Growing consumption a bane for India - Chandran Nair.I was reading this interview that appeared in the Economic Times, Mumbai Edition today with great interest.
"Author and think-tank founder Chandran Nair is a second-generation Indian-origin Malaysian based out of Hong Kong . He made news in India a few years ago at a conference in New Delhi, where he took on American political scientist Francis Fukayama over what he calls the latter's "odd view of the world based on an inherent belief in American exceptionalism".
Nair advocates a new model of capitalism for Asian economies .constrained capitalism--that particularly wants governments to regulate the use of natural resources, and therefore the nature of consumption, through a range of policy tools. In his new book, Consumptionomics, he argues that the consumption-led Western economic model , which is based on under-pricing resources and externalising the true cost of goods and services, won't work in resources-constrained Asia.
He says that governments in the region must start reshaping capitalism by making resource management, and therefore the pricing of these, the centre of all policy-making. But to do this, we must reject the existing Western model and stop being in denial. He has named his think-tank GIFT, short for Global Institute for Tomorrow, and among other activities it offers leadership development programmes which are "both experiential and based on an Asian worldview". "It is, in fact, not a think-tank, I rather call it a think-to-do-tank," he tells Ullekh NP in an interview. Edited Excerpts :
How do you look back at taking on Francis Fukayama in India?
I did not see my role at the conclave organised by India Today in New Delhi as one of taking on Fukayama as such but more of trying to share with the mainly Indian audience a sense of how intellectual subservience had resulted in even delusional ideas from the West being hardly questioned or openly challenged in Asia.
What are the failures of the Western model of development and why do you think it won't work in emerging economies such as India and China?
It is now a model of an entrenched political and economic ideology and at the same time has historical underpinnings based on colonialism and therefore global privilege with access to unlimited resources (example: colonies such as India, African nations or frontier land such as Australia). As such it does not belong in the 21st century where all the scientific evidence points to limits being surpassed on numerous fronts as the global population is set to exceed 9 billion in 2050 (it was only over 1 billion in 1900). It does not believe there are limits and this is simply a lie or, kindly put, "being in denial". It will not work in India and China because the pursuit of "more" at any cost will bring about catastrophic failure simply because there are far too many Chinese and Indians (India's population was slightly over 300 million at Independence 62 years ago and has increased almost four fold since then). For those who are not in denial, that is already all too obvious. But I must stress here as I do in the book that it does not mean they must remain poor. In fact, the book argues that the current trajectory is likely to shatter the dreams of hundreds of millions of the poor for a better life.
You have warned the world of what you see as the worst-case scenario: Indians and the Chinese trying to consume like the Americans. As an antidote, you bring in a concept called constrained capitalism. Could you please expand on it?
I am not suggesting that we get rid of capitalism which some have lazily assumed. Nor is the book saying that the West has a free pass and Asians must now be poor. The book is very clear on this and it argues that capitalism has many elements that can be further refined for a crowded 21st century. But modern capitalism has morphed into something that seeks to benefit and thrive at every turn by under-pricing everything. You could look at the origins of capitalism in the US and argue that it even under-priced basic labour by using slaves. To various degrees that continues today in different parts of the word given how migrant labour is exploited in Asia. The focus of the book is on resource use. I am proposing that Asian governments start to reshape capitalism by making resource management the centre of all policymaking and to do this by putting in place the necessary frameworks and policies to price things properly. In a constrained world this is a fundamental shift that is needed and requires rejection of the Western consumption-led growth model where everything can be traded and has a price, but is actually under-priced to suit the needs of vested interests, industry and its lobbyists.
What are the reforms required for the new model?
Making access to resources and the maintenance of their vitality the centre of all polices is the first step. I believe this is only possible if we have strong governments which are willing to stand up to vested interests and also the mainly Western-led international bodies which are wedded to the notion of the "globalisation of everything and anything" through free markets, free trade, the power of technology and the leveraging of finance. "
Mr.A.N.Raman CCM ICWAI and President of SAFA was discussing how Integrated Sustainability Reporting has taken a center stage and how it was one of the main pillars of discussion in the recent IFAC - PAIB Meeting held in Melbourne, Australia.
To me all that is said by Chandran Nair and Raman squarely falls under Cost / Resource Management. Cost Accounting and Audit's scope need to be enlarged. It needs to bring in Sustainable Reporting within its gamut. I really cannot see Sustainability as another concept but only as an extension of of Cost/Resource Management Reporting.
Indian visionaries had it in them to bring Cost Accounting and Audit. It now needs to incorporate Sustainable Reporting within the Cost Reporting and Audit Framework.
Till now under cost accounting and cost audit and reporting framework, the reporting was limited to resource consumption within an enterprise for manufacture of a single product vertical. Through the EGR it now needs to be for the entire Enterprise.
Going forward what now needs to be incorporated is managing resource availability externally with its internal consumption and paving the way for its sustained availability.
What also needs to be done is to take Indian experience in Cost Accounting, Auditing and Reporting framework to the world. It provides the much needed platform for integrated sustainable reporting.