Sanjiv Bajaj at Idea Exchange: ‘The digital world is breaking old monopolies and driving competition because consumers

Sandeep Singh: Your father would speak truth to power. What gave him the courage to stand out considering so much was at stake?

My father had a great life that we can only be envious of and aspire to. But it was a life driven by simplicity, by being outspoken, honest and driven. He was very caring of the people he knew, irrespective of whether they were family, friends, his driver or his staff; he did what he could to help each one. He used to be associated with the Bombay Club but what he was trying to say back then was to make the market competitive. He was the original proponent of Make in India and that today is a national call.

His father and my grandfather, Kamal Nayan Bajaj,  was a  Congressman and had already been a three-time Member of the Lok Sabha when he opposed Indira Gandhi’s bank nationalisation. He was the chairman across most of our companies then and my father, who was the eldest in the next generation, had joined the business. My grandfather offered to step down as chairman to shield the companies from the politics of retribution. But my father asked him to continue, saying he was standing for the right cause and that we would bear the consequences should we run into a problem. There were no consequences. The Government was also mature.

I think fearlessness was in his genes. My great grandparents spent years in a British jail, giving up whatever money they had made for the freedom struggle. My great grandfather Jamnalal Bajaj was the Congress treasurer till he passed away in 1942. My father grew up in that environment, knowing nothing different. You will find more such honest snippets in his no-holds barred biography by Dr Gita Piramal. Even the day he passed away, I told him we had got an advance copy of the book. He wasn’t bothered because his life was never about himself.

Sandeep Singh: Would you like to carry his legacy of speaking for the industry?

I would definitely hope to do that. Our styles are different. My father was used to standing up and shouting from the podium. I have a more collaborative approach. Everybody wants a solution to a problem. It doesn’t work if you’re only going to be critical. A balanced approach is to address the wrongs, give the right suggestions, be proactive. If that is in national interest, then people understand that.

Sandeep Singh: An ongoing war has resulted in lower economic growth rates. While the RBI is looking to support growth, how do you see this crisis impacting India’s GDP?

Post-pandemic, we are in a continued period of significant uncertainty. This war has created an additional layer of uncertainty. Let’s hope that a truce is closer rather than not. It is terrible that we have to invoke our most barbaric selves to resolve issues in the 21st century instead of being progressive. As far as the pandemic is concerned, we have been driven by the right moves from our government, be it in vaccine coverage or increase in capacities across hospitals. But as humans, we get complacent when the threat recedes. I would urge the Government to accelerate booster vaccines. It is proven that they not only help the vaccinated, they help those that are not by reducing the pool of people that the virus can multiply in. I think if these two crises are in control, India is poised for a steady growth going forward. We’ve started to see that in the last couple of quarters. So even as rates start tightening up, we know our central bank is focussing both on inflation and growth. Currencies now are a third factor because they become an issue only when they spike.

There is a significant medium and long-term opportunity. Over the last 20 years, our per capita income has more than doubled, our infrastructure is top notch. From being a developing country, we are becoming a developed country with a large educated population, which means a very large domestic consumption base. This is where Make in India, with the ease of doing business and lower costs, can make us competitive, increase volumes, create jobs. We have a few 100 million people who will need jobs in 10 years. They will spend money and this will fuel the economy.

You have to create confidence in the industry and treat it like an equal partner in wealth creation. I would say no action should be taken retrospectively, unless it is somehow hurting the country’s national security

Vaidyanathan Iyer: This sounds optimistic but the Indian economy has been slowing down from a growth rate of  8 to 10 per cent since 2012. Whatever the reforms, the private sector hasn’t invested enough in the economy. What could have been done in the last 10 years and what needs to be done now?

The future is only built by optimists. So, it’s better to be optimistic, get a few things wrong than be a pessimist. Over the last decade, we recovered from the world’s worst financial crisis. Countries like ours don’t have the financial wherewithal to spend themselves out of a crisis the way the more developed countries do. Within this limitation, the Government must be credited for spending big on hard infrastructure. That’s what is supporting the current growth rates of five to six per cent. We are far ahead of the West in digitisation, which started in 2008. The Government is working on a set of open-market digital protocols to take health to the next level. Be it the cash flow-based technology platform for SMEs or the GST platform access for online lending, all will have a positive impact. On the other hand, we have seen the structural changes in GST. It could be more efficient but at least it has started and will get more efficient hereon.

The Government’s Covid-time measures, like cutting corporate tax to 25 per cent and tax breaks for new businesses  are making us competitive globally. The Government has done its fair share. The private sector will invest in capacity when it sees demand rising enough to exhaust existing capacity. It is driven by the demand it sees on the ground. Unfortunately, a significant external factor has held us back.  And now, war. Consumers save every time there is uncertainty.

I think 70 per cent of your Bitcoin is already mined. There’s a finite value. Currency is a very strong method of keeping power as a country. But it loses value during war. There’s merit in independent currency. Just monitor & regulate it

George Mathew: What needs to be done to boost consumption? Have the government and the private sector done enough to improve investments and consumer spending?

Consumer demand will come when the consumer is secure about the future. The second factor is consumer savings. The third is product availability and the last is capacity. I believe that certain sectors, if you look at commodities for example, have already started building new capacities from last year. As supply chain disruptions reduce, we can produce goods within. If we build our capabilities, then we won’t be in the same kind of situation again in the future. We have the wherewithal to become a strong manufacturing base in Asia to support ourselves.

Anant Goenka: Do you think that the Government has done a good job with regard to the Ukraine war so far? What position should Indian industry be taking vis-a-vis Russia?

Our Government is in a challenging position. But led by the Prime Minister, the international relationships that we have built over the past seven years have helped us create trust on both sides in this war. How do we use that? Not only for our national interest but more importantly, to find a solution. I think this is an opportunity. But I’m not a politician. I won’t be surprised if discussions are not already happening.

The Government has done its fair share. The private sector will invest in capacity when demand rises enough to exhaust existing capacity. It is driven by the demand it sees on the ground. Unfortunately, external factors have held us back

Anant Goenka: Among most industries around the world, there is a lot of consolidation happening with the largest player just getting larger and larger, eating up the smaller player. Is the concentration of power in the Indian economy a concern or is it just the way of capitalism?

Typically, large successful companies end up controlling capital, assets and land. They have an ability to negotiate, own large machinery or larger plants and command cheaper distribution networks. Large brands can monopolise the entire sales distribution network. But the digital world is dramatically changing this equation. You can be an Airbnb without owning a single hotel room. You can be an Ola without owning a single car. You no longer need to play by the traditional rules of the last 200 years, or ever since the Industrial Age, at least in many sectors. For some sectors like steel, the old rules still work, because that capacity makes a difference.

But look at banking. It is basically about providing a safe haven for people to park their money and then selling them services in the bargain. However, the decentralisation in financial services, at least on the asset side, because that’s what regulators have currently allowed, has changed this scenario. If you want a home loan, you can go to 10 different lenders, be it NBFCs, home loan companies or banks. You don’t have to go to your own bank unless it offers a better rate. The same applies to the insurance sector. The digital world is breaking chains of old monopolies and driving competition because consumers are getting more choices. And these are easy to access, they are there on your phone. So, I actually see the days of companies depending on their size for success becoming less and less. If at all, size can be a disadvantage because it…