Creation of Wealth By DR T.H. CHOWDARY * Director, Center for Telecom Management & Studies Chairman, Pragna Bharati (Intellect India), Andhra Pradesh Fellow: Tata Consultancy Service Ltd. * Former Information Technology Adviser, Government of A.P Chairman & Managing Director Videsh Sanchar Nigam Ltd., Bombay T: +91 (40) (O) ® F: +91 (40) (O)‏ GITAM, VSK: 2 Jan 2014

Wealth is of two kinds Intellectual Material, economic Intellectual wealth does not diminish. The more you share, the more it grows Material wealth has limits. We may be satiated but not satisfied. Material/economic wealth diminishes on consumption Intellectual wealth can’t be diminished or destroyed. eg. Germany, Japan, after the wars S706_ Jan 2014THC_CTMS2

Source of all wealth Nature Whatever is in the Sun is on earth- 110 elements थो असाक्सौ पुरुषः सो अहमस्मि Intellect can create wealth even without natural material resources eg: Singapore, Taiwan, South Korea, Japan S706_ Jan 2014THC_CTMS3

Land & Sea Adam Smith: Land labour & capital Unless there is a great land mass, there cannot be natural wealth- ores, coal, oil & gas, forests, rivers, mountains Russia, Canada, USA, Brazil, China, India – vast lands Urbanisation –masses of population Pressure on land- Density of population high to reduce commutation costs Suburban land holders become wealthy by sale of land to Realtors! Skyscrapers and sub terraneons (Japan & Netherlands) structures S706_ Jan 2014THC_CTMS4

Factors for wealth creation Labour - Diminishing role Electricity, motor, machines, Robots Eg: Toyota Factory near Tokyo; 360 Robots, 60 men 1000 cars/day Intellectual “labour” Innovation, invention Scandinavia Now China too ( to be competitive) USA- Robotizing to bring back manufacture S706_ Jan 2014THC_CTMS5

Capital is crucial Comes from savings Savings in Banks Banks lend & invest (Commercial & Investment Banks) Public Limited company –Great invention – limited liability ; millions of investors - not dividends but capital appreciation Stock exchanges Regulators (RBI; SEBI) S706_ Jan 2014THC_CTMS6

Vision, entrepreneurship, risk & rewards (1) We will make electricity so cheap that only the rich can afford to burn candles. -Thomas Alva Edison (1978) Ghar Ghar Mein Radio Gaon Gaon Mein Telephone -THC (1997) Hath Hath Mein Telephone; Gaon Gaon Mein Internet - THC S706_ Jan 2014THC_CTMS7

Vision, entrepreneurship, risk & rewards (2) “Genius is one per cent inspiration and ninety nine percent perspiration “When Sir M.Visveswaraiah saw the Cauvery water falls at Jog ( 1920s) he exclaimed “what a waste?” When Jamshetji Tata saw the waters of Roha river Roha cascading down he wondered, “All this water from the Western Ghats is wanted. We should harness it to produce hydro electric power”. S706_ Jan 2014THC_CTMS8

Wealth Creators Risk-takers Entrepreneurs Failures don’t deter Leaders- Integrators of talents Andrew Carnegie’s Tomb-stone “Here lies buried a man who knew how to hire people better than himself” (Contrast: Sonia Gandhi – If a lowly person is given power, he discards all able counsellors, Does the dog which relishes shoes (leather) know the sweetness of sugar cane - Vemana Lee Iacocca: Chrysler Revival S706_ Jan 2014THC_CTMS9

Tatas & Wealth Creation (1) Cotton Textile Mills Nagpur Swadesi Tata Steel, Sakchi becomes Jemshedpur Vivekananda Inspires Indian Institute of Sciences (IISc, Bglr) Steam locomotives for Railways Trucks Tata Hydro Tata Shipping Tomco –Coconuts (Kerala) Tata Chemicals – Sea water Indica & Nano S706_ Jan 2014THC_CTMS10

The Tata Saga (>140 Y) Over 100 companies 450,000 people across the world Foot print in 85 countries Employees: EU – 50,000; North America- 22,000; China-4,000 Group revenue - $ 101 bln Exports Products & services to 85 countries 58% of Tata revenues come from abroad Flagship – TCS- Associates- 250,000; Revenue- Rs. 72,000cr 32 are listed companies Market cap; $ bln Share holders: 3.9 mln Revenue/Employee ; Rs. 14 mln Invests 3% of net profit in CSR activities THC_CTMSS706_ Jan

Tatas & Wealth Creation (2) Andhra valley Western Ghats Artificial Lake Air India Intelligent Grid Tata Tea TCS Taj Hotel S706_ Jan 2014THC_CTMS12

Some Modern Indian Wealth Creators Birlas Mahindra Godrej KCP (1930) Andhra Sugars (Mullapudi Harischandra Prasad) Amara Raja (Galla Ramachandra Naidu) Ambanis Munjal Infosys, Wipro, HCL, Infotech…. S706_ Jan 2014THC_CTMS13

Patriot Industrialists Ogale Glass works Dabur Bengal Chemicals Birlas, Dalmia’s Bajaj Verghese Kurein S706_ Jan 2014THC_CTMS14

Corporate Social Responsibility (CSR) Indian Institute of Science TISCO: Free Schools, Hospital, Insurance, Pensions Tata Trusts Tata Scholarships (ICS…) All wealth (dividends) goes to various trusts Tata Institute of Fundamental Research ( TIFR) BARC and ISRO Tata Institute of Social Sciences S706_ Jan 2014THC_CTMS15

Sharing as an ideal Saha yagna praja srushtva purovacha praja pathihi Anena prasavishyadhvam eshavaha tu ishtakamadhuk. – BG 3.10 Devanbhavayathanena te deva bhavayanthu vah Parasparam bhavayanthaha sreya paramavapsyadaha. -BG 3.11 Ishtanu bhogaan hi vo deva dasyanthe yagnabhavitaha Tairdatthana pradayaibhyo yo bhunkthesthena yeva saha -BG Bhunjathe thvagham papaye pachanthyathma karanaath. -BG 3.13 S706_ Jan 2014THC_CTMS16

Sharing as an ideal Eesavaasyamidam sarvam yatkincha jagatyaam jagat, Tena tyaktema bhujithaah; Maa grithah kasya swith-dhanam. “Everything in the universe abides in the Supreme Being. Realise this well; realising it cast off the desires that rise in the heart, for example, the thought of possessing what is enjoyed by another. Joy comes only by the giving up of desires and attachments. (Enjoy by renunciation of and sharing with others of what more is not needed by you; may you not accumulate; whose is this wealth?) -Isavaasya, Interpretation by Rajaji. Let us all strive to live in the light of this wisdom. S706_ Jan 2014THC_CTMS17

Wealth Destroyers Export of ores Welfare before wealth (NREGA, Fee Reimbursement, paavala vaddi, no vaddi, loans waivers…A.Ps profligacy; give –aways (Radios, TVs, grinders, bicycles, shoes, sanitary napkins, tablet PCs, mobile phones, Haj & Jerusalem subsidies; Urdu ghars, shadi khanas; one-Rupee /Kg ; No Rupee-Rice. Since fiscal 2004 G.O.I spent Rs tln on various subsidies On NREGA cumulative spend Rs tln A PURA Hub requires Rs. 600 mln; upgrades 10 to 50 villages 7000 PURA Rs. 4,20,000 cr would create R-Urban areas Gram-IT is part of it. S706_ Jan 2014THC_CTMS18

You cannot… “You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong. You cannot help the poor by destroying the rich. You cannot establish sound security on borrowed money. You cannot keep out trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them What they could do for themselves.” -Abraham Lincoln (Source: Freedom First, May 1989) S706_ Jan 2014THC_CTMS19

Tainted and tattered flag of Socialism (and “secularism”) (1) Sri Nani Palkhiwala History will record that the greatest mistake of the Indian republic in the first 50 years of its existence was to make less investment in human resources- education, family planning, nutrition and public health- than in brick and motor dams and factories. We have too much government and too little administration; too many laws and too little justice; too many public servants and too little public service; too many controls and too little welfare. Indian liberalisation encounters formidable opposition from three quarters. The top heavy bureaucracy reluctant to shed its enormous powers Influential politicians who prefer to let socialism remain the opium of the people and of whom it can be truly said that if ignorance is bliss, they should be the happiest men alive. S706_ Jan 2014THC_CTMS20

Tainted and tattered flag of Socialism (and “secularism”) (2) – Quite a few Indian businessmen men who are much interested in their own personal prosperity than in the future of the country and who preferred to flourish in the non competitive environment. – These three are the obstructionist forces…India continues to remain the only significant country in the free world to hold aloft the tainted and tattered flag of socialism. “ We shut our eyes to the fact that socialism is to social justice, what ritual is to religion and dogma is to truth”. Over taxation corrupted the national character overtly. The nation survived only because the tax system continued to breathe through loopholes and the economy used to breathe through window of tax evasion. S706_ Jan 2014THC_CTMS21

Socialist’s service to the poor and aam aadmi ( one example) Power bills (July 2012) of A.P Ministers MinisterGalla ArunaM.Mukhesh Goud DK Aruna Danam Nagender E.Pratap Reddy Amount (Rs.) 62,65733,18825,01317,23111,021 N.Chandra Babu Naidu Kiran Kumar Reddy 84,352100,000 Some have 12 air conditioners in their house. Rule:2 MLAs ( from allover the state) have private houses in government allotted sites in Jubilee/Banjara Hills. S706_ Jan 2014THC_CTMS22

Books for Reading (1) The Reckoning Vitality in a Business Enterprise: -Frederick R. Kappel Big Business & Human Values -Theodore V. Houser: Chmn sears Roebuck The Uncommon Man - Crauford H. Greenwall, President E.Idu Pont de Nemoars & Co Freeman & The Corporation -Roger M. Blough: Chmn United States Steel Corpn New Frontiers for Professional Managers -Ralph J. Cardiner : President General Electric Company. S706_ Jan 2014THC_CTMS23

S706_ Jan 2014 Books for Reading (2) How to Win Friends & Influence people – Dale Carnegie The Human side of Enterprises - Douglas Mcgregor My years with General Motors – Alfred P Sloan A Japan which can say “No” to America Kautilya’s Artha Sastra Are You Listening – Dr T H Chowdary The Creation of Wealth – R M Lala (The Tatas from 19 th to the 21 st Century) Vincent People Peter Drucker It Couldn’t be Done - Published by the USIS, New Delhi Heidi & Alwyn Toffler – The Future Shock – The Third Wave – A new civilisation in the making THC_CTMS24

S706_ Jan 2014 Books for Reading (3) Shantiparva in Mahabharata Sundara Kanda (Ramayana) – Hanuman to Sita Gita Rahasya by Lokamanya Tilak Bharthrihari’s Subhashitas Sumathi & Vemana Satakas Rama Charita Manas – Tulasi Das Krishnavatara – KM Munshi Women in the Bible Life and Times of Jamshedji Tata (For the Love of India by R M Lala) JRD Tata Letters THC_CTMS25

Lives of great men… Lives of great men all remind us we may make our lives sublime and departing leave behind us foot prints on the sands of time. – Henry Wadsworth Longfellow S706_ Jan 2014THC_CTMS26

Innovation & Entrepreneurship Innovations in production processes – Avoid rejects, re-engineering, wastes Entrepreneurship Ideas, mentoring, incubation Stanford – hundreds of companies incubated Venture capital How many succeed ? <10% in the USA 15/20,000 companies fold up every year in Japan. Institutional investors put less pressure on companies dividends; not so retail investors. Government must assist & stimulate R&D by direct support and incentives ( tax, land, interest, researchers & teachers exempt from IT in Belgium) S706_ Jan 2014THC_CTMS27

Technology & IPR for Wealth Creation S706_ Jan 2014THC_CTMS28

S706_ Jan 2014 Ten-Year Trend in Engineering and Technology Master’s Degrees in the United States, China and India (Actual and Estimated Data) Source: The India Economy Review, 30 Sept 2007, Vol.4; THC_CTMS29

S706_ Jan 2014 Ten-Year Trend in Engineering and Technology PhD Degrees in the United States, China and India Source: The India Economy Review, 30 Sept 2007, Vol.4; THC_CTMS30

S706_ Jan ,000 20,000 15,000 10,000 5, Number of Research Papers Published India China South KoreaIsraelBrazil Years No. of Papers Source: Business World, 30 Jan 2006 Quality of Education (1)‏ THC_CTMS31

S706_ Jan ,000 3,000 2,000 1, Number of PHD Degrees in Engineering India ChinaSouth Korea Japan Taiwan Source: Business World, 30 Jan 2006 Years No. of Degrees Quality of Education (2)‏ THC_CTMS32

Contribution to World’s Research Papers IndiaChinaUSA 3.7%10.6%27.7% (Source: UNESCO SC Report 2010) S706_ Jan 2014THC_CTMS33

Patents applied and granted in the period 2004 to 2008 CountryAppliedGranted Japan391,002176,950 USA456,321157,772 China289,83893,706 Korea170,63283,523 Europe146,15059,819 UK59,81923,379 India36,81218,230 S706_ Jan 2014 (Source: Forbes India, Nov5,2010) THC_CTMS34

Global Patents IndiaChinaUSA USPTO* Triadic (Source: UNESCO SC Report 2010) United States Patents and Trademark Office + Triadic patents are a series of corresponding patents filed at the European Patent Office (EPO), the United States Patent and Trademark Office (USPTO) and the Japan Patent Office (JPO), for the same invention, by the same applicant or inventor.[1] Triadic patents form a special type of patent The Trilateral Patent Offices, or simply the Trilateral Offices, are the European Patent Office (EPO), the Japan Patent Office (JPO) and the United States Patent and Trademark Office (USPTO). In 1983, these patent offices set up a programme of co-operation in an effort to "improve efficiency of the global patent system". [European Patent OfficeJapan Patent OfficeUnited States Patent and Trademark Officepatent offices [ S706_ Jan 2014THC_CTMS35

Patents In Y 2010, China filed for 400,000 patents; 75% were by Chinese companies; 25% by foreign companies working in China The total number of filings in India is yet to exceed 50,000 a year; only 19% are by Indian companies; foreign companies in India filed 81% India’s patent office has 250 patents examiners; China has 4,500; it would increase them to 9000 by 2015; by then India will have 1000 patent examiners (Source: Page 106, Tata Review, Dec 2011) S706_ Jan 2014THC_CTMS36

Scientific Publication India18,91136,261 China38,2061,04,968 (Source : UNESCO Science Report 2010) S706_ Jan 2014THC_CTMS37

Scientific Researchers in the World India Share – 2.2% Researchers / 1000,000 Population IndiaChinaUSAJapan (Source: Every Mans Science: June-July 2011) S706_ Jan 2014THC_CTMS38

Civilian R&D Expenditure ( ) Source: The book, Start-up Nation- The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer Source: UNDO (United Nations Development Programme) Report, 2007/2008 Percentage(%) of GDP S706_ Jan 2014THC_CTMS39

Venture Capital Investments per Capita $ US Source: The book, Start-up Nation- The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer (Source: Dow Jones, Venture Source: Thomson Reuters; U.S. Central Intelligence Agency, World Fact Book, 2007, 2008 ) S706_ Jan 2014THC_CTMS40

R&D Spending as % of GDP Country% India0.9 Israel4.86 Sweden3.75 Finland3.56 Us2.82 Denmark2.72 China1.4 (Source: Mint, ) S706_ Jan 2014THC_CTMS41

From Developing to Developed Growth of Population & GDP GDPPOPPCIPCI time to double Nehruvian socialism More than 50 Y P.V Naraishma Rao & After 6 to to 7.1(10 to 15) years With one child norm since 1978 China in the last 10 years alone Increased PCI from $800 to $4000 Became the 4 th largest economy World’s largest in Has the world’s largest foreign exchange 3.3 tln (c.f India $ 295bln) S706_ Jan 2014THC_CTMS42

Dhanyawad: Thank You S706_ Jan 2014THC_CTMS43