Chairman of the Governing Board, Rajat Gupta, Dean M R Rao, members of the Board, Faculty, Graduating students and distinguished guests. I feel greatly privileged on being invited as Chief Guest, for the sixth Convocation at the ISB.

I watched the basic mainstream idea evolve from a concept in the minds of a few distinguished business leaders, to a natural reality. It is very nice to be here and see this colourful building and to be present on the occasion of Graduation of a very successful class, which reflects the actual realisation of what was perhaps a dream, which became a vision, and was converted into reality. I think it is an appropriate time to pay tribute to many business leaders, Rajat Gupta himself, his colleagues, many of whom are here and the large number of dedicated people who have worked together to make this possible.

I have no doubt that the Faculty, too numerous to name so I am not going to name them all, and Dean M R Rao, deserve great credit for what the ISB has turned out to be. From my conversations with board members, I have also sensed that there are two other names that I should mention. They are Ajit Rangnekar and Savita Mahajan. I think it is perhaps also appropriate to recall that when the institution was first set up, Pramath Sinha moved from McKinsey, to fill in the first stream of this institution. Well, they all have my applause and thanks on behalf of, I think society in general, for having made this possible.

Of course the stars of the gathering of the Convocation are the graduating students. I have just heard from the Dean of your outstanding performances, in fact that you have all received some extraordinary placements. This is an appropriate time therefore to congratulate you. Also I would like to offer a special word of congratulations to those who have won special prizes and distinctions and of course most importantly, I would like to congratulate the proud parents who are present here. I have no doubt that they will remember this occasion much more than the graduating students will. So congratulations to all.

Normally a Convocation is designed to give some words of wisdom to young people who have been spending their time in the University and have no idea about the real world. I have attended many such Convocation addresses. But this is a very different kind of convocation. You all, I believe, have gained five years of experience in the real world and specially came here, ready to step back and take managerial advice. You know how the real world is like and I know you must all be eagerly awaiting a return to it. So I thought I would use this opportunity to share with you some thoughts on what likely you will find at this time in the world that you are now going to enter.

I believe that you are fortunate to be returning to the real world at the time when India seems to have made a transition to rapid growth. I graduated in 1963. Twenty years after I graduated, the economic growth rate of the country was around 4 percent and population growth was 24 percent. So by comparison, the economic growth was less than 2 percent for over a twenty year period. You are going back into the real world where the economy is growing, in the last four years, at the rate of 8.4 percent. The government is setting a target for the next five years at 9 percent. Now if you go to the end of that target period, the economy would be really at 10 percent. What I want to emphasize is that this is not a promise; this may or may not happen, it will require a lot of hard work to get it done. But I do believe that it is possible. And this is not just a government’s view. I think this is the view of virtually all international observers. India has what it takes to achieve - a transition to a steady sustainable growth of 9 to 10 per cent.

Now what does this mean? Population is now growing at one and a half percent, so if we have to grow at 9 percent over the twenty years, basically you will be facing a growth rate, GDP, per capita of something perhaps just a little less than 8 percent- which is now four times faster than what the economy grew at when I graduated. The common intelligent implication of this is that you will expect a tremendous amount of structural change in the economy. Now this change is going to be reflected in many things. By the year 2035 or so, India is likely to be the third largest economy in the world, after US and China. That is a huge transformation. Our markets will be much more open to foreign goods. Investors will be much more openly flowing in and equally important, Indian investments abroad will be taking place and the Indian industry will have footprints, not just in this country, but also in the western world.

There is a big change in structure too. When I graduated there was this whole glamour associated with working for a multinational. The obvious reason was that working for multinationals, apart from the salary, gives you the opportunity to have that global experience. You are fortunate in that you can have that global experience by either working for a foreign multinational or an Indian multinational, and many of you who pass out will in fact, be working for our Indian multinationals. Domestically in terms of our social system, this rapid change is going to involve changes in technology. In global world, first of all technology is changing faster than any other area. I think nothing demonstrates this more than the pace of penetration of the internet, in recent years. Internet technology was invented way back in the 1960’s, in the RAND formation of the USA, primarily in providing a secure system communication. It translated into common use, really somewhere in 1994, when World Wide Web service was introduced. That was thirteen years ago. During that period, this particular technology has not only become wide spread but has changed in the way we do business, changed the way we cumulate and assemble knowledge but has also changed the manner in which we access it. It no longer requires computers. It requires a mobile phone. And the penetration of mobile connectivity is perhaps one of the most remarkable examples of what it can do in accelerating the change. I think the change in India in the next twenty years, is likely to be breathtaking compared to anything that we have known so far. In addition to this aspect of technology, there has been a complete change in the global organization. We have been a very slow organizing country. But the combination of rapid growth rates and greater mobility and compressive globalization, is going to lead to a much more rapid pace for globalization. This is also necessary if we want to create a more inclusive society.

At the moment, there are too many people dependant on agriculture for their living and as a result, rural-urban capital differences are allowed. All over the world, this kind of situation has been observed when the population takes half the land and put into non-agricultural activity. A non-agricultural activity does not mean that all activity is within the cities. I think one of the most interesting things about modern technology and certainly the internet is the fact that it enables us to connect people with urban activities, even if they are not in internet powerful areas. But it does mean that large villages will become small towns and much greater spread of amenities will have to take place in this environment. Linking all this, one of the most important things is that we expect to see a revolution in expectations. It is not possible to have rapid growth without an expectation on the part of everyone else that the benefits should flow to them in equal numbers. And I think this is perhaps one of the most important changes that one observes in the last ten years. The rapid growth of the economy has been a witness of a successful economic change and economic reforms, initiated in the mid 1980’s and accelerated very significantly in the 1990’s.

If you go back ten years, there was a period when many people doubted whether these reforms would produce economic growth. Many people said that these changes will be disastrous, Indian industry will collapse. This gave rise to a different type of criticism, which I think we need to pay attention to. I think people now believe that we know the recipe to generate rapid growth. We know what is necessary for the growth to take place at 9 percent. But people question whether this growth is going to be inclusive enough. I think this is why in economic funding we are now focusing on the quality of environment we need to bring about faster and more inclusive world. We need to focus on how to make sure that the growth rate effects and improves the performance of agriculture. Since mid nineties, we have actually seen a de-acceleration in the growth of agricultural production. Agricultural GDP grew at about 3.6 percent per year between 1980 and 1996 and thereafter it went below 2 percent and has gone up in the last two years. It’s now objective to bring about a quality change that will bring approximately 4 percent growth in agriculture.

Next we obviously have to focus a lot on infrastructure. Anybody who has been around in East Asia Coast and foreigners who visit the country and our own businessmen, who are familiar with the situation of growth, tell us that the single biggest obstacle in bringing about rapid growth of both employment and GDP is the quality of infrastructure. And I can assure you that this subject is very high on the priority list of our government. A major improvement in infrastructure is, virtually a sure way, not only in ensuring that we get the growth we want but also ensuring that growth is more evenly distributed. Large companies and large growth rates can deal with a lack of infrastructure because they themselves build lot of these infrastructures. We are trying to focus one the smaller and the medium companies, whose competitiveness cannot be established unless the quality of infrastructure improves in general.

Two other areas which will be critical for quality are education and health. I think in both areas we have some outstanding success stories. Our best educational institutions compare to the best in the world. But the average standard is much below than what it needs to be, if we are to compete in a highly competitive and highly open knowledge economic driven world economy. I think education is something in which the government is going to focus on. It is something in which both the public sector and the private sector have a major role to play. The whole objective in this area should be to create an environment in which public sector, private sector and public private partnership are possible. Much the same thing actually holds for the infrastructure also. Because this is an area where, some infrastructure can only be done by the public sector, but a lot of infrastructure can be done if the policies are right, through private sector participation, and that is what they are really planning to do.

In all these areas the big challenge is how to manage change. Change, that is going to be relevant for the public sector, for the private sector, for the public– private partnerships. It should be relevant in the civil society organizations, which play a very important role in communicating messages, and in stimulating innovation and different ways of tackling problems at lower levels in government. It is really very important in the whole process of decentralizing, both funds and authority; from the central government to the state government and from the state government to Panchayati Raj institutions. But I don’t know how many of you will have the opportunity to participate in these various management challenges in each sector. I hope that some of you at least, perhaps many of you, will just not limit the application of your management skills to the corporate sector, which of course needs it, but will also be tempted to bring management skills into these other sectors, all of which actually do require a huge amount of management input.

Finally one word before I conclude. I think technology and globalization are going to create a world, in which change will be much more rapid. Institutional change, technology change, equation of working etc. is going to be more rapid than in the past. This will open up new opportunities. It will create uncertainties and I think the success of the future is likely to grow in this rapidly changing world. This is true as much for the companies, as it is for the individuals and I think that the challenge has to be met at both levels. As a general rule, whether it’s a firm or an individual, it has to be nimble and flexible in order to cope with the change. Most importantly for you individually, as you return to the real world, this is an advantage. Seniority and experience will be of much less importance than the way in which you can take risks and think out of the box. I am sure that you had a very hardworking one year at the Indian School of Business and are ready to meet with this particular challenge, as you go out once again into the real world. With that my very best wishes for this event. Thank you.