It’s like getting on to a tiger, and you can’t get off. You have to make the best of the bad bargain, says Shriram Group chief and Padma Bhushan awardee, R. Thyagarajan
He lives a simple life, likes mathematics and loves Carnatic music. A great fan of violin maestro Lalgudi G. Jayaraman, R. Thyagarajan, founder Chairman of the Chennai-based Shriram Group, has been among those who have been chosen for this year’s Padma Bhushan award by the Government. Doing business is nothing but social service. So he says in this interview with The Hindu. Excerpts:
Looking back, what has been your biggest regret?
I have been an employee for many years, and an employee-cum-businessman for about 10 years. And then, I have been solely a businessman. I have had different kinds of experiences.
I don’t regret anything. I take life as it comes. There is no point in regretting. You can ask me which experience was unpleasant and which one pleasant. Being in employment is wonderful. The most painful experience is being in business in India. The ease of doing business is one of the worst in India. The difficulties and pains associated with doing business is probably the highest in India as opposed to most other countries.
Why then are you continuing in it?
It’s like getting on to a tiger, and you can’t get off. You have to make the best of the bad bargain, and this is the experience of all businessmen. The outside world thinks that the businessmen are happy, and that they have lot of money. The attitude towards businessmen should be that of sympathy and support. Unfortunately, it is marked by jealousy.
According to Raghuram Rajan, “government regulations aim for impossible”. A person who enters the business goes around these regulations, and finds a way to avoid them. Finally, he is caught, because he is avoiding these regulations.
You then try to put more regulations to see that he doesn’t avoid them. Regulations are the starting cause of bribery. Such a system is designed for corruption. All these regulations are created by government because there are too many employees, too many offices, too many departments and too many executives who have nothing positive to think.
Being a democracy, is it a constraint for growth?
You can’t have China transplanted in India. It is not possible. It has a different culture, and a different way of looking at growth. I am not suggesting solutions. I am only offering palliatives. If we do these things, we are not going to be better off than China. That’s going to be an effort, and that will last another 50 years. We are not in a race here. I am talking about improvement that can take place.
What are they?
They are mainly about reducing regulations. They should be reduced in size. We need to increase their precision rather than vagueness. Regulations are vague, and they can be interpreted in such a manner that a businessperson is considered to have done something wrong. We need to move from regulations to guidelines. More regulations become roadblocks, which create fatigue in a businessman. No matter how many roadblocks you cross, you come across another. At some stage, you develop fatigue, and begin to think why should you do business in India? During this period, whatever you do, you take 5 or 6 times the effort that you will be taking in another environment where doing business is much easier.
Can you give an example?
Take the life insurance industry. We need to provide more security to the people, and enough savings for the community to facilitate long-term infrastructure projects. You need the life insurance money for long-term projects. The new premium 10 years from now will be 50 per cent of what it is today. If it is growing at 20 per cent per annum, then it should double in 10 years. The life insurance premium should be eight times that of what is today. But we are moving to half only because of regulations. There is a process in which agents should pass an exam, and undergo training. None of them are practical. So they go through a sham process of training, and a sham process of passing some examination. The examination becomes routine, and the quality of exam is not evaluated. The regulator who created it doesn’t even bother to look whether the examination system is designed to make the people who really passed to learn. In the end, there is no guarantee that anyone is going to earn money. So, none will opt to become an agent. If you don’t have any agents at all, which is the situation now, the existing agents retire voluntarily. When the agents stop doing any business, the LIC will drop.
Is there a deliberate design in this?
It arises due to natural tendency of government and monopolistic organisations to exercise power. This is a natural tendency. It is universal. In India, you can’t afford this because we are poor. Americans can afford it because they have a strong private sector base. Many countries have bad regulations. They can afford it because they need not grow. However, we have to grow. If the gross domestic product (GDP) grows at the rate of 2 per cent, they are happy and comfortable. We have to grow at 10 per cent. We are importing all these regulations from the United States. The regulations are framed in a manner and interpreted in such a way that you can’t be sure if what you are doing is right.
A few general insurance clients wanted their policies to be renewed. They could have sent their cheques directly to insurance companies. But they take the advice of brokers, and, hence, send it to us. We then forward them to insurance companies. In the meantime, if their policy expires … if nothing happens, it is alright. What if something happens?
During the inspections, the regulators said we are not supposed to do it as it is prohibited. They said whatever is specifically mentioned, you can do, but what is specifically not mentioned, you can’t do. Nowhere does it say that the broker should collect the premium from the customer but you have done it. We told the regulators that we have done it in the interest of the customer because he should not have gap in his cover, and that we have a responsibility to keep it that way. Since there is no rule, they fined us for it. The fact that we are being fined will be put on the Insurance Regulatory and Development Authority (IRDA) website.
They have spread an impression that “we are a set of thugs” who have to be periodically punished. I am unable to see India shining. We will come down more in our growth rate. India cannot grow because we are burdened with bureaucracy and government, which make it more difficult for businessmen to create wealth for the community.
Why are you continuing in business?
You cannot get out once you are in. We are still getting into newer businesses. Why do we run more business when we say it is a pain? I believe it is social service. To me, running a business in India can be done only if you take it as social service. Blaming the politician is the worst scenario the Indian bureaucracy has created for itself.
Do you agree that business in the modern day is all about bottom line?
Bottom line is wealth creation. So you focus on it. The wealth creation is not for me. It is for the community, it is for the poor and needy.
Is bottom line a dirty word?
No it is not. It is essential. Look at the communist society in China, which evolved out of revolution. Prosperity in China is created by private enterprise, and also the government institution that runs like a private institution with profit motive focusing on money. The profit motive is essential. It is not good, but is needed like medicine. You need not like medicine but you have to take it. Profit motive is what drives people who have creative ability to create something.
Is there a limit to the level of medicine you can take?
That’s what will come when enough prosperity has been created. Then regulating the prosperity may be justified. That will not happen in India today for the next 20 years. Much more prosperity needs to be created
What is your take on taxing super rich?
I am a Gandhian. I understand the un-workability of the force in the long run. Stick as a tool to influence decision becomes less and less effective as you go. Gandhi believed in influencing people by changing mindsets. That was how he made Birla do a lot of social service. He appealed towards his good human nature. When you do that, 90 per cent of the people respond. So, the best way to make money is to appeal to the sentiments of the people.