दृष्टिकोण – Indra's Viewpoint

For a long time I have not written on China vs. India, though I did refer to China for its unique statistics of its progress. Though I am of opinion that both the country would have worked together to get the best from their strengths and prevailed over the rest of the developed nations who looked down upon them for a long time.

I read TCA Srinivasa-Raghavan’s article, ‘Dealing with Chinese crudeness’ in Business Standard today and I got tempted to get my readers go through it.

The Chinese take the wives of new mayors on a trip to the prisons where the older, convicted mayors are held. The Chinese ambassador has just blown a very rude raspberry at India by claiming Arunachal of India as China’s. This is typical of China, which has become a very crude and uncouth country. Successful in some ways, yes; but by and large, by any civilised yardstick, a massive failure.

The Chinese, as everyone knows, have a very focused leadership, even though mostly it is focused only on how to stay on in power. One of the things that these un-elected gangsters-as opposed to our elected ones-are discovering is that corruption gives them a bad name. So they have decided to do something about it. This consists of holding show trials and then shooting the accused. Several mayors, it seems, have been shot in the last few years. The lucky ones have been sent down for 20 years.

But this is not all. To demonstrate that corruption is a bad idea, the Chinese have started another wheeze. Every now and then, when a gaggle of new mayors have been elected, they take their wives on a trip to the various prisons where convicted mayors are held. The idea is to get the wives to have a word with their husbands as to what may await them if they get too greedy. But a little greed is permitted. The limits are defined depending on how well you have done by the boss.

The Chinese government also doesn’t have a very high opinion of its rural folk, though around 70 per cent of Chinese still live in rural areas. They are abysmally poor. But they don’t vote and that makes all the difference. So China siphons off wealth from the rural areas to the urban areas. Every rural Chinese parts with around 45 per cent of his income in one form or the other. About half of this goes towards maintaining a bloated bureaucracy in the countryside, which exploits the peasantry. Nor are there Medha Patkars or Aruna Roys in China.

I met a very experienced and senior Australian journalist a couple of months ago. She said she had gone to interview some peasants who had been thrown off their land so that some factories could be built. Within a few minutes a couple of policemen arrived and asked her to leave and they placed her under virtual arrest and took away her passport and finally sent her off after a few hours. Can we do that?

China also doesn’t allow trade unions. There is no right to association and as my young colleague Govindraj Ethiraj pointed out last Tuesday, let alone trade unions, it takes a dim view of even trade associations. Only the ruling party has the right to gang up and coerce the rest. No trade unions, no employee rights, hire-and-fire, what a lovely place, daddy!

China under a separate bilateral deal signed away things to the US by allowing the latter extraordinary rights and freedoms. But the interesting point is that in spite of what all the US can do to reduce the flood of imports from China and in spite of trying, it has failed. Why? Because the agreement didn’t say anything about the exchange rate! So the yuan remains undervalued and China’s trade surplus swells. China’s exchange reserves crossed a trillion dollars two weeks ago. How clever is that? But I have looked and looked to see if any one in China is criticising the central bank and the government. Right, you guessed it: not a soul.

China also gets up to all sorts of low trickery in the international arena. It has two major challengers in Asia-India and Japan. So what does it do? It helps Pakistan go nuclear to check India and North Korea go nuclear to check Japan, while it leaves itself free to do what it likes-like offering Muslim nations nuclear deals (Bangladesh and Egypt, to name the two latest “initiatives”). But everyone has very high regard for this country. The capitalists admire it because it allows people to get rich at the expense of the poor. The Communists admire it merely because it has styled itself communist. The question is: do we want to be like China? If not, please stop swooning over it.

China can be used as benchmark for development, but can’t be copied. India must search and evolve its own model. With our strength in knowledge sector and with help of technologies, every one must help becoming efficient, transparent and accountable.

CHINDIA’S CENTURY
Read ‘Secrets, Lies, And Sweatshops ‘
Friend or foe… India assesses what China means

National Manufacturing Competitiveness Council (NMCC) that has come to an inference that only with manufacturing growing 12% or more, India’s GDP can grow above 10% that is a necessity for eliminating poverty from the country in effective manner.

Manufacturing growth has averaged over 12% in the first six months of 2006-07. It picked up from 11.7% in the first quarter to 12.4% in the second. Historically, it happened before too. In the period 1993-96 India grew even faster pace of growth, even 15% in some months. And so some doubts the sustainability of the growth of manufacturing sector. What is the biggest difference between current developments and what had happened in nineties that can make the country feel comfortable now?

Perhaps all responsible for the development- Indian corporates, their financiers, the capital market, and also the regulators and policymakers have learnt from the necessity of competitiveness from on going globalisation of every sector.

Physical infrastructure still lacks the world class and scale, but it has improved to certain extent. The travel time between Mumbai and Delhi has halved. It can reduce further with some sincere approach to the execution speed of already sanctioned projects, be it port, airport or roads. For, the real problem seems to be a singular inability to execute decisions taken-whether completing a project (for instance, the overdue New Delhi-Gurgaon expressway or Golden Quadrilateral or NS-EW corridors) or fixing theft and loss in electricity distribution. How can rural India effectively participate in manufacturing without rural electrification, which is being implemented under the Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) programme, if states like UP, Bihar, Orissa, West Bengal, Assam and Jharkhand have backlog to the extent of 90%?
The topmost priority for the government must be to work out changes in the organisational structures of the project execution so we can achieve objectives agreed upon and do so in time. If Delhi Metro Project can do it, so can the others too.

Many things are happening so far manufacturing sectors are concerned. According to the CII Manufacturing ASCON Survey, 65% of the 125 sectors tracked have reported production of high to excellent growth (10 to 20% and more than 20%) over the period April to September 2006. According to the survey, PVC, switchgears, power cables, circuit breakers, castings, fluid power and nitrogen have all shown a strong growth from the basic and intermediate goods sector. In the capital goods sector boilers, distribution transformers, power transformers, industrial furnace, textile machinery, tractors, transformer and transmission line towers among the capital goods industry have led the growth.

The manufacturing sector seems set to enhancing its share in the GDP to the targeted 30%. The export performance of the manufacturing sector has been better with some sectors shifting to the excellent growth category. The survey pointed out that 17 sectors recorded excellent growth in exports with seven sectors in the high growth category, 10 sectors recorded moderate growth. It is interesting that CII is also working to catalyze 100 manufacturing companies to innovate and move towards becoming global leaders.

MNCs of western countries are setting up manufacturing shops and expanding in India. Indian medium and big manufacturing companies are acquiring companies in developed countries to expand their market and obtain the latest technologies. Videocon’s acquisition of Daewoo Electronics is the example and perhaps a case to emulate. Progress of Tata Motor’s Rs 1-lakh car project that can create a capacity of about a million more cars, appears to be satisfactory as per the media report.

However, there are some disturbing reports too that must concern all. Some of our manufacturers are giving up the manufacturing easily and preferring the Chinese cheaper import. CII and the government must look into the reasons. India needs more and more new entrepreneurs in manufacturing too.

Manufacturing must spread up to the villages.

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IIM-L adopts a village
I am happy to find some of my suggestions rather dreams getting realized. Perhaps, there are many enthusiasts thinking alike about the ways of developing the rural India that requires effective means to improve its earnings. When I once asked prospective MBAs in a class of a Noida’s reputed business school if they would be interested in working on rural development, I got very hesitant affirmation. As a surprise change, <a href="IIM-L adopts a village“>IIM-L students decided to adopt ‘the village, Chakarpurva in UP’ and have already interacted with the village folks to assess Chakarpurva’s problems. Once in a month, they have meeting with the village panchayat along with the block development officer to set goals, as well as to assess the progress of the work initiated,

It has happened under the leadership of Professor D.S. Sengar, a Fulbright scholar and chairman, student affairs. And certainly it is easy for someone from IIM-L ‘to put a call to an officer and get things implemented, because of the weight of the brand. Chakarpurva is a typical UP village with 300 inhabitants with a dirt track for a road, no primary healthcare center, no power, and a primary school, still to be recognized by the state education board and literacy level below 50 per cent.

 IIM-L students under the banner of Bhavishya, have drawn up a plan for Chakarpurva, and identified five areas which required immediate focus: ‘infrastructural development to tackle the lack of transport network and power; environment overhauling necessitated by the lack of underground drainage system posing a health hazard; cultural rejuvenation needed to counter social evils like child marriage and dowry prevalent in the village; social development in the field of education; and economic self-sufficiency to ensure that unemployment levels stayed low and credit got available on time.’

 Microcredit assistance, self-help women group initiatives are starting in January 2007. IIM-L students have set themselves strict deadlines and phase-wise implementation. They wish to channelise some corporate social responsibility to the village by implementing a novel conceptualise-initiate-transfer model wherein project ownership is transferred to corporates after a phase-wise completion.

The students are also trying to convince the villagers to show a little initiative instead of seeking help. Education is another lacuna they find, and three days of the week, the students teach children who cannot afford a formal education.

Let us hope the students of IIM-L will achieve what they are doing successfully in corporate world.

Involute Technologies develops Rural Entrepreneurs

In another story, Involute Technologies, a gear manufacturing company has taken an initiative to turn more than 30 farmers of Dhanore, a small village 40 km from Pune into entrepreneurs in the auto component business. Involute’s plant at Alandi (a small town 10 km off Dhanore) manufactures over 12 lakh gear components a year for clients such as Tata Motors, John Deere and Bharat Forge with turnover above Rs 60 crore.

About 30 farmer-entrepreneurs supply parts to Involute Technologies worth Rs 3.71 crore every year. The farmers in all employ 346 employees in their small workshops. Many owning their own land have given up farming as they found it less lucrative, and turned to manufacturing.

In 1992, a strike at Involute Technologies (IT) forced it to switch over to this business model. While training farmers and unemployed youth to fill in the labour requirements, it found many of the farmers getting into entrepreneurship. Again, when the order book of IT increased substantially, outsourcing of parts it manufactured to farmers was an effective alternative. Involute trains the farmers on the machine shop for two years. It then assists a worker in setting up his own manufacturing unit, either by giving him free space on the company premises, or by setting him up in a shed near the plant.

The best part of the deal is that these entrepreneurs are not bound to IT only and are free to sell to other companies as well. IT arranges to buy steel and get forged parts from suppliers. Then the farmer-entrepreneur on his second-hand machines completes the rest of machining operations such as cutting, grinding, and shaping as per the original equipment manufacturer’s requirements. All parts from the farmer- entrepreneurs produced are sent to IT premises daily for inspection for quality. IT also manages the logistics to maintain the stock according to the client’s requirement.

Involute Technologies supplies second-hand grinding, shaping and cutting machines (Rs 25 lakh-30 lakh) and recovers the cost in the pricing of the supplies from the entrepreneurs. The investment on the farmers’ workshops is one-time, and the farmers maintain the machines themselves. ? The model has drastically changed the face of Dhanore’s economy. Is it not the model that many bigger manufacturers such as Tata Motors, Hindustan Motors, and for that matter many others would have followed?

Direct sourcing from farmers

Reliance Retail has already started with Reliance Fresh with vegetables and fruits in Hyderabad. Reliance Fresh is trying to hit at the right points to make the supply chain efficient, unlike the traditional Indian food supply chain that is grossly inefficient. There are several intermediaries. Each adds his profit margin to the cost. Besides, there is huge wastage in transit. Farmers are the worst hit by these intermediaries. Farmers get the minimum negotiated. Reliance Retail plans to buy always from the farmer, and not from the mandi. For example, the leafy vegetables, brinjals, tomatoes and green chillies in the Banjara Hills outlet were sourced directly from farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of Andhra Pradesh. Already, a few hundred farmers have been hooked on to the Reliance Retail supply chain. In the next five years, that number will grow to millions. Even contract farming – by assisting farmers to procure high-quality seeds, fertilisers and other essential raw materials – is on the cards. By going to the farmer directly, Reliance Retail hopes to dis-intermediate the supply chain and eliminate waste. This means fresher products at lower cost. This is the model that can give the maximum price to the farmers, if Reliance doesn’t become unscrupulous to corner the maximum benefits at the cost of farmers. Other big business houses such as Birlas, Bharatis must keep this in mind.
Read
Leveling the Indian Playing Field?
PS: Read this column of Gurucharan Das ‘The price of potatoes’,who agrees with my views

Sudheendra Kulkarni, an IITian in an article ‘Ramcharitmanas and Hindu reform’ in Sunday Express’ has some interesting thing to say about the need of certain changes even in Holy Scriptures, if it serves certain purpose.

The following lines from Tulsi Ramayana: “Dhola gawanra sudra pasu naari, sakala taadan ke adhikari” (A drum, a rustic, a sudra, a beast and a woman – all these deserve to be beaten.) “Is this what Tulsidas says?” I said to myself in anger. “What kind of religion is this that denies dignity and justice to fellow human beings?” However, my subsequent reading of, and about, Tulsidas had convinced me that these lines were grossly misunderstood.

Since the lines appear in Sundarkand, I was eager to hear what Pathak (Guruji Ashwinikumar Pathak, brother of Harin Pathak, a BJP MP from Gujarat and famous for interpretations of Ramcharitmans) had to say about this most controversial aspect of Ramacharitmanas. Rather than evading it, he dealt with it elaborately by making three points. Firstly, the meaning imputed to the contentious lines is totally out of tune with the divine philosophy permeating Tulsidas’s Ramayana – that of God’s boundless love for all His creation, without distinction. Secondly, he emphasized that the word ‘taadan’, in the context in which it appears, means the very opposite of its popular meaning – namely, soft and careful treatment. But his third point was most important. “Ramcharitmanas was written in a different age. If some lines in it sound hurtful to any section of our society today, what’s wrong in simply changing them? Therefore, I have replaced the word ‘taadan’ with ‘laalan’ (loving treatment).”

Here was an exemplary case of textual revision of an important work in Hinduism. By rendering Valmiki’s Ramayana from Sanskrit in the language of the common man in his time, Tulsidas enshrined the epic in the hearts of millions of Hindus in the Hindi heartland. Gandhiji, for whom Ramanama was his “refuge in the darkest hour”, has written: “I derive the greatest consolation from my reading of the Tulsidas’s Ramayana. It takes a foremost place in the spiritual literature of the world.”

Yet, Gandhiji it was who said that even scriptures can, and should, be reinterpreted if they are found wanting. In the context of a debate on the Holy Quran, he wrote: “Every aspect of every religion has, in this age of reason, to submit to the acid test of reason and universal justice if it is to ask for universal assent. Error can claim no exemption even if it can be supported by the scriptures of the world.” (Young India, Feb 26, 1925) Therefore, the Mahatma would have been happy at the revision that has now been introduced in his favourite book.

I myself feel like deleting many words, particularly when Tulsidasji keeps on revering vipra (Brahmins). But I feel it will be unjustified to change the words in the text. It is for the people who misrepresent Tulsidas to be more flexible. They must not think of changing the contents of the books written hundreds and thousands years ago. Instead, they must take the good things from them and discard that are irrelevant in present situations. Words and sentences must not be used to malign our saints. We must understand the right meaning and context.

It all started with the BRICs report. It predicted that India and three others -China, Russia and Brazil – would be giant economic forces in the coming century. Surprisingly, the Indian economy is moving much faster than the BRICs assumed GDP growth figure of 6.5 per cent. India is growing at more than 8% and may soon get into a growth rate of double digit. Even the conservative NCAER agrees for 8.5%(?), though it fears that the Planning Commission’s ambitious nine per cent growth target for the 11th plan may not be achievable.

What will be scenario of the Indian economy by 2010, the year India will hold Commonwealth Games, barely 39 months away?

GDP: GDP climbed to about $690 billion in 2005 up from about $600 billion in 2003. With the current rate of 8 per cent of growth, GDP will touch $1 trillion slightly before 2010. But with the higher growth rate expected, the GDP may be better.

Passenger cars: India is expected to produce 1.1 million cars this year, and over 2 million by 2010.

Two-wheelers that keep middle-class Indians on the roads: India’s two-wheeler industry is the world’s second largest and will turn out 7 million vehicles this year. That can easily go up to about 12 million by 2010.

Colour televisions, usually one of the first electronic purchases that every Indian household makes: India will make about 11 million television sets this year and the production is likely to climb to about 20 million by 2010.

Hi-tech outsourcing, the sector that has built India a brand: Outsourcing is climbing at a steady 30 per cent annually and exports are slated to hit $60 billion by 2010. Some say it to grow to $100 billion.

Steel: Ram Vilas Paswan says that production of steel is set to overtake all the earlier targets and will touch 80 million tonnes (mt) by 2011-12, a 23 per cent jump over the earlier projection of 65 mt.

Manufacturing:
Tata Motors plans to roll out its small car by early 2008, perhaps from its Singur, West Bengal plant. And Tata Motors expects to reach a production figure of 5,00,000, or may be million. Tata Motors is building another Rs 2,500-crore plant for its super-hit mini-truck, the Ace that created a history of a sort. Tata Motors began rather modestly in mid-2005 with plans to produce 30,000 of these ‘last mile’ vehicles at its Pune factory. It ended up selling about 60,000 in the first year. The Uttaranchal factory is expected to turn out about 250,000 vehicles once it is ready in less than a year.

Maruti Udyog is investing almost $2 billion (Rs 9,000 crore) in the next five years, pushing up production from 600,000 to 900,000 in about three years. Maruti has many plans such as diesel engine manufacturing as well as contract manufacturing up to 4,00,000 cars annually for export. Auto sector has reasons for this optimism- very low auto penetration of huge market of India and low cost (at least 35% cheaper than US) quality manufacturing in India. Auto sector is over-enthusiastic, as India’s per capita income will reach about $1,000 roughly around 2010. As established, the number of people buying cars jumps dramatically when per capita income touches about $1,000.

Hyundai Motors and M&M are other companies that are having big plans in auto sectors.

By 2010, the Indian auto industry may actually become a hub for sourcing components and for the manufacture of small cars for export. Estimates indicate that the four-wheeler auto industry is projected to grow at a CAGR of 9% between 2005-2014 and the two-wheeler industry at 16% in the same period. Auto component export may reach about 20 billion by 2010.

Retail: Kishore Biyani’s recently re-named company Future Group is shopping to push up store space in malls and plazas across India from 4 million sq. ft to about 8 million sq. ft this year; and aims to touch about 30 million sq. ft by 2010. Biyani hopes that his group will grow from its current $1 billion turnover to anywhere between $6 billion and $7 billion by 2010. The Retailers Association of India (RAI) expects that organised retail will climb from about 18 million sq. ft currently to almost 60 million sq. ft by 2010. Reliance Industries’ Mukesh Ambani plans to spend about Rs 25,000 crore (that’s roughly $5 billion if that helps to bring all those zeroes into perspective) over the next five years. The Aditya Birla group has readied a blueprint for India’s second-largest retail rollout with Rs 15,000-crore investment in over 6,000 stores in three years.

Telecom: Ambitious Maran, the young minister is now talking about having 500 million phones by 2010. India has become world-beaters in telecom with about 170 million phones ringing already. After clocking a world record by adding over 6 million subscribers in September, surpassing China, India is expected to have added another 7 million in October. India is claiming the ‘fastest growth’ crown from the Chinese. Some Other market research companies have estimated that India will, in fact, overtake China when it comes to selling mobile instruments by around 2009. Nokia, LG and Motorola have put up factories to manufacture mobile phones after years of saying that the Indian market was better supplied from abroad.

By 2010, India, once being hopelessly outclassed by China, will be the second largest manufacturing nation of the world. Engineering outsourcing is another potentially great sector that can suck all the technically competent Indians.

Both high-tech sector as well as manufacturing will require huge lot of skilled technocrats. This year IT sector plans to employ 1,00,000 freshers (expected shortage 5,00,000 by 2010). The main challenge will be for the educational institutes. While Maruti’s Jagdish Khattar demands a port tailored specially for car exports, Karnik requires the creation of six ‘knowledge cities’ from where InfoTech giants can reach out to the world.

And may be we can sort out our ways to reach bilateral trade target of US$ 50 billion by 2010 between Chindia.

PS: T N Ninan: All in a week’s work

Renault to Make Autos With Indian Company
Reliance ripple: Retail rivals ramp up

It was early morning 3.30 a.m. I thought it is going to be good day after I completed reading few ‘slokas’ of Gita before I started surfing news. The first news itself enthralled me.

Transparency International (TI), the Berlin-based anti-corruption watchdog, has brought a good news this year. India ranks now No. 70 on its Corruption Perception Index (CPI) out of 163 nations, a distinct improvement over last year, when India was at No 88.

And there are already people to give the credit of this reversal of its downward slide on the CPI, to the Right to Information (RTI) Act.

However, Vice-Admiral (retd.) RH Tahiliani, president of TI-India appeared pessimist. “Indians give Rs 21,000 crore every year as bribes,” he said.

US is ranked at No.20 (7.3). India shares the 70th rank with nine other countries including China, Brazil and Egypt, all of whom have scored the same (3.3). Lesser score implies more corruption. Should the nationalists be happier that Pakistan is ranked at 142 (2.2)?

TI’s Corruption Perception Index draws its conclusion from multiple expert opinion survey polls that compiled perceptions of public sector corruption from across 163 countries. It involves a total of 12 agencies as source to the survey, which includes World Bank, Political and Economic Risk Consultancy, UN Economic Commissions for Africa, World Economic Forum and World Markets Research Centre as source to survey. The survey in India covered 11 public departments that included police and judiciary as well as education and hospitals.

Should Indians take some solace that thing are improving though slowly? I personally go by R H Tahiliani, Chairman, Transparency International India that “corruption would only go down if people refuse to pay bribe”

I was pretty delighted and as usual I left for my morning walk after Yamuna returned. In my third round, my acquaintance Gehlot joined me. He is still a superintending engineer in PWD, UP. Gehlot respects me and discusses things pretty frankly. I wanted to have his views on a recent incident in nearby Ghaziabad in which some 17,000 aspirants of police jobs went on rampant destruction of property including molestation of women. As Gehlot knows the region for many years with number of relatives in the area, I thought he would be better informed. I was shocked by his version of the reasons for the incident.
“Sir, what can these people do if they can’t get the job for which each of them had already paid Rs 4 lakh?”

“How do, you know that?”
” Sir, I had gone myself for the appointment of the son of my driver to the people representative of the area who could get that done. He told me curtly that I was a little too late.”

I was reminded of what Pathak one of my office assistants of HM days told me, when I was in Kolkata last time. He has got his only son in navy. He had to pay Rs50, 000. I never believed that there is so much of corruption in appointment to so low category a job.

On enquiry, he further added that 90% of the contracts for development work that are in abundance these days, are going to one community Yadav in UP. None can raise his voice. All these contractors pay 10% of the contract value in advance to the minister, who happens to be the brother of the CM. Should I be happy or morose after hearing the story from Gehlot?

I remember my PhD friend and rice mill owner at Kichha telling me that 60 % of the output of the mill are to be given to FCI and for that a fixed 26% of the value must be paid to the officer of FCI(Food Corporation of India).

What should I think about the improved Corruption Perception Index of India?

I shall keep my hope. I further read the text of a cryptic SMS that Bihar DGP Ashish Ranjan Sinha sent to senior police officers, including district SPs, over the past few days

”Ask your officers to be honest. Trap cases against police on the rise. It’s denting the image…”: DGP

As report comes from Bihar, the most corrupt of the states, the raids against bribe takers have jolted the state police headquarters to cause enough worry about image. Even Bihar CM seems buoyed by the success.