This will give rise to the capital and labour market flexibility that will ensure creation of a new prosperity through the destruction of the old hidebound systems. This was the synthesis of a discussion between industrialist Mukesh Ambani and academic Sumantra Ghoshal on "Creative Destruction".

The function was held held today to mark the release of a book `Business Legends' by Gita Piramal as a sequel to her previous bestseller `Business Maharajahs.'

"Greater labour market flexibility was a must to usher in the change in mindset that would unleash creative destruction in India," said Ambani. He pointed out that this would have to be a matter of mindset transition, which would depend to a large extenton how the government defines itself over the next decade: as a facilitator or a player. He felt a virtual consensus had emerged on the subject, implying that the government was destined to be more a facilitator than a player given the direction of change between 1991, when India began a reform programme, and now. With 300 million people set to join the already 300 million strong labour market in the next few years, all that protection of existing labour would do is weaken the economy by playing to a sub-elite within the labour force of around 30 million.

Ghoshal pointed out that along with inflexibility in labour market, India also suffered an absolute lack of flexibility in capital markets, and said the business class had not made its position adequately clear yet on where it stood on suffering changes in business control, and therefore absorbing the pain inevitably associated with destruction. Would the Indian business class be willing to relinquish management in a free market for business control?Ambani responded by saying that there had to be a division between ownership and management, and that there was a realisation, learnt through pain of reforms unleashed since 1991, that the capital market would not favour owners who were not good managers but sought to manage their own businesses.