DEAR Mr Prime Minister, According to a recent report in The Times of India, you have been apparently "irritated by a rash of foreign tours" by your ministers, especially those with retinues of bureaucrats in tow. No doubt, many ministers love Harrods, Saks Fifth Avenue and Gallerie Lafayette and can furnish ingenious reasons to justify tours to western lands. Your displeasure is perfectly understandable and you have rightly let your ministers know that they had better "desist from making avoidable foreign journeys".
So far as good. You then decided to set an example by saying that you won't be attending the World Economic Forum (WEF) at Davos in early 1999, as well as the G-15 meeting and the Commonwealth Summit. I suppose that G-15 meetings are dominated by empty political rhetoric. Equally, I guess that in a world of regional trade blocs, the Commonwealth may be an antiquated idea. But if you'll pardon me, your decision to skip the annual meeting of the WEF is extremely myopic. This thrift is worse than being penny wise, pound foolish.
Davos is one of the most powerful marketplaces—not just for investments and networking, but for presenting one's country to the heavyweights of the international business community. Few Indian politicians and bureaucrats have understood this. The overriding reason for this is the old mindset of "India, the incomparable" and "India, the mother of all markets, where everyone will come begging". Your sentiments also seem to reflect this belief. According to the report, you think that India is a large market and investors will come if they want to. So, there's no need for an Indian delegation to Davos.
Regrettably, Mr Prime Minister, nothing can be farther from the truth. International capital seeks environments that give the best risk-weighted returns and, at this point of time, it isn't really dying to invest in India. Let me share with you why this is so. It will also explain why you must go to Davos with a small but very competent team.
The world is still feeling the impact of the East Asian collapse. Between March and September 1998, the dollar-based stock indices fell, by 48 per cent in Malaysia, 44 per cent in Thailand, 43 per cent in Singapore, 34 per cent in Korea, and 30 per cent in Hong Kong. Taiwan (a dip of 28 per cent) and India (down 27 per cent) are only marginally better off. There are fears that the IMF's $35 billion package for Brazil may not stave off another crisis. In short, Mr Prime Minister, the investing world that will arrive en masse at Davos is scared as hell about emerging markets.
This is where you should be stepping in. It is vital for India's prime minister to interact with the world's most powerful industrialists, businessmen and investors and tell them in no uncertain terms the developments in India in five critical areas. First, you must emphasise that India is a responsible democracy, and that the world need not fear it as a tinpot nuclear state. Second, you need to highlight the state of the economy. That involves giving a brief resume on growth prospects; gently emphasising that a growth of 5.8-6 per cent is decent, given the state of Asian economies; demonstrating that, by virtue of minimising short-term dollar debt, India escaped the worst of the Asian contagion; and outlining credible measures that you will be taking to cut the fiscal deficit.
Third, you must list the reforms that your government has implemented in 1998, and proposes to carry out in 1999. You also need to stress the continuity of reforms, and how the process will gather greater speed under your government. Fourth, you must enunciate your government's policy towards foreign investments and the steps that have been and will be taken to improve infrastructure. Fifth, you need to disabuse the foreign media of an odious label—the "government led by India's Hindu nationalist party". In this context, it is important to clearly explain what this "nationalism" means in the areas of economics, business and governance.
WITH investors uncertain about its short-term future, India needs its prime minister to make a lucid, honest and forceful pitch to the audience at Davos. You might argue, "Won't Yashwant Sinha suffice?" The answer is simple. For all of Mr Sinha's reform-oriented virtues, he's no substitute for a head of government. Besides, you are an excellent communicator and, given proper briefing, will create just the right impression.
Some of your babus will tell you that Davos is overrated. Don't believe them. Let me give you a brief list of some people who attended the 1998 annual meet. Among politicians, there were Germany's Helmut Kohl, Dominique Strauss-Kahn of France, Chuan Leekpai of Thailand, Li Lanquing of China, Eduardo Frei of Chile, Shimon Peres of Israel, Carlos Menem of Argentina, Ernesto Zedillo of Mexico, Thabo Mbeke of South Africa, to name a few. Businessmen included Percy Barnevik, Serge Dassault (Dassault Aviation), Bill Gates, Michael Bloomberg, Eckhard Pfeiffer (Compaq), Goran Lindahl (ABB), Kenneth Lay (Enron), Niall Fitzgerald (Unilever), and Edward Zander (Sun). Add to that the heads of the world's leading economic institutions and half-a-dozen Nobel laureates. Surely, this doesn't add up to an overrated event.
So, Mr Prime Minister, please be parsimonious about foreign trips, but do attend Davos, especially the 1999 meeting. Set up a team that understands the dynamics of Davos to network your meeting and prepare your presentation. Take a small but effective group with you, perhaps consisting of Yashwant Sinha, Jaswant Singh and R.K. Hegde, with Vijay Kelkar, Bimal Jalan, N.K. Singh and Montek Ahluwalia. Believe me, it will make an impact and help refocus international investors towards India.
