'The 'Feel Good' Is Genuine'

BBC : Would India be able to maintain its present rate of economic and industrial growth ?

Rahul Bajaj : I feel that what is being called the ‘feel good’ factor is genuine and it shouldcontinue. However, nobody has a crystal ball, and if nothing unforeseen happens, if the monsoon is good andthe international scene remains calm, I think that the ‘feel good’ factor should not be short-lived.

BBC Listener from Gwalior : There is no doubt that economic development has taken place in India over theyears, but what hampers this and other positive things is the deep rooted political corruption, in whichindustrialists like you play an important role -  you make, break and manipulate governments. What are the viewsof a vocal person like you ?

Rahul Bajaj : I agree with you in parts. There is no doubt that poverty and unemployment are the biggest problemsfaced by this country. I would put corruption as the second biggest problem being faced by India. Till here Iagree with you.

Now how does corruption thrive? It is very easy to say that the big industrialists are neck-deep incorruption, this is the point I would like to confront and contradict.  It is a total lie that big industrialists can have a government of their choice in place by throwing money.I do not think that there are many industrial houses which have so much money and power that they couldinfluence any government. Maybe, one or two - once again, I am using the word maybe – but certainly not many, as is commonly said.In my long business career I have never seen Tatas and Birlas trying to influence any government.

Corruption is quid pro quo.  These days things like struggling for licenses etc., has gone down, butmany serious problems are still there. For a common man it used to begin with things like a telephoneconnection, when the monopoly of public sector was there. With the entry of private sector, things haveimproved -- but yes, corruption is still a big problem.

I can say for myself that I have never generated cash for anyone nor have I given any political fund toanyone.

BBC listener from Jaipur : Well if the well-being of economy depends on natural factors such as good rains, i.e. a good monsoon, are the impressive growth rate statistics not very brittle? Secondly the AsianDevelopment Back (ADB) has expressed concern at the poor rate of employment in India, what do you say ?

Rahul Bajaj :It is a fact that the Indian economy is very largely dependant on factors such as the monsoon forits well-being, other things being equal, as compared to the American and the British economy. So if thereis a good monsoon, the growth rate figures are good; on the contrary if rains fail, India suffers. What is required to be done is more and more irrigation, and also preservation of water through dams andcanals.

Secondly, for a strong economy, what India needs is a long term measure as sound infrastructure. Thebeginning for which has been made by Prime Minister Vajpayee with his plan of a ‘Golden Quadrilateral’,and also, in the long term, measures such as the inter linking of rivers, the work for which is being done by Mr SureshPrabhu --  this would also take about ten years.

But by resorting to these solid measures could India’s dependence on monsoon come down?  Therefore, I would put a question mark on those who say that India would maintain a growth rate of about 8-9percent for the next four-five years.

BBC listener from Gandhinagar : Let us focus on the automobile industry only to see how the economy isfaring. Your own company Bajaj Auto, has stopped the manufacture of Bajaj Super model. Why? And also now whyare you concentrating on motor-cycles instead of traditional scooters ?

Rahul Bajaj : Bajaj Auto is ready to once again start the manufacture of any model, which the customers want.Our god is the customer, we make what they want, and the fact is that today there is a greater demand for themotor-cycles in the Indian market.

BBC : But why has the demand of scooter in Indian market gone down ?

Rahul Bajaj : There are many reasons. Five years back, we used to manufacture seventy thousand scooters a month;now it has gone down to twenty thousand. On the other hand, during the same period, the sale of the motor-cycleshas gone up from ten thousand a month to eighty thousand.

The reasons are many, one of them is the increase in the purchasing power of the middle class and the uppermiddle class. Now the middle class teenagers want to be macho and prefer their girlfriends sitting at theback of a motorcycle and driving it at a high speed. 

The motorcycle sales have gone up in the rural areas also, the reason being that the good monsoon has giventhe farmers a good return in the recent past and the motorcycle is suited to rural roads. The roads there arebad and the big wheels of the motorcycle place it at an advantage as compared to the small wheels of thescooter. Therefore a motorcycle is a better rural vehicle.

Also, what has happened is that price difference between a scooter and a motorcycle has narrowed downconsiderably. Earlier the scooter was quite cheaper in comparison to a motorcycle. Now the motorcycles at theentry level, like the Bike and Buxar of our company and Don of our competitor, are now priced almost equal tothat of a scooter. Fuel economy is also a factor which goes in the favour of the motorcycle.

BBC listener from Vishakhapatnam : The economic growth rate projection figures at the moment look good, butare they realistic and would they last? Are these only for the big business or also for the common man, anddespite these figures, India remains at number three in Asia?

Rahul Bajaj : The figures are realistic there is no doubt about it. I know that the people of the countrytake such figures with a pinch of salt, but they can’t be wrong as much research is done by the CentralStatistical Organisation (CSO) on these. No government can afford to give wrong figures now --  if it does, andthen different figures come out, they would be in a real embarrassing situation, so it is not easy to fudgefigures.

What can be criticised is that the government of the day is trying to take political mileage projectingthese impressive figures as its achievement. It is spending crores of rupees in what is being called the ‘Indiashining’ campaign. This is a political move aimed at the elections, you are right there.

BBC : But Mr Bajaj why are such things as growth rate figures and schemes like the Kisan Credit Cardbrought out only in the election year? Is this not mixing of economy and politics ?

Rahul Bajaj : See, if one individual politician was giving the figures it would have been a different thing, butthese figures are of the RBI, CSO – so there should not be a doubt, yes inaccuracy could be there, but thatis a different thing.

Now about the election sops, it is being said that these populist measures are only shortlived and arebeing done with an eye on the vote bank, it could be there I do not deny this. But what we should see is whether the announcements are in the interest of the country or not.If they are let us welcome them, on the other hand, if they are not, then let us criticise them.

If you ask me about the announcements during the last two months, I think broadly they are in the interestof the nation, except the merger of the DA with basic pay for the central government employees.

BBC listener from Delhi : How can we say there is a ‘feel good factor’ when problems like poverty andcorruption are still menacingly there ?

Rahul Bajaj : See the ‘feel good factor’ is related to industrial growth, economic development and to anextent to the stock market. Corruption has been there for 40-50 years, and it is a matter of shame for all of us. But then whois responsible for this menace? We ourselves! Why do we vote for corrupt candidates and criminals? We should take the initiative ourselves and encourageothers to fight corruption.

BBC listener from Raipur : Employees whether in public or private sector are facing the regular threat ofretrenchment and salary cuts, thereby reducing the purchasing power of the common man. Without this, how canthere be stability in the market?

Bajaj : Your general point is right, and I also say that employment generation has to be a priority.Even in economies such as Europe and America, if employment generation is not there, it leads to a crisis. If you look at the overall picture, employment generation is not on a decline, on the contrary it ison a rise, and that is why there is a higher growth rate.

What is happening in countries like India is that due to the ever increasing population, the total numberof employees is rising and thereby so is the total number of employed also.  But in the organised sector unfortunately, the number of employed has not increased,in fact it has gonedown. So we have to increase employment steadily in the services sector along with the exports. This wouldinclude areas as software, tourism, etc,.

Therefore if the organised sector were to only increase employment, it would not survive – it has toexpand in new areas and with it would come the employment.  Bear in mind that India has one of the tightest corporate governance laws, I would go to the extent ofsaying we are overdoing it.

BBC listener from Bihar : Why are the Indian companies unable to compete at the world level? What shouldbe done for improvement?

Rahul Bajaj : For that a change in labour laws and a solid infrastructure is required. But on the other hand, look at the other side of the coin. Many foreign companies came to India, some wentback, some closed down, some of them have been successful, but none have troubled the Indian industry. Forexample look at automobile sector – companies such as Honda, Suzuki, Yamaha, Vespa – all of them came toIndia. Some of them are doing well, but the Indian Bajaj has performed better than all of them.

Similarly, look at Tatas in cars – their product is better than many foreign cars. The Indian companieshave not fared badly in competition. Where we have done badly, is that these foreign companies can directlyimport from places such as China and other places. These have had an adverse impact on small scale industry ofIndia.

BBC : But Mr Bajaj, you were the most vocal critic of import of scooters from China, did it help?Because the import did not take place?

Rahul Bajaj : It was neither beneficial or destructive. Our opposition was that the Chinese product was notWTO compliant. Today also we need not be afraid of China, if it is WTO compliant. India is a foundermember of WTO, whereas China became a member only two years back. Till then we did not know what subsidies andbenefits they were getting, so why should we compete with them?

Remember, the price of two-wheelers can only come down anywhere in the world by competition. This is theonly guru mantra for bringing down the prices. If there is monopoly there would be high prices, but introducecompetition in every sector and you would see a decline in prices.