In India It's All About People, Politics, and Possibilities

I met so many great members of the extended Wharton family in India last week–from prospective students to the most senior leaders in business and government. They represent all types of industries from cutting edge e-commerce, like Snapdeal founder Kunal Bahl, to family businesses, such as Reliance Industries’ Hital Meswani who runs the world’s largest oil refinery and is now rolling out India’s largest 4G network.

What I learned from spending time with these and other Indian business people during my trip can be distilled down to the following two lessons, expressed in the quintessential Wharton-way of equations.

1. India’s economic opportunity = inefficiency x scale

There are lots of zeros surrounding everything in India. Their population is 1.3 billion people today, rising to 1.7 billion by 2050–passing China to become the world’s largest country by 2025. India has about the same land area as my native Australia, it just fits more than 50 times as many people. There are nearly 100 million Indian kids in high school, the largest and fastest growing young population in the world.  

India’s breathtaking scale and infinite variety makes it a fascinating place, however when it comes to the country’s economic prospects there are inefficiencies everywhere. The weight of India’s bureaucracy is legendary, but I was more struck by inefficiencies in the private sector. 

Take Information Technology as an example. Everyone knows about Bangalore and India’s homegrown BPO giants (Infosys, Wipro, TCS). You’d assume this would mean that mobile would be massive in India too. You’d be right, and wrong at the same time. There are close to a billion mobile phones. Almost everyone in India has one. The problem–even in the middle of big cities like Delhi and Mumbai–is that dropped calls are just as much as fact of life as traffic jams.

The list of available mobile networks on a phone in India is much longer than in the US. The problem is that, no matter which one you choose, the chances of a strong and stable connection are very limited. Lots of competition is supposed to be good for consumers, but in India's case the fragmentation of the mobile market creates problems that are only made worse by India’s longstanding roadblocks to erecting networks of cell towers.

That said, the combination of market fragmentation and challenges with building infrastructure also creates massive opportunity in India. Reduce inefficiency even modestly and, given India’s immense scale, the benefits will also be very big. This is nowhere more evident than in the frenzy surrounding Snapdeal and Flipkart, India’s upstart e-commerce kingpins. Indian e-commerce today is way smaller than in China or the US but it is growing much faster. Neither company comes close to Alibaba or Amazon today, but wait a few years and they just might.

Certainly the relatively new Indian government, headed by Narendra Modi, is betting on the private sector to drive a quantum leap forward in the economy. 

2. Indian politics = sport x soap opera

Ask any group of Indians about PM Modi and you are bound to get many different answers, all expressed passionately, eloquently and persuasively. When I expressed my wonderment at the volume and intensity of political debate in India I was told to understand 2 things: Indians love sports, cricket in particular, which is close to an unofficial religion throughout the country; and secondly, Bollywood is booming with Indian's love of personal dramas from the highest brow movies to mass market soap operas. Politics, I was told, is where sport meets soap opera in India—both a contact sport and a series of passion plays. 

Mr. Modi’s boosters believe in the notion that the PM has a grand plan for market reform that has begun with a big powerful vision (“Make in India,” “Skill India,” “Invest India”) and a highly disciplined focus on execution. However, his critics paint a completely different picture of a politician who loves talking on big stages but falls way short when it comes to action, and who is recklessly inattentive to the worrying rise of inter-ethnic tensions in India.

The reality is no doubt somewhere in the middle. I was just struck, over and over, by the fact that when it comes to politics Indians turn the volume dial up to 11, to borrow a line from the classic "Spinal Tap" mockumentary. In America many are perplexed by the personal attacks among the Republican candidates for President. My sense is that they look positively genteel compared with the daily cut and thrust of Indian politics.

My overall reaction following my recent deep dive into Indian culture is “what an amazing country.” So much opportunity, so much debate. We will all benefit by being more involved. That is what I certainly hope will be true for Wharton in the months and years ahead.

Geoffrey Garrett is Dean, Reliance Professor of Management and Private Enterprise, and Professor of Management at the Wharton School of the University of Pennsylvania. Follow Geoff on Twitter.