‘Economist’ this week has four reports related to India. It is good enough indication of the importance and attention that India is getting these days.
The report on Information technology in India ‘Gravity’s pull’ deals with a fear or prophecy of if India’s computer-services industry heading for a fall.
The “IT” in India’s IT industry has always been something of a misnomer. True, most of its more than 1.6m employees sit in front of computers, writing software for Western firms, remotely maintaining their computers and electronically handling some of their operations. But the business is mostly about people and processes. The very essence of India’s IT firms is their ability to marshal huge local workforces to supply high-quality services. Today more Indian than American firms meet the highest internationally recognised standards for software development.
So why the concern? Indian IT faces a host of threats. The most immediate difficulty is the rapid appreciation of the rupee against the dollar in recent months. Western firms, meanwhile, increasingly want Indian providers to do more than just keep systems running; they want help in developing new solutions to business problems-something few Indian firms are set up to do. India’s IT firms have shown before that they can change if they really need to. Even if the heavyweights stumble, smaller firms are ready to take up the baton.
In Indian start-ups section, it has ‘Entrepreneurial push’ and answers a query. Is Bangalore another Silicon Valley in the making?
More venture capital (VC) is flowing into the country-including some from American VC firms active in India-and a growing share of it is being invested in innovative early-stage firms. Things are moving in the right direction, but this is hardly Silicon Valley. The infrastructure for technology entrepreneurs is at “an early stage.” The “term sheets” listing the financing conditions are the same, but the courts may not interpret them in the same way. Professional networks and the collective knowledge of how things are done are still developing. The demand in India is not so much for new technologies as for new ways to make technology affordable to the masses. Such approaches are likely to fare well in other emerging economies-and could disrupt rich countries, too.
Narendra Modi and his style in Indian politics can’t escape the attention of anyone with assembly election in the state. Many think, a win for Narendra in Gujarat will make him a larger than life personality in Indian politics. And the cadre of BJP, if there is one will like his elevation to head the throne at New Delhi. Though media may not agree but he is one who has done equally well with development. Even many of his critics agree about it.
Economist views in ‘Anyone but Modi‘:
Mr Modi’s national ambitions would be “virtually unstoppable” if the BJP won. That would be a problem in the rest of the party because Mr Modi alienates the RSS and others in the BJP with his centralising, autocratic style. With no other BJP politician of national stature, the party had little choice but to turn to Mr Advani for the moment.
Economics focus and concern for the rising rupee is behind the report: ‘The uncomfortable rise of the rupee’. Is India suffocating from too much foreign attention?
India’s IT industry, which first advertised India’s virtues to the outside world, is now suffering more than most from the avid interest in the rupee. Worst hit, however, are India’s labour-intensive manufacturers. Nonetheless, some fear-and others hope-that the dearer rupee will prompt India to take a step backwards and tighten its controls on capital inflows. The migration of capital from the rich world to the poorer one is a sign of a bleaker season to come in the world’s biggest markets. This would, then, seem an inauspicious moment for India to bet its future on export-led growth. If it cannot resist the inflow of foreign capital, it should try instead to make room for it-by observing fiscal restraint-and to make the most of it-by investing it wisely. India may then have an economy worthy of a more expensive rupee; and its children may have better things to do than hang around at traffic lights trying to change a buck.