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Creation of Wealth

Creation of Wealth. By DR T.H. CHOWDARY Director: Center for Telecom Management and Studies Fellow: Tata Consultancy Services Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor,

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Creation of Wealth

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  1. Creation of Wealth By DR T.H. CHOWDARY Director: Center for Telecom Management and Studies Fellow: Tata Consultancy Services Chairman: PragnaBharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191(O) 2784-3121® F: +91 (40) 6667-1111 hanuman.chowdary@tcs.com Talk@ GNITC, Hyd: 27 Dec 2012

  2. 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 S684_Dec2012

  3. Source of all wealth • Nature • Whatever is in the Sun is on earth- 110 elements थो असाक्सौ पुरुषः सोअहमस्मि • Intellect can create wealth even without natural material resources eg: Singapore, Taiwan, South Korea, Japan S684_Dec2012

  4. 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 S684_Dec2012

  5. 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 S684_Dec2012

  6. 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) S684_Dec2012

  7. Vision, entrepreneurship, risk & rewards (1) We will make electricity so cheap that only the rich can afford to burn candles. -Thomas Alva Edison (1978) GharGhar Mein Radio GaonGaon Mein Telephone -THC (1997) Hath Hath Mein Telephone; GaonGaon Mein Internet - THC S684_Dec2012

  8. 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”. S684_Dec2012

  9. 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” • Lee Iacocca: Chrysler Revival S684_Dec2012

  10. 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 S684_Dec2012

  11. Tatas & Wealth Creation (2) • Andhra valley • Western Ghats • Artificial Lake • Air India • Intelligent Grid • Tata Tea • TCS • Taj Hotel S684_Dec2012

  12. Some Modern Indian Wealth Creators • Birlas • Mahindra • Godrej • KCP (1930) • Andhra Sugars (MullapudiHarischandra Prasad) • Amara Raja (GallaRamachandra Naidu) • Ambanis • Munjal • Infosys, Wipro, HCL, Infotech…. S684_Dec2012

  13. Patriot Industrialists • Ogale Glass works • Dabur • Bengal Chemicals • Birlas, Dalmia’s • Bajaj • VergheseKurein S684_Dec2012

  14. 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 S684_Dec2012

  15. Sharing as an ideal • Sahayagnaprajasrushtvapurovachaprajapathihi Anenaprasavishyadhvameshavahatuishtakamadhuk . – BG 3.10 • Devanbhavayathanenatedevabhavayanthuvah Parasparambhavayanthahasreyaparamavapsyadaha. -BG 3.11 • Ishtanubhogaan hi vodevadasyantheyagnabhavitaha Tairdatthanapradayaibhyoyobhunkthesthenayevasaha -BG 3.12 • -------Bhunjathethvaghampapayepachanthyathmakaranaath . -BG 3.13 S684_Dec2012

  16. Sharing as an ideal • Eesavaasyamidamsarvamyatkinchajagatyaamjagat, • Tenatyaktemabhujithaah; • Maagrithahkasyaswith-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. S684_Dec2012

  17. Wealth Destroyers • Export of ores • Welfare before wealth • (NREGA, Fee Reimbursement, paavalavaddi, 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, shadikhanas; one-Rupee /Kg ; No Rupee-Rice. • Since fiscal 2004 G.O.I spent Rs. 9.12 tln on various subsidies • On NREGA cumulative spend Rs. 1.66 tln • A PURA Hub requires Rs. 600 mln; upgrades 10 to 50 villages • 7000 PURA hubs @ Rs. 4,20,000 cr would create R-Urban areas • Gram-IT is part of it. S684_Dec2012

  18. 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) S684_Dec2012

  19. Tainted and tattered flag of Socialism (and “secularism”) (1) • Sri NaniPalkhiwala • 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. S684_Dec2012

  20. 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. S684_Dec2012

  21. Socialist’s service to the poor and aamaadmi ( one example) S684_Dec2012

  22. 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. S684_Dec2012

  23. 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’sArthaSastra • Are You Listening – Dr T H Chowdary • The Creation of Wealth – R M Lala (The Tatas from 19th to the 21st 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 S684_Dec2012

  24. Books for Reading (3) • Shantiparva in Mahabharata • Sundara Kanda (Ramayana) – Hanuman to Sita • GitaRahasya by LokamanyaTilak • Bharthrihari’sSubhashitas • Sumathi & VemanaSatakas • Rama CharitaManas – 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 S684_Dec2012

  25. 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 S684_Dec2012

  26. 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) S684_Dec2012

  27. Technology & IPR for Wealth Creation S684_Dec2012

  28. 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; www.iipm.thiktank.com S684_Dec2012

  29. 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; www.iipm.thiktank.com S684_Dec2012

  30. Quality of Education (1)‏ Number of Research Papers Published India South Korea Israel Brazil China 25,000 20,000 15,000 10,000 5,000 Source: Business World, 30 Jan 2006 No. of Papers 0 1980 1990 2000 Years S684_Dec2012

  31. Quality of Education (2)‏ Number of PHD Degrees in Engineering China South Korea Taiwan India Japan 4,000 3,000 2,000 1,000 500 0 Source: Business World, 30 Jan 2006 No. of Degrees 1975 1975 1999 Years S684_Dec2012

  32. Contribution to World’s Research Papers S684_Dec2012

  33. Patents applied and granted in the period 2004 to 2008 (Source: Forbes India, Nov5,2010) S684_Dec2012

  34. Global Patents S684_Dec2012

  35. 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) S684_Dec2012

  36. Scientific Publication S684_Dec2012

  37. Scientific Researchers in the World S684_Dec2012

  38. Civilian R&D Expenditure (2000-2005) Percentage(%) of GDP 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 S684_Dec2012

  39. 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 ) S684_Dec2012

  40. R&D Spending as % of GDP S684_Dec2012

  41. From Developing to DevelopedGrowth of Population & GDP S684_Dec2012

  42. Dhanyawad:Thank You S684_Dec2012

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