2004 has arrived with a bang as far as India is concerned. The Sensex has increased by 73% when compared to last year and crossed the magic figure of 6000. GDP growth in Q2 has been 8.4%. The foreign exchange reserves have crossed a $100 billion mark. Rupee has appreciated against the dollar. Interest rates are at the lowest. Foreign Institutional Investment has grown to $7.4 billion of which equity is $6.52 billion. The PE ratio has improved from 12.72 on April 25, 2003 to 19.88 on 3 January 2004. The total market capitalization stands at Rs. 1,312,800 crores against Rs. 1,091,082 crores on February 11,2000 registering a 20.2.% increase.

All this is truly a cause for celebration. The good news is that the recovery and the improved market sentiment had been led by manufacturing growth and productivity. This has been made possible due to sustained cost cutting due to increased application of TPM, SPC, Six Sigma and self assessment models that IOD has propagated through Golden Peacock Award models. After years of practice of lean manufacturing, Indian companies today are leaner and meaner. It is due to the robust performance of Indian companies that FII's are now flocking to India and fueling the stock market. The bullish sentiment has spawned further expansion programmes. Indian companies have planned IPO's worth 22000 crores this year.

In 2003 "Brand India" has moved on several fronts. The outsourcing work has been pouring. It is expected to generate $ 57 billion and 4 million jobs by 2008. Global Competitiveness Report by Geneva based World Economic Forum which in the past has shown India at the bottom rung has rated India No. 1 in the amount of foreign technology licensed. It is No. 2 in terms of technology transfer. In terms of the pool of scientists and engineers, India is rated No. 2. China's standing in these key areas is 54th, 29th and 64th.

"Made in India" which till recently was an international joke, is now prominently displayed in upmarket western stores like Tommy Hilfiger, Espirit, Wallmart, Gap, Selfridges and Harrods. Garment exports currently at $6 billion are set to grow 8-10 times by 2010.

Auto industry has been India's real success story. In the first 6 months of 2003-2004 India exported over 220,000 cars and bikes worldwide. Auto giants such as Daimler Chrysler, Volvo, Benz source parts worth $1.5 billion from India. Thanks to low interest rate the domestic uptake of cars is also slated to increase by staggering 25% this year.

Year 2003 has also witnessed Indian takeover of global companies. Anil Agarwal of Sterilite which took over BALCO amidst great controversy has had a highly successful IPO in the UK. He has become the richest Indian in the UK surpassing Mittals after acquiring copper mines in Australia and Zambia. Tata Motors is all set to acquire Daewoo's truck factories in South Korea. Ranbaxy has acquired RPG Aventis part of the famous French MNC called Aventis. Subhash Chandra's Essel Packaging has become world's biggest producer of laminated tubes after acquiring Propack of Switzerland. TISCO and HINDALCO have become the lowest cost metal producers in the world.

The real achievement this year has been that the global leap has not been confined to software. There has been an overall surge in India's performance in every sphere - sports, entertainment, food, fashion films, pharma, meditation and yoga alongwiside manufacturing India's lotus posture and Aishwarya have both been featured on Time cover. Indian students have overtaken the Chinese to be the single largest foreign student population in US. The Indian brain is increasingly becoming an icon. Countries like Australia and Canada have doubled their targets for Indian students. Indian youth is sought after even by the world's glitterati. Arun Nayar has been the heartthrob of a famous Hollywood star.

All this is ample proof that India is shining. The question, however, is "Is it shining as brightly for all of its 100 billion people? The answer is a resounding 'no'. This prosperity is only limited to the upper and middle classes. Despite all the achievements, opulence and vibrancy of the stock market, starvation, man's oldest enemy, still rules and 840 million Indians still live below the international poverty line earning less than 2 dollars a day. Several million hungry had been added only in the later half of 1990s because of the poor farm output as per the recently published FAO report. 84% of Indian population has little to do with the stock market.

India is fast becoming a nation divided with rich cities and poor villages. There is a growing gap between the consumption of the urban rich and starving rural population. The rich worry about the minuscule quantities of pesticides in their drinking water and Colas, little realizing that our villages lack even the drinking water. The slums that surround our sprawling skyscrapers in new developments are stark witnesses to the vast disparities in India. These are the time bombs waiting to explode. The achievements that we refer to cannot be sustainable unless the poor, the underprivileged, the deprived and downtrodden can participate in India's dream.

In the de-regulated digital economy where it is the business which drives the government, the responsibility for removing these disparities rests with the business. It is for business to realize that in this era of knowledge economy if growth is not equitable and shared, it cannot be sustained. It is the disparity that drives people to desperation. People can live with poverty but not injustice. India's advantage lies in its youngest population in the world. 40% of our population is below the age of 25 and largely unemployed. These young people are not going to sit idly if India's growth does not improve their well-being.

Our growth should not become a reminder of what most of us have all along suspected that India is a rich nation inhabited by poor people. Our poverty is man made. It lies in the translucence and opaqueness of the governance processes of our country. Sharp disparities exist even within various states. India shining may apply to western India whose growth rate is 10% but certainly not eastern India whose GDP growth is only 3%. There are sharp differences even in the governance processes between the states such as Karnataka, Maharashtra, Gujrat and Andhra Pradesh of the Western India and Bihar, UP, Orissa, Jharkand and Chattisgarh of Eastern India. The tragic murder of Satyandra Dubey, a Bihar engineer shows complete absence of the rule of law and the power of mafia in those areas.

The government of India has a budget in excess of Rs. 30,000 crores for poverty alleviation programmes. There is no accountability in its expenditure. It is a pity that all the political parties are insensitive to the dangers of corruption. Misuse of public office and the abuse of electoral process as exposed in the cases of Judev, Jogi and Tehlka underlie our poor governance. The tragedy is the lackadaisical manner in which we deal with even proven cases of corruption. Admittedly corruption is not a phenomenon exclusive to India. The corporate frauds in US and Europe have laid bare a corrupt system in advanced countries which is equally diabolical. There is, however, one stark difference. In western countries there is a certainty of action at least when the culprits are apprehended. In our case instead of taking action our government puts all its energy to destroy the accuser. Corruption is treated only as a game for one upmanship.

Corporate mis-doing can do the greatest damage to this bullish market. Markets have only begun to bring in the small investor after a long absence. Not long ago 45% of the polled in a survey of potential investors had said that stock markets are a sure way to ruin. Our most important challenge, therefore, is to restore the credibility of the stock market. This is not going to be easy. Western experience has indicated that mere box-ticking of corporate governance codes does not help. Indeed it is a recipe for disaster because it gives you the illusion of things being in control. This is an area where government needs a political will to discipline erring parties. India has a very poor record in this area. JPC constituted after the UTI scam lost the opportunity of taking effective measures. The government is still sitting on the Naresh Chandra Committee report on the reforms in the composition of boards to include independent directors. Independent directors are a cornerstone of good corporate governance. Transparency, equity, integrity, accountability and social responsibility are vital to sustain the market.

A lot of current investment is being diverted to mutual funds. More and more investors are reposing faith in fund managers after the strong performance of equity and debt funds over the past couple of years. The assets under mutual funds control are rising at the rate of 50% a year. It is because of this that SEBI has to keep a sharp eye on the quality of their disclosures. The wrong doings of US mutual funds, long thought to be saviours of small investors, are too recent to be forgotten. The sleaze of US Mutual Fund industry has discredited the institution. Maximum attention needs to be focused on all practices that invite abuse. Any arrangement in which favours are exchanged for commission business, research or a prominent place on some brokers' recommended list of funds is to be thoroughly investigated and the culprits punished. We need in SEBI a missionary of the zeal of Eliot Spitzer, the New York Attorney General who has brought the wrongdoers to book and helped restore confidence in US financial sector .

We must not forget that we are living in an age of escalation and exponentials. Everything has to be magnified in the battle for eyeballs. The attention span is increasingly becoming a scare resource, while media seeking our attention is multiplying astronomically. Inspite of living in a knowledge economy, we have become helpless victims of media manipulation. Iraq war was a classic example. The reality has nothing to do with perception. Our minds are trapped in by craftily engineered stories fired at us at regular intervals by vested interests through audiovisual missiles to advance their agenda. We have little time to digest, let alone analyze the avalanche of new information. In the end instead of making us wiser, the new information is often confounding and disorienting us.

This is where the hype about India's bullishness hides an inherent danger. The drumming of "feel good factor" based on the upper middle class's access to riches can work as a smoke screen preventing us from seeing the face of real India and missing the opportunity of working to improve the lot of the very people to whom we owe this success.

India's success in 2003 has been a culmination of years of diligence and hard work basically of the Indian worker. Credit for these achievements has to go to every Indian. Cost advantage that Indian companies have been able to show and which have attracted the foreign investors are due to the efforts of our working classes. So many of these have been sacrificed in the name of downsizing during these cost cutting exercises. So many of these are lost their health and even lives due to explosure to toxic substances in the manufacturing processes they were employed in.

Despite the hype of CSR there is little evidence of the business using this tool as part of strategic intent. Action so far on this front has been limited to PR gimmicks. It is time business realized the importance of developing community health care and educational programmes for long term business sustainability. It is tragic that we have no measures even to quantify the environment impact of our industrial processes. What good is all economic growth if our children are asthmatic because of the uncontrolled pollutants. There is an urgent need to insist on proper disclosures of companies environmental impacts.

Working classes have long been suffering from the increasing differentials between their wages and the salaries of the top management. These have become worse in recent years. While CEO salaries have skyrocketed, the workmen's wages have increased only marginally. The differentials between the lowest and highest paid in India have risen to 1:300. The Indian dream of global reach will remain a fantasy unless our corporations involve all stakeholders to share the benefits of growth with them and recognize the contribution every Indian makes. It will be tragic if people who really contributed to this miracle are left out and benefits of India's global leap are reaped only by the upper layers. It is time we saluted these people whose sacrifices have made us realize this Great Indian Dream.

*Dr Madhav Mehra is President of World Council for Corporate Governance.