Question: What will be necessary for India to sustain the
current rate of growth?
Azim Premji: I think the most
important thing is we have to maintain fiscal discipline. Whether it be
in our fiscal deficit, whether it be in terms of focusing, in terms of
development, in areas which can generate scarce resources and therefore
back inflation rates, and in terms of integrity in our leadership.
Is there any truth to the concept that India is a bubble?
Premji: Oh, that’s completely irrelevant, frankly. I wouldn’t even
think of it. It’s a mature democracy of 1.11 billion people. We’ve had a
tradition of successful democracy since '46, '47. We are probably one
of the only democratic governments in the world which for more than 10
years has successfully led and managed coalition governments, alliance
governments. Britain is facing it now and they’re panicked. Whereas we
have done it successfully for 10 years; three governments, and done
it... and the job has gotten done. The job of nation building, the job
of nation leadership in a difficult, complex coalition has worked. What
more maturity can you expect from a democracy?
As India becomes richer and salaries rise, will outsourcing still make
financial sense for Western countries?
It will make sense because the companies are going up the value chain.
And as the international companies are trying to learn our business
model, we are learning their business model probably faster than they
are learning our business model. So cost arbitrage will always be there
because the cost arbitrage is not determined by two million engineers in
the country who are working on a job, or three million engineers in a
country who are working on a job. The cost arbitrage is determined by
the standard of living of four billion people, which is still much, much
lower than the rest of the developed world; much, much lower. And when
the developed world escalates even at 3% on salary levels a year, they
escalate on a base of 100, where even if you escalate at 7% a year on a
salary level, or 10% a year on a salary level, we escalate not on a base
of 100, but we escalate on a base of somewhere between 10 and 20. You
just run mathematics and you will find that even at high inflation
rates, the gap continues to be there, if not increased.
Recorded on May 7, 2010
Interviewed by Victoria Brown