India Economic Summit 2006

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India Economic Summit

Meeting New Expectations

New Delhi, 26-28 November 2006

The views expressed in this publication do notnecessarily reflect those of the World EconomicForum.

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Other specific information on the India Economic Summit, New Delhi,26-28 November 2006 can be found at the following links:

Meeting News www.weforum.org/indiaSession Summaries www.weforum.org/india/summaries2006Photographs www.pbase.com/forumweb/india2006Programme www.weforum.org/india/programmeInterviews www.weforum.org/india/indepthPartners www.weforum.org/india/partnersWeblog www.forumblog.org

Preface 3

Summary – Meeting New Expectations 4

State and National Competitiveness 7

Managing Growth 12

Infrastructure Development 15

Risk Management 18

The Creative Imperative in India 21

Acknowledgements 23

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Contents


3

Preface


The theme, “Meeting New Expectations” clearly captured the imagination of the 600 leadersfrom government, business, media and civil society who joined together in New Delhi for the22nd India Economic Summit. India’s growth rate has averaged over 7% over the last threeyears, which has clearly raised expectations economically, politically and developmentally. Andthe consensus going forward is that the economy will achieve 10% growth and higher overthe next several years.

But the mood at this year’s Summit was neither that of complacency nor that of hubris;instead it could be characterized as one of responsibility. The challenge of spreading highgrowth across more state economies, infant industries and into rural communities was whatgalvanized the various stakeholders this year. Moreover, participants from India and fromabroad understood that high growth was not synonymous with either inclusive or equitablegrowth, both of which are at the foundation of any market-based democracy. Sonia Gandhi,Chairperson, United Progressive Alliance and President, Indian National Congress, remindedus all that “the economic growth we are experiencing must not be at the cost of socialawareness and social responsibility.”

The result was frank and open discussions that highlighted the need for greater alignment ofIndia’s public policy, development and industry agendas at multiple levels. As has been thetradition for over 20 years, we introduced innovations aimed at building a stronger consensusamong business, civil society and government on critical growth challenges.

For example we launched our “India@Risk” report in collaboration with the Confederation ofIndian Industry (CII). Building from the Forum’s Global Risk Network, this project identified sixmajor global risks that have the greatest impact on India’s future growth and development. At theopening plenary, the Indian Finance Minister Palaniappan Chidambaram identified HIV/AIDS asthe most “frightening” among the six risks. Later in the Summit, mitigating this risk wasexplored in depth with Dr Anbumani Ramadoss, Minister of Health and Family Welfare ofIndia, in a session on partnership models for business action on HIV and TB – epidemics thatkill approximately 1,000 people each day in India. One such successful model discussed atthe Summit was the India Business Alliance to Stop TB, a public-private partnershipsupported by both the Forum and CII and their respective member companies. And for thesecond consecutive year, the Schwab Foundation presented the 2006 India SocialEntrepreneur of the Year Award on the occasion of the Summit. Vikram Akula, Founder andCEO of SKS Microfinance Private Limited received the award from Sonia Gandhi. SKSMicrofinance has been hailed as the “Starbucks of Microfinance” for adopting global businesspractices in microfinance leading to over US$ 71.6 million in loans benefiting 1.5 millionIndians.

As you read the thematic essays and data presented in this report, three importantconclusions emerge as we prepare for the 23rd India Economic Summit, scheduled for 2-4December 2007. First, India must now seize the opportunity to strengthen the foundation ofits remarkable growth by developing its rural economy, as agriculture contributes over 20% ofGDP and employs roughly 70% of the population. Second, India must remain in the vanguardof globalization. Indian Minister of Commerce and Industry Kamal Nath remarked in theclosing plenary: “The great champions of globalization have now started shirking it, but we inIndia trumpet globalization because we are getting globally competitive.” And third, tomaintain this competitiveness, most of the burden will fall on state governments. It is at thestate and municipal levels where most of the barriers that impede investment into agriculture,power, transportation and, most importantly, human development are to be found.

Lee HowellDirector, Head of Asia

This has been India’s year. Perhaps no other economyhas enjoyed such a buzz over its prospects or suchcelebration over its progress. The irony of this notoriety isthat it only raises the pressure on policy-makers to doeven better, particularly for India’s thousands ofimpoverished rural communities, where news of thecountry’s growing prosperity has also arrived. Meetingtheir expectations will require that governments and theprivate sector focus on four issues identified as toppriorities at the India Economic Summit:

• Improving higher education standards and technicaltraining, and broadening learning opportunitiesnationwide

• Recruiting, managing and retaining the most skilled andtalented workers

• Reversing environmental degradation in terms of climatechange and water scarcity

• Improving the national supply chain by upgradingphysical infrastructure and introducing administrativeand tariff reforms

Now, thrust somewhat reluctantly into the vanguard ofglobalization, India must seize the opportunity tostrengthen the foundations of its remarkable growth byuplifting its rural poor. “The economic growth we areexperiencing must not be at the cost of social awarenessand social responsibility,” stated Sonia Gandhi,Chairperson, United Progressive Alliance and President,Indian National Congress.

It became clear through the discussions that much of theimpetus would need to come from state governments. Athicket of regulations from state to state is impedinginvestment into agriculture, power, transportation, andmost importantly, human development. While India hasmanaged to create a sizeable urban middle class, thefastest growing segment of its population, its rural farmingcommunity, is also the poorest. With two-thirds of thepopulation still working on farms and agriculture shrinkingas a percentage of the economy, the need to give therural poor the tools to upgrade is clear.

All the biggest risks to India’s development ultimatelycome back to how they might exacerbate the plight ofthis group – and whether their protest would manifestitself at the ballot box or in social unrest. If there was onemessage that permeated all the discussions at this year’sSummit, it was the urgent need for better education fromthe smallest primary school to the biggest universities.

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Summary – Meeting New Expectations


“The economic growth we areexperiencing must not be at thecost of social awareness andsocial responsibility.”

Sonia GandhiChairperson, United ProgressiveAlliance and President, IndianNational Congress


State and National Competitiveness

India’s global competitiveness compares well with thoseof China, Brazil and Russia. But if the Indian economy isto achieve and sustain 10% growth, a number ofshortcomings have to be addressed, particularly ineducation, governance and the rural economy.

• India’s states are the principal shareholders in India’sdevelopment. Given India’s democratic system, India’s future competitiveness will depend on the statesand their capacity to adopt reforms and tackle theirrespective problems. The competition among the statesfor investment will spur them into action.

• India aims to replicate across the rest of the economythe successes attained in the IT, pharmaceutical andtelecommunications sectors. India’s competitiveadvantage may be its ability to deliver innovative, qualitygoods and services at a low price.

• Increasing the productivity and efficiency of the ruraleconomy is essential. The goal is to create a domesticcommon market through supply chain managementand regulatory reform that resolves the anomalies thatcharacterize cross-state commerce.

• Improving higher education standards and technicaltraining is critical if India is to improve its globalcompetitiveness by confronting the range of challengesit faces.

Managing Growth

India aims to boost economic growth from 8 to 10%by 2010 but a number of obstacles stand in the way.

• Poor infrastructure, a weak agriculture sector andskills shortages are placing constraints on growth.

• India will need to double growth in the farm sectorto 4%, if it is to meet its goals and achieve moreinclusive growth.

• Educational reforms are vital for alleviating ashortage of labour that has pushed IT salaries up20% a year.

• To promote innovation, India must make it easier forcompanies to access capital and encourageenterprises to go global to improve competitiveness.

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Activators and Innovators: The Role of Business in HIVAIDS and TB in India – Jo Johnson, K. Srinath Reddy, Anbumani Ramadoss, Leonard Tauroand Jamshyd N. Godrej

Infrastructure

Improving India’s inadequate infrastructure is essential tosustaining economic growth and reducing disparities inincome.

• Energy and water remain two crucial areas forinvestment. India needs to find more domestic sourcesof natural gas and promote investment in power plants,water treatment and irrigation.

• Growing trade has created an urgent need forinvestment in logistics, particularly roads, ports andrailways. Customs facilities need to operate around-the-clock.

• Private investment is crucial. Special purpose vehiclesshould be used to manage infrastructure projects andeliminate red tape.

• The maze of state regulations still needs trimming. Thefinancial industry should be further deregulated tofacilitate fund-raising and risk management.

Risk Management

The risks to economic growth are urgent, requiringtailored solutions.

• Healthcare should be seen as an investmentopportunity; priority should be given to HIV and TBawareness, diagnosis and treatment.

• Protectionist forces are rising, emphasizing the need forstronger ties with trading partners in the West andSouth Asia.

• Oil prices and air pollution are also rising; India mustinvest in alternative energy sources and in suppliesoverseas.

• Global climate change threatens India’s fragile watersupply, raising the need to conserve, discourage wasteand price water to reflect its scarcity.

• India’s youth is a positive force but its schools need anoverhaul if it wants to truly leverage its demographicdividend. Companies should invest in vocational trainingand help design college curricula.

6India Economic Summit

Vikram Badshah, Head of Public Policy, Confederation of Indian Industry, India; Pawan Munjal, Managing Director and Chief Executive Officer,Hero Group, India; Rahul Bajaj, Chairman, Bajaj Auto, India; Sunil Kant Munjal, Chairman, Hero Corporate Service Limited, India

At the India Economic Summit, many participantscalled for India to repeat in other sectors thesuccesses it has achieved in IT, pharmaceuticals andtelecommunications. Its move towards greaterinnovation capabilities has been significant. (See Figure 1) The message of this refrain: that Indiashould find new drivers of growth, reform and open upits markets further, and find niches in which it can shineinternationally. India’s global competitiveness – it is43rd on the World Economic Forum’s latestcompetitiveness ranking – compares well with thoseof the three other large, emerging economies withwhich it is often grouped: China (54th), Russia (62nd)and Brazil (66th). India’s rise has turned it into aglobalization booster, said Indian Minister ofCommerce and Industry Kamal Nath. “The greatchampions of globalization have now started shirking

it, but we in India trumpet globalization because weare getting globally competitive.” But India’s drive for competitiveness is complicated byits federal system. A lot depends on the states – andhow they address the competitive pressures they facewill be critical to determining India’s globalcompetitiveness. After all, the states are the principalshareholders in Indian development, as Montek S.Ahluwalia, Deputy Chairman of India’s PlanningCommission, once described them. Explaining whythe national government cannot issue fiats to stategovernments to resolve nagging problems such assupply chain complications resulting from the array oftaxes and fees that hamper cross-state commerce,Nath acknowledged that “some things possible inChina aren’t possible in India.” He added, however,that in India, “states are [now] looking for revenues[and so] we are inducing and counselling states tomake them see the larger growth picture.”

Some states have started rationalizing their taxsystems, spurring others to act, Nath noted. Statesdiffer widely in income level, quality of infrastructureand governance standards. Foreign investors areincreasingly more discriminating in their choice of stateto target. As in China, this has naturally sparkedrivalries. Said Nath: “The new thing that is happeningis the competitive atmosphere among the states.” Themore responsive are taking stock and adopting bettergovernance practices, eschewing knee-jerk ideologyfor solid results. Indeed, some of the more pragmaticstates have come to understand the value of forgingpublic-private partnerships with the private sector toaddress their shortcomings in areas such asinfrastructure, water management, healthcare andeducation that are crucial to attracting investors.

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State and National Competitiveness


“The great champions ofglobalization have nowstarted shirking it, but wein India trumpetglobalization because weare getting globallycompetitive.”

Kamal Nath, Minister ofCommerce and Industry, India

“We have a low-costeconomy and a high-qualityresource base so we will beable to produce qualitygoods at a low price. Butwe need to build thatresource base further.”

Kapil Sibal, Minister of Scienceand Technology and EarthSciences, India

Figure 1. India Transforming into an Innovation-Driven Economy

The aspirations of citizens are much higher and theydemand much more of their leaders, Vasundhara Raje,Chief Minister of Rajasthan, acknowledged. “Running astate is like running a business,” she said. Rajasthan hasput a lot of emphasis on developing its alreadyestablished tourism sector and on improvinginfrastructure. Power production is being privatized andwind power projects expanded. The state expects to havea surplus of power within two years. Meanwhile, the ChiefMinister of the National Capital Territory of Delhi, SheilaDikshit, stressed the need for privatization and bettermanagement of resources. The private sector can beinstrumental in multiplying the positive effects of reforms.For example, while power sector liberalization hassignificantly improved the quality of service anddistribution, consumers still feel their needs are not beingmet, Dikshit explained. Private companies can step in toraise service standards even higher.

For his part, the Chief Minister of Maharashtra, VilasraoDeshmukh, told participants that his government is“cutting red tape and rolling out the red carpet.” Already amajor recipient of FDI, his state contributes 13% of thenational GDP. It was the first state in the nation to setaside 25% of live water storage capacity for domestic andindustrial use. It is also aiming to maintain its powersurplus position by investing US$ 13 billion in the sector.The state is also pushing the development of specialeconomic zones (SEZs) that will offer world-classinfrastructure, liberal tax regimes, one-stop-shopclearance procedures and a hospitable working

environment. Even a poorer state such as Bihar ismobilizing to create an investor-friendly business climate.It is focusing on developing its agro-processing andtourism sectors and improving healthcare and educationfacilities, as well as roads and other infrastructure.

The states and the competitive spirit they generate willcertainly be instrumental in helping India within five yearsto achieve and sustain 10% growth, the level where Chinais today. India will need their contribution andcollaboration to address serious competitiveshortcomings, particularly in education and humanresources, governance and the rural economy. Thecountry as a whole will also need to exploit its competitiveadvantages, especially its youthful demographics – overhalf the population is under the age of 25 – and the value-for-money proposition that won it 85% of the globalbusiness process outsourcing (BPO) market or more thanUS$ 6 billion in revenues. “Every consumer in the worldwants a product at the lowest possible price and at thehighest quality,” said the Indian Minister of Science andTechnology and Earth Sciences, Kapil Sibal. “We have alow-cost economy and a high-quality resource base sowe will be able to produce quality goods at a low price.But we need to build that resource base further.”

It is a unique business plan, one that builds on India’srecent successes, particularly in IT services andpharmaceuticals. Indeed, India’s pharmaceutical firms aremoving beyond generic production to innovative R&D inpartnership with global companies to develop new drugs.


“Running a state is likerunning a business.”

Vasundhara RajeChief Minister of Rajasthan

“We need to revamp thehigher education system.We have no talent goingthrough the postgraduateprogramme.”

Hari S. BhartiaCo-Chairman and ManagingDirector, Jubilant Organosys,India

The same is true in software development. In the BPOmarket, India is expanding its repertoire to include so-called knowledge process outsourcing (KPO), or theoffshoring of high-end knowledge work in variousfields including engineering, design, medicine, financeand law. And India is aiming to develop an effectiveinnovation ecosystem. “Innovation is not buying uptechnology,” reckoned Sibal. “It may be quality, but it’snot affordable. We need to partner with industry toadapt technology and innovate to meet the needs ofthe common folk.”

It is all about competitiveness through increasedefficiency. “What makes Indian firms more competitiveis that they can absorb technology,” said Rajiv Kumar,Chief Executive and Director, Indian Council forResearch on International Economic Relations(ICRIER). “We are increasingly a productivity-driveneconomy.”

Yet India’s competitiveness drive has long beenstymied by its poor infrastructure and lack of viablesupply chains. Rural development and agriculturehave suffered without adequate transport, storage andhandling facilities. India’s supply chain, said PankajChandra, Professor, Operations and TechnologyManagement, Indian Institute of Management, is“fragmented, complex and lacks discipline.” AddedHans-Joachim Körber, Chairman and Chief ExecutiveOfficer, Metro, Germany: “If we get a proper supplychain, then the vision of India as the food factory ofthe world may be possible.”

That future for India’s agribusiness sector depends notjust on the building of the physical infrastructureneeded in rural areas, but also on other issuesincluding the modernization of the retailing sector anddistribution networks, and how effectively India canresolve the anomalies that characterize cross-statecommerce, the software of supply chain management.These problems are also hampering growth in themanufacturing sector. A major obstacle: the variety oftariffs and fees levied on goods and transport enteringstates. It can take eight days for a truck to delivergoods from Kolkata to Mumbai, a distance ofapproximately 2,000 kilometres. “The goal is to createa single Indian common market,” said India EconomicSummit Co-Chair Nandan M. Nilekani, President,Chief Executive Officer and Managing Director, Infosys

Technologies, India. “To create that single marketrequires government intervention if you are going toreform all of this. There are a lot of stakeholders with aclaim on these taxes.”

This is a crucial challenge to which the states hold thekey. But there are doubts that this stumbling blockcan be effectively addressed soon, given India’sfederal structure and democratic political system. Yetrelying on the market and the competition amongstates to produce better governance may be the best– and perhaps the only – approach that democraticIndia can take. Indian companies, meanwhile, areworking around the problems. The automotive partssector, for example, has managed to build up a 7%share of the global market, supplying components toBMW, DaimlerChrysler and other global automakers.

The main reason behind such successes is theavailability of the right skills and talent. All of India’scompetitive ambitions really depend on its ability toimprove higher education standards and technicaltraining. “We need to revamp the higher educationsystem,” Hari S. Bhartia, Co-Chairman and ManagingDirector, Jubilant Organosys, India, said, noting thelow number of Indian PhD students. ”We have notalent going through the postgraduate programme.”India’s low R&D spending relative to GNP is alsohampering the development of its innovationecosystem. (See Figure 2)


Figure 2. R&D Spending Not Keeping Pace withEconomy

Other participants hailed India’s educational achievementsso far, while acknowledging that there is enormous roomfor improvement. “We should really give some credit thatthe Indian education system has done something,”argued Mohamed A. Alabbar, Chairman, EmaarProperties, United Arab Emirates and Co-Chair of theIndia Economic Summit. Said Jaggi Vasudev, Sadhguruand Founder, Isha Foundation, India: “The important thingis that there is a huge volume of intelligence in the ruralarea – 70% of the intelligence is out there – so we are notreally increasing our knowledge base.” Certainly therelationship between GDP per capita and the number ofregional polytechnic institutes is significant. (See Figure 3)

That plea to focus on the poor and remote neatly sumsup the two factors that will determine India’s futurecompetitiveness: how well the nation as a whole and thestates in particular can develop their resources,particularly their people’s skills and talents, to meet thecountry’s growth and equity goals as well as the demandsof globalization, and how well Indians can tap the vastpotential of the rural economy. Concluded R. Seshasayee,Managing Director, Ashok Leyland, India, and President,Confederation of Indian Industry (CII): “You can’t attackthe top end unless you nurture the bottom end.”


Figure 3. Polytechnic Institutes Play a Role inState Economic Development

“The depth of educationneeds to continue for Indiato remain competitive.”

Sir Michael RakeInternational ChairmanKPMGUnited Kingdom


India ranked 43rd overall in the World Economic Forum’s Global Competitiveness Report 2006-2007. The subcontinentreceived excellent scores in capacity for innovation and sophistication of firm operations. The Report noted that while firmuse of technology and rates of technology transfer were high, penetration rates of the latest technologies are still quitelow by international standards. This reflects India’s low levels of per capita income and high incidence of poverty, theReport concluded.

“The quality of the business environment in India has improved tangibly in recent years, with goods, labour and financialmarkets making gains in efficiency. There have also been substantial improvements in the underlying institutional climatein such areas as property rights, the operation of the judicial system and other indicators which capture essential aspectsof building a sound investment climate,” noted Jennifer Blanke, Senior Economist at the World Economic Forum.

Further progress in fiscal consolidation should enhance the ability of the government to respond to pressing needs,particularly in the areas of education, public health and infrastructure. Insufficient health services and education as well asa poorly developed infrastructure are limiting a more equitable distribution of the benefits of India’s high growth rates. Theavailable evidence suggests that the Indian economy may have entered a high growth plateau. The challenge for theauthorities will be to ensure that this process is sustained and that it precipitates further progress in poverty reduction,the Report noted.

India’s Economic Competitiveness

The Most Problematic Factors for Doing Business

India’s economy grew by 9.2% in the third quarter of2006, the sixth time in the past seven quarters in whichGDP growth has surpassed 8%. The economy is clearlyclimbing to a higher altitude. “Our overall macroeconomicposition is very strong,” said Montek S. Ahluwalia, DeputyChairman of India’s Planning Commission. “The externalposition is very strong; Indian business has gained a lot ofself-confidence; and international perceptions of India arebetter than they were four years ago.” The good newshas prompted Ahluwalia and his team to target 9%growth for the first three years of the next five-year plan tobe launched in 2007 and then aim for 10% for theremaining time covered by the blueprint. Achievable goals– but is such growth sustainable?

The trouble is that as India manages its growth higher, thegoing will only get tougher. Constraints such as poorinfrastructure, the underperformance of the agriculturesector and the shortage of skills will make it more difficultto sustain the fast pace unless significant progress ismade in resolving bottleneck problems. It will be evenmore difficult to ensure that growth is equitable, the toppriority for India’s leaders. “Many years ago people usedto doubt whether we knew how to grow fast,” Ahluwaliaobserved. “Now the question is can we make growthinclusive.” (See Figure 1)

It will take strong partnerships between the public andprivate sectors and better political and corporategovernance to address the drags and disparities thatcould spoil India’s ambitions. “Industry will do what isnecessary to achieve the targets we set provided we dowhat we can to provide them a decent level ofinfrastructure,” Ahluwalia reckoned. But the governmentalone cannot come up with the US$ 350 billion ininvestment needed over the next five years to construct orupgrade the airports, ports, bridges, roads, ports andother facilities it needs to support 10% growth. Public-private partnerships and significant private investment areessential.

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Managing Growth


“The demand for people isjust going through the roof.Many industries are simplycompeting for the samepool of labour.”

Nandan M. Nilekani, President,Chief Executive Officer andManaging Director, InfosysTechnologies, India; Co-Chair,India Economic Summit 2006

“Many years ago peopleused to doubt whether weknew how to grow fast.Now the question is can wemake growth inclusive.”

Montek S. Ahluwalia, DeputyChairman, PlanningCommission, India

Figure 1. Poverty in India Varies Greatly by State

Another critical factor is agriculture, which still employs70% of the population. The sector has slowed downsince the mid-1990s and is currently growing at just2%. For the economy to achieve 10% growth,agriculture will have to grow by at least 4%. “Theagriculture sector will be India’s powerhouse,”predicted Indian Member of Parliament JyotiradityaScindia. But for this to come true will requiresignificant restructuring. The sector must diversifybeyond traditional cereal production into more high-value businesses such as horticulture, floriculture andfisheries. But this will involve the production,distribution and marketing of perishable products.Rural supply chains today are highly inefficient. About40% of Indian produce is wasted due to insufficienttransport, storage and handling facilities. “If you wantto develop the agricultural sector, one of thepreconditions is a proper supply chain,” said Hans-Joachim Körber, Chairman and Chief Executive Officer,Metro, Germany. “It is still very difficult to move foodand vegetables from one state to another. There shouldbe a focus on the supply chain to secure future growth.”

A further constraint on growth is human resources.Pay increases in IT are running at a staggering 20%,indicating how tight the labour market is in India’sflagship services sector. Companies complain ofinadequate talent among graduates and difficultiesretaining personnel after spending money andresources on their training. If manufacturing andagriculture are to expand, if the retail sector is tomodernize to cater to the expanding ranks of middle-class consumers and to the untapped rural market, ifthe infrastructure the nation badly needs is to be built,

if the health and education facilities and programmesthe country requires are to push ahead, and if theeconomy’s knowledge base is to widen, what Indianeeds are workers with the skills to carry out thisambitious growth agenda. “The demand for people isjust going through the roof,” said India EconomicSummit Co-Chair Nandan M. Nilekani, President,Chief Executive Officer and Managing Director, InfosysTechnologies, India. “Many industries are simplycompeting for the same pool of labour.”The onus is on the education sector, particularlyIndia’s universities. “You can’t have rapid growth orinclusive growth unless the education system isproviding enough expansion of the relative skills,”explained Ahluwalia. “As we move towards 9% or10% growth, the constraint in terms of available skillswill become marked in certain areas.” Added SunilKant Munjal, Chairman, Hero Corporate Service, India:“For India, innovation will be the key to movingforward. Our labour costs are already not that lowwhen you compare them to some other nations. Thesupply of people is large, but what matters is ourability to train people. It’s not just formal education; it’sall manner of skills and vocational education.”

Again, the participation of the private sector will bevital. At the closing plenary, Indian Minister ofCommerce and Industry Kamal Nath announced thatthe cabinet is moving to introduce legislation to allowforeign educational institutions to set up in India. Thetwin aims: to boost the quality of education byopening the market to foreign competition, and toattract accomplished Indian educators at universitiesabroad to come home.


“If you want to develop theagricultural sector, one ofthe preconditions is aproper supply chain.”

Hans-Joachim Körber,Chairman and Chief ExecutiveOfficer, Metro, Germany

“The agriculture sector willbe India’s powerhouse.”

Jyotiraditya ScindiaIndian Member of Parliament

This landmark measure is the sort of bold decision thatthe government has to make to eliminate or at leastreduce the obstacles to sustaining 10% growth and toensure that the benefits of high growth are fairly shared.“There are many countries that use education as anexcuse for an underperforming economy,” said GrahamMackay, Chief Executive, SABMiller, United Kingdom, whowas also a Summit Co-Chair. “Most of the time thequestion is whether there is an enabling environment forgrowth. Is there a business-friendly enablingenvironment?” The key is good governance, Mackayargued. (See Figure 2)

Unfortunately, India’s record so far is patchy, he reckoned.India can do better. The battle to get the economy inshape to sustain 10% growth is inextricably linked to thedrive to improve state and national competitiveness. Whilemaking workhorse sectors perform better and moreefficiently, India needs to find new sources of growth. Thismeans making it easier for companies to access capitaland encouraging capable enterprises to go global to honetheir competitiveness. It means further reform of thefinancial services sector, including the deepening of thebond markets. (See Figure 3) It means modernizing theretail sector to trigger a consumer revolution with theparticipation of international players such as Wal-Mart and

Metro in partnership with local firms. It means letting theprivate sector step forward and promoting a wide rangeof public-private partnerships. “The private entrepreneurialspirit that has come out of economic reforms is a geniethat has been let out of the bottle and is impossible to putback in,” said Rajiv Kumar, Chief Executive and Director ofthe Indian Council for Research on International EconomicRelations (ICRIER).

India, to be sure, is in “a new growth trajectory,” Kumarconcluded. “While 10% growth is very possible, anyonewho assumes that it is a given is being complacent.” Inmanaging the growth of this large, sprawling economy ofover a billion people, there is certainly no room forcomplacency.


Figure 3. India’s Corporate Bond Market LaggingFigure 2. States Perceived as Most Corrupt Tendto Have Lower Per Capita State GDP

Poor infrastructure may be the single most importantissue India faces. Despite impressive economicgrowth, India’s dilapidated roads, congested ports,inadequate power and labyrinth of state regulationsare braking development. It can take up to eight daysto truck goods from Kolkata to Mumbai. Steven Okun,Vice-President, Public Affairs, UPS, Singapore, said ittook him more time to travel from Delhi to Mumbaithan to go from Singapore to Hong Kong. Suchexperiences do little to encourage investment.

Improving India’s infrastructure would propel economicgrowth, create jobs, boost domestic consumption,lower costs and stimulate exports. If its infrastructurewere better, the country’s impoverished rural sectorcould even be transformed into a leading exporter. Onthe other hand, if infrastructure improvementscontinue to lag, foreign investment could stall anddevelopment would concentrate in service industriessuch as IT outsourcing. This would exacerbate incomedisparities, feed social pressures and raise thepotential for unrest.

The government has ambitious plans to improve thesituation. Montek S. Ahluwalia, Deputy Chairman,Planning Commission, India, outlined thegovernment’s aim, as detailed in its 11th Five-YearPlan, to raise infrastructure spending from 4.7% to 8%of GDP. The government has committed to developing35 new airports by 2009 and has embarked on aproject to add 6,000 kilometres of highways connectingDelhi, Chennai, Kolkata and Mumbai. And, recognizingthe link between a broad power grid and state wealth,the government announced in October it will sell stakesin its four largest power companies to help financeexpansion of the nation’s power supply. (See Figure 1)

For the nation’s teeming cities, the government hascreated a US$ 110 million programme to revampurban infrastructure in exchange for legal reforms. Thestate of Maharashtra, for example, will repeal a lawrestricting land ownership, said Vilasrao Deshmukh,Chief Minister of Maharashtra, India, to gain roughlyUS$ 80 million in infrastructure funding for Mumbai.

“There is progress, but a lot more needs to be done,”said Peter Bakker, Chief Executive Officer, TNT,Netherlands and Summit Co-Chair. Indeed, the list ofareas where India needs to invest is only growing, asantiquated infrastructure creaks under the burdenimposed by accelerating growth.

Burgeoning trade and travel have clogged India’sports and rail system. Customs facilities, likewise,need to operate around the clock. Power demand is

15

Infrastructure Development


Figure 1. Wealthier States Tend to Have BroaderPower Grids

“We are cutting red tapeand rolling out the redcarpet.”

Vilasrao DeshmukhChief Minister of Maharashtra,India

“There is progress, but a lotmore needs to be done.”

Peter Bakker, Chief ExecutiveOfficer, TNT, Netherlands; Co-Chair, India Economic Summit2006

surging, yet half of the country’s villages still lack electricityand industry cannot rely on the existing power grid. Indiadepends on expensive imported oil and pollutingdomestic coal, yet natural gas-fired plants operate belowcapacity for want of fuel. More investment is needed infinding domestic sources of natural gas and buildingnetworks to distribute it to consumers.

The nation’s water supply is shrinking and India needsbillions of dollars in irrigation pumps, dams, rainwaterharvesting facilities, water treatment and desalinationplants. (See Figure 2)

Villages need schools and all but the top universities arein disrepair. India’s cities require a massive overhaul oftheir transport and waste systems, yet are growing so fastthat some participants recommended India should beginscouting out sites to start building cities from scratch.

“Over the next 30 to 40 years we’ll be building a newDelhi every year,” said Ashok Khosla, Chairman,Development Alternatives, India. “There are plenty ofplaces we can go to put our cities that won’t competewith agriculture.”

The government estimates it will need US$ 350 billion tomeet the goals of the five-year plan, at least US$ 100billion of which will need to come from private investors.But many investors remain uncertain about whether therewards of investing in infrastructure projects that couldspan decades will compensate them for the risks ofpartnering with governments who face election pressuresevery few years.

This mismatch in performance horizons is made trickierby the fact that governments – both state and national –want to retain control over key public assets. As a result,infrastructure aims will require public-private partnershipsthat bridge the gap in expectations. India is establishingspecial economic zones as one solution; anothersuggestion is the creation of special purpose vehicles thatwould provide investors with a single public partner ableto cut through the red tape for them.

Turning over more of the task of financing and executingbig infrastructure projects would leave more money forgovernments to spend on India’s social infrastructure,improving education and healthcare, said Ajay Dua,Secretary, Department of Industrial Policy and Promotion,Ministry of Commerce and Industry, India. (See Figure 3)


Figure 2. Access to Renewable Water Dropping Figure 3. Commitment to Social Safety Net Varies by State

“We’re amazed by theachievements made byIndia over the past 10years.”

Hoang Trung HaiMinister of Industry of Vietnam

Investors say more also needs to be done to removeimpediments to investment, including reducingregulations, lowering taxes, eliminating subsidies andharmonizing the various forms of all three which theyencounter from state to state. “We need to create anIndian common economic market,” said Summit Co-Chair Nandan M. Nilekani, President, Chief ExecutiveOfficer and Managing Director, Infosys Technologies,India.

India also needs to develop more robust financialmarkets, particularly a market for corporate bonds, toexpand its fund-raising capabilities and better spreadproject risk. Deregulating the insurance industry wouldhelp, as would putting more of India’s state-controlledbanks under private management. “We’re all soeuphoric about our stock market today, but we have anon-existent debt market,” said Gautam Thapar,Chairman, Ballarpur Industries, India. “If we only havehalf a financial market, we’re not going to get theinvestment we need.”


Whether it is hand-woven saris from Madhya Pradesh or cow’smilk from Punjab, getting any product from one point to anotherin India can be a trial. Consider a typical truck run from Kolkata toMumbai, a distance of approximately 2,150 km. The trip can takeabout eight days, including stops at state borders to pay tariffsand fees and complete formalities or to wait for crossings toopen, as well as other delays. No wonder 40% of India’s producespoils before delivery (see column opposite).

India urgently needs reliable and efficient supply chains – not justso that fashionable Delhi ladies can pick out a traditionalChanderi sari from their local boutique, or the school child inChennai can get his daily carton of Nestlé milk. A good supplychain, of course, benefits the consumer. Goods are fresher, morechoice is available, and prices should be lower. A modernretailing industry can develop, creating jobs in both urban andrural areas, though perhaps at the expense of some of themillions of small convenience shops that have so far been themain retailing experience most Indians have had. “Retail has thepotential to be an absolute revolution just like what we achievedin telecom,” said Mukesh Ambani, Chairman and ManagingDirector, Reliance Industries Limited, India; Co-Chair of the IndiaEconomic Summit.

But the real dividend will be at the front end of the supply chain.Better, more efficient infrastructure, transport, storage, handlingand distribution will cut down the middlemen and bring buyers,retailers and consumers closer to the farmers or the weavers. Inthe food sector, this will empower the farmer and transform therural economy. “There is a huge mindset change,” explainedAmbani, whose company in November 2006 launched its firstretailing venture, opening 11 stores in Hyderabad under thebrand ‘Reliance Fresh’. “Corporations wouldn’t go directly to thefarmer. All that is gone and I see a huge amount of enthusiasm.We have the potential to increase the income of the farmermultifold.” Increasing farmers’ incomes will contribute significantlyto boosting equitable growth in a country that, for all its recentsuccess in IT services, remains predominantly an agriculturaleconomy.

KOLKATA TO MUMBAI – 2,150 km (The Economist,3 June 2006)

WEDNESDAY 14.00The lorry is loaded in Kolkata. It cannot depart because of day-time road restrictions on heavy vehicles.

THURSDAY 04.00 The lorry reaches National Highway 6 after a traffic jam within thecity.

THURSDAY 20.00The lorry reaches the border between West Bengal and Jharkard.The border is closed for the night.

FRIDAY 05.00The lorry joins the border queue and it takes two hours to clearthe documents and two more to clear the border.

FRIDAY 18.00After a 200km journey across Orissa, the lorry stops for the nightas the road is closed due to the threat of attacks by bandits orMaoist insurgents.

SATURDAY 05.00After a 12 hour drive to reach the Chhattisgarh border, there is afour hour queue to cross the border, which is open at night.

SUNDAY 06.00The lorry arrives in Maharshtra and must go through 12 tollbooths and inspection points (on top of the previous 14).

TUESDAY 10.00The lorry arrives in Mumbai and the driver telephones the Octroiagent to get forms processed which takes all night.

WEDNESDAY 10.00The lorry reaches the customer.

TOTAL8 days; an average 11 km/hr; 32 hours waiting at toll booths andcheck points.

India’s Supply Chain Challenge

The risks to India’s progress span the developmentspectrum, from the immediate perils of poor nations tothe long-term challenges of affluent economies. Whileproblems of water, the rural poor and disease haveplagued India since before independence, they are beingjoined by modern-day challenges, including volatile oilprices, the threat of international protectionism and globalclimate change.

The potential impact of these problems rises as theeconomy grows. So India’s early stage of developmentgives it the chance to confront them early and devisenovel solutions. “Every risk is an opportunity for innovationand change,” said Palaniappan Chidambaram, Minister ofFinance of India.

One of the greatest risks is the one posed by India’syoung and growing population. If India fails to adequatelyfeed, school and employ this swelling group, its“demographic dividend” could become a demographicdisadvantage. Later, India will face the same problem nowvexing Europe and Japan – how to support an ageingpopulation.

As many as two-thirds of India’s population live in ashrinking agricultural sector, uneducated and unskilled,driving more into the cities by the year. Thus, even ascompanies complain of a skills shortage, growingdisparities in income could stoke social unrest.

Ultimately, India’s democracy may prove the lever thatforces policy-makers to address these needs and avert asocial crisis. “If you don’t have democracy, there is agrave danger of social unrest,” said Palaniappan

Chidambaram, Minister of Finance of India. “But ourdemocracy is a great pressure valve.”

India needs to improve its educational systems from theprimary level through to the universities. Industry needs toplay its part as well, providing vocational training andhelping universities design more practical studies.Companies can also play an important role in ruraldevelopment by helping to set up schools, creating agro-ventures or helping local government beef up theirtechnological capabilities.

Added to India’s burden is the scourge of HIV andtuberculosis. The government estimates that as many as5.7 million Indians are HIV-positive and almost 2 millionhave TB, with many cases unreported as the two mutuallyreinforcing diseases spread beyond high-risk groups. Thegovernment has shifted from preaching abstinence todistributing condoms and now offers free HIV treatmentand a TB programme that is reckoned as one of theworld’s most successful.

The government aims to increase spending on healthcare,but this an area where companies can play a direct role:there are no restrictions to private sector investment inhealthcare. Ultimately, though, one of the most powerfulweapons will be overcoming taboos to increaseawareness.

The collapse of the Doha Round has underscored thegrowing risk to India, among others, of a rise inprotectionism, which could hurt India’s trade in goods andservices. “The great champions of globalization havestarted shirking it, but we in India trumpet globalization

18

Risk Management


“Every risk is anopportunity for innovationand change. Risk givesimpetus for technologicalchange so I would regardrisks not merely as risksbut as opportunities tomove ahead at a swifterpace.”

Palaniappan Chidambaram,Minister of Finance of India

“Our intensity of energyusage has to come down.”

R. SeshasayeeManaging DirectorAshok LeylandIndiaPresident of the Confederationof Indian Industry

because we are getting globally competitive,” saidKamal Nath, Minister for Commerce and Industry. ButIndia faces its own backlash if the poor continue to beleft behind by globalization.

India should deepen its relationships with the EU andUS, but also with its immediate neighbours to raise itsclout in trade negotiations. “To be at the global tableyou must be able to carry the region,” said Rajat M.Nag, Director-General, Southeast Asia Departmentand Special Adviser to the President, AsianDevelopment Bank, Manila. (See Figure 1)

India is particularly vulnerable to an oil price shock.Though it lies close to rich gas fields and relies ondomestic coal for most of its energy, India is a net oilimporter and subsidizes fuel prices. India is alreadyshort of natural gas. “There are gas projects we’vehad to put on hold due to volatility in prices anduncertainty in availability of gas,” said T.Sankaralingam, Chairman and Managing Director,NTPC, India.

Chidambaram estimated that high oil prices cost Indiaroughly 1 percentage point of annual economicgrowth. India needs to secure its energy supply, investin a strategic oil reserve and start taking stakes inforeign supplies as China has done. It must continueto develop alternative sources of energy at home,such as solar, wind and biofuel. Equally important,India needs to waste less energy. “Our intensity ofenergy usage has to come down,” said R.Seshasayee, Managing Director, Ashok Leyland, India,and President of the Confederation of Indian Industry.

Perhaps the biggest risk facing India, however, is theimpact of global climate change, particularly on itsworsening water situation. India already suffers fromthe effects of deforestation and air pollution thanks toits reliance on coal. Droughts and floods are on therise and glaciers are retreating. The impact of theseproblems globally appears to be contributing to moresevere weather, potentially affecting the monsoonsthat are critical to the nation’s agriculture and watersupply.

Shortages of water pose perhaps the greatest risk ofsocial unrest. Almost a third of India’s people lackaccess to quality drinking water and the numbers aregrowing as water supplies shrink. “That is a shockingindictment,” said Ravi Narayanan, Adviser, ArghyamFoundation, India. (See Figure 2)


“There are gas projectswe’ve had to put on holddue to volatility in pricesand uncertainty inavailability of gas.”

T. Sankaralingam, Chairman andManaging Director, NTPC, India

Figure 1. Trade with US and ASEAN Nations Rising Figure 2. Overall Water Supplies Falling Behind

In addition to massive investments in water-relatedinfrastructure such as desalination plants and dripirrigation, policies should discourage the growth of water-intensive crops in dry areas. Cities must conserve andrecycle water to reduce their burden on rural supplies.Mechanisms also need to be developed to price water toreflect its scarcity.


The spread of HIV/AIDS in India, fuelled by co-infection withtuberculosis, is threatening India’s economy. The Minister ofFinance of India, Palaniappan Chidambaram identified theHIV/AIDS and Tuberculosis risks listed in the WorldEconomic Forum’s India@Risk 2006 report as having themost “frightening propensity to get out of hand.”

India carries the highest burden of the twin epidemics of HIVand TB which are predicted to be a significant drag onIndia’s future economic growth as they continue to affectmillions of working age adults, reducing workforces,diminishing productivity and cutting household incomes.

The World Economic Forum’s India Business Alliance to StopTB (IBA) is a model private sector response to the diseasewhich kills more than 1,000 people a day in India. Judgingby the early successes of the IBA, which is the world’slargest private sector effort to control TB, tackling the illnessis an achievable goal. The IBA was set up in 2004 by theWorld Economic Forum’s Global Health Initiative (GHI) toincrease the involvement of the private sector in TB control.

32 Indian companies joined forces under the auspices ofGHI in partnership with the Revised National TB ControlProgramme, the Confederation of Indian Industry, the WorldHealth Organization and the Stop TB Partnership in anAlliance that now reaches more than 4 million people.

India Business Alliance to Stop TB: achievementssince 2004

• More than 4 million people reached with TB controlprogrammes

• More than 7,000 people now on TB treatment• 32 companies now committed to TB control activities • Leading companies: Reliance, TATA, Aditya Birla involved• Unique public private partnership model with business as

healthcare provider

Spread of HIV and TB ThreatenIndia’s Economy

Environmental concerns ranked high on the agenda ofIndia’s decision-makers at the India Economic Summit.Vulnerability to climate change and a decline in freshwaterquantity and quality in particular were at the core ofconcerns discussed. Water issues, warned Indian FinanceMinister Palaniappan Chidambaram, are the biggest risk toIndia’s development. Chief Minister Vasundhara Raje ofRajasthan highlighted the challenges of balancing efficientpricing with equitable access, and Ralph Peterson, Chairmanand Chief Executive Officer, CH2M Hill Companies, USA,proposed models for downstream financing of upstreamefficiency.

India’s place in the global fight to mitigate climate changeremains unclear, with significant resistance to emission cutsbeing balanced by real opportunities to benefit from CleanDevelopment Mechanism projects. Whatever role India plays,the threat posed by a warming climate is real for the regionand poses particular risks to Indian agriculture and communitiesexposed to flooding, a development reflected in increasedinterest in agricultural risk management tools. (See Figure 1)

Mitigating these environmental risks will be an essential partof ensuring the sustainable growth of India’s economy andbuilding a more equitable and dynamic subcontinent.

The Environment Risk to Growth

Figure 1. Insurance Covering a Larger Portion ofAgricultural Land during the Monsoon Season

Since its Annual Meeting 2006 in Davos, the WorldEconomic Forum has been pursuing the “creativeimperative” through the interactive sessions andworkshops in regional meetings across the globe,including this year’s India Economic Summit. The aimis to tap the combined knowledge of Forum partners,members and meeting participants – business,government and civil society leaders from around theworld – to identify innovative approaches toaddressing international issues and problems, fromthe lack of water to ageing demographics, fromimbalances in the global economy to the threat ofterrorism. Many of these captured ideas will fuel thediscussions and brainstorming at the Annual Meeting2007 and help shape its agenda.

These are some examples of the creative ideas andout-of-box insights that participants at the IndiaEconomic Summit discussed in New Delhi:

State and National CompetitivenessIt is critical for India to shape its competitive niches inthe global economy. It must further cultivate thecomparative advantage it has already exploited in thebusiness process outsourcing market. This meansproducing high-quality goods and services at a lowcost. India can collaborate with developed countriesto “extend” the niche competitiveness of thoseeconomies. Indian Minister of Science and Technologyand Earth Sciences Kipal Sibal, for example, hasproposed to Norway that it set up marine engineeringtraining facilities in India and then outsource businessto trained Indian personnel. This would allow Norwayto maintain its leading position in the marineengineering sector, while providing new skills to Indianworkers. As Minister Sibal put it: “You build yourfuture; we build our human capital.” Such collaborativearrangements would provide India with the know-howit requires such as energy conservation techniquesand technology.

Efforts must be made to address the problem ofunemployment among graduates and postgraduatesin rural areas who are unable to get a job. Not attunedto urban living, they are similarly unsuited to village lifeor rural employment. The private sector should makeuse of these talents in their efforts to develop ruralmarkets.

India and its neighbours should do more to promoteSouth Asia as an economically integrated region. “Wereally underplay our neighbourhood at our own cost,”said Rajiv Kumar, Chief Executive and Director, IndianCouncil for Research on International EconomicRelations (ICRIER), India. “The region from Chittagong(in Bangladesh) to Kabul (in Afghanistan) is and willremain an integrated economic space – trade,migration, population, the labour force. We [India] takeresponsibility for building that economic space. Ifothers are afraid of our size, we must make them feelsecure.”

To create an Indian common market, a single point-of-departure process should replace the repeatedformalities and levies on cross-border commerce andtraffic. Ways should be explored to divide therevenues fairly among states with valid claims.

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The Creative Imperative in India


“Science and technology isthe key for innovation andeconomic growth. But alsoimportant is socialinnovation, changingmindset to take risks.”

Kiyoshi Kurokawa, ScienceAdviser to the Prime Minister,and Professor, NationalGraduate Institute for PolicyStudies (GRIPS), Japan

“India has to focus on how to monetize innovation. The costof failure is low in India and that is something we should useto our advantage.”

Kiran Mazumdar-ShawChairperson and Managing Director, Biocon India, India

Managing GrowthWhile some accomplished Indian academics, engineersand scientists who have gone abroad have returned,many still do not come home, unwilling to accept localpay scales and conditions. The proposed legislation toallow foreign educational institutions to enter the Indianmarket could provide a mechanism for attracting IndianR&D talent back. But this initiative will have to bebolstered by new grant programmes, investment from theprivate sector in education and the creation of public-private partnerships to support higher learning andresearch.

To empower women and expand opportunities for them inthe workplace, Indian companies should consideradapting flexible work schemes that have been used incountries such as Japan that have also had to addressgender inequality.

Infrastructure DevelopmentTo construct the infrastructure India needs will requireinvestment of US$ 350 billion over the next five years. Asthe government will not be able to provide all thenecessary funding, the private sector will have to coverthe shortfall. In a session on financial markets,participants discussed the need for alternative sources ofcapital. Deregulation of the insurance sector and pensionreforms could unlock funds that may then be invested ininfrastructure development. In addition, the creation ofdedicated public vehicles for investing in infrastructureprojects would centralize the tendering and approvalprocess, thereby eliminating the confusion investorstypically face.

Risk Management“India is being robbed of at least 1% growth because ofhigh oil prices,” said Palaniappan Chidambaram, theMinister of Finance of India. He called for oil-producingcountries to meet high oil-consuming nations, proposingthat the two groups set a pricing band for petroleum.Chidambaram also called on developed countries toprovide funding and technology to developing economiesto help them reduce energy consumption and increaseenergy efficiency.

India needs to examine new ways of water conservationsuch as rain harvesting in urban areas.


The Key Challenges Ahead: R. Seshasayee, Mohamed A. Alabbar, Kamal Nath, Michael Rake, Nandan M. Nilekani and Graham Mackay

The India Economic Summit is held in cooperation with the Confederation of Indian Industry (CII).

The World Economic Forum wishes to acknowledge the support of the following companies as Partners:

Strategic Partners

AccentureAIGAMDApax PartnersAudiAvayaBain & CompanyBombardierBTCisco SystemsCitigroupThe Coca-Cola CompanyDeloitteDeutsche BankErnst & YoungIntel CorporationKPMGManpowerMarsh & McLennan CompaniesMerck & Co.Merrill LynchMetroNestléPricewaterhouseCoopersSiemens

Regional Partners

GeoPost InternationalUPS

Summit Supporters

CH2M HILLDepartment of Industrial Policy and Promotion,

Ministry of Commerce and Industry of IndiaEmaarFinancial TechnologiesIndia Brand Equity FoundationSABMillerTNT NV

Service Provider

Taj Palace Hotel

The World Economic Forum would also like tothank Kamal Nath, Minister of Commerce andIndustry, and Vilasrao Deshmukh, Chief Minister ofMaharashtra for their generous hosting of activitiesduring the India Economic Summit.

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Acknowledgements


Peter Torreele is Managing Director of the World Economic Forum. Lee Howell is Director, Head of Asia,at the Forum. The India Economic Summit was under his direct responsibility, with Colette Mather,Senior Adviser, South Asia; Shruti Bhatia, Senior Manager, India; Satyadeep Rajan, Senior MemberRelations Manager, Asia; and Samantha Gianora, Event Manager, Summit Coordinator.

Samantha Tonkin, Senior Media Manager at the World Economic Forum worked with Wayne Arnold andAlejandro Reyes to produce this report.

The World Economic Forum would like to express its appreciation to the summary writers for their workat the Summit. Session summaries are available at www.weforum.org.

Associate Principal, Editing: Nancy Tranchet

Design and Layout: Kamal Kimaoui, Associate Principal, Production and Design

Photographs: Prabhas Roy

Special thanks to PricewaterhouseCoopers for their help in preparing data and statistics underpinningthis report.

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Contributors


The World Economic Forum is an independentinternational organization committed to improvingthe state of the world by engaging leaders inpartnerships to shape global, regional andindustry agendas.

Incorporated as a foundation in 1971, and basedin Geneva, Switzerland, the World EconomicForum is impartial and not-for-profit; it is tied tono political, partisan or national interests.(www.weforum.org)