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Luis Miranda
Luis Miranda
Employees from various departments collect brooms before a cleanliness drive at an Indian Railways office in Mumbai

(Photo: Danish Siddiqui / Reuters)

Prime Minister Narendra Modi announced with much fanfare the Swachh Bharat Mission on Gandhi Jayanti last October. The aim is to ensure a Clean India in five years. A lot of staged photos were taken across the country of ministers, celebrities and bureaucrats cleaning streets. What was remarkable is that the new PM told the world that we are a filthy nation and we need to fix it urgently. So far, the previous governments never admitted that we have a serious problem and not much was being done about it on a large scale. A lot of money was being spent, but the impact wasn’t much. And Indians want a Swachh Bharat. A recent India Today survey found that 41 percent believed that the initiative was a very good one that will make India cleaner. Twenty-nine percent felt it was a very good idea, but impractical. That’s a 70 percent vote for the cause seven months later.

But what’s happened so far? Yes, it has only been seven months and the data is still trickling in. The fear is that we will see a repeat of what we have seen over the past decades. Live Mint recently carried an article titled ‘Accounting for toilets, but no accountability for sanitation’. The focus has so far mainly been only on building the infrastructure and not much is happening on getting people to use them. Companies are jumping over each other to build toilets and this summer, at any AGMs, chairmen will brag about the number of toilets they have built. This is a great leap forward. However, I have three large fears.

First, we will succumb to the Great India Infrastructure Model – ‘Build, Neglect, Rebuild’. The toilets will be built (yes, we can tick that box), but they will be built badly. As a result, few people will use them and they will hence get neglected. And a few years later, in another frenetic burst of activity, they will be rebuilt. We have seen this happen time and time again across the country and there is a high likelihood that this will recur. The attitude of many players – both in the government and in the corporate world – is that we have infrastructure targets to meet and we will meet them. But not many are talking about building them properly. I was introduced to this challenge by Supriya Jaan Sonar of the Right to Pee campaign, where she said we need a change in attitudes to build proper toilets (click  here for my earlier blog on ‘Intent is important to Bring About Change’, where this initiative of CORO also highlighted the gender biases in the toilet situation in India). Samhita Social Ventures, which advises companies on CSR strategies and helps them implement them, has had many companies approach them to build toilets and when they discuss some of the softer issues needed to do it properly, the companies run away. Of course, there are some firms who understand the need to build toilets properly.

Second, we are not doing enough to create a demand for toilets. The precursor to the Swachh Bharat Mission was the Nirmal Bharat Abhiyan. Arghyam, founded by Rohini Nilekani, is working closely with the Karnataka government to build the demand for toilets in rural India. Just building toilets will not mean that people will stop open defecation. The government had reserved 15 percent of the NBA budget for Information, Education and Communication (IEC). Only 5.65 percent of that budget was used in 2012-13! In the recent budget, the allocation for IEC was dropped further, from 15 percent to 8 percent, highlighting the government’s fascination for building infrastructure without focusing on creating a demand for this infrastructure. Organisations like Centre of Gravity and Final Mile are working on changing behaviour patterns to create this demand. Dasra, with support from Forbes Marshal, did a study on urban toilets and referred to this problem as the silent killer; in India, more than 1,000 children under the age of five die each day due to diarrhoea caused by lack of sanitation – that is 3,65,000 kids a year! We need to make people realise that building proper toilets actually helps improve their health, and by consequence, their earning ability.

Third, we are not doing enough to build ‘proper’ toilets. Given the pathetic state of toilets today, it is no wonder that people don’t want to use pokey, smelly and filthy cells that masquerade as toilets. A few years ago, my son and I were returning from Purushwadi, a village near Akole (an interesting programme run by Grassroutes Journeys). On the way back, he wanted to go to the toilet and we got off at Thane station. What a disaster that train station toilet was, despite charging people to use it. Many organisations are, therefore, looking at ways to build better toilets, keeping in mind the needs of the local environment. For example, 17000 ft Foundation is building a few toilets in Ladakh for a corporate sponsor. They are working with designers in Ahmedabad to improve on the traditional Ladakhi toilet. A lot more work has to be done in this area to build useable toilets.

Keeping all this in mind, the Social Enterprise Initiative of the University of Chicago Booth School of Business, together with Toilet Hackers and Samhita, is hosting a Convening on Sanitation in Delhi this week to stimulate behaviour change and usage. We are bringing together the government, NGOs, corporate India and academia to see how we can ensure that Swachh Bharat actually delivers what Prime Minster Modi set out to do. We will start off with Prof Richard Thaler of Chicago Booth talking about the need to change behaviour. Thaler wrote the best seller, ‘Nudge’, a few years ago and set up a ‘Nudge Unit’ under Britain’s Prime Minister David Cameron. We then have a panel to take stock of where we are on Swachh Bharat. This will be followed by detailed sessions of behaviour change, gender issues and building systems.

One of the speakers at the convening is John Kluge. John is committed to improving sanitation across the globe and has set up Toilet Hackers to drive this (I love his title – Co-Founder and Chief Disruption Officer). I recently caught up with him and discussed briefly his four-year journey in this space. He admits it is a tough task across the world and it needs strong partnerships between the government, NGOs, citizens and donors (including corporate) to ensure that sanitation improvement is done in a sustainable manner. Academia also has a large role to play by providing cutting-edge research and analysis. This week’s convening on sanitation at the University of Chicago Centre in Delhi aims to achieve precisely this.

Disclosure: I am connected with CORO, Samhita and 17000 ft and studied at the University of Chicago.

ngo

Image: Shutterstock

I recently spoke at an event that focused on CSR in Education. It was a well run event, with some amazing discussions organized by Educational Initiatives (EI) and Samhita Social Ventures. And I nearly got booted out for challenging three basic issues – the under-spending on overheads, the high cost of submitting proposals and collecting data and the short-term strategies to fix the education challenges in India. I feared I would be politely escorted out by the security before I spoke more rubbish.

Let’s look at the first point – the 10% cap on overheads. It is amazing how these numbers get cast in stone. I spent 10 years in the PE industry where the 2/20 rule (i.e. 2% management fee and 20% share in the profits) remained fixed for decades. No one dared to challenge it until recently; so too with the 10% cap. I am reading a very interesting book, “Give Smart”, written by Tierney (the co-founder of Bridgespan Group) and Fleishman. One of the traps in philanthropy they write about is ‘nonprofit neglect’ – the ‘widespread resistance to providing general operating support, which grantees can use to develop their organisational capacity.’ As a result NGOs cannot spend scarce resources on bringing in more professional advice or resources (I am not arguing that it is needed in every case). Nor can they spend on proper training and facilities … because donors don’t like funding this, probably because they consider this a waste.  In 2009 Gregory and Howard of Stanford wrote about this problem, calling it ‘The Nonprofit Starvation Cycle’. One of the NGOs I am connected with was grilled recently by a donor on every cost item (the Board, on the other hand, felt we need to actually spend more). On the other hand another NGO was told by a donor that the team should not scrimp so much and start spending more on overheads to improve efficiency. These are two very contrasting views on overheads and expenses.  Tierney and Fleishman compared this to airlines – would we prefer to fly on an airline that had the lowest maintenance cost? Or go to the hospital with the oldest, depreciated equipment? They differentiated between good overheads (e.g. hiring a great chief operating officer) and bad overheads (e.g. excessive rent or lavish entertaining). I think the time has come for donors to relook at this artificial cap on overheads and instead focus on the nature and need of the expenses to make the NGOs more sustainable.

The second point was on the excessive cost of applying for grants and collecting impact data. Don’t get me wrong – we need data. But we have swung from one extreme of not looking at outcomes (the RTE still ignores outcomes) to getting over-paranoid about it. Tierney and Fleishman write about grant makers who require grantees to annually fill out 50-page reports that are probably never read in their entirety. This annual exercise is disruptive and unproductive if not done properly – it is a bad overhead.  We need to focus on lowering the cost of preparing grant proposals. One of the organizations I am involved with is trying to do this by harnessing the power of technology. There is so much scope to reduce costs by standardising proposals and sharing data.  We also need to focus on lowering the cost of data collection to measure impact. Another NGO I am involved with did a spectacular job of reducing costs to a fraction of industry standards and significantly increasing the success rate of the intervention. Skeptics did not believe their numbers and so they had to spend a fortune (funded by another donor) to get the numbers validated. EI has successfully developed technologies to measure impact and collect data at a low-cost. We need more initiatives in this area.

Finally my last point was on our impatience to see results. I remember speaking on a panel organize by iDiscoveri a couple of years back where Pasi Sahlberg spoke on the Finnish education system. I asked him what lessons can India, which has 300 million kids in a broken educations system, learn from Finland, which has only 5 million people. He said two things – (1) right from the start there was equity in the system where everyone had access to quality instruction (the much-debated 25% reservation under the RTE was a major step forward in this direction) and (2) Finland took 25 years to reach where they are today. A few weeks back Bill Gates said the same when he was in Mumbai – education reform takes a long, long time. We therefore cannot dramatically change the system if we cannot think long term. We are only offering band-aid solutions.

Unfortunately governments and CSR teams want quick results. So we focus on building toilets and classrooms, instead of focusing on how we can improve education outcomes over the next generation. Of course in many parts of the country, like in the Northeast, school infrastructure is so pathetic that the basics don’t exist. Samhita recently mapped the education initiatives of 100 companies in the BSE 500 with the largest CSR budgets. 54% of the companies spent on infrastructure and learning material but only 9% spent anything on systemic change.  Of course we need milestones to track on-going progress. Yes, we will see one-off examples where excellent people will create excellent impact in the short term – but the challenge is to make these more widespread. Technology can play a large role here also.

So let’s start thinking really long term, invest in overheads to help us get there and reduce unnecessary transaction costs to help us focus on outcomes more effectively.

This is my 25th blog for Forbes India. I have enjoyed writing for them over the last three years. I have been slammed, ignored and praised. Thank you for convincing  Forbes India to stick with me. Yet!

One of the biggest challenges managers face today is the inability to delegate. I have come across some bosses who have done a fantastic job of delegating. One is Aditya Puri at HDFC Bank. His view has always been that if he needs to make decisions for his subordinates, he doesn’t need them around. Another example is Arvind Sethi at HSBC. We have had some real big fights, but he would not interfere unless I asked for help. And another was Nasser Munjee who gave me a free hand to build IDFC Private Equity.  And there is my dad, Mario de P Miranda, who mastered the art of leaving office on time and not bringing work home. He is convinced that I am a totally incompetent manager because I still take calls at all times of the day and night. Delegating never comes easy.

A couple of months ago, I came across a couple of great quotes on delegation. The first was by Vellayan Subbiah. He said that his father, MV Subbiah, often remarked, “Remember that the bottleneck in a bottle is always at the top.” This is such a great statement! By not being able to delegate, the boss becomes the bottleneck and slows down decisionmaking. I have seen so many versions of this over the years.  Organisations go into analysis paralysis because the guy at the top can’t take a decision and becomes the bottleneck.

GV Prasad of Dr Reddy’s Labs was once speaking at the Isha Foundation’s Insight programme for entrepreneurs. He was asked how he learnt to delegate and to let go. He responded by saying, “In reality, you make more mistakes by not delegating.” This was such a powerful statement too. By not delegating, he had realised that he made bigger mistakes and his team did not learn to take their own decisions.  He added that he had a great team and that one cannot tell good people what to do.

These two statements on bottlenecks are deep. If all bosses followed them they would find that they suddenly have a lot more free time to pursue other interests. And when you reach my age you realise that your most valuable commodity is time. Management guru Ram Charan, at the same Isha Foundation event, went on to talk about how one can manufacture time. He quoted the lessons he learnt from one of his former students. First, recruit people better than you. Second, make up your mind not to do three things after six months – find the people who can take this over from you. This way you create time for yourself and you can scale up your ability to perform.

So, here am I talking about manufacturing time and writing this blog in the middle of the night… how does one manufacture time so that one is asleep by midnight? I still have so much to learn from my father!

ideaImage: Shutterstock

Every year, for about 3 days, the local media writes about think tanks and their role in society. This is, thanks to the University of Pennsylvania’s annual ranking of think tanks (under their Think Tanks and Civil Societies Program).  The latest rankings were released recently and it is great that many Indian think tanks appear on that list, including two that I am personally involved with – Centre for Civil Society (CCS) and Gateway House. CCS has, once again, remained at the top of the heap amongst Indian think tanks, and remains the only Indian one in the top 50 global list. Gateway House jumped into the rankings for the first time and also featured high on the rankings of think tanks that use social media and the internet well.  Soon, all of this will be forgotten and think tanks will continue their struggle to survive and get criticized for only being ‘thinkers’ and not ‘doers’.

So, what does a think tank actually do? Across the world, decisions are being taken by various people – politicians, bureaucrats, businessmen, social activists etc. Quite often, these decisions are being made based on sentiment or incomplete data. Think tanks help bring expert knowledge to decision-making.

They provide decision-makers with reliable information. They analyze current events in a comprehensive manner and help policy makers make informed decisions about public policy. CCS has, for the past 17 years been doing just this – championing the cause of free markets, school choice and the right to livelihoods. Gateway House was set up 5 years back in Mumbai to create a platform to inform and influence foreign policy in Delhi by acting as a bridge between business (Mumbai) and foreign policy (Delhi).

The number of think tanks in India has grown in recent years, whereas globally the tribe is shrinking.  The U Penn Report blames a global hostile political and regulatory environment for this.  Governments across the world, not just in India, do not like criticism and therefore try to place restrictions on think tanks.  As citizens challenge the right of governments to have a monopoly on decision making, think tanks have an even larger role in ensuring that correct information is made available to public. We recently saw how social media played a large role in getting Narendra Modi elected as Prime Minister after the general elections that concluded in May. Think tanks have a lot to gain from growth and traction on Twitter, Facebook and other platforms, because it enables them to disseminate information faster and more efficiently. Both CCS and Gateway House host discussions on Twitter, Google Hangouts, etc.

One challenge think tanks have to deal with is fund raising.  It is easier for an NGO to raise money to feed hungry children, treat AIDS patients and teach kids. But, it is more difficult for a think tank to raise money to analyze the reasons on why do so many kids go hungry, why AIDS continues to be a threat and why our youth are not getting educated properly, despite enrollment rates being very high.

Fund raising is an even bigger problem in India, where funding for most think tanks comes from large philanthropists, government grants or international donors. The source of funding always throws up concerns about the independence of think tanks. Last year, Brookings, which consistently tops U Penn’s rankings, faced a lot of criticism about their independence because of funding from donors like the Qatar government.  In 2013, Brookings managed to set up shop in India owing to donations from many rich Indians cutting large cheques to gain a seat on the Brookings India Initiative Founders Circle. Most of these donors will not support a domestic think tank.

Today, think tanks are also caught between Action and Ideas. The U Penn report talks about how think tanks are “forced to abandon traditional methods of operation, such as dialogue and debate, and consider new methods as funders and other stakeholders in the policy process have grown impatient with conferences, forums and seminars on public policy issues.” Hence there is a need for more advocacy in effecting change, something that CCS has embraced.

For example, CCS helped set up the ‘National Independent Schools Alliance (NISA)’ to fight for the rights of 400,000 budget private schools. Many of these schools face closure because of the irrational fixation of the government on input norms under the Right to Education Act 2009 (RTE), totally ignoring educational outcomes at schools. Earlier this month, we won a significant victory when the Haryana High Court passed a judgment that no school can be shut down without the State following due process. The writ petition was filed by members of NISA. CCS also recently published a report, The 100 Laws Report, together with Vidhi Centre for Legal Policy and NPFP, outlining 100 laws that need to be repealed.  40 of these recommendations were included in the report by the Law Commission of India.

CCS also conducts a series of interactive dialogues in campuses across the country, branded Freedom Caravan. And this year, the theme was ‘Why is India Poor?’ Sometimes, think tanks have to support good ideas that many people do not like. One such example is the RTE’s 25% reservation rule for children from disadvantaged groups. CCS initiated ‘Coalition 25’ to help develop workable models to implement this rule and the first step is ‘Patang’, a project being implemented in 3 private schools in Delhi.

Last week, Gateway House hosted a Google hangout on the role and challenges of think tanks. One of the participants was Jim McGann, who is Director of the Think Tank and Civil Societies Program. Their 2014 Global Go To Think Tank Index Report, which is available online, has some very interesting insights into the world of think tanks.

There is cautious optimism about how the Modi government will look at think tanks. NITI Aayog, the successor to the Planning Commission, has been set up as a policy think tank to the central government. If we need to have a strong and thriving democracy, we need to invest in the generation of ideas and encourage the proper use of data in decision-making.  Only then, will we able to achieve what Rabindranath Tagore wrote about – “Where the mind is without fear and the head is held high … where knowledge is free … into that heaven of freedom, my Father, let my country awake.”  This is why we need more think tanks to help focus on the power of ideas, so that the Government and Corporate India can operate better.

Disclaimer – I am Chairman of Centre for Civil Society and Advisor to Gateway House

Photo: Vikas Khot

Photo: Vikas Khot

Many years ago I was introduced to Russell Peters, the stand-up comedian, by our son, Khashiff. In one episode he talked about why Chinese can’t do business with Indians. And it ends with the Chinese store keeper reprimanding Russell Peters because he was negotiating too hard, “Be a man, do the right thing!” So as we end this year, let’s explore what “Do the right thing” actually means.

A few weeks back I found myself in this green oasis of peace called the Isha Foundation. I spent  four days at their ashram near Coimbatore as a Resource Person for the annual Insight Programme, where 200 entrepreneurs and business executives showed up to get insights into management, spirituality and networking. I was pretty much clueless about what to expect, but it turned out to be a fascinating session. We spent four days listening to and discussing issues with Sadhguru, Ram Charan, Ratan Tata, GV Prasad and others. It was great and I hope I get invited back next year (Jeby, I hope you are reading this!)
Ratan Tata started off by saying that doing the right thing is what drove him and it can sometimes be tough to do so. The next day, GV Prasad also talked about doing the right thing and success will follow. The next morning we had a silent walk in the forest and I thought about this a lot during that walk.

What is the right thing? One of the 10 commandments is “Thou shalt not steal”. A call centre employee in Chicago gets laid off because her job has been off-shored to India. It makes economic sense for her company to do so. The call centre employee in Bangalore is happy, but the lady in Chicago is not; she feels that her job has been stolen from her. Suddenly the concept of what is stealing has taken a different meaning. I am sure many people in the US feel that Indians have stolen their jobs. The same way many Indians believe that the British stole our cotton and other resources by buying them cheap, shipping them to Manchester, and then selling cloth to us at high margins. Thou shalt not steal. Life is not just black and white. There are many shades of grey.

At that time I was in the midst of reading a very interesting book, “The Looming Tower – Al-Qaeda’s Road to 9/11” by Lawrence Wright. A colleague, Sanjay Shah, gifted it to me and he said that law enforcement agencies use this as a reference book to understand the mind of a terrorist. It was a fascinating read and traced some of the origins of 9/11 back to the 1967 war between Israel and Egypt. Muslims felt that God had turned against them and let them be defeated by the Jews; the only way back was to return to the pure religion. In 1979 Khomeini reframed the debate with the West when he took over Iran and specifically targeted the freedom in the West as being evil. In 1981, after Sadat’s assassination, many Egyptians were tortured in prison. Many of the victims wanted revenge for their torture. This appetite for revenge also ended up in 9/11.

Ayman Al-Zawahiri, the current Al-Qaeda head, was also arrested and allegedly tortured in Egypt at that time. The Quran prohibits suicide. But Zawahiri turned that view on its head by saying that giving one’s life in the pursuit of the true faith is not suicide and the suicide bomber will get extraordinary reward in Paradise. The jihadis who came to train in Afghanistan in the 1990s were different from those who came to fight against the Soviets in the 1980s. The earlier jihadis were men of dubious backgrounds from Saudi and Egypt. The new jihadis were well-educated, single, not very religious, and displaced. They came mainly from Europe and Algeria and found refuge in the local mosques because they felt alienated in these foreign lands.

So, back to the walk in the Velliangiri forest earlier this month. Clearly most of us believe that the suicide bombers are doing something totally inhuman and their acts are criminal and totally unjustified. There is no way, I believe, they will end up in Paradise. On the other hand, the suicide bomber believes he or she is doing the right thing. He or she believes that the West is immoral and that the Americans are controlling the Middle East and do not approve of the American support of Israel. This is their way to fight back for the true faith. So who decides what the right thing is?

The British call the 1857 uprising the Sepoy Mutiny. The Indians call it the First War of Independence. Who is right? The US, during the Vietnam War of the 1960s, indiscriminately sprayed chemicals over large parts of agricultural and forest land. The Red Cross of Vietnam estimated that 1 million people, including many children, were disabled or had health problems due to contamination by Agent Orange. Many Americans believed that this was the right thing to do and dispute these numbers.

132 kids were killed by barbarians in Peshawar this month. Their killers possibly believed that they were doing the right thing. 500 years back the Catholic Spanish monarchy started the inquisition and a lot of inhuman violence was carried out even against Catholics. Was that doing the right thing? The Babri Masjid was knocked down in 1992 and more than 2,000 Indians were killed in violent Hindu-Muslim riots that followed. Were those who demolished the masjid and slaughtered Hindus and Muslims after that doing the right thing? Are those companies that rear cattle and chickens for our food doing it the right way? Walking back and forth through history show us that life indeed has many shades of grey.

Who is to decide what is the right thing to do?  Is ‘doing what works’ the right thing? Is doing the right thing dependent on the context? Whose context, since there is always another point of view?

So as we end 2014, I leave a hard thought with you. Were the killers of the 132 kids in a school in Peshawar doing the right thing? I definitely do not think so, but who am I to decide what the right thing to do is?

air_bagsA couple of days back I read a newspaper article with the headline “Airbags will hike cost, hit sales; Cos”.  India recorded the highest number of road accidents in the world in 2013 – not something to be proud of. So the government wants to improve road safety and hike up safety norms. The UK-based Global New Car Assessment Programme reported that some of our top-selling cars are unsafe.  But companies are concerned that the addition of airbags and anti-lock braking systems in smaller cars will hike up their costs. The highly-respected RC Bhargava, chairman of Maruti said, “The growth of manufacturing will be impacted if the government decides to mandate these features across Indian car models.”

I immediately recalled a lecture I recently had on a Coursera course – “Unethical Decision Making in Organisations”. It was a fascinating course taught by two professors, Guido Palazzo and Ulrich Hoffrage, of the University of Lausanne. In that course they analyse why good people do bad things (as opposed to why bad people do bad things). They refer to this phenomenon as ‘Ethical Blindness’.  The discussion on the additional cost of airbags reminded me of a case we discussed on the course about the Ford Pinto, one of the most controversial cars manufactured.

The background of the case is as follows. Ford produced a car in the ’70s called Pinto. This was a time when there was a global oil crisis with prices shooting up and fierce competition from Volkswagen and Japanese car manufacturers. The Pinto was the baby of Ford’s CEO, Lee Iaococa, and was meant to turn around the company. The mandate was clear – get the car produced ASAP. There was severe time pressure for an extremely complex production. But there was a design flaw – the fuel tank was at the rear of the small car. So there was a risk that if someone banged the car from the rear, the car could explode. The smart financial analysts at Ford scurried to their calculators. They did a cost-benefit analysis, comparing the cost of repairs ($137 million) vs the possible cost of settlements for deaths and injuries ($50 million).  The infamous ‘Pinto Memo’ analysed each cost – $11 per car to repair it, $ 200,000 paid to each dead victim, $67,000 paid to each burn victim, etc. Hence, no action was taken because it made cold-blooded financial sense to let people die in a car with a design flaw. Ford finally stopped production after a 1978 case where three teenagers died when their Pinto exploded in an accident.

The argument by the Indian car manufacturing industry today is the same – the cost of lives is less than the cost of improving the safety standards of small cars in India. The Pinto story became a symbol of the cold-hearted profit maximisation attitude of companies. Unfortunately, after 40 years we hear a repeat in India.

Professors Palazzo and Hoffrage ask why did Ford do all of this? Why did they not stop this high risk of explosion? The people at Ford were not bad people. Many of them were good. And yet the company continued to produce a faulty car. The team at Ford operated in a tough environment. Iacoca was a tough boss… the Pinto was his baby… there was a lot of pressure on financial numbers. One of the engineers on the call-back team (the team that decided when to call back a car to fix the problem) was Dennis Gioia, who later on became a famous management professor. He wrote a story on his experience. He said that after he had left Ford, he argued that Ford had a moral responsibility to recall that car. But while he was at Ford, he perceived no compelling reason to recall that car.

In the ’70s, there was no strong focus on car safety. People believed that accidents happened because of bad drivers and bad roads. This sounds so much like us in India today, 40 years later. Gioia said that there was a clear standard operating process to call back the car – (1) how many cars have this problem and (2) is there a clear traceability. Pinto had a problem – they knew that. But they were under tremendous time pressure and could not get conclusive evidence to trace the design flaw to the deaths. Remember the Pinto was the baby of the CEO of the company. And there was an oil crisis. And competitors were aggressively gaining market share. Iacoca used to famously say that safety did not sell. Crash tests became obligatory only in 1977; the Pinto came out in 1970. This situation made the good people at Fiord not realise that they were doing something highly unethical. Palazzo and Hoffrage call this unethical blindness – the context they were in blinded them to the fact that they were unethical.

The manufacturers of small cars in India can learn a lot form Ford’s Pinto episode. From what I read in the papers they are experiencing the same form of ethical blindness (it is unfair to single out Bhargava of Maruti Suzuki only; but he was the one quoted in the press) …. some day they will realise that their argument was totally unethical.

An electric pylon carrying high tension wires is pictured in front of a residential complex after electricity was restored in New Delhi

At a meeting prior to the Maharashtra assembly polls, I heard Piyush Goyal, minister of state for power, coal and new & renewable energy, say that his government will ensure that there is 24×7 power by 2019. My initial reaction was that of cynicism because I have heard so many tall claims from the government since 2002 on how the power situation will be improved and India will be a power-surplus country. So I probed further. The devil is in the detail, and in keeping with the ‘let’s-focus-on-the-small-things-first’ strategy of the Modi government (No, I am not drinking Kool-Aid), it may happen. Let’s look at four measures the government is focusing on. Some of my figures have been sourced from government data published under the title “Achievements during the first 100 days” by Goyal’s ministries.

Fix the fuel supply to restart stranded capacity and reduce stressed assets in the banking system by increasing private participation in coal mining. The coal allocation scam when the UPA government was in power and the ‘stupid’ (for lack of a better word) mass cancellations of coal mine allocations by the Supreme Court were disasters for our country. So, we quickly need to put this behind us, avoid unnecessary legal hassles, and get the private sector back into the coal mines so that we benefit from all this coal. The government, on October 20, allowed private companies in power, cement and steel to get their own coal mines through e-auctions. This hopefully clears the mess created by the Supreme Court and it is heartening to read reports that the Congress will back this ordinance. Let’s also get new technologies from overseas to mine this coal more efficiently. We also have 24,000 MW of mothballed gas-fired power plants, thanks to the fact that we haven’t got gas. The KG Basin situation has to be fixed and the government is taking a hard stand on this. Similarly, gas imports will be needed. The banking sector will also look better once these stranded power assets start generating cash flows.

Also, there is the need to double the capacity of Coal India. This is the big elephant in the room. About 20 years ago, I spent many evenings at Coal Bhawan in Kolkata with Partha Bhattacharyya when he was chief manager (Finance), discussing foreign exchange rates. Since then, Partha became chairman and Coal India went public. But the company still operates largely in a time warp. Coal India has committed to doubling production to 1 billion tones by 2019 (CAGR of 18 percent). That will be amazing, if the target is achieved.

Sepate feeder lines are essential too. Gujarat reportedly has 24×7 power because the state has separate feeder lines for farmers. This way, customers who pay full rates can have separate feeder lines which ensure there is continuous supply of power. Why should someone who pays a high rate of Rs 7 a unit have to daily spend Rs 17 a unit to generate power from a diesel genset when there is no power? Hopefully, clear power segregation, metering and budget allocations in states will also facilitate proper open access where wheeling charges are not absurdly high.

Renewable energy is very crucial as well. Wind and solar rates are falling fast due to better technology and economies of scale. It takes very little time to set up a wind or solar farm compared to setting up a coal or gas power plant. The government is committed to increasing the number of wind and solar plants to ramp up capacity fast. The government has restored the accelerated depreciation benefit for wind power developers and has amicably settled the anti-dumping duty dispute for the solar industry. The government is also committed to maximising the potential of hydro power by ensuring that hydro projects in the North and Northeast get commissioned at the earliest. This is another example of focusing on low-hanging fruits.

Of course, there are other issues to be fixed like quickly increasing investments in the transmission sector, cutting down T&D losses and increasing energy efficiency. Lower interest rates will also help. The final problem that needs to be fixed is tariff–cross subsidies make rates ridiculously high. In most parts of the world, industrial tariffs are lower than residential rates. India is a notable exception. In order for “Make in India” to succeed, we need lower tariffs for the industry.

This means that $250 billion is needed to be invested in the power sector over the next five years… a ‘powerful’ dream? If we continue to focus on small things and execute properly, it is possible that the rest of India can enjoy what we take for granted in Mumbai–24×7 power. It is interesting to see a quote of Milton Friedman in a Government of India book, “Judge a policy by its results, not by its intent.”

Piyush Goyal will be judged in 2019 on how successful he was in taking 24×7 power from his home in Mumbai to the rest of India.

Combination picture of 2014 Nobel Peace Prize winners, Indian children's right activist Kailash Satyarthi and Pakistani schoolgirl activist Malala Yousafzai

Kailash Satyarthi and Malala Yousafzai (Photo: Reuters)

A year back I only vaguely knew of Kailash Satyarthi and the Bachpan Bachao Andolan (BBA).  Last year the doorbell rang at the home of Sapna Bajaj Sawant, my wife’s old college buddy. There was a young boy at the door looking for work. Sapna told him that he should be studying. He said that he needed to work to support his family. Sapna asked him to come back the next day. She then called my wife, Fiona, to ask her how this kid could be helped and where this kid can be schooled. The kid never came back. Fiona and I talked about what we would do in such a situation. I didn’t have clear answers. That evening I received an email from Leaders Quest regarding their Pow-Wow to be held a few months later in Jaipur. We were given a list of non-profits and we had to select one to spend the day with. My eyes immediately fell on an organization that worked on putting an end to human trafficking and child slavery. It described Bachpan Bachao Andolan (which means ‘save the childhood’) and also mentioned that we would be able to interact with an orphan from Nepal  who was earlier a rag picker and pick pocket and who now volunteers with BBA. Maybe I could find answers for Sapna (and myself) if I spent a day at BBA.

That’s how I got to spend time last October with Kailashbhai, his wife,  Basu and the rest of the team at Bal Ashram. It was fascinating to hear some of the stories these young kids told us. One boy worked as a slave in a sweatshop in Delhi after he was sold by his family. They would be hidden when inspectors showed up. Another kid, who snuggled up to me later, talked about how he begged on the streets of a town in MP. After talking to us, one kid looked us in the eye and asked, “What can you do for us?” I struggled for an answer; I was there to get answers to my questions, not to answer such tough questions. I gave a bullshit response, which must have been so bad that I can’t even remember it today. After we stewed in our embarrassment for a while, the boy said, “If you really want to help us, the next time you see a kid being forced to work and not given a chance to study, complain to the authorities. That’s how you can help us” He did not ask for anything for himself… all he asked for was that we help rescue other kids who are still in slavery. That blew my brain… to have lived such a crappy life and only care about other helping kids in similar situations. There was a lesson in humanity that is not taught in a classroom.

Before that session Kailash had told us the BBA story. I have met him a few times since then and have always been enthralled with his stories about rescuing kids, being locked up in remote towns and railway stations by conniving policemen, being beaten up, crossing the world with the Global March Against Child Labour, etc. Enough will be written about him and his work over the next weeks, so I won’t detail them here. I asked him my question and he said that it is not wrong for kids to work for economic reasons, as long as they are treated properly and given a chance to get educated also. Slavery, bonded labour, inhuman conditions can’t be accepted.

We then heard Basu Rai’s story… orphaned on the streets of Kathmandu at 5, joined a street gang at that age, became a beggar, learnt to use a knife after getting beaten up as a pickpocket, rescued by CWIN of Nepal at 8, on an airplane to Manila at 9 to represent Nepal at the Global March Against Child Labour. That was when he met Kailashbhai for the first time. He then traveled alone from Nepal to Delhi at the age of 10 and landed up at Kailash’s home. Along the way Basu also became an entrepreneur, training people for the BPO industry. And he is only 25 years old today. Basu was looking for a publisher for his life story and Renu Kaul Verma of Vitasta, Papri Sri Raman and I subsequently helped him realise his dream of publishing his life story. However, his story doesn’t end here and he still has to craft the rest of his life. You can order a copy on Amazon or Flipkart. I also learnt how tough it is to sell a book through conventional book stores.

So why is Kailash a stranger in his own land? Maybe because there are so many Kailashes here who are battling exploitation in India. I only got to know of him a year back and most of the country heard of him for the first time last Friday when he was awarded the Nobel Peace Prize along with Malala. Everyone knows of Malala, thanks to the foreign media. In India the crab mentality ensured that people did not acknowledge the great work he is doing. I haven’t read many congratulatory comments from politicians and businessmen over the past two days and people remark to me, “You are the only person we know who knows of him!” Kailash received many global awards before the Nobel Prize, but hardly anything in India. Now the Indian awards will flow. Kailash struggled for funding for BBA and the Global March. Now funding will flow. At the age of 60, new doors and opportunities will be opened. That’s the power of the Nobel. I possibly will find it difficult to meet him since the whole world wants to be seen with him now. When will we in India appreciate the hard work being done by people focused on human rights violations – slavery, domestic violence, mental abuse, etc? When will companies and philanthropists fund such ventures also, instead of only funding education (and now sanitation, after Modi brought the issue to centre stage)? When will India support vital, but neglected, human rights issues when the help is urgently needed, instead of jumping in only to keep the Prime Minister happy or because the Nobel Prize Academy has rewarded this work?

I am happy that I knew Kailash when he was an unbranded giant. This is the beauty of accidents… if it was not for Sapna, Leaders Quest, Basu Rai, etc. I would not have known Kailashbhai and I wouldn’t have been exposed to the cruel and compassionate world of child labour and slavery.  Cruel because inhuman humans destroy the lives of these kids and compassionate because heroes like Kailsahbhai and his team at Bachpan Bachao Andolan work 24X7 to save these kids.

So please get involved with these causes, because you shouldn’t have to ask yourself again, “Who is Kailash Satyarthi?” when the next Kailash gets rewarded by an international organization.

(Disclosure – I am an Advisor to Leaders Quest / CORO India)

Reuters

Reuters

I have been experiencing something very interesting over the past couple of months: I have been involved in various discussions about the virtues of economic freedom and capitalism! And I find that strange because capitalism got thoroughly bashed up after the 2008 global financial crisis. Focus moved from economic freedom to the pathetic state of the poor. The fact that there was a strong positive correlation between increased economic freedom and poverty reduction was forgotten in the excesses of recent capitalism. And when the late Gary Becker said that free markets generally do a good job, while governments generally do not do a good job, only a few people cared to listen. The Chicago School stood discredited. Forbes magazine, which celebrates capitalism, must have also gone through a tough time!

First of all, I spoke at a few sessions of the Freedom Caravan, an interactive dialogue with young people organised by the CCS Academy to explore pressing questions that affect our economy. We discuss what the foundations should be for a free, prosperous and just society. This year the discussion was on ‘Why is India Poor?’ During these 3-hour sessions at various colleges across the country we encourage participants to think critically and freely ask questions so that we all become better agents for change.

We start off by discussing the various traditional reasons given for India’s poverty: Population, education, resources, culture, colonial legacy, corruption, democracy, size, climate, globalisation, etc, and go on, by using data, to analyse why each of these are, at best, only half-truths. We then discuss the role of institutions and policies in determining economic success and, by looking at data again, we talk about the role economic freedom plays in creating policies and institutions that reduce poverty and create economic wealth.

In the past 60 years we have been able to see some real natural experiments on how economic freedom has created prosperity and how the absence of economic freedom has resulted in misery—just look at the two parts of Germany and Korea after they were split up. We conclude by looking at data from across the world compiled by the Fraser Institute and the World Bank.   For example, countries with more economic freedom tend to grow more rapidly; the share of income earned by the poorest 10 percent of the population is unrelated to economic freedom; and the amount of income earned by the poorest 10 percent of the population is much higher in countries with higher economic freedom.  You can download a copy of the book for free from http://ccs.in/liberty-society-series-1-why-india-poor.

Then, about a month ago, I connected with a group of professionals who are keen on ending the socialist mindset and bureaucratic controls that prevail in our country. They believe that only economic freedom can make India an economically strong country where poverty is considerably reduced. Most of the brainwashing in favour of socialism starts in the classroom, and students do not get a chance to freely debate the merits and faults of various economic frameworks. Most debates on this issue do not use data and it is very easy for the socialism argument to be adopted by politicians and voters. This group of professionals seeks to use facts and figures to back its arguments. How do we teach voters that accepting freebies does not help them? In Tamil Nadu, for example, the government gave away free TVs. India Spend, India’s first data-based journalism initiative, reported a few years ago how thousands of TV sets were given away to villages that did not even have electricity. Shouldn’t the state government have focused on creating more capacity for generating and distribution of electricity instead?

Finally, and this resulted in me writing this blog, I attended a session recently with Bill Gates, who outlined three areas of focus for India: Health and sanitation, education and capitalism! He described how capitalism creates the capital that is helping improve the quality of health and education in India. Most NGOs raise money from foundations and philanthropists who made their money because of capitalism and economic freedom.

The time has come to move the argument from wealth inequality to reducing poverty. Instead of focussing on how the rich are getting richer (the Indian crab mentality) shouldn’t we focus on getting the poor out of poverty? How do we create a larger pie where everyone benefits, as opposed to either creating a larger pie where only a tiny section of society benefits or repeatedly slicing the same pie so much that there is no incentive to work hard? When will people learn that it is better to teach a person to farm than to dole out food every day (I thought that the fish and fishermen analogy wouldn’t fly with the vegetarians!)?

I will end with one of my favourite poems, ‘Where the Mind is Without Fear’ by Rabindranath Tagore. Tagore did not specifically mention economic freedom in that poem. But the freedoms that he talked about—knowledge, speech, hard work, debate—are all components of economic freedom… “Into that heaven of freedom, My Father, let my country awake.”

(Disclosure – I Chair the Board of Advisors of the Centre for Civil Society).

dialog

Image: Shutterstock

I was in New York recently and met the United Nations’ special representative for the naming dispute between Greece and Macedonia. This row began in 1991 when Yugoslavia was split and since then, negotiations have been going on for over 20 years. To me, a 20-year dialogue indicates that the talks are a total failure. However, the representative looks at it very differently.  “Have you read about this dispute on the front page of a newspaper? Have you read about it on the back page of a newspaper? Have people died because of it? The answer is ‘no’ to all these questions. Hence, it is a successful negotiation!” It is very likely that neither side wants to give in because it may be political suicide, but as long as dialogue continues, there is continued peace and trade.

This got me thinking about the importance of continued dialogue. I recently came across a private equity deal where lawyers are battling it out and neither side is talking to each other directly. As a result, the trust deficit (which I have written about earlier) has widened even further. If both sides do not talk to each other directly with or without a trusted intermediary/negotiator, how can a dispute be resolved without ending up in court where a judge will make a decision and lawyers will get richer?

People need to talk. Sometimes verbal diarrhoea may actually help! About a decade ago, I attended one of my most interesting courses ever-Negotiations-at the Indian School of Business, taught by a couple of professors from overseas. We discussed the importance of preparing for a negotiation (one has to know one’s facts) and the realisation that we may actually not know what the other side is thinking (we only can predict or guess about it). And only by continued dialogue can you and the other side work towards a settlement. Of course, for strategic reasons, one side can walk out of the dialogue, but a permanent stalling cannot help.

Earlier this week, I participated in a Google Hangout at Gateway House on Chinese President Xi Jinping’s upcoming visit to India. It was very interesting to hear KJM Varma, China correspondent for PTI, say that the Chinese media is talking a lot about this visit; this is possibly because about 80 percent of China’s recent investments in India have gone into Gujarat when (Narendra) Modi was chief minister there. After the hangout, I was discussing the Macedonia-Greece issue with two of the Fellows at Gateway House–Akshay Mathur and Sameer Patil. Akshay spoke about how the 16 rounds of border talks between China and India had resulted in relative peace for about 20 years until last year’s incursions in Ladakh. Sameer remarked that dialogue ensures that other stuff continues. Sometimes dialogue for the sake of engagement ensures that there is less violence, though it may not actually end the dispute. And over a period of time, as a new generation takes charge, the bitterness wears off. Last year, I spent a couple of weeks in Nagaland and Manipur and met a few Nagas, who are in their 70s and 80s, and their children. The older generation still does not want to settle, but the new generation is tired of all the fighting and wants peace. And if the politicians do not screw it up, we could have peace there soon.

Of course, in private equity, we cannot wait for 20 years to settle a dispute through dialogue! We need to accelerate settlements. But that acceleration cannot be done through our court systems alone. It needs continuous dialogue as well. At IDFC Private Equity, we never went to court for a dispute with any of our promoters. This was mainly because we strongly believed in maintaining dialogue; especially when things got tough. Remember what Sameer told me, “Dialogue ensures that other stuff continues.”

 
 
Luis Miranda
Luis Miranda started investing in India's infrastructure before it became fashionable. He started IDFC Private Equity and was earlier a part of the start-up team of HDFC Bank.
Luis has invested in and has been on the boards of companies like GMR Infrastructure, Delhi International Airport, Gujarat Pipavav Port, Gujarat State Petronet, L&T Infrastructure and Manipal Global Education.
Today he is involved with various non-profits like Centre for Civil Society, SNEHA, Human Rights Watch, Gateway House and Samhita Social Ventures. Luis graduated with an MBA from Chicago Booth.
 
 
 
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April 16, 2015 13:16 pm by Swachh Bharat: It’s time to see some impact | Samhita
[...]  Read the full article here [...]
April 16, 2015 09:55 am by Luis Miranda
Thanks, Sahu. Absolutely right - what's the point o building something that no one wants.
April 15, 2015 08:53 am by Sandeep Sahu
A good read wherein it specifically addresses the issue of acceptability of toilets by the very people who are supposed to use it
April 13, 2015 13:23 pm by Col Pankaj Goel
I am also involved in the field of education and my son Prachur is having revolutionary ideas on the subject. He is from IIT Bombay and wants to do some great interventions for the society in education and skilling. In fact I will be pleased if you can connect me to my counter part at Manipur. I am ...
April 13, 2015 10:05 am by Luis Miranda
Padmanabhan, thanks for the feedback. I just connect the dots ... the amazing work is being done my the armies out in the field.