The Road to World Power

Sridhar
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Re: The Road to World Power

Postby Sridhar » 06 Nov 2001 23:40

I have no arguments with the fact that Indian industry has to be exposed to competition and the process of survival of the fittest will bring out the best in Indian industry. However, while moving on opening up the economy to competition from outside, the Govt has to simultaneously move towards freeing Indian business from shackles of various kinds. IMHO, while there has been progress on the former in the last 10 years (and which will accelerate due to upcoming WTO deadlines), there has been very little progress on the latter after the first couple of years of reforms.<P>Indian industry continues to be subject to constraints like SSI reservations, land ceilings, labour laws that protect the interests of labor leaders rather than of labor, various kinds of zoning restrictions and poor infrastructure. While none of these can be changed in a very short period, it is also a fact that there has been no attempt to change these significantly, at least uptil now.<P>Industries that have not been subject to these controls or for whom these constraints do not matter too much have done well, for instance, IT, pharmaceuticals etc. However, many other industries will just collapse under the weight of fierce international competition.<P>Those arguing from protection from Chinese imports are those who have been inefficient and have used corrupt practices to survive uptil now. A large majority of the industrialists who thrived under the license-quota raj are of this variety. We need not have any sympathy for them. However, in order to avoid widespread unemployment, we need to attract new investment, both domestic and foreign, in various industries. The only way that can be done is to unshackle domestic industry, whether in terms of labor laws or whatever.<P>The way forward would be to speeden up the SEZs, promulgate special laws for the SEZs which bypass the regular labor laws, zoning laws, SSI reservations, import restrictions etc. The success of SEZs would force more and more states to want such SEZs. Over time, the resistance to the change of these laws for the whole country would reduce.

kautilya
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Re: The Road to World Power

Postby kautilya » 07 Nov 2001 01:01

Sridhar:<BR><BR>My thoughts exactly. Thanks for putting it so well. <BR><BR>I think even after opening up, there can be and should be certain incentives for local production. Every country does that for e.g. in the form of WTO compatible very low import duty. I think very low duty for import can still act as an incentive for local production. But, the difference is that in this case is that the local industry has to become really competitive to compete with the imports due to small price differencial. and, becoming competitive in such an environment locally can easily translate into good export performance.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 02:01

I agrre with Sridhar. However i dont agree with his views on trade.<BR>After the partial reform process, Indian business esp industry is still treated worse and are under far greater constraints than most other civilized countries.<BR>Problems of 5 decades cannot be solved overnight. Nobody likes to say this but Inidan labor is inefficient compared to most countries including China (Labor productivity will go up with wages and with development of an industrial culture). Cost of credit is higher. Transportation, energy costs are also higher. the legal system is slothful and inefficient. Law and order is poor. I can go on and on. <BR>License and quota Raj businesspeople may not deserve sympathy but they do not deserve contempt either. What were they supposed to do? Give up altogether (and I know many who did). They just responded to the system's needs. Corruption is a symptom of a problem than the problem itself. What is a businessman supposed to do? Pay Rs 1000 to a local labor inspector or let the bugger stop your factory on some flimsy nonsensical reason. End result - personal bankruptcy and destitution for your 250 employees and their families. <P>First let us have some real reform. Then give Indusrty a reasonable time (5 years or so) to adjust. Open the markets then. Even then protect vulnerable industries until the first World drops its double standards with reagrd to free trade in agriculture and textiles. Then just watch the smoke as we blaze an awesome trail.

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Re: The Road to World Power

Postby venkat_r » 07 Nov 2001 03:47

Wow! when i conversed with some of the business people ( small business people ) who have employees, they attribute their difficulties to the problems that they face not business wise but, the other problems that they face, lack of standards, lack of technology, lack of trained manpower, harrasment by each and every division of the govt, local goons, land owners, legal proceedings, .... We have to think that average Ramu, who is working and the average Gopi who is putting up a company have to succeed in order for the country to succeed.<P>Seems like ABV is trying to point to one of them,<P><A HREF="http://www.rediff.com/news/2001/nov/06rus4.htm" TARGET=_blank>PM attacks curbs on flow of scientific knowledge</A>

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Re: The Road to World Power

Postby kautilya » 07 Nov 2001 05:22

Atish:<BR> I agree with you that we have to reform ourselves internally, and that should be given higher priority. We have about 4 yrs. till full WTO still left, but no govt. till now has had, nor does it seem like any will have the guts to take the hard decisions necessary to do the internal reforms. Things in India only work when there is a crisis, so, expect lot of what you want only to happen near the final deadline of WTO. A sad commenntry on our politicians/politics, but that is the way it is.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 06:10

We refuse to reform for the following reasons:<BR>1. Vested interests are too well entrenched- Anybody who challenges the system is sidelined. I still wonder whether Kumarmangalam died a natural death. <BR>2. Labor unions are the biggest enemies of labor in India. Draconian laws make it impossible to fire a worker which obviously makes businessmen reluctant to hire them.<BR>3. Middle class genuinely believes that Indian industry can never make quality goods. Simple case of inferiority complex. <BR>4. Goddamn materialist culture that does not understand the meaning of quality and chases brand names. i know plenty of Indians whose ambition in life is to own a Mercedes. Overpriced and unreliable car in my opinion.<BR>5. And most of all petty hatred and jealousy of businessmen and the rich. <BR>6. Sentimalist, ineffectual, and socialist mindset of the middle classes. (Cant blame the poor, they are misinformed and take their cue from the middle class).<BR>Will continue this tirade. Sorry if this sounds a little bitter. My pet peeve. All problems including security evolve from our mindless economic policy.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 07:34

<A HREF="http://www.indian-express.com/ie20011107/ed1.html" TARGET=_blank>http://www.indian-express.com/ie20011107/ed1.html</A> <P>Hope this means a bit more sense from labor unions. As the article also states, I doubt it myself.

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Re: The Road to World Power

Postby Nikhil Shah » 07 Nov 2001 08:04

Unless an average Indian doesn't earn Rs 49.00 to compete with an average American earning a dollar....this mano-a-mano-survival of the fittest is bullshit!!<P>That doesn't mean we follow socialist economic policies. There is a middle ground where we keep what belongs to us and share what belongs to others. You get my gist? Gujjus will know what I am talking about, "Taru maru sayyaru, maru mara baap nu". For the business majors: We only compete where we have the competitive advantage. Everything else should be subsidized or protected. And than slowly build the capabilities (gain the advantage) and than kick ass!!

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Re: The Road to World Power

Postby kautilya » 07 Nov 2001 08:23

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Nikhil Shah:<BR><STRONG>Unless an average Indian doesn't earn Rs 49.00 to compete with an average American earning a dollar....this mano-a-mano-survival of the fittest is bullshit!!<BR><BR>That doesn't mean we follow socialist economic policies. There is a middle ground where we keep what belongs to us and share what belongs to others. You get my gist? Gujjus will know what I am talking about, "Taru maru sayyaru, maru mara baap nu". For the business majors: We only compete where we have the competitive advantage. Everything else should be subsidized or protected. And than slowly build the capabilities (gain the advantage) and than kick ass!!</STRONG><HR></BLOCKQUOTE><P>And, why would anybody let you compete in his country if you don't let them compete in yours? and how do can protectionism make industry competitive? the whole Indian industry was protected for 50 years, and that's long enough for anybody to become competitive. It definatly didn't help. <P>why is everyboiy scared of opening up to competition? don't you have any faith in the ingenuity of our people? Believe me, if opened up we will kick ass... there may be short term shocks, but remember that we are smart people, and we will win.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 09:11

In the past 50 years industry may have been protected from external competition but what about internal harassment. If the police saves you from the thief and then robs you thats not protection. Ingenuity cannot create miracles out of thin air. Indian entrepreneurs are on strike. Survival of the fittest is the law of nature, whatever be the per capita income. And when does the west let us compete fairly in agriculture, steel, textiles and so forth. Bring the cost of energy, transport, indirect taxes, regulation complexity, interest rates down to global levels first. Can be done if political will is present. Develop suitable financial institutions or allow private sector to do so. Provide speedy justice in commercial court cases. Allow hiring of contractual labor and make labor markets more flexible. Improve education system so that labor quality improves. Then open the markets. Banish unfair advantages to state enterprises.Improve regulation of restrictive trade practises.I have supplied a partial list of handicaps by ndian industry.

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Re: The Road to World Power

Postby kautilya » 07 Nov 2001 09:47

Atish:<BR>I am all for removing the ineffieciencies in the internal economy that you are talking about. But, the only way I see those ineffieciencies being removed is public pressure after the economy is opened up, or some other crisis. Even the 1991 reforms happened only because of the BOP crisis. There is no other way I see, except if the current breed of politicians suddenly attain elightment. :)<P>Infact, long back I had started a thread which in which my starting post said something exactly like you i.e. removal of internal economic inefficiencies should have much much higher priority then external opening up. But, both have to be done. The only problem is that I don't see the govt. taking that stand. The only way to get our politicians to get off there posteriors is to give them a crisis. the only way I see that happening right now is the various WTO deadlines till 2005.If our politicians were a little bit savy that would have prepared for it long back, but I am afraid they are not.

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Re: The Road to World Power

Postby Sridhar » 07 Nov 2001 11:04

Nikhil:<P>Your argument is not borne out either by the historical experience of economies or indeed the prediction of economic theory. In truly free markets, it does not matter what is the relative level of incomes, availability of resources etc. of the economies involved. Free trade is always beneficial to both the rich and the poor. Perhaps you have heard of the famous Ricardian balance in this regard. Of course, the current so-called 'free trade' regime (the WTO) is not so free and is tilted towards the rich and the powerful in many ways. In spite of that, every evidence suggest that being part of the WTO is better than not being a part of it.<P>Secondly, whether you like it or not, you are going to have to open up when the WTO deadline comes. Would it be better to let the industry remain protected till the WTO deadline and get a couple of years of false security or would it be better to progressively expose them to competition so that they learn to compete and are better prepared when the deluge of foreign competition opens in a couple of years. IMHO, it is prudent to do the latter.<P>Note that this does not mean unilaterally opening up our house for all outsiders to enter. There would continue to be mechanisms in the WTO that protect domestic industry and we should prudently use these to protect against unfair competition or to extract concessions from other countries.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 12:16

Kautilya,<BR>I am almost completely in agreement with you. It will take a crisis to reform. Unfortunately if we reform at the last minute it will cause maximum hardship and that much more time for Indian business to catch up. result being more unemployment and unrest and so on and so forth..<P>Sridhar,<BR>Very good arguments to Nikhil's post. However Indian businesses are well aware of what to expect post WTO. They desperately need help to survive and strengthen till then. A sick man should not be progressively exposed to disease. Instead of breeding immunity he might die (and right now Indian industry is dying fast). Just look at the number of companies registered with BIFR over the past 5-6 years. The number balloons every year.

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Re: The Road to World Power

Postby abhischekcc » 07 Nov 2001 13:23

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by kautilaya:<BR><STRONG><P>I guess then all the economic policies from 1947-1990 were great, :D <P>But what you are suggesting that we should hand over our markets to the foreign companies, just in the name of consumer.<P>I'll give you an example of inefficiency.<BR>The govt. gives sibsidies to the fertilizer factories to bring down the prices of fertilizers. , Now what this means is that no matter how inefficient the production process , the company will always be in the market. In fact, the more costly its production, the higher the amount of subsidies it gets from the govt. :eek: :eek: <BR>This system has to go.<BR>It should be replaced by the more efficient INDIAN industries, not more efficient FORIEGN industries.<BR>We should be creating a win-win situation, in which both our consumers and our industries, win. Not a win-lose situation, where the consumer wins at the cost of the Indian industry.

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Re: The Road to World Power

Postby abhischekcc » 07 Nov 2001 13:28

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Rak:<BR><STRONG>Policy not Poverty the cause of Indian woos<P> <A HREF="http://inq.philly.com/content/inquirer/2001/11/05/business/CASS05.htm" TARGET=_blank>http://inq.philly.com/content/inquirer/2001/11/05/business/CASS05.htm</A></STRONG><HR></BLOCKQUOTE><P>I don't know what the lady is talking about. I went from Delhi to Agra a few months back, and there no such security check. :mad: <BR>Maybe , that they have been added after 911.

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Re: The Road to World Power

Postby abhischekcc » 07 Nov 2001 13:35

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Atish:<BR><STRONG>The problems in our economic policy are manifold. For 50 years entrepreneurs and businessmen have been treated as criminals and worse. Property of honest citizens has been confiscated in the name of socialism and nationalization. The interests of labor have been sacrificed to the careers of trade union leaders. Free enterprise has been curbed. Bureaucratic strangleholds on every aspect of business. And criminal rates of direct and indirect taxation. Indian industry and business has to be protected because it has been crippled over decades. In time with real and meaningful reform Indian industry will kick ass so hard that it would be the greatest economic miracle in history anywhere. But until that happens we have to protect our own. Else prepare for dumping by the Chinese and the West, massive job losses (that is already happening) and economic subjugation.<BR>The middle class will slowly be unable to afford the phoren goods they desire so badly now.</STRONG><HR></BLOCKQUOTE><P>I agree with you wholeheartedly here.

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Re: The Road to World Power

Postby abhischekcc » 07 Nov 2001 13:39

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Atish:<BR><STRONG><BR>1. Vested interests are too well entrenched- Anybody who challenges the system is sidelined. I still wonder whether Kumarmangalam died a natural death. </STRONG><HR></BLOCKQUOTE><P>I believe you are refering to AV Birla, not his son Kumarmangalam, who is hale and hearty. The fact is, AV Birla was suspected of having died of AIDS. :D

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Re: The Road to World Power

Postby abhischekcc » 07 Nov 2001 13:48

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Nikhil Shah:<BR><STRONG>Unless an average Indian doesn't earn Rs 49.00 to compete with an average American earning a dollar....this mano-a-mano-survival of the fittest is bullshit!!<P>That doesn't mean we follow socialist economic policies. There is a middle ground where we keep what belongs to us and share what belongs to others. You get my gist? Gujjus will know what I am talking about, "Taru maru sayyaru, maru mara baap nu". For the business majors: We only compete where we have the competitive advantage. Everything else should be subsidized or protected. And than slowly build the capabilities (gain the advantage) and than kick ass!!</STRONG><HR></BLOCKQUOTE><P>I agree with you whole heartedly here.<P>I think this is the first time I have agreed with an administrator, and that too wholeheartedly. :D

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Re: The Road to World Power

Postby kautilya » 07 Nov 2001 14:18

abhischekcc:<P>I am all for removing internal economic inefficiencies. Please read my previous post for more clarifications.

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 14:23

Abhishekcc,<P>I meant PR Kumaramangalam the erstwhile power minister. It warmed the cockles of my heart the way he took on the power mafia and denounced the public sector unions. Died of a mysterious illness.

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Re: The Road to World Power

Postby Nikhil Shah » 07 Nov 2001 21:56

Hey hey hey!! Don't jump on me because I used to "P" word. Read my last statement about NOT following Socialist Economic Policies.<P>As to what should be open up and how much depends on collectively how much do we stand to gain? Sure there will be loss of jobs/rozi-roti in some sector and others will offer greater opportunity. Collectively, the opening up should lead to gain for the country and ITS PEOPLE and hence I said slowly building up the capability. Isn't "antidumping duty on Indian steel in America" protectionism? All the sectors that rely on middle-class and up should be opened up. That is where the consumerism is rampant. At lower levels where there is very little education and a lot of poverty, meanial jobs should be protected. Who is going to feed these 300 million people? There are ways to bring efficiencies w/o relying too much on technology. And first step towards this opening-up should be with domestic privatization and (limited)JV w/ foreign companies.<P>If I were dubya running for election in India, I would call for "compassionate capitalism"!!<P>Here's a thought I will leave you all with. Would you like to protect diary industry from China? Today we literally and figuratively the land where milk flows, the largest producer of milk in the world. I can asure you that China is quite capable for producing cheaper milk and other diary products than India. Would you put "anti-dumping" duty on China for that?

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Re: The Road to World Power

Postby Atish » 07 Nov 2001 23:38

Nikhil,<BR>A few points.<BR>1. True capitalism with MINOR checks and balances here and there is always compassionate. Every other system restricts growth and encourages poverty.<BR>2. All industries employ menial labor (and many more with support services and ancillary industies) irrespective of target market.<BR>3. A lot of countries can produce milk cheaper than India (Again culprit being goverment, dairy business on commercial scale is not allowed apart from coops). It is the cost of refrigeration and transport that protects local milk producers.<P>I am proud to use the P word. Protect every damn sector of the economy you can except a few where we are already in a postion to compete (I dont know which ones off the bat).<BR>A few sectors that should be open are those where the technology/experience/expertise will help us. These include all kinds of high tech manufacturing, financial institutiona and insurance co, defence etc. This is because Indians were not allowed to open businesses in these sectors and build a knowledge base.<P>P.S. Nobody is feeding the 300 million even now. And nobody can because there is simply not enough to go around. Without growth nothing is possible. And nobody should expect the rich to devote themselves to feed the poor without personal financial incentives. Enlightened self interest is the best way to motivate people. Speaking from personal experience, I can say being called bloodsuckers (movies/political speeches/journos) even when acting with best intentions at heart has caused deep grievances among business people and entrepreneurs in India. Though a proud and patriotic Indian, I dont owe any of my countrymen a free lunch. <BR>As an example on plantation activity cumulative direct and indirect taxes are still in the 60-70% range. This is robbery by another name.

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Re: The Road to World Power

Postby abhischekcc » 08 Nov 2001 12:31

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Atish:<BR><STRONG>Abhishekcc,<P>I meant PR Kumaramangalam the erstwhile power minister. It warmed the cockles of my heart the way he took on the power mafia and denounced the public sector unions. Died of a mysterious illness.</STRONG><HR></BLOCKQUOTE><P>OOPS. Got that wrong.<BR>But even he was reputed to have contracted AIDS.<P>Whenever you hear that a famous so-and-so has died of malaria, think of AIDS. Malaria and AIDS have got quite similiar treatment and medicines, hence it is easier to hide the fact that the said patient has AIDS.<BR>This goes for a lesser extent for TB as well.<P>AV Birla died in US of Malaria. Should we take it to mean that America lacks the medicine to fight malaria? :D

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Re: The Road to World Power

Postby jarugn » 08 Nov 2001 23:47

Important Lesson from Norway - give power to women!<BR> <A HREF="http://latimes.com/news/nationworld/world/la-000089269nov08.story?coll=la%2Dheadlines%2Dworld%2Dmanual" TARGET=_blank>http://latimes.com/news/nationworld/world/la-000089269nov08.story?coll=la%2Dheadlines%2Dworld%2Dmanual</A>

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Re: The Road to World Power

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Re: The Road to World Power

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Re: The Road to World Power

Postby svinayak » 29 Nov 2001 10:06

The Chinese economic miracle <P> Alok Ray <P> BY NOW there is a general consensus that the<BR> Chinese economic performance since 1978 (when<BR> reforms officially started under Chairman Deng) is<BR> an even bigger miracle than the East Asian,<BR> involving Singapore, Hong Kong, Taiwan and<BR> South Korea. Chinas GDP averaged nearly 10 per<BR> cent over the two decades beginning 1978. But<BR> even more impressive has been its success in<BR> reducing poverty. The percentage of rural poor<BR> by the international poverty line norm of $1 a<BR> day, using 1985 purchasing power parity fell from<BR> 60 per cent in 1978 to 11.5 per cent in 1999.<BR> And based on the Chinese official poverty line<BR> ($0.7 a day), the percentage of rural poor was<BR> lower 33.5 per cent in 1978 and 4.6 per cent in<BR> 1999. In Russia, by contrast, GDP in the 1990s<BR> fell by 44 per cent and poverty rose from 2 per<BR> cent to 50 per cent. The share of agricultural<BR> labour in total employment fell from over 70 per<BR> cent in 1978 to around 50 per cent in 1996. <P> According to the World Bank, it took the US 50<BR> years and Japan 60 years to achieve a structural<BR> transformation similar to Chinas. Despite rising<BR> urban-rural and regional inequalities in the<BR> post-reform period, the benefits of growth were<BR> widely shared. During 1978-1995, 20 Chinese<BR> provinces had per capita growth rates higher<BR> than any other country. Over the last two<BR> decades, Chinas share in world trade jumped<BR> from 1 per cent to about 4 per cent (Indias is<BR> only 0.6 per cent) and is projected (by the World<BR> Bank) to touch 10 per cent by 2020. Foreign<BR> direct investment (FDI) flows into China rose<BR> from near zero in 1978 to more than $40 billion in<BR> 2000 (contrast this with Indias $2.3 billion).<BR> Whichever way one looks at it, Chinas economic<BR> performance is nothing short of a miracle. <P> One often wonders why China has done so well<BR> while countries such as India are woefully<BR> lagging. What are the key factors behind Chinas<BR> success? <P> Role of overseas Chinese: China embarked on<BR> reforms more than a decade before India did.<BR> China, from the very beginning, could get<BR> substantial help from overseas Chinese,<BR> especially from Hong Kong and Taiwan. The<BR> capital, technology, entrepreneurial ability,<BR> marketing skills and international trading<BR> experience of the overseas Chinese made a<BR> formidable combination with the advantages of<BR> cheap land and abundant supply of low-priced<BR> disciplined labour in the mainland. <P> Chinas export boom was facilitated by the<BR> relocation of labour-intensive parts of the<BR> production process from Hong Kong and Taiwan<BR> to the special economic zones (SEZs) in the<BR> coastal provinces. Over 80 per cent of FDI into<BR> China comes from overseas Chinese. By<BR> contrast, NRIs are mostly professionals with<BR> much less involvement in trading and<BR> entrepreneurial activities. They also have much<BR> less money to invest. Their preference is for safe<BR> investment in dollar-denominated fixed deposit<BR> schemes offered by Indian banks at higher<BR> interest rates, rather than in the more risky<BR> equity market. Moreover, Indian expatriates are<BR> much more cosmopolitan in outlook and do not<BR> feel any special bond to invest in their<BR> motherland. <P> Labour market conditions: Contrary to popular<BR> perception, China pursued raw capitalism in the<BR> coastal provinces. Labour unions, though allowed<BR> in China, mostly played a co-operative role with<BR> the management, instead of the collective<BR> bargaining role practised in non-Communist<BR> countries such as India. Managers in the<BR> export-oriented factories in the SEZs were given<BR> unhindered right to hire and fire workers. Many<BR> of the workers (often female) were temporary<BR> migrants from the rural areas and did not receive<BR> the benefits given to employees in state-owned<BR> enterprises, which kept the labour cost of<BR> export-production low. This provided important<BR> incentives for FDI to flow to China, rather than<BR> to countries (such as India), which had even<BR> lower wages but that advantage was more than<BR> offset by labour indiscipline and militant trade<BR> unions. <P> Role of administration and political system:<BR> During 1995-2000, China received FDI of nearly<BR> $210 billion, while India got less than $14 billion.<BR> Apart from other advantages, China is generally<BR> perceived to offer a better business environment<BR> in terms of infrastructure, stability in policy<BR> decisions, speed in implementation and<BR> commitment to economic reforms. Corruption<BR> does exist in China, but unlike in India, things get<BR> done quickly once the consideration is paid. <P> A single-party authoritarian political system<BR> ensures continuity of policy (so long as the<BR> leader is not dislodged), facilitates extension of<BR> successful experiments to other parts of the<BR> country, lessens the chance of negotiating with<BR> the wrong guy (recall the Enron episode in India)<BR> and speedy implementation of policy, once<BR> decisions are taken. One should, however,<BR> remember that China also faced many adverse<BR> conditions, which put it at a relative<BR> disadvantage. For example, the area under<BR> cultivation per worker in China was only 40 per<BR> cent of that in India and 20 per cent of that in<BR> Brazil (World Bank data). <P> Moreover, China had to experience the<BR> dislocation arising out of the disastrous Great<BR> Leap Forward and the Cultural Revolution<BR> experiments under Mao. However, these proved<BR> a blessing in disguise for its subsequent reforms,<BR> as the Cultural Revolution weakened central<BR> control and the power of the bureaucracy. <P> Chinese leaders also learnt from past mistakes.<BR> They realised the dangers of nationwide<BR> experiments, the need for material incentives<BR> (which Mao ignored), experiments suited to local<BR> conditions, regional autonomy, gradual reforms,<BR> pragmatism instead of dogmas and the<BR> importance of the rule of law (remember Deng<BR> was publicly humiliated twice during the lawless<BR> days of the Cultural Revolution). Though India<BR> has the advantage of a Western-style legal<BR> redress system (which presumably the foreign<BR> investors prefer), the inordinately long judicial<BR> process robs much of its effectiveness. <P> Instead of following the big bang, approach<BR> adopted in the erstwhile USSR and East Europe<BR> in the 1990s, Chinese reforms followed a gradual<BR> evolutionary path (crossing the river by touching<BR> stones, to use Dengs celebrated phrase) based<BR> on localised experiments in selected sectors and<BR> its extension to other areas only when the local<BR> experiments turned out successful. China<BR> followed a sequential approach. Reforms were<BR> first introduced in agriculture and foreign trade<BR> and foreign investment sectors (that too in<BR> limited coastal regions) and later extended to<BR> industry. <P> The gradual introduction of private initiatives and<BR> market-determined prices in agriculture (which<BR> replaced collectivised farming) brought prosperity<BR> to a vast number of poor. (Earlier, land reforms<BR> under Mao had destroyed big landlords.) This laid<BR> the ground for the subsequent phenomenal<BR> growth in rural industries, by generating local<BR> investible funds from rising rural incomes, freeing<BR> surplus labour from collective farms for industrial<BR> employment at low wages and providing a<BR> growing market for industrial consumer goods. In<BR> the process, the initial reforms built up a big<BR> political support base for more reforms. <P> Similarly, the infusion of foreign capital and the<BR> growth of production for the competitive world<BR> market exposed China to new ideas and<BR> technologies, and changed the closed mindset of<BR> earlier decades. Even a casual visitor to a<BR> department store abroad would be struck by the<BR> bewildering variety of innovative Chinese goods,<BR> in sharp contrast to the limited range of<BR> traditional export products from India. In the first<BR> stage, China, unlike the USSR and East Europe,<BR> did not try to reform the state-owned<BR> enterprises by privatising existing units. The<BR> Chinese relied more on introducing competition.<BR> The rapid growth of new enterprises (mostly<BR> collectively owned firms and some private firms)<BR> created the competitive pressure on the<BR> state-owned units, which forced them to<BR> improve efficiency. <P> China is now going for privatisation of large-scale<BR> state enterprises only after the non-state<BR> enterprises have developed the potential to<BR> absorb the redundant workers in state<BR> enterprises. Even then, privatising the<BR> large-scale state enterprises with its social and<BR> political fallout is proving to be a big headache<BR> for Chinas policymakers. <P> Reforming government at different levels was<BR> another important feature of the Chinese<BR> reforms. China is the first country where the<BR> ruling Communist party voluntarily shifted its<BR> official ideology for planning to markets and<BR> private property rights without any political<BR> revolution. Vietnam could well be the next.<BR> However, some researchers feel that China, by<BR> postponing reforms in several areas to avoid the<BR> social and political cost of reforms, may have<BR> created conditions that would make it difficult<BR> for it to continue the current growth momentum.<BR> But this is a subject matter that needs to be<BR> addressed separately. (The author is Professor<BR> of Economics, IIM-Calcutta.)

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Re: The Road to World Power

Postby venkat_r » 06 Dec 2001 18:48

<A HREF="http://www.rediff.com/money/2001/dec/06wbank.htm" TARGET=_blank>India set to be major economic power: World Bank</A>

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Re: The Road to World Power

Postby kautilya » 30 Dec 2001 02:02

<B> A Must Read !!</B><P>This is a very uplifting series of articles in the current issue of outlook. <P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=1" TARGET=_blank>This was the year Arthur C. Clarke invented for all of us. Fittingly, our millenarian fetish played itself out in macabre fashion. Yet, as we stumble onto 2002, Sandipan Deb rediscovers the unacknowledged boons of 2001. </A><P><BR><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=7" TARGET=_blank>2001 didn't begin all too well, but it has ended better. We have graduated to becoming a quasi-ally of the US and carved a major role in Afghanistan.</A><P><BR><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=3" TARGET=_blank>From a trickle of drought-weary villages, it's now ready to deluge kasba, city and metropolis alike. Water harvesting is an idea whose time has come.</A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=10" TARGET=_blank>An Indian cartel on the lines of OPEC? The industry weathers a tumultuous year, and the technology bloodbath, to stand tall amid global ruins. </A><P><BR><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=4" TARGET=_blank>ISRO is not your average space cowboy, dabbling in arcana. With its technological edge, it's making forays into newer domains of application—and the ultimate orbit of world markets, with a 20% share. </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=5" TARGET=_blank>He was king, finally. He bought one, got galores free. In the feast of choices laid before him by a Globus or a Big Bazaar, he has never been more full. </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=8" TARGET=_blank>India is on the threshold of the third technological revolution—after the industrial and the IT booms—as old-style ventures romance their biotech ambitions </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=9" TARGET=_blank>A new work efficiency, and easy funding, promises to give us what we've always only dreamt of— 6,000 km of velvety asphalt to zip on endlessly </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=11" TARGET=_blank>The Class of 2001 has fresh faces. Koneru Humpy, P. Gopichand and the junior hockey team are the heroes busy scripting a text for fans to celebrate. </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=2" TARGET=_blank>There's more to Indian cinema than the NRI's nostalgia for home. Lagaan, K3G, and Moulin Rouge mark Bollywood's arrival on the world stage. </A><P><A HREF="http://www.outlookindia.com/full.asp?fname=Opening+Essay+%28F%29&fodname=20020114&sid=6" TARGET=_blank>Hindi cinema in 2001 was a dismal affair, largely. But three films made us, and the world, feel good in a year full to the brim with morose tidings. </A>

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Re: The Road to World Power

Postby kautilya » 31 Dec 2001 01:19

<A HREF="http://http://economictimes.indiatimes.com/articleshow.asp?art_id=632408210" TARGET=_blank>Some do a Houdini, others hang in</A>

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Re: The Road to World Power

Postby venkat_r » 02 Jan 2002 08:38

<A HREF="http://www.hinduonnet.com/thehindu/holnus/02011812.htm" TARGET=_blank>http://www.hinduonnet.com/thehindu/holnus/02011812.htm</A><BR><B>India eighth in world telecom sector </B>

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Re: The Road to World Power

Postby abhischekcc » 09 Jan 2002 16:46

Let me move this topic to the top.

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Re: The Road to World Power

Postby abhischekcc » 09 Jan 2002 16:50

Let me move this topic to the top.

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Re: The Road to World Power

Postby krsai » 11 Jan 2002 01:24

It is high time Govt of India takes up such measures: <p>Bush backs automotive revolution

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Re: The Road to World Power

Postby durvasa » 11 Jan 2002 15:47

AFAIK, Indian growth in 2001-2002 is expected to be second highest (4.8-5.5%) after China (7.0-7.4%). No other country (with GDP>30bn) is growing faster than us. <p>http://new.financialexpress.com/fe_full_story.php?content_id=308<p>Th other nations with similar growth expectations are Russia and Bangladesh ( both ~5.0%). While Bangaldesh performance is impressive, the Russian growth is mostly due to higher oil price. Russia grew by more than 8% last year, beating even China.
<p>I don't think (but not substantiated) any of the 'tiger' economies are growing faster and I am 100% sure (i have the latest Economist of my desk as i write) that no OECD is growing at more than 3%. <p>Can anyone provide a link to expected growth rates of all major nations.<p>Indian 2Q performance (5.3%) ending Sep-2001 was better than that in 1Q , resulting in an upward revision of GDP growth estimates, probably the only nation to have achieved so. <p>http://atimes.com/ind-pak/DA04Df03.html

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Re: The Road to World Power

Postby kautilya » 11 Jan 2002 22:16

<blockquote><font size="1" face="Verdana, Arial">quote:</font><hr>Originally posted by durvasa:
AFAIK, Indian growth in 2001-2002 is expected to be second highest (4.8-5.5%) after China (7.0-7.4%). No other country (with GDP>30bn) is growing faster than us.
<hr></blockquote><p>Even then, I feel we are nowhere near our potential, and that is the sad part. We need to remove rest of the shackles on out economy. I am really very disappointed by the performance of BJP govt. on the economic front. It's always been just talk and they have not done much in the area of reforms.

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Re: The Road to World Power

Postby svinayak » 17 Jan 2002 22:54

Envisioning A New India: The Prahalad Prescription
The challenge before us is daunting. What should we do and where we do we begin? CK Prahalad spoke recently at a CII Summit in Bangalore. The following is taken from a note on the CII website on Prahalad's talk:<p>Domestic companies should consider India's large poor population as a huge market opportunity and design products and systems that are targeted at them. The skills and innovations developed through this process can then be used for selling products and services to poor people throughout the world. The success of this model will contribute towards an annual economic growth of 10 to 15 per cent and the creation of 10 to 15 million new jobs every year, India's two top priorities for transforming the economy.
"Can we convert 800 million poor people of India into an opportunity for innovation for developing and marketing products for 4.5 billion people through out the world,'' Mr Prahalad said. This approach would help Indian companies become innovation driven, create global scale, scope and technology and result in the creation of global Indian companies as well as a world scale domestic market.<p>Mr Prahalad said India would be able to influence global industry evolution only if it becomes a growth market, focuses both on manufacturing and services, creates global scale companies, stops differentiating between domestic and export markets and develops low cost high quality technology.<p>A 21st century super power, Mr Prahlad said would have to be both militarily and economically strong. If India continues on its current five per cent growth path, the gap between India and other countries including China will continue to widen and by 2010, India's economy will be one-sixth that of China. "The challenge before India is to transform its economy. With a five per cent growth rate, India will be unable to compete with China in transforming its economy. At five per cent growth, you won't get a chance to play,'' he said.<p>Therefore, unless India was willing to accept a diminished international status, it had no <p> option but to clock an economic growth of 10 to 15 per cent and to create 10 to 15 million new jobs, year after year, for the next 20 years.
Mr Prahalad said global firms today were in a constant search for new revenues, cost reduction, quality improvement, scale and speed. In this context, he said India had sold itself short by focussing too much on low labour cost advantage and not adequately emphasising the quality aspect.<p>
It is interesting to think about Prahalad's comparison with China. In the one area where India leads China, see what the Chinese are starting to do. Saritha Rai wrote about it in a recent New York Times article, "Chinese Race to Supplant India in Software" (January 5, 2002):<p>The world's two most populous countries, with more than a billion people each, will fight this war with programmers, which they both churn out in the thousands.
Indian labor is cheap, but Chinese labor is cheaper. Programming produced by Chinese costs about 20 percent less than that produced by equally qualified Indians, and some see this as eventually giving China a big advantage. At the same time, companies like Infosys and Wipro are looking for ways to use Chinese talent for their own software development efforts.<p>Kiran Karnik, president of Nasscom, said China would take several years to catch up with India. "However, we can't afford to be complacent," he said.<p>Crisscrossing the 50-acre Infosys campus in a golf cart, [the Chinese] delegation was asked how long it would take China to overtake India as software powerhouse. "In the next 5 to 10 years, we hope to do that," Mr. Weiping, vice president of Jiaotong University in Shanghai, said with quiet calculation.<p>
Are we thinking of getting ahead of China in manufacturing? Are we thinking 5-10 years ahead?

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Re: The Road to World Power

Postby Sridhar » 17 Jan 2002 23:14

While India has grown overall at about 6% in the 90s, like all average figures, this conceals more than it reveals. Actually, we have seen far higher growth in a few states and low growth or even decline in others. My guess is that the SDP of states like Maharashtra, Gujarat, TN, Karnataka and perhaps AP have not been any lower than the Chinese economy, though it would be lower than the corresponding areas in China (Shanghai, Shenzhen etc.) Bihar has, on the other hand, probably seen a decline due to the decline in mining and steel industries and I doubt that any area of China has declined as it has. The other difference is that the high growth areas in China are also where the population is centred, whereas in India, the Gangetic belt, which has a huge chunk of population, has not benefited from the growth in the last decade.<p>Does anybody have any info on the State Domestic Products for all the states in the last decade or so?<p>What we should be doing is to bring the basket case states to a semblence of growth, if not high growth, and to develop certain regions (spread across the country) as ultra-high growth regions. The SEZ plan has some potential in this regard, but it is not yet being unleashed (due to political differences on labor laws and other regulations).

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Re: The Road to World Power

Postby Sridhar » 17 Jan 2002 23:24

This article talks about the state-level growth issues that I mentioned in my earlier post.<p> http://www.business-standard.com/today/economy2.asp?Menu=3

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Re: The Road to World Power

Postby Calvin » 01 Apr 2002 00:53

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