400-1800: A Horizontally Integrative Macro-History’, University of Amsterdam, 1995
3.L.N.Rangarajan, ‘Kautilya – The Arthashastra’, Penguin Books, New Delhi, 1992
(Published in Yuva Bharati -Voice of Youth, Vol.37, No.10, May 2010)
The global crisis that struck the world in 2008 is the latest symptom of the failure of the western economic systems. For about twenty years after the collapse of Soviet Russia, it was argued that market-centric economic theories of the west, led by the US, remained the best and the only solution for the development of economies of all the countries in the world, irrespective of their histories and backgrounds. Hence “one size fits for all” approach was advocated, in spite of the vast differences in culture, resources and life styles of people living in various parts of the world. Countries were compelled to accept the beliefs and ideas of the west through the multilateral agencies and the establishments. But from the 1980s, the market- based approaches have been proving to be failures in different parts of world, from South America to ASEAN countries and other parts of the world. When we look at the developments in India against this background, we get useful insights. At the time of Independence, India was a poor, underdeveloped and illiterate country. More than three fourth of the population was dependent on agriculture for livelihood. Figures show that in 1950-51, about 45% of the population was living below poverty line and the literacy rate was around 17%. The average age of life was just 32.1 years. India was a condemned nation, struggling to survive without much respect in the global arena. But after sixty two years now, the whole world is turning its attention to look at India and the functioning of her economic, business and management systems. In recent years, Indian economy has been growing at the second fastest speed in the world. It remains as one of the least affected economies due to the global crisis. India has around 85 million entrepreneurs engaged in various economic activities. The history of the macroeconomic management of the past six decades shows that our policy makers remain looking at the west trying to learn their approaches and adopt them to the maximum extent possible. Sincere efforts have not been attempted to develop policy frame works suited to the Indian conditions and implement them. As a result the country has been facing serious difficulties in many areas, including agriculture which remains the most important constituent of our economy for it is responsible for food security, apart from providing employment and livelihood to large sections of the society. But amidst all these problems, India is growing. The growth has been continuing in spite of the confusions and contradictions at the policy making levels. It is this growth that is making the world to turn its attention towards India. It is time we studied the Indian economic, business and management systems from realistic perspectives and understand the ‘functioning models’ in the light of changes in the global economic scene. Then only the global crisis and its impact on the Indian systems would be clearly understandable to us. Global economic crisis What erupted as the financial crisis beginning from September 2008 with the collapse of the mega investment firms in the US, affected in turn the insurance companies and banks resulting in the exposure of the fragility of their entire financial system. The impact spread to the other sectors as well, affecting giant automobile corporations such as General Motors. Simultaneously the crisis affected other major western economies and moved to the other regions of the world. So what started off as an American financial crisis became a global economic crisis within a few weeks. The US Government had to announce bailout packages worth over $ 700 billion and support programmes to help stop the crisis devastating their companies and lives of citizens who lost their jobs and savings. The other countries affected by the crisis also offered various types of incentives and packages to protect their economies from further troubles. But the crisis is far from over. Even after one year the woes of the crisis continue to daunt many of the western economies, particularly the US. About 120 banks have collapsed in 2009 alone. The rate of unemployment has crossed ten percent.
More than six decades of post-war growth has not solved their problems; rather it is leading to more difficulties. With all their scientific advancements, health care costs have skyrocketed. They find it difficult to provide even the basic minimum medical facilities to all sections of the society. In spite of many years of economic progress, the gap between the rich and poor has been widening. Surveys note that the satisfaction levels of the average American have been going down. Growth has slowed in the richer countries as a whole. Saving rates are either low or negative. Families are breaking down at higher rates. Child poverty ratio remains high among many OECD countries. Social security expenditures are going up. As a result the burdens to the governments have been increasing.
Failure of western theories The impact of the market fundamentalist approach has been troubling the rest of the world as well. The poorer and developing countries remain the victims of the rich countries and powerful multinational corporations. Human Development Report 2005 mentions that the payments made by the US government to their cotton farmers had resulted in the fall of cotton prices in the poor countries, leading to the poverty rate increasing from 37 to 59% in Benin alone. Nobel laureate Joseph Stiglitz, who was with the World Bank earlier, notes: “Globalization today is not working for many of the world’s poor. It is not working for much of the environment. It is not working for the stability of the global economy.” The market approach has affected India also. Unemployment is on the rise. Social sectors are not being cared adequately. The most crucial sector namely, agriculture is in serious difficulties. Hence there is an all round dissatisfaction against globalization and the market ideology across the world. Paul Krugman, winner of the 2008 Nobel economics prize, observed recently that “much of the past 30 years of macroeconomics was “spectacularly useless at best and positively harmful at worst.” So the root cause of the latest financial crisis, and the resultant economic crisis, is clearly the western theories and their approaches. An objective analysis of the western economic history shows that their models rest on weak foundations. Earlier it was feudalism in which lands were owned by a few, with most of the population toiling for their masters. Then it was mercantilism which aimed for huge stocks of gold and silver for the royal treasuries, without any benefit for the citizens of their countries. Colonialism, that resulted in the huge exploitation of men, material and resources by a few European countries, was the major and most visible scheme of the mercantilist ideology. Backlash against mercantilist approach witnessed capitalism being propounded by Adam Smith in the eighteenth century. Poor working environment, suffering at the hands of the factory owners and the overall population not getting benefited led to the birth of the communist ideology put forth by Marx and Engels in the nineteenth century. The failure of communism in Soviet Russia in the late 1980s and the subsequent disintegration of the state into smaller countries left the US driven market model as the ‘only alternative’ to the rest of the world, as claimed by the supporters of the neo-liberal framework. But now, as the recent developments make it clear, the market model is also failing them, and all of us in the rest of the world.
Western models are not universal
It is informative to note that after the latest crisis, when it was pointed out that the western models have failed, one or two major European countries specifically mentioned that it was the US model that failed. Hence it is clear that even the European countries are not ready to accept the US- driven market ideology. A study of economic history would make us understand that that no one western model dominated the world, especially after the ascendancy of the west. The noted economic historian Andre Gunder Frank asserts that the world economy was Asia based even during 1400-1800. To quote Frank: “….. all available estimates of world and regional population, production, and income, as well as the discussion ….. on world trade, confirm that Asia and various of its regional economies were far more productive and competitive and had far and away more weight and influence in the global economy than any or all of the “West” put together until at least 1800.” But as the modern history was written by the west as they saw it, Asia’s rightful place was denied. To quote Frank: “Asia’s rightful and historically documented place has been denied by the dominance of excessively Eurocentric perspectives on early modern and recent world economic history - and social science.” The developments during the recent periods show that the countries which did not follow the policy prescriptions of the west have escaped the crisis. In this connection it would be useful to see what Stiglitz had noted on the capital control policies of India and China. To quote: “It is no accident that the two large developing countries spared the ravages of the global economic crisis—India and China—both had capital controls.” But the countries that implemented the prescriptions of the US dominated west had to face serious difficulties. Hence it is clear that the western models are not the ‘only best models.’ So they cannot be universally advocated to all the countries in the world. In fact in any economic matter, there are many non-economic factors. Family, society, culture, lifestyles and preferences are some of the major factors that play a dominant role in economic decisions. History, backgrounds and resources also have their role. But unfortunately, modern economics does not take all these into consideration, as the western paradigms are different from that of the rest of the world. Individualism dominates their lives. States and markets are the only two major external entities to them. Hence all their theories revolve around these beliefs and their lifestyles. This is the reason why Alan Greenspan, the Governor of the US Federal Reserve Bank for more than fifteen years, has been arguing till recently that saving was a waste and people should spend as much as possible. Now the crisis should help them – and all of us - to recognize that there are other methods of managing economies and there are many non-economic factors that play a role in taking economic decisions. So as a first step we should avoid looking at the economies of different countries of the world only through the western theories. This is all the more true for an ancient economy such as India. Kanagasabapathi notes: “It is very unfortunate that we try to understand the economic models of different countries, particularly an ancient nation such as India, through the two popular “isms”, born very much later in the west. Even the study of the world economic systems begins only from the last few centuries. It is as if no economic system had existed earlier, even in prosperous civilizations such as India and China.” Indian economy – During the earlier centuries India is an ancient civilization. India is known for her economic prosperity and all round achievements since the earliest times. Indus- Saraswathy civilization proves the existence of well planned urban systems about 4500 years ago. Business historian Agarwal notes that imports and exports were at their peak in India even during those times. The first economics book of the world namely Arthasashtra was written in India about 2300 years back. Even when we take the last two millennia for which comparative figures are available, India stands out as the most productive and sustainable economic power in the world. Maddison shows that India was contributing 32.9% to the global GDP, the highest in the world, during the beginning of the Common Era, with China following us with 26%. India remained as the most powerful economy in the world for more than 80% of the time during the last two thousand years. It was the British domination that destroyed the Indian systems and made India lose her superior status. Even in 1750, India’s contribution to the global GDP was almost 25%. India was made as a poor nation by the British. Functioning Indian Models Now within sixty two years of Independence, India has already emerged as a global power – economic power, business power and management power. She is the fourth powerful economy. Indians are setting up businesses in different parts of the world. Many Indian companies have become important players at the international level. Several clusters such as Surat, Tirupur and Karur have become household names in foreign countries. Indians dominate international businesses such as diamonds in Antwerp. An increasing number of Indian professionals are occupying senior and responsible positions in different fields abroad. What is the reason for India emerging as a global power, in spite of difficulties and disturbances at various levels? What was the reason for India contributing one third of global GDP 2009 years back and maintaining the number one position for more than eighteen centuries? The answer is the unique Indian models. They are functioning even today, against all confusions and predicaments among the elite and ruling sections of the country. For all economic activities, funds are important. It is better when the funds are mobilized through savings. But people need to save. They cannot be mandated to save. The main problem with the western economies is the lack of savings and the consequent lack of own funds. So there is shortage. But in India saving is part and parcel of one’s life. It takes place naturally without getting noticed. In 1950-51, when about half of the population was starving, the saving rate was 8.6%. One has to remember here that the current saving rates in the richer countries such as the US and the UK are in negative figures. It means they are spending more than what they earn. But in India even when people do not earn adequate amounts, they save. Saving rates have continued to increase over all these years and as a result the official saving rate for 2008-09 was 38.1%. It is one of the high rates in the world. We have to remember here that there are other popular avenues of investments such as gold and a variety of indigenous methods that are not taken into account for the calculation of official saving rates. India buys about 20 to 25% of global gold output annually. If we take all the different methods of saving into account, our saving rates would be more. Why do people save money, even when they are in difficulties? Why don’t they spend whatever they have and enjoy their lives? In Indian culture it is the duty of the householders to look after their children, elders and dependents. So everyone thinks it is his/her duty to save as much money as possible so that they would be able to contribute to the wellbeing of the family. Parents sacrifice their needs to provide comforts to their children. As a result huge funds are saved in different avenues. Due to high levels of saving, capital formation becomes easy. Since India is a family and community oriented society, there is a pool of huge social capital. As a result promotion of business is facilitated. Net works of relationships are used for establishing and running businesses. World Development Report 2001 notes that Tirupur is able to successfully compete in the international textile market due to the prevalence of high social capital. The report mentions that Tirupur businessmen are able to borrow loans without much transaction costs, as people ‘rotate credit’ due to their close relationships. This practice has been helping them to sell the products at lower prices, as their cost of capital is low when compared to their competitors from western countries. In a study conducted among the diamond exporters from Surat and Ahmedabad, it was reported that about 80% of them were financially supported by their relatives when they set up their ventures. Family bondages and community orientation encourage and help Indians to enter into businesses. As a result people venture into different economic activities in huge numbers. Economic Census 2005 notes that there were around 42 million businesses in the unorganized sector, comprising of small businesses. Reserve Bank of India mentions that there were about 13 million units in the SSI sector. An all India survey published by the Government of India noted that there were 2042 clusters across the country during 2001-02, with each cluster housing hundreds of business and industrial establishments. As for the corporate sector, there were 7, 43,678 companies at work at the end of March 2007. (Govt. of India, Ministry of Corporate Affairs) It is important to note that most of the businesses, especially among the small and medium category, were established by the promoters themselves through their savings and support from families and close circles comprising of relatives and friends. The contribution of the state and state mechanisms remain very low. In the unorganized segment for example, more than 95% of contributions have come from the promoters, their families and close circles. A study of major clusters in the states of Gujarat and Tamil Nadu showed that in most of the cases initial funds for businesses had been mobilized by the promoters through own funds, family support and informal sources. ( Kanagasabapthi) The share of banks funds even in working capital remained very low in centres such as Sankagiri, the transport cluster with the second largest lorry traffic in the country. It is necessary to know that the contribution of the women folk to the functioning of the economy and the success of businesses is enormous. Many businessmen attribute their success to the dedication and support of their mothers, wives, grandmothers and sisters. The presence of all these factors combined with the native entrepreneurship systems makes India one of the unique economic models. Sivakasi in Tamil Nadu was a little known place with only salt water about 90 years ago. Two youngsters decide to enter into business, go to Calcutta, work in the match factory run by foreigners, learn the business and return to their native. With great difficulties, they set up their first match unit in 1923. Today Sivakasi is a household name in the country for it manufactures 90% of the national cracker requirements and supplies 80% of the match boxes, besides having a share of more than 45% in offset printing. Cheque books of European banks, air tickets of foreign companies and the highest prized diaries of the world are printed there. The ordinary people of Sivakasi, many of them with little or less education but enormous business sense and vision, have made the town a ‘ little Japan’ as the first prime minister of India called it. Whether it is Namakkal with the largest lorry traffic in the country or Surat with a turnover of more than 50000 crore rupees, almost all the business and industrial centres in the country have similar histories behind them. No business is difficult for these people, for they have the enterprise and native intelligence in abundance. They compete with the western multinationals run by the highly qualified technical/business school graduates and emerge successful even in the foreign soils, making the country proud and richer. Hence it is the functioning models with unique features that are responsible for taking India to greater heights. But unfortunately they are not recognized, as we still continue to look at the country from western perspectives. In the earlier centuries before the arrival of the British, native systems thrived and prospered with the support of the society and the state. Hence they produced better results. In the changed circumstances, after two hundred years of destruction and more than sixty years of confusion, the native systems had to undergo many changes. But with the strong foundations provided by the age-old culture, the overall spirit remains. It is this spirit, rooted in the dust and soil of this country, which is making India functional and productive, irrespective of the strong negative influences from within and outside. Conclusion The global economic crisis is a symptom of the failure of the US driven market approach. The crisis seems to indicate the beginning of the end of the contemporary western models. India escaped the crisis and continues to move forward with all the problems, as the functioning Indian models help the country from the onslaught of the narrow market ideology. Studies by the author indicate that the Indian economic and business models are unique and stand on stronger foundations. It is unfortunate that they are not understood and recognized properly and our policy makers continue to ape the west. Hence the critical issues remain unsolved. There is a long way to go to provide facilities to all the sections of the society by making one and all participate in the development process. It is time we studied the Indian systems and devise policies based on the ground realties, so that our strengths are fully utilized for getting maximum possible benefits.
References
1. Stiglitz, Joseph E., Globalization and its Discontents, Penguin Books, New Delhi, 2002 2. Human Development Report 2005 , Oxford University Press, New Delhi, 2005 3. Krugman Paul quoted in The Economist, July 16, 2009 4. Frank, Andre Gunder, ReOrient: Global Economy in the Asian Age, Vistaar Publications, New Delhi, 1998 5. Kanagasabapathi, P., Indian Models of Economy, Business and Management, Second Edition, Prentice Hall of India , New Delhi, 2009 6. Agarwala, P.N., A Comprehensive History of Business in India – from 3000 BC to 2000 AD, Tata McGraw- Hill Publishing Company Limited, New Delhi, 2001 7. Maddison, Angus., The World Economy- A Millennial Perspective, First Indian Edition, Overseas Press (India) Private Limited., New Delhi by arrangement with Organisation for Economic Cooperation and Development, 2003 8. World Development Report 2001, World Bank, Washington, 2001 9. Patel, Sharad and Kanagasabapathi, P., ‘A Study on Gujarat Diamond Export Industry’, Unpublished report, P.S.G. Institute of Management, Coimbatore, April 2005 10. Handbook of Statistics on Indian Economy, Reserve Bank of India, 2008 11. Statistical Review of the Corporate Sector, Annual Report 2007-08, Ministry of Corporate Affairs, New Delhi 12. Final results: Third All India Census of Small Scale Industries 2001- 2002, Ministry of Small Scale Industries, Government of India, New Delhi, 2004
(Published in Perspectives in Social Science, Vol.2 No.1, C.Achutha Menon Foundation, Thiruvananthapuram, pp.18-29, Jan-Mar.2010)
India is an ancient civilization with a proud history of continuous prosperity. Even during the previous two millennia, she was the most powerful economy in the world, till the Britishers started destroying her. India was a poor nation at the time of Independence, and within a period of just decades she is emerging as major economy at the global level. The reason for the prominence and rise of India is her backgrounds and native management models. With the ascent of the West during the recent centuries, their concepts and practices came to be used throughout the world due to historical reasons. Now they are facing serious difficulties as their foundations are weak. Hence it is no use copying them. Instead we have to recognize the functioning Indian models, develop newer ones and create theories that are suited to our conditions, to go forward in the right direction.
Introduction
We are witnessing two major developments at the international level during the recent years. One is the large scale failure of the western economic, business and management models. Second is the rise of India and China in the economic and business fields. Among these two countries, India is democratic with a very long history of economic prosperity since the earliest times. In recent times, she has emerged as a major economic force at the global level in a period of just six decades after independence. Indian business sector has been growing and is spreading its wings successfully across the globe.
The economic crisis that erupted in the US in 2008, and devastated the west, has shown that their models have failed in their own country. As a result serious questions are now being raised against their models, particularly with regard to their applicability in other countries. In fact reputed economists such as Paul Krugman, who is the 2008 Nobel laureate, are questioning the very fundamentals of the western theories. At the same time many experts have started to admit that that the Indian models would be better than the western systems. During the past few decades, there have been attempts by a few concerned experts to create awareness for developing an Indian system of management, primarily based on the ethos and spirit of the nation. Voices have also been raised, on different occasions, regarding the suitability of the western models to the Indian conditions. The time is ripe now to examine the position in the changed circumstances and create a suitable climate for evolving native models for better performance and sustainable development.
Management concepts and theories – Developments in India and the West
India is an ancient civilization. India remained a powerful economy, with successful business and trade practices since the ancient times. Even when we take the last two millennia, we could find India as the most vibrant and prosperous nation for most of the period. Economic historian Maddison (2003) notes that India was contributing 32.9 percent, almost one third of global GDP, during the beginning of the Common Era, i.e. 2009 years back. We understand that India’s position as a premier economy continued uninterrupted, till the Britishers started interfering and destroying the native systems.
An economy that remained as the most prosperous one for many centuries with successful businesses must have had very good management systems. We have to remember here that India was not just the major economic power, but also the premier centre for educational, scientific, intellectual and spiritual activities with pioneering contributions in diverse fields. We understand that the management concepts were predominant in the ancient literatures and scriptures. In fact we could see various management concepts discussed in different books, apart from the well recognized works such as the Bhagawat Gita,Arthashastra and Thirukkural. More than two thousand years ago, Thiruvalluvar had written on what are now considered as the modern management concepts such as human relations development, norms of good governance and communication skills. Hence Nanda (2006) asserts: “The scholars in Europe and America have to be informed that management thought in ancient India are not limited to one book i.e. Kautilya’s Arthashastra. This is one of the many books of knowledge in relation to management.” One could see the usage of management concepts and principles in the form of sayings and proverbs in the day to day lives of the ordinary citizens across the country, even today. These proverbs explain different management ideas in just a few words beautifully. They are available in many Indian languages. Nanda notes: “In ancient India, we find a lot of definition of subjects relating to management in some way or other.” So the management concepts are not new to India; they seem to have been used even among the common people since the earlier periods.
Later when the Britishers began to adopt their methods and introduce their systems after their arrival, Indian economy and businesses declined. As a result the time tested concepts and systems that were developed over many hundreds of years of experiments were neglected and destroyed. Finally when India got independence after more than two hundred years of alien domination, she was a poor nation with a host of problems.
Most of the modern west is comparatively new. Maddison notes that Britan did not even have clearly defined borders till about five centuries years ago. The most predominant of them today, namely the US, was ‘discovered’ in 1492 and it was only later that the Europeans settled there. Economic historians such as Andre Gunder Frank emphasized that the rise of the west in the later centuries was not due to any of their superiority such as technology. He notes that even their claim to the philosophy of ‘capitalism’ is far-fetched. To quote Frank (1998), “ Until about 1800 the world economy was by no stretch of imagination European-centered nor in any significant way defined or marked by any European-born ( and European-borne) “capitalism”, let alone development. Still less was there any real “capitalist development” initiated, generated, diffused, or otherwise propagated or perpetrated by Europeans or the West. That occurred only by the stretch of the Eurocentric imagination, and even that only belatedly after the nineteenth century…………”
Experts note that the Europeans could emerge at the global level only due to their colonial policies. As a result Europe, and mainly the British, could improve its economic position at a rapid speed in the eighteenth and nineteenth centuries. Subsequently the US emerged as the major economic force in the twentieth century. Management theories of the west started emerging in Europe and America from the final decades of the nineteenth century. Cole (2004) notes: “The Classical school of management thought and thinkers emerged from 1880s to 1930s. It was the result of unprecedented growth during the industrial revolution. Large and complex organizations created the organizational complexities, and problems of operational efficiency.” Practising managers such as Taylor and Henry Fayol, and social scientists such as Mayo and McGregor had contributed to the earlier management theories. It was the academicians and the management consultants who have been predominantly contributing in the later periods. To quote Cole: “Most of the contributors to the theory and practice of management nowadays are academics with strong research backgrounds, and most are from USA. Of the practitioners, almost all are practicing management consultants, indeed most also hold positions in American universities.” Here it is relevant to understand that the western management theories are of recent origin, and the later ones have mostly been contributed by the US academicians.
As India and the rest of the world were under the dominance and influence of the European thinking, their management practices came to be adopted in the colonies across the world. Later when America began to dominate the global economic scene, they began popularizing their management systems. They supported the establishment of management and business schools in different countries such as India. As a result, the US model of management appeared to be the appropriate model for all the other countries. The increasing spread and influence of the multi national corporations during the last few decades have also helped the U.S. and the western management systems to spread out to different parts of the world.
Different models of management
Basically there are two types of thoughts with regard to the approach towards life. They could be broadly classified as the western and the eastern types of thought. They are based on the outlook, views, ideas and lifestyles of people in these parts of the world. The economic, business and management models of different countries are based on these thoughts and approaches. Hence we have to keep this point in mind, when we discuss the management models of India and the west. Otherwise any analysis or comparison of management models would not be meaningful. The most prolific contributor to the value based Indian management thoughts, Professor Chakraborty (1991), notes: “It is prejudicial to the real interest of Indian management not to know or to choose to ignore the two fundamentally different streams of human temperament in the world: the western (especially since the renaissance) masculine, logical, rational aggressiveness and the Eastern feminine, intuitive, receptive realization.”
As the eastern and western management systems rest on different foundations, it might be difficult to find universal management models applicable to all the countries in these parts of the world. Sharma (2001) writes: “There is no single model that is applied everywhere in different countries. “Pascale and Athos in their book, The Art of Japanese Management, have contrasted the approach adopted by the professional managers of the Western and the Eastern world, in solving their problems. The principal difference between the Eastern institutions and those in the West is that ours is tuned to organizational structure and formal systems to cope with those challenges. In contrast, Eastern institutions, while until recently advancing more slowly in thinking about organizational forms and formal systems paid more attention to social and spiritual means.” Experts note that culture plays a vital role in shaping the management approaches. Parthasarathy (2006) asserts that “Management is predominantly culture specific.”
How relevant are the western models for India?
When the attitudes and approaches of people in India are vastly different from that of the Western countries, it might not be advisable to adopt their methods. Sharma asks: “Can a society, which has spirituality as its dominating characteristic, adopt the ‘management philosophy’ developed in the West per se.” The contemporary functioning economic, business and management systems of India are different from that of the West (Kanagasabapathi, 2009). Against this background, if India tries to emulate the western models she might not be able to attain full success. To quote Chakraborty (1991): “Authentic success in Indian organizations will remain an elusive purple patch if superficial emulation of techniques springing from the western temper remains the mainstay.”
Flaws in western models
Cut-throat competition and too much of individualism have created irreparable distortions in the western system. Even the organizational loyalty, which is important for any system to succeed, is considered as incorrect by the west. Chakraborty (1991) notes: “Western thinking, by and large, prompts us to treat organizational loyalty as an anti-professional value. The truth is that today professionalism is almost a byword for loyalty towards personal mercenary aims. Yet no great achievement is ever possible without a focus of loyalty which transcends the individual self. Besides, in the long run, life itself loses meaning if every thought and action remains centered on the little self only.” The top management is only bothered about garnering the maximum benefits for themselves, even at the cost of the larger interests of the employees, shareholders and the society.
Many of the western experts themselves voice opinions with regard to the problems associated with their management practices. For example, Salamon (2002) from U.K., “…… candidly admits that there are several flaws in the western model of managing a business.” Self-centric approaches, maximization of profits at all costs, little concern for the larger environment and a narrower view of life are some of the major flaws in the system. What could be the main reason for the flaws in the western models? Chakraborty (1991) asserts that it is the absence of ethical principles. To quote: “A survey of the managerial and administrative processes also reveals the same dominating paradigm as in economics. …. It is the invasion of this credo into management which causes it to leave out the ethico-moral man in managerial processes.”
Functioning management models
Studies reveal that Indian and Indianised management models exist and are successfully functioning in India. The non-corporate sector plays the dominant role in the Indian economy and businesses, with a contribution of about 57% to the national income. Different studies on the management styles and practices in the non-corporate sector show that the management models are native. Studies of different economic centers, including highly successful industrial and business clusters covering different types of organizations including companies, and society based business initiatives provide important clues to the functioning of native management systems.
Let us take for example, the field of personnel management which is a very important area in modern management. In almost all the successful centres, the overall management approach towards employees is friendly and not antagonistic. On the whole there is a personal orientation beyond the employer-employee relationship. The entrepreneurs try to keep their employees satisfied by helping them, whenever such help is required. In many instances there is a ‘fraternal approach’ to the employees. In the course of time, most of these factory/business relationships get extended into personal and family relationships. One could notice the established entrepreneurs in different parts of the country taking it as their duty to promote and develop new entrepreneurs by helping them in all possible ways. This is the highest forms of assistance to anybody who wants to start a business.
There is an industrialist in western Tamil Nadu, who has promoted more than 10 textile spinning units, all by himself during the last two decades. He has more than 10000 employees working for him. There has been no strike, and not a single protest by the employees during these years. But he is not a HR professional, and not even a qualified textile expert. How could he maintain such a high level of human relations and extraordinary success in business? It is all due to his personality as a concerned and a humane employer, moving closely with everyone irrespective of their status. He knows the names and background of all his employees and remains as a source of support in times of difficulties.
‘Indianised’ styles in corporate sector
One could notice more of a traditional orientation in a majority of the corporate sector. In many places one can still notice the traditional office systems devoid of a luxurious outlook, elderly promoters attending work and helping the subsequent generations in all possible ways, and in a few cases loyal employees contributing sincerely well after retirements. All of them have adapted to the modern times, without losing the inherent value systems. It is a common feature to see the managements updating themselves with the operations and performance of the companies using latest technologies. Subsequent generations have acquired minimum qualifications or more, and have learned to use as much technology as they require for operations and management. In many cases the heirs to the business try to get technical and management qualifications in the relevant fields from good institutions.
As far as the big corporations are concerned, though there has been an outward tendency to emulate the West, the attitudes and approaches of those who control are primarily Indian. During the previous decades, the earlier generations tried to steer the businesses without losing track of their value systems. Though the modern generations remain a bit confused, they would certainly prefer to follow the Indian ways in the changed circumstances after the crisis. There is also a mix of the Indian and the Western methods in different instances. Even the multinational enterprises that operate here know that India is a ‘culturally tough’ nation. Hence they Indianise their practices, as much as possible, to establish their business and succeed. These Indianised approaches seemed to have worked well in different cases as they combine the other approaches with the India approach approaches and make suitable combinations of practices.
Cultural foundations of Indian management
The contemporary achievements of India are mainly due to the cultural backgrounds. In such a situation, Chakraborty (2003) presents that India would be able to achieve greatness only by following the management systems based on the cultural traditions and native spirit. “The need for authentic management, management that is true to cultural roots, is becoming clearer daily in both the East and the West. The United States, for instance, cannot meet Japan’s great industrial challenge by copying Japanese methods. Japanese methods do not fit the American ethos. The graft will not take. America must regain its industrial excellence through methods that are compatible with its own unique character and values. Similarly, India will not realize its material potential through copying the US, Britan or Japan. India will be great only by being India. Neither a country nor a person can achieve greatness through imitation. Greatness cannot be achieved through imitation. It can only be achieved through authenticity. The Bhagavad Gita says, “Better in one’s own dharma, though imperfect, then the dharma of another well performed. He who does the duty ordained by his own nature incurs no sin.”
Higher ideals in management practices
It could be seen that the Indian society always governed its actions by reference to higher ideals, even while engaging itself in routine activities. Maharishi Aurobindo notes: “Indian society developed with an unsurpassed organizing ability, stable effectiveness, practical insight into its communal coordination of the mundane life of interest and desire, kama and artha; it governed always its action by a reference at every point to the moral and religious law, the dharma; but it never lost sight of spiritual liberation as our highest point and the ultimate aim of the effort of Life.” What could be the reason for this? The answer might be found in the words of Tagore: “We still know that only in ……. spiritual wealth and welfare does civilization attain its end, and not in a profile production of materials, not in the competition of intemperate power with power?” It is India’s obligation not just to herself but to the world for a transformation in the management approach. Chakraborty (1999) notes: “The irrefutable commandment is that the secular and the material must be informed and invested with the sacred and spiritual. ….. India’s obligation to herself and to the world is to relive this sacro-secular symbiosis for effective transformation in every epoch.”
Management education based on western notions
Modern management education in India has a background of about seventy years. The management schools rely almost only on the western concepts and practices for teaching. Ojah (2005) notes: “Post graduate management education as we know it today has been strongly influenced by similar education in the U.S. ever since Harvard Business School and Sloan Business School, Massachusetts Institute of Technology, helped with the establishment of the Indian Institutes of Management at Ahmedabad and Kolkata respectively in the early 1960s. Continued recruitment of faculty in the IIMs, and other similar institutions, from universities in the west, particularly the U.S., has ensured that most of the prominent post graduate programs in management in India have followed the norms that emerged in the US environment, although with a lag.” As the emphasis remains more on the western theories and approaches, the candidates are not exposed to the realities of the functioning Indian systems. .
Need for India oriented approach
It is time the management institutions did some serious thinking. The western business and management models are facing serious problems, prompting them to go for deeper understanding of the issues. Saraswat (2005) noted earlier: “Widely publicized financial and accounting scandals at large multinational corporations such as Enron and WorldCom in recent years have brought issues of corporate governance, ethical conduct, and social responsibility to the forefront of the academic debate in the United States. Market-rigging scandals at other global corporations such as Italy’s Parmalat demonstrate that the problem is not confined to any one country or culture; its dimensions are global. The growing public awareness of these transgressions has exposed the inadequacy of management education in universities and management practices in corporations. The existing parameters of academic discourse and time-honoured principles of organizational behavior seem to ignore the underlying spiritual and human values on which important management decisions are based. Consequently, individuals in positions of great responsibility in corporations are often unable to either recognize the norms and boundaries of accepted ethical behavior or deliberately trespass them. Academic and corporate establishments in the US are, therefore, recognizing the need for a deeper discussion and understanding of the underlying causes of unethical behavior”
Against this background, there is no use copying the western models. It becomes imperative to reformulate our attitudes towards the western approaches, depending on their applicability and usefulness to India. If necessary we might even have to challenge their models that are not relevant. In this connection, Chakraborty (1991) asks : “… have we Indians ever thought of challenging its wholesale transmission to our students and managers. Could it be that post-independence Indian culture has been so character-less, and our intellectual spinelessness so shameful, that the well intentioned Americans have never really faced a solid and genuine challenge to review the intellectual wares they have brought over to do us good?”
For any country the native models are the most suitable ones. They have their roots in the native soils and are sustainable. It is all the more true in our case. India being a unique country with a proud record, it is necessary to recognize and nurture the functioning models, and develop better ones to suit our conditions. It is to be remembered that the basis for all attempts towards newer models should revolve around the core principles of the nation. To use the words of Chakrabotry (1991): “India has never been a mercenary or colonial culture like many western nations. Materialistic cultures may be glamorous, but not happy. So we are told today that ‘Americans are not getting enough happiness for their money’. The ‘Protestant ethic’ has been associated with the promotion of several exploitative, mercenary colonial cultures. It is therefore likely to be unsuitable to the hidden grain of the Indian temper. The limited sociological perspective tends to miss the woods for the trees. The ‘deep structure’ remains untouched. Courage is required to go to the root of the matter and construct or re-construct our own models. If the endeavour is uncompromisingly honest and sincere, we need not worry about immediate results.”
So we have to create new theories and evolve newer models wherever required, as the foreign models, by nature, are bound to create discord in an ancient country such as India. Moreover we would be able to get the necessary results, only when we follow models that are suitable for our lands. History shows us that as long as India followed her models she was prosperous. The movement they were neglected or thrown out, the system suffered. The solutions for many of the contemporary difficulties could also possibly lie in our inability to understand and develop the native models. Hence it is time that we resolved to create a suitable climate to appreciate and develop native Indian models. In this connection, it is worth noting the words of Samir K Baura (2009), the Director of IIM-A, in a recent interview: “It is high time that we started creating Indian knowledge. We must ask how many management theories have Indian B- schools produced.”
References
1.Barua, Samir K (2009). ‘Create Indian management theories’. Interview. Business India. November 1
2.Chakraborty, S.K. (1991). Management by Values – Towards Cultural Congruence. OxfordUniversity Press: New Delhi
3.Chakraborty, S.K. (1999). Ethics in Management: Vedantic perspectives. OxfordUniversity Press: New Delhi
4.Chakraborty, S.K. (2003). Foundations of Managerial work- Contributions from
Indian thought. Himalaya Publishing House: Mumbai
5.Cole, Gerald. (2004). Management Theory and Practice. Thomson Asia Pte Ltd.: Singapore
6.Frank, Andre Gunder. (1998). Re Orient: Global Economy in the Asian Age. Vistaar Publications: New Delhi.
7.Kanagasabapathi, P. (2009). Indian Models of Economy Business and Management. PHI Learning: New Delhi
8.Maddison, A. (2003). The World Economy- A Millennial Perspective. Overseas Press (India) Private Limited.: New Delhi
9.Nanda, Jayanta K. (2006). Management Thought. Sarup & Sons: New Delhi
10.Ojah, Abhoy K. (2005). ‘Management education in India: Protecting it from the ranking onslaught’. Decision.Vol.32, No.2
11.Parthasarathy, Swami. (2006). Human Values Management- 20 Key Principles for Modern Management. Ane Books India: New Delhi.
12.Ray, Sougata and Sinha, Anup. (2005). ‘Management education- Let a thousand flowers bloom amidst a hundred questions’,Decision. Vol.32, No.2
13. Salaman, Greame. (2002). India need not follow western biz model, interview. The Hindu-Business Line. October 1
14. Saraswat, Satya Prakash.(2005). ‘Reflections on Spiritual foundations of human values for global business management’. Vision- The Journal of Business Perspective. Vol.9, No.3
15.Sharma, G.D. (2001). Management and the Indian Ethos. Rupa and Co: New Delhi.
(Published in Global Management Review, Sona Institute of Management, Vol.3, Issue 5, Nov.2009)
Earlier, the labour component in construction cost used to be 25 per cent. Now, it was 30 per cent. Valuers should take this into consideration. S. Pichaiya, convenor of the event, said service sector was driving the country's growth and so professional services such as valuation were gaining importance. Valuers need to introspect and improve the standards of valuation.
