Key note address by Azim Premji, Chairman, Wipro Corporation at the Bombay Chamber of Commerce & Industry at their Annual General Meeting on Friday May 28 at Mumbai President of the Bombay Chamber of Commerce and Industry, Mr. Nasser Munjee, Distinguished guests and friends, I am very happy to be with you today. The Bombay Chamber of Commerce has provided an important forum for the business community to share their thoughts and ideas with each other. In the years to come, the role of forums such as these will become even more important. We have a resilient economy, with a healthy growth. The globalization and liberalization initiatives that began more than a decade ago have begun to yield results. The future looks even more optimistic. According to one report, India could well be the world's third largest economy in less than 30 years from now, after the United States and China. To achieve this will obviously not be easy. We have a major task of transformation ahead of us. I would like to use this opportunity to share my own thoughts on transformational leadership, which alone can convert hopes into reality. For any transformation to be comprehensive and sustainable, it should cover not only the economic transformation but also social transformation. This will ensure that the benefits of transformation are pervasively distributed. Since all transformation begins in the mind of the transformational leader, it includes the change that government, business and social leaders need to bring about in their own leadership styles. Transformational leaders do not depend on authority or charisma. The attributes needed are more intrinsic to the personality of the leader. I would like to briefly mention some of these. First, transformational leaders identify themselves as change agents. They are not content to let things remain as they are even if it seems very comfortable. Second, they are courageous and value driven. They are willing to look ahead and work towards creating a better future. Their vision creates a sense of purpose both for them and their organizations. Third, they are lifelong learners. They pick up the ability to deal with complexity and uncertainty. They are also able to guide others when they are lost in the maze of ambiguity. Fourth, transformational leaders communicate high expectations and express important ideas in simple ways. They give individual consideration, personal attention and continuously coach and advise their team members. Finally, they delegate enough to promote a culture of pro-activeness in problem solving. They anticipate many problems before they happen and do not wait for one crisis to strike after another. Such transformational leaders form the basic resource pool to initiate a wider economic and social transformation. When it comes to economic transformation, we must remember that for all the sweeping changes we have witnessed in recent times, the fundamentals remain the same. Like the law of gravity, basic laws of demand and supply are great levelers. At the same time, as I look ahead, I can see certain irreversible changes and the forces driving these changes. Transformational leaders need to be aware of these new economic drivers because they can impact the economy in important ways. There are three kinds of drivers with varying amplitude and different time horizons, which I feel will dictate the future of economy and business. The first are the short term or immediate drivers. These are primarily various kinds of arbitrage opportunities that exist across various national economies and regions. Remember the growth experience of Indian Software industry. The labor cost differential among Software professionals between US and India was a great arbitrage opportunity on which initial success of the industry was built. Similar opportunity has arisen today in BPO industry and in Pharmaceutical research. Labor cost differential is just one kind of arbitrage opportunity. In this connected world, which is not homogeneous, various kinds of cost and price differentials exist across the boundaries of national economies, industries and jurisdictions. They also exist within national boundaries. They can be in any form – differential cost of raising capital, different taxation and legislative frameworks, etc. The immediate business opportunities will come from these short-term drivers. The entrepreneurs and managers, who will resourcefully leverage these immediate opportunities, will make high profit. Hence these are the drivers, which should be at the back of every businessman and manager’s mind, as they provide the sharpest guidance for localized action by an individual. In medium term, technological possibilities and changes in geo-political scenario will be the major economic drivers. These need to be looked into by built to last firms for strategic planning. But the sweep of these drivers is much broader. Unlike short-term drivers, these do not provide quick opportunities for gains and require a lot of sweat and labor. In the long run, however, they are worth the trouble. All leapfrog economic gains come from these drivers. Every great global company was built by leveraging on these drivers including GE, Microsoft, IBM or Ford. After September 11, public spending on security has suddenly returned to economic center stage for the first time after the end of the cold war. It is important to look at medium term drivers. If you understand them, you can shape the rules of the game rather than being ruled by them. Technological and political forces are extremely crucial economic drivers. They not only decide the momentum of change but also can also drastically turn the course and direction of things to come. The last set of drivers comprises long-term drivers, whose impact may not be felt in day-to-day business. But they are so pervasive that they impact every facet of human life. These require collaborative action by society. These drivers are of the order of globalization or environmental sustainability. For example, take the case of demographic shifts currently undergoing in developed parts of the world. In the entire history of human civilization, we haven’t witnessed a world where old people outnumbered youngsters. For India, these new drivers represent an unprecedented opportunity for success and growth. It is up to us to harness this wonderful opportunity to take ourselves into a totally different league in economic transformation. Coming to social transformation, there are many complex issues that confront a country like ours. I have looked at just five of these issues because I think they have a far reaching impact. I am convinced that the first priority is Primary Education. At Azim Premji Foundation, our key drive is towards universalization of Primary Education. We have 30 million children in the age group 6-14 who are out of the school. Education helps people make informed choices, and enhances their access to opportunities. The second issue is Primary Healthcare. Our infant mortality rate is 70 per thousand compared to less than 10 per thousand in the developed world. This level of morbidity, combined with illiteracy, deprives millions of our people from benefiting from the economic opportunities. Third, we need to overhaul our land related laws, taxation and information systems. It is estimated that 90% of land in India are subject to legal disputes over the ownership. Stamp duty ranges between 8-15% of the property value, encouraging avoidance. On the other hand, property tax rates are low and collection is inefficient. All this has led to Indian land prices being the highest among the Asian nations relative to average incomes, and low tax collection is hampering our ability to maintain urban infrastructure. Effective Land Reforms can really boost housing and retail sectors, two of the largest sectors of the economy outside of agriculture, and generate huge employment opportunities. Fourth, we must focus on the power situation. Power sector is by far the biggest resource drain on the economy. We need to eliminate power thefts/leaks and improve efficiency of generation, distribution and transmission. These changes can have a major impact on the fiscal deficit of the states, apart from bringing down the cost of doing business in India. The first investment we make before opening up any facility in the country is the generator! Fifth, water scarcity is being felt across the country. Less than 40% of the cultivable land is under assured irrigation. Underground water table is declining at the rate of 5% every year. In the medium term, water shortage will create a significant barrier to growth - whether agriculture, industry or urban infrastructure. It is important that we push ahead with innovative projects like interlinking of the rivers. The task ahead is challenging. But that is what makes it so exciting as well. Ultimately, we cannot help being transformed ourselves by what we attempt to transform. If we jump into a lake, we may or may not learn to swim. But we cannot help getting wet. The transformation that takes place within us is the greatest reward of all. I look forward to joining you in the journey of transforming our nation.