Misplaced Views of Ruchir Sharma about India’s Northern States

Posted on May 12, 2012 by indra

Ruchir Sharma in the chapter on India’s economy of his widely acclaimed book ‘Breakout Nations’ opines,’The centre of economic dynamism is shifting from the south and parts of the west to the major population centres of the central and northern heartland.’

“In the 1980s, when India first began to reform, economic growth increased from 3 per cent to 5.5 per cent, propelled mainly by the emergence of technology and outsourcing industries in Karnataka and Tamil Nadu. Back in 1981, incomes in the most-developed states were 26 per cent higher than those in undeveloped states, and that gap had grown to 86 per cent by 2008. Predictably, this produced a certain arrogance in the southern states…. Southerners saw themselves as harder working, better educated, and more ready to compete in the world. Bihar became the butt of southern jokes that India could end its running territorial dispute with Pakistan by giving up Kashmir, so long as Pakistan took Bihar too.

Soon thereafter things began to change, and in recent years the north has been growing faster than the south. Between 2007 and 2010, the average economic growth rate of the southern states decelerated from 7 per cent to 6.5 per cent, while that of the northern states accelerated from 4.5 per cent to 6.8 per cent.

Chief Minister Nitish Kumar stormed into office in 2005. Bihar started to function, then to fly. Now its economy is growing at 11 per cent, the second fastest in India, and Nitish is lauded as a model of what a straight leader can accomplish in a crooked state.
….. the formerly dynamic southern states seemed to a hit a wall of complacency. The economy in six Indian states grew faster than 10 per cent in 2010, but none of them were in the south.

Even when India’s growth dipped to 6.9 per cent in the fiscal year ended March 2012, the northern states as a whole showed a slight year-on-year acceleration, with the bulk of the deceleration attributable to the west and the south.

(Interestingly,) India’s southern states still have a per capita income only slightly above the national average of $1,400.
Literacy rates are rising faster in the north than the south, evidence that the new leadership is taking advantage of their demographic potential: half of India’s under-15 population resides in just five underdeveloped states—Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan and Orissa.”

While the Ruchir Sharma’s statistics might be right, I don’t find the Northern states coming up anywhere near to the Southern states. And my main skeptism is due to poor standard of education that can certainly not only be gauged by the increasing literacy or demographic potential.

The standard of primary and secondary education in the Northern states that is much less urbanized than the south remains extremely poor. It’s more so because of the quality of teachers and the absence of any measure to make them accountable or motivated.

The GER in higher education is dismal with gross neglect in creating intake capacity over the years for quality higher education, particularly in professional courses such as engineering and medicine or specialized science and financial subjects. The states have hardly taken any significant step to improve the learning atmosphere in the colleges at large that admit students for pass course humanity and science courses but do hardly ensure regular teaching by quality teachers to complete the curricula. All the thrust is still on making the students pass examinations by any means, even the unfair ones knowing fully-well the uselessness of such certificates for becoming employable or helping anyway in self employment.

While in US I get more and more convinced that the explosion of professional colleges in thousands in Southern states not only catered to the students of the northern states but also provided the manpower requirement of the developed countries such as US and UK. Majority of the NRIs among the doctors, engineers, bankers and other professionals are from the Southern states. Even the list of distinguished American Indians in any field of activities consists of the persons with origin in Southern states.
Northern states and particularly their politicians must do better than what Southern states have achieved in higher education to compete and get into the category of developed states. (Andhra Pradesh, which has 705 engineering colleges with the capacity of 3,04,200 students.)

For India, the cost of illiteracy is $53.56 Billion. Can someone estimate the potential GDP rise with enrolment ratio of the students getting into higher education going up to 50%? It is anything between 12 to 20 percent, as the data appearing in media keep on giving different figure. Is my expectation very high? The US has already a ratio of 84%.

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A Day when in New York

Posted on May 10, 2012 by indra

As usual I get up pretty early in the morning. It has continued here too. And even with the constraints of my poor eyesight, I sit on the laptop and waste some time. Actually I have hardly an interest in American politics so I don’t go for browsing news so early in morning. I enjoy making tea when all others in the family are still sleeping.

Rajesh lives in Little Neck in New York. It’s a locality with Korean and Chinese as landlords. The architecture of the independent houses is a mix. Rajesh’s landlord is a nice Korean with farming background. He has kept a big enough backyard where he grows different vegetables for his own consumption. He hardly buys any from regular shops. But as the Korean cooks, we get some pungent smell. Shephali sometimes uses incense sticks to make it tolerable.

I enjoy my morning walk the most in US because of the cleanliness, greenery and flower beds along the user-friendly pedestrian paths that one finds everywhere in US.


From Little Neck, New York

Unfortunately, Noida though relatively new have not been able to build pedestrian paths along its streets and has hardly bothered to keep its vacant land green. I really get morose when I go out there for my morning walk. Even Svanik who is hardly about 8 pointed this out. He really pointed out the missing pedestrian path and trash bins in Noida. He was also wary about the dust and dirt in the Noida air and kept on closing the main door.

However, in this part of New York, the cars remained lined along the street as it is in Noida, though many a houses are having its own garages. The domestic trashes are placed outside by the residents in disposal bags and taken away once in a week. It’s is certainly easier because of proper town planning.

During my morning walk I hardly find anyone but few kids, sometimes with their mothers going to the local schools. I go up to North Mills School where Svanik goes and stand for some minutes at that crossing watching a woman assisting the kids in crossing the road. Rajesh takes Svanik in car.

After returning from morning walk, we go for breakfast that hardly requires an Anil or any cooking. Microwave heats up the milk and varieties of tempting cereals do the rest. And around the time corresponding to 8PM in India, my iPad provides me the services of my favourite news programmes of NDTV 24×7.

We finish our lunch by 1.30PM or so. Rajesh brings Svanik from school by 2.30 PM. He keeps on playing alone with various gadgets and watching his shows on TV. I sleep for a while and then get up to go on my laptop that has by then the Indian newspapers of the next day on its sites. It happens when the people in India are sleeping. Internet has certainly bridged the distance and brought loved ones face to face. Today many of the family members who matter are on Skype. Perhaps every day some new developments are coming up in the field.

Unfortunately, Shephali got a sprain in her leg right on the first day we arrived in New York. Medical care in this country is far below our expectations.

However, we went out in the afternoon or evening on some days, be it to East River or Brooklyn Park in Manhattan area, for a movie like Avengers, or for a dinner in Indian restaurant, Diwan.

This will be perhaps the last time we are in this area. Shephali and Rajesh are shifting to Austin in June. Shephali will do his fellowship in psychiatry and Rajesh as usual will be working for his company in California from home.

While returning to India in August we shall have to remain in airport itself before boarding Air India, if the airline resumes working. We are worried about the possible inconveniences. Why can’t the employees be put behind the bars for causing the monetary losses and immense mental agonies to so many innocent customers?

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Wanted a President for the most populous Nation!

Posted on May 6, 2012 by indra

The nation is going to have a vacancy for the highest post its constitution has created. The incumbent president made the people to rethink if the majority party be allowed to select a similar person loyal to the first family or someone big enough for the post is searched. Should the person be political or apolitical? While Dr. Rajendra Prasad could be a benchmark for political president, Dr. Radhakrishnan would certainly be called the best among the apolitical ones with Dr. Abdul Kalam closely following him.

Though the president of the country is just decorative one but in some political situation, he may be required to play a very critical role. With the end of clear majority for one political party in Lok Sabha election, his role becomes very crucial. And that is the reason for getting a person loyal to the party in race becomes necessary. Many past presidents expressed their difference with the then prime minister and caused political concern.

In the recent past, Abdul Kalam though a technocrat by training, proved to be a very good president. His name came again this year. However, Sonia still doesn’t back his candidature. She will not leave any stone unturned to bring in a loyal president who can play a favourable role after the crucial general election in 2014.

In a shrewd political move, Sonia could push the first woman president, incumbent Pratibah Patil in Rashtrapati Bhawan. She could have certainly selected a better woman candidate. But stranger was the naming of an old hardcore politician by the main opposition party making the win of the incumbent easier.

It’s strange that the media or the elite groups of the country hardly debate the issue seriously. The activists and intellectuals could have suggested some names as the best choice for the post. However, in absence of any such move, the election will remain a total political event. BJP does hardly matter with its getting an untouchable tag because of its brand image of a party of the caste Hindus. Every other political party is ready to go to any length to appease the major minority community.

Sonia has not zeroed on any single name. Media speculates that it will choose between Pranab and Ansari. Left to Sonia, Ansari will get preference, she does hardly consider Pranab loyalist.

The major opposition party could have selected some names that could have divided Sonia and her allies. But I don’t expect that to come. Jaswant Singh is certainly not the right choice.

Why can’t the nation select persons such as Girish Karnard, Namwar Singh or RA Mashlekar, or for that matter the first family’s loyalists Sam Pitroda, V.KrishnaMurthy or Prof Yashpal as president? There may be hundreds of distinguished Indians in many fields who will be certainly better as president than the present president. However, none may be as lucky as the incumbent.

It is painful to see the whole nation as mute spectator, confused or helpless permitting the so-called representatives of the people taking any quality of decisions in name of democracy, be it on corruption or alleviation of poverty, growth or inflation, PDS or land acquisition.

Can the country go on moving ahead in spite of policy paralysis and without efficient governance?

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India’s Slowing Economy and Ruchir Sharma

Posted on May 3, 2012 by indra

It started with India’s own chief economic adviser Kaushik Basu. Basu expressed his doubt about any reform coming before 2014 election. Soon after came the bomb blast from Standard & Poor. It was followed by Moody’s dismal remark about Manmohan’s government: “(Manmohan) Singh is an ageing technocrat who now appears tired of the rough and tumble of Indian politics. This leaves the national reform process in limbo.” Moody’s Analytics termed the national government as the “single biggest drag” on business activity and named Congress’ first family behind the failure. Soon thereafter, IMF also cited governance concerns and the tardy pace of project approvals for a moderation in economic growth.

But more shocking but interestingly refreshing were the views of Ruchir Sharma, Global Head, Emerging Markets, Morgan Stanley Investment Management, and author of ‘Breakout Nations: In Pursuit of the Next Economic Miracles’, for which Fareed Zakaria, Editor-at-Large, Time magazine has said, “This is the best book on global economic trends I’ve read in a while.”

In last week, Ruchir and his book got the maximum media coverage in India. India’s middle class and intellectuals listened to his views about India’s economy and its prospect to be an economic power with immense interest and concern.

I watched a NDTV programme on ‘Breakout Nations’ anchored by Pranay Roy with Ruchir Sharma in the presence of YV Reddy, the former governor of RBI, Montek Singh and Sunil Mittal of Bharati Airtel. Ruchir Sharma went on with his revelations made in ‘Breakout Nations’ and the others agreeing quietly with his inferences. After the idea of BRICKs propounded few years ago, Ruchir has come out with a list of prospective ‘Breakout Nations’. The book has a chapter on India too, but it also has many other nations among the probables such as Turkey, Indonesia? But here I present some of his views on India’s economy:

‘It was the rising tide of global liquidity and not anything unique to India that accelerated its growth rate from a level of around 5.5 per cent to 8-9 per cent between 2003 and 2007.’ Will it make any difference in the attitude of the present government?

“The history of economic development says that unless you systematically reform, you cannot grow in a sustained manner, which is what China has done,”

Anything less than 7-8 percent growth will not make India a `breakout nation’. On the per capita front, while for a country like Korea with a per capita income of over $20,000, it would feel like a boom if it grows at 4-5 per cent, for a country like India with a per capita income of $1,500 it would feel like a recession.” Will the government work hard and try to find ways and means to go for the growth shaking off its complacency?

Amongst the BRIC nations, India is most likely to break out since it has the advantage of low per capita income of $1,500, more unproductive resources in the economy, more unemployed and under-employed people who can be brought up in the urban areas. Despite such advantages, India is not the fastest growing economy in the world today. His worries centre around the government’s rising expenditure and the slow pace of economic and social reforms.

According to Sharma, businessmen were finding it more and more difficult to do business in India and would rather take their money out. “My confidence in India will increase a lot when I see domestic businessmen willing to invest lot more at home rather than diversifying,”

According to Sharma, “Growth is coming out of states increasingly and the quality of governance is improving there, but at the Centre it still remains very poor. And the reason for India being a ‘breakout nation’ is its states.”

India’s growth fell from 8-9 per cent to 6-7 per cent and its market fell 35 per cent in dollar terms — so, ‘expectations’ are key.

‘China has more billionaires than India, which is to be expected, but the net worth of China’s billionaires is 4 per cent of its GDP — it is 17.2 per cent for India.’

Basically, a lot of churn among wealth generators is desirable. Preferably, these billionaires are come up in non-government-related sectors (tech, for instance) and there’ll be no backlash.

India had a lot of churn and that seems to have stopped now. 9 of the top 10 Indian billionaires in the 2010 Forbes list were holdovers from the 2006 list. The top 10 Sensex stocks account for two-thirds of its total value; in the case of the Dow this is half.

According to Ruchir, India has a 50:50 chance to get in as breakout nation. However, many states of India are breaking out, while the Centre isn’t.

India will have to take risks. In the 1990s, India did things that paid off. Keep doing them, not doing anything is wrong. Don’t do MGNREGA that keeps people on the farm.

‘The country has a high chance of becoming a “breakout nation” only if it does not grow complacent, avoids becoming a welfare state, brings reforms systematically and globally, and commodity prices fall.’

Even a lay man can suggest something that this government is not doing. Why is Prime Minister not taking the country men in confidence? Why is he not talking with a core group of young economists instead of consulting only the old guys with set ideas? Why is the government trying for a wider consensus on the second generation of reforms to keep the economy on a 9% growth path?

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India Makes It in Manufacturing

Posted on April 30, 2012 by indra

A country that can design, manufacture and launch Agni V, RISAT-1 and Missile defence system has obviously the manufacturing skill and potential to get into the global market as a great manufacturing power. But why then India remains laggard in manufacturing to contribute a share to GDP comparable to other Asian countries? While a considerable number of private manufacturing companies associate to these high tech projects, a huge potential still remains.

Mc Kinsey has been in the consulting role for India’s manufacturing sector for many years. In one report, ‘When to make India a manufacturing base’ in September 2005, McKinsey considered India lagging behind the rest of Asian counties in manufacturing. Multinational corporations never took much initiative to make India its manufacturing base. And perhaps the main hurdle for getting into globally competitive manufacturing businesses at that time was the poor level of infrastructure such as power, road, and port.

In March 2012, McKinsey analysis finds that rising demand in India, together with the multinationals’ desire to diversify their production to include low-cost plants in countries other than China could help India’s manufacturing sector to grow six fold by 2025, to $1 trillion, while creating up to 90 million domestic jobs. It advises on how multinationals can win in India. By 2015 the market for manufactured goods from low-cost countries will more than double, to nearly $8 trillion a year. China will probably capture much of the growth. But as McKinsey estimates, ‘up to $5 trillion a year will be up for grabs as global companies seek to diversify production and sources of supply beyond China, both to address rising factor costs there and to chase domestic demand in other countries’. And India must grab that potentials at all cost.

For quite some years, India at least wishes to improve upon the manufacturing sector. It reflected in setting up of National Manufacturing Competitiveness Council that finally culminated in recently accepted National Manufacturing Policy.

With my association with auto sector, I can vouch for the progress made by the country in manufacturing sector. There is hardly any auto sector globally known company, be it in the business of commercial vehicles, passenger cars, two-wheelers or even tractors and naturally the components that are not present in India with its own manufacturing facility. Many have made their India facility as the global hubs for certain platforms of vehicles. While the older traditional locations such as Pune, Chennai, and NCR expanded its manufacturing facilities to world class standard and added product development centres, new manufacturing clusters are also growing. One such is coming up in Gujarat around Sananda that started with Nano manufacturing facility.

Power equipment manufacturing that was the monopoly of BHEL has also seen addition of some big private manufacturing players such as Larson and Toubro, and Bharat Forge. I don’t know if these can stop the onslaught from the Chinese power equipment manufacturers from getting the major orders from the new power plants.

It is interesting to note that foreign companies keeping on considering India in their priority and expanding the manufacturing. Recently, ZF Steering, General Cable and Piaggio did that.

The government has kick-started domestic electronics manufacturing by pegging its huge orders to value addition done in India. As estimated, the import of electronics will be second only after crude oil. India’s electronic industry must get a boost up with the government encouragement.

Innovation plays a key role in determining which countries and companies can succeed in global manufacturing looking two decades down the road. Over the years, India has significantly improved its innovation capability, be it Tata Motors or Mahindra and Mahindra or Godrej or many other small and big manufacturing companies.

However, the government can further provide the boost to manufacturing by going aggressively in opening sectors such as defence and railways. A transparent system in government ordering and procurement may indirectly help manufacturing in a big way. The unscrupulous vendors from the countries such as China oil the people in the government and even the defence services to block locally produced manufactured goods. The recent story of Tatra and BMEL shows the loss to the nation’s manufacturing by preferring to continue with screw driver technology instead of phased local manufacturing.

It’s unfortunate that the big industrial houses as well as young entrepreneurs still hardly show preference for the setting up of manufacturing businesses. The world is getting into Third Industrial Revolution through digitization of manufacturing as reported in ‘The Economist’: ‘Instead of bashing, bending and cuttng material the way it always has been, 3D printers build things by depositing material, layer by layer. That is why the process is more properly described as additive manufacturing. Additive manufacturing is not yet good enough to make a car or an iPhone, but it is already being used to make specialist parts for cars and customised covers for iPhones.’

India still remains laggard in keeping itself contemporary in manufacturing. Indian technocrats must excel in manufacturing.

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Next President: Why Kalam Again?

Posted on April 26, 2012 by indra

Even when I am in New York, it is interesting that the Internet has kept us so near to my country. I watch the most reputed news channel on my i-Pad as I used to do in India while Yamuna would be watching her favourite serials on TV.

For some weeks, many names are appearing in media as the candidates for the most coveted post of the country. The country will soon elect its president. Mulayam and Lalu appear to be still important in the politics of the country. After winning UP assembly election, Mulayam has improved his political weightage. He is playing a double game of siding with Sonia as well as pretending to have independent view. He has tossed the name Kalam. He has kept on claiming that it was he who made Kalam a President last time. Mulayam wishes to find out the acceptance of Kalam and also please the community that has made him the king of UP.

Perhaps, Mulayam also expects someone to put forward his own name in the fray. After passing on the chiefministership of UP to his son and little chance of becoming Prime Minister, perhaps the next best option for aging Mulayam will certainly be to get into the president house. Some have already proposed his name.

Kalam still appears to be the most popular choice if we go by the media report and polls. However, I don’t think that he would go for the race without a consensus on his name. Moreover, it is shameful that a country of 1.2 billion has only one person good enough to be the president. I still like him, his Gandhian dream of PURA and his inspiring dialogues with the younger generations visiting all over the country. But I will prefer someone else this time.

Lalu has put his weight behind Ansari, the present Vice President, perhaps after getting a hint Sonia will also perhaps go for Ansari. The preference for Ansari is again to please the important minority community as additional factor.

It is unfortunate that none of the political party consults its legislators. It is the head of the party or the high command who decides. Others just vote based on whip in our democratic system.

Unfortunately, none of the two major political parties-Congress and BJP wishes to elect some apolitical person as president. However, many names are floating in the media. I myself and many would have preferred one from the apolitical lot.

My own preference will be for one from the three- Gopal Krishan Gandhi, the former governor of West Bengal, NR Narayana Murthy, and Sam Pitroda. All of them can command respect also from the international community. Besides these men, the distinguished former heads from judiciary or academic fields deserve considerations as the next president.

I am sure every one of the persons mentioned above will be better than the incumbent.

I wish a public debate could come out with a panel of five distinguished persons out of which the legislators could have elected one.

However, as it appears, in coming years the president of India will be only from the minority, Dalit or a woman. No one from so called upper caste even with all other qualifications and capability can get into Rastrapati Bhawan. Am I becoming caste-biased?

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Indian Economy: Auto Sector in 2011-12

Posted on April 17, 2012 by indra

Over the years, India has joined in the race of manufacturing nations in many areas. Auto sector is one where India came from behind and today it as one of the largest selling market. India’s auto sector for the first time crossed two-million-mark of car sales. And even in the gloomy global economy, it grew. Auto sales, be it of the passenger cars, two-wheelers, or commercial vehicles, are good indicators of a country’s overall economy and the aspirations of the people. Besides creating employment in the manufacturing plants and auto components parts manufacturing facilities, it also enhances the engagement in service sectors such as dealers and after sales service providers at all levels.

The sector creates employment in big way for the grassroots level of population with its demand of drivers. In India while the top end car owners employ chauffeurs, even a good percentage of owners of the compact cars also still prefer to keep drivers. Each commercial vehicle creates an employment of about 5-6 persons, while the three wheelers create self employment for the people, as these vehicles are in use for transportation of passengers as well as goods.

Siam announced the auto industry sales figures for the last year.

The passenger car sale in the domestic market during 2011-12 was 2,016,115 units, and the projected passenger car sales growth at 10-12 per cent in 2012-13.

The total sales of commercial vehicles, in FY12 were 809,532 units, up 18.2 per cent. The segment is pegged to grow by nine to 11 per cent in FY13.

The three-wheeler segment saw a decline of 2.4 per cent at 513,251 vehicles in FY12, Siam has projected five to seven per cent growth.

The total two-wheeler sales were 13,435,769 units in 2011-12. Interestingly, it is the rural region that has kept the sector growing so fast. It showcases the aspirations of rural young men.

India unlike China performs well in export of vehicles of all types. During April-March 2012, the industry exported 2,910,055 automobiles registering a growth of 25.44 percent. For the first time in history car exports crossed half a million in a financial year.
Almost all the global auto makers who have set up manufacturing plants and some even the development centres, are doing good business. For some of their platforms, India has become their manufacturing hubs.

One can also take pride in the domestic players such as Tata Motors, Mahindra and Mahindra, Ashok Leyland, Hero MotoCorp, and Bajaj Auto that are on the road to become global players. It is evident from the growth in volume of production and their acquisitions abroad of manufacturing companies and R&D facilities.

Mahindra and Mahindra is process of setting up an advanced engineering centre for R&Din Chennai.

The Engineering and Research Centre (ERC) inside the Tata Motors‘ factory in Pimpri is the nerve-centre of the research and development effort. Today, Tata Motors has about 5,500 people working in R&D spread across India and the rest of the world.

But a more interesting is the story of Hero MotoCorp Ltd that is one of the largest two-wheeler makers of the world. It has gone for building its own R&D capability after parting from Honda of Japan. ‘Hero’s newly created 300-member strong research and development team will be working closely with the engineers from Erik Buell to develop motorcycles. Erik Buell is expected to provide design inputs while Hero will develop its own engine with the help of Austria-based AVL (Anstalt für Verbrennungskraftmaschinen List).

India’s auto sector is moving on the right course making almost all of the global manufacturers of passenger cars and commercial vehicles from the countries such as Germany and Japan to rush in India.

I, myself wait for Mahindra Mini Xylo to be launched to decide between that vs. Maruti Ertiga as my next vehicle.

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India- The Reasons to be Hopeful

Posted on April 14, 2012 by indra

Many had gone abroad for higher education, got opportunity and placed with good companies with six figure salaries and lived a much better quality of life. Some have returned to reinvent new careers in India even on meager remuneration.

Some instead of opting for working as a cog in the wheel on salaried assignments in respected companies decided to go for their own enterprise to try out their own idea of business and are making waves with their futuristic ideas and innovations. The story of Anish Joel, who runs My Earth Store in Dharamsala in Himachal Pradesh, is one. My Earth store promotes organic and eco-friendly products made by NGOs and rural communities. Foradian, a small-town venture at Kasargod near Mangalore is another example.

Some of the young men and women had worked hard as students and got over the hurdles of the most difficult entrance tests of the world and had joined IITs, IIMs with many sweet dreams, passed out with laurels that would have fetched huge salaries and the opportunities to work in the coveted MNCs to lead a comfortable life. However, they decided to work under the government scheme to spend 2 years assisting collectors in Maoist areas.

5 IIM graduates passing out in 2012 have decided to revamp the entire education system through their unique business models.

And the few of the farmers took risk and went for a new way to farm. Darvespura village in Nalanda district of Bihar has added another first to its name by setting a world record in potato yield. The name sake of Chief Minister Nitish Kumar, has harvested 72.9 tonnes of potato per hectare surpassing the earlier yield record of 45 tonnes per hectare held by farmers in the Netherlands.

And it is not true that India lags in R&D. India currently has an R&D talent pool base of over 200,000 engineers growing at an average of 9 per cent a year for the last five years. Further the R&D segment witnessed a 13% salary hike and has managed to control attrition levels. The data show the satisfaction and achievement of the researchers. According to Zinnov, nearly half of the world’s largest R&D spenders have their centres in India. Interestingly, many non-US companies have started looking at the country as a viable R&D investment option and planning to set up R&D centres in this lucrative market. At present, about 28 per cent companies with HQ in Japan, EU and APAC have their centres in India and this is likely to increase.

India’s indigenous development of the products for the security of the nation showcases the potentials of Indians.
India has successfully carried out the maiden test flight of its second indigenous Airborne Early Warning and Control System aircraft in Brazil.

India is well ahead with its nuclear triad (ability to launch strategic weapons from land, air and sea). However, the indigenous nuclear-powered submarine INS Arihant will kick off sea trials this year.

There are also certain achievements that must make every Indian proud. Perhaps India is unique in conducting all its election electronically on EVMs even with its largest electorate in world.

India has also undertaken the Unique ID programme, which will enrolled its 1.2 billion population. The platform is designed internet-like to enable a huge range of vendors (currently government, but in the future who knows) to create applications to deliver services — public distribution system, subsidies to farmers, education vouchers, drivers’ licences, whatever. In addition to the huge boost to empowerment, this will do wonders for the budget deficit, always the single biggest constraint on India’s growth. The double-digit dream will still become a reality.

The thought of India becoming an economic superpower is no longer outlandish. Some have freedom to differ, and some questions, ‘Who says India wants to be a superpower’?

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India’s Mastery in Missing Buses

Posted on April 11, 2012 by indra

China is beginning to vacate some space of low-cost, labour-intensive manufacturing as the country’s per capita income increases. Unfortunately, India is not among the beneficiaries. It could quite easily have been. Does it not reflect on Indian weakness when India goes down to Bangladesh or Vietnam in manufacturing through low-cost industries and that too because of its policies? As Mc Kinsey reports, Bangladesh is the next hot spot and the country’s ready-made-garment industry identified solid apparel-sourcing opportunities. Why has India with the great past of textiles and with maximum producer of cotton failed to remain high? It could have provided millions the necessary engagements and means to remain out of poverty?

Indian small businessmen keep on talking about the long hours of power cuts, the high cost of every infrastructure input, the slow turnaround time at ports, labour law, and of course red tape and inspection raj as excuses. But most of them wish to make big money in easy way rather than having a mission to create jobs for the needy country men with some investment and hard work in manufacturing.

The hero of 90’s revolution is in mute and ‘statue’ mode. The political class is too busy in everything else but helping to raise the development speed of the country.

India’s young entrepreneurs, business leaders, and society have overlooked the potential of rural India in multiplying the manufacturing potential of India by taking it to the unemployed cheap rural labour. Organizing the rural potential with selecting and training interested groups for some outsourced work would have kept the cost down in many of the manufacturing jobs for the producing the things required for mass use.

The government has failed effectively in providing electricity without which nothing gets produced these days in competitive manner. Not that there are no rural ventures, but it has not penetrated and scaled up to the desired extent.

In a similar manner, India is missing the bus in BPO sector too. As reported, in a 2008 report NASSCOM and Everest, the Indian BPO industry would have earned $30 billion from exports by 2012. However, in the last six years, voice contracts coming to India, as estimated, have fallen by half. The industry may clock less than $16 billion this year, and it is all because Indian entrepreneurs and education system failed to provide the right spoken skill for that type of work. Is it not surprising that India has lost to Philippines? And the loosers are the young boys and girls with education up to class X or XII standard with good communicating ability in English from lower middle class, and not the established entrepreneurs who switched over the location or upgraded the work and the services of much higher value additions. But every one can’t pick up the high end BPO that requires higher education and better domain knowledge.

Philippines became the biggest provider of voice-supported services as its BPO industry jumped 21 per cent to $10.9 billion. As reported in ‘Business Today’, ‘at pure voice operations, the Philippines, with $5.2 billion in revenues, has already become No. 1 in the world, pushing India, at $4.8 billion, into the second spot’.

India must go for few policy decisions for creating industries that will provide jobs for the new generation that is getting into the market. Indian PSUs such as BHEL and BMEL, must grow much bigger outsourcing whatever can be done with the vendors. Defense production must encourage the private sector to enter and establish factories. Indian policy makers must realize the extent of national loss by opting for import rather for local manufacturing of the huge defence requirement. ISRO and other high tech establishments as well as the national research establishment such as CSIR and DRDO must help establishing manufacturing facilities in the country as a national mission and take the country forward in manufacturing of electronics.

Let India not miss the bus this time.

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India as Economic Power

Posted on April 5, 2012 by indra

As early as October 2007, McKinsey Quarterly stated, ‘India is moving quickly to capture its place on the world stage’. India has arrived and it is getting visible at all the international platforms of some consequences,

India is still cost effective and labor intensive economy. It has its educated talented mass too. IT sector has established and upgraded itself to carry out all sorts value added outsourcing of work from developed countries. Even with competition and various other challenges, India continues to drive leadership in the global sourcing market with a 58 per cent share. Indian companies are building a hub of centres across 70 countries that create a seamless solution for the clients. Indian companies are also investing and providing employment in the developed countries. IT exports from India totalled about $69.7 billion during financial year 2011-12.

India has also created a strong manufacturing and export oriented industrial framework. All global automobile makers worth name are having manufacturing facilities as well as product development centres. Some such as Maruti Suzuki, Hyundai, Ford and even Toyota along with trying to take the maximum advantage of the large domestic market are also making the country an export hub for at least some platforms of their cars. Indian manufacturers such Tata Motors and Mahindra and Mahindra are busy in fulfilling their dreams of becoming a global company with acquisitions abroad and have developed world class products through their Indian and overseas R&D centres. In motor cycles, Hero and Bajaj are already among the top few in the world, while for tractors, Indians are the largest manufacturers. In heavy engineering industry too, L&T, Crompton Greaves, BHEL have earned their place. http://www.economywatch.com/indianeconomy/india-and-global-economy.

The Tata Group is the largest manufacturing employer in the UK.

Ireland’s richest person — Pallonji Mistry — is an Indian.

Coal India is the single largest coal producer in the world.

India is the largest whisky manufacturer in the world.

Indian management has established itself globally by turning around the acquired companies such as Corus and JLR. While Ford failed, Tata Motors could make it profitable as jewel in its crown.

Globally known brand names such as Citigroup, Pepsi and Motorola are associated with an Indian CEO. And in US, as per one estimate, over 50% of total patents filed for industrial innovations in the US have Indian brains behind them. Similar may be the number for new startup entrepreneurs in US. (I got reminded of the stories of persons such as Dr. Suhash Patil that I came across in ‘The Game Changers’.)

Indian academicians have achieved distinctive place with many Business Schools of American universities having deans of Indian origin. Soumitra Dutta, the Johnson Graduate School of Management at Cornell University; Nitin Nohria, dean of the Harvard Business School; Sunil Kumar, dean of the University of Chicago’s Booth School of Business; Dipak C. Jain, the current dean of INSEAD ( French business school), was the dean of Northwestern University’s Kellogg School of Management until 2010; Jaishankar Ganesh at the Rutgers School of Business-Camden and G. (Anand) Anandalingam at the Robert H. Smith School of Business at the University of Maryland.

Through frugal innovations that includes, Nano, the cheapest car in the world from Tata Motors; Aakash, the cheapest tablet PC in the world, priced at $46; and other cheap tablets; Chhotukool from Godrej Appliances provided a cooling solution, at nearly half the cost of an entry-level refrigerator. India today has earned respect for its designing talent.

And that is the reason that companies such as Apple, Microsoft, Google, Intel, etc especially in IT that generates maximum value from innovation, rely on resources from India. It might have started with Texas Instruments and GE but today almost every globally established company has or is in the process of setting up its R&D centres on India. According to an estimate, the number of foreign R&Ds operating in India till December 2011 was about 900.

With 100 companies of over a billion dollar market cap, India has established its position globally.

Indian bankers have established themselves all around the world for efficient financial management. Indian banks have significantly less bad loans versus pretty high in China.

Bangalore has more Grade-A offices than Singapore
India is the largest diamond cutting and polishing centre in the world.
India is the largest sugar consumer in the world.
Parle-G is the world’s largest selling biscuit brand
KEC is global leader in tower production capacity

There is no dearth of IT entrepreneurs in India today. Infosys N R Narayana Murthy has become the icon of Indian IT industry and was recently selected as one of the 12 “greatest entrepreneurs of our time” according to a Fortune magazine list that was topped by Apple’s late chief Steve Jobs.

But Indians are exploring many fields other than IT, ITeS or pharma sector. For example, Ram Karuturi, CEO of Karuturi Global, had already made his company the world’s largest cut flower exporter. And Ram is not the only Indian looking to African countries for setting up farming enterprises with a huge potential to meet the India’s shortage of edible oil and pulses.

India is the largest exporter of rice this year and can do the same with sugar too. It will have 90 million tons of wheat this season. India feeds 17 per cent of the world population with barely 2.4 per cent of the arable area, 4.2 per cent water and 11 per cent livestock. A young farmer of Darveshpura village in Nalanda district has set a world record in potato production through organic farming. Few months ago, a group of farmers in the same village had created a “world record” producing 224 quintals of paddy per hectare. I get reminded of the time when India was dependent on foreign grains.

And when it comes to compare India with China, I get reminded of the size of media. India has the largest number of newspapers/publications any country in the world has. There are over 72,000 publications currently registered with the Registrar of Newspapers of India. And over 700 TV channels have been permitted to uplink or downlink from the country; over half these claim to be ‘news and current affairs’ channels. The number of FM radio stations has zoomed and will go up further – from over 250 now to around 1,200 in the next five years.

India is pushing ahead in its own unique way, perhaps, in spite of the mediocre political leadership.

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