The founder of Infosys, N.R.Narayana Murthy has for long been vocal on the need to bring about inclusive growth in India and for India’s corporate chiefs to lead the way in terms of governance, fairness in compensation levels and to enhance respect. Having stepped down from an operational role in the company a while ago like the other co-founders, At 73, Murthy now devotes more time to Catamaran Ventures- the family office firm which invests in firms in varied sectors while enjoying time with his grand children. He spoke to Shaji Vikraman on issues ranging from the current discourse on jobless growth to corporate governance and what India’s rich, powerful and the elite need to do at his Bengaluru office : Excerpts
As a business leader, you have been unusually quiet. How do you look at the last four years of this government and the current discourse on jobless growth and disruptions?
The current government has put in a lot of effort in encouraging entrepreneurship and in creating a lot of jobs. However, the growth rate of software companies which were the primary channels for creating jobs for engineers has come down. Their intake has reduced. Perhaps as late as 2014, Infosys used to take 25,000 engineers per year while, today, I am told that that number has reduced to 15,000. The employment opportunities are not improving even in the manufacturing sector since productivity improvements have impacted the job creation. Overall, it is a worrisome trend.
So how do you address this issue of creating jobs
In a. country like India, there are 400 million illiterates and about 400 million semi-literates, Sectors like information technology cannot create a large number of jobs. Job creation will have to come from low-tech manufacturing and low tech services. So, the Prime Minister’s emphasis on Make in India is very good. But, we have to reduce friction to Indian entrepreneurs, and to foreign companies to start new manufacturing entities in India as manufacturing has considerable scope for even semi-illiterates and in some cases, illiterates too.
What’s the friction you are indicating?
For instance, if you want to construct a factory, you need a host of approvals. A fledgling entrepreneur does not have the resources to obtain all these approvals. If we can get the bureaucracy at the state government level to reduce the time frame for approvals and bring it down to two weeks, it can make a positive difference.
In an essay you wrote two years ago, you had said that after the economic reforms of the 1990s, Indian businesses are now in control of their destiny. Do you still have that sense in the current backdrop of heightened action by enforcement agencies and disruptive moves like GST and demonetisation?
Yes. Indian business is very much in control of their destiny compared to the pre-1990s.Today, there is no licensing tyranny, there is current account convertibility, companies can list on global exchanges and the availability of telephones is easy. From all those angles, it is much more easier to start as an entrepreneur today. But, there are lots of areas of friction for state governments to sort out – like land, construction of factories, zoning laws. There are issues like infrastructure, commuting in big cities, pollution levels, availability of good schools in big cities, and the ability to attract talent from other cities. That is why it is important for politicians, bureaucrats and corporate leaders to sit together and think of how to accelerate growth and create more jobs.
You had flagged off your concerns on corporate governance including in the company you helped promote – Infosys last year. Since then we have had quite a few cases – such as the conflict of interest issue featuring ICICI Bank CEO, Chanda Kochhar and in other companies too. Have governance standards in Indian companies slipped further?
I am not conversant with corporate governance practices in any specific company and I would not want to comment on Infosys. However, it is very important to realise that the only way we can gain the confidence of investors in India is if we brought higher levels of transparency and accountability in our actions in governing companies. As long as we ask an important question – Does our action enhance respect in the eyes of the society, then that action will be the right one.
So how do you rate current levels of corporate governance in India?
Certainly, India is not clearly on top in terms of good governance. We are on the path of improvement and more and more efforts are needed. Some of the criticism may seem unpalatable to boards of companies in the short term. But in the interest of the health of companies, it is important for the boards of Indian companies to take the bitter pills.
You have said that without compassionate capitalism, this country cannot create jobs and solve the problem of poverty. Are current leaders not heeding this advice or are they less sensitive?
If I look at some of the instances which happened in the last few years, the senior managements of firms had approved high salaries for themselves while the lowest level were denied even the basic level of compensation. Something is wrong in a society when this happens. All of us have to open our eyes and do something about this. In some ways, leaders of capitalism like the rich, the powerful and the elite of any society have to exercise self-restraint in according themselves or their friends disproportionate benefits from the fruits of a corporation. If this does not happen, you won’t have peace and harmony in a society. In some cases, it has not happened. My hope is that good sense will prevail.
The IMF recently pointed to the growing divide or inequalities in an economy like India. Do you also share the view that the income inequality gap has widened over the last few years?
It does not take rocket science to figure out that the Gini co-efficient is increasing in India. Therefore, it is very important for the rich, the powerful and the elite which includes politicians, corporate leaders, the bureaucracy and the media to become aware of this and to work towards reducing the Gini co-efficient. When does violence pervade a society ? When people lose hope. And who is responsible for hope? It is the rich, the powerful and the elite who can enhance hope. Therefore, it is their responsibility to keep hope alive. The day the rich, the elite and the powerful do not take responsibility for this and for ensuring peace, you will have violence.
In the past, you had spoken about how technology is a great equaliser, a powerful weapon and not a discriminator. In an unequal society like ours, how do you see this playing out in the social media given rumour mongering, lynching? Can tech offer a solution or should be look for social solutions.
The people who use social media are by and large the elite. There is an onerous responsibility on the rich, the powerful and the elite to exercise self -restraint when they use social media. It is like the power of a gun. The use depends on the quality of the heart. If you give a gun to a person with a good heart, he or she will use it to defend people. But a person with a bad heart will use it to kill people.
20 years ago, we had flag bearers abroad such as Infosys, TCS and the Wipro. Why do we fewer world class firms?
I do not think so. There are several good companies – We have Flipkart, Paytm and others which have competed with global companies. I am very positive that India will produce even better entrepreneurs than the ones earlier as long as our values are good. The problem is whether there is a good heart.
Two decades ago, Infosys popularised the concept of stock options in India. Looking at that as a tool to reward employees now, do you think there is a need to take a relook at how it is structured?
There is nothing wrong with the stock options. But what we need to do is to ensure that there is a justification for awarding these options and that vesting is over a longer period. The vesting period should be 20 years so that the companies can benefit from the awardees for a long time.
Your colleague, Nandan Nilekani, got into a public role years ago helping build Aadhar – the unique identity mechanism. Would you take up a public role?
I don’t see myself doing that. I am in my 73rd year and this is not the time to think of a public role. I am happy spending time with my grandchildren.