India Economic Summit 2007

India Economic Summit Building Centres of Excellence New Delhi, 2-4 December 2007

Report

This publication is also available in electronic form on the World Economic Forum website at the following address: India Economic Summit Web report: http://www.weforum.org/summitreports/india2007 (HTML) The electronic version of this report allows access to a richer level of content from the meeting, including photographs and session summaries. The report is also available as a PDF: www.weforum.org/pdf/summitreports/india2007.pdf (PDF) Other specific information on the India Economic Summit, New Delhi, 2-4 December 2007, can be found at the following links: www.weforum.org/india www.weforum.org/india/programme www.weforum.org/india/partners www.weforum.org/indiaprivate www.weforum.org/india/summaries2007 www.weforum.org/india/indepth www.weforum.org/india/workspace Photographs can be found at the following link: www.pbase.com/forumweb/india2007

The views expressed in this publication do not necessarily reflect those of the World Economic Forum.

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Contents

Page 3 Preface Page 4 Summary: Building Centres of Excellence Page 8 State and National Competitiveness Page 10 Inclusive Growth Page 14 Infrastructure Development Page 18 Risk Management Page 22 Building Centres of Excellence in the WorkSpace Page 24 Acknowledgements

2 | India Economic Summit

Preface

The theme of the 23rd India Economic Summit, Building Centres of Excellence, acknowledged India’s remarkable achievements in creating highly competitive and innovative companies. But more importantly, it also underscored the challenge of extending that success beyond traditional industry, urban and academic centres to rural communities, where 70% of the population still resides. The record 800 leaders from business, government and civil society, representing over 40 countries, were in strong agreement that, without building centres of excellence in new domains and states, the country’s economic and demographic strengths could transform quickly into weaknesses in a highly-competitive global economy. Tellingly, there was no evidence of complacency setting in as a result of the country’s record GDP growth, strengthening currency and historically high equity markets. Indeed, the challenge of spreading higher growth across more state economies and developing industries, and into rural areas, was seen as remaining for a generation or more. Therefore, the mood at this year’s Summit was about how to get things done in these areas, sooner and faster.

and global insight from among its community of stakeholders. There was perhaps no better symbol of this spirit than the introduction of the WorkSpace to the India Economic Summit, which offered a unique collaborative environment for decision-makers to codesign responses to address the big challenges of today and tomorrow. A series of highly interactive and professionally facilitated WorkSpace sessions focused on such topics as expanding India’s competitive edge, developing a strategy for climate change, leveraging innovations from social entrepreneurs and building the new Indian multinational. We also published the India@Risk 2007 report in collaboration with the Confederation of Indian Industry (CII). And, for the third consecutive year, the Schwab Foundation for Social Entrepreneurship presented the India Social Entrepreneur of the Year Award for 2007 on the occasion of the Summit. We look forward to continuing to build on these successful initiatives in the coming years.

Discussions did not focus, as in the recent past, on how to achieve greater consensus among industry, state and national leaders around key growth challenges, but were directed instead at adopting and scaling grassroots innovations that are delivering faster and greater results on the ground.

As you read the key points and data presented in this report, we look forward to hearing your thoughts and welcome your suggestions as we prepare the programme for the 24th India Economic Summit, scheduled for 16-18 November 2008. The challenges faced by India, and the world for that matter, are more complex, interrelated and intractable than ever before. With over two decades of commitment to addressing these challenges, we hope that the India Economic Summit can continue to serve you as an important platform for collaborative thinking and creative solutions.

It was in this spirit of getting things done faster that the India Economic Summit programme was designed to tap into the collective intellect, on-the-ground experience

W. Lee Howell Senior Director Head of Asia and Global Agenda

3 | India Economic Summit

Summary: Building Centres of Excellence

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The greatest challenge facing India is to build an effective, efficient, scaleable and sustainable infrastructure for this fast-emerging economy.

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As long as advanced and developed economies have an edge over developing countries in knowledge, financial and material resources, I do not think we should rush to the conclusion that power has shifted.

Hector de J. Ruiz, Chairman of the Board and Chief Executive Officer, AMD (Advanced Micro Devices), USA; Co-Chair of the India Economic Summit

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Palaniappan Chidambaram, Minister of Finance of India

While there was confidence among the participants at the 23rd India Economic Summit, there was no complacency. India’s Finance Minister Palaniappan Chidambaram, for example, was candid in his assessment of the challenges ahead. Despite all the progress India has made in recent years, particularly as a result of substantial investment and spending growth, “my worry is whether we are getting bang for the buck,” he said. “While outlays have increased manyfold from 2003-2004 to 2008, are these outlays resulting in outcomes in the field?” That was the main question on participants’ minds: Is India getting the results it needs now that it is achieving 8-9% growth a year and foreign investment has risen sharply? It was not enough to recognize problems; participants focused on finding solutions to the root causes of India’s competitiveness deficiencies. Minister Chidambaram, for his part, pinpointed the lack of sufficient restructuring in the financial sector as an obvious failing. “The financial sector is the heart of the economy and we haven’t been able to push through reforms; that’s a disappointment.”

4 | India Economic Summit

At the end of the Summit, participants agreed on the areas in which action will have the greatest impact. The agenda of priorities for the coming year includes skills development, improving governance, upgrading education, building public-private partnerships (PPPs) in infrastructure, and addressing environmental degradation and water scarcity. All are enormous tasks, but perhaps the most challenging will be the development of India’s enormous human resources through skills training and education. In many of the sessions, time after time, participants stressed that it is critical for India to take full advantage of its demographic advantages by providing the schooling and instruction necessary to raise the skill levels of its expanding workforce and to create the millions of jobs necessary to allow them to be productive and contribute to inclusive economic growth. India will be able to build the many centres of excellence it needs to sustain high growth with equity over the long term only if it can educate and train its people to be productive at all levels of society and in both the rural and urban areas. “What we now need to do is roll up our sleeves and deliver on the

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A key to future growth is the enormous domestic market and the consumption-led economy, which has powered India’s growth and provided a degree of resilience and protection from global ebbs and flows. Orit Gadiesh, Chairman, Bain & Company, USA; Member of the Foundation Board of the World Economic Forum; Co-Chair of the India Economic Summit

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India has always been outside the epicentre of events and yet we get drawn in by the sheer gravitational pull of our geography, resources and potential. Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India; Co-Chair of the India Economic Summit

expectations for India that exist around the world,” stated Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India, and Co-Chair of the India Economic Summit. He added that the country needs to develop the competencies that will deliver on the promise of India. The India Economic Summit, convened in partnership with the Confederation of Indian Industry (CII), was organized under four sub-themes: State and National Competitiveness, Inclusive Growth, Infrastructure Development and Risk Management. In addition, for the first time at the India meeting, four WorkSpace sessions were held on the following topics: Innovative Models: Expanding India’s Competitive Advantage, Getting Ahead of the Climate Change Curve, Excellence Despite the Odds: The Social Entrepreneur in India and Unlocking the DNA of an Indian Multinational.

State and National Competitiveness India has become one of the most successful economies in the world in attracting the attention of global business strategists and investors. But to improve its competitiveness in the long term, it will have to address its economic weaknesses. The most pressing among them is the need to increase skills training to better prepare its young population to enter the workforce. Poor infrastructure, differences in regulatory and policy regimes across states, the absence of a single national market, deficiencies in the manufacturing sector, bureaucratic red tape and corruption are among the key obstacles to improving India’s global competitiveness. • A major priority is the skills deficit. While labour productivity has improved, India does not have the skill levels to sustain 9% growth. • Training young people for vocational work is critical if India is to take full advantage of the demographic dividend it can gain from its fast-growing workforce. • Government-controlled education and vocational schemes may not be sufficient to address the problem. The private sector must be involved to create jobs for new entrants. • Investors should be encouraged or even required to set up training institutes in their respective sectors.

5 | India Economic Summit

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You need to take the untapped human resources and bring them to fruition; otherwise, India will have a different value proposition.

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There are great opportunities in India, but don’t take anything for granted. Keep investing in education and address infrastructure. Edward J. Zander, Chairman and Chief Executive Officer, Motorola, USA; Co-Chair of the India Economic Summit

Ben J. Verwaayen, Chief Executive Officer, BT, United Kingdom; Co-Chair of the India Economic Summit

Inclusive Growth

• The private sector has a role to play. Banks, for example, can promote microfinance and provide rural Indians with education on the basics of finance. • The government must raise incomes in the countryside without accelerating the rush to the cities. Tools to achieve this include technology to turn rural India into a service centre for urban areas and regulations and incentives to encourage companies to “ruralize”.

India faces a major challenge in dealing with its urban poor and the even larger numbers of people who live in poverty in rural areas. As India aims for growth with equity, it may be difficult to improve conditions in the countryside without making the situation worse in the cities. • About a quarter of Indians live below the poverty line, while almost 70% of the population is in the countryside. • The rising discontent among the poor has led to a political backlash, including violent protests and insurgency. The growth of regional parties is, in part, a result of the need for the disadvantaged to have their voices heard. • To address the concerns of the poor and disenfranchised, the government and national parties will need to embrace local interests. A key priority must be to increase spending on rural infrastructure.

6 | India Economic Summit

Infrastructure Development One of the biggest challenges India faces is to address its lack of adequate and well-maintained infrastructure. Infrastructure investment must rise to around 9% if India is to sustain 10% growth. The challenge: to forge the public-private partnerships necessary to marshal the resources and expertise needed to dramatically improve the situation.

Kamal Nath, Minister of Commerce and Industry of India

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Within India, the challenge is how to create 100 million new jobs in the next 15 years. Mukesh Ambani, Chairman and Managing Director, Reliance Industries, India; Co-Chair of the India Economic Summit

• The public sector has insufficient resources to tackle the infrastructure deficit, while the private sector has funding and talent issues of its own. • The successful completion of the National Highways Authority’s Golden Quadrilateral project is an example of a public-private revenue sharing agreement. • Even if clearly defined projects existed, pricing and risk management, especially between public and private entities, need more sophistication and should move away from the traditional “cheapest supplier” mindset. • Cross-sector government cooperation must be improved so that an integrated approach may be taken in constructing infrastructure projects such as airports, which will need roads and transport links to allow easy access. • India does not have sufficient capacity to execute multiple mega-construction projects due to the lack of qualified engineering firms and the paucity of trained manpower.

Risk Management In managing the risks that threaten its current expansion, India must aim to turn some of the threats into opportunities. Although the rest of the world considers India to be an emerging superpower, it is in the country’s strategic interest to resist complacency and to avoid hubris. • Economic success should not be narrowly defined by the middle class, white-collar ideal. India needs to fill the burgeoning demand for skilled, blue-collar labour. • India must address global problems such as HIV/AIDS and global warming. • Climate change is exacerbating the rapid decline of India’s freshwater supplies. India must focus on building the necessary infrastructure to harness rainfall and floodwaters for productive use. • Protectionism, both at home and abroad, is another looming risk to India’s growth. • The prospect of a US economic slowdown may also have a negative impact, but India may be better insulated from a recession in America than East Asian economies. • India could risk raising social tensions if not enough jobs are created to absorb the increase in the workforce. A major challenge is to provide young people the skills they need to be productively employed.

7 | India Economic Summit

State and National Competitiveness

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Labour productivity has been rising but our skill levels have been abysmal. The skill levels of the labour force are lower than what we need for 9% growth. Suman Bery, Director-General, National Council of Applied Economic Research, India

In recent years, India has clearly been one of the most successful economies in the world in attracting the attention of global business strategists and drawing in foreign investment (see Figure 1). According to official figures, FDI in the financial year 2006-2007 totalled US$ 19.5 billion, up from US$ 7.7 billion the year before. The government expects US$ 30 billion for 2007-2008, an ambitious target that is still only about half the inflow to China. The Planning Commission forecasts that the economy will grow by 8.5% to 9% over the current financial year to March 2008. The goal going forward: sustained 9% growth that is inclusive. To get there will require addressing serious constraints. At this and previous India Economic Summits, participants have identified and debated the widely recognized challenges confronting India as it seeks to boost its global competitiveness and achieve China-level growth rates (see Figure 2). These familiar obstacles to raising productivity include poor infrastructure, differences in regulatory and policy Figure 1: Foreign Investment in India

Figure 2: India's Competitiveness India shares characteristics of both factor- and innovation-driven economies Institutions Innovation

Infrastructure

Business sophistication

Macroeconomic stability

Innovation-driven economies India Factor-driven economies Market size

Health and primary education

Higher education and training

Technological readiness Financial market sophistication

Goods market efficiency Labor market efficiency

Source: World Economic Forum

regimes across states, the absence of a single national market, the need to develop the manufacturing sector, bureaucratic red tape and corruption. Each pressing problem requires urgent attention. The divide among states, for example, is already leading to dangerous social tensions and anti-government protests. According to a recent study by Lehman Brothers, the poorest five states, where about 40% of the total Indian population lives, account for just a quarter of national output, while the five richest, with only about 26% of the population, produce more than 40% of the output.

20,000

15,000

10,000

5,000

0

2007

2008*

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

-5,000 1991

Foreign portfolio investment inflows (US$, millions)

Portfolio inflows for the first half of fiscal year 2008 greater than 2006 and 2007 combined $25,000

Source: Reserve Bank of India Note: * Years are fiscal years ending March. 2008 data includes FII flows through 19 Oct 2007, and ADRs/GDRs through July 2007.

8 | India Economic Summit

At this Summit, a spotlight was trained on one glaring deficiency that has not received as much attention in previous meetings: the need to increase vocational training and technical skills in the workforce. India’s achievements in IT and pharmaceuticals, as well as the cadres of top managers who have spread across the world are testament to the talent that India has produced. What India lacks are people with the skills to keep its economy humming – the masons, carpenters, hotel waiters and armies of workers who are the foundation of any economy. “Labour productivity has

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We need skills development as a major initiative.

Young people want to learn and become skilled.

Sunil Bharti Mittal, Chairman and Group Chief Executive Officer, Bharti Enterprises; President, Confederation of Indian Industry (CII), India

Ambika Soni, Minister of Tourism and Culture of India

been rising but our skill levels have been abysmal,” said Suman Bery, Director-General, National Council of Applied Economic Research, India. “The skill levels of the labour force are lower than what we need for 9% growth.”

“The government needs to let go of its control over the education system,” said Shiv Nadar, Founder, HCL; Chairman and Chief Strategy Officer, HCL Technologies, India. Syllabus-driven state schools do not give students the skills they need to compete. “We need skills development as a major initiative,” Sunil Bharti Mittal, Chairman and Group Chief Executive Officer of Bharti Enterprises and President of the Confederation of Indian Industry (CII), agreed.

It also requires a concerted effort to provide skills training. The government acknowledges this critical task. “For every one of our people to benefit from new employment opportunities being created across the economy, we must ensure that every Indian is educated and skilled,” said Prime Minister Manmohan Singh in his Independence Day message to the nation in August this year. Singh announced the launch of a Vocational Education Mission to open 1,600 industrial training institutes and polytechnics, 10,000 vocational schools and 50,000 skills development centres. Every year, he said, over 10 million students will receive vocational training, four times the number today. “We will seek the active help of the private sector in this initiative so that they not only assist in the training, but also lend a hand in providing employment opportunities.”

Colette Mathur, Senior Adviser at the World Economic Forum, offered a practical proposal with respect to the development of special economic zones: require investors to set up a training institute for workers in their sector. Ambika Soni, Minister of Tourism and Culture of India, supported the idea. “Young people want to learn and become skilled,” she said, noting the need for training facilities in such fields as tourism, hotel management and healthcare. There are opportunities for investors, the minister concluded.

Figure 3: India Younger Than Many Asian Peers Over half the population is younger than 25 years old 100%

21%

16%

90 Percentage of population, 2005

Much has been made of India’s youthful demographics where over half the population is under the age of 25 (see Figure 3). According to Goldman Sachs, the number of people of working age (15-60 years old) will peak at about 64% around 2020. This can be a significant global competitive advantage, but only if the jobs are created to accommodate the bulge in the workforce. It all starts with education, Indian Finance Minister Palaniappan Chidambaram told participants. “India can reap the benefit of its demographic dividend and avoid it turning into a demographic liability by ensuring that every child can access quality education and stay in school for at least 10 years.”

80

29%

70 60 50

7% 17%

6% 16%

6% 17%

23%

24%

22%

28%

26%

19%

19%

20%

34%

35%

35%

Indonesia

Malaysia

India

20% 18%

18% 15% 15%

20 10

9% 20%

24%

40 30

9% 21%

24%

27%

23%

22% 16%

0 Japan

Australia

60+ years old

South Korea 40-59

25-39

China 15-24

0-14

Source: Asian Demographics Ltd

9 | India Economic Summit

Inclusive Growth

Mani Shankar Aiyar, Minister of Panchayati Raj and Youth Affairs and Sports of India

There are two types of poor in India: the millions packed into India’s growing urban slums and the even greater number eking out life in its rural heartland. The conundrum the country faces is that improving the situation in the countryside will likely make matters worse in the city. “What do migrants want?” asked Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India; Co-Chair of the India Economic Summit. “They want diversity of income, sanitation, drinking water, power, roads. But even when they get those, they will still want the life they see on their televisions. Human beings like to live in cities; they have done so for thousands of years.” It is no secret that India needs to make its tremendous economic growth more equitable, to spread it more fairly among society – not just wealth, but infrastructure and educational opportunities. Roughly one quarter of Indians live below the poverty line, and almost 70% of Indians live in rural areas, where desperate farmers too often find solace in suicide.

10 | India Economic Summit

The rising discontent of these have-nots has already produced a political backlash. A radical Maoist insurrection, Naxalism, has spread through some states while, across the country, regional political parties are growing in strength, upsetting the dominance of national parties and forcing them to cobble together coalition governments – like the one now in power in New Delhi (see Figure 1). While these new political parties offer an important voice for those disenfranchised or displaced by economic development, they often base their appeal on caste and the personality of their leader, making them divisive and raising concerns about corruption. “They can muster big crowds but they are perceived to be not very honourable,” said Arun Jaitley, Member of Parliament and General Secretary, Bharatiya Janata Party, India. Figure 1: India's Parliamentary Parties Parliamentary power now spread among more political parties 14 Average number of parties winning seats for elections in 5 largest states

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If we can take opportunities to rural India, there’s no reason why rural India would wish to come like lemmings to urban India.

12

10

8

6

4

2

0

1985-89

1990-94 1995-99 2000-04 For elections occurring during periods (parliamentary terms not aligned across the five states)

Source: Election Commission of India

2005-07

Ben J. Verwaayen, Chief Executive Officer, BT, United Kingdom; Co-Chair of the India Economic Summit; Mani Shankar Aiyar, Minister of Panchayati Raj and Youth Affairs and Sports of India; Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India; Co-Chair of the India Economic Summit and Mohamed A. Alabbar, Chairman, Emaar Properties, United Arab Emirates listen to Nik Gowing, Main Presenter, BBC World, United Kingdom

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What do migrants want? They want diversity of income, sanitation, drinking water, power, roads. But even when they get those, they will still want the life they see on their televisions. Human beings like to live in cities; they have done so for thousands of years.

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Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India; Co-Chair of the India Economic Summit

The proliferation of coalition governments that rely on consensus decision-making could also have a diminished ability to formulate and implement effective policies. “Coalition government has its own compulsions and its own limitations,” said Vilasrao Deshmukh, Chief Minister of Maharashtra, India. “It can delay decisions.”

broadens access by farmers to credit. In doing so, it is helping to plug a gaping hole in funding for connecting rural Indians to the mainstream economy. The private sector is also making great strides through microfinance, providing rural development capital while freeing many rural people from the grip of moneylenders. Instead, microfinance offers the rural poor a way to leverage their own industry and thrift by popularizing not only debt but also savings accounts. “The bank account has become a status symbol in the villages,” said M. R. Rao, Chief Operating Officer, SKS Microfinance, India. To realize the potential microfinance has tapped, however, India needs greater deregulation. Existing rules, for example, prevent bankers from tying up with telecommunications companies to use established cellular customer networks to distribute financial services. Figure 2: Rural Infrastructure Investment

Achieving inclusive economic growth is a priority for India’s current government. Its latest budget includes a 31% increase in spending on rural infrastructure – 15% of public infrastructure funds are expected to be allocated to rural irrigation (see Figure 2) – and

Rural irrigation expected to receive 15% of public infrastructure funds 1,500,000 Projected infrastructure investment, 2007-12 (Rs, crore)

To achieve a broader mandate and regain political momentum, national parties need to boost regional chapters to embrace local interests; likewise, regional parties need to develop more robust national agendas.

Electricity 1,250,000

Water supply/Sanitation

Rural

Rural roads Telecoms

1,000,000

750,000

500,000

Urban

Irrigation

250,000

0

Source: Government Planning Commission

11 | India Economic Summit

Palaniappan Chidambaram, Minister of Finance of India and Sunil Bharti Mittal, Chairman and Group Chief Executive Officer, Bharti Enterprises; President, Confederation of Indian Industry (CII), India

Bankers also have an important role to play in filling the rural education gap, by teaching rural Indians the basics of finance. To be sure, education often serves as a politically correct panacea in debates about poverty relief, but this year’s Summit broke from the platitudes by outlining practical areas where education can have an immediate impact. Improved vocational training was singled out as a critical necessity for India that would address its growing shortage of skilled trades workers while recognizing that a higher degree may not be a realistic aspiration for the bulk of the country’s youth. Vocational training is an area, moreover, where companies can get more immediate returns on their investment, either by conducting their own training, financing vocational programmes or helping to develop curricula.

12 | India Economic Summit

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The war for talent is such that we have hundreds of millions of people who cannot monetize their skills today because we haven’t connected them. It’s in everyone’s interest that we unleash that capability and that talent.

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Bankers concede, however, that their industry is also guilty of holding back. Microfinance typically charges relatively high interest rates, yet default rates among micro-borrowers remain near zero, indicating what bankers say is excessive caution on the part of microlenders. Part of that caution, they say, stems from the fact that there is no credit bureau to keep track of rural borrowers, nor a reliable way – such as driving licenses or birth certificates – to even identify them. Some have called for the government to issue national voter registration cards.

Ben J. Verwaayen, Chief Executive Officer, BT, United Kingdom; Co-Chair of the India Economic Summit

The good news for India is that its economy is largely driven by domestic demand as opposed to exports. The rural population, therefore, represents a critical source of new labour for India’s services-led growth. But solving the riddle of how to raise income levels in the countryside without accelerating the rush to the cities requires new thinking on what urbanization means. In short, convincing rural Indians not to move to big cities will require moving the city closer to them. “If we can take opportunities to rural India, there’s no reason why rural India would wish to come like lemmings to urban India,” said Mani Shankar Aiyar, Minister of Panchayati Raj and Youth Affairs and Sports of India.

Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company, India, speaking at the SlimCity private session

Industries that rely on rural inputs – food processing, biofuel production and handicrafts – should move closer to their production centres. Doing so will encourage the creation of new urban centres, turning villages into towns, and towns into small cities. Technology can also be used to turn rural India into a service centre for urban India in the same way that India has become a service centre for the world. “The war for talent is such that we have hundreds of millions of people who cannot monetize their skills today because we haven’t connected them,” said Ben J. Verwaayen, Chief Executive Officer, BT, United Kingdom; Co-Chair of the India Economic Summit. “It’s in everyone’s interest that we unleash that capability and that talent.” Ultimately, it may take a more concerted push by government to make this shift out of the cities happen. Regulations and incentives may be needed to encourage companies to “ruralize”. But it is clear that India can no longer afford to let investment and commerce remain confined within the city limits. “Rural and urban are not separate; both are connected, said Aiyar. “Until we see that, India will become prosperous and Indians will remain poor.”

Transformation – Sustainable City Development and Inclusive Urban Growth At a session on the new SlimCity initiative of the World Economic Forum, business leaders concluded that farreaching change is imperative in order for India’s cities to achieve sustainable development and provide inclusive growth for its citizens. Accountability, coordination and resources were identified as the three core areas in need of transformation. Participants underlined the success of the Delhi Metro development as a widely recognized example of the overwhelming advantages of clear accountability in city governance and transparent, coordinated public sector project management. Participants highlighted the fact that India possesses world-class resources, but its economic and inclusive growth can only continue if leaders from the public and private sectors rise to the challenge of putting these resources in the hands of those who need them. The World Economic Forum’s SlimCity initiative is a global partnership of leading city mayors and private sector board executives, supported by the World Bank, the International Energy Agency, UH-Habitat and ICLEI. The initiative provides a risk-free, dynamic, multistakeholder environment within which cities and the private sector can pursue the development of energy and resource efficiency in cities.

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Infrastructure Development

Nandan M. Nilekani, Executive Co-Chairman, Infosys Technologies, India; Member of the Foundation Board of the World Economic Forum

“The greatest challenge facing India is to build an effective, efficient, scalable and sustainable infrastructure,” noted Hector de J. Ruiz, Chairman of the Board and Chief Executive Officer, AMD (Advanced Micro Devices), USA; Co-Chair of the India Economic Summit. As India’s economy continues its high growth trajectory, its lack of infrastructure becomes an ever-increasing concern. To sustain and realize India’s growth potential, the government of India has tabled ambitious plans to boost infrastructure investment from historic levels of 3-4% of GDP to around 9% by 2012. The Planning Commission’s current infrastructure investment estimate within the 11th Five-Year Plan period stands at US$ 490 billion. These plans do not include private capital expenditure investments, which will lead to an even greater demand for infrastructure-related services and products. But many business people harbour doubts that these plans will come to fruition because of resource gaps faced by the public and private sectors.

annum, most analysts agree its lack of infrastructure costs the economy between 1.5% and 2% of GDP per annum. This equates to between US$ 95 billion and US$ 134 billion lost in cumulative GDP by 2012. The Indian government recognizes that it faces a significant task. On one hand, public sector borrowing restrictions and the lack of construction resources mean it has to approach the private sector to help fund and implement their plans. On the other hand, the private sector faces significant resource and talent issues of its own to cope with extra demand for construction. The current five-year plan for infrastructure sets aside an average of 30% (US$ 145 billion over five years) in PPPs and purely private infrastructure-related projects. Telecommunications, roads, ports and airports are the main targets for the higher share of private funding, reflecting recent significant steps taken by the government towards embracing the private sector (see Figure 1). Figure 1: Infrastructure Investment, by Sector Private sector contribution expected to be 0% of irrigation funds, but nearly three-quarters of ports spending 100%

Projected share of total infrastructure investment, 2007-12

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At the end of the day it’s easier to build a road than it is to build a democracy.

Private 75

States 50

25

Centre

14 | India Economic Summit

Source: Government Planning Commission

Ports

Telecom

Airports

Storage

Roads

Gas

Electricity

Railways

Water supply/ Sanitation

But the cost to the economy of not dramatically improving infrastructure will be huge. Even though India’s US$ 1 trillion economy is growing at 8-10% per

Irrigation

0

Rajat M. Nag, Managing Director-General, Asian Development Bank, Manila

The National Highways Authority of India has led the way by successfully completing the Golden Quadrilateral project through revenue sharing arrangements with private contractors, introducing model concession agreements as well as acquiring land in a practical manner. The government did not interfere when the telecommunications private sector innovated by introducing leapfrogging technology to eliminate the need to lay an expensive network of land cables. Further, the government has “pre-approved” 11 international and domestic consultancies to advise on infrastructure related projects to make the bidding process simultaneously quicker and more transparent. Additionally, it has authorized a viability-gap financing mechanism for projects that do not meet purely return-oriented targets, and recently set aside a US$ 100 million fund to finance the exploration and design of designated projects. However, there are many areas that still lack clarity and need attention. First among these is the lack of “bankable” projects. General project funding requirements are easy to determine, but private sector players complain there are no clearly articulated projects defined in a way that they can readily start executing. Even if clearly defined projects existed, pricing and risk management, especially between public and private entities, will need more sophistication and should move away from a traditional “cheapest supplier” mindset. For example, two ultra-megawatt power facilities have been negotiated on 40-year fixed price contracts. While in the short term this may seem like a

great deal for the government, it has unwittingly introduced unsustainable pricing and risk policies that may deter future private players from bidding by such risk distortion. Indeed, more broadly, public and private entities need to reflect on their respective abilities to manage and control the variety of development, construction, financial structuring and market risks, and allocate them appropriately within PPP frameworks. And the social consequential risks need addressing too, especially regarding the resettlement and rehabilitation of affected voting populations. Complicating the picture further, cross-sector government cooperation is not strong. Silo-led developments, rather than integrated approaches, lead to stunning examples of where nearly-built structures, such as Bangalore’s international airport, will have no quality roads leading to or from them when they open. But blame is too easily put on the government. Consumer mindsets are also a problem. Central government ministers as well as state chiefs are rightly afraid to place a price on commodities seen as essential to rural area welfare, for fear of a voting backlash. Rural areas, in particular, expect water to be provided without cost. Some experts have suggested introducing a “water credits” system similar to carbon credits to discover the price of increasingly scarce potable supplies. But the Planning Commission does not envisage much private participation in either irrigation or water supply.

15 | India Economic Summit

“

The government regards infrastructure as a critical constraint. It is our view that the target we have set for the economy which is to accelerate to an average of 9% growth cannot be achieved if we fail to make efforts in infrastructure.

inevitably lead to improperly planned projects risking high alteration costs and poor quality execution. Thus, the commonly held perception that India is an abundant oasis of engineering talent is plainly false. As Chaly C. K. Mah, Chief Executive Officer, Asia Pacific, Deloitte, Singapore, noted, “When you talk about skilled labour, there is a massive shortage in India and the core is to ensure you have a solid education system.”

Montek S. Ahluwalia, Deputy Chairman, Planning Commission, India

Even though the engineering and construction industry in India employs over 32 million people, it has not until recently been recognized as an industry. However proud India is of its centres of education excellence, they only cater to a minute proportion of the population. The rest of the “educable” workforce, as N. K. Singh, Deputy Chairman, Planning Commission, Government of Bihar, India, dubbed them, are not emerging with the right skills, leaving many enlightened companies to take the initiative to train them “on the job” and issue skill certificates.

“

Dispute resolution needs to be significantly streamlined. Complex decision-making jurisdictions that are constitutionally mandated within national, state and local power seats add significant cost and time overruns to infrastructure projects that cross boundaries and encroach on several sovereignties. A properly functioning and responsible arbitration mechanism is generally absent with non-binding decisions and cases waylaid in courts or automatically referred to the Supreme Court. But even if mindsets shift significantly, will there be sufficient capacity to execute? First, large engineering and construction companies with mega-project management capabilities in India are few in number. The industry lacks not only size but also appropriatelytrained manpower. Of the 500,000 total engineering graduates, only 5% are civil engineers. And even those graduating are lured by higher wages in other non-infrastructure-related sectors such as call centres or jobs in the Middle East offering much higher salaries. Especially acute is the shortage of talent at the planning, design and maintenance levels – particularly at the middle-management stage – which will

16 | India Economic Summit

Government officials and private sector players agree on one thing, though: comparisons between China and India regarding infrastructure development should stop, since the two systems are so unlike one another when it comes to large-scale planning. Indian officials like to portray China as a centralized polity that has no problem or issue with moving large populations to make way for critical infrastructure projects. Of course, this view misses the underlying tensions between centre and provinces. But one thing is clear, and put best by Nandan M. Nilekani, Executive Co-Chairman, Infosys Technologies, India; Member of the Foundation Board of the World Economic Forum: “At the end of the day, it’s easier to build a road than it is to build a democracy.”

Rajiv Lall, Managing Director and Chief Executive Officer, Infrastructure Development Finance Company, India; Montek S. Ahluwalia, Deputy Chairman, Planning Commission, India; Rajat M. Nag, Managing Director-General, Asian Development Bank, Manila; Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company, India

Meeting India’s Infrastructure Challenge The current state of the country’s infrastructure and the government’s new proposals to increase expenditure to 9% of GDP by 2012 (see chart) formed the basis of a workshop organized by the World Economic Forum and the Confederation for Indian Industry (CII) ahead of the India Economic Summit. The private meeting comprised a broad array of stakeholder groups including government officials, private sector players, global engineering firms, consultants, financial intermediaries and multilateral organizations, including the World Bank. Infrastructure Spending

Electricity

Roads\Bridges Telecom

Railways Irrigation

Water supply/ Sanitation Ports Airports Storage Gas

Overall infrastructure investment expected to increase from $201 billion in the 10th plan, to $492 billion in the 11th

11th plan (FY07-12)

Building on the findings of the World Economic Forum’s Engineering & Construction: Scenarios to 2020, participants noted that the central government has made a lot of progress on changing mindsets by actively involving the private sector and making the bidding process for projects more transparent. Financing for projects in general did not seem to be an issue, but participants called for greater depth in private sector bonds to match project tenures. Private sector participants also called for more clarity on the range of detailed projects envisaged by the government to assist in their planning and more detail regarding the mechanism of public-private partnerships. They also highlighted the fact that different sectors should learn from others in terms of best practice. In addition, they commented that, given the growing number of options for investment opportunities globally, India needs to focus on making it easier for multinational companies to work on infrastructure projects.

10th plan (FY02-07)

$0

100

300 200 Anticipated investment (US$, billions)

Source: Government Planning Commission; Lehman Brothers

400

$500

Finally, the group mandated that the Forum and CII produce a series of case studies highlighting infrastructure solutions already being implemented around the country. This, they said, would help share best practices within India and shed light on the Indian infrastructure situation for global companies.

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Risk Management

Rahul Bajaj, Chairman, Bajaj Auto; Member of Parliament, India

India’s boom is replete with risk. The World Economic Forum’s India@Risk 2007 report outlined just six of the major global risks to the country, including the loss of freshwater, economic shocks and oil peaks, the economic impact of demographics, globalization vs protectionism, climate change and infectious diseases. Most people associate risks with jeopardy, but risk is an essential ingredient in success. “Risk is not identical to threat,” explained Sean M. Cleary, Chairman, Strategic Concepts, South Africa. “Risk lies on the cusp between threat and opportunity. The challenge when addressing risk is to turn it into an opportunity.” To do that, it is important not to see India’s problems as insoluble, nor to take India’s success as preordained. Indeed, talk of India as a new economic superpower may be premature, warned Palaniappan Chidambaram, Minister of Finance of India. He added that a superpower is a magnet for knowledge, a financial centre and has access to abundant natural resources. India has yet to secure these things and so must avoid hubris or chauvinism. India must not, therefore, let economic success be narrowly defined by the middle class ideal as seen on television. Between peasantry and prosperity, India

18 | India Economic Summit

needs to fill the burgeoning demand for skilled labour. “The concept of dignity of labour has to be established to a much greater degree than we have,” said Anjali Raina, Country Training Director, Citibank, India. And as large and complex as it is, India cannot afford to turn its back on the world’s problems – they have historically had a way of pulling India in. HIV/AIDS is an example of an imported problem that will require Indian solutions to solve. With at least 5.7 million HIV-positive people, India last year overtook South Africa as the country with the largest number of people infected with the virus that causes AIDS. Global warming, meanwhile, is exacerbating the rapid decline in India’s freshwater supplies (see Figure 1). By 2025, India’s per capita supply of renewable water is projected to drop to only a quarter of what it was in 1975. India, however, receives more rainfall than it can manage, which often results in flooding. Harnessing those floodwaters will require that India build dams

Figure 1: Access to Renewable Water Dropping 2025 per capita water supply in India is expected to be less than half the supply in 1975

Renewable water per capita (cubic metres)

“

“

The real economy, including manufacturing, is what is important and the appreciation of the rupee is making that economy suffer.

3,500 3,000 2,500 2,000 1,500 1,000 500 0 1975

2000

Source: United Nations Food and Agricultural Organisation

2025 (medium estimate)

“

“

Along with national security, the three pillars of security – human, economic and physical – need to be raised to bring the economy to a position where the challenges can be met. The risks were identified because of their interconnectedness, which magnifies their impact. Shamsher S. Mehta, Director-General, Confederation of Indian Industry (CII), India

and reservoirs, as China has built infrastructure such as the Three Gorges dam. “India must summon that kind of determination and will to execute the projects,” said Chidambaram. Many worry that the government has adopted a shortsighted approach to the environment, however, rejecting calls to cap emissions growth despite abundant evidence that India is choking on its pollution. While critics agree with India that the West must lead the world in cutting emissions, many say India shouldn’t use development as an excuse for repeating the West’s mistakes. Instead, said Stuart Popham, Senior Partner, Clifford Chance, United Kingdom, India has an opportunity to leapfrog ahead, “and formulate regulations that might be the template for the rest of the world”.

Protectionism, both at home and abroad, is another looming risk to India’s growth. India has its own opponents to free trade and capital flows, and many Indians who are afraid of displacement want to block the creation of special economic zones that stand to boost investment and create centres of job growth outside major cities. In the United States, a growing number of people see the rise of India and China as a threat to their own prosperity. India is fortunate in that, relative to export-dependent East Asia, it is somewhat insulated from the market turmoil emanating from the troubled US housing market. India relies largely on coal for its energy, and its economic growth is driven primarily by domestic demand rather than exports. Nonetheless, India relies on imports for as much as 80% of its fuel needs and is trying to substitute coal with cleaner, but imported, natural gas. Rising oil prices have repercussions for India, and India has room to play a more assertive diplomatic role where its energy supply is concerned. The prospect of a US economic slowdown next year, while of greater concern to East Asia’s exporters, also has a potentially negative impact for India. Already this year, the US dollar has fallen dramatically against the rupee, making it harder for Indian exporters to compete overseas and luring speculative investments into India, which is in turn pushing the rupee up even

19 | India Economic Summit

India@Risk: Six Global Challenges Ahead session: Robert D. Blackwill, President, Barbour Griffith and Rogers International, USA; Chaly C. K. Mah, Chief Executive Officer, Asia Pacific, Deloitte, Singapore; Shekhar Dutt, Deputy National Security Adviser, National Security Council (NSC), India; Madeleine K. Albright, President, The Albright Group, USA; Stuart Popham, Senior Partner, Clifford Chance, United Kingdom and Shamsher S. Mehta, Director-General, Confederation of Indian Industry (CII), India

Urgent action is required to avoid the tipping point that scientists say will be reached if fast-growing countries emit as rapidly as others have in the past. Business participants stated that the case for action in India is simple and undeniable, and they are willing to step forward if government hesitates. Participants expressed their view that, irrespective of the United Nations Climate Change Conference 2007 outcome, the Indian business community should show leadership and start taking the first steps forward.

20 | India Economic Summit

Appreciation

The rupee's relative value changing as the dollar-euro rate evolves 140

120 Against US$

100

Against

80

7/1/2007

1/1/2007

7/1/2006

1/1/2006

7/1/2005

1/1/2005

7/1/2004

1/1/2004

7/1/2003

1/1/2003

7/1/2002

60 1/1/2002

Participants were given expert overviews of the scale and urgency of the climate change problem facing the subcontinent. As well as the adaptation challenge – which, if not met, has huge potential to stunt future national growth – there are predictions of a seven-fold increase in energy consumption in India by 2030, 60-70% of which will be provided by coal. India will soon become a major emitter of greenhouse gases and will face increasing international pressure to reduce emissions levels.

Figure 2: Value of the Rupee

Relative value of the rupee (100=January 2002)

Business leaders sat down at the India Economic Summit to discuss the climate change challenge. The high number and level of participants during the programme’s two sessions on the topic showed that there is rising business concern in India about the issue.

faster (see Figure 2). Normally a rising currency helps keep a lid on inflation but, in India, the flood of cash into the country and rapid growth are combining to accelerate price increases.

Depreciation

Business Leaders in India Take on the Climate Change Challenge

Source: Reuters

Some Indian industrialists suggested capital controls to help stem the inflow of portfolio investments. “Something has to be put there – not for money going out but for money coming in,” said Rahul Bajaj, Chairman, Bajaj Auto; Member of Parliament, India. Despite the experiences of Malaysia and Chile, economists warn that capital controls would be a mistake. The strong rupee lowers the cost of importing much-needed capital goods, which can in turn be used to boost productivity. India’s capital markets need to be liberalized, they say, so they grow and become less volatile. But until that happens, Indian companies will have to get used to bigger swings in the rupee’s value.

India@Risk India is at an inflection point – while the prospect of sustaining 8-10% growth is achievable, it is not a given, according to a report released by the World Economic Forum's Global Risk Network and the Confederation of Indian Industry (CII). Decision-makers cannot assume that tomorrow’s growth story in India will read like today’s. The economic fundamentals are in place, but political dynamics and the scope of structural reforms are more likely to shape the next chapter, according to the India@Risk 2007 report released at the India Economic Summit. In the short term, three economic threats loom large: a rising rupee, an oil price shock and a collapse of asset prices (especially property or shares) triggered by a global re-appreciation of risk. In the medium and long term, risk mitigation should focus on building increased resilience via continued investment in basic infrastructure and education, in order to reap the demographic dividend of a young, aspirational and growing populace. With more than 71 million new jobs required over the next five years, inclusive growth is an imperative for India.

A longer-term risk to Indian economic growth is its rising population of new job entrants. With half of the population under 25, the Indian working-age population is expected to rise by more than 10% to 762 million by 2012. The added savings and consumption will propel the Indian economy even faster. With most of these young people counted among the rural poor, however, the worry is that limited access to education has left most of them lacking marketable skills. That could leave India short of skilled workers, but teeming with restive unemployed. The government aims to broaden access to primary and secondary education, and increase college enrolment. But economists and executives stress that it is the quality, not just quantity, of education that counts. They feel that too many colleges are producing under-qualified graduates. At the same time, many college graduates are often over-qualified for service sector jobs such as plumbing and electrical work.

Another key priority highlighted in the report is water – per capita supply in 2025 is expected to be less than half of that in 1975 (see chart). There is no doubt that the current water situation in India will get much worse unless different approaches are taken. India has enough precipitation but not enough storage in terms of dams and reservoirs; it needs improved groundwater recharge and should explore opportunities for further public-private partnerships. Other risks that could derail India’s future growth prospects include climate change, infectious diseases and the potential backlash against globalization (i.e. rising protectionism). “Some of these risks are beyond India’s control, including exogenous economic crises and an oil price shock,” said Palaniappan Chidambaram, Minister of Finance of India, adding, “Other risks are endogenous and can be overcome – for example, risks associated with demographics and the lack of freshwater.” The report concludes that for India – a country characterized by huge opportunities and ever-increasing regional and global interdependence – the imperative is for collective action to mitigate these shared risks. For the full report go to: http://www.weforum.org/pdf/grn/indiarisk.pdf Access to Renewable Water Dropping 2025 per capita water supply in India is expected to be less than half the supply in 1975

Renewable water per capita (cubic metres)

Vocational training is an area into which companies can invest directly and reap rewards in a relatively short time. If India can manage to train more of its poor, rural young people to take up skilled jobs, it will be able to fill not only its own need for labour, but find more jobs to meet the rising shortage of skilled workers in nations with ageing populations overseas.

3,500 3,000 2,500 2,000 1,500 1,000 500 0 1975

2000

2025 (medium estimate)

Source: United Nations Food and Agricultural Organisation

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Building Centres of Excellence in the

WorkSpace

Participants at the India Economic Summit had the opportunity to take part in four WorkSpace sessions, which focused on different issues important to India’s future and sought a uniquely Indian perspective in addressing them.

Innovative Models: Expanding India’s Competitive Advantage

Getting Ahead of the Climate Change Curve

Participants looked at various innovative models that are transforming India into a centre of excellence. These models were explored across sectors, industries and business domains to determine how they could be replicated. Participants split into groups from various industries, where they co-designed ideal 3-D models that would enable innovation in any context.

Experts and business leaders in this session looked at climate change from a sector perspective to identify cross-sector risks, explore leading practices and build systemic solutions to this very relevant global issue. Participants divided into groups to look at risks and identify leading practices to start defining concrete actions they could take immediately. All concurred that India has a large role to play in rolling back the effects of climate change.

The groups came away with insight into how to encourage an environment conducive to innovative thinking. All agreed that innovative ideas and processes can often be applied from one industry to another and that industries can learn from one another. The concept of innovation may by necessity mean that organizations need to develop new business models to remain relevant. This is particularly important for top-down institutions. Innovation is not only about inspiration; it goes beyond new products and services and should be viewed as a strategic issue. Trying something new may mean making mistakes, but should also mean being willing to invest in making mistakes to get to something really good. Many participants concluded that innovation could be viewed as an excursion: taking a few steps away from their comfort zone and then returning full circle to their issue or challenge with new insights and solutions.

22 | India Economic Summit

Generally, the participants identified innovation as a key to tackling the effects of climate change, as drastic solutions are needed to ensure a sustainable future. Participants noted that knowing the carbon footprint of a business’s supply chain is an important step in learning where to make changes to reduce the footprint to zero. Energy efficiency was also flagged as an important priority for businesses to make, including investing in green technologies and products. Participants further highlighted the significance of advocating national and international frameworks such as market mechanisms to price carbon; a “greener” approach to urban and rural design; and a consumption tax, as opposed to an income tax.

Excellence Despite the Odds: The Social Entrepreneur in India

Unlocking the DNA of an Indian Multinational

Building on the World Economic Forum’s and the Schwab Foundation for Social Entrepreneurship’s focus on social entrepreneurship, this session explored the concept of social entrepreneurship and how it could be relevant and applicable in an Indian context. Participants were greeted in small groups by a number of entrepreneurs from India and abroad, who explained how they became socially engaged. Groups then broke out again to design their own ventures to address an issue relevant to India’s future.

This WorkSpace session focused on exploring the elements that make companies successful. Participants studied various cases, such as the rise and decline of empires, the unfair competitive advantage of some economies, the viral nature of the “Facebook” phenomenon, and the concept/lifestyle branding of enterprises such as Manchester United to review what factors and unique features make them successful – or unsuccessful. Participants examined what elements might be transferable to Indian companies, then identified features that could contribute to Indian companies’ international growth.

Nearly all groups agreed that effective social entrepreneurship is about scale. One person acting alone is a good place to start, but has a small impact; a larger group scales up the results and raises awareness about an issue. Further, scalability and sustainability require easy access to capital and a secure operating environment for socially-minded projects. One group coined the term social incubator – referring to the environment that fosters interest, investment and commitment to social projects. Moreover, social entrepreneurs should leverage collective experience by collaborating with like-minded individuals and companies. Companies should be approached with a value proposition to leverage their strengths, help them expand into new business markets and address gaps in Indian society, such as access to clean water or education for rural migrating workers. Entrepreneurs by nature need to think creatively. For example, one group of participants sought to address the shortage of cooking fuel for the rural poor by creating a company producing cooking gas from animal and human waste. Nearly all participants thought that, if a socially-minded venture is not a good business model, it is not worth doing. Social entrepreneurship is not only about doing good for good’s sake, they agreed.

Under the categories of brand, culture, cost effectiveness, growth and innovation, participants found a number of positive factors unique to India. Culturally, Indians are positive about the future, learn quickly from others and adapt well to change. Their success in the last century is a testament to these cultural characteristics, which have allowed India to thrive in the face of challenges. The brand India itself is a positive force for international growth. Instead of focusing on low costs, India should develop a high value proposition in niche markets. One such niche market identified by one group is the wellness market, to which India’s cultural focus on holistic living, spiritualism, yoga and Ayurveda is highly valuable and marketable. Participants recommended that Indian companies operate with a view to sustainability by increasing brand awareness, expanding country and local knowledge and by cultivating talent to lead globally. Indian companies are smart to look at growth, while recognizing their limits. Indian companies should identify their competitive advantages and exploit them, scale up intelligently and rapidly, and develop new models and concepts.

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Acknowledgements

The World Economic Forum would like to thank the officers and staff of the Confederation of Indian Industry for their partnership in the India Economic Summit. The World Economic Forum wishes to recognize the support of the following companies as Partners of the India Economic Summit:

Strategic Partners ABN AMRO Bank Accenture AMD American International Group (AIG) Apax Partners Audi Avaya Bahrain Economic Development Board Bain & Company Bombardier The Boston Consulting Group BP BT CA Citi Clifford Chance The Coca-Cola Company Credit Suisse Deloitte Deutsche Bank Deutsche Post World Net DuPont Ernst & Young Kudelski Group Lehman Brothers Manpower METRO Group Microsoft Corporation

Morgan Stanley Nestlé NYSE Euronext Olayan Group PepsiCo Reliance Industries Reuters Standard Chartered Bank Swiss Re UPS VTB Bank

Summit Supporters Apollo Tyres Capgemini Department of Industrial Policy and Promotion, Ministry of Commerce and Industry of India DLF Emaar Properties Financial Technologies India Rakindo Developers

Service Providers NDTV Taj Palace Hotel

The World Economic Forum would also like to thank Sheila Dikshit, Chief Minister of the National Capital Territory of Delhi, and RAK Investment Authority, Government of Ras Al Khaimah, United Arab Emirates, for hosting activities during the India Economic Summit.

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25 | India Economic Summit

Contributors

W. Lee Howell is Senior Director, Head of Asia and Global Agenda at the Forum. Sushant Palakurthi Rao is Associate Director, Deputy Head of Asia at the Forum. The India Economic Summit was under their direct responsibility with Chantal Adamson, Senior Event Manager and Summit Coordinator, and Shruti Bhatia, Senior Manager, India and South Asia. Lena Hagelstein, Global Agenda, Programme Manager Geopolitics, and Global Leadership Fellow, World Economic Forum; Vidhi Tambiah, Associate Director, Content Development, World Economic Forum; and Samantha Tonkin, Senior Media Manager, World Economic Forum, worked with Wayne Arnold and Alejandro Reyes, report writers tasked by the World Economic Forum to produce this report. The World Economic Forum would like to express its appreciation to the summary writers for their work at the Summit. Session summaries are available at: www.weforum.org/india/summaries2007 Editing: Janet Hill, Editor, and Fabienne Stassen Fleming, Senior Editor Design: Kamal Kimaoui, Associate Principal, Production and Design Layout: Kristina Golubic, Graphic Designer Photographs: Prabhas Roy Special thanks to PricewaterhouseCoopers for their help in preparing data and statistics underpinning this report.

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The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org)