wrong then chances are there that it ' s a wrong decision.
I think this is something we at CRISIL deal with regularly; we know a better rating will make the issuer happy. But it will neither be good for us in the long run nor good for the market on a whole. On the other hand, the converse, which is to give weak ratings- which decides interest rates may make banks happy but will seriously hurt the borrower ' s financials. So we face a daily dilemma of balancing out the market needs and treading the correct path.
My personal view is that all perpetrators of scams and frauds that you see in the news would have started out like you and me. None of them began with an intention to commit a crime but at some point they faced a dilemma and chose a particular path. This is a very real issue that all managers will face- a series of small imperceptible choices which may go on to make or break a career.
Q) How important do you think corporate governance is in today ' s context? Do you have a corporate governance policy in place at CRISIL?
A) It is very important indeed. We are a highly regulated company, a Standard & Poor subsidiary, regulated by SEBI and have a strict code of conduct bound by several policies. More importantly since we rate companies in the marketplace, we ensure that we are doing what is right.
Corporate governance is extremely crucial because the kind of confidence investors have in good management decides how they invest. Corporate governance is intrinsic to a business strategy that aims to be above board.
Q) How do you recognize and tap growth strategies in a globalizing economy?
A) We have a structured product development plan. We keep scouting the market for products and demand / supply gaps in the domestic market. As an illustration, five year ago we launched a rating known as SME ratings when we recognized a market opportunity that banks could use these ratings to lend to SMEs. We created a viable business model and successfully implemented it. Today we have rated about 50,000 SMEs over the last 5 years.
Additionally, we have a very rigorous process for identifying opportunities for inorganic growth both in domestic as well as international markets.
Q) What do you think are some new and never seen before business trends which will shape the economy which india is going to encounter in next 5 or 10 years just as we saw the‘ dotcom bust’ or‘ 2008-2009 recession’?
A) Sustainable high growth is going to be a key challenge over a medium to long term. Urbanization, policy reforms, political landscape and social activism are all going to play a critical role in charting India ' s socioeconomic story going ahead.
Right now, we don ' t see the benefits of growth going to the entire economy so I see definite growth challenges. Social transformation is also imminent. We also need to successfully tackle issues like infrastructure, credit availability, inflation and food security.
In terms of benefits we foresee huge potential in the use of technology to enhance productivity. We could also see material improvements in public governance at a broader level. The kind of demographic mobilization that we are witnessing in Delhi and other metropolitan cities couldn ' t even have been imagined twenty years back. Technological advancement and proliferation of social media platforms have significantly increased information access and public participation in socio-economic issues.
Also, I see a critical need for skill development. At an international level the developed economies like US, Europe etc. will struggle unless they innovate continuously. China will transform itself from a growth oriented economy to a domestic consumption based model. But India is interesting because it has a unique set of socio-economic and demographic problems and opportunities. Building a strong infrastructure for skill development in conjunction with technological advancement can provide us significant productivity gains across sectors.
At a global level, I see that the developed countries will continue to struggle thereby shifting the economic epicentre towards Asia.
Q) Can we continue to survive as an import economy?
A) As a country, we continue to remain largely selfsufficient. In recent years, while agriculture has shown a growth rate of 3.5 %, other sectors, primarily services have grown at a much faster pace.
As I had highlighted before, what is needed is a paradigm shift in productivity. Diminishing share of agriculture in the GDP doesn ' t imply that we are becoming import driven. Improvements in irrigation, technology and skill development leading to application of modern agricultural practices can provide us significant productivity gains in agriculture.
Q) When & how does a leader decide to pass over the baton to his successor?
A) The best leaders are the one who are highly driven with unimaginable energy levels and incredible response times. These people are always in want of newer challenges and are essentially driven by goals they have set for themselves. Such a leader effectively moves on when he feels he has achieved the purpose he had set out for himself in that particular role.
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