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Speaking to CNBC-TV18, NR Narayana Murthy , Chief Mentor of Infosys said that it is understandable if small companies ask for sops from the government. But larger companies need not get tax exemption.

 

He also stated that the IT industry has provided the largest number of jobs in the last decade or so, provided the best salaries and contributed to society more significantly. 

 

Excerpts from CNBC-TV18's exclusive interview with NR Narayana Murthy:

 

Q: We are in an island of prosperity and that is what the IT industry is sort of facing a backlash for. You have to deal with the outsourcing backlash and now you got an internal backlash. How are you responding to this and the criticism that is coming your way?

 

A: We have to be equanimous about issues; we have to take the good, the bad and the ugly. Having said that, I must say that there is not too much data or too much logic in any backlash or disgruntlement, as far as the IT industry is concerned. This industry has created the largest number of jobs in the last decade or so. It has provided the best salaries in the overall perspective. It has, in some sense, contributed to the society much more significantly.

 

Q: Why do you think there is a sense of resentment or disconnect?

 

A: There are many reasons. First of all, there is a glaring disparity between the people who work in IT, because their salaries are pretty good. They travel abroad and the way they dress themselves is different. They have much higher disposable income, they buy houses and are creating tremendous pressure on the system.

 

The second is in a nation where there is a small percentage who have got all these good things and majority does not have, it is very natural for the majority to feel a bit of feud about the 'haves'.

 

Third, there are few cases where the IT people have not conducted themselves in the best fashion. So, all these things add up to the discontentment that we see.

 

Q: How do you plan to bridge these disconnectors, as part of one of the leading technology companies, in the country? Is there something that you can possibly do, because some of the criticism is perhaps legitimate? Do you think some of that criticism is legitimate and valid?

 

A: Professor CNR Rao, who is a well-known scientist, an extraordinary person by any standards and a great researcher, whom I have known him for 40 years, got a bit upset about our industry in the Outlook magazine. He said, why can't these people go to Ramanagaram, etc. My answer was simply this -who has gone to Ramanagaram? Have the scientists, bureaucrats and ministers gone to Ramanagaram?

 

They all know that Bangalore is under tremendous stress. In our business, our customers have to come and review our progress and have discussions, etc. For that to happen, we need good roads. If Ramanagaram has a six or eight lane highway, or decent five star hotels that our customers are comfortable with, we will all go to Ramanagaram. So, the solution is not to blame the industry.

 

The solution is to look at why we have failed in our planning. In fact since 1989, I have been having continued discussion with the State Government, on the need to improve our road system, airports, power facility, etc.

 

Q: Which is grudgingly moved forward?

 

A: Yes, grudgingly, but the result is all the chaos that you see; traffic jams and bruises that have risen. This is a normal reaction in an unplanned economy. If you go to New York, Los Angeles, Singapore or Tokyo, all those cities have seen the same kind of growth, but you don't see this kind of chaos or discontentment, because they have planned it well.

 

Q: Do you think it is a practical and viable solution for private players to actually get into government's domain?

 

A: All of us pay our tax. We all are citizens of this country; we live in this city and pay taxes. So, we are entitled as much as anybody to decent roads. There is nothing like only IT people use the road, then we didn't make it a toll road. In fact, we are the first to suggest a toll road, saying that those of us from IT will pay the toll.

 

Infosys offered to pay Rs 100 crore, out of Rs 400 crore, that was to be used to build this elevated highway. Finally, it turned out that the person who bid the best offered to pay the government a bit of money, instead of the government paying him, otherwise we would have paid Rs 100 crore. I think that argument is not null and void.

 

Q: From a corporate leader to a political leader, there is a lot of speculation on whether you will finally join the ranks or move from corporate India to political India. Is that an option that you ruling out completely?

 

A: I must say that we need to look at a platform where educated, honest, decent people, can put their interest in the society ahead of their own personal interest, all come together and perhaps create a movement.                                              

 

Q: Do you think business makes a good political leader? Do you think there is room for businessmen in Indian politics, because we have seen a trend emerge in the last couple of years?

 

A: If there is a businessman, who puts the interest of the country ahead of his own personal interest and who is as ethical as anybody else, who is concerned about the city, community, state and the country, I do not see why they will not make good politician.

 

Q: Is there no conflict of interest?

 

A: No, but the moment you become a politician, you obviously have to leave the business that you are in.

 

Q: None of them had done that. Are they are very much part and parcel of everyday operations of their businesses?

 

A: Obviously, that creates some confusion in the minds of people as to their agenda and motive. So, I suppose people have to learn from those experiences and change, so that nobody can accuse them of having a hidden agenda.

 

Q: Speaking of the woes that the IT sector has faced, the rupee continues to appreciate and there is no sign of it slowing down or stopping anytime soon. The Prime Minister has gone on record to say that we should do away with incentives and tax sops in 2009. How difficult is it going to be? How much of a challenge is it going to be for the industry?

 

A: I personally do not think it would be a challenge. After all, it is silly for the industry to say that we will be viable only at Rs 40 per dollar.

 

Q: Are you pushing for the STPI extension or not?

 

A: At the level of the company, the company has to do what is expected by the shareholders. We cannot say that we will not do what is legitimate and legal. However, at a certain higher level, where people like me, Nandan and many people in the country have to rise above the interest of our own company. Then, we have to say we have to do what is good for the country.

 

I believe that what is good for the country is that we should pay taxes. Just because we are in exports, it does not mean that we should not pay taxes. After all, last year, we made some Rs 3,200 crore of after tax income, after paying Rs 700-800 crore of tax outside India. It does not make sense for us not to pay tax in India.

 

On the issue of the exchange rate, I believe that we cannot ask any sop for the government. I can understand if there is a small company, which is suffering. They could ask for sops, but companies in my opinion, above a certain level of maturity, should not ask for any sops.

 

In fact, I have taken this up with Mr. Chidambaram, Mr Yashwant Sinha and Mr. Jaswant Singh saying that, 'why don't you stop this tax exemptions for companies above a profit of maybe Rs 10-20 crore or Rs 50 crore?' Beyond that, there should be no tax exemption.

 

Q: Are you asking for a differential set of dues?

 

A: Yes, encourage smaller people and new entrepreneurs. But there is no need to encourage us.

 

Q: What has the response been like?

 

A: They have all been very kind, but they are caught up in their own issues, which are beyond such simplification as I did. So, I am sure they will certainly do what is right.      

 

Q: Speaking of controversies- another controversy, which has plagued the IT players, especially big ones is the entire SEZ controversy. A lot of your plans have been held up. To your mind, what is the resolution?

 

A: This whole SEZ thing has become a real estate exercise. If Infosys were to create hundred thousand jobs, for creating them, it requires a certain land, because one cannot operate without space. On the other hand, saying that we are making a real estate exercise where every five years, the real estate guys can renegotiate with companies in the SEZ staff, where even the revenues that the real estate fellow gets is tax exempt, I think that is silly.

 

If you want to operate a SEZ, you will have to be the exporting company, because you want all the facilities, you want to reduce friction to business. But there is no point in saying that you can be a real estate developer and will get all the facilities. It has to be provided only to legitimate companies, which are actually in the business of export

 

Q: What is the role as far as corporate India is concerned? In the larger framework of society, I know that you are doing a lot of work through the Infosys Foundation whether its education, healthcare and so. But as a wider role, what is it that corporate India can actually do? Where is the room and what sort of push do you actually see?

 

A: I think the primary role of the corporation is to create a large number of productive jobs, while maximizing shareholder value and running the business ethically. So, you have to maximize shareholder value, run the business legally and ethically; show fairness and transparency in the accountability with respect to all the stakeholders and at the same time create jobs.

 

That is the primary role of a corporate. Then, you could give a part of your profits to make a difference for yourself and for your society. Beyond that, I do not think there is any other responsibility of India Inc.

 

Q: You talked about doing business in an ethical manner. I know you have been a big proponent of corporate governance practices in India. Are you satisfied with the way things are functioning?

 

A: I do think that we have made considerable progress. By and large, most companies have understood the power of market capitalization. Today, people are much more concerned about enhancing profits.

 

There is a good incentive that is being created, which forces people to run their corporations legally and to follow the finest principles of corporate governance. I think it is happening; it is slow but it is happening.

 

Q: We have seen a change in leadership that Infosys with Kris coming in as well. What are the similarities and the differences between Kris and Nandan, because I know you think that every individual or the seven members on the board are very unique and different from each other. To your mind, are there any revelations in the past couple of months?

 

A: First of all, all the good things about the senior management of Infosys, not just the founders but the senior management, is they all have the same values. They have put the interest of the company ahead of their own personal interest. They are ethical, have a kind heart, are employee oriented and are customer focused. So, that is the most important requirement at Infosys.

 

After all, they see what Infosys is the first among equals. You have to work in a team. The difference is that Nandan is the big picture man; Kris is very reflective and intellectually extremely deep. Frankly, I would say of all the seven founders of Infosys, Kris and Shibu are the brightest intellectuals.

 

Today, we have the two brightest people as the CEO and COO of Infosys, while they are not as outgoing as Nandan or me. But the important task is to ensure they leverage the strength of Nandan and my strength, while using their smartness in making this company succeed and I think they are both doing a good job of it.

 

At a certain stage in the life of an organization, you need the corporate mindset in certain areas. At the same time, you need entrepreneurial spirit in certain other areas. For e.g. in individual actions, you must say what new ideas you can bring to the table.

 

But at the same time you need to consult people, have discussions and debates, get experts and make sure that people are happy with the decisions that you take. So, you have to marry the corporate mindset with the entrepreneurial mindset, once you are at a size like Infosys is.

 

Q: Are you ready to make the entrepreneurial leap within the organization?

 

A: Yes, I think so. Of course, they are doing a good job, like Nandan did and Shibu is doing. I think we are combining all those things and that is the best part of Infosys. This is the world's biggest debating society; we discuss, argue, debate every issue and in the end, we come to what probably is the best decision.

 

Q: Are you enjoying life as the Chief Mentor?

 

A: Very much, though I don't get to be there for more then three-four days a month on this campus. But certainly, whatever little time I have, I do enjoy.

 

Q: Have you been able to catch-up with music and films?

 

A: When I am traveling, certainly on flights I tend to sleep lot more. So, I have not been as successful in watching films or listening to music that I thought I could, given that I do so much of traveling.