The Indian Economy Blog

March 2, 2006

India Shining (again)?

Filed under: Business — Edward @ 9:19 am

Well I’m glad to see that I’m not the only person around who believes in India. There’s Fareed Zakaria for one:

Even the here and now is impressive. Indian companies are growing at an extraordinary pace, posting yearly gains of 15, 20 and 25 percent. The Tata group, the country’s largest business house, is a far-flung conglomerate that makes everything from cars and steel to software and consulting systems. In this sense, it is a useful window on India’s industrial and postindustrial economy. Its revenues grew last year from $17 billion to $24 billion and it is heading for extremely strong growth this year. At another end of the scale, the automobile-parts business is made up of hundreds of small companies. Five years ago the industry’s total revenues were $4 billion. This year they will exceed $10 billion. In 2008, General Motors alone will import $1 billion of auto components from India.

I think self-belief is one of the most important steps to success. India is too wracked by self-doubt. Ronaldinho Gaúcho didn’t get to be the world’s number one footballer because he thought there was another better player somewhere else!

Incidentally I was also struck by this comment from Ruchir Sharma:

Logically, the power sector would be an urgent target for reform. Well, not in India. There is little political willpower to crack down on power theft, and politicians still think doling out free power to farmers is a vote winner.

Well quite. But let me let you in on a little secret. India isn’t the only continental scale country where this reluctance to grasp the nettle of reform is a vote winner for politicians (and here).

9 Comments »

  1. Well I’m glad to see that I’m not the only person around who believes in India.

    are there a lot of serious commentators who dont? i am being serious – who is negative of india?

    Comment by mihir — March 2, 2006 @ 9:37 pm

  2. Edward, I agree with the spirit of your post, yet the final sentence strikes me as illogical.But let me let you in on a little secret. India isn’t the only continental scale country where this reluctance to grasp the nettle of reform is a vote winner for politicians[.]Just because India’s politicians are not alone in placing votes above reform does not address or argue against Ruchir’s observation.

    Comment by Sahil — March 2, 2006 @ 11:57 pm

  3. I am proud to see us Indians finally shed our chalta hai attitude and finally decide to fix our problems. India has a lot of potential and it will take us a few years to solve a lot of the problems we face today especially rampant poverty. The media especially in the United States seems to report our 300 million strong middle class. But unless we pull our poor masses out of poverty, any development will not be true.

    That said, I feel great everytime I talk to my colleagues. The image of India as a third-world is being transformed into a technology powerhouse. Slowly but surely, we are on our way to becoming the great nation that we always knew we could be.

    About #1′s question — who is negative about India? — who cares!

    Rayan Felix Coutinho
    http://www.rcoutinho.com

    Comment by Rayan Felix Coutinho — March 3, 2006 @ 3:50 am

  4. India has 300+ middle class? really? :)

    Comment by S.David — March 3, 2006 @ 6:41 am

  5. Jim Rogers thinks India is a horrible investment destination -excepting tourism!

    How about that.

    Comment by Pravin — March 4, 2006 @ 8:56 pm

  6. I do believe that India has finally shed its chalta hai attitude and is facing the reality now. We have shown a positive growth in all our sectors. Our major growth potential in the Services sector has been a major drive force for our economy for the past few years, contributor of 56% to the GDP of the country. We have been lagging behing china in the manufacturing sector. But still its improving, definitely government rules and regulations have not benn that favorable for the manufacturing sector but still we have shown a positive growth of 9.4% and agricultural growth has bounced back to 2.3%. We have also shown a positive growth in the rise in per capita GDP.

    We are facing some serious problems in infrastructure. For India to maintain this consistent growth, we have to take serious steps in improving our infrastructure, roads, transport and supply chain. Improvement in these areas will attract more FDI and will be a great help for the industrial sector and the retail sector. Privatisation has gone a long way in improving our economy. Telecom sector is a good example in this respect. At this juncture we are facing some serious problems which can be a hinderance in our growth. Poverty, corruption, bad infrastructure, and volatile agricultural growth. We have to take these things seriously and should work towards eleminating them.

    Poverty: For poverty NREGS programme might prove effective but implementation and the proper usage of the allocated Rs 11,700 crore is a big question.

    Human resource: We are facing a serious fall in the sex ratio, on one side we are projecting ourselves as an economic power but social status has been marred by serious problems. The outlay of Rs 28.737 crores for women and children in the budget will only be beneficial if and only if implemetaion is done properly. Lets see how much goes into the deep pockets of corruption????

    Agriculture: Reforms in the irrigation plan and credit policy can definitely help. We should now concentrate on cash crops and horticulture and look for more export content from this sector. Immense dependence on monsoon has caused problems not only to this sector but also to othe sectors. Outlay of Rs 4,500 crore under the AIBP program should be used for proper management and distribution of water resources. Common Area development Programme can prove effective. But everything depends on the implementation aspect.

    Education and Unemploymnent: More emphasis to technical education aimed towards industry specific skill and training is advisable. We should concentrate for creating employment in labour intensive areas like textile and manufacturing and steel sector. Well improvement in these sectors will definitely create more employment.

    I believe we are facing some serious problems, but we are not in deep slumber or following the principle of “sab chalta hai”. We have realised our immense potentials and the way changes are happening things are in favour of India. We have to capitalise on this and the coming decade is going to be our testing time in all spheres form economy to social conditions. A favorable environment bolstered by state peace will definitely take us a long way.

    Comment by Pradeep Gorai — March 6, 2006 @ 9:05 pm

  7. With Ref to PG,

    how is it that india shining ?

    If we could just check for the stats, that how much of the actual alloted has been utilized, and then a fraction of that for how much
    of it has actually been implemented upon… ??

    how about:
    1. R n D: in our country, we see tax holidays offered by the commerce minister for all FDI’s, so why not for R n D, chk our for policies in Singapore to attract and retain talent, and encourage resarch.
    May be its high time for Mr. PC to learn a thing or two from them.

    We have over 150 companies doing R n D in india, ibm, intel, motorola, how many among them are indian ?? Cant we offer tax subsidies to a better extent to indian companies promoting resarch

    2. Agriculutre Is 6 lakh hectares enough, and that too Mr. PC is talking about extending the land under irrigation, what about the land that is having NO water. Am not sure what 0.00** percent of the total land area in India is he really talking about irrigating, i hope it really does implement.. though a minute fraction

    3. Infrastructure ?? seems heavy.. … we have enuf of it… jst 94% of GQ is over, wow.. task accomplished…

    4. our service sector contributes 56% to GDP now, number of companies of indian origin among these that contribute.. could be count on fingers, may be gvmnt needs to improve policies on this front to encourage a few more…

    Comment by Ritesh Shah — March 15, 2006 @ 5:10 pm

  8. The GDP growth has increased from 7.5 to 8.1 percent but what about agriculture growth which has bounced back to 2.3 per cent.
    How a country can ever shine leaving behind 70% of it which is still in rural area and so the economic condition depends largely on this part??

    Do we understand that rural reconstruction is highly requisite for shining India?? We need to develop a society which has equality and uniformity.

    Projects like “Rajiv Gandhi Grameen Vidyutikaran Yojana” and “Sarva Siksha Abhiyan”certainly brings some hope.

    But then don’t we need some revolution like “Green Revolution” in each and every part of country???

    I do believe that Privatization has gone a long way in improving our economy and the GDP has shown very positive growth. And it’s very much required to keep generating revenue from sectors like IT, manufacturing etc.but the revenue generated should be properly pumped in the area which is less developed and in great need to remove poverty.

    Comment by Poonam Prakash — March 18, 2006 @ 4:32 pm

  9. I’m very positive about India. I believe in this country, all of you and myself. Ok. That said…

    > I think self-belief is one of the most important steps to success. India is too wracked by self-doubt

    I just want to stress that there’s a fine line between self-belief and self-deception. We have a lot of problems to solve and it’s too early to get self-congratulatory. We all know the solutions we need to finish in the next 5 years. More real education. More infrastructure. Less government/corruption. Let’s go fix them. Just like we fixed the first set of problems back in 1991.

    Comment by Jayakumar — March 19, 2006 @ 3:58 pm

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