With political independence in 1947, India inherited an economy that had been ruled for more than 200 years. It took almost half a century to kick-start serious liberalisation and move towards economic freedom. Today, the nation once written off by the world for its Hindu rate of growth, is a services superpower-in-the-making. Today, Indians the world over are respected for their work and expertise across professions like finance, technology, medicine and knowledge. Today, Indians are dumping lucrative international assignments and returning home.
The first signs of a growing nation are when its people get respect and attention from the world. Recognition translates into confidence in its own people and fuels success stories.
Post-World War Germany and Japan, the United States in the 1980s and China in the 1990s are great examples of how confidence and pride in people built the nations that lead the global economy today. The same pride has been evident in Indians in the past few years.
<b1>The Indian growth story can be attributed to three traditional drivers — growing urbanization, the significant development of small towns & rural India, and global integration. Increased focus on infrastructure and education has also contributed towards making India the 12th largest economy in the world.
But the most significant role in the Indian growth story has been played by the services sector, which in itself has revolutionized the manner in which business is conducted today.
The services sector has been witness to three big waves:
In the 1990s, the software services wave changed the global image of India for good.
Since 2002, with the telecom services wave, the industry has witnessed a more than 80 per cent year-on-year growth, and has attracted the attention of every global major.
And from 2005, we are witnessing the first signs of the financial services wave, with global players rushing into India big-time, and Indian multinationals consolidating their position to take on the world.
However, India has a long, long way to go before she can consider herself a financial sector leader in the global marketplace. To put things in perspective, the top three Chinese banks have got into the global top-10 list in the last few years. This is something that was unimaginable even 5 years ago. Today, the market capitalization of the third largest bank in China is more than the combined market capitalization of the entire listed Indian financial sector! This means that several Indian financial sector players need to break into the top league if India wants to be a growth leader.
There is also a new fourth wave that is in the making — that of infrastructure. Investment in infrastructure is required to provide growth opportunities for the three basic sectors of agriculture, manufacturing and services. Also, India needs to understand that while we find new waves, she needs to ensure that the old waves are sustained.
She must also understand that there is a need to strengthen the foundations of civil society as this growth needs to be inclusive in nature and drive benefits across all sections of society. This includes adequate attention to civic amenities like education, sanitation, law and order, etc. Growth would also be hollow and meaningless unless it is backed by social justice.
India needs to realize that while the wind is blowing in her direction, there is a very thin line between confidence and conviction, and between exuberance & foolhardiness. That is why it is important to focus on the unfinished work rather than thump our chests in victory. India has risen, but the elephant needs to dance.
(Uday Kotak is Vice-Chairman & MD of Kotak Mahindra Bank)