Bizsol Update wishes all its readers a Happy and Prosperous New Year!
The world has seen a number of wars. But none is as confusing as the Ukrainian war that is about to complete one year. For many a man in the world this war is more mysterious and confusing than any other, in living memory. Still the war rages on. Why and for what purpose? If you are able to answer even one part of the question, you are an expert in international affairs. What is this war for – geography or ideology or for both? Welcome to the new war order where the consequence of the war is stark but not the causes. One fine morning when Vladimir Putin, the Russian President decided that the world has had enough peace for its own good and what followed was war and its miseries. We may not know how to end this war in Ukraine; but let us at least understand the reasons for this war resisting the temptation to sit on judgement to pin the blame for this war on one or the other. In the past, we had some clarity on the purpose for which a war was being fought – it had always been simplistic posturing like good vs evil or democracy vs authoritarianism. We have seen this in various theatres of war like in Afghanistan, Libya, Syria, Iraq and Yemen to name a recent few. In all these cases, we knew whom to support even though the world at large had few options to end any of these conflicts, however unjustified they have been. In all these war zones we anchored our support on one or the other, and we knew who should win. But not in Ukraine. Come on, how many of us knew that there existed a country called Ukraine and that it mattered to all in order for us to support or oppose it against the mighty Russians. Let us take a fleeting glance at the war in Ukraine now that we know that this war carries consequences to us Indians also. Let us see if we can make sese of this senseless war even if we carry no readymade instant solutions to end the war started without our knowledge, consent or participation. Ukraine was part of the erstwhile Soviet Union. Putin, on his part, had always wanted to restore that regal order and prestige and had harboured thoughts of restoring the old glory and prestige that the Soviet Union once enjoyed. When the Russians in Ukraine felt that they were being discriminated against, especially in Crimea which had been an integral part of Ukraine, you had the stage getting set for a conflict. Whatever the reason the cultural roots of both Russia and Ukraine takes primacy in this conflict more than geography. To cut a long story short, Russia sees Ukraine as a renegade country and under Zelensky this country will have to be managed sternly if Putin were to realise his dream or at least the beginning of it. Henry Kissinger, the high priest of world politics feels that Putin has already lost the war bar the shouting. Outside world now should now themselves to tackle him quite diligently to muffle the possibility of any desperate step — including the use of nuclear weapons. Kissinger belongs to the world of realpolitik where there are no permanent enemies or permanent friends. Kissinger is still reaching out for a relatively face-saving formula for Putin when things move to the negotiating table. Kissinger does not want Putin to be subjected to any “humiliating” treatment at the end of this episode. He should know the consequences. As of writing, Putin along with the heads of many a state is already calling for a halt to the ongoing war. That augurs well for some kind of peaceful settlement and that too soon. Russia started the war as a short picnic in the park. The other is facing the effects of this war like in a comedy show. Now both realise that reality can be quite harsh, and both will have to carry the cross. Today the focus is more on how to end the war than whether to end it at all. It may be too early to write the eulogies for the winner and obituaries for the loser. Here permit me to quote Winston Churchill. He said presciently at the end of the second battle for El Alamein in Egypt concluded in November 1942 when he reflected on the British victory. “This is not the end. It is not even the beginning of the end,” he warned, memorably. “But it is, perhaps, the end of the beginning.” As Russia’s invasion of Ukraine approaches its 11th month, it is reaching the same inflection point. It has been a story of Russian hubris, human suffering and, above all, Ukrainian defiance.
No one wants to be in Xi Jing Ping, the Chinese supremo’s shoes. A week or so back he was the last man standing fighting the deadly Covid virus that reputed to have been incubated at Wuhan, a province in China. When the pundits predicted unprecedented number of people either dead or affected it looked unlikely to be so in China at least. Xi battled the virus valiantly against all odds with all his credentials intact. Xi had declared a zero Covid policy fearing severe backlash just before his all-important elections that elevated Xi in the party gathering for a record third term. On hindsight he seems to have anticipated it right. The moment the elections were over, and he was formally anointed as the Party’s supremo, there was mutiny at hand for him to deal with all in the name of Covid. He on his part did react with predictable accuracy. He withdrew the restrictions and rescinded the zero Covid policy. It turned out to be a proverbial invitation to death. People with poor herd immunity having not encountered the virus before and with an ineffective vaccine on hand, the most powerful man in China, nay in the world, now looked the most vulnerable. The epidemic is raging at a rate that defies logic. The state virtually has stopped counting the death because the number is both large and alarming. With the Chinese economic system having been integrated well with the outside world, the virus has now a free ride across the world crossing borders and spreading itself at will. Chinese authorities never missed an opportunity to deride the Western nations for the spread of the virus. Now they are in the centre of it all. When the country transited from a zero Covid policy to no policy at all, people have nowhere to turn to for succor. The sudden abandonment of the zero Covid policy now is likely to be responsible for a whopping million deaths. This is in China. With the world relying on China more and more for supplies of industrial and other materials the situation looks quite grim all over. The government is being panned and criticised for its inept handling of the Covid crisis. The country famous for selling industrial products are selling funerary items now at a rate not seen earlier any time. Sad but true. The crematoriums are busy as never before. We have seen it all. And it is not pretty or comfortable to deal with. What turn the virus is going to take is unpredictable. But the dead are not going away quietly, for sure. There will be a huge economic and political price to pay for Xi and his government besides civil unrest. What shape it would take remains to be seen.
Infosys is arguably one of the best organisations to be founded in India for more reasons than one. The company has over the years earned the reputation to be the bellwether for both corporate governance and professionalism. What is important is that it has maintained that status in the IT industry for quite some time and for impeccable reasons. The company tuned a milestone recently when it completed four decades of its existence. Here is a company promoted and nurtured by local talent – more particularly by local talent not endowed with inherited wealth to promoting and running an industry in a highly competitive environment. One of the founders of the company Mr. N R Narayana Murthy took this occasion to air his current view on the succession policy in the company as it has been practiced at Infosys. Murthy aired his views that he had made a mistake when he decided that the children of the founders shall not work in the company. Now for the company at 40 he feels that it was a wrong decision in retrospect. His reason is that he had robbed the children of the founders an opportunity to work and excel at Infosys. In the past, Murthy had shunned this idea for fear of the influential founders bringing their children to Infosys sacrificing the basic tenants of meritocracy. In a country riddled with nepotism, it is easy to recognise the importance of this decision. Infosys is famed for its steadfast principles of promoting professionalism and tenets of corporate governance. That is one place in India that the company rules the roost – meritocracy. Though the company ironically had a blip when Murthy himself brought his son Rohan to helm the company sometime in 2013 with him in tow which was roundly criticised by all. That experiment did fail is another matter. Corporate governing principles evolve in a company depending on the environment in which it operates. In India then as it is now, cozying up to power is widely practiced so much so that nepotism had become the bane of industry or any other collective endevour. Murthy and his team were lauded by all for bringing some clean polices while deciding succession at the top. That is why Infosys as we see it, is what it is today. Infosys also had its share of existential crises during Vishal Sikka’s time and his open spat with Murthy. For a moment Murthy in the evening of his life, seems to have forgotten these foundational principles of Infosys. The company may not be controlled by a family; but it has always been remotely run by the family of founders like a musical chair with the CEO of the company in the middle. The influence exercised the families of founders an open secret. For a moment Murthy had forgotten that a company is only as good as its top man. The attrition in Infosys is at top level would have been quite high as every potential aspirant would have been acutely aware that he or she cannot become the CEO of the company if pedigree had been a criterion for being a CEO of the company. In fact, one of the important things that Murthy and his fellow founders declared to the world is that no one including the founders of the most successful company in India would walk into the corner office of their own company with a God-complex. In a country that suffers from entitled members of some of the political families, that is no mean achievement. The country has been saved of another dynasty, this time in a corporate setup with Murthy’s earlier policy on succession. Mr. Murthy, for once you are wrong in trying to revisit your decision on Infosys’ succession planning. The country was spared of the tyranny of another dynasty, this time from the corporate sector.
Here is some food for thought. Arguably one of the most critical economic problems facing the country centers around unabated and untamed inflation. Currently it is clocking 5.90%. The RBI and its Monetary Policy Committee (MPC) are at their wits end on what to do. MPC has been mandated to bring the inflation down to 4%. The time-tested way to contain inflation is to raise the interest rates. This can work only if the rising inflation is directly attributable to a rising demand for those goods. However, the inflation that we see today is on the supply side through increase in the cost of materials and services that we consume while producing the finished products. Raising interest rates raises borrowing costs that in turn results in layoffs and cut back on essential expenditures. Much of the global inflation that we see now is because of the escalation in cost of supplies like fuel, food or fertilizer. If the rise in inflation results in higher costs of critical raw materials, how do we deal with them. This is the problem bothering the RBI while trying to control inflation. Spurred by intractable wars and intermittent bottlenecks in supplies, the world is fighting a difficult, perhaps a losing battle to keep the prices in check. India is not alone in this situation. The bulk of the blame for persistent inflation was placed on the deteriorating global situation following the Russian invasion of Ukraine in late February which led to a huge spike in the commodity prices, especially crude which India imports. In a manner of speaking India imports commodities and attendant inflation also along with it. Let the truth be told. On hindsight, RBI has been behind the inflation curve though the former is loath to admitting it. Now because of the importance of inflation, there are calls for more multifaced approach to inflation management. In India food and fuel have been identified by RBI as systemically significant sectors while fighting the inflation battle. One can reasonably expect some more wide-ranging policies coming from the central bank to tackle the ever-rising threat of inflation. A sense of urgency is also likely to surface with the general elections coming up one year from now. The situation being what it is, the Guv must surely be feeling quite lonely in the corner room in the RBI.
Thank you.
Venkat R Venkitachalam
