Luis Miranda
Luis Miranda

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)



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

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).


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.”

Photo: Reuters

Photo: Reuters

A couple of weeks ago, I was in Chembur, at one of the first slum rehabilitation buildings, sitting with some members of CORO, an NGO which works on developing grassroots leaders across Maharashtra. We were discussing with the CEO of McGraw-Hill Education the work that the young team was doing on the Right to Pee (RTP) campaign. The senior management of the company was in India on a quest organised by Leaders’ Quest.

The challenges that women face when it comes to urinating are plenty, and the more I talk to people, more shocking things emerge. At many places, women go in groups to pee because they feel unsafe going alone. At other locations, especially in rural areas, worms and insects like leeches enter their urinary tract which can be extremely painful. Some women deliberately do not drink enough water so that they don’t have to pee often, resulting in urinary tract and other infections. At public toilets, while men can pee without paying a penny, women have to pay.

We asked the team why it does not agitate more, why does it not block the streets and resort to other forms of agitation to ensure their voices are heard. A young lady said something that still resonates in my mind because of its profoundness. “We need to change attitudes. If we force them to build toilets, the municipality will build toilets that are non-functional, which will be poorly maintained and unhygienic to use.  So unless people have the intent to build proper toilets, we will have to continue with our campaign for the Right to Pee,” she said.

Supriya Sonar, RTP activist from CORO, who has been working on this campaign for over three years, taught me an important lesson that rainy morning in Chembur. Quite often, we frame laws and rules to achieve a certain social objective. But in reality, nothing changes. That’s because there is no intent. All that the people are concerned about is ‘ticking the box’. So audit committee meetings and board meetings get over in 30 minutes.  The box is ticked and there is no real intent to hold a proper meeting. Similarly, we believe that just by attending school, our children become educated. And we see that in infrastructure too. A Land Acquisition Bill is made into a law, but it doesn’t help land acquisition. Committees were set up by the previous government to fast-track projects, but people in the department say not much happened because there was no real intent by the Congress to expedite the projects.

Dowry was abolished when dowry payment was made illegal in 1961, but dowry harassment and demands still continue. The caste system was abolished over 60 years ago (discrimination against lower castes is illegal under Article 15 of our Constitution), but the system still continues in cities (just check the matrimonial columns), and even more in villages. Similarly, decades of affirmative action hasn’t dramatically changed the lives of many people. On the fringes there have been success stories, but not for all communities.

Yes, it is important to enact laws to force social change and enforce ‘proper’ business conduct. But that is only the first step in the long battle to effect change. The Right to Education and the Right to Food legislations will remain empty promises unless there is serious intent to help the uneducated and the starving. This is why voters voted for (Narendra) Modi – they believe that he has serious intent to bring about change.

Supriya taught me something valuable… unless we change people’s attitudes, we will not be able to see change. And changing attitudes is a lot tougher that enacting laws.

Image: Shutterstock

Last weekend the University of Chicago opened its Center in Delhi. This is the first major US university to set up such a facility in India. When I visited the center while it was being built, I was amazed at its location. It is in a building called Capitol Point at Connaught Place. Imagine an office in the centre of Delhi with lots of affordable car parking and just 15 minutes from the airport!

Capitol Point is an interesting joint venture between DLF and the New Delhi Municipal Corporation (NDMC) and houses multi-level car parking. This is the most sophisticated car parking facility of scale that I have seen in India. It has 11 levels with 8 levels of car parking, 2 levels of commercial space and the basement is a parking bay to drop off and collect your car. The commercial space is where the University of Chicago and other offices are located.

The parking experience is amazing. You drive into the basement, after the mandatory security check, and get your parking ticket from a machine that also takes a picture of the car before an automated boom barrier lets you into the basement. You then drive your car onto a pallet in the basement and get out of your car. Your car is automatically taken up to one of the parking levels and automatically parked till you return. The car park uses pallet-based technology on conveyor belts. The car engine is shut off when you drop off your car in the basement – so there is no pollution on the 8 levels where the cars are parked.  To retrieve your car you take your ticket to the air-conditioned lobby in the basement where a machine lets you know your total bill which you pay at a counter (the payment part has not yet been automated). While you wait for your car to come down you can sit in air-conditioned comfort, where you will be notified on a screen when your car is ready for you in the basement. The average collection time is less than 5 minutes. You then get into your car and drive out. If you have a driver, your driver can wait the entire time in the same lobby and can watch television, instead of sitting in the hot sun on the road. What an experience! All for just Rs.10 an hour.

Now here comes the sad part. The car park is hardly used by people in Delhi! Owners and drivers prefer to park on the road, possibly paying a higher rate or parking for free and blocking traffic, while their cars get heated up under the sun. What a shame. When I went there once I asked my driver to park in the car park and he was amazed at the cost and the experience. I asked him why he had not gone there before and he said that he wasn’t aware of the car park. So I hope that DLF and NDMC start advertising more about this excellent infrastructure that is priced so reasonably. The cost to park here is a fraction of what it costs in other major cities across the world.

There is more to come… In less than a minute one can walk from the University of Chicago Center in Delhi to the Shivaji Station of another state-of-the-art infrastructure project – The Delhi  Airport Metro Express. I have used this Orange Line many times and it is the most efficient way to get to the airport from the centre of the city. Once it took me just 45 minutes from Old Delhi to the airport during evening rush hour by using two of the metro lines. Last Monday I had a huge suitcase which was not difficult to roll from Capitol Point to Shivaji Station, take it on the escalators (which work), get it scanned and get onto the metro. In less than 15 minutes I was at T3 of the Delhi airport at a cost of only Rs. 120. The ride is extremely comfortable and the quality of the compartment and the infrastructure (including fully-automated ticketing machines) are just like the Hong Kong airport express and the Paddington Express in London. Yes, there were delays in getting this started and it had to be shut down for a while after it started for technical and commercial reasons. But this is by far the best way to get into Delhi from T3.

And here comes the sad part, again. Not many people use it. Maybe ‘sophisticated’ Delhiites can’t be seen talking public transport. Smart commuters from Mumbai tell their drivers to wait for them at one of the stations and thereby escape the crazy Delhi airport traffic. All for a fraction of what it costs in Hong Kong and London.

This finally brings me to a Reuters report that I found on the website of Tata Power some time back – “Counting the Cost of India’s Blackouts.”  This is an excellent note that reflects the sad state of infrastructure in India. To quote from it, “Is it better to pay more money for more electricity, or keep prices low and look forward to blackouts that will conk out offices, factories and homes in India? … Indian politicians must therefore strike a balance between allowing the private sector to make money, while at the same time protecting the interests of customers (and voters) in a country where hundreds of millions live below the poverty line … Is it better to have state-run pot-holed roads, or have swish six-lane highways that charge a toll that becomes unaffordable to some?”

I hope people in Delhi and the next government are listening.


Many months ago, I attended a discussion at the Observer Research Foundation on the future of the Mumbai racecourse at Mahalaxmi. It was an interesting discussion. There were many proposals presented on how one can develop that open land into a lovely green space which all Mumbaikars can enjoy. Today, people can walk or run around the racecourse track during certain times of the day and enjoy total peace away from the noise and pollution of Mumbai. A few years ago, when our daughter was sitting for her examinations at her school in Tardeo, I would go for long walks at the racecourse around 9 am while she wrote her papers. It was so peaceful.

The 99-year lease to the Royal Western India Turf Club (RWITC) expired last summer. In May 2013, the BMC decided against renewing it. A part of the 226 acres is owned by the BMC and a larger part is owned by the state government. I do not know where the lease renewal decision is stuck at the moment, but it clearly has been forgotten by the media. I thought that the proposal to build a garden of international standards at that site was an excellent idea and some very interesting proposals were presented.

However, the underlying tension in that room related to the sincerity of the government in actually retaining that open space for the citizens of Mumbai. People were sceptical that the government would actually build a garden, let alone build one to international standards. There was a fear that real estate developers would grab parts of the land and the area that would be finally available to develop a garden would be much smaller.  I left the room with the belief that we should renew the RWITC lease—this way all of us would at least be able to enjoy a part of this open space for most parts of the day—but it finally boiled down to a lack of trust in the government on whether it would keep its commitment.

It is this trust deficit that is hurting public policy today. Citizens do not believe that the politicians and bureaucrats work in the interest of the citizens. Lobbies, like the real estate lobby in this case, can adversely impact our interests. And the recent corruption scandals have seriously widened this trust deficit. This is the deficit that the Aam Aadmi Party very successfully exploited in Delhi. But does that mean that all politicians are crooked? Does that mean that all bureaucrats are crooked? Does it mean that all policemen are crooked? This is what the public seem to believe. I do not think so. Yes, there are many people in public service who have forgotten the importance of the words ‘public’ and ‘service’. So even if the government wants to take a step in the right direction, people doubt it.

And this trust deficit has made decision-making difficult in the government itself. Government officials cannot offer a contract to someone who possibly has the best product but not the cheapest price. Contracts have to be bid out and must be awarded to the lowest bidder. This is because there is a trust deficit within the system—people assume that a contract has been awarded bilaterally because someone has been bribed. Of course, open, transparent bids have a lot of advantages. However, in many cases, the contract will be awarded to the lowest-priced contractor, who will do a shoddy job or come back with repeated cost escalations.

Take a look at the existing domestic terminal in Mumbai. It was the last major contract done by the Airports Authority of India before the airport was passed on to GVK to manage. It looked lovely, but, within a few months, we all noticed the poor quality of material used. The new Mangalore airport has a similar challenge—lovely design, but poor quality material—all because the L1 process has to be followed to avoid persecution by the dreaded 3 Cs—CVC, CBI and CAG.

This trust deficit does not only exist between the government and employees and citizens. It is found everywhere. Cricket, or example. The betting mafia has given a bad name to the game. If someone drops an easy catch fans say “paisa khaaya” (the fielder has been bribed). Just like when a batsman gets out for a low score.

And this trust deficit gets into our own homes. So, many times, we come across husbands and wives quarrelling on silly matters. Or mothers-in-law over-supervising their daughters-in-law. Or kids not being allowed some freedom.

How does one overcome this trust deficit in our lives? In the public sphere there are institutions that are supposed to protect us, like the judiciary and the media. Unfortunately, even some of these have lost the trust of the citizens. And how do we overcome this trust deficit in our own personal lives?

I have three suggestions. The first is open transparency (as opposed to ‘fake’ transparency). For example, if there is public transparency on how tariffs are being set by toll operators, it is possible that the public will stop supporting the absurd destruction of toll booths by the MNS. It will also bring back trust in PPPs. But there have to be boundaries for openness—otherwise the trust deficit leads to fears of persecution by vested interests or the 3Cs.

The second is open communication.  If people are open with each other and communicate properly, the trust levels will improve.

And the third is that we stop being so suspicious and stop seeing conspiracies in every situation.

Until then, the trust deficit will continue to eat away at our faith in public and private institutions.


Prof Arvind Panagariya

A few weeks back I attended a talk by Prof Arvind Panagariya of Columbia University, hosted by Gaja Capital. And I loved it. After a really long time I heard someone in India talk about the role of markets in reducing poverty. Our colleges are filled with socialist teachings on the subject and we seem to trap our students in a time warp. So it was so refreshing to hear Prof Panagariya. He talked about the need to grow the pie in order to redistribute wealth … if we only have poverty then there is not much wealth to redistribute. He added that the reduction of poverty is more important than the reduction of inequality.

A few days before that I had met a consultant who had recently majored in Economics from one of the leading colleges in India. When she was still in college she had attended a course taught by a think-tank that I am associated with, Centre for Civil Society (CCS). CCS, was set up by Parth Shah 16 years back to open the minds of young Indians … to teach them about public policy … to give them an opportunity to connect classroom theory with practical work … to highlight the importance of making decisions based on data. And this young lady said that she enjoyed the iPolicy sessions of CCS because they discussed a very different type of economics from what she was taught in college and the theory was validated by experiential testing. I recalled my college days in Mumbai.  I was taught that the father of economics was Adam Smith and that John Maynard Keynes was God. That was it – no mention at all about economic theory after Paul Samuelson.  I then went to the University of Chicago and was exposed to a branch of economics that I had never heard about in Mumbai. I was introduced to names like Milton Friedman and was taught by Nobel Prize winners like George Stigler and Gene Fama. Thirty years later the situation is the same in our colleges, with a small tweaking … maybe one part of one paper over 4 years would talk about ‘fresh water’ economics. The developments in Economics over the past 30 years seem to be irrelevant in India.

I recently participated in a discussion on philanthropy with Rohini Nilekani and she talked about how we should use markets as a force of good in philanthropy, especially since a lot of recent wealth was created by entrepreneurs like Azim Premji and the team at Infosys, thanks to the role of markets.

Unfortunately after 60 years of independence we are still brainwashing our students that socialist policies will get our country out of poverty. So I asked Prof Panagariya how can we get more Indians aware about the role of markets in economic development and the reduction of poverty. He said that the problem lay with the faculty in our colleges. Those who are market-inclined either don’t get teaching positions because their ideology clashes with that of the rest of the faculty or they decide to take up corporate jobs. As a result, we have the same antiquated knowledge being taught over generations in our classrooms by so-called development economists who fail to realise that the world has changed around us. I have still to see the curriculum of a top college in India devote sufficient attention to new concepts like the Chicago School of Economics, the Public Choice School of Thought and Behavioural Economics. And this gets compounded when the faculty invariably comes from former students of the same college. This inbreeding has to stop so that students get exposed to new concepts.

I am not arguing that one theory is better than the other – all I am saying is that students need to be exposed to different schools of thought. And students should be encouraged to debate these theories and get hands-on training in economic policy. At Chicago Booth the faculty consists of people like Gene Fama and Richard Thaler who are on opposite sides of the efficient markets hypothesis. We need to see such intellectual tolerance in our campuses in India. About a year back I spoke about the role of markets to a bunch of post-graduate students at Manipal University. I felt like a slave in Roman times being fed to the lions. We argued a lot and most of the students felt that I was a total idiot to talk about crazy concepts like the importance of incentives and competition. I ended by saying that I wasn’t there to brainwash them that markets represented the Holy Grail, but to expose them to other ideas and let them debate these ideas amongst themselves. Their professor, Sundar Sarukkai, subsequently told me that there was fierce debate on my talk after I left. Mission accomplished.

I remember attending a 2-day seminar in Delhi a couple of years back where faculty of Delhi University, JNU and the University of Chicago got together to discuss the future of the study of humanities. One particular session stood out – a presentation by a professor from Delhi on research being currently done in Indian universities. Nothing in her presentation was backed by data and we instead discussed frivolous issues. It was a fascinating couple of days which highlighted the lack of academic rigour amongst some of the leading faculty in Delhi and the total disdain to look at what the data says. Which is why Bhagwati and Panagariya’s recent book, ‘India’s Tryst With Destiny’, is great – they use data to debunk common myths about India’s journey over the past two decades. For example, after markets took over from the state in 1991 poverty has declined even for scheduled castes and tribes, growth has gone up, jobs have been created and health and education has improved … this is, of course, only if you want to look at the data. Panagariya is also a supporter of education vouchers and cash transfers.

I asked my former Chairman, Dr. Vijay Kelkar, why data is largely ignored in public decision making and he paraphrased the sorry state of affairs with this lovely quote of leaders in public policy – “Don’t confuse me with the facts.” Dr Kelkar also reminded me of the famous quote of Prof Raj Krishna, of the Delhi School of Economics – “India’s policy makers are knowledge proof.” So is the media.

So those of you who were brought up on a heavy diet of Keynesian economics (like I was) and want to take a walk on the wild side, sign up for “Are Markets Moral?” (Jan 4-5 in Delhi; or the Asia Liberty Forum (Jan 7-9 in Delhi;

Have you recently been asked a question that you struggled to answer? I was in that situation a few weeks back. I was attending the 2013 Leaders’ Quest Pow-Wow in Jaipur. People from all over the world got together at the fabulous Samode Bagh and Palace to  push ourselves as we discussed issues as diverse as  leadership, ‘what really matters’, moral courage and the lost art of dialogue and also meet some great NGOs, like Bachpan Bachao Andolan, operating in and around Jaipur.

So here I am sitting with a smaller group of people from England, Brazil, Palestine, China and Israel on a Sunday evening when bang comes the question, “What is your dream?” Rene, who asked me that question, grew up in Ghana and now lives in London where he has had a fantastic career. “What is your dream?”

I did not know what to answer. And it bothered me because I have always been a dreamer and have always had dreams of doing great things. Often I have preferred living in my dreams than in reality because my dreams were more interesting.

“What is your dream?” I struggled to give a half-baked response and told my group that this question had stumped me and I was not happy that I couldn’t have a proper response. Maybe it was the excessive drinking the previous night at a friend’s party in Bandra that had made me incapable to dream at that moment.

The next four days were a mix of interesting introspection, deep discussions, random walks through villages, some great meals in exquisite locations and a trip to spend a day with kids who were rescued from bonded labour. I met some fascinating people, including Basu Rai, who at the age of 5 found himself orphaned on the streets of Kathmandu. I was introduced to an NGO called CORO that works at grassroot community change in Maharashtra. I had long conversations with a lady who faced death threats after publishing a book on Islam and is now weary. We discussed the serious challenges facing humanity. I learnt about life in Palestine. I learnt about the challenges kids in Brazil faced. I met an American who was going to spend 6 months looking after the dying in Kerala. I was reminded once again that India may be poor economically, but we are rich spiritually and emotionally. We talked about ‘active hope’. But I couldn’t find my blasted dream. Does one need a dream at all? I questioned the need for a dream.

“What is your dream?” I tried concocting dreams. But they did not excite me.  Three years back I quit my full-time job in private equity, climbed Kilimanjaro with our son and struggled to complete the Athens Marathon. I got a tattoo. I spent the past three years in the company of some incredible people who are doing amazing work in a variety of social enterprises,  NGOs and for-profit ventures. I hung out with college students discussing the roles of the State and the Markets. I travelled with my wife and kids to enchanted places like Bhutan and Leh, where we spent three weeks volunteering with an NGO (17000 ft Foundation) setting up libraries in remote government schools close to the Chinese border and the Pakistan Line of Control. I controlled the pace at which I worked. I would go for long breakfasts with our daughter. I was on the board of an IPL team. But I had stopped having a dream.

After four days of trying to find my dream, I came back home and told my wife about my frustrating search for my elusive dream. She gave me that loving look that only wives can give their husbands when we have done something really stupid and simply said, “You don’t have a dream, because you are living your dream, you idiot!” Sometimes what we are looking for is staring back at us – we only need to know how to look. Now why didn’t I discuss this with her four days earlier?

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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December 15, 2014 17:53 pm by Raj Singh
Dear Pankaj, I am operating a budget school in a remote village of Bihar. I am a professional and ventured out to education to contribute my part to my village few years back after quitting premium job in Tata power. Since then tirelessly working to create quality educational institution. Howeve...
December 14, 2014 06:25 am by Luis Miranda
Tejas, thanks. Unfortunately, the auto industry is not different from most other industries where, unless the penalties are very high, customer safety is ignored. The 'Pinto Memo' took this argument to an extreme ... And ths was in the US, not India, albeit one generation back.
December 14, 2014 06:17 am by Luis Miranda
Anirban, thanks for pointing this out. Yes, a car is safer than a scooter. But it can also give a false sense of security, especially at faster speeds during non-peak hours. The point I was making is that we sometimes miss the wood from the trees - should the focus be on profits or safety? Where is ...
December 12, 2014 16:33 pm by Tejas
I agree with you 100 %. Since long the auto industry has closed its eyes and mind for its sales targets. Even the fuel emission control to Euro 4 etc was implemented because of the push of government. Citing costs is a hogwash. The air bags cost claim (Rs 70000) etc is just to deceive the public. ...
December 08, 2014 17:33 pm by Anirban Ghosh
Safety of vehicles must be enhanced. However I must add that Mr. Bhargava has been partially quoted. It is a fact that small cars with more safety features will be more expensive. Mr. Bhargava fears that this will make more Indians buy two-wheelers instead of small cars. Two-wheelers are more accide...