The Indian Economy Blog

July 12, 2006

The Better, Faster Road to Development

Filed under: Business — Atanu Dey @ 2:35 pm

India has been singularly unlucky in the sense that its movers and shakers don’t seem to get what it takes for the economy to prosper. Therefore it comes as a terribly pleasant surprise when one comes across a M&S who apparently gets it. Not only does the man get it, he gets it in spades and how.

Mukesh Ambani apparently gets it.

The 17th July edition of Newsweek International carries a must-read article on Mukesh “Mr Big” Ambani’s Makeover Plan for the Nation. The article says that Mukesh

has finalized plans to invest more than $11 billion over the next decade to build two new satellite cities outside creaking, overcrowded Mumbai and Delhi. He foresees these metropolises emerging within just four years, each with a population of 5 million people making $5,000 a year, on average (or seven times India’s norm), and hosting top multinational companies. And that is all pretty simple—a development on steroids—compared with the idea that really gets Ambani going.

Ambani’s favorite scheme aims to revolutionize in one swoop two of India’s largest but most backward sectors: farming and retail. . . . Ambani plans to invest $5 billion by 2011 to put both the farms and the stores on the road to modernity, connect them through a distribution system guided by the latest logistics technology, and create enough of a surplus to generate $20 billion in agricultural exports annually.

Further down in the article, it says

Ambani wants to build a chain of both small and supersize stores across India, creating 1 million jobs and reaching $25 billion in annual sales, all by 2011. If his plan succeeds, he says, consumers will get fresher food at lower prices, rural incomes will soar, farmers will become active consumers, and Reliance will become “a WalMart in India.”

And finally

To transform Indian farmers into quality suppliers for his new retail chain, Ambani plans to create 1,600 farm-supply hubs across India, providing technical know-how and credit, selling seeds, fertilizer and fuel, and buying produce. He also plans to build some 85 logistics centers to move food to retail outlets and to ports and airports for export.

See why I say that it appears as if the man gets it?

First, he talks about creating cities. Cities are the engines of growth since it is an urbanized population which has the productive capacity to create economic wealth and thus lead to development. India’s largely rural population has to be urbanized and since the existing cities are basically incapable of absorbing the population, new cities have to be developed.

Second, he talks about transforming agriculture by raising its productivity. Building a large number of farm-supply hubs will make the supply chain for agricultural inputs more efficient. Raising agricultural productivity will not only increase production but will also release farm labor which can then migrate to the cities and produce non-agricultural goods and services.

Third, the farm output will be more efficiently brought to the market. It is estimated that around 40 percent of farm produce never reaches the consumer. Introducing efficiencies in the supply chain of farm output and retailing it efficiently will translate into lower prices for consumers and higher realized prices for the farmers. This in turn will increase farm incomes so that the remaining rural population would be able to effectively demand more non-agricultural goods and services — the same stuff that is being produced by the labor released by the farms.

This is along the lines of Irma Adelman recommended long ago: Agricultural Demand Led Industrialization, or ADLI.

The important point to note is that the schemes that Mukeshbhai is concentrating on has, prima facie, nothing to do with development, leave alone development of rural India. But in effect that is precisely what will happen. The answer to India’s rural economic development lies in cities. It is the urbanization of the rural population which will help rural development, not the so-called “development of villages” as I have argued for a while.

To a large extent, the 1,600 farm-supply hubs are approximations of RISC. RISC are the seeds of a mini-city in the rural area. With about 5,000 of these, you can effectively aggregate the 600,000 villages into productive mini-cities.

The approach that Reliance is taking is commendable because it is private sector driven and does not involve the government directly. Indirectly, of course, the government has to acquiese to the plan. Not just that, it is possible that the government will give away quite a bit of the land needed for these new Reliance cities at below-market prices. Yes, Reliance has power and it will only grow. But the question we need to ask is this: is it better that the land gets utilized and wealth created, and even though some of that immense wealth will go to enhance the Ambani fortunes, than the alternative where the land sits around doing precisely nothing and millions of people don’t get to lead a better life? I think the answer is a no-brainer (unless of course the answer is from a no-brainer communist), “Yes, better that someone creates wealth and takes a chunk of it if it means that lots of people will also grow rich, than the alternative.”

30 Comments »

  1. Atanu,
    Somebody has to convey this message to Indian farmers and the large rural population. Farming is not going to improve their lot. Naidu tried to tell this in AP and he was booted out.

    On a slightly different note, the planning commission has an approach document for the next five year plan on its website (http://planningcommission.nic.in/). I know that the people who blog on this website have a dim view of government planning, but this looks like a document worth looking at. They are also seeking comments on the draft.

    Any comments from anyone?

    Comment by SKY — July 12, 2006 @ 3:19 pm

  2. Two thoughts:

    I think instead of revitalizing major existing cities, if alternative cities are built just to populate them with white-collar workers, existing cities will turn into even bigger slums – ie Delhi and Mumbai will become even bigger dumps with pockets of rich gated communities and middle class mostly migrating to newer cities.

    While Mukesh Ambani has access to cheap credit and lot of clout to implement his plan, if he really wants to do, craters in the form of groups supporting sustainable development – ie don’t exploit those poor farmers (they are happy being poor) – and we are against big box stores that destroy traditional mom and pop retail will surely coalesce. And these craters will be pretty formidable, even for an Ambani.

    Comment by Chandra — July 13, 2006 @ 11:59 am

  3. hi Atanu,

    Cross posting should exist for comments also :)

    You can dismiss me as a communist, but I can’t help seeing this project with great suspicion.

    I don’t know whether this new Ambani project will revolutionize agriculture or not. Neither do I know whether the kind of money it generates will be so much that a few millions going to the Ambanis is fine or not.

    All I know is this, what is going to earn Ambani money is not the agriculture and the retailing, but the real estate.

    It has become a pattern that even undergrad students like me are beginning to notice.

    Ambani or whoever purchases land at dirt-cheap rates from the govt. Now he ‘develops’ the land, which basically means he lets out the land for people to do whatever they want; and earns huge profits. That is what the SEZ in Haryana is about; That is what the BMIC project is about; and that is what even the Bangalore Airport project is about. Building industries, roads and airports is the least of their concern.

    And I am afraid that Ambani’s new plan is just a repetition of an old trick.

    The crux of the problem is this: the government is able to procure lands and low rates; and it is only people like Ambani who can convince the government to hand over the land to them for non-agricultural purposes. For all others, the answer is going to be that the political cost is too high.

    My solution: give farmers the right to property. The government shouldn’t have the right to take over private lands; and farmers should have the right to sell land to anyone who desires to buy it; whatever his purpose maybe; so long as he declares his purpose and sticks to it.

    The result: the moment Ambani starts buying lands somewhere prices will shoot up and he will no longer find ‘revolutionising agriculture and retail’ a profitable venture.

    I wrote something very similar in my post

    The problem of land-grabbing

    Again, I have no problems whatsoever with Ambani making money. As long as he buys land directly from the farmers at full market price. And if he is really interested in revolutionising agriculture; all the better.

    Comment by Karthik Rao Cavale — July 13, 2006 @ 5:37 pm

  4. Karthik, I thought that I had addressed the point that you raise. Yes, it is possible that Reliance makes money out of real estate. So what?

    Land sitting around owned by the government doing nothing is for anybody. The creation of wealth is what matters. And if Reliance is smart enough to use the land, increase its value, produce goods and services, and get rich, more power to them.

    So what happens when Reliance makes money? What does it mean to say that Reliance “makes money”?

    Creation of wealth — stuff that you use, wear, eat, live in — that is what matters. That someone uses existing resources and creates wealth is what matters. That someone also gets “rich” — that is, has more money to his or her name — is not something that should bother anyone. Sure, I envy the guy his billions but I also know that he made his billions not by stealing from someone who had created the wealth. He made his billions by creating some stuff and then taking a share of it.

    Communists are happy so long as no one has wealth; I am happy that people in general have stuff, even if it means a few have obscene amounts of wealth.

    Finally, what does a Bill Gates or a Mukesh Ambani do with his wealth? Obviously he cannot personally consume it. There is a limit to how many luxury cars he can own, and how many mansions he can own or live in. The majority of the wealth that they own goes into productive assets which enrich the economy as a whole.

    I don’t begrudge the rich their wealth as long as they have created more than they have personally amassed. This cannot be said of those who steal from others — politicians do that sort of thing. They steal from the general people and impoverish others while enriching themselves.

    Comment by Atanu Dey — July 13, 2006 @ 5:49 pm

  5. Two objections:

    1) Much of this land is likely to be private property; farmland. I don’t argue that converting farmland into built up space is bad, but why should the farmer have to give his land to ambani at dirt-cheap rates? (with the government acting as the middleman)

    2) If it is government property, isn’t it in public interest for the government to make as much profit out of the sale as possible? Why should the rates be lowered?

    Comment by Karthik Rao Cavale — July 13, 2006 @ 7:14 pm

  6. This argument is going in circles.

    Land is only worth what someone is willing to pay for it. Unless it is irrigated, much of our agricultural land is of extremely low value.

    Try selling a barren piece of land in the wilds of Haryana to anyone. Esp. when you are told the nearest metalled road is 10 miles away, the nearest power line is even further and there is no domestic water supply, no railway line, no grocery store, no petrol bunk, etc. Even worse this piece of land you are selling is all of 2 acres in the middle of a thousand others with no easement access and no proper title.

    This is the situation with so much of the land our farmers hold. They are convinced that it is a biblical land of milk and honey while it nothing of the sort. This low value of the land is also why so many are essentially approaching destitution.

    I’m glad this post is nailing the truth on the head. Let me bring another fact to the table. India has a total 600 million or so acres. Of this about 250-350 million acres is farmable. We have 700-800 million trying to make a living from that. The problem is self evident. The land can support a farm population of 100 million or so. Tops. The rest have to move to the cities.

    Fragmented land has no value.
    Undeveloped land has no real value.

    We must train and help these people move to the cities.

    Look at it from another perspective. Will we ever be a developed nation when we let 60% of our man power slave on agriculture, wasting their productive years? I think not.

    Comment by Theo — July 13, 2006 @ 7:36 pm

  7. Another addition: How far Ambani is responsible for the increase in the worth of the land is something seriously debatable. For one, I don’t see him doing anything concrete…

    The land that he is eyeing for probably has very high value even today. But he knows that he has the money to bribe the government into selling it to him for ultra-cheap prices. It takes a lot of bribing to make the government sell farmlands for building cities; after alll they are shit scared of us ‘communists’. Mantri developers in Bangalore can’t do it. And Deve Gowda found that the bribes paid by NICE were not enough. So even BMIC is likely to be scrapped. But Ambani is different, he’ll push it through.

    Next: property in his city is priced lower than other property outside, because of the subsidy that he got he can afford it. People flock to his cities.

    Next: He makes the lives of everyone living in his city unbearable by minting money from basic services like water, electricity and telephones, all at rates significantly higher than outside.

    You still think it’s worth it? I’d rather have the govenment do the developing. Or even better, I’d like to remove the Govt. from the scene and make Ambani pay market rates for the land he is seeking.

    Comment by Karthik Rao Cavale — July 13, 2006 @ 7:49 pm

  8. My two cents: I would agree with Karthik that it would be best if he paid market rates for the land, especially to deprive the state of the power to confiscate private property for the “public good”. Feeds corruption, nothing else. And I am not so sure the M&S don’t know what it takes for the Economy to prosper.I jsut suspect that they have no incentive to do the kind of things that are required for development.
    And Theo, yea, they feel its the land of Milk and Honey, while its nothing of the kind. Their problem, not yours, as long as they don’t hitch you to their plows and make you till their land.
    I am rather chary of the kind of “Big Think” I see in RSIC- whether its the state or private enterprise thats doing the Big Thinking. Better private enterprise, though, they have the incentives to get it right, and to learn from their mistakes.

    Comment by Rajeev — July 13, 2006 @ 8:19 pm

  9. I agree that it would be best if Reliance paid market rates for the land. And that the poor farmers were not cheated out of the fair value for their land. And I wish I could have my cake and eat it too. And a pony. With cherry on top.

    It is a bad situation. The government is inept and cannot fully protect the interest of the poor — perhaps it is so because the people who constitute the government depend on the excuse of the poor to make their moolah. In any event, Reliance has created wealth, and if they had to engage in shady deals with the politicians, at least one thing there is little doubt about is that they created wealth also.

    My position is simple, really. If Reliance creates Rs 100 worth of wealth and keeps X for itself, at least others have ( Rs 100 – X ) worth of wealth that they did not have before, as long as X is less than 100.

    Comment by Atanu Dey — July 14, 2006 @ 9:46 am

  10. Yes, yes that is ok. But if there were a free market situation, with the govt. at a safe distance, you’ll find competitors who will drive Ambani out of the world, simply because reliance is one big inefficient and corrupt organisation and its projects are going to have few takers if viable alternatives are available. Now, don’t ask me to explain the last statement, it’s a prejudice that I don’t care to explain.

    Comment by Karthik Rao Cavale — July 14, 2006 @ 9:59 am

  11. Karthik, I sincerely hope that there will be a free market and that Reliance meets competition. But in the meanwhile, I wish Reliance success even though I understand that they don’t the best reputation as ethics and business go.

    Comment by Atanu Dey — July 14, 2006 @ 10:28 am

  12. Guys, this is going around in circles.

    Do we have evidence that RIL snatched land from the farmers ?

    They adore Tata when in reality Tata pays peanuts to workers and still dont make anything great. Compare TCS to INFY , Compare TISCO to Mittal. Compare Tata Telcom, VSNL to Bharti. Compare Tata Motors to Maruti. In all areas Tata doesnt take any risk and keep india in the LOWEST profile possible. The one lakh car is the best joke indians will know about. Tata DTH is in bay of bengal now with GSLV.

    I may sound like bashing Tatas but i am only bashing INDIAN thinking, which hails TATA which is a non-performer (And hence no failure) and
    cast aspersions on Reliance which is one of the fastest growing companies in the world. (we might see a Fortune top 10 from India)

    http://www.business-standard.com/common/storypage_c.php?leftnm=10&autono=98176

    Comment by Benny — July 15, 2006 @ 1:12 am

  13. With about 15% of the population, 10% of the food production and 3% of the land, the Indian Economy should have about 8-11% of the world GDP.

    Comment by Raj Chanani — July 15, 2006 @ 2:33 am

  14. At a first perusal, I thought the comments were needlessly skeptical about the post. In fact peeling this onion shows us what ails our current debates. Simply put, we excel at identifying how bad
    any proposal is, but we suck at identifying what exactly is wrong; we don’t isolate the good from the bad among various aspects of a proposal so as to preserve the good and improvise the bad, and we definitely have an unexamined nasty habit of throwing the baby out with the bathwater, just because the baby’s father/mother is “suspicious.”

    I am rather chary of the kind of “Big Think” I see in RSIC- whether its the state or private enterprise thats doing the Big Thinking.
    (“Rajeev”): You are not the only one, i.e., you may find this latest
    Economist article on economic models
    resonate to your thinking. I think we have here a case of throwing up our hands based on the disenchantment driven by the status quo, rather than to try to figure out what and how we can make this happen in a fruitful way and moving forward.

    The major good about this proposal is what Atanu said: it is private sector driven. Why? Because our needs and problems require specific set of solutions, and specific expertise in specific fields. You can identify them clearly if you take the time to do it and for most of these problems there are solutions out there. You don’t need a revolution. For example, many problems that beset farmers are not just only political, but technical and you solve one, the likelihood of solving the other improves. Everything that we need to improve the competitive participation of farmers, i.e., supply-chain excellence in a nutshell, is already developed, deployed and run
    efficiently under private sector. Examples are many, look around (Walmart, UPS are popular examples.) We should admit to ourselves that these solutions, expertise lie in private sector, not in public sector.

    So we know what the problems are and we know where the expertise lies to solve them. Why shouldn’t this make sense to leverage the private sector expertise?

    My solution: give farmers the right to property (“Karthik Rao Cavale”): This is an emotional response to a technical problem. Without improving the skill-set of farmers, without putting in place some mechanism that helps the farmers to not only take ownership of
    the farming itself, but also to give them better control over pricing, better visibility into where their produce is worth more and in general without empowering the farmer, giving more land would do very
    little other than to satisfy the “giver” that he/she “did the right thing.”

    Moreover, far from being a communist, your comments reflect a basic misunderstanding of how stuff works when things are cranking in a market-based economy. Lying between two markers called “a communist” and “a capitalist” there is an immense, often-trodden, fertile ground of ignorance. I’ve often seen people sauntering lazily on this ground and only too glad to accept the labels of either “a communist” or “a capitalist” because, well, that is a safe ground, isn’t it?

    When stuff starts to happen – a building work, a large road project, or a development of a city – the only thing anyone can really be sure is how best to start it. The rest of the trajectory of where and how a project will take its course will depend entirely on the people who are influenced by it: the ordinary people who may benefit from it, the law makers who recognize a good thing when they see one and have the guts to leave it alone, the business folks who see the profits and are incentivized to keep it running, the politicians who know when to stop greasing their hands (as someone said you can’t take the politics out of a politician, so let’s just live with them)…all this has a time element. A beginning, a middle and if god blesses, an end. It has a project management element, has an element where the media, the social commenters, the general middle-ware of society shapes, watchdogs,
    modifies, steers and in general holds its feet to the fire. All this is to be done by none other than you and me and others, because that’s how one participates in a democracy. This is where we can influence and cull what’s right from what’s wrong and god forbid if the law in India can get off its ass, it too can help so the inevitable ethical violations can be brought to light, and curbed.

    In all that I said above, someone like Ambani with his current proposal can only control how best to start it, and I am sure you’d agree that his won’t be the only control that wants the piece of the pie when the project gets underway. All that other stuff that gets
    in, it is up to all of us, the rest of us, and the folks who actually take part in the project itself, those who work at this company, and those who benefit from the so-created eco-system of knowledgeable workers.

    Finally, as a general comment, the prospect that Ambani will “mint money” arises out of the fact that Ambani is “investing money.” Whether you like it or not, the only way stuff gets done is to align their profit-motive with the larger good of the society. This adherence to not to see this basic fact of life is school boyish! Geez, no wonder economic literacy is such an important aspect of everyone’s education.

    Regards,
    Crazyfinger

    Comment by Crazyfinger — July 16, 2006 @ 10:34 am

  15. I don’t see any point in having a public sector project with no competition to fight. The only reason why the public sector is ineffective is because they don’t have to bother about competition. So I don’t understand how you people can argue that a project that will have no competition will be efficient and offer the customer the best deal for his money. Most likely not, because they are going to make as much money in any case, probably they will try to increase profit by lowering standards.

    That is what this Reliance city promises to be. Low cost because they got the land at subsidised rates. And looting the customer after that. Do you think that anyone else will be allowed to buy such huge amounts of land by the government? Even at the prevailing market rates?

    Without improving the skill-set of farmers, without putting in place some mechanism that helps the farmers to not only take ownership of
    the farming itself, but also to give them better control over pricing, better visibility into where their produce is worth more and in general without empowering the farmer, giving more land would do very
    little other than to satisfy the “giver” that he/she “did the right thing.”

    I have no idea what you understood of my statement. I didn’t mean to suggest that the farmer must be given more land. I suggested that the farmer must have the retain the land as long as he wishes (no govt. coercion) and sell it whenever he wishes at any price he wishes to sell it at (no green area fundaes).

    And please don’t talk of improving farmers’ skill sets. They know well enough how to strike a good bargain for their land.

    Comment by Karthik Rao Cavale — July 16, 2006 @ 2:15 pm

  16. I am sorry, I meant ‘private sector’ and not ‘public sector’ in the first line of the last comment.

    And read this post.
    http://indianeconomy.org/2005/11/04/highway-robbery-by-the-government/

    Comment by Karthik Rao Cavale — July 16, 2006 @ 2:18 pm

  17. As soon as you talk about deregulation to allow competitive forces to enter the equation, then the communists will make a ruckus against it. They’ll quickly call it a sell-out of public interests. People want utopian perfection on the first try, and will stonewall anything where even the slightest criticism can be raised. As a result, no movement will occur at all, and they’ll be stuck miserably where they were before.

    Comment by Sanjay — July 17, 2006 @ 8:05 am

  18. This is great initiative. Anyone with a great vision and $ can do it but it takes an entrepreneur to make it successful.

    I agree with Theo, we have too many in Agriculture and our land plots are too small to compete with ‘open global market’. Our farmers are not making enough money to enjoy the modern life. We need to absorb lots of these farmers in other value-added agro industries – need to train them, finance and provide education.

    Government and Industrialists should join for a viable long-term plan where urbanization can be carried out with a long sustainable infrastructure. The WTO and other Free Trade agreements will put more pressure on farmers and we should be prepared for it. Like done for IPCL in Vadodara, new industry can guarantee apprentiship and jobs to 1 or 2 member from each of the farmer familiy in return for their land and may also give some stock options.

    We need to think bold big original ideas and understand that new wealth can be created – it is not that when one person get rich at the cost of other person.

    Comment by RacerOla — July 19, 2006 @ 2:45 am

  19. Cities are the engines of growth since it is an urbanized population which has the productive capacity to create economic wealth and thus lead to development.

    Can you please define wealth? Why are you rolling your eyes?

    I will help you, today’s economics does not define wealth!!!! Economics without defining wealth is like mathematics without zero. If you are surprised, mathematics did exist for 100′s of years before concept of zero was added to refine mathematics, so don’t be surprised today economics can exist without defining wealth.

    Now back to the subject, we will see a massive de-urbanization in next 100-200 years. This means prosperity will move from cities back to the villages.

    Comment by GeneralPublic — July 21, 2006 @ 7:05 am

  20. Karthik, have you considered the delitirious effects of speculation bubbles? What would happen is that the scarce resource of land would quickly become overpriced as a result of hyper-speculation that would be triggered by your broader approach. At least from what Atanu’s suggesting, the industrially-minded could quickly move to get industrial underpinnings underway, rather than having all the initial momentum squandered and dissipated with real estate hyper-speculation that would only benefit the landed and not the landless. Because while I appreciate your desire to help the land-owning, it is the impoverished landless majority who are most in need of economic trickledown.

    Comment by Sanjay — July 23, 2006 @ 11:24 am

  21. Its all fine to make and build new cities in the best ways possible. But it hides the fact it is or existing cities that require urgent surgery.

    Mumbai will not and will never be a Shanghai. Damn, Mumbai is not Mumbai right now!!

    Comment by Ravi — July 24, 2006 @ 8:59 pm

  22. Well, i am worried about what is going to happen to the displaced people. At one look, Ambani has brought out a wonderful plaan to save rural India. i find it extremely hard to digest that.
    Ask them to take over existing stores and companies that are in losses. Let them build on that. A limit should be placed on the real estate these big corporations hold too.

    Comment by Alex — July 28, 2006 @ 10:07 pm

  23. I am tempted to think about the use of the BOT (Build Operate Transfer) or BOOT (Build Own Operate Transfer) model in such a case. Such mechanisms have been used in the highways/roadways sector with some success. Thinking of it on a macro level, say the land is sold to a private enterprise at low or market rates (debatable); it should then be developed by the private player and owned/operated by it for a predetermined period of time. The eventual transfer of the SEZ or township to the public sector will ensure that in the long run matters involving trust are democratically managed.
    A major concern with this approach is the uncertainty that will surround private participation as profit motives will be curbed to some extent. This can be taken care of by establishing Special Purpose Vehicles or using existing ones to assist the private sector in financing such projects. This significantly reduces debt burdens. The Annuity model which is a variation of the BOT model could also be a viable alternative. If case such an approach is considered, the government would pay a certain amount, which it feels is the cost of development, to the private player on a continuous basis. This approach also gets rid off the risk factor which would otherwise be handled by the private player.
    Considering all arguments made previously, this is some sort of a compromise formula. What say?

    Comment by NSP — July 30, 2006 @ 5:08 am

  24. Mukesh Ambani has forgotten the cardinal principle set by his father – never get into a business that involves too many people.
    If he thinks he would be able to control hundreds of thousands working in his proosed retail empire, well, good luck to him!

    Comment by S K Modi — July 31, 2006 @ 11:28 pm

  25. Ila Patnaik of IE has a good column on the issues with land acquisition for infrastructure development. She endorses auction of land proposed by Shubhashis Gangopadhyay, director, India Development Foundation, for transparency. The auction idea seems workable and fair to farmers who are forced to sell their land under eminent domain.

    Here is the column:

    http://www.indianexpress.com/story/9715.html

    Comment by Chandra — August 2, 2006 @ 11:39 am

  26. One factor that nobody seems to have noticed is the impact of declining availability of cheap transportation fuel (a hard geological fact that most economists are in denial of) on unsustainable practices of industrial farming. The last thing India wants is an emulation of the US industrial agriculture that destroys topsoil and increases dependence on fossil fuel for agriculture and transportation of products. I have nothing against the likes of Ambani, but if he is trying to do a “Monsanto”, that would spell disaster for the Indian population, compared to which today’s farmer suicide rate (however tragic it is) would seem like a minor irritant.
    We need to get the average city guy also to grow stuff and not expect supermarkets to supply everything in a post-fossil-fuel world. I guess Ambani knows this only too well and maybe that explains his interest in getting into the most basic of man’s needs in a big way.

    Comment by Aravind Nair — August 4, 2006 @ 5:47 am

  27. I think that the following artice on Answers.com is very good. I would think that the definition of India in year 1000 is different than the India of today.

    http://www.answers.com/topic/list-of-countries-by-past-gdp-ppp

    Comment by Anonymous — August 5, 2006 @ 5:14 am

  28. Dear Atanu,

    To my knowledge Indian agricurltural productivity on per acre basis is half that of China and lower than most countries. We also need to alter the steep imbalance between urban and rural population through RISC-like new cities. Hopefully Ambani’s retail drive (and SEZs) will become one of the positive drivers in both these vital areas.

    You generally rail on corruption and use terms like economic rent. You have also written about why monopolies are bad for same reason. You do write about the Ambani’s getting land at lower price. But the word corruption or economic rent does not come in. This looks like a lapse of objectivity on your part. There may be problems with alternatives (land auction, property rights to farmers, government’s non-use of land etc.) but that does not justify a subsidy to a private enterprise.

    Reliance group has achieved amazing growth starting with petrochemicals then refineing and exploration and more recently with telecom. But their ethics specially getting favors from government has been partly responsible for it (besides their risk appetite, management ability and style and more recently their growing wealth).

    Sharad

    Comment by Sharad — August 20, 2006 @ 9:03 am

  29. The Ambani plan sounds like a grand Walmart-ization for India. I don’t know about all of India, but at least in most smaller cities of UP, the lifeblood of the local economies is the little family run stores. What happens to these when the mega-corporations take over?

    Comment by kayd — August 24, 2006 @ 1:31 pm

  30. [...] retail industry – Protect The Chain But At What Cost – Kirana Will Still Rule – The Better, Faster Road To Development – The Wrong Behind – A Nation Of Self-Employed – More Bang For the Government [...]

    Pingback by The Indian Economy Blog » India’s Retail Revolution: Question 1 — December 26, 2007 @ 8:07 am

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