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C. Gopinath

IN AN interview published in these pages early October this year, GE's Chairman and CEO, Mr Jeff Immelt, was questioned on a topic that must now rank as the press' most favourite hobby-horse. Namely, how are we doing compared to China. Mr Immelt was very diplomatic in not criticising India, and praised India's intellectual capital. But his comments made it very clear that he sees China as a place where things happen. Action, not words.

Now Mr Immelt is not your average foreign visitor to the country making promises of investments and then returning home to say that he will think it over. Nor is he the kind of NRI audience our Ministers speak to when they travel abroad who usually have a list of pre-conditions.

As Chairman and CEO of GE, he heads a $126 billion (Rs 6,04,800 crore) corporation that operates in 100 countries, employs about 300,000 people worldwide and usually tops the list of the world's most admired companies. His company has already invested about $500 million (Rs 2,400 crore) in India where they sell medical equipment, motors for washing machines, and undertake engineering design and software exports with about 18,000 employees.

His predecessor, Jack Welch, made the momentous decision to target India and clearly Immelt is following the same line. Over the next three years, GE plans to invest Rs 300 million (Rs 1,440 crore) and hire 30,000 people. Thus, when Mr Immelt speaks we need to stand up and listen.

Mr Immelt feels that things don't move. He commented that the same discussion about reforming and privatising the power sector has been going on for about 15 years. While we debate on the technicalities, union rights, and the terms of investment, load-shedding continues to strangle growth all around the country.

The main excuse given for our slow progress is, with a smug expression, that we are a democracy. I think it is time to stop blaming democracy and look for the real reasons. China is now growing at 8 per cent and has been growing in the 8-10 per cent range for sometime. We struggle to reach 7 per cent, and have now fallen back to 5 per cent. Surely, democracy does not cause a 3 per cent shortfall in growth rates.

Let us, for a moment, concede that democracy does result in slower decision-making than autocracy. We could say that decision-making is slow, as we have to take others' views. We can say that governments have to be responsive to people and the world will applaud. It still does not explain why, once a decision is taken, everyone has a right to prevent action being taken. We are not even fully utilising the much-vaunted democratic institutions for more efficient decision-making. If Karnataka and Tamil Nadu cannot agree on sharing waters without burning a few buses in the process, and refuse to show each other's television programmes, it is a clear case of inefficient conflict resolution systems within democracy.

Mr Immelt says: "China seems to be going ahead in a straight line. Whoom! The roads, the highways, the telecom bandwidth. Done! Done! Done!" Take a look at our privatisation. The Government makes a decision, then goes back on it. If one part of the government favours privatisation, another part is working actively to bring it down. Even for a democracy, we are darned pretty slow democracy. Balco was sold and then it got stuck in the courts.

How can we be a working democracy? There is nothing wrong in having differences of opinion on matters of policy. But how can we tell people that we know how to resolve our differences and move ahead. We need to identify the conflicts that hamper progress and deal with them. Organisational theory has some tips for us when it comes to conflict resolution. Conflict is healthy, up to a point. The occurrence of conflict reflects that there are opposing viewpoints and the debate would result in a more effective solution.

A pluralistic society, like in India is, a fertile breeding ground for a multitude of opposing interests. Competition for scarce resources also produces conflict. As in organisations, conflict is to be accepted as a way of life.

Conflict is best managed before it begins to be manifest. In the earlier stages, conflict is latent — there is potential for conflict to arise. It then moves to a stage of perceived conflict, when each party realises that its goals are being thwarted by the other. They then begin to have negative feelings about each other. This is when efforts at resolution need to be initiated. If both parties have an interest in achieving their own goals while at the same time helping the other to achieve their goals, they can then arrive at a compromise, or collaborate. However, when there is very little interest in helping the other person achieve their goals, each one avoids the problem, or begins to compete. That is when the conflict becomes obvious and destructive.

Structurally, conflicts can get resolved when there is greater integration between the warring parties (such as coalition governments), or when the parties realise a common goal and work towards it (such as the Hindu and Muslim business communities in Surat, as against their brethren in Ahmedabad).

A democracy allows for conflicting goals and priorities to be resolved inside the Assembly, through debate, and on the streets, through elections. The need for destruction of public property to make a point shows an urgent need for a greater level of education of the representatives of the people, the need for attitudinal change, the need to understand an opposite point of view, and the skills of making compromise and collaborating for common goals.

It is only when democracy is misused that we sacrifice growth and it is patently false to lay the blame at the door of democracy.

I think I know what most of you are thinking. It's the politicians who are doing the fighting, or standing in the way of progress, not us. But as passive observers, we are equally guilty. Then, the solution is to pick up the phone, or pull out that sheet of paper and tell the misguided leaders just what you feel about their behaviour.

Attracting FDI is not just a question of announcing tax holidays and reserving land for huge enterprises. As long as the country allows its internal differences get in the way of formulating and implementing policy, and drags its feet in taking action on decisions made, investors will find several other attractive destinations. Meanwhile, now that we know how we are doing compared to China, let us act on what we already know.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US, His Internet address is cgopinath@Suffolk.edu)

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