Supreme Court Stay on 27% Reservation for OBC- Some Questions

Posted on March 31, 2007 by indra

The media is agog with this unexpected Supreme Court’s stay on the implementation of the government’s decision to reserve 27% seats for Other Backward Classes, more popularly called OBCs in central educational institutions, including top schools like IITs, IIMs, and AIIMS since it came yesterday sometime.

I have expressed many a times that any identification and differentiation of the people on the basis of castes must end, if India wishes to be a modern great global economy, and that it must wish above everything.

I was very happy with the report of an initiative of Shri Shri Ravi Shankar, founder of the Art of Living Foundation. About 5,000 people, including several Dalit and Hindu leaders, pledged to work against untouchability and discrimination through a seven-point action plan at the first truth & reconciliation conference held in New Delhi.

Sri Sri Ravi Shankar, founder of the Art of Living Foundation, addressing the conference, had said, “Discrimination is not sanctioned by religion. Every Hindu should be educated about the fact that many sacred texts were written by Dalits maharashis in Hindu literature. Notable examples are the two great epics, Ramayana and Mahabharata written by Dalit Maharishis Ved Vyas and Valmiki. Fear and communication gap between communities is keeping us apart. We must reconcile differences.” The seven-point action plan focused on ensuring temple entry for Dalits, collective celebrations of festivals including community feasts, abolishing the practice of separate utensils for Dalits, empowerment of women from economically weaker sections of society, providing educational facilities to weaker sections, spiritual and religious education to Dalit children and equality and justice for all. As a symbolic implementation of the plan, leaders partook in a community feast. Dalit leader and president of the Indian Justice Party, Udit Raj welcomed the initiatives and advocated that the posts of the head of maths be filled by priests from every caste on a rotation basis.

Why should any honest Indian or, if I say so, Hindu disagree with any of the seven points? I don’t think there is any rationality in perpetuating the caste system that is the unnecessary and damaging burden from the history. Let the country men including the Hindus agree to dismantle it, if not with one stroke, over a timeframe. Caste based society kept India slaves for centuries and certainly none would like to get that exploited again and again by the vested interests to keep us at the bottom of the pyramid.

Some pertinent questions need answers.

Should the caste system with its damaging historical past be the main identifying factor of the society? Do and will the people of India and particularly the next generations like to perpetuate their identification by their castes?

Why was the census based on the caste dropped after 1931? Even if it was by a default, it must be considered as a wonderful decision to integrate the society.
Should the Indian constitution be amended to provide for a single-issue headcounts or referendum?

Does the unanimous backing of the parliament members for reservation, or for that matter on any issue of shellfish interest of the members such as office of profits bill mean the wills of the people of India?

However, I wonder why could those opposing quotas for OBCs not find even a single MP to support their cause and oppose the bill that is getting so much of indirect moral support from judiciary.

Is the judiciary doing what is just technically correct and judicially prudent or is it the ego war between the judiciary and the legislature to prove its supremacy?

The court might have certain justification for stay such as lack of authentic data on the size of OBC population, extent of backwardness, as well as the centre’s adamant refusal to exclude the creamy layer from quotas. However, the decision would have come much earlier to avoid the anxiety among those OBC students who are standing a chance to get admitted in absence of the stay.
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‘Don’t Divide The Country’
An inconvenient truth
A Blow To Affirmative Action In India

Posted in economy, social issues | Leave a comment

Other Sectors Must Emulate IT Sector

Posted on March 29, 2007 by indra

A new report by CLSA entitled Chain Reaction by Bhavtosh Vajpayee and Anshu Govil has appeared.

The report tries to put in figure the implications of strong IT sector growth across the economy. Some of its data are fascinating and other sectors such as textiles, pharma, or auto components and leather must emulate it for creating an all-out growth, employment and alleviation of poverty.

Export: IT/BPO exports have reached about $30 billion in the financial year 2006-07. Over the next three years the industry will double ($60 billion export target in 2010). Its incremental impact over the coming three years will be similar to what it has achieved over the last 20 years. (Interestingly, President Kalam wishes the figure to be $100 billion by 2010. And one can imagine the implications with that.)

Job creation: The industry is expected to create over 1.7 million new jobs directly and using a conservative multiplier of 1.4 (every IT job is expected to create 1.4 new jobs in other sectors), about 2.3 million indirect jobs over 3-4 years. Thus the IT industry will absorb 80-85 per cent of all the employable engineers and about 60 per cent of all quality graduates.

From about 4 million people entering the job market in urban India every year, the IT industry (both directly and indirectly) will absorb nearly 35 per cent over the coming 3-4 years. About 13-14 million people enter the working age population annually taking both urban and rural India together. And the IT industry has the potential to employ 10 per cent of these people.

Real estate: Based on a Cushman & Wakefield projection of 850 million square feet of residential demand till 2010, 70-75 per cent of this incremental residential demand will cater only to the IT sector (for both rental-cum- owned housing).

Commercial space: The demand projection is for 155 million square feet of commercial space in India till 2010. The IT sector alone will account for about 65 per cent of this, even after assuming that the sector builds about 50 per cent of its own space and leases only 50 per cent.

Middle Class Creation: Between 2002 and 2010, India will add 4.4 million households to the upper middle class, of which about 20 per cent will be accounted for by IT. Between 2002 and 2010, the report points out 21 million households will be lifted out of the category earning less than Rs 100,000 per year, and the IT industry through indirect job creation will account for at least 20 per cent of this uplift.

Tax collection: Over the next 3-4 years, 13-14 per cent of all income tax collections will come from IT employees. 20-25 per cent of India’s nominal GDP expansion over the next three years will come from the direct and indirect impact of the IT sector.

A recent analysis by the Asian Development Bank, based on the numbers in the latest National Sample Survey Organisation report on employment creations during 1999-200 and 2004 proves the point.

“Those who have studied till middle school seem to be the biggest gainers from the growth in employment, cornering nearly 42% of the 70 million jobs that came up between 1999-2000 and 2004. It means over 29 million new jobs during the five-year period have gone to those who have studied till middle school.

Next in line are those who have completed primary school, bagging over a quarter or 18 million new jobs that were up for grabs. While their educational qualifications would have made them eligible only for blue-collar jobs in factories, these two segments also fared well in the services sector.”

However, IT sector is playing a role model for companies as well as individuals. IT sector proved beyond doubt that even technocrats and not only those born with silver or gold spoon in their mouth can be entrepreneur and rich. It also created larger number of millionaires among its employees by sharing the wealth so that they can help it grow wealthier. The sector also gave a new meaning to investing public and changed the goalpost of investor expectations. It brought a new standard for the quality of life both at home and at workplace. And wherever IT clusters grew, the overall standard of that city got transformed, be it Bangalore, Hyderabad, Pune, Noida, Gurgaon, or Sector 5 of Salt Lake City in Kolkata.

While IT industry has shown how one can deliver despite all the infrastructural and procedural bottlenecks and why the corporate India must stop hiding behind those excuses. It demonstrated that if freed of governmental interference and outdated legislation, Indian companies can be world-class.

This is where India’s globally recognized superiority in IT and ITeS sector provides a better value for the country and its people at large than what the manufacturing sector has brought to China, as both in the entry salary as well as the annual increments, IT sector is better off.

The generic pharma, auto components and auto manufacturing, and the leather, textiles and apparel industry all have similar potentials to create employment and prosperity for the youth joining workforce. Just take one example from the trends in auto sector. The penetration of midsize cars is gradually increasing, and it means the need of more and more drivers in Indian scenario. (“The increased affluence leads to a greater propensity to employ drivers.” According to projections of JD Power.) Against the estimated 238,000 units of mid-size cars sold in 2006, the number is likely to grow to 555,000 by 2012. And the small cars would grow from 778,000 in 2006 to 10,50,000 by 2012. All that means huge employment of all skill categories.

Retail and financial services are the two new sectors, which have the potential to employ at least 5 million in 5-7 years and really broad base growth across regions and skill sets.

However, It only confirms India must grow at higher rate without getting complacent about it.

Posted in industry | Leave a comment

India, China, or Vietnam

Posted on March 28, 2007 by indra

According to a revised estimate announced by commerce and industry minister, Kamalnath, one of the most visible ministers of UPA government, the fiscal year will be the best with FDI (Foreign Direct Investment) touching a figure of $15 billion, nearly the double of $7.72 billion of the last year. The achievement is creditable, as India could manage only $38.90 billion between 1991and march 2006. But even with $15 billion FDI, India’s share is less than one-fourth of what China ($63Billion) attracted in 2006. But all this is happening because of only one reason; India is the second largest market after China. Thee government has not done any thing significant to attract more and a respectable figure in comparison with China.

Michael Dell, the founder chairman of world’s second largest PC maker Dell Inc. was recently in India. It is interesting to appreciate what he said. ” Dell’s 86 suppliers are planning to invest $19 billion in next two years, but not a single dollar is coming to India. Reason is the high tariff structure. One of the suppliers is investing $5 billion, but it has chosen Vietnam over India to invest. Dell sources around $19 billion worth of components from China and Taiwan but nothing from India. India levies 20-25% tariff on PC production visa-a-vis many other countries with very low or nil tax rates. Of a $500 PC, the duty element in India is around $100. However, because of the sheer size of the Indian market Dell is putting up an assembly plant in Sriperumbudur SEZ near Chennai at an investment of $ 30 million to manufacture 400,000 units annually.

Why can’t the government decide the priority high tech sector where it intends to have FDI inflows? Why can’t it be reducing the tariff in line with even a poorer country such as Vietnam? Why should it go on collecting these high taxes and doling out in so-called programmers for social equity once they know through different studies of the experts that it hardly reach the beneficiaries and gets diverted to the relatives and known of the politicians, bureaucrats, and only those who manage the vote banks or accounts in Swiss banks? Why should it go on talking of globalisation, if it can’t master the rules and tricks of competition?

The second story is of South Korean steel giant Posco that signed the MOU in June 2005 for setting up a 12-million ton steel plant in Orissa at an investment of Rs 52,000 crore. Even after almost two years, the issues related to the land and mining lease are not cleared. When the media reported Posco’s intention to shift the project to Vietnam, both the Orissa and central government has woken up to the realities. The Orissa government today said it would within the next 3 months, remove all hurdles to South Korean steel giant Posco. Even PM is making promises to resolve disputes over land acquisition that threaten to delay projects including steel ventures by Arcelor Mittal and South Korea’s Posco. And what is the guarantee that it would happen, when, as reported, the villagers opposed to the Posco steel project had formed “self-sacrifice squads” to protect their lands from being acquired?

Is the government doing sufficient selling of the necessity and advantages of these development projects among the people of the region? And can the so-called activists such as Medha Patkar and her peers present an alternative plans for the growth of the regions and the country? Why can’t they be given a district’s administration and all resources to prove their models of inclusive growth? Why can’t the government go for a countrywide debate on the issues of acquisitions and making the bills on SEZs and acquisition robust enough to be vulnerable to get exploited by the business tycoons?

How can any foreign investor get attracted to India with this sort of trouble in starting a business, as with each passing day the project cost increases that is critical to any Greenfield project? If the country aims to attract FDIs comparable to China, it will have to make all the necessary changes in its working culture. There is no shortcut to grow with all sorts of inefficiency in the systems and every imaginable types of indiscipline in the people of the country brought in through the shrewd politicians and their so-called leaders in the name of democracy and human rights.

All foreign investors may talk nice about India in public but when it comes to investment, the SWOT study of the country where they intend to invest must satisfy them fully for its long-term commercial viability providing sufficient returns. And that is the reason that Intel decided to build its $2.5 billion first Asian chip manufacturing plant in the northeastern city of Dalian in China, reflecting China’s growing importance as a market for high-tech goods. The great economist Prime Minister and his able lieutenants know why Intel couldn’t be attracted to India that fails to come out with a competitive policy for chip manufacturing sector as a strategy for the nation that wishes to be a superpower in IT sector. Many a times, a question crops up. Are they really serious enough?
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HSMC-Infineon to set up $4bn fab unit in India

Posted in industry, manufacturing | Leave a comment

Machining Industry Can Lead Indian Manufacturing Sector

Posted on March 28, 2007 by indra

Dr. B N Mondal, Head, Centre for Advanced Materials Processing, Central Mechanical Engineering Research Institute & Secretary, Investment Casting Society, India had invited me to attend the ‘National Workshop regarding super hard material and its cutting (machining) application’ at CMERI, Durgapur during 29-30 the March, 2007. As I am not keeping very good health these days, I found traveling to Durgapur a little trivial. But I couldn’t resist the temptation to write a brief update on machining industry in India, as I foresee. I did send this to Dr. Mandal, whom I knew from his IIT’s days. Rakesh, my eldest son was at that time in IIT, Kharagpur. Here is the writeup that I could do.

Machining Industry Can Lead Indian Manufacturing Sector

Machining has been an important manufacturing process for ages for engineering industry. A large number of parts going in the final assemblies of the products, be it aeroplanes or automobiles require machining operations to finish them within critical tolerances for optimum functioning over the life cycles.

Over the years, there have been sea changes in all areas of the machining, be its the machine tools, the cutting tools, fixturing, or other accessories such as cooling agents. But some changes are almost universal in all these. Flexibility, reconfigurability, modularity, ease and error free automatic operations, and serviceability have been the main goals.

CNC Machining centers and turning centers have replaced different machine tools for varying machining operations, such as drilling, reaming, boring, and even turning, grinding and even broaching. Even a complicated component such as cylinder blocks of an automobile engine or a sophisticated huge sheet metal stamping die tools can almost be totally machined in a single setup today on one machine.

Cutting tool materials today can machine harden above 60Rc pieces and that too without any cooling agent that used to cause a lot of nuisance on the shop floor. In next step, perhaps the cutting tools will be smart enough to automatically switch over the cutting parameters depending on the real machining characteristics of the material being machined.

Workholding fixtures are smarter to control precisely the grip force required for the cutting parameters without deforming the features as it comes out of the machine tools after the finishing operations.

But the most important input has come from the Internet compatible controls that has made troubleshooting and maintenance manageable even for sophisticated items by removing the need of the expert to be physically present to assist on the machine tools.

Some of new trends that has helped the machining to be more productive are the near net shape basic forming processes for precision casting and forging that have eliminated the need of three step machining to one. Simultaneously, in some sector such as aeroplane industry, the components are getting bulk machined from almost raw billets integrating number of components in one thus eliminating assembling operation and tolerance stack up. The advent of high speed machining and hard machining has also facilitated the production engineers to eliminate number of machining steps.

Surprisingly, no innovation has come in basic machine tool design to replace the machining/turning centers that once was predicted.

For India, it is necessary that it becomes a manufacturing nation so that huge employment gets created to exploit its demographical advantages to the best. Machining industry can be one area that can serve the purpose. Some may say that it is capital intensive, but with machining center when one machine can be used to finish many components totally, it can be commercially viable business.

I am pained that India even today does not facilities good enough to manufacture all the die tools of the automotive industry, and the OEM manufacturers both domestic and global with presence in India are dependent to get it from other cheaper countries such as Japan, Taiwan, South Korea, or perhaps from China and Thailand. One can appreciate the need by looking at the number of die tools involved in creating a new model of car and its cost. Will the OEMs keep on importing them with frequent changes of models that will be expected from the Indian automotive enthusiasts and consumers?

My other agony relates to the machine tools industry. Unfortunately, with all opportunity not a single machine tools company could grow to a global scale though all the necessary skill and talent with demand too was there. Naturally, an ambience is to be created by the government agencies such as National Manufacturing Competitiveness Council (NMCC) so that more and more of the graduate engineers start thinking of becoming entrepreneurs in manufacturing sector. CMERI can also be a motivating force.

Posted in industry, manufacturing, Tecchnology | Leave a comment

India’s Auto Industry- A Showpiece in Manufacturing Sector

Posted on March 27, 2007 by indra

In February, France’s Renault and its Japanese affiliate, Nissan, announced plans to team up with Mahindra & Mahindra to build the passenger car manufacturing plant. The Rs. 4,000 crore ($902 million) facility in Chennai will turn out 400,000 cars a year from mid-2009 on. If industry rumors are to be believed, eventually the number could double to 800,000.
Indian auto industry now produces about 1.1 million cars each year.

India’s auto industry has plans to invest some Rs. 35,000 crore ($8 billion) over the next 3-4 years in building manufacturing capacity in India for another two million cars each year, with half a million earmarked for exports.

About two-thirds of the planned investments of the industry — about Rs. 24,000 crore ($5.4 billion) — will come from Tata Motors, Maruti and Hyundai and other companies.

The Tatas are expected to invest Rs 10,000 crore ($2.2 billion), revised to Rs 15,000 now and this includes outlays for a new, low-cost car, a joint venture with Fiat and capacity for commercial vehicles.

Maruti plans to invest Rs. 4,000 crore ($900 million) in its plant in Manesar near New Delhi, after which its capacity will increase from 600,000 cars to 900,000 cars.
Hyundai is doubling its Indian capacity to 600,000 cars at a cost of Rs. 5,000 crore ($1.12 billion).

Honda Motors will spend Rs. 1,800 crore ($400 million) to triple capacity to 150,000 units by 2010 with a new manufacturing plant in Rajasthan.

General Motors is investing about Rs. 1,300 crore ($280 million) in its second Indian plant in Pune, near Mumbai, where its capacity could more than double to 140,000 cars in a year. Industry watchers expect it to produce its economy car, Chevrolet Spark, at the facility.

Nine of the world’s top 10 automobile companies are manufacturing today in India. Some other global automakers have also lined up impressive investment plans for India in recent times. Volkswagen is setting up a manufacturing facility at Chakan near Pune. Daimler Chrysler has also acquired 100 acres nearby at Chakan to set up a assembly line by end of 2008. BMW Group is set to roll out its first cars from the Indian plant set up in the Mahindra City near Chennai early 2007.

India’s capacity by 2010 could triple to 3.1 million cars a year, making it the same size as China’s market today. (In the U.S., automakers sold 7.6 million cars in 2005, according to data updated in January by the U.S. Bureau of Transportation Services.)

India’s auto sector has certain obvious advantages: low manufacturing costs compared to developed countries, a robust and growing vendor base for components, large skilled manpower including that for R&D, and fairly big domestic market of 250-million-strong middle class. India potentially could emerge as a global hub, at least for small cars.

Many opine, India is an attractive base from which to export cars to third country markets. Carlos Ghosn, the CEO of Renault and Nissan, has been quoted as saying that sourcing cars from India for the world markets is 35% cheaper than Europe. However, many think, China could still be cheaper by about 12% to 15% today. So China remains the first choice for global investors. It’s a little early to tell if global auto majors will switch to India as their first choice to manufacture small cars for export markets.

However, some think the point in the rise of per capita income of Indian middle class when fast ‘motorization’ happens is coming nearer. Vehicle financing in India is also helping, as it accounts for 85% to 90% of all cars bought (typically up to 80% of the car’s value is financed). By contrast, the penetration of vehicle financing in China is considerably lower, even as it boasts nearly three times India’s passenger car volumes. (In the U.S., about 56% of consumers and 41% of businesses financed their vehicle purchases in 2005.)

But the people eagerly waiting the arrival of Tata Motors’ car priced at Rs. 100,000 ($2,200) in 2008 that may change the rules of the game. It’s targeting at least one-fifth of seven million two-wheeler buyers who may want to graduate. This will mean 1.4 million cars, more than the current size of the domestic car market. Tata Motors has already a history of similar success. It profitably sells its Ace, a light commercial vehicle, for Rs. 130,000 ($2,920), and it is 80% outsourced. Tata Motors will be a company to watch. Some still believes, ” Tata Motors would be a frontrunner here.” And one can imagine the things to happen, if this can make cash rich and highly young CEOs of Bajaj Auto to take the challenge.

Bravo! Let auto sector lead the manufacturing. If the industry leaders integrate R&D capability and strength of IT sector with innovative designs and after sales services that provide delight to the customers, the Indian auto industry is on the right track with global ambitions.

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Cars to drool over
Speed Bumps For Automakers In China, India
The incredible story of Tata Motors and the Rs 1-lakh car

Posted in industry, management, manufacturing | Leave a comment

Commercial Jet vs. Bullock Cart

Posted on March 24, 2007 by indra

As reported in media, China wants to build its own commercial jet by 2020. Ambitious? Sure. Realistic? Maybe. No one disputes China’s ability to produce a credible airliner. The country has been a parts supplier to Western aircraft makers for decades and is building its own 70-80 seat regional jet, the ARJ-21.

However, the Western media is skeptical about its success, and it has its logic. Boeing, Airbus, and General Electric have developed advancedaerospace technologies such as new, lighter materials that have helped to make air travel faster, safer, and cheaper. If the Chinese intend to use lower labor costs to undercut Boeing and Airbus on price, airline CEOs will probably just yawn.

The recentsuccess of Boeing’s carbon fiber 787 Dreamliner will carry 250 passengers in a composite fuselage that, along with new advanced engines, will improve fuel efficiency by 20% over similar-sized rivals, and cut maintenance costs by more than 30%. Over the life of a wide body aircraft flying the longest routes, fuel will cost more than four times the sticker price of the airplane, according to brokerage Merrill Lynch.

China wants to make its own planes. And there’s certainly a domestic market for them. Chinese airlines are expected to buy 2,650 new passenger aircraft over the next 20 years, worth $289 billion, according to commercial-airplane experts. Still, the risks are enormous. Even veteran manufacturers have stumbled badly at times, with Airbus’ troubles in building its A380 super jumbo just the latest example of how unforgiving the industry can be.

Sure, China can make toys, steel, ships, and even cars. And it’s getting better at all of them. Airplanes, though, may be a stretch, even for a nation as ambitious as China.

Indias Bullock Cart

India set up its Hindustan Aeronautics Ltd. with much fanfare to produce its own planes both for civic aviation as well as for air force of the country. Its investment is huge with lot of manufacturing and R&D facilities in different location. Unfortunately, HAL has hardly any product that makes India globally recognized as aircraft manufacturer.

However, my interest was with some ambitions manifested in an Indian PSUs innovation. News appeared in The Times of India on Thursday March 22,2007- Govt to give steel bullock carts to villagers. That runs further. In a bid to promote consumption of steel in the countrys rural areas, the steel ministry has decided to distribute bullock carts made of steel to villagers, particularly among the weaker sections. As a pilot project, 70-odd steel bullock carts made by the Vishakhapatnam-based Rashtriya Ispat Nigam Ltd (RINL) are ready for distribution among villagers in the vicinity of RINL.

Further, improving upon the great work done by the ministry, the report continues. A steel ministry official said that these bullock carts were sturdier and longer lasting than those made of bamboo and othertypes of wood. If the experiment succeeds and the product becomes popular and is found to be cost-effective, then the government could even go in for large-scale production of such steel bullock carts through a public sector undertaking. I dont know how the steel bullock cart compares with the weight of traditional ones and who shall use them. With whatever I have seen, both the bullocks and carts are disappearing from the rural India with tractors replacing them.

What should one think about the fertility and innovativeness of the minds of both the politicians and bureaucrats leading the nation? How should these great political ideas be ranked?

I dont mean that good application based researches are totally absent. In the area of steel making itself, BESU (Bengal Engineering College, Shibpur, Kolkata of our days) has come out with sturdier yet lighter steel that can have a commercialpotential in automotive and other sectors. Even the students of some of the engineering colleges have developed good automotive products. But the politicians even in the 21st century cant think anything beyond the bullock carts and rickshaw.

Posted in governance, manufacturing | Leave a comment

Three Women, Three Ways of Livelihoods

Posted on March 24, 2007 by indra

Today I shall like to tell the stories in brief of three individuals: Lal Muni, Kiran, and Sarvatia. The common link between them is that all the three are from near around Patna. You are to draw your own conclusions from them.

Bihar may be the poorest state till date, but its people are wonderfully talented since ages. Some of the stories of individual successes perplex one raising obvious question, ‘why is then the state so poorly placed on the development index?’

Lal Muni Devi: Lal Muni Devi the poor, uneducated woman from Azad Nagar village in Patna district used her dank, thatched house to grow mushrooms. A photograph of Lal Muni and the story of her achievement have been put on the website of CIMMYT, a well-known Mexican institute engaged in research for improvement of maize and wheat crop. Lal Muni Devi finds mention as an inspirational farmer among 25 from seven Asian countries. Till four years back, Lal Muni used to work for other farmers as a daily labourer. It so happened that the instructors from Indian Institute for Agricultural Research (ICAR) brought together 25 women from the village and taught them how to grow mushrooms. Lal Muni took the initiative with zeal. She did not need any land to grow mushrooms, a plant she had never even heard of till the ICRA training. Fortunately, market was easily available for the produce in nearby Patna city. Today, Lal Muni is entrepreneur and pretty well off. Others can emulate her.

Kiran Devi: Kiran is another woman with the manly guts. She came from a poor background. Kiran started with a teashop, but today Kiran is in business of junk selling in Patna. As usual, the profession requires guts to deal with the people with whom she is to deal. The business flourished and now Kiran also owns a number of rickshaws too and get them plied on rental. This business also requires tough handling, but Kiran has plenty of that. Kiran has now found a place in the new Class IV maths textbook from National Council of Educational Research and training (NCERT) that is all about maths and real life.

But let this feature end with the anticlimax- the story of Sarvatia Devi.

Sarvatia Devi: Sarvatia Devi, in her early 40s, has been a beggar ever since she became a widow about 25 years ago. But she is no small-time beggar. Sarvatia is neither destitute nor homeless. As Sarvatia confesses, “On Tuesdays and Saturdays when people throng the Kalibari, I earn between Rs 300 and Rs 400. Other beggars of the locality do not generally encroach on my territory.” On other weekdays, however, Sarvatia sells vegetables both in the morning and evening. Sarvatia boasts of having a ”comfortable home” behind Ashok Cinema besides a well-settled married daughter.
According to her insurance agent, Sarvatia has purchased two short-term policies worth Rs 3 lakh and Rs 1 lakh for which she pays an annual premium of Rs 31,000 and Rs 5,000 respectively. She also has a bank account with a hefty amount to boot. Interestingly, she has traveled across the country and even been on pilgrimage to many holy places – all while begging. According to her, she does it free, ”It’s fun traveling on trains free of cost. I board any train and beg till I reach my destination.”

I don’t know how we rate Sarvatia’s accomplishments in life. She might have gone for a profession that may not be a respected one, but many go that route, as they all can’t be Lal Muni or Kiran.

Alas! There are more of Sarvatias. Can’t we all help to create an ambience that produces more of Lal Munis and Kirans?

Posted in economy | Leave a comment

China Invades India’s Manufacturing Sectors

Posted on March 23, 2007 by indra

Last Sunday, I had to go to buy fruits and vegetables from the weekly bazaar that comes up near our house in Noida on the road, as Yamuna was sick. I was stunned to find apples from China along with those from Australia and the local sources, all selling at Rs 100 a kg. Let me confess, the Chinese ones looked more attractive because of their uniform pinkish colour and size. I kept on enquiring from the vendor and all others who also had them, ‘are they sure that these are from China?’ Let me confess, I bought only two of ‘Australian ones for Rs 40, as I never even imagined that the apples will be that costly and there will be so many buyers even in this weekly bazaar.

While I was talking with the fruit vendors, an elderly bearded man selling locks and knifes on his bicycle mounted mobile shop that doubles as repair shop too, came from behind and confirmed that he also now sells all Chinese products.

I read and wrote earlier about the Chinese kirpans used by Sikhs that are now all Chinese-make. The Chinese have captured the export market of kirpans too that was earlier held by Punjabi manufacturers. It made me blog on the subject. I had earlier written about the other items such as lamps and decorative pieces including Ganesh and Lakshmi statues that appeared in market during Diwali. I also read about the Chinese Banarasi and Kanchivaram silk sarees that are so much sought after by the Indian brides in North and South India for marriage displacing the original ones woven by the local weavers. All these items from China are certainly hurting the poor craftsmen and workers, and now fruit growers in Kashmir, Himachal, and Uttarakhand.

It serves the unscrupulous traders well who get these popularly demanded items from torchlight’s to table tennis racquets or badminton gears or crockery and regularly required electrical items such as transformers, capacitors, inductors, ICs or fluorescent lamps from the Chinese sources, as it gives them better margin. Chinese imports have wiped out almost 80% of the ‘gift segment of the domestic ceramic industry and forced the 60 out of the 70 units around Delhi to close down.

Are these the benefits of globalisation that all reputed economists such as Jagdish Bhagwati of Columbia University and prospective candidate of Nobel Prize talk of so loudly? How do these small manufacturers and poor craftsmen fight this unethical invasion?

‘Business Today’, March 24 issue has published a feature ‘The China Effect’ dealing how ‘in a variety of industries, cheap imports from China are killing local manufacturers. How much of it is due to China’s competitiveness and how much due to dumpings?’ It reports on sectors such auto components, silk and textiles, toys, ceramic tiles, bulk drugs, automotive tyres, and gifts and household goods that are reeling under the Chinese Price menace. But I got a shock when I read a news report that small shops of a town in Gujarat came out on roads to complain against the so called invasion of biggies of organized retail sector in big malls coming up fast that are selling cheap and unbranded produces of China and killing their business and livelihood. I was for organized sector in retails. But if these outlets go for importing the items of China, as claimed by the protesters, that are rejected by the European and Americans at very cheap price and sell to ignorant Indian customers, it is just simple cheating. China is having the first move advantage. The manufacturers in China developed the household items such as one for gifts for the developed market, and flooded the developed markets at cheaper price compared to what was available in those market from the local manufacturers because of the higher labour cost in those countries. Many big retail stores such as Wal-Mart got the items developed and manufactured by the China for the price advantage. Chinese created a huge manufacturing capacity for those items. Many of them were fakes of the branded items of the Western countries. For Indian manufacturers, it is difficult to compete in price if Indian traders bring the rejected lots that are basically seconds or scraps, and sell at cheaper prices. Again, the importers are resorting to many other unscrupulous means too such as importing kirpans that might attract more duty as toys that is charged lower duties.

In some cases as automotive tyres, the Indian manufacturers allege traders of undervoicing imports. Fuels account for about 30-60% of the manufacturing costs in case of crockery and pottery items, and the Chinese fuel costs almost one-third of that in India. Naturally, the question is ‘How can the Chinese fuels be that cheap?” Is the fuel cost subsidized by the Chinese government?

I am much more shocked with some news from the auto component sector that I am more acquainted with. While India exported Rs 69.3 crore of auto components to China in 2002-03 and imported only Rs 47.4 crore, ACMA predicts that by the close of the 2006-07, Chinese imports will touch Rs 1,127.6 crore. How can the Chinese offer cost advantages of 30-40% to OEMs? As reported, recently an Indian supplier of auto component was outbid by 55%. Indian manufacturers sarcastically call it Chinese black magic of pricing to outbid competition. One Indian manufacturer asked, “How can the Chinese quote below the price of the steel going into the component?”

How do Indian manufacturers, particularly the smaller ones with limited resources, face this unethical competition from China? Will NMCC (National Manufacturing Competitiveness Council), CII and Assocham have a cell of experts to study all these cases and suggest some means to compete to the manufacturers and the government? Can some NGOs such as Mr. Arvind Kejriwal of RTI fame and with a background of mechanical engineering help on the issue of this Chinese invasion in pretext of free trade and globalisation? Can the students and faculty of IIMs and IITs take up this challenge to study the challenges posed by the Chinese and come out with suggestions? While the bigger manufacturers as in past will have to focus on innovative approaches to compete through superior design and R&D and better management practices, the smaller manufacturers, craftsmen, and weavers need help of all sorts including the removal of anomalies of taxations such as higher import duties for raw materials than for the finished products and even subsidies of some sorts.

Indian manufacturers must face the competition and grow in scale to compete, but all who can, including the employees, must provide the input for that. Otherwise the consequences will be severe so far the employment potential of the sectors are concerned. Moreover, the new entrepreneurs will hesitate to enter in manufacturing sector.

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Germans shifting choice to India from China

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Corporate India’s Rural Strategies

Posted on March 21, 2007 by indra

Many bigger business houses in India are taking rural initiatives for getting into enormously large market of CK Prahalad’s ‘the bottom of the pyramid’ as well as to carry out their social responsibility.

Rural India is having more than 742 million people (or about 65 per cent of India) with rising incomes and aspirations. According to IRS data, over half of the 145 million rural homes in India earn between Rs 1,000-Rs 5,000 per month. Estimates put the rural market in India at Rs 80,000 crore.

It will be interesting to know about some of the Corporate India endeavours for rural India.

New Delhi-based DCM Shriram started the Shriram Krishi Vikas Centres in 1997 to do some value-additions to its primary business of selling urea, fertilisers and sugar manufacturing – all dealing with farmers. The centres offer the services of agronomists to local farmers across 100 villages in India. These centres are hooked to a regional centre in Alwar (Rajasthan), which, in turn, can plug into Delhi and several rural research institutes. The average number of queries the centre gets could run into thousands. For instance, in Punjab, farmers were not using potash as a fertiliser because of a three-year-old government advisory that stated that there was enough potash in the soil. Tests showed that this was not true any longer, and, therefore, productivity was dropping.

The first Hariyali Kisan Bazaar was born in July 2003. That meant stocking all brands of urea and fertiliser (besides its own) and tying up with fuel companies such as BPCL. As consumers started demanding more, the whole product range kept expanding to several non-agri products. These could be anything from apparel to schoolbags, Tata-Sky’s DTH service or insurance (ICICI-Lombard for weather and ICICI-Prudential for life insurance). There is currently a huge demand for banking services, but licensing issues hold the group back. Soon it will be rolling out the National Commodities Exchange (NCDEX) services to make future trading available to farmers. It has today a 54-outlet strong chain of rural supermarkets that offer everything the people there may need on a farm, and more. By the end of two years, the target is to have 250 Hariyali Kissan Bazaars nationally – each servicing an area within a radius of 15-20 km.

Godrej Aadhar oulets are also working on the same line. Farmers can get their soil tested for Rs 50 or pick up fertilizers or soil nutrients, in addition to buying groceries. Today some 31 Aadhar centers in India service 15-25 villages each. The plan is to take the numbers of the outlets to 1,000 in five years to service 20,000 villages. ITC’s Choupal Sagar outlets are extension of the same idea. Almost all these corporate houses are trying to eliminate the intermediaries to provide the best value to the farmers directly and avoid risk of cheating the rural illiterate lot. I wish they didn’t become too greedy soon.

As reported, Hindustan Petroleum has set up 589 common community kitchens (rasoighars) in 30 villages across India over the past two years to bring clean fuel and save time in gathering firewood. Now the girls go to school in many of these villages instead of going to collect firewood. HPCL makes losses on the rural rasoighars in addition to a loss of Rs 150 on every cylinder sold, but sustains for a cause.

Along with the Department of IT and Microsoft (and in some places, Hughes), the Indian government is setting up 100,000 (CSCs) common service centers across India. The kiosk is a computer center. A trained local runs it. These e-kiosks will offer everything from crop prices and insurance to tele-medicine and education. It will give the villagers daily inputs about the weather, prices, etc. The idea is to have one centre for six villages, so the government plans to reach all of India’s 600,000 villages by March 2008. Microsoft is working at tying in banks, financial institutions and other companies that might want to offer their products and services through these kiosks.Kisan Call Centres are another similar initiative.

The FMCG majors HLL with Shakti, and ITC with e-Choupal have already made its presence felt in rural India. Kodak, Shell, Reliance Industries, Microsoft, Dhanuka Sugars, Hughes, HDFC, ICICI, HPCL, Nokia and Tata Teleservices are plugging into rural India in their quest for growth.

Nokia has commissioned the Bangalore-based Centre for Knowledge Societies to look at how their new mobility could be used by villagers to jump over the social and digital divide between rural and urban India. As the 60 per cent of all growth in subscribers is now going to come from rural areas, almost every major operator – Reliance, Airtel, BSNL – has adopted a village to revolutionise communication. Tata Teleservices (TTSL) has started training programmes for teachers from villages to help them teach locals about telecommunication in UP. A few months back, TTSL launched the parivar offer (family plan), in Punjab. It allows one family, of 3-10 people, to connect to each other through a common network at a minimum cost of 10 paise per minute.

Several agri-product companies such as Mahindra & Mahindra or Dhanuka Sugars – previously content to sell just urea, fertilisers or tractors – are working on the same line in different forms. Reliance was forced to look at rural markets because its license for petrol retail was granted on those grounds. Reliance has specially designed small sized fuel pumps costing about Rs 4 lakh-7 lakh against the usual Rs 40 lakh-1.5 crore in cities. Each was designed to service an area within the radius of 10 km. The first of 60 pumps, covering 720 villages, was set up in 2005 in Tanna (Gujarat).

In a significant move to help the farmers of Uttar Pradesh, the State Bank of India and Nabard have joined hands to establish a “Farmers’ Club”. The club aims at enhancing the bargaining power of the farmers and artisans besides reaching out to the rural masses.

As everything from self-help groups to banks and the government get together, a network of physical and other services is beginning to find its way into rural India. If the initiatives of all these agencies are coordinated properly, the rural India will transform in next five years.

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Google logs into rural India
RIL`s jatropha plant to create 12,000 jobs
And Bihar too

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CM’s Janata Durbar Can Bring Necessary Social Changes Too

Posted on March 17, 2007 by indra

The news items emanating from the Janata Durbar of Nitish Kumar are sometimes exhilarating and heartening. Further, I heard Nitish Kumar is also visiting all the district headquarters as a means of routine contact with ‘aam aadami’ to have a feel of the problems and issues of the region. It is a great thing to do. I wish it could spread some necessary messages too. I wrote a letter to his e-mail.

Dear Nitish Kumarji,

It is nice to hear about your Janata durbar. I have some suggestions. I am sure you must be doing that, but still I wanted to express my views.

I wish the durbar or all such public interactions be also used to pass on certain urgent message to the aam aadami, as a total attitudinal change is required in the mindsets of the people of Bihar in particular.

One such message must be to appeal to all attending the durbar to send their children, all boys and girls, to the school. And the panchayats must ensure that. If necessary, some incentive or awards such as the ‘best panchayats with 100% children attending school’ can be instituted.

Another important message must go about the futility of the certificate of examinations obtained by unfair means at the examination centers, many times assisted by the guardians.

You have already taken initiative to stop lobbying (or pairabi) for transfer. But can you also pass a message that with huge number of state employees doing nothing, there is hardly any scope for employment in the state government, and the people must not look for the government jobs too much. Only solution to the unemployment of the youths is self-employment through small businesses after getting trained in skills that are in demand.

In three years time left with you, please do something so that Bihar improves its ranking considerably at least in education sector. Bihar and Biharis have only knowledge sector to prosper in the state or outside honourably.

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These durbars can serve the people in many ways. It can tell them how an ordinary woman named Lal Muni Devi earns her living honestly that can be emulated by others, particularly, as none in Bihar’s villages are without a house of some sort.

On one hand I get a shock of my life that Bihar doesn’t produce today even a single megawatt of electricity. On the other hand, to my surprise I found many households in Bihar’s remote villages are enjoying at least some connectivity with the world with solar plates on the rooftops, and are update with news of World Cup 2007 and entertainment from the 100s of private channels. I appeal to CM to provide special subsidy to underprivileged class to install solar energy sources. If DMK can go on distributing colour TV, can’t our CM help the poor get a light at home?

But my main worry is about the disinterest in almost all the people that I met about the education. Panchayats can play a big role with 50% women in it for everything including healthcare and education through effective ‘aanganwadi’ system. Schools must be reformed. Teachers must come out of political patronage and religiously take care of the children in the school. DMs must be given the responsibility to initiate and develop a good education hub in every headquarters with number of secondary and higher secondary schools, trade training centers, and an engineering and medical college. An innovative means must be found to get all the children above 14 years who can’t go for higher education with employability into some sort of skill building. Skill can be as basic as plumbing, carpentry, tailoring, haircutting, massaging, electrician and bricklaying. Teacher may be one who knows the skill and train the children. It hardly matters if Bihar can’t provide the jobs for them. If the government even with private agencies can train them, they can get better employment wherever they migrate be it Kashmir to Qatar.

He can also help in getting some social myths regarding caste-based professions broken. The farmers must diversify the cultivation pattern based on profitability, must breed more milking or meat producing birds and cattle of good quality as means of additional earning in the family. Many are doing that but the potential is huge with sure prosperity.

I wish CM took advantages of some of the rural initiatives such as one from Microsoft or ITC’s e-Choupal to digitally connect the rural Bihar to provide the necessary agriculture related services. As reported, “by March 2008, the Indian government hopes to set up 100,000 common service centres (CSCs) across India. These e-kiosks will offer everything from crop prices and insurance to tele-medicine and education. Footing the bill for half of them is Microsoft India.”

Bihar government is to be proactive to take the advantages of these initiatives rather than fighting here too the political battles. It will be anti-people.

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