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India Needs Its Own Mark Carneys

The private sector in India has a better record of appointing foreign talent than does the public sector

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There was much excitement recently in India after the Financial Times speculated about the process to find a successor to Mark Carney, the Governor of the Bank of England.  Among a list of potential candidates, both internal to the Bank and external, the article stated that "attracting Raghuram Rajan, the highly respected Chicago-based economist and former Reserve Bank of India governor, would be a coup".  Some websites in India were soon (erroneously) reporting that the job had already been offered to Raghu.

Based on his performance at the RBI, securing Raghu to lead the Old Lady of Threadneedle Street would indeed be a coup.  The British economy will need an assured hand at the central bank during the uncertainties of Brexit.  Similar thinking led to the appointment in 2012 of Mark Carney, then Governor of the Bank of Canada, to help the recovery from the global financial crisis.  Carney has proved well worth his compensation package of £880,000.  His Canadian nationality was never an issue.

The UK demonstrates a welcome openness to foreigners in leadership positions in both the public and private sectors.  Mrs Thatcher favoured Ian Macgregor, an American of Scottish birth, as her agent of change in nationalised companies such as British Steel and British Coal.  40% of CEOs of FTSE 100 companies are now foreigners, as are 30% of Chairmen.  A significant number of these migrant leaders are, of course, Indians.  This import of talent must be positive for the competitiveness of British companies.  

India has occasionally attracted home NRIs to take up leadership positions in the public sector.  Raghu Rajan returned from the University of Chicago to advise the Finance Minister and then assume the Governorship of the RBI.  Sam Pitroda renounced his US passport in order to help Rajiv Gandhi transform the telecom and IT industry.  However, given the change agenda facing the country, much more could be done to appoint such leaders with relevant international experience.  

While India has the advantage of millions of talented NRIs from among whom talent could be tapped, there is no good reason why only Indian nationals should be considered for many roles not involving security considerations.  SBI or Coal India might well be better led by the right Australian or South African than by the domestic candidates currently considered for such PSU roles.  

The private sector in India has a better record of appointing foreign talent than does the public sector.  The recent competitive progress demonstrated at Tata Motors must be credited to the Managing Director, Guenter Butschek, just as the success of Jaguar LandRover reflects the great leadership of another German, Ralf Speth.  

A challenge to attracting international talent is the lower pay structure in India, most especially in the public sector.  Levels of compensation at the top of many Indian companies is now approaching international norms, but PSU leaders remain ridiculously underpaid.  The Chairman of SBI, by far India's largest bank, was paid only Rs 30 lakh last year, about the same as the starting salary of a fresh recruit from IIT to Goldman Sachs.

Some narrow-minded nationalists may object on principle to the idea of bringing in foreigners.  But they might recall the words of that great reformer, Deng Xiaoping, who said, "It doesn't matter whether a cat is black or white, as long as it catches mice".

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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mark carney bank of england raghuram rajan

Alan Rosling

The author is an entrepreneur and strategic adviser. He co-founded Kiran Energy and was earlier an Executive Director of Tata Sons. He was a Special Advisor to the British Prime Minister during 1991-93. He now lives in Hong Kong but is frequently in India. He is the author of Boom Country? the New Wave of Indian Enterprise.

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