Indian Economy - News & Discussion 27 May 2012

[vera_k]

For the purposes of the article, it is treated like a tax since it is one more thing that reduces disposable income in the hands of the consumer. If not for social security, the federal tax rate could be higher by 12% such that the deficit is turned to a surplus.

[krisna]

Why Isn't India A Superpower Or Global Leader?

The main difference between India and China is that China’s savior, Deng Xiaoping, came to power in the 1970s and started the liberalization from 1976. Our savior, Narasimha Rao, came late, and we could start moving only from 1991.

Look at the GDP of both nations for the first twenty seven years in the chart below. Both competed at the bottom of the pit. Nehru and Mao fought on who could ruin their nation the most. Fortunately for China, Mao’s siblings and most of his children died young or were lost. Unfortunately for India, Nehru’s progeny survived, and the madness continued.

first diagnose the problem then the solutions can be found.

India vs. China in GDP 1950-2005

Notice China since 1976 when Mao died. India had a similar bump in 1964 when Nehru died. But, the euphoria was short lived, as Nehru’s successor could not live long enough to keep Nehru’s daughter out.

Look at the growth rates of both nations for the past sixty years. Both had comparable rates until 1976 (with China swinging far more), but since then, it has been consistently ahead of India (except 1989 at the time of Tianenmen). Then we caught up with them in the mid-1990s, and since then, the gap in growth has narrowed down.

See modern India going up with better consistency since 1991.

In the first seven years of economic freedom, India pulled sixty million people out of poverty – most of this in rural India. If you take the population growth at the bottom into account, the actual numbers could be close to one hundred million. That is no mean achievement.

we have to kick out congis for good along with the die nasty.

[krisna]

Gujarat Gas stake sale: Oil Ministry blocks PSUs bid

Gujarat State Petroleum Corp (GSPC) going solo in acquisition of British energy major BG Group’s stake in Gujarat Gas Co Ltd (GGCL) was a result of Oil Ministry blocking its PSUs from joining the Gujarat government firm.

Oil Ministry was vary of giving BJP—leader and Gujarat Chief Minister Narendra Modi any kind of advantage on the eve of elections in the state, sources said.

The ministry was upset about Modi claiming credit for gas pipelines that GSPC is to lay with oil PSUs from the east coast to the west and then up to Jammu. It felt majority of the money was being put in by oil PSUs but it was Modi who was getting all the credit, they said.

crap reasons given.

[krisna]

The Prime Minister wants public sector undertakings to either invest their surpluses or give them as special dividend. The PSUs are sitting on nearly Rs 2.50-lakh crore.

[krisna]

India Growth: The untold story –Caste as social capital
Introduction

Indian economy has been growing at a compounded average growth rate [CAGR] of more than 8.5 percent in the last five years. [1].The largest segment of the economy namely the service sector accounting for nearly 65 percent is also the fastest growing sector. We find that the share of non-corporate sector namely partnership /proprietorship firms in the service sector are significant. It is more than 70 % in activities like trade, hotels and restaurants, transport and other areas like plumber/carpenter/painter/mason/priest etc. Domestic savings have been the primary source of funding of this growth. They constitute nearly 90 percent and the role of Foreign Institutional Investments [FII] and Foreign Direct investments [FDI] has never been more than 10 percent. Of this domestic savings; the role of House hold savings is phenomenal and it constitutes nearly 75% of the domestic savings. Hence the growth is due to households in service sector facilitated by self-financing or financing by extended families/communities. Different castes/communities have played important role in this growth in terms of capital formation, market access; risk mitigation and diversification etc.

The Share and Growth of Service Sector

We find that nearly 60 percent of our economy is non-corporate sector consisting of partnership and proprietorship firms. Contrast this with US economy which has corporate sector having more than 75 percent share in their GDP in 2010 [2]

The non-corporate sector consists of tiny, small and medium enterprises and characterized by partnership and proprietorship –self employed organizations. They are primarily held by families/extended families and the role of caste/community in promoting, organizing, financing, marketing is very important. We first find out community –wise ownership of Indian Economy.

The Role of OBC’s/SC/ST in Enterprises

We have the exhaustive Economic Census 1998 and 2005, conducted by the Central statistical Organization [CSO] which covers 30.35 million and 41.83 enterprises engaged in different economic activities other than crop production and plantation. It deals with own account enterprises as well as establishments, an enterprise run by employing at least one hired worker .It covers private profit and non-profit institutions, cooperatives, and all economic activities including Dharamshalas /temples. We have given in table -7and Table-8 the salient findings pertaining to ownership of the enterprises. We find that in 1998 more than 50% of all enterprises are owned by SC/ST/OBC’s in the rural areas and the same is around 45% in the total. In 2005 the percentages are 55 for rural and 50 for total. This encompasses manufacturing/ construction / trade / hotel/ restaurant/transport/finance and business and other services.

The Enterprise survey also reveals that 90 % were found to be self-financing. Much of it has have come from informal caste networks [3].The number of establishments financed by financial and non-financial institutions were only 4 %. The remaining was financed by voluntary organizations /Government etc. What is required to be debated is the enhancement of credit systems for the enterprises and more so to those owned by SC/ST and other backward communities. In other words the focus should be on “Vaishya–vaisation” of the large segments of our civil society.

Was there discrimination in Education?

The renowned Gandhian, Dharampal visited British and Indian archives and reproduced reports which were undertaken by the British in Madras, Punjab and Bengal Presidency for 1800 to 1830. According to a detailed survey done during 1822-25 in the Madras Presidency [that is, the present Tamil Nadu, the major part of the present Andhra Pradesh, and some districts of the Present Karnataka, Kerala and Orissa] that 11,575 schools and 1094 colleges were still in existence in the Presidency and that the number of students in them were 1, 57,195 and 5431 respectively.[4] Much more important in view of our current debates and assumption – is the unexpected and important information provided with regard to broad caste composition of the students in these institutions. We have provided the data in Table-6. We find that the position as early as the first part of nineteenth century was significantly in favor of the backward castes as far as secular education was concerned.

Hence the British inspired propaganda that education was not available to the so called backward castes prior to their efforts is not valid. The “secular” education always played a major tool in social transformation prior to British rule.

Hence the foundations of modern education were very much present even in the beginning of 19th century and this has facilitated growth of entrepreneurship in the later period.

Social Capital

Mr. Gurucharan Das the corporate chief turned author and analyst say “In the nineteenth century, British colonialists used to blame our caste system for everything wrong in India. Now I have a different perspective. Instead of morally judging caste, I seek to understand its impact on competitiveness. I have come to believe that being endowed with commercial castes is a source of advantage in the global economy. Bania traders know how to accumulate and manage capital. They have financial resources and more important, financial acumen. They have an austere lifestyle and the propensity to take calculated risks. They have proven their flexibility of mind as they graduated from trading to industry. These constitute significant strengths. Joel Kotkin demonstrates these strengths in the case of Palanpur Jains, who have used their castes and family networks in wresting half the global markets for uncut diamonds from the Jews’ [9]

Role of Caste: An Illustration

The World Bank suggests that the remarkable growth of Tirupur [Tamil Nadu] is due to the coordinated efforts of Gounders many of them not even matriculates.

What is behind this story of development? The needed capital was raised within the Gounder community, a caste relegated to the land-based activities, relying on community and family network. Those with capital in the Gounder community transfer it to others in the community through long-established informal credit institutions and rotating savings and credit associations. These networks were viewed as more reliable in transmitting information and enforcing contracts than the banking and legal systems that offered weak protection of creditor rights”[10].

The amount of networking and contract enforcement mechanism available with caste institutions are not fully appreciated.. The same is true regarding Nadar community in Virudhunagar area pertaining to matches and printing industry.

Clusters and Caste

Clusters occupy a significant place in the economic scene in India. They play a crucial role in the development of the Indian businesses. Their contributions to the national income, employment, exports and innovation is very significant. The United Nations Industrial Development organization [UNIDO] had noted that in India “it is estimated that there are approximately 350 small scale industrial clusters and around 2000 rural and artisan based clusters contributing almost 60% of the manufacturing exports and 40 % of the employment in the manufacturing industry. [11]. The ministry of Small scale Industries Government of India has estimated that there are 2042 clusters of which 1223 are in the registered sector in 26 states and another 819 in the unregistered sectors in 25 states/union territories. They constitute significant portions in output, employment, exports in different states. [12]Actually the study of several clusters spread across several regions of the country points to the role of community is the emerging entrepreneurial development. [13].

The clusters are promoted and run by ordinary persons –most of whom are first generation entrepreneurs. The Sankagiri transport cluster of Tamil Nadu with the second largest lorry traffic in the country more than 80 percent were earlier drivers and cleaners. Similarly in the knitwear industry in Tirupur [Gounders] more than 90 percent were from Agricultural backgrounds. The descendants of farmers from Palanpur and Kathiawar have created the diamond hub in Surat which provides employment to large numbers in Antwerp and New York. The clusters have entrepreneurs with less formal education and more practical knowledge. There are studies to show that Tirupur Gounders [knitwear exporters] or Sivakasi Nadars [matches/crackers and printing] etc have mostly less than high school education but significant shop floor experience. This experience is gained in the units run by other family members or community members. [13] Hence community becomes a crucible for gaining practical knowledge.

Actually clusters are not anonymous group of individual entrepreneurs but interconnected extended families/caste and communities.

The important aspect of clusters are that they are relationship based business rather than rule based. They are also not state dependant but self funded and developed. Once the clusters develop the entrepreneurs establish schools, colleges, and other common facilities like marriage halls required for their communities. In almost all the clusters one could notice educational institutions established by the local communities. Clusters develop as full-fledged centers of economic and social /religious activities.

Another important characteristic is the generation of Funds and mobilization of resources from close and local sources; as we already saw significant portion of economic activity is self financing or funded by extended families/community networks.

This also facilitates dealing with failures due to risk taking. Actually there is risk sharing and failure is not looked down upon. The extended family/community extends its help in the context distress/failures and these acts as a major cushion in undertaking risky activities like exploring newer markets or innovating new product lines. Clusters act as drivers of economic activities facilitated by family/extended family/caste networks.

In a financial sense caste provide the edge in being a risk taker since failure is recognized and condoned and sometime encouraged by the group. Instead of creating large number of “proletariat” in the fashion of nineteenth century models. For that we need to recognize caste as the natural social capital present in our system.

Social backwardness, it is pointed out, as a valid reason for caste based reservations compared to reservations based on say economic criteria. But as M.N. Srinivas the doyen of sociologists point out that “An important feature of social mobility in modern India is the manner in which the successful members of the backward castes work consistently for improving the economic and social condition of their caste fellows. This is due to the sense of identification with one’s own caste, and also a realization that caste mobility is essential for individual or familial mobility” [14]

It is also assumed that caste is a rigid hierarchical system which is oppressive. But it is pointed out by the renowned sociologist Dr. Dipankar Gupta that “In fact, it is more realistic to say that there are probably as many hierarchies as there are castes in India. To believe that there is a single caste order to which every caste, from Brahman to untouchable, acquiesce ideologically, is a gross misreading of facts on the ground” The truth is that no caste, howsoever lowly placed it may be, accepts the reason for its degradation”[15]Dipankar Gupta ;Interrogating Caste; pp1; Penguin Books 2000].

caste and new capitalists

In his pioneering work on New Capitalists and Caste, Harish Damodaran elaborates on the emerging trends of new businesses and castes. [16] He delineates three general trajectories of industrial transition by communities. ”To further elaborate –The first is the conventional Bazaar- to- Factory route involving the various Bania and Vaishya groups. The second from office to Factory, refereed to the Brahmins, Khatris, Kayasthas, The Bengali bhadralog, and other scribal castes with a distinct urban middle class orientation. These sections traditionally dominated the bureaucracy and white colar professions and their entry into business was essentially a post –independence development. The third pathway; from field to factory covering those communities classified as belonging to other backward castes [ OBC’s] like the kammas,Reddy, Gounders, Jats, Patidars,Marathas,Nadars,Ramgarihas, who can be classified as “rural middle class’ whose political ;social and economic empowerment was one of the epochal features of last century. Their journey into corporate boardrooms howsoever uneven across regions paralleled a similar transition achieved by the urban scribal castes. Both these urban and rural middle class led trajectories have undermined the time honoroued association of “business communities” with an exclusive Vaishya [Bania] order

The recent studies by reporters of Mint [17] bring out the issue of caste facilitating the emergence of newer businesses in different locations of the country. The role of extended family and caste has been recognized in the upward mobility of middle castes in commerce and business

dalit enterprenuerships

The members were consulted by the planning commission recently as part of the pre-budget consultation. It marks the emergence of a nascent trend in India of enterprising dalits choosing to create independent businesses instead of depending on quotas in government jobs to get ahead.

Some of them have built impressive empires like Kalpana Saroj who heads Kamani Tubes with an estimated turnover of Rs 500 crore and Ratibhai Makwana whose Rs 300-crore Gujarat Pickers is one of the country’s largest polymer distributors. The delegation was led by Milind Kamble saw the invitation from the Plan panel as an acknowledgement that Dalit entrepreneurs are making their presence felt in Indian business circles. “It’s a great day for us that the government wants to hear our expectations from the union budget,” he said. “We want the government to formulate a policy to help Dalit businesses to grow so that we get out of the reservation trap. But there’s more to the Delhi visit than a meeting with Montek. The presence of such a large group of dalit business leaders in the Capital will also be an occasion to do some image re-engineering by presenting the changing face of these communities. Delegation members will hold an open dialogue with intelligentsia representatives on their plans for 2011 and their dreams and ambitions. [19]

We also find that caste in politics divides but caste in Economics unites. Not only that, castes which have used business as a route for upward mobility has succeeded much better than those who tried to use politics. The examples, which come to mind, are Nadars and Gounders in the former category and Vanniars, Thevars and Dalits in the later category in Tamil Nadu. [20]

conclusion

The metropolitan elite and rootless experts have concluded that caste is bad. They have made it into a “four letter” word and so every Indian is expected to feel guilty whenever caste is mentioned and talked about. In international forums caste is used as a stick to beat anything connected to Indian religions, customs, and culture. In other words slowly caste has been made to be for Indians what is “holocaust” for Germans and Austrians.

We have an uncanny ability to self-abuse ourselves in a masochistic way. But more tragic is our enthusiasm to convert all our strengths to weaknesses since some white men started abusing Indians for having caste system. We fail to recognize that it is a valuable social capital, which provide cushion for individuals and families in dealing with society at large, and more particularly the State. The Anglo-Saxon model of atomizing every individual to a single element in a right-based system and forcing him to have a direct link with the State has produced disastrous effects in the west wherein families have been destroyed and communities have been forgotten. Every person is standing alone in a sense stark naked with only rights as his imaginary clothes to deal directly with the State. The State also does not have the benefit of concentric circles of cushions to deal with individuals. The State has taken over the role of father and mother as well as spouse in terms of social security, old age homes and rights of children to sue and divorce parents!

Caste has been made a curse by the intellectuals based on the half-baked knowledge and acceptance of the Euro Centric model of individual, which is right based rather than duty, based system. Hence one way to overcome it is to have reservations since the euro centric model suggests that.

Caste has played an important role in the consolidation of business and entrepreneurship in India particularly in the last fifty or so years. The economic development has taken place in the “India Uninc” or the partnership/proprietorship activities financed by domestic savings and facilitated by clusters and caste/community networks. Actually caste has been a major social capital in our growth process and it has not been adequately recognized. This paper explores the economic growth constituents and catalytic components. It also identifies the role of caste in the growth process among the emerging entrepreneurial groups.

We need to recollect the important observation made by Swami Vivekananda in one of his famous lectures in response to the welcome address of Hindus of Jaffna in 1897. He says “The older I grow, the better I seem to think of these [caste and such other] time-honored institutions of India. There was a time when I used to think that many of them were useless and worthless, but the older I grow, the more I seem to feel a diffidence in cursing any one of them, for each one of them is the embodiment of the experience of centuries.” [21]

[krisna]

Republicans better for India Bharat Karnad

For reasons not entirely clear, the Indian establishment prefers the Democratic Party with romanticised memories of the days when Kennedy’s ambassador in New Delhi, John Kenneth Galbraith, had easy access to Jawaharlal Nehru, offered sound but unsolicited economic advice to a socialist India struggling with the statist demons it had created, and all the while displayed good humour. However, it was during Kennedy’s successor Lyndon B Johnson’s presidency that India lived ‘ship to mouth’ — relying on the gift of American PL 480 grain, which leverage was used ruthlessly to punish India for not supporting the American policy in Vietnam. It was, however, the denial in 1966 of the $980 million grant-in aid that Johnson had promised, which had the most devastating consequences. The nearly billion dollar aid was supposed to cushion India’s transition to a market economy. With that cushion pulled from underneath her, Prime Minister Indira Gandhi decided against going through with her economic reforms liberalising the Indian economy that Washington had been urging. Had Johnson not held back the funds, Indira Gandhi not gone back on her decision to eliminate the license-permit raj in 1966, India would have had a 10 year economic head-start and, who knows, might have been where China is today — on top of the world.

[Arjun]

India Growth: The untold story –Caste as social capital

This is truly original and insightful research ! Congratulations to Prof Vaidyanathan for articulating this important perspective on the caste issue.

[Hari Seldon]

Economist Bibek Debroy on the facts and fictions behind the Gujarat growth story (video interview)

Worthwhile watch, folks. IMVVHO.

[sugriva]

India Growth: The untold story –Caste as social capital

RVaidya does make some notable points with respect to the role of caste in the economic affairs of this country. However celebrating the caste based proprietorship model will be missing the wood for the trees. Consider this. Services constitute close to 63% of our GDP. By its vary nature a service is a conveyance of a product, perhaps with some value addition, from point A to point B. E.g. a kirana shop conveys products made by the organized sector to end customers. Transporters transport products made in one corner of the country to another. A barber uses a scissor, combs, a chair to cut a customer hair. However as you would have guessed the question to ask is what percentage of these products are being produced in caste based proprietorships. Go into any decent barber shop. The sanitized cabinet that the barber uses to store his scissors is not made in India. In all probability the chair too is imported. Another example. Look at any construction site. The tower crane is in all probability imported or made by the organized sector (L&T). So as and when we move to start producing these products, they will have to be made by the organized corporate sector which will increase the share of products and manufacturing in our GDP. This will also lead to the decline in the role of these so called caste based enterprises. So far the caste based organizations have shown no inclination to move into producing products. There are reasons for that. Most products today require significant knowledge of technology which is not accessible to these caste based networks. You can say that it is a barrier to entry for them.

[Arjun]

RVaidya does make some notable points with respect to the role of caste in the economic affairs of this country. However celebrating the caste based proprietorship model will be missing the wood for the trees. Consider this. Services constitute close to 63% of our GDP. By its vary nature a service is a conveyance of a product, perhaps with some value addition, from point A to point B. E.g. a kirana shop conveys products made by the organized sector to end customers. Transporters transport products made in one corner of the country to another. A barber uses a scissor, combs, a chair to cut a customer hair. However as you would have guessed the question to ask is what percentage of these products are being produced in caste based proprietorships. Go into any decent barber shop. The sanitized cabinet that the barber uses to store his scissors is not made in India. In all probability the chair too is imported. Another example. Look at any construction site. The tower crane is in all probability imported or made by the organized sector (L&T). So as and when we move to start producing these products, they will have to be made by the organized corporate sector which will increase the share of products and manufacturing in our GDP. This will also lead to the decline in the role of these so called caste based enterprises. So far the caste based organizations have shown no inclination to move into producing products. There are reasons for that. Most products today require significant knowledge of technology which is not accessible to these caste based networks. You can say that it is a barrier to entry for them.

I think you are misunderstanding the point of the article - which is on the role of caste as 'social capital' towards the promotion of entrepreneurship. And this would include all kinds of entrepreneurship - including 'product-based' and 'organized corporate sector' types that you've mentioned.... As the article points out, Tirupur is an example of caste-based community entrepreneurship largely by the Gounder community of Tamil Nadu. There are scores of highly corporatized firms with revenues in excess of 100Cr in that cluster.

I think all Indians are aware that certain communities have displayed more entrepreneurship flair than others - so the question is what contributes to this differential performance and can it be replicated. The differential performance is explained by the concept of 'social capital' whereby some communities place perhaps more emphasis on entrepreneurship and risk-taking than others; possibly failure is not looked down upon as much, & most importantly the caste / community provides the support system required so that the entrepreneur can take risks as appropriate. These and other attributes are what go towards the sum total of 'social capital' for entrepreneurship that can be attributed to the caste.

Bottomline being, the 'social capital' provided by some castes has played a key role in Indian entrepreneurship - and replicating these same features in other castes can perhaps boost the competitiveness of Indian entrepreneurship even further.

[Theo_Fidel]

All of this misses the essential point that caste based transactions are necessary only because trust based transaction is non-existent in India.

Without a proper trust based system our economic future will remain cloudy. The disasterous experiance of the TMB should not be forgotten. Caste based systems are extraordinarily in-efficient users of capital, money flows to the the strongest mannan rather than the the most productive and innovative. Scaling is always an issue. Success is always accidental and usually unrepeatable. A single Hyundai factory in Chennai produces more wealth than the whole of Tirupur. And it is repeatable with no restrictions on the 'type' of people.

As long as we have primitive systems like 'caste' based transactions and their defenders we can not progress fully. We can not have enforceable law based systems or strong meritocratic institutions to run our nation. Without that we are guaranteed to remain poor.

There are no short-cuts to becoming rich.

15+ years of schooling for all.
Strong legal system
Progressive social system
Hard work for all

[Arjun]

As long as we have primitive systems like 'caste' based transactions and their defenders we can not progress fully.

What exactly do you mean by 'caste' based transactions and who is defending it ? TMB and other community banks are hardly the type of support envisaged in the article - we are talking about the more intangible support system and values that makes say Palanpuri Jains so successful in one particular trade and replicating the support system across other communities who wish to be more entrepreneurial.

Obviously FDI like that of Hyundai has its place, but indigenous entrepreneurship is even more critical than FDI in promoting the local economy of any country. Every blue-blooded consulting firm from McKinsey, Booze, Monitor downwards has reams of studies on what it takes to promote entrepreneurship in local communities - which is accepted as one of the primary factors contributing to economic development of any region.

Something led me to believe that you were an entrepreneur yourself - so I find it rather odd that you run down Tirupur when you should be the first person to want hundreds of such success stories across the country.

[Theo_Fidel]

Yes, I say this as a beneficiary of 'caste' based entrepreneurship. It must end if India is to progress. Tirupur, while successful, is now a major impediment to proper professionally run and industrial scale law based enterprises. For India to prosper these primitive systems must end.

[Arjun]

Yes, I say this as a beneficiary of 'caste' based entrepreneurship. It must end if India is to progress. Tirupur, while successful, is now a major impediment to proper professionally run and industrial scale law based enterprises. For India to prosper these primitive systems must end.

Nobody is questioning the importance of law-based, professionally run and gigantic-scale enterprises. Whatever is required to promote those ABSOLUTELY needs to happen. But the economic lifeblood of any region will always be small-scale, SME type businesses (just as true of the US as anyplace else, maybe even more so).

Entrepreneurship, practically by definition (though there are cases where this is not true) has to be small-scale in the early stages. The question is, what kind of support system, does the entrepreneur have, to fall back upon - because every entrepreneur takes risk & there will always be a majority percentage of all entrepreneurship that will go through difficult times.

If you look at the US, the support system can be the family - but once you go beyond the family you would have to fall back on the state or the religion. So you have two extremes - a puny family at one end, and the state / religion at the other. In India you can maybe try and leverage the larger community of relatives (which is practically the same as the caste in most cases). So the community /caste does play a vital role in providing the intermediate support system that the state / religion cannot.

There are a number of negatives of the Indian caste system (such as caste-based discrimination), and there are some positives (of which providing social capital for risk-taking is one). So the correct approach would be to eliminate all the negatives and accentuate only the positives.

[RamaY]

All of this misses the essential point that caste based transactions are necessary only because trust based transaction is non-existent in India.

Without a proper trust based system our economic future will remain cloudy. The disasterous experiance of the TMB should not be forgotten. Caste based systems are extraordinarily in-efficient users of capital, money flows to the the strongest mannan rather than the the most productive and innovative. Scaling is always an issue. Success is always accidental and usually unrepeatable. A single Hyundai factory in Chennai produces more wealth than the whole of Tirupur. And it is repeatable with no restrictions on the 'type' of people.

As long as we have primitive systems like 'caste' based transactions and their defenders we can not progress fully. We can not have enforceable law based systems or strong meritocratic institutions to run our nation. Without that we are guaranteed to remain poor.

There are no short-cuts to becoming rich.

15+ years of schooling for all.
Strong legal system
Progressive social system
Hard work for all

Are you talking about the caste based reservation systems and caste based economic packages etc.,?

It is confusing. How do you ensure everyone has to work hard (how do you define hardwork and what is the benchmark?) to become rich?

What do you mean by "progressive" social system? Is the one that says one believer = 4 women = 8 non-believers or the one that says one has to become a believer foregoing their natural culture and tradition for the country to progress, or the one says everyone who is rich (at a given point) is enemy of the class struggle, that is perpetual?

How can a 15-year school guarantee corruption free, eco-conscious, civic-mannered individuals? Afterall isnt india filled with such corrupt, environmentally disastrous and civic-Asuras with 15 year education under their belt?

Strong legal system - again how do you define it? Is it the same thing that takes 60 years to give a split verdict?


I don't see the clarity you show in finding a Bharatiya problem, in providing a solution be it Bharatiya or slavish in nature.

[Theo_Fidel]

Arjun,

Even in the USA regions that are highly family and religion based, read the South, are weak and net consumers of wealth. The East & West coast subsidize them so they stay afloat. It is the aim of a trust based system to assure equal access and opportunity to all even if it is flawed. There is simply no other way to get opportunity going.

Every small business in USA is backed equal parts by the owner + local bank. All small business are provided lines of credit, etc without which they can not survive. This is simply impossible for all in India due to our 'caste' based system. There was a reason TMB was started after all and also a reason it crashed and burned until it became professional and law oriented.

It is also an illusion that 'caste' based systems generate wealth. They simply do not. There was a report earlier on this thread that showed that the vast majority of India's wealth was generated by about 2% of the people employed in the organized sector. All the rest feed off this miniscule productive sliver. That is why I said that a single Hyundai factory in Chennai creates more wealth than Tirupur. There is difference between the two. Hyundai raises the productivity of the average worker, Tirupur does not. This is why Tirupur is non-competitive with say China while Hyundai can crush China. Caste based systems are never about improving productivity and so generating wealth. They are about hoarding knowledge and wealth.

That is why it must end for India to become wealthy. Of course there are those who sit in USA and then challenge the usefulness of wealth itself for India. What can one say....

[member_23677]

Arjun,

Even in the USA regions that are highly family and religion based, read the South, are weak and net consumers of wealth. The East & West coast subsidize them so they stay afloat. It is the aim of a trust based system to assure equal access and opportunity to all even if it is flawed. There is simply no other way to get opportunity going.

Every small business in USA is backed equal parts by the owner + local bank. All small business are provided lines of credit, etc without which they can not survive. This is simply impossible for all in India due to our 'caste' based system. There was a reason TMB was started after all and also a reason it crashed and burned until it became professional and law oriented.

It is also an illusion that 'caste' based systems generate wealth. They simply do not. There was a report earlier on this thread that showed that the vast majority of India's wealth was generated by about 2% of the people employed in the organized sector.{Although, I couldn't find the report you are talking about I am pretty sure you are being sarcastic here} All the rest feed off this miniscule productive sliver. That is why I said that a single Hyundai factory in Chennai creates more wealth than Tirupur. There is difference between the two. Hyundai raises the productivity of the average worker, Tirupur does not. This is why Tirupur is non-competitive with say China while Hyundai can crush China. Caste based systems are never about improving productivity and so generating wealth. They are about hoarding knowledge and wealth.

That is why it must end for India to become wealthy. Of course there are those who sit in USA and then challenge the usefulness of wealth itself for India. What can one say....

Just a little suggestion Theo, if you don't mind,provide links for proving what you are saying, as most of what you say above is pretty vague and doesn't help much in the debate. If you could provide some links to the above bolded parts,it would be highly appreciated and will help in effectively countering your points. Otherwise, most of the responses you get would also be vague and philosophical than something of meaning.

Also, I think you are reacting so violently because you think this is some pseudo-intellectual paper to continue caste system and the segregation that come with it (it was there for only a short period,but then again,we can discuss this somewhere else if you wish), but it's not. It merely says that generations of Indians of a particular family keep working and improving a specific activity (diamond-cutting for example, or iron smelting that were able to produce the non-rusting iron of Delhi) and that helps in generating wealth in that particular field. Instead of demonizing and throwing this system in the dustbin just because some morns from outside wanted to justify their own bigotry is unjustified. Hitler and 100% of Nazis at least killed all the jews he captured, the ebil brahmins didn't. Some areas of the desh were highly discriminatory to dalits, while other's were not. It states that instead of being superficial, we should one again look into the actual mechanisms of caste system and how they can be applied in modern context.

[Bade]

If I understood Theo's point, he was highlighting the need to share information and resources outside of clans...forget caste for a moment. I do not think one needs to bring in discrimination, as the word caste invokes for many.

Just imagine, if the west had a similar highly restricted information sharing regime (they still do in a very diluted form), where others would be excluded by just having been born outside of the west. There was no need for them to publish openly or trade technology with the rest of the world, right from the days of the industrial revolution. That would have been disastrous for the world.

Inventions and as a result productivity increases happens, only due to increased connectivity among people and networking of ideas. So he has a valid point. There is nothing philosophical about it.

[member_23677]

If I understood Theo's point, he was highlighting the need to share information and resources outside of clans...forget caste for a moment. I do not think one needs to bring in discrimination, as the word caste invokes for many.

Just imagine, if the west had a similar highly restricted information sharing regime (they still do in a very diluted form), where others would be excluded by just having been born outside of the west. There was no need for them to publish openly or trade technology with the rest of the world, right from the days of the industrial revolution. That would have been disastrous for the world.

Inventions and as a result productivity increases happens, only due to increased connectivity among people and networking of ideas. So he has a valid point. There is nothing philosophical about it.

Ah.. my bad. I would apologize to Theo for misunderstanding. However, West has a patent system that puts it's trademark on each and every page it publishes, however it blatantly steals other countries' works even when they are patented. That is the reason the Indian govt. recently had to patent all the findings and knowledge of our ancestors as these western companies were stealing as well as put their stamp of originality on the works of Indians. Many family systems have no particular way of presenting their new findings or techniques through research articles and thus to keep the knowledge original,this secrecy thing might have been started. So, if we have to continue this system, we need to accommodate patents for their findings and THEN let the info. spread freely.

[RamaY]

1. If one defines Vedic education as knowledge, then it does not give any edge in modern economy.
2. If one defines english education as knowledge, then it started only with British and one should blame British for not giving universal education. And after that, they should blame the idiots who gave birth-based and caste-based reservations and who ruled India for the past 60 years.
3. If one defines knowledge is driven by profession, the none of the industrial skills are in the hands of Brahmins or Kshatriays or Vaisyas.
4. If one says people didn't share wealth outside their family then it is the same even now. Only my children and family can claim and get my wealth, unless I donate it to others.
5. If one defines caste as family tree then it is same even now.
6. If one defines caste as varna then it is same even now.

If one wants to blame caste just because their adapted religious masters taught them so, then this inferiority complex goes only when they expell the foreign slave ideology from their minds.

[member_23677]

^^ RamaYji, would you mind if we take this debate to off-topic forum?

[RamaY]

If I understood Theo's point, he was highlighting the need to share information and resources outside of clans...forget caste for a moment. I do not think one needs to bring in discrimination, as the word caste invokes for many.

Just imagine, if the west had a similar highly restricted information sharing regime (they still do in a very diluted form), where others would be excluded by just having been born outside of the west. There was no need for them to publish openly or trade technology with the rest of the world, right from the days of the industrial revolution. That would have been disastrous for the world.

Inventions and as a result productivity increases happens, only due to increased connectivity among people and networking of ideas. So he has a valid point. There is nothing philosophical about it.

This is very simplistic view that dilutes the constraints held in western systems. The whole patent system, world bodies, WTO etc are to protect ones interests.

In US too one gets the benefits of being a us citizen, only after they are GIVIN (not automatic) citizenship. Even there one cannot work in certain fields and areas unless they are us citizens or security cleared.

Every system has a structure. Pre-Islamic India too has a system. ~1300 years of foreign rule and chaos didn't change this. It is both the regiliance of that system (for saving the interests of Bharatiyas) and the failure of colonizing systems. That is why casteism is bad mouthed so much.

As long as casteism lives the Abrahamic faiths cannot usurp Bharat.

Now it is upto Bharatiyas to use that structure to strengthen themselves and beat the colonizers.

[RamaY]

^^ RamaYji, would you mind if we take this debate to off-topic forum?

I think it is relavent here because people blame the caste system for being the impediment to economic growth.

It is both a wrong diagnosis and people using it as the woolen sheet to hide the failures of secular socialist education and economic system have to be proven wrong.

[member_23677]

^^ RamaYji, would you mind if we take this debate to off-topic forum?

I think it is relavent here because people blame the caste system for being the impediment to economic growth.

It is both a wrong diagnosis and people using it as the woolen sheet to hide the failures of secular socialist education and economic system have to be proven wrong.

Are you directing your anger at me or Theo?

I personally have done my research reading blogs and articles about caste system and have found that it didn't had even an iota of discrimination before the britards came in and started writing their own versions of Indian culture and systems. That's where most of it was twisted and then,mass publication followed which incited internal divide among the Indian society.
I merely stated that Theo might be reacting to this report because he thinks it is related to predijuice in some way as is widely believed by many,even on this forum. My standing is pretty clear regarding the caste system that it has more to do with cultural distortion by britards than anything else.

[RamaY]

No P.Bhagat garu. I am not mad at Theoji or others either.

I was posting my thoughts.

[Theo_Fidel]

It is both a wrong diagnosis and people using it as the woolen sheet to hide the failures of secular socialist education and economic system have to be proven wrong.

This is simply wrong and people are getting seduced by their own rhetoric. The same Secular education and Economic system now produces 10%+ growth every year despite a blip or two.

The problem in earlier times was that there was simply not enough of either. The entire state of TN earlier produced 2000 engineers annually, it now produces 200,000 and growth is 10 times as fast in magnitude. How many engineers does UP/Bihar produce annually, that it self should explain why they are behind. Productivity has increased dramatically due to the fact that an engineer can now be used to manufacture a car on assembly line while earlier unskilled/uneducated labor was used. Engineers in Chennai are on average 3 times as productive and can work to world class quality.

One other thing. I have tried to avoid being churlish but go back and look through the economic growth records. 3 of the slowest years of growth in the past 20 occurred under the NDA. One year 2000 was down to 3.8%, fully half present growth rate. Now you can blame it on the bomb test or Kargil or what ever but it is reality. While grateful for its presence, it is now 8 years in the past. Over the past 8 years India's GDP has tripled to quadrupled. Obviously something has gone right.

Even now there simply is no national alternative. You can go looking for one but no where in the world will you find a economically viable alternative. Like I said there are no shortcuts.
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RamaY,

You are increasingly sounding like Deepak Chopra and the wannabe leader of a cult. This is most unfortunate. I held you above the other logic challenged folks that parade through here because of your ability to empathize and stay attached to reality. I did not agree with you but could follow your logic. It appears the questionable elements have gotten to you.
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I hate the word caste. Can we just say 'vernacular community' based entrepreneurship.

Bade is right that I'm pointing out the inherent purpose of community based systems which are built to hoard knowledge and money for the few. Patents are non-existent and new ideas are a complete no show. Even more damaging is what it does to the folks involved. Aspirations are suppressed and even marriage becomes a time to prevent loss of wealth. Minds are closed and folks very quickly stop learning. There is zero intellectual ferment and a quest to make things better and cheaper. It should be pointed out that the Hyundai factory today produces 4 times as many cars as 10 years ago with only 50% more workers. As a result workers now get paid 3-4 times what they did 10 years ago. BTW not all of Tirupur is community based. Large chunks are run by large companies. Madura Coates for instance has a large presence there.

[Arjun]

Even in the USA regions that are highly family and religion based, read the South, are weak and net consumers of wealth. The East & West coast subsidize them so they stay afloat. It is the aim of a trust based system to assure equal access and opportunity to all even if it is flawed. There is simply no other way to get opportunity going.

Every small business in USA is backed equal parts by the owner + local bank. All small business are provided lines of credit, etc without which they can not survive. This is simply impossible for all in India due to our 'caste' based system. There was a reason TMB was started after all and also a reason it crashed and burned until it became professional and law oriented.

It is also an illusion that 'caste' based systems generate wealth. They simply do not. There was a report earlier on this thread that showed that the vast majority of India's wealth was generated by about 2% of the people employed in the organized sector. All the rest feed off this miniscule productive sliver. That is why I said that a single Hyundai factory in Chennai creates more wealth than Tirupur. There is difference between the two. Hyundai raises the productivity of the average worker, Tirupur does not. This is why Tirupur is non-competitive with say China while Hyundai can crush China. Caste based systems are never about improving productivity and so generating wealth. They are about hoarding knowledge and wealth.

That is why it must end for India to become wealthy. Of course there are those who sit in USA and then challenge the usefulness of wealth itself for India. What can one say....

Ok, I will make this the last post from my side on this topic, because I think we are talking past each other. Just to make my stance very clear -

1. Wealth creation and GDP growth should be the top priorities of any country / region and India is no exception

2. I don't see caste as being synonymous with religion in any way, as you seem to have misunderstood. Caste in India is just another term for an 'ethnic group' with the additional characteristic that it is largely endogamous, ie members prefer to marry within the set if feasible.

3. You seem to be focusing on caste as a source of 'funding' alone for entrepreneurial businesses. The concept of 'social capital' goes beyond acting merely as a source of funding, to providing intangible support, moral support (ie risk-taking is viewed favorably within the community and business failure does not necessarily become a source of negative gossip ) AND as a source of positive social values that promote attributes necessary for business success.

4. Even if we restrict the discussion to funding alone - You talk about bank funding, which is also available in India through NBFCs at the higher-end and Microfinance at the lower-end. The availability of private sector credit in India certainly needs to be strengthened - but early-stage businesses across the world are largely funded by equity so debt is really an insignificant component of total early-stage funding requirement for all businesses combined.

5. Institutional mechanisms of equity for early stage (VCs, angel funds) need to be strengthened but again they would address only the top 5 - 10% of the total requirement for early-stage equity. The same statistic would apply to the US as well.

6. Even in the US, most early stage funding is through personal resources + 'friends & family' which typically include members of the larger set of relatives.

7. 'Social capital' of castes is not just about providing additional capital to entrepreneurially-minded members of the caste - but also about multiplying manyfold the number of individuals within the caste who would want to be entrepreneurs. This point is very key.

8. Once the business has reached a certain scale and size - it definitely needs to shed its 'caste oriented' image or funding if it wants to become globally competitive. I don't see any contradiction out here - the caste /community based support is purely early-stage and only until the point that the firm can transcend the need for the caste networks and assistance.

[Singha]

Institutional mechanisms of equity for early stage (VCs, angel funds) need to be strengthened but again they would address only the top 5 - 10% of the total requirement for early-stage equity. The same statistic would apply to the US as well.

I think thats true. the vast majority of SME in the US get funded via loans from friends and family, personal savings and maybe a chunk of it from a bank loan against collateral like property. the "VC stuff" is very rare in non-IT fields though it does happen, my wife has worked for a couple but they are not really VCs more like free agent angel investors.

less corruption in running a business (no hafta to local cops, rowdies or union leaders), getting the permits needed in a time bound manner,surplus and cheap electric from grid, less number of permits needed, better transportation and logistics to reduce cost, a bigger market of people able to afford the product are maybe advantages that SMEs in rich countries have that we dont. even then people prefer to setup manufacturing ops in some really remote areas to take advantage of some freebie like land grants, cheaper labour rates etc. my wife's former co had a facility deep in the woods of the pacific northwest some hours drive out of seattle.

its a chicken and egg problem, unless our SMEs can come up in a million, 1000s make it to midsize and 100s of big size we will never become rich enough to be able to cleanup corruption and infra issues. but these same corruption and infra issues act as a brake on this

[Theo_Fidel]

Arjun,

You are talking about an idealistic situation while I'm using concrete examples and the reality of how it works in India. In your idealistic system it could all potentially work out. If only everyone would play nice. This system is light years away from what exists on the ground in India.

In case you missed it, the wealth of India is simply NOT created by SME's or community based groupings.

I only brought up financing because I mentioned TMB. The real purpose of community based groupings is to get things done through avenues not open to the common man. All the communities have their own network of connections that only work for them. For instance I can get a ticket on any train with 2 hours notice from Chennai central. Or I can get my Pineapples through Marthandam with a couple of phone calls to 'people'. This is simply not how a modern country should work. The only reason certain communities do well at certain industries is the very same access to social networks. It is not that they are good at it or that they care about or even that they know what the hell they are doing. Case in point is the Mannargudi selection of Monorail for Chennai. It is head spinning how Mannargudi came to dominate mono-rail tech in India. It is purely accidental and unrepeatable.

[ShauryaT]

Theo, I largely agree with the thrust of your message. Professions and trade skills, restricted to a clan or caste is highly unproductive in a modern economy, regardless of how it has come about. No worthwhile social or political organization claiming to speak for the Hindu view point in the matter has a desire to see it continue. However, I will ask you to dwell on the close interlinkages between electorates, power and wealth that the policies of the country has encouraged since independence that has compounded these clan oriented issues, coupled with the lack of reliable systems of governances and the lack of an environment where outsiders from the clan can be suitably trusted, invention and honest work rewarded and protected. I will recommend a book by Arun Shourie called "Falling over backwards" that documents all these issues quite well.

[Arjun]

In case you missed it, the wealth of India is simply NOT created by SME's or community based groupings.

Directionally, SME wealth creation is where we are headed.

SMEs account for 50% of GDP in developed countries and around 70% of employment. India's SME contribution to GDP is 17% - obviously as India develops this figure would and should go much higher.

[Hari Seldon]

Economist Bibek Debroy on the facts and fictions behind the Gujarat growth story (video interview)

Worthwhile watch, folks. IMVVHO.

Folks, want to up this one again. Just finished watching the whole thing. *extremely* worthwhile. And hope-inspiring. We've had great minds on here diss Gujarat's HDI, heap credit on Guj's entrepreneurial culture for the last decade's development etc. Well, watch with an open mind and be awed.

[Theo_Fidel]

SMEs account for 50% of GDP in developed countries and around 70% of employment. India's SME contribution to GDP is 17% - obviously as India develops this figure would and should go much higher.

It is a Fox News TP but it is simply not true. SME's by definition can never reach the scale necessary to throw off wealth like a Microsoft or a GE can. Wealth in all nations is always created by large enterprises, meaning 500+ employees. SME's are good at then taking that wealth and turning it into services for the the people. But consumer services are never the source of wealth. Large enterprises are simply not nimble enough to do this. Here are a couple of image to show the job situation for instance in the USA. As you can see large enterprises create the majority of jobs, not only that these are the 'good' jobs that increase folks wealth rather than reducing them to wage slaves.





Lets us stay attached to reality and not fall for propaganda please...

[Arjun]

Theo ji,

Your own graphs show SMEs employing 1-500 have a larger share of total employment than the 500+ firms ( ratio is 55:45). So what exactly are you trying to prove out here ?

Are you, by any chance, also disputing the statistics on SME share of GDP?

[RamaY]

Theo ji,

All I want is Indian solutions to Indian problems.

In order to define the problem correctly, we need to understand the social issues (caste discrimination and untouchability) for what they are and how they came into place to begin with.

Once we know what brought these ills in, we can cure them by removing the conditions that brought such inhuman practices.

We are already seeing the failure of BR Ambedkar in that his noble ideas are ba$$$$$dised into unending caste/religious reservations, and divisive politics. If Ambedkar's plan and the prevailing Hindu majority's hope was to bring social peace and progress by paying reparations, it didn't work in 60 years.

Any solution that tries to blame and humiliate one section of the society for the benefit of the other will fail, no matter how many structures we build.

There are Bharatiya solutions to this and every problem. But somehow people are so prejudiced that they are scared of their own identity. We cannot have these Schizophrenics form policies that affect our future generations.

On one side we are claiming that Bharat is going to be the next super power. On other hand we are spewing dispise on everything Bharat. What kind of super power Bharat will be with this contradiction? A power with no self-awareness and self-respect. That would be disastrous to Indians as well as the world.

[Theo_Fidel]

Arjun,
It appears you have now dropped your 70% claim without even a by your leave. Making dog food or hair cuts or selling flowers is not creating wealth. This is what SME's are good at.
Here's is what ASSOCHAM said back in 2009...

Small and medium enterprises (SME) are likely to account for 22 per cent of India's GDP, up from 17 per cent now, in the next three years on the back of technological upgrade, a study said.

It is propaganda myth making that SME's generate wealth. Africa for instance is filled with SME's. 90% of its businesses are SME's yet it is pi$$ poor. Wealth is generated by large companies that can leverage information and technology to take on the problems we face. SME's have their place as the source of future large companies and fresh wealth creation.
------------------------------------------------------------------------------------------------

All I want is Indian solutions to Indian problems.
In order to define the problem correctly, we need to understand the social issues (caste discrimination and untouchability) for what they are and how they came into place to begin with.

Saab,

This is what I mean by closing your mind. The world as a whole knows far more than India ever will. This is simple reality. We should see what works and incorporate it in India. I'm open to all suggestions to make India rich. I witness the degrading aspects of poverty and superstition in front of me in India. We need to get wealthy.

WRT this definition-wefinition business.. ...saab, we have been round and around the game for 60+ years. You now sound like a Congresswala looking for yet another sub-committee or Judicial inquiry with 1,500 page report. People are discriminated against because society does nothing to stop it. As long as we don't protect the weak and the poor, stuff like the caste system will pop up to crush the folks. This what I mean by social reform. It is changing the way people think. When you see a poor person oppressed in India right now everyone rushes to join the gangbang. There is no one there to defend the weak, enforce the law and protect the helpless. This has proved to be economically/socially catastrophic. When yet another boat capsizes in the Ganga, you notice that all the survivors are able young men, few of the women and children survive. Until that dynamic changes and you hear of a boat going down and most of the men drowing to save the children and women our future will remain cloudy.

Saab, I put it to you we know what is wrong with India. But to put it right folks like you and I will have to give up our privileges.

[RamaY]

Economist Bibek Debroy on the facts and fictions behind the Gujarat growth story (video interview)

Worthwhile watch, folks. IMVVHO.

Folks, want to up this one again. Just finished watching the whole thing. *extremely* worthwhile. And hope-inspiring. We've had great minds on here diss Gujarat's HDI, heap credit on Guj's entrepreneurial culture for the last decade's development etc. Well, watch with an open mind and be awed.

Excellent insights.

[RamaY]

Saab, I put it to you we know what is wrong with India. But to put it right folks like you and I will have to give up our privileges.

I don't know about you but I haven't had a single privilege in my life, while being born into the so-called upper caste. None of my close family got any privilege either.

I never blamed India or anyone for that. I was told it is fact of life and there is nothing wrong about it. I was told be happy that you have some food and have access to govt education. I was told to respect the institutions and do not blame others. That is what made me what I am.

The so-called lower castes are constantly bombarded with propaganda that they are undermined by the visible others. This made them not realize their potential. I have many friends who I tutored and begged to take Engg exams because they can get in to those govt. colleges which I can never dream of. Few of them put in the 1-2 hour hard world and reaped the benefits. Even then some of them kept on doing degree after degree to get into govt jobs because they thought they can make money beyond the stipulated salary.

Some of your posts are trying to continue this nonsense into future, as I understand them. It will not benefit them and not the nation.

I love Bharat and want it to be strong. That strength comes only when the downtrodden too become strong and prosperous. So I have a vested interest in them become self reliant and self confident.

[Theo_Fidel]

I don't know about you but I haven't had a single privilege in my life, while being born into the so-called upper caste. None of my close family got any privilege either.

I think right there is your blind spot. Oho! now you too are against caste prescription are we. My how quickly folks spin around.

I love Bharat and want it to be strong. That strength comes only when the downtrodden too become strong and prosperous. So I have a vested interest in them become self reliant and self confident.

It is commendable that you want everyone to become self reliant and self confidant. So pray tell how you achieve that. How exactly does a sick 70 year old become self reliant or a frail 12 year old working on the streets.

See I love India. ALL of it. Your sort of nonsense has no future.

[member_23677]

I don't know about you but I haven't had a single privilege in my life, while being born into the so-called upper caste. None of my close family got any privilege either.

I think right there is your blind spot.

What blind spot? I have many dalit or SC/ST friends who are close enough to discuss their problems with me. I never have heard much of anything. Job interviews never ask for castes, schools rarely do (it is common in christian schools), so if you are implying that there is some great injustice happening with dalits that is not happening with others,I think you are misguided.