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Next pandemic: What can insurers do?

TOI blog: October 26, 2020

https://timesofindia.indiatimes.com/blogs/outlier/next-pandemic-what-can-insurers-do/

While the debate on the possible source of COVID-2019 continues – the pandemic shows no signs of an exit. Yet, scientists are already concerned about what could be the next big one. Howsoever distanced insurers may seem, they do have an important role to play. If only they begin to see the dotted line between the climate crisis and the current pandemic, as well as what possibly lies in store.

Insurance & Ethics: A rare cocktail!

My article in today’s TOI blog: October 19th, 2020

https://timesofindia.indiatimes.com/blogs/outlier/insurance-ethics-a-rare-cocktail/:

The closest you come to ethics in insurance is a subdued mention of Utmost Good Faith! The ‘Cyberfication’ and digitisation of insurance and the businesses they cover – will make insurance & ethics a truly heady mix…

“The rise of environmental justice struggles throughout the state… slowing down the neoliberal juggernaut, but not stopping it”.

J Devika is a researcher and teacher at Centre for Development studies, Thiruvananthapuram. She is a historian who brings to bear that training to engage with contemporary issues. She writes in both Malayalam and English and translates between the two languages. She offers her commentary on www.kafila.online and collects/translates the writings of/on Malayali feminists on www.swatantryavaadini.in.

J. Devaki: The activist community is under threat in Kerala.

Praveen Gupta: The discourse on Climate Change continues to be deeply Eurocentric? Understand the likes of ‘Swatantryavaadini’ provided Kerala a strong tradition and spread?

J Devaki: Yes, I tend to agree – climate change and the Anthropocene are indeed grand narratives and tend to be Eurocentric. But that does not mean that they are either all-pervasive or impervious to local interpretation. The effects of chaotic climate are felt everywhere in the world for sure, and we draw upon resources from all over to make sense of it. The climate change discourse is only one such. A great strength of environmental activism in India has been that it has refused to take its eyes away from the local and regional context, even as it engages with global discourses, and all this it does with considerable critical acumen.

A great strength of environmental activism in India has been that it has refused to take its eyes away from the local and regional context, even as it engages with global discourses, and all this it does with considerable critical acumen.

Swatantryavaadini is a collection of the writings of early twentieth century feminists – or women whose writings qualify to be called feminist. Again, feminism is a global discourse, and its Eurocentrism has been challenged repeatedly from the margins. If you look at this work, you will notice the complexity of transnational exchanges which do not fit into a simple coloniser/colonised binary.

PG: Have the recent devastating floods led to increased activism?

JD: In Kerala, I cannot really say that it has. It should have led to a wholesale rethinking of our recent development trajectory from an ecological perspective. Given the claims about Kerala’s left traditions, many expected this. But no. The truth is that the very little is left about the Left, and the new economic rightwing orientation of the government can hardly see the importance of ecological stability in capitalist growth.

There is growing fear, however, among more and more sections of people, about rampant destruction of the environment, but there is little commitment among them to heal the damage through changing lifestyles. There is even denial of ecological destruction.

It has been the other way round: for example, rock quarrying, which was identified by scientists of the Kerala Forest Research Institute as contributing heavily to the destruction of the Western Ghats and exacerbating the damages done by the floods, has only been further encouraged in the state. And people protesting rock quarrying – local people, that is – have been handled quite roughly. There is growing fear, however, among more and more sections of people, about rampant destruction of the environment, but there is little commitment among them to heal the damage through changing lifestyles. There is even denial of ecological destruction.

PG: What drives the affected people into a self-denial mode? Does this aspect of climate psychology or sociology mellow down activism?

JD: From our research on the local self-government’s response to heavy, persistent industrial pollution at the island of Eloor in Kochi, it appeared to me that the insights of environmental psychology about denial of environmental destruction are very valuable indeed, especially for those of us who desire to change mindsets. The response of residents to environmental pollution at Eloor closely resembles that which has been called ‘socially-organised denial’ in the literature on climate change denial.

The response of residents to environmental pollution at Eloor closely resembles that which has been called ‘socially-organised denial’ in the literature on climate change denial.

It is now widely agreed that the ‘information-deficit’ model of climate change denial which claims that better and more accessible, scientifically grounded, reliable information will convince people is not adequate to make sense of denial – that is, knowledge is necessary, but may not be sufficient. For instance, some sociologists and psychologists now argue that the apparent indifference of people in the face of a veritable flood of information and knowledge of climate change may be a form of grieving. 

Psychologists studying climate change denial point out that the increased perception of death-risk that ‘risk society’ allows may actually activate ‘distal defenses’ which keep death thoughts unconscious – and one form they take is of bolstering the existing world-view even when it is not sustainable in plain view. In our interviews at Eloor, we were struck by the fact that elected members almost never volunteered to broach the topic of pollution until we suggested it explicitly to them; there was much diffidence about speaking of it. From our data, it appears that both the ‘proximal’ and ‘distal’ defenses that Dickinson talks about seem to be at work at Eloor.

I am talking about just one site in Kerala, but this maybe at work on a much larger scale.

PG: What is happening at Eloor and why could the community around the Periyar river not mobilise corrective action?

JD: In Eloor, industrial pollution has been a constant, severe problem since the 1970s at least, and though there was activism there against it, and though this activism caught much attention in Kerala and even reached global forums, it was unable to change local mindsets. In fact, the activists here were even able to be part of the Local Area Action Committee set up under the aegis of the Supreme Court to stop the chemical pollution of the river and for two years, they wielded considerable influence. However, this did not translate into widespread acceptance of the activists’ stance on the environment.

People who grew up there were nostalgic not for Nature but for national public industrial culture. The activists, however, had roots in the earlier farming and fishing livelihood culture which was exactly the opposite!

Part of the reason for this is to be found in the local history of Eloor – it was the hub of nationalist industrialisation from the 1950s, which once embodied the Nehruvian idea of industrialisation. People who grew up there were nostalgic not for Nature but for national public industrial culture. The activists, however, had roots in the earlier farming and fishing livelihood culture which was exactly the opposite! But there were other reasons as well. Civil social activism, especially intervention, in Eloor was (a) made possible from above, through the intervention of the Supreme Court, and (b) technical in nature. The activists were also dogged by the fact that they were fighting both public and private sector chemical industries – and were up against the combined power of all the major trade unions, and not just the large private corporates.

PG: Who are the major defaulters? Are these state-owned industries?

JD: In Eloor, yes. And that is a huge hurdle.

PG: The Silent Valley was one of the early high-profile projects that drew major ire of environmentalists. To what extent did they succeed?

The Silent Valley struggle was perhaps the major success story as far as environmental struggles in Kerala are concerned... on the one hand, ecologists and popular science activists advanced different sorts of scientific and technical arguments, and on the other hand, poets and writers created new metaphors that ignited people’s imagination and gave them the power to ask fundamental ethical questions.

JD: The Silent Valley struggle was perhaps the major success story as far as environmental struggles in Kerala are concerned. This success was the result of the fact that what began as a technical discourse was expanded into a much larger discourse that posed fundamental questions about human beings’ ethical relationship to the non-human. This was done by the poets and writers who joined the movement. So on the one hand, ecologists and popular science activists advanced different sorts of scientific and technical arguments, and on the other hand, poets and writers created new metaphors that ignited people’s imagination and gave them the power to ask fundamental ethical questions.

PG: Kerala has 100% literacy and a communist government; you still witness major environmental breaches? Is activism not community led?

JD: Well, neither literacy nor communism guarantees good sense about the human future, especially our ecological future. The activist community is under threat in Kerala. Ecological activism is increasingly dubbed anti-people, Maoist, a foreign conspiracy and so on, like elsewhere in India. Only that a much larger public sphere – and one with many folds – assures that these threats are not always successful. The government however simply ignores activist voices – and encourages terrible disaster – for instance, Adani’s ongoing ecological misadventure at Vizhinjam which is wiping out Thiruvananthapuram’s beaches and threatening several coastal hamlets. The government was forewarned of this disaster many times by activists and scientists, but it all fell on deaf ears. The meager disaster relief doled out in times of crisis are little relief, they are even a mockery…

The activist community is under threat in Kerala. Ecological activism is increasingly dubbed anti-people, Maoist, a foreign conspiracy and so on, like elsewhere in India.

PG: Despite close co-existence with nature unlike why do we still see environmental depredation in Kerala?

JD:  Close co-existence with nature in Kerala was once an integral part of life here; but no more, except among our ecosystem people. Only part of the environmental activism in Kerala could be called that fueled and led by ecosystem people. The rest (including the Silent Valley Campaign) is largely middle-class. In the 1980s, there were two streams: you could perhaps call them the Romantic and the Rationalist. Of these, the Romantic stream urged people to examine ethical questions on their relation to non-human life, created new myths and metaphors that built a new imagination and cosmology, and often relied on a prelapsarian idea of Nature. The Rationalist was more inclined to treat Nature as a resource, and so favoured cost-benefit analysis and technical approaches. Both these were advanced by the middle-class and centred on conservation.

The rise of environmental justice struggles throughout the state – around many issues including sand mining, granite quarrying, waste dumping, water shortages, wetland destruction, chemical poisoning (Endosulfan) and so on – was not accompanied by a reimagination of environmental activism.

In the 1990s and after, with greater consumption and resource predation, questions of environmental justice became equally or more important. But as this was deepening, the official response (evident in Kerala’s experiment with decentralised planning for development) was of ‘resource mapping’, focusing on sustainable use alone.  The rise of environmental justice struggles throughout the state – around many issues including sand mining, granite quarrying, waste dumping, water shortages, wetland destruction, chemical poisoning (Endosulfan) and so on – was not accompanied by a reimagination of environmental activism. So, these continue to be fragmented though numerous throughout the state, slowing down the neoliberal juggernaut, but not stopping it.

PG: Is increasing frequency of wild elephant deaths a manifestation of human animal conflict?

JD: Yes indeed. Such conflict has been discussed since the 1920s at least when plantations expanded in Kerala. Now however, the problem is far more than wild elephant intrusion. The human-animal interface has narrowed alarmingly, and so we see wild animals far away from forests, seeking food in waste dumps and preying on crops. Wild boars, for example, are roaming around towns; wild otters are now all over in thickly populated river sides far away from forests. , and so we see wild animals far away from forests, seeking food in waste dumps and preying on crops. Wild boars, for example, are roaming around towns; wild otters are now all over in thickly populated river sides far away from forests.

The human-animal interface has narrowed alarminglyDiseases like the monkey fever, once localised in the Karnataka Western Ghats, now appear in Wayanad. This affects not just human beings, but also animals. People turn hostile (especially when mechanisms for compensation are sluggish and inadequate) and plant traps or poison animals.

Diseases like the monkey fever, once localised in the Karnataka Western Ghats, now appear in Wayanad. This affects not just human beings, but also animals. People turn hostile (especially when mechanisms for compensation are sluggish and inadequate) and plant traps or poison animals. But poisoning also occurs when wild boar and gaur forage waste dumps near human habitations; such cases have also been reported.

PG: My best wishes for all the amazing work you do!

A case for health insurance mutuals and cooperatives

TOI Blogs: October 9, 2020

https://timesofindia.indiatimes.com/blogs/outlier/a-case-for-health-insurance-mutuals-and-cooperatives/: There could not be a better timing for self help groups (#SHGs) to design, setup and run own safety network/s for their health insurance needs. A nod for health mutuals/ cooperatives has the potential to revolutionise delivery of health insurance at the #bottomofthepyramid.

“The main reason why we stay grounded is… to be part of a movement that searches for alternatives to just and better ways of living beyond fossil fuels”.

Giulia Fontana grew up in Zurich (Switzerland), where she studied environmental science. Lorenz Keyszer is from Halle Saale (Germany) and moved to Zurich to study environmental science. That is where he met Giulia in one of the many voluntary projects where he is active.

Giulia is interested in social change and the role of grassroots movements in it. She is involved in different sustainability projects and as a side job works as a caretaker for children with disabilities. In 2016 she decided to never fly again and did not regret it. Lorenz has not flown since 2015 and has no plans to do so in the future – he prefers to be on his bike anyway. Lorenz is interested in the degrowth / post-growth discourse as well as in plural economics.

The two were invited to a wedding in Sydney. How did they make it there without flying at all – makes a fascinating story? Something they have put together as a book in German! The young couple literally shares a playbook for how ‘to be part of a movement that searches for alternatives to just and better ways of living beyond fossil fuels’.

Giulia and Lorenz: Glimpses into the future of carbon free travel.

Praveen Gupta: Without boarding a single plane, you both travelled from Zurich to Sydney. Why Australia?

Giulia & Lorenz: A friend of ours, Rosa, who is Australian but lived for many years in Zurich, was going to marry in Australia (and moving back to Australia). She not only invited us to the wedding but asked Giulia to be her maid of honour. We had already quit flying well before Rosa invited us to her wedding. An idea came up: maybe we could travel without taking a plane to Australia. First, we thought that travelling to Australia without flying would be impossible, but then we researched a bit and found many good reports from other travellers that it was actually possible. Step by step we organised the journey, all the visa and hostels and just suddenly it started. But it still feels a bit unreal.

PG: What is it that you were trying to achieve in the process?

G&L: We decided to quit flying because it has a highly negative impact on the climate. We became aware of this due to our studies. Flying is one of the most CO2-intensive activities that individuals can do. Flying is also a huge injustice: while only a small minority globally flies, many people are affected by its consequences, mostly in the global south (see Stay Grounded by Ivanova & Wood, 2020). In addition, CO2 offsets are highly uncertain and problematic, because they inhibit social change, and it is unclear whether they will lead to emission reductions at all. Technologically, it still looks very bad as well (electric planes are still a daydream and will remain so for quite a while). Aviation must, therefore, be reduced in order to maintain our livelihoods. Through staying grounded we want not only to directly minimise our share in this climate crisis but also initiate greater cultural, political, and systemic change away from fossil fuels.

Flying is one of the most CO2-intensive activities that individuals can do. Flying is also a huge injustice: while only a small minority globally flies, many people are affected by its consequences, mostly in the global south.

PG: What did it take you to plan this trip? What was the travel like (in terms of time, countries, means of travel, cost, and safety) and what did you finally achieve?

G&L: With the help of the internet, guidebooks, and the knowledge of other people we slowly organized the trip step by step. We organised our journey backwards, since crossing the ocean was the hardest and most uncertain part. As soon as we knew we could go on a cargo ship from Qingdao to Brisbane and would be in Sydney in time for the wedding, we organised our journey to Qingdao via trains through Russia, Mongolia, and China.

Onboarded at the port city of Qingdao, China.

We also had only roughly one and a half month for the way to Australia, since we were still studying and working till mid-June 2018 and knew we need to be in Australia in August 2018. So, for both of our travels (to Australia and back to Europe) we needed around 1.5 months. We made some breaks and definitely got to know a bit of the culture and countries, but of course you could travel all the countries and places much more than we did. In Sydney, Australia, we stayed nearly 11 months and were studying and working (no travelling). Our way back was quite similar to our way to Australia. We went with the train from Sydney to Brisbane. In Brisbane we took a cargo ship, this time to Japan. From Japan we went with a ferry to Vladivostok in Russia. Then we travelled all over Russia with the train again, took the train to Riga (Latvia), a bus to Warschau (Poland) and back to Germany with the train.

Safety was never an issue during our whole travel. But here must be added, that we are in a privileged situation with enough money, the “right” passport, sexual orientation, and skin colour. Cost however were more of a problem since travelling on train and cargo vessel for so long requires a lot of money. Happily, we managed through our savings from previous work (but putting aside money while studying was only possible through the support of our parents). We ended up spending 4000 Euro per person (everything included: food, hostels, visa, train, cargo ship) which is a lot of money.

PG: Did you put yourself through this rigour because you were studying to be environmentalist, thus trying to prove that you practice what you preach?

G&L: The main reason why we stay grounded is to not support the aviation industry and fossil fuels derived lifestyle but instead to be part of a movement that searches for alternatives to just and better ways of living beyond fossil fuels. Through this we want to trigger cultural, societal, and political change. Practicing what we stand for, as studies show (see Westlake, 2017),  gives more credibility and affects friends and family but also other people (e.g. through social media).

People are going to think about such practices, discuss them, they see that other ways of living, ways of travelling are possible, normal, interesting, which can lead to ripple effects and is part of a needed cultural change. In the end we are aware and stress this wherever we can that individual changes are far from enough, that we need to agitate, educate and organise if we want to have a chance at achieving the systemic changes beyond our current capitalist growth system. But individual and cultural change plays a part in this.

PG: How to make it possible for everyone to change their travel culture and spark wider societal change towards less, slower, and better travelling?

G&L: During our travel we realised that there are many barriers to reducing flying and travelling more slowly such as: 

  • Price – often times flying is cheaper than travelling without a plane
  • Time – a very rare resource in our societies and travelling without a plane usually requires a lot more time
  • Missing or awfully bad alternatives to flying or simply no connections
  • Massive publicity for flying
  • Incentives for frequent flying such a “miles and more”

If these barriers would not exist, it would be much easier for people to travel less, slower and without a plane. These are points that need to come about through political and systemic changes. That is why in our opinion it is crucial to organise politically and demand e.g. investments in alternatives to flying, incentives that train rides become affordable for everyone and that frequent flying is disincentivised, for instance through banning airline advertising. One could also think of a frequent flyer levy that increases with the number of flights a person takes per year, basically a counter program to frequent flyer discounts. This would be an important step, since also in rich countries the majority of flights is taken by relatively few people that fly multiple times a year. The revenues could go into making train rides better and cheaper or set up a sailing ship passenger line to replace long haul flights.

The main reason why we stay grounded is to not support the aviation industry and fossil fuels derived lifestyle but instead to be part of a movement that searches for alternatives to just and better ways of living beyond fossil fuels... A transition to a post-capitalist de-growth society, where people have more free time and which is not so much driven by competition, speed, profit and global outreach.

One would also need to address the time scarcity many people experience, since train rides usually take longer. A four-day week or longer holidays could be a start for this. Of course there are many more things which would need to be done, such as taxing aviation fuel, stopping airport expansion, bring back night trains and even more fundamental points such as a transition to a post-capitalist de-growth society, where people have more free time and which is not so much driven by competition, speed, profit and global outreach.

Besides these political and structural changes we could try to trigger slow and less travelling by education and showing that one can experience a lot by travelling less and feel the distances – to highlight the benefits of travelling flight free (we guess that’s what we are doing right now). We like the example of bicycle lanes: if there are none, people are not going to bike wherever they need to go. But if there are no people biking on dangerous streets and demanding bike lanes but instead everybody happily using cars, bicycle lanes are not going to be installed. 

PG: Governments are bailing out airlines with tax-payer money. They do not seem to be reconciling with the new normal?

G&L: In our opinion this is the reason why it is so important to think   beyond individual actions and to demand political and systemic changes. States are forced to compete with other countries, to economically grow in order to stabilise employment, stay legitimised, finance military etc. For this growth, the airports and aviation industry are crucial, e.g. for tourism, trade, and skilled labor. (See example of the third runaway in Vienna and the argumentation for it). So, to us it is no surprise that governments are not reconciling with the new normal. Even when the pandemic started, aviation was largely allowed to continue, meaning more spread of the virus. In order to change something, social movements are crucial, which not only start building alternative institutions and adopt different lifestyles but organise collectively to push change.

So, to us it is no surprise that governments are not reconciling with the new normal. Even when the pandemic started, aviation was largely allowed to continue, meaning more spread of the virus. In order to change something, social movements are crucial, which not only start building alternative institutions and adopt different lifestyles but organise collectively to push change.

PG: Do you believe this amazing example has rightfully made you a role model?

G&L: For us it was important to not only do “our thing” but also talk about our travel and to hopefully inspire others, friends, and family. To show that other ways of travelling are wonderful and possible. But every person stands at another point and has other possibilities. We live in a world with many constrains and injustices, some people are forced to travel for work, others need to visit families living far away, others have physical disabilities and again for others it is just not doable to travel at all because of their origin.

For us it was important to not only do “our thing” but also talk about our travel and to hopefully inspire others, friends, and family. To show that other ways of travelling are wonderful and possible.

We address people who due to our unjust world have possibilities to stop flying (at least people who fly often usually have these possibilities). People who can make the decision to stop flying just for fun. There are many other people for whom this decision is not possible and for us it is important to acknowledge that too and also to acknowledge that not every flight is the same (there is a difference between jetting for holiday shopping to New York and visiting family once every two years). So again, these considerations about barriers to slow travel make us stress the need for wider system change and collective organising.

PG: Would you like to share your thumb-rule for measuring carbon footprint?

G&L: Reduce or stop:

  • flying (instead ask yourself: do you really need to go there and if yes are there other possibilities)
  • using cars (instead use public transport, your bicycle or walk – and improve your health)
  • eating meat and dairy (instead discover colorful and yummy vegetarian food)
  • purchasing electricity from fossil fuels (instead change to renewable energy providers)

Also see this article. These are on average the worst activities in terms of carbon pollution. But again, we need these changes alongside systemic, collective change. So not only focus on your footprint, but engage, educate yourself and get organised! See also this wonderful article.

PG: So, where would you wish to head-out next?

G&L: To a just and sustainable world!

Travelling wise: for the moment we get to know the countries we grew up and our neighbor countries. There is so much to discover in front of your door.

The train ride via Russia.

PG: As young people what are your thoughts on having to inherit a sick Planet? What needs to be done to make it sustainable again? 

G&L: We think that we need to build a just society beyond fossil fuels that works for everyone and not just the 1%. Where every human person is having a live-in dignity. From our understanding about how our society is working at the moment and what is hindering this vision, this means that we must overcome capitalism and growth-based economies by changing ourselves, educating others and organising collectively to push for change with prefiguration, with civil disobedience and by establishing new institutions of direct democracy, mutual aid and solidarity.

Without a massive upheaval of many people, who are ready for change, we will not make it. But change is coming, and we believe that it can happen fast if enough people want it enough.

Without a massive upheaval of many people, who are ready for change, we will not make it. But change is coming, and we believe that it can happen fast if enough people want it enough. There are so many books and thinkers who already are thinking about these questions and finding transformation strategies – we would refer to them since we also are fairly new to this topic. See:

1) Alexander & Rutherford (2014). The Deep Green Alternative: https://simplicityinstitute.org/wp-content/uploads/2011/04/The-Deep-Green-Alternative.pdf

2) Alexander & Gleeson (2019). Degrowth in the Suburbs: https://sustainable.unimelb.edu.au/publications/books-and-monographs/degrowth-in-the-suburbs-a-radical-urban-imaginary/degrowth-in-the-suburbs

3) D’Alisa et al. (2015). Degrowth: A Vocabulary for a new Era: https://vocabulary.degrowth.org/

4) Hickel (2020). Less is More – How Degrowth Will Save The World: https://www.jasonhickel.org/less-is-more

Finally arrived in Brisbane, Australia.

PG: Do you see any sense of urgency to restore our only home back to a healthy state? 

G&L: No. We need to drastically reduce our greenhouse gas emissions to stay below 1.5 degree warming starting right now and better yesterday (see IPCC Special Report on 1.5 degree). There is absolutely no time anymore, in nine years we need to be down by more than 50% of global emissions. Moreover, when taking climate justice seriously (what we do) the global north/rich counties would need to be on an even deeper trajectory path already. Instead we see rising greenhouse gas emissions, discussions over discussions on some minor matters. And still, it will never be too late to do something. But in order to avoid the worst of suffering we better started yesterday, and since we didn’t we should do all we can right now: educate, agitate, organise and start building a different society which can displace the unjust and unsustainable system we are living in (prefiguring)!

We need to drastically reduce our greenhouse gas emissions to stay below 1.5 degree warming starting right now and better yesterdayInstead we see rising greenhouse gas emissions, discussions over discussions on some minor matters. And still, it will never be too late to do something.

PG: I am sure your amazing adventure will open many eyes and spur lots of people to shed fossil fuel from their passion for travel!


Climate Change and insurance: Oxymoron?

https://timesofindia.indiatimes.com/blogs/outlier/climate-change-and-insurance-oxymoron/: The Planet and the entire ecosystem is facing an existential crisis – why must insurers aid and abet? Why can’t they get it?

“Language and Masala of your Cuisine binds you – Religious bonds cause divide”.

From footnotes to the header

The two-part Dorabji Tata piece to commemorate his 161st birth anniversary is beginning to yield a dividend. From the footnotes, Dr. R.D. Samarth (RDS) moves to the centre-stage! He literally represents the third generation of the Company, after Dorabji. The beginning of an end of the golden era of a unique institution, as it transitioned from nationalism to nationalisation.

It is a thrilling story which brings at times tears and at times a feeling of pride. I had this experience during my assignments in Lagos, Lusaka, Mauritius, and Port of Spain.

One of its many ‘maverickian’ elements also contributed to its greatness – by following its people rather than the flag! They were quite an assortment. Indentured – who began moving up the social ladder, traders – of whom some took to manufacturing, and fresh settlers. RDS spent much of his working life in New India’s foreign service. To capture his sense of nostalgia, It is a thrilling story which brings at times tears and at times a feeling of pride. I had this experience during my assignments in Lagos, Lusaka, Mauritius, and Port of Spain.

Unpeeling the institutional memory

Coming from the frontlines of this dynamic theatre, he is a repository of stories – in the classic oral tradition. As a protagonist, he is the company’s voice from its glorious past – regrettably many known and unknown have been long lost in the mists of time. They, like him, were a part of the Dorabji dream touching the lives of ordinary people putting in extraordinary effort to make their mark in the distant lands.

The dividend came in the form of the nonagenarian’s response to the Dorabji story. In unpeeling the institutional memory, RDS allows us glimpses into the building blocks of greatness. The mind is sharp, it is the fingers that occasionally hit the other key – as he valiantly ‘narrates’ it all to the keyboard!

Overseas Indian enterprise in Mauritius and the West Indies emerged from the capacity of survival of Indian labour. Enterprises in East Africa emerged from the commercial DNA of Gujarati community to survive patiently in times of financial strain. While those in West Africa were a sheer by-product of commercial adventure – seen in the spirit of Sindhi community.

Overseas Indian enterprise in Mauritius and the West Indies emerged from the capacity of survival of Indian labour. Enterprises in East Africa emerged from the commercial DNA of Gujarati community to survive patiently in times of financial strain. While those in West Africa were a sheer by-product of commercial adventure – seen in the spirit of Sindhi community. It is now the anthropologist in him that takes over!

What was brewing in the melting pot?

“There was no mix up cultures amongst the Indo-Mauritians. Biharis, Tamils and Marathees retained their identity. In the West Indies – Biharis were dominant and retained their culture but lost their language. In Suriname majority was from Uttar Pradesh. They retained their language and culture including wearing the dhoti”.

“It was an interesting experience for us that Marathi language was retained by Marathi Muslims who settled in South & North Rhodesia (now Zimbabwe). There was a school to teach Marathi in Bulawayo. When news spread of our arrival in Central Africa – we got bottles of pickles and masala. Issues of Kirloskar came from the Konkani Muslim families. We were pleasantly surprised when a young Muslim commercial traveller from Durban told us about his grandfather being an agent for Bal Gangadhar Tilak’s Kesari. Our Marathi Muslim friends looked after us like members of family during our stay in Zambia”.

When news spread of our arrival in Central Africa – we got bottles of pickles and masala. Issues of Kirloskar came from the Konkani Muslim families. We were pleasantly surprised when a young Muslim commercial traveller from Durban told us about his grandfather being an agent for Bal Gangadhar Tilak’s Kesari.

“Then there was this Tejpal, our agent from Mangalore. He made exceptionally good success as employee of the Tea estate. Many members of his family came for work to Nyasaland (Malawi today). They were particularly good sportsmen. The Blantyre Club of Indian community was reputed for Cricket. In spite of the racial problems in Central Africa, Blantyre Indian Cricket team was participating in the tournaments in Salisbury and were supported by Indian Rhodesians”.

The Truths We Hold: Senator Kamala Harris’s African connection is longer than generally believed!

“Your communication on NIA’s global operation motivates me to share with you and all dear friends some interesting news about our relationship with the likely Vice President of USA”. And he lets out to me yet another truth he holds!

“Her Grandfather for whom she has affection – Mr. Gopalan was posted in Lusaka as a UNDP advisor for newly formed Government of Zambia. Since I had been resident of Lusaka from 1962 to start our operation in then Federation of Rhodesia & Nyasaland, I had the role of assisting Indians coming to Zambia. Gopalan’s family thus developed intimate relations with us. Kamala’s mother was then in the USA. Her aunt Sarala was in Lusaka. Gopalan was an exceptionally fine gentle person and we had a very enjoyable association for 4 years when we left for Mauritius. He was a very good bridge player and his weakness or pleasure was tobacco. My special duty was to supply him tobacco from Malawi”.

Her Grandfather for whom she has affection – Mr. Gopalan – was posted in Lusaka as a UNDP advisor for newly formed Government of Zambia... Gopalan’s family thus developed intimate relations with us. Kamala’s mother was then in the USA.

And how can I give Hong Kong a miss, where I followed him after a decade and half. This was RDS’s last foreign stint. Walking past 50 Nathan Road, Tsim Sha Tsui in Kowloon for the first time – my colleague WY Lee pointed at the Holiday Inn and informed it had an Indian owner by name Harilela. Hari Harilela (now late) best known as HK’s richest Indian started as a young tailor. Stitching suits for the American GIs during the Vietnam war. Two privileges came as the country head in HK – an annual invitation to a Diwali party at his lavish Kowloon Tong mansion and a share of business in all his annual insurances. “How is my friend Mr. Samarth?”, is how our first conversation commenced! I need to confirm with RDS whether it was bridge that bonded him with Harilela, as well. His fan following did not stop there.

My friendship with JRD and Russi Lala was the outcome of my article on Dorab TataRussi phoned to tell me that not only did he like it but JRD too is very pleased... My response to him was that if JRD liked it then I have a request – that he should accept our invitation for lunch.

And what bridged him to the Bombay House? “I  would like to tell you that my friendship with JRD and Russi Lala was the outcome of my article on  Dorab Tata in the NIA house journal ‘The Vision’. I described him as the pioneer  of Scientific Humanism in India. Russi phoned to tell me that not only did he like it but JRD too is very pleased. My response to him was that if JRD liked it then I have a request – that he should accept our invitation for lunch. The one and only memorable visit, since the nationalisation in 1972, emerged from this dialogue”.

First, my name is pronounced “comma-la,” like the punctuation mark. It means “lotus flower,” which is a symbol of significance in Indian culture. A lotus grows underwater, its flower rising above the surface while its roots are planted firmly in the river bottom”. How poetic! This is the closest she gets to her Indian origin, in the best selling biography. Should we read too much in her Indianness? Perhaps not, sound experts!

Whether the company would wish to leverage this and attempt an entry into the US is not the moot point. RDS has deep dived into forgotten waters and presented an invaluable pearl straight from the depths of its institutional memory. Such magical moments can make any vision happen. Any takers for the unfulfilled Dorabji legacy?

Thank you, Dr. Samarth! Yeh Dil Maange More!!!

Mind your language. The customer expectations are rising – Amazon, Tesla, Netflix and more…

Insurance Alertss: September 12, 2020

http://insurancealerts.in/MasterPage/MediaView/19247 Interviewed here in context of the following Op-Ed:

https://bfsi.economictimes.indiatimes.com/blog/insurance-customers-desire-an-amazon-moment/4461.

“We are grateful to the many great climate warriors… that have led us all… and have brought the climate change agenda to the very centre of our political, economic and societal choices”.

Duarte Costa is the Climate Analysis Lead at Climate Scale – a climate services tech company based in Brussels, sponsored by the EU Commission’s Copernicus programme and Vortex. Its endeavour is to empower people to act on climate change. He red flags the fact that financial services are not properly equipped with adequate and science-based standards to incorporate climate change data and metrics into their climate risk analysis. Duarte further highlights the lack of pragmatic and objective standards to assess, report and disclose on physical climate risks. That TCFD (Taskforce on Climate-related Financial Disclosures) will result into greening of the finance sector – yet he reiterates that it requires to ensure that reporting on climate physical risks is based on the best climate science and adequately managing future uncertainties.

Duarte is excited with the fast pace at which climate risk reporting is being adopted and even legally incorporated in some jurisdictions. At the same time, he is concerned with the lack of precise and science-based standards in measuring and reporting physical climate change risks including their inherent uncertainty. We may see businesses building their resilience using data on future physical climate risks that are physically less plausible or robust, he warns. Even worse, businesses may ‘pick and choose’ the future climate trajectory of their choice and report and disclose their physical risks regardless of the actual scientific robustness and plausibility of these projections. This is a considerable risk that may in fact jeopardize the success and effectiveness of the TCFDs to protect the financial sector (and thereby us all) from climate change risks.

Duarte also reminds us to not forget that, climate change risks particularly, have a higher probability and impact than those of the current corona crisis. The fiduciary responsibility of the insurance sector, like that of financial lenders and regulators, is of utmost importance when dealing with climate change risk. Indeed, the lack of well-defined standards is a problem. Thereby, there is no guarantee that our financial institutions are safe and being adequately regulated to ensure they are resilient against climate change shocks. 

Climate change risks particularly, have a higher probability and impact than those of the current corona crisis.

Praveen Gupta: Any insights into what you are trying to achieve?

Duarte Costa: In an essence, my team and I strive to protect businesses from climate risks and build effective climate resilience. My main role at Climate Scale is to facilitate the complex information and understanding produced from these projections of climate change with our client’s needs and concerns about future climate. My approach builds on actively listening to clients and being there almost as an interpreter, translating multi-Tb of over 1000 climate model projections into accessible information to decide upon. This work has an element of empowering people to act on climate change and that is, in my opinion, the most significant contribution this role allows me to make.

My approach builds on actively listening to clients and being there almost as an interpreter, translating multi-Tb of over 1000 climate model projections into accessible information to decide upon.

PG: Are the financial services willing and equipped to incorporate climate change data and metrics into their climate risk analysis?

DC: Yes and no. Yes, they are willing. But no, they are not properly equipped. In fact, I have serious doubts that they can do it adequately (using the best available science) if it is not required of them to do so. The word adequately here plays a huge importance. It is possible to incorporate some climate change data into reports even for instance by applying some of the tools and methods of the past (where ESG accounting was also highly marginal). That was the time when physical climate risks were more a box to tick in sustainability reports. In 2020 that is far from being adequate and helpful to the goal of protecting businesses from climate risks and building climate resilience effectively. There is no doubt that there is a widespread awareness and concern in the financial sector about climate change, mostly in terms of climate mitigation (where can we reduce our carbon footprint?) and to a certain extent in terms of climate risks (how will we be affected by climate change?) and climate adaptation (what do we need to do to reduce such risks?).  The three cover a large landscape of sectors beyond finance and are in fast growth, particularly mitigation, but steadily – risk and adaptation too.

The lack of pragmatic and objective standards to assess, report and disclose on climate risks is leaving it unclear for many businesses how to actually incorporate this information into their financial risk assessments.

Yet, the lack of pragmatic and objective standards to assess, report and disclose on climate risks is leaving it unclear for many businesses how to actually incorporate this information into their financial risk assessments. So far, for those that have already started reporting financial climate risks, they do so under vague and rather qualitative standards of reporting. For instance, in some cases physical risks are reported based on heat maps highlighting low, medium, and high risks with little information on why this categorization and on the physical consistency and range of change in model simulations behind these categories. It is a good start, but not yet effective in ensuring business resilience against climate change. 

PG: Is the TCFD an effective way forward?

DC: The Taskforce for Climate Related Financial Disclosure (TCFD) is steadily emerging as a set of voluntary standards that are becoming widely adopted by businesses and regulators as a common ground for global reporting on climate risks. Many of us (including me!) are wishing that the TCFD will result into greening of the financial sector. However, in my view, these still remain rather qualitative and overly focused on the transitional risks of climate change, leaving the estimation, analysis, and disclosure of physical risks very much behind. This is worrisome and urgently needs to be addressed.

Many of us (including me!) are wishing that the TCFD will result into greening of the financial sector. However, in my view, these still remain rather qualitative and overly focused on the transitional risks of climate change, leaving the estimation, analysis, and disclosure of physical risks very much behind.

In fact, last year’s EY Global Climate Risk Disclosure Barometer revealed that businesses assessing and reporting their climate risks are overlooking and sometimes even omitting physical risks from their assessments of risk. The reason seems to be that these are (in theory but not always) experienced in the long term rather than immediately. In addition to this, according to the recent TCFD status report, there is insufficient information to factor in climate-related risks namely on assessing long-term returns. In either cases, while the adoption and demand for climate risk disclosure is growing, it seems that this rise reflects a reactive instead of proactive response to the risks of the climate emergency. Simultaneously, we are being forced to learn, in this current COVID-19 crisis, through extremely hard numbers (in number of lives lost and economic losses), of the cost of being reactive instead of proactive.

Accounting for climate change risks requires proactivity in considering long-term risks and in sourcing the right data to factor adequately in climate risks. For instance, on physical risk it is fundamental to set standards on data quality, data sources, types of climate models, levels of spatial and temporal resolution, types, and sizes of model ensembles. More importantly, how future physical uncertainty (an inherent element of future predictions of climate) is documented, reported, and managed. Reporting climate change physical risks must advance from being a tick-box add-on to risk assessment to a fundamental risk to be thoroughly assessed, based on the best science, and with implications to the core operation and decision-making of a business.

Reporting climate change physical risks must advance from being a tick-box add-on to risk assessment to a fundamental risk to be thoroughly assessed, based on the best science, and with implications to the core operation and decision-making of a business.

Moreover, TCFD recommendations need to continue to evolve to effectively guide businesses and protect the economy from large shocks. 

I am excited with the fast pace at which climate risk reporting is being adopted and even legally incorporated in some jurisdictions. However, I am concerned with the gaps and loopholes in doing so (especially on physical risks) using the best available science. This may (mis)lead into a general understanding of climate risk as a transitional one with little or no inclusion of the most intrinsic source of climate change risk: changes in the natural environment.

We may thereby see businesses building their resilience using data on future risks that are physically less plausible or robust. Or even worse, they may ‘pick and choose’ the future climate trajectory of their choice and report and disclose their physical risks regardless of the actual scientific robustness and plausibility of these projections for a given location on the planet. This is a considerable risk that may in fact jeopardize the success and effectiveness for the TCFD’s to protect the financial sector (and thereby us all) from climate change risks.

We may thereby see businesses‘pick and choose’ the future climate trajectory of their choice and report and disclose their physical risks regardless of the actual scientific robustness and plausibility of these projections.

Finally, let us be reminded that, climate change risks particularly, have a higher probability and impact than those of the current corona crisis and, like for the latter, uncertain and unknown risks are better dealt with using the best science available and a precautionary approach. These are aspects that the TCFD standards can have a crucial role in.   

PG: Climate Change presents a material risk about which the big business including big insurers have a fiduciary responsibility to warn investors. Are they emerging as important reformers?

DC: This is an especially important point. Insurers are certainly one who must pay a higher price for climate change risks. When we see the devastation caused by unprecedented extreme events like recent hurricanes in the USA, fires in Australia and floods in the UK and Europe we immediately know that these may also pose serious risks to insurance businesses that have not accounted for such inconceivable events. So, for the insurance sector, I would say that it is in their best interest to not only incorporate physical risk from climate change in their material risk assessments, but as importantly, to do so under the best physical robustness. In the experience I have with Climate Scale, this can play a significant difference in the outcome of future risk, if the overall uncertainty of projections and their physical robustness is not considered.

For the insurance sector, I would say that it is in their best interest to not only incorporate physical risk from climate change in their material risk assessments, but as importantly, to do so under the best physical robustness.

The fiduciary responsibility of the insurance sector, like that of financial lenders and regulators, is of utmost importance when dealing with climate change risk. Both as a warning on riskier assets from unknown risks (climate change risks are unapparent, non-immediate and often unprecedented) as well as an opportunity to steer businesses and the financial sector into a safer portfolio.

PG: No mandatory single standard exists, what is disclosed varies greatly from company to company. What do you believe needs to be done to make the lives of investors easier on this front?

DC: Except for a few countries (like France, Canada, and soon New Zealand), this is correct, but also changing quickly. Indeed the lack of well-defined standards is a problem: (i) for investors that need to have clarity (and some added pressure) on how to start doing something they have not done before and (ii) for us all that have no guarantee that our financial institutions are safe and being adequately regulated to ensure they are resilient against climate change shocks. 

Indeed the lack of well-defined standards is a problem: (i) for investors that need to have clarity(ii) for us all that have no guarantee that our financial institutions are safe and being adequately regulated to ensure they are resilient against climate change shocks. 

I am optimistic about the TCFD, despite the serious issues that I have raised. It is also very encouraging how rapidly it has been gaining leverage across the globe.  

The next step, which I think needs to be discussed and implemented right now, is to ensure that these standards actually safeguard our financial institutions, particularly in ensuring that businesses use the best information available, document and manage the inherent uncertainty of future climate under the best science. This is not trivial, neither to implement nor to be overlooked.

PG: How can technology tools like the ones you work on instill a sense of Climate urgency?

DC: The technology I work on serves to help businesses handling this component of physical risk – thus far largely omitted and overlooked by TCFD. My work focuses more on helping address this element of the TCFD process with solutions rather than instilling the climate urgency. I think, for that we are grateful to the many great climate warriors. Especially the newest generations, that have led us all – citizens, business-owners, employers, employees, politicians – and have brought the climate change agenda to the very centre of our political, economic, and societal choices.

PG: My best wishes Duarte. May your dedication and focus translate into a sustainable world!

The case for a Dorabji legacy whose time has come: Leveraging Sino-Indian synergies!

Man of Steel: Dorabji Tata – Founder of ‘New India’ (1919).

Background

Much is being written around the globe about the increasing anger and mistrust towards China across nations, due to its role in the start of the pandemic particularly, in terms of transparency and communication about the severity and risk that the virus posed. In India there is keenness to capitalise on this perceived opportunity by positioning ourselves as a good alternative to China. Global players are seeking to diversify their supply chains and thereby attract investment and jobs to India, boosting foreign trade at the same time. While this appears an opportunity, it lacks imagination and is a rather unidimensional approach. A long-term sustainable win-win one would be in the form of engaging with China and leveraging its unique strengths. To top it all we are neighbours. Is there a way we could use it as a blessing? It is what this exploration is about!

The Dorabji way

In traditional wisdom it was either a business that followed a flag or a flag that followed business. Whereas the East India Company paved the path for the Union Jack to India, it was American companies that followed the Sino-US rapprochement. Once in a while you see an outlier achieve success, by following its own calling irrespective of the political imperatives. The New India Assurance Co. Ltd. was one such rare case when its founder Dorabji Tata implemented his audacious vision for an international imprint despite the constraints of a colonial economy. That it did not fully succeed could be ascribed to the fact that it was way ahead of its time and the nationalisation of the insurance industry stalled it in the tracks.

Before I narrow this down to a limited firsthand exploration and insight, I wish to put out the canvas that Dorabji1 set out to address. At its zenith, when the geography extended from the Caribbean to Fiji – the sun never set on the New India ‘empire’. It extended to over 70 countries when the number of countries were far fewer than today. A cadre of foreign service officers was specially created to nurture it. Yes, it was a time of low touch or virtually no regulations which suited an entrepreneurial spirit.  The Snowy Mountains project, in Australia, for instance, led to setting up a full-fledged company with 100 employees – when the country practiced a ‘White Australia’ policy. Starting an agency, within two years of existence, in London was not just a leap of faith but an endeavour to build capabilities and skills to justify the self-belief. It acquired licenses to trade in many parts of North America including every province in Canada. A post war entry into Japan and Germany defied conventional wisdom. All this and much more stirred by a vision and conviction.

As a beneficiary of this farsightedness, I owe it the opportunities to run business in Thailand as well as Hong Kong and deal first-hand with markets such as Taiwan, Mainland China, Indonesia, and Vietnam. Given my focus I have chosen this as a rationale for a possible Sino-Indian inter-corporate exploration and even beyond – notwithstanding the polity in which the companies operate. Interestingly, what I am putting forth did not end up with a wonderful six and a half years personal experience. The journey continues.

In a post war world taking sides with the winner was the general rule. However, the choices ‘New India’ made defied this prevailing wisdom. Its timing of entry, for instance, into Japan and Germany was non-conformist.

In a post war world taking sides with the winner was the general rule. However, the choices ‘New India’ made defied this prevailing wisdom. Its timing of entry, for instance, into Japan and Germany was non-conformist. The key focus of this piece is the Company’s ability to maintain cordial engagement with Mainland China in its space (post the Cultural Revolution it had to shut shop in China – with insurance becoming non-existent. The Company continued a relationship with the regulator People’s Bank of China).

Despite all the prevailing stress in the then English Colony, ‘New India’ maintained a branch operation in Hong Kong. It also had in place a business arrangement with Tai Ping Insurance Co. of Taiwan, serviced out of HK. No Indian business house or for that matter any other global business brand had such a three-dimensional play in place. Maverick vision yes, but surely a lost opportunity that could not keep it going! It is this aspect of corporate consciousness that deserves more attention in management literature. Despite being the master of an inherited conglomerate in making, Dorabji Tata bestowed a unique and exclusive exploration upon his insurance enterprise.

The Dragon and the Elephant: A case for synergy continues!

Late Chairman Deng Xiao Ping’s launch of China’s market-oriented reforms was a master stroke resulting into an outcome unparalleled in human civilisation. To blame China for all the woes – particularly of the western world – is not only naïve but lacks in context. Rather than a rise of China it is its resurgence that needs to be understood. Like many of us, my knowledge of Chinese history was coloured by the western interpretation. Further conditioned by the traumatic Indo-China war resulting from the border dispute inherited from our colonial master. If one were to set that aside – an incredible reality emerges which is about co-existence and synergies between the dragon and the elephant. Can that ‘New India’ vision from the past be juxtaposed into the present? Can a corporation side-step the narrative between two states howsoever adversarial and yet facilitate a benign chemistry between them? It may sound utopian, but the New India case study lends strong evidence. And there is a compelling reason for us to seize the momentum unleashed by Deng Xiao Ping. More on that soon.

It may sound utopian, but the New India case study lends strong evidence. And there is a compelling reason for us to seize the momentum unleashed by Deng Xiao Ping.

I am old enough to recall media stories as to how imports from China helped the American economy maintain its inflation rate at almost 1% per annum. In the not so distant a past was the OPEC crisis which forced the Americans to scale down their car sizes from the gas guzzlers to the Japanese made efficient but smaller versions. The Americans, particularly the United Auto Workers (UAW) detested the impact caused by the Japanese. During my first ever visit to the US, in 1984, I saw posters saying ‘Unemployment made in Japan’ stuck on the walls of an auto assembly plant in the Mid-West.

In its persistent wooing of China in the early days, this is what George W Bush, then VP, said in 1985 while addressing the Sichuan University: ‘American firms were eager to invest in China’. ‘American consumers would soon hanker after Chinese goods’, he predicted. ‘We are interested in helping China,’ Bush told his audience. ‘Very, very interested.’ The low-cost of virtually everything else that followed courtesy China, was a welcome relief after a rude inflationary shock fired from the barrel of the oil.

Insights from the New India experience

I can vividly recall numerous incidents about how the Chinese built their position – from the sidelines of my erstwhile industry. During 1991-93, I was stationed in Bangkok. One of our local clients, of Chinese descent, exported earth moving equipment worth millions of US Dollars to Guangdong province, China. To cover the transit, he would buy the most basic form of transit insurance from my company. I tried hard to reach out and convince him for a wider coverage. He was not easy to find. When I did manage to see him, I realised how busy he was sourcing second-hand equipment from wherever in the world it was available. He imported them into Thailand, reconditioned and shipped them to locations in China. ‘There would never be an insurance claim because the Chinese are in a big hurry’, he would assure me! One began to decipher what that meant when media reports said coastal Chinese GDP was growing by 30 to 40% per annum.

In 1993 when I landed in Hong Kong for my next stint – I could feel the tectonic shifts. Car thefts (from HK to China), for instance, started with small versions of Toyota and Honda. Mercedes and Lexus were in vogue by the time I arrived. As they peaked, there were not many insurers willing to insure them for the standard coverage or at the normal price. It did not matter if HK was left hand drive and the Mainland right hand! Manufacturing started migrating to the neighbouring Shenzhen and beyond, in Guangdong. The labour cost was a mere 10% of HK. Incentives were plentiful and for the asking. Suddenly the placid duck-farms visible from the border lookout of Luk Ma Chow became home to construction cranes. Thanks to Shenzhen’s meteoric rise, HK pales before it.

Industry migration from HK and Taiwan to the Mainland

Just then Ranbaxy was establishing a small manufacturing facility in Guangzhou and sought my help to arrange a local insurance contract. I was obviously curious as to what made them enter China. The answer was simple, ‘we can charge Rs. 10 here for a capsule that gets us Rs.1 in India’! Mind you, this was a little over 25 years ago when the target audience was the Chinese domestic market.

Despite all other political differences and sabre rattling – the business reality was a binder.

My attention was also drawn to a portfolio in Taiwan which had begun to shrink. This was about prosperous Indian origin traders who would majorly export container loads of cheap goods, such as footwear, to Africa. The manufacturing moved from Taiwan to across the straits in the Fujian province. Despite all other political differences and sabre rattling – the business reality was a binder. The one thing that continued to be made in a high cost economy like Taiwan was the sticker ‘Made in Taiwan’. So, what were the erstwhile shoe manufacturers up to? Believe it or not, virtually overnight most of them started assembling laptops! A quantum leap and pace of change seen nowhere else other than the Greater China.

China’s amazing growth story: Emotions versus rational!

The overwhelming cry now in the wake of the pandemic is to de-risk by moving manufacturing out of China. However, is that the solution? China has gone up the value chain and will continue to do so. Yes, not everything ought to be in and around Wuhan or for that matter any single hub. The Far East (FE) and South East (SE) Asia are so interdependent that their respective unique politics does not any longer come in the way of trading with each other. Such is the intensity of interdependence that the FE and SE Asia now account for a major chunk of the global trade.

Can Vietnam, Thailand, Myanmar, Indonesia by themselves or collectively rival what China does? In some ways it is like asking can India be replaced as the back office of the world. There will be competing hubs be these in Philippines, Costa Rica, Sri Lanka or elsewhere. Could they ever assume the scale and depth we have here? India has evolved so rapidly from the early days of body shopping to the cutting-edge high value offerings of today. Big Tech finds India too compelling to ignore. They have here their state-of-the-art application development centres. The pandemic and the US visa restrictions have now made foreign companies more dependent on development centres. These centres are not outposts anymore but integral extensions of headquarters and being billed as Offshoring 4.0.

In some ways it is like asking can India be replaced as the back office of the world... These centres are not outposts anymore but integral extensions of headquarters and being billed as Offshoring 4.0.

‘No one comes close in the developing world to China. And that is why U.S. companies are so headstrong about staying there’: Why American Companies Choose China Over Everyone Else – Forbes. A more recent issue of Time highlights how and why the costs of decoupling would be steep, and unwanted during a time of deep global recession. And the U.S. bullishness fails to account for the reality of how interconnected the two economies still are. China produces 97% of America’s antibiotics. Apple, the most valuable U.S. company, and the world’s first trillion-dollar one, still produces most of its wares in China. And Chinese enterprise is still finding success in the U.S. Lockdown favorite videoconferencing service Zoom, for example, was created in Silicon Valley by an entrepreneur born in China’s Shandong province.

Some manufacturers who shifted businesses to Vietnam because of rising costs have now returned to China, chastened by labor disputes and other headwinds. With labour cost 10 times more than equivalent skilled workers in China in much of Europe, moving work there will not be viable either.

Learning from history

Yes, there was an era when together China and India accounted for much of the global trade. Flourishing trade along the iconic silk route and a thriving maritime link made them the two foremost economies of the world.

“Sir Thomas Roe, the ambassador sent by James1 to the Mughal court, presented before the Emperor Jahangir in 1614 – at a time when the Mughal empire was still at its richest and most powerful. Jahangir inherited from his father Akbar one of the two wealthiest polities in the world, rivalled only by Ming in China. His lands stretched through most of India, all of what is now Pakistan and Bangladesh, and most of Afghanistan. He ruled over five times the population commanded by the Ottomans – roughly 100 million people – and his subjects produced around a quarter of all global manufactures.” 

Having maneuvered and manipulated its hold over India, the East India Co. then played its opium card with China... In all fairness, the return of the ‘Elephant’ and the ‘Dragon’ on the global centerstage needs to be seen in this context.

William Dalrymple’s The Anarchy is a remarkable story of how one of the world’s most magnificent empires disintegrated and came to be replaced by a dangerously unregulated private company … unfolding a timely cautionary tale of the first global corporate power. Having maneuvered and manipulated its hold over India, the East India Co. then played its opium card with China. The Opium Wars gave a serious blow to the stability of the Chinese empire. In all fairness, the return of the ‘Elephant’ and the ‘Dragon’ on the global centerstage needs to be seen in this context.

What are good options in the India/China context?

As the pandemic rages and with it all the attendant controversies, it is time to introspect as to what synergies, if any, lie in store for us both? Should it be a back to back2 or could it be a face to face positioning? Controls in today’s business environment are far and few. Ability to execute robust risk management practices could make that possible. The prevailing condition only demonstrates how an agile top down approach works and how hyper individualism leads to anarchy. China’s strength lies in its top down pre-emptive approach to risk management. With all the prevailing uncertainties that keep popping up from time to time, such an agility is a rare virtue to have in a long-term dependable partnership. Indeed, that is what reinforces the case for our big neighbour.

“I do not think that the typical Western focus on short-term incentives and outcomes and use of linear logic is up to the challenges our world faces now and into the future’’.

Michele Wucker

Michele Wucker3 is the author of bestseller Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore. In an interview to my blog this is what she said “I do not think that the typical Western focus on short-term incentives and outcomes and use of linear logic is up to the challenges our world faces now and into the future’’.

Once again, back to the Time “The U.S. response to COVID-19 has been so muddled, it’s not yet possible to say how much of the sluggishness is due to unreadiness, how much to incompetence, and how much to the American system of governance, with its emphasis on individual freedoms over centralized authority. What does seem clear is that the performance of the Chinese system of broad state controls – over both citizens and the economy – offers Beijing a unique chance to steal a march on the future”. Would we like to miss out this opportunity?

A pipeline of opportunities beckons

The Chinese economy, built on manufacturing expertise, connectivity, and first-class infrastructure, already appears to be bouncing back from the pandemic. China is set to emerge even stronger after COVID-19, adds Time. On PPP basis it is already the world’s largest economy and well on its way to be the number one. Geographically proximate – ideal for a supply chain partnership. The Belt and Road Initiative (BRI) could open vast new opportunities, if leveraged well. We have a sizeable young population while China is ageing. An excellent pacesetter for adopting new technologies. Why cannot we consider say opening Chinese speaking back offices to support their businesses? Last several years I have travelled to many new locations in the Mainland – thanks to the curiosity honed from operating at its periphery during the 1990s. I am very humbled by the humility with which qualified actuarial and doctoral resources apply themselves in resolving the challenges at the very bottom of the societal pyramid. Something still outside our focus.

The best outcomes are a result of harmonious commerce. The ancient silk route not only facilitated the spread of Buddhism but blossomed the trade which made us the two largest economies in the world. What can emerge today can be rather serendipitous.

The best outcomes are a result of harmonious commerce. The ancient silk route not only facilitated the spread of Buddhism but blossomed the trade which made us the two largest economies in the world. What can emerge today can be rather serendipitous. Two years ago, at an annual academic4 event in Baoding (one-hour bullet train ride from Beijing), I caught up with a group of youngsters over dinner. Two of them were pursuing their post-doctoral programme in the US, the other two taught at Peking and Shanghai Universities. One question they posed to me was how can we get admitted to your IITs and IIMs? Having studied in the US, all had not one but several amazing professors of Indian origin – alumnus from these institutions! That itself makes such an irresistible business case!

President Xi Jinping recently instructed cadres to ‘turn the crisis into an opportunity.’ We heard our own Prime Minister express similar aspirations. Xi’s ‘China Dream’ to take ‘center stage of the world’ includes strategies like Made in China 2025 to upgrade to high-tech manufacturing, and China Standards 2035 to become the dominant writer of rules that govern future technologies. Again, echoes Premier Modi’s vision. Beijing’s new goal, analysts say, is to leverage the pandemic to catalyse 10 years of reform into just two.

This is not about exercising a choice between China, the West, or the rest. It is about leveraging them all and not missing out on China. Yet another set of three dimensions to focus upon the Dorabji way.

China is also capitalising on its leadership in green technology. Its apex Politburo Standing Committee has backed $1.4 trillion spending on so-called new infrastructure, including a wide range of low-carbon technologies, transitioning away from fossil fuels, and expanding its economic influence. As the world’s top three polluters if there is one lesson for us two from this pandemic, it is about decarbonising and protecting our ecology.

The speed at which the Chinese turnaround a business opportunity into reality is phenomenal. That is where lies the golden opportunity! This is not about exercising a choice between China, the West, or the rest. It is about leveraging them all and not missing out on China. Yet another set of three dimensions to focus upon the Dorabji way.

In conclusion

Dorabji Tata’s vision remains an unfinished agenda. Whatever stopped it from fruitionFor whoever in the world wishes to leverage its depth, sweep and versatility – it is truly an idea whose time has come.

The last two centuries saw the rapid decline of the world’s two oldest and prosperous civilisations with a long history of meaningful co-existence. Coming out of that black hole, it would be ironical if we do not see what synergies exist in the immediate neighbourhood. Our respective aspiration to be self-reliant does not preclude inter-dependence. As businesses it will be a serious aspirational pitfall if our strategy does not include the other country. Each one of us has its own risk, but two nations that wish to regain their places in the sun can go farther and longer as strategic partners in commerce. The forces unleashed by the initiatives of Deng Xiao Ping are for us to tap, too. And we too have much more to offer than Buddhism and Bollywood! Meanwhile, Dorabji Tata’s vision remains an unfinished agenda. Whatever stopped it from fruition – ahead of time or the nationalisation? For whoever in the world wishes to leverage its depth, sweep and versatility – it is truly an idea whose time has come.

Footnotes:

1. One name that I came across, again and again, in many parts of the Far East was late Mr. BK Shah. The most longstanding MD of New India Assurance. He carried the Dorabji baton forward. Ensured New India’s position at most high tables. The Asian Hull Syndicate, for instance, was one such and as the head of HK operation I also had the opportunity to be an alternate director to the CMD and ‘hob nob’ with the CEOs of participating blue chip insurers of the region. An actuary by qualification, BK Shah was inducted to the Insurance Hall of Fame. The only Indian till date.

Mr. AC Mukherji (ACM) another illustrious New Indian started as an apprentice officer in 1948. When New India was both a life and non-life insurer. ACM retired as the CMD of the company in 1985. Continued to play an active role, in several capacities, post that. He worked very closely with late BK Shah and is encyclopedic – full of amazing insights. Having nationalised the non-life insurance industry – the government invited Mr. Shah to advise on the structure of the future industry. One of the several recommendations made was to create a separate holding company for the governance of the four newly created entities. This led to the creation of General Insurance Corporation of India. Mr. Mukherji’s first assignment, as an apprentice officer, was as a Cargo Manager to Ceylon. Thereafter he was assigned to Germany and posted at Allianz which represented New India in the country. ACM is fluent in spoken German.

‘’Your bosses like AC Mukherji and KC Ponappa can run the country’’: Such was the calibre of the leadership. Recalling a glowing tribute by Professors Jai and Ghosh at a Management Development Programme in 1984. Late Mr. KC Ponappa was then the CMD of United India.

Dr. R.D. Samarth was originally recruited as part of the exclusive ‘New India foreign service’ cadre. Amongst the several postings across the globe he was the head of HK, too. Following him after a decade plus, I had the pleasure of going through the available company archives. One of the most stimulating discovery was a lucid articulation of the multi-pronged approach to the three Chinese entities Mainland China, Taiwan, and HK). The inherent lateral thinking and the conviction in it was remarkable. Samarth retired as the General Manager at the Company’s Head Office.

2. Developments is some Asian Insurance Markets and their possible implications for India: A Bystander’s view. In this essay I alluded to the rise of Chinese, Vietnamese, and Indonesian insurance markets along with India. Also highlighted is the importance of India and China working face to face rather back to back! The paper won SK Desai Memorial Prize (1995-96) by Insurance Institute of India.

3. thediversityblog.com/2020/04/26/just-think-about-what-the-world-might-look-like-if-more-people-focused-on-solving-obvious-gray-rhino-challenges-instead-of-obsessing-about-black-swans/: Michele Wucker interview April 26, 2020  www.thediversityblog.com .

4. China International Conference on Insurance and Risk Management (CICIRM) is an annual event organised by Tsinghua University, Beijing. Prof. Chen Bingzheng is a key pillar of this event: www.thediversityblog.com/2019/07/26/buddha-of-the-chinese-insurance-market. At about USD 600 billion, China’s current GWP is approximately 30 times of what it was a little over 20 years ago – since it joined the WTO. Its economy has successfully lifted 800 million people out of poverty. The focus on the bottom of the societal pyramid is remarkably unwavering.