Indian Economy - News & Discussion 27 May 2012

sanjaykumar · Post by **sanjaykumar** » 27 Jan 2013 04:45

All those who wonder why Chennai continues to be the place of choice, despite infrastructure issues, need look no further than the supply of engineers and graduates. No other area in India even comes close.

At least in Chennai most medium to large manufacturing is bench marked to the world, ISO9000 and all. Even Engineering degree types struggle to keep up.

I am interested in the why of this. Is there a cultural reason, if so it needs to be codified so the rest of India can learn from it.

SriKumar · Post by **SriKumar** » 27 Jan 2013 06:44

Theo, nowhere did I argue that manufacturing jobs are low-skill, in fact quite the contrary. What I did argue for was the need to support a manufacturing base and not depend solely on IT-vity growth. This is within the scope of the original discussion which has a broader, policy-level scope; so we are not talking about specific prescriptions to an entreprenur on what type of an enterprise to start. Any abdul can still go and start an outsourcing firm and immediately contribute to the economy, that is fine. If a person is low-skilled, he is equally doomed whether it is IT or manufacturing. In fact, several discussions on BRF Education thread have pointed to the lack of a good pre-college education as the main stumbling block for development of India. 'abhijit' alluded to this as well, a few posts earlier.

This business of trying to find PSU style manufacturing jobs for 5th standard fails has to stop. Our manufacturing has to be world class not dumbed down so some nanha from triupur can do it.

I dont know who proposed going back to PSU-style manufacturing (strawman?). Not me. I think we need more Hyundais and Ford plants around, and if it means building engineering colleges every 5 miles like you find on the Chennai-Bangalore road after Porur, so be it.

Within Hyundai Chennai, the actual production level labor is only about 5,000 or so. All the rest are in sales, marketing, testing, QC, software, equipment repair, install, etc. To my mind all these are service jobs, not suited to 5th standard fail types.

We need more of these success stories and .....have policies that support the infrastructure for such future enterprises, whether it is 10+2, ITI, B.Sc, ABC or XYZ.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jan 2013 07:15

Srikumar,

I was not necessarily trying to argue with you but rather with the general direction of the tone over the past few pages. I largely agree with your post, where I disagree is with your statement that we should think of low tech factories followed by high tech factories. The has been the general tone of the statements over the last several pages. I don't get it...

Manufacturing so important and critical yet we should throw our unwashed 5th fail abduls at it. How in heavens name are we going to get a single world class, read productive/wealth generating product out of that group. IMO we should throw our engineers and graduates at the problem, even a shampoo packet factory should be populated with engineers and graduates, IMO. This is the only way to create wealth.

I don't think there is anything on this entire planet 5th standard fails can do other than brutal manual labor. I do not know how to save them. My best prescription is that folks in factories and IT shops get rich enough that they can support this mass of low productive unskilled and low employed folk out there. I'm sure no one likes their income taken away to feed others but it is the best and probably only solution for the economy right now other than revolution and riots.

Of course we need to demand that the next generation goes to school, completes it and gets a minimal degree of some kind. Until then there is going to be a lot of friction in India over this dichotomy. We need to get over this fetish that mass manufacturing can somehow save us.
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That said the real kujli IMHO is over the fact that we do not have a world class industry manufacturing electronic goods. I don't know what the answer to this is. One city or the other has to take up the challenge to nurture it like Chennai nurtured automotive. It will take an immense sacrifice by the locals in education, land, water and power. So who is going to step up.

For instance during this power crisis in TN, many large and critical industries still get first priority to power even while residential areas are cut. Now how many other areas are willing to put up with that.

SriKumar · Post by **SriKumar** » 27 Jan 2013 11:34

Theo_Fidel wrote:I was not necessarily trying to argue with you but rather with the general direction of the tone over the past few pages. I largely agree with your post, where I disagree is with your statement that we should think of low tech factories followed by high tech factories.

You might notice that I had prefaced it with an 'if'. It was not a comprehensive or exhaustive prescription, as a single statement can never be. I think the issue of saving the 5th-class failed people is a separate discussion and should not be conflated with a discussion on which sectors to develop. Understanding the reasons and proposing solutions for poorly education kids in India (including social justice type approaches) will surely derail the topic. My position is that they should be educated to 12th class atleast, even if they decide to mooch off after that and not work in any sector. My larger position was that there should be a focus on the manufacturing sector vis a vis other sectors, and there should be govt. commitment to grow it, whether it be in the form of a skilled workforce, power availability, land, access to roads, dockyards or whatever else needs to be done.

Singha · Post by **Singha** » 27 Jan 2013 12:18

My wife is in plastic and chemical manufacturing for six yrs in 3 cos in blr now being a chemical and manufacturing engr . The scene around blr is that the production supervisor, lab personnel , design staff are all well educated engrs or bsc/msc grads. They interact closely with parent cos in europe, usa and similar facilities in cheen which are further along the product delivery curve.

The min reqd for actual production line is 12th pass..but there arw many ba/bsc types doing it as well and trying for it as well due to not enough white collar jobs.

There is no room for 5th pass in any production setup using machinery...for one thing they would be unable to understand and use the machines and safety protocols demanded in any modern shopfloor.

You do meet various interesting ie not-itvity people in such cos some are educated in mit types who returned to start cos which function as subsystem suppliers, some have small or medium cos there and started operations in india in places like pune, chennai, blr .... Some iim prof types who started market research cos...small cos but very kowledgeable and interesting people vs the std of people in itvity.

subhamoy.das · Post by **subhamoy.das** » 27 Jan 2013 15:17

I picked up the latest issue of economics during my recent mall visit. A few points I will high light, which will throw similar thoughts as I was making via ve service and factory jobs and which one is more suitable for a country of INDIA's size

1. factories are moving back to "close to customer". The main reason is cost of producting goods has a number of other cost inputs - other than wages - which are now adding up so much so that cost of goods produced in CHINA is same as US right NOW and will even become prohibiteively costlier in the coming days. One key reason is automation - replacement of low-skilled asian hands with machines and robots.The other key reason is the cost of shipping goods from factories to end customers has risen dramatically in the past.

2. Service offshoring on the other hand is in full swing and likely to continue till 2022. The primary reason being wages is the principle cost and still there is 20-40% difference between onshore and offshore and service delivery happens over the wire and hence not affected by cost of shipping. There are a number of reasons why they feel it will reverse the trend - like manufacturing - to US or Eurpoe but right now there is no stopping.

3. Some folks feel that as much as 34m service jobs could be offshored and that it will be a third industrial revolution but today there is a general feel that 4m jobs has been offshored and complex jobs are now routinely getting offshored.

4. Service is not just programming or managing networks remotely. It includes engineerign service like modeling the next engine,fixing issues with electrical machiens etc. For example TCS has a huge automible service vertical where loads of engineers are using computer to solve engineering problems. So service is huge and is driven my graduates - both engineering and other streams - and cannot employ 10+ guys for sure. I personally feel that we have still scracthed the tip of service and much more can be done in IT-enabled services. CALL CENTER does not belong here and has already died in INDIA and taken over by Philipines.

5. Factories in CHINA will remain as long as their a a sizeable local demand of its outputs. The days of making in CHINA and shippign all the way to US or Europe is coming to and end. I am glad that INDIA is following the right step by producing what is consumes locally and then exporting surplus - from auto to cell phones. Factories cannot be re-located to other low skilled countries because of scale, supply chain issues and a host of other factors. It is expected that as wages drop in US and automation level increases even BRIC MNC will move factories to US and Europe because the demand is still coming from there. GE has already move all fridge, washinc machihe factories to US.

6. Probably now the sales figures that chola was quoting makes sense. Somebody is now trying madly to show the CHINA is generating a huge demand so that the factoreis does not relocate even if the jobs on the ground is not supporting that kind of sales. So this could a sub-prime crisis realted to cars unfolding.

subhamoy.das · Post by **subhamoy.das** » 27 Jan 2013 15:37

SriKumar wrote:Suraj mian,
when you do produce your first wowPhone (tm), this phata abdul is first in line for the hand-set (for the KK/Mti feature)....that para should have gone into the humor thread.

subhamoy.das,
I think a part of the issue as I see it, is one needs to define exactly what one means by knowledge jobs (or information jobs). General opinion holds that IT jobs alone are knowledge jobs. In my opinion, this is incorrect. Jobs on production floor are also knowledge jobs. Jobs existing in the pre-computer era are also knowledge jobs (atleast some of them). A Ph.d in metallurgy experimenting in a lab to get a better alloy is a knowledge job. Running CNC machines, product planning, process planning of a factory etc. all require training and knowledge. I think you are stereo-typing a factory job as a worker who mindlessly assembles stuff. I dont know the figures but there are a lot of engineers employed in factories (surely a knowledge job) and routine-motion jobs are being replaced by robots. If 70% of Indian economy should be a knowledge job, please define 'knowledge job' and provide some examples of categories (IT being the obvious one).

Finally, I could not fully gather your position but I think you are trying to see what is the best recipe for maximizing job growth in India. If one is trying to think on a country-wide scale, it is not wise to pick one box in a supply chain (and I include design in the supply chain) and say- this is where I will focus. That leaves the country's development distorted and very vulnerable to disruption. One has to look at everything starting from raw material (if it is a physical product), design, manufacture, distribution to markets (which ultimately pays you for the service/product). As Suraj mentioned, there is a major debate going on in the US about bringing back manufacturing back into the country. I would say that one needs to take a holistic look at what a country needs in order to be self-reliant and self-sustaining, and with a type of development touches most of the population; and then extrapolate from there. This, to my mind, would involve owning more of the full process and not just a few areas that are computer-related. There is no doubt that IT (coding, database mgmt, networks etc.) has provided a quick, and unprecedented boost to the economy but there are some basics in the economy that need attention, in spite of the bright sheen in other areas. However, most would agree that high-tech industry is a good thing to have (chips manufacture, automotive and aerospace). At some point (and I think it now), attention has to be paid to develop these as well. If this means bringing in low-tech factories followed by high-tech factories, it should happen.

knowledge jobs are those jobs which requires at least a formal degree in a specific field and can be executed from a computer system. Every industry has these jobs and are usually called the white collar jobs or intellectual jobs. Take example of aerosapace. Jobs of modelling, testing, developing the proof of concept vehicles are all knowledge jobs and is executed outside the factory/production setup.

We should drive torwards a knowdlegd or ITenabled industry which will employ our science and commerce gradudates and post grads. The 10+ and 5+ can be absoved in the down stream service and local manufacturing to support the IT-enabled economy like a clerk in an organized retail - local of wall mart, the driver, the guard, etc etc...

I think INDIA has fouced on high tech manufacturing using the desing route - aeropspace, telecom, heavy machines etc - and low end manufacturing to satisfy local consumption.

AbhiJ · Post by **AbhiJ** » 27 Jan 2013 17:16

Theo_Fidel wrote:
All those who wonder why Chennai continues to be the place of choice, despite infrastructure issues, need look no further than the supply of engineers and graduates. No other area in India even comes close.

Chennai is nowhere near the level of Mumbai-Pune Cluster in terms of Industrialization.

Arjun · Post by **Arjun** » 28 Jan 2013 13:18

X-post from 'Ideas of India' thread...

Sushupti wrote:Has UPA killed the India growth story?

http://www.rediff.com/business/slide-sh ... 130128.htm

Steven Rattner, is popularly known as the Car Czar of Obama Administration. This is because of his role leading the restructuring of the auto industry in 2009. A renowned veteran Wall Street financier, he is the chairman of Willett Advisors LLC, the investment arm for New York Mayor Michael R Bloomberg's personal and philanthropic assets.

In addition, he doubles as an economic analyst on MSNBC's Morning Show, contributes to The New York Times and for the Financial Times. No wonder, when he speaks, people listen.

In a piece titled "India Is Losing the Race" in The New York Times (January 19, 2013) Rattner brilliantly analyses India versus China growth debate.

"As recently as 2006, when I first visited India and China, the economic race was on, with heavy bets being placed on which one would win the developing world sweepstakes," he writes and adds "Many Westerners fervently hoped that a democratic country would triumph economically over an autocratic regime."

Nevertheless, Rattner woefully concludes "Now the contest is emphatically over. China has lunged into the 21st century, while India is still lurching toward it."

China's gross per capita income of $9,146 is more than twice India's. And its economy grew by 7.7 per cent in 2012, while India grew at an uninspiring 5.3 per cent. Crucially, he points out that China's investment rate of 48 per cent of GDP exceeded India's at 36 per cent.

Rattner hits the nail right on the head when he states "But the impact of that spending can be hard to discern; on a recent 12-day visit to India, not many rupees appeared to have been lavished on Mumbai's glorious Victoria Terminus, also known as Chhatrapati Shivaji Terminus, since it was constructed in the 1880s."

Rattner goes on to add "Parts of Mumbai's recently built financial district - Bandra Kurla Complex - already look aged, perhaps because of cheap construction or poor maintenance or both. It's hardly a serious competitor to Shanghai's shiny Pudong."

Putting his finger where it hurts most, Rattner points out "China has 16 subway systems to India's 5. As China builds a superhighway to Tibet, Indian drivers battle potholed roads that they share with every manner of vehicle and live animal. India's electrical grid is still largely government controlled, which helped contribute to a disastrous blackout last summer that affected more than 600 million people."

Is Rattner suggesting infrastructure to be the only differential between Indian and China? Pointing out to a range of issues having a debilitating impact on the Indian economy, he opines that many of probably India may not even be a beneficiary of the promised and much hyped demographic dividend. Why?

In a stunning yet succinct analysis, he points out that India growth story has been deeply hurt by a suffocating bureaucracy and a workforce which according to him is "unskilled." And that is the crux of the issue.

All round failure

Rattner is not the lone voice in the wilderness. Moreover, the "race" with China merely provides a context to the discussion on hand. Forget the race, let us look at these issues in absolute terms.

The Time in an Article provocatively titled "Is India's Growth Story Over?" (June 14, 2012) quotes a report by Standard and Poor's released a few days prior to it and titled "Will India be the first BRIC fallen angel." This report reportedly cautions that India may become the first so-called "BRIC" country to lose its investment grade rating. Meanwhile, some economists are now talking of Indonesia replacing India in the BRIC group of countries!

Simultaneously, Soutik Biswas, the Delhi Correspondent of the BBC in a story titled "Is the India Growth Story Over?" on June 1, 2012 visualises a possibility of a return of the 1991 economic crisis, probably in a virulent form. Blaming India's fractured polity, he lays the blame on lack of political maturity amongst India's elected representatives. "A broken politics makes for broken economy" he concludes.

Likewise Nirvikar Singh in a Column titled "Is India's Growth Story Dead?" ([Financial Express - 6th December 2012) quotes Professor Dani Rodrik of Harvard who authored a paper titled "No More Growth Miracles," arguing that technical progress in manufacturing is becoming more skill and capital-intensive, and that there is less room to export for new entrants.

Hence, according to Rodrik growing through labour-intensive manufactured exports, is going to be difficult in future. The East Asian and Chinese miracle depended to a very large extent on creating a huge manufacturing base that allowed employment generation coupled with an export led growth possibilities. In short, according to him India has indeed missed the bus.

Nirvikar Singh in response points out that "improvements in income distribution, institutional quality, and the well-being of the poor in non-income-based measures such as basic health, nutrition and education may be the optimal path to follow" and adds "investing in people may actually make growth more sustainable."

Lest all this is dismissed as theoretical rants of some economists, analysts and columnists, let us not ignore the negative developments at the ground level.

At Davos, the annual pilgrimage destination for the world's rich and held last week, India is reportedly "getting the cold shoulder this year. It may not be out of place to mention that till recently India was hailed as an "emerging economic powerhouse" and was an "attractive investment destination." Of the 260 sessions there just one was focused on India.

But never mind - a full Indian Contingent went to Davos - of course for sight seeing!

Failure of UPA

A closer analysis of the views of various authors referred above demonstrates that one set believe that the macro-economic framework of the global economy has changed irrevocably. The days of labour intensive manufacturing and exports may well and truly behind us. But that partially explains our downturn.

It may be noted that while some economic managers within the UPA celebrated the unprecedented growth between 2004 and 2008 as the direct consequence of their management skills now blame the global economic crisis for the domestic downturn. So much for their understanding of Economics!

Another set blame it on the fiscal mismanagement by the UPA Government. Remember that we ran gargantuan fiscal and current account deficits continuously for several years now. Surely, years of economic mismanagement has taken its toll. But this too does not explain the downturn story fully. Yet another set blame our poor governance, which only provides partial explanation to this conundrum.

In short economists may disagree on what ails the India economy, but are near unanimous in their prescription - improve governance, make institutions work and invest in human capital - a point that is repeatedly missed by the economic managers of UPA.

But what is worse is that UPA managers refuse to believe that our Economy is under severe structural stress. Some believe that the downturn is a consequence of global economy catching cold and fervently hope that this too would pass. Possibly, if we return to a scenario of robust global growth (which at this point in time this looks extremely remote) India too may experience spectacular growth.

But global economic growth is one half of the problem. But what about skill enhancement? What about improving Human Development Index? How should we enhance our manufacturing, institution and governance? Put differently, what would be the legacy of the UPA Government? It could well be 2G, CWG and Coalgate and probably nothing positive.

This is where India needed and continues to need reforms. And this is where the UPA has been a spectacular failure. Readers may be shocked to note that the Human Development Index (HDI) for India in 2004 was 124 while in 2011 it was 131. In short, the spectacular economic growth under the UPA regime has meant very little for most in the absence of improvement of the HDI.

Wherever India has progressed - say for instance maternal mortality or in infant mortality rate - neighbouring countries like Nepal, Bangladesh, Bhutan and Sri Lanka have done equally well or even in some parameters, spectacularly better. Similarly, on the ease of doing business index or on corruption, India has either stagnated or has deteriorated in the UPA regime when compared to her global peers. On the overall confidence of doing business, the decade under UPA has been a lost cause.

No doubt, while there is a conspiracy of co-incidences at a global level, the fact remains that for the present downturn the UPA has to blame itself. When the going was good, the UPA indulged in fiscal profligacy. Assuming an eight per cent growth to be a new norm, these managers never thought of a rainy day.

This was the time for India to improve its infrastructure, reforms its tax and labour laws, bring about fiscal discipline, improve governance, set institutions in order, create employment, impart skills to its youth while seek to improve human development index. Frankly UPA lost the plot between 2004 and 2008, not now. Now is the time to lament.

Theo_Fidel · Post by **Theo_Fidel** » 28 Jan 2013 13:24

Painful reading from one who wished well of India. All the usual points ticked of including our recent discussion of the bizarre idea of mass manufacturing generating jobs for the 'unskilled'.

http://opinionator.blogs.nytimes.com/20 ... -the-race/

Visits to crowded Indian urban centers unleash sensory assaults: colorful dress and lilting chatter provide a backdrop to every manner of commerce, from small shops to peddlers to beggars. That makes for engaging tourism, but not the fastest economic development. In contrast to China’s full-throated, monochromatic embrace of large-scale manufacturing, India more closely resembles a nation of shopkeepers.

For one thing, many of India’s youths are unskilled and work as peddlers or not at all. For another, despite all the reforms instituted by India since its move away from socialism in 1991, much more would have to change. Corruption, inefficiency, restrictive trade practices and labor laws have to be addressed.

India’s rigid social structure limits intergenerational economic mobility and fosters acceptance of vast wealth disparities. In Mumbai, where more than half the population lives in slums often devoid of electricity or running water, Mukesh Ambani spent a reported $1 billion to construct a 27-story home in a residential neighborhood.

Arjun · Post by **Arjun** » 28 Jan 2013 13:37

Theo_Fidel wrote:Painful reading from one who wished well of India. All the usual points ticked of including our recent discussion of manufacturing generating jobs for the 'unskilled'.

You know, this reminds me of something I've found to be quite bizarre on this forum. The guys who have the most interest in strutting up and down against the Chinese and facing off against them in some kind of imagined competition in the PRC Economy thread - seem to have the least interest in actually pushing for leadership change in India, that can at least get something going to deliver on this bravado ! I seriously wonder why....

Abhijeet · Post by **Abhijeet** » 28 Jan 2013 14:25

I think the discussion was more about the bizarre idea that India will simply step over the industrialization phase and start delivering high end services to get rich. I pointed out why this was extremely unlikely given the low level of skills that most Indians have.

Right on cue, The Hindu has a good op-ed about where India is HDI wise: http://www.thehindu.com/opinion/op-ed/t ... epage=true

Take the main policy prescription (de-emphasize GDP growth) with a grain of salt. However, there's an abundance of good facts in the article. The data are clear, and shameful:

- India has grown at 6% per year on average for over 30 years now, since 1980. Despite this, its HDI ranking has remained unchanged: #134 in 1980, and #134 in 2011.
- In 1980, about 80 per cent of the population subsisted on less than two dollars a day. That percentage has declined by as little as five percentage points since then. (The article says five per cent, which I believe is a typo.)
- India's life expectancy has gone from 55 years in 1980 to 65 years in 2011. This is 3 years lower than Bangladesh, 9 years behind Sri Lanka, and exactly even with Pakistan (despite all their troubles over the period).
- 44% of children in India are still malnourished, compared to 25% in sub-Saharan Africa
- The mean years of schooling for adults in India is 4.4 years. That single statistic explains a lot about India.

This fits in with my anecdotal observations about the general lack of intelligence in Indian society, and how the bottom of the ladder has not budged over the last few decades. While the top is now performing at international levels and earning close to international salaries, the bottom is as poor as ever.

When India was growing slowly there could at least be hope that faster growth would pull the poor out of poverty as it has done in so many other countries. Now that we've had multiple decades of fast growth without any real societal transformation, I'm really not sure what will cause dramatic change.

Arjun · Post by **Arjun** » 28 Jan 2013 14:51

^ All this is completely peripheral to the main issue. The reason we have this spate of articles in the Western press and the view regarding India has dramatically changed over the last 2 years is ONLY because of two issues - GDP Growth has fallen back in comparison to China, and the spate of governance-related issues one after another in India have raised serious questions regarding the country's leadership.

If these two had not happened - India would still be the toast of the world.

So the bottomline is - (a) deliver on growth & (b) turnaround the perception regarding lack of governance and leadership.

Abhijeet · Post by **Abhijeet** » 28 Jan 2013 15:26

That sounds simple enough!

I am less concerned with what the Western press writes about India and more about what is true -- as, I hope, are most people reading this forum.

Arjun · Post by **Arjun** » 28 Jan 2013 15:43

Its all a virtuous cycle...Perception regarding prospects influences investment (both domestic and foreign) which in turn affects growth. And growth over a period of time will change perceptions.

Main point is not to get sidetracked by all kinds of remedies peddled by assorted JNU-types. Just focus on boosting growth...Governance and leadership required to deliver this is obviously lacuna #1, which needs to be addressed fair and square before any subsequent issue.

Abhijeet · Post by **Abhijeet** » 28 Jan 2013 16:35

If you say so. Sigh.

Arjun · Post by **Arjun** » 28 Jan 2013 19:02

Abhijeet wrote:If you say so. Sigh.

Bhagwati has been tearing his hair out for the last 2 decades, trying to convey the same basics to dynastic morons.

Jean Dreze and the Dynasty are responsible for the complete mess of the last several years...lets not get carried away by articles penned by their cohorts in academia.

vera_k · Post by **vera_k** » 28 Jan 2013 20:38

Abhijeet wrote:This fits in with my anecdotal observations about the general lack of intelligence in Indian society, and how the bottom of the ladder has not budged over the last few decades. While the top is now performing at international levels and earning close to international salaries, the bottom is as poor as ever.

This is not anecdotal at all. Universal primary education started less than 10 years ago. Even today, India does not have universal secondary education. Ergo.

VKumar · Post by **VKumar** » 28 Jan 2013 21:34

In my experience of recruiting thousands of University grads for software programming, I have been disappointed. Most fresh grads are unable to write a single page essay on a topic of their choice! Those who do attempt have poor grammar & spelling.

The only thing they seem to have learnt is a programming language. No idea of Quality Assurance, testing etc.

Even soft skills are missing.

All are expert at negotiating higher pay whenever a crucial assignment comes.

The higher education is of poor level. Employees would have been better off having studied upto school levels carefully than go on for graduation.

Grads are unable to do basic stuff that an 8th standard student should find easy.

Teachers are no better, if available!

No wonder software companies have huge armies of 'people on the bench' because these people are being trained to do what their education should have taught them.

Theo_Fidel · Post by **Theo_Fidel** » 28 Jan 2013 21:56

This is still a reality based forum, one of the few that remain.
There is this unfortunate detail that most of the countryside is not sold on growth. There is every chance that if ignored these folks might turn around and say enough. It is their land and water that is being taken to produce our industrialization. But leave that for the moment.

I don't think anyone mentioned skipping industrialization, just that there will be no such stage in India. Industrialization is proceeding at a rapid pace but only for high skill modern manufacturing. Das has clarified that what he really meant was that we need a skill based economy, which will end up being mostly service type jobs even in the manufacturing sector. We are most definitely going to skip the Dickensian smog choked phase of industrialization. The steel plants we are putting up for instance are all world class high technology engines, no 5th fail/pass need apply.

I certainly don't agree with the tone of the Hindu article that GDP growth is not everything. To my mind growth is everything, nothing else matters. But I do worry about this dichotomy of a developed and undeveloped India living together. Let me explain it this way.

Periodically there is a fit of depression that the entire bottom class is being left behind and there are no jobs for them in the new India. Every time this comes up politically there is a tremendous push to demand mass manufacturing so these folks can have jobs. A few years back came the demand for job reservations in industry and even IT. But GDP growth is only possible with the educated class. Little to no advancement is possible with the unskilled. Growing agriculture might help, but it only benefits if you own land, and most are landless.

Occasionally the fear for me personally is that our very growth may run into this structural limit. I have always thought that there is plenty of educated folks even with a 12th graduation rate of 30% in places like TN and a degree rate of 5%-8%. Enough to keep our growth going long enough to develop the resources to pull the children of the destitute up by their boot straps. At least till a per capita GDP of $8000-$12000 or so. There is unfortunately a small chance that we might run out of steam before that. Every time I visit CI and places like Chattisgarh & MP this fear grips me particularly strongly, personally it is scary to see how little has changed. OTOH every village now has a little blue painted school with a noon meal center attached. There are long strings of kids going to school with uniform and school bag even in deepest heart India, something that was not true even 10 years ago. But to be productive we need to make sure they get to the 12th and pass at the rate of 85% at least.

Right now that has to be the real bet people should be worrying about, the bet India has taken against itself.

VKumar · Post by **VKumar** » 28 Jan 2013 23:06

If you see, the only sectors where India has made significant success is where the government was missing for many years, thus permitting a base of entrepreneurs to build up business without much government interference, or interference by trade unions. For example, diamond, software, tution classes, designer clothes.

However once government/bureaucrats become aware of the success, that sector is then controlled and becomes just another business.

Also, if you see legislation, it is aimed always at controlling the successful, instead of encouraging success.

How can a billion flowers bloom when they are denied sunshine, water and fertiliser?

member_23629 · Post by **member_23629** » 28 Jan 2013 23:20

When India was growing slowly there could at least be hope that faster growth would pull the poor out of poverty as it has done in so many other countries. Now that we've had multiple decades of fast growth without any real societal transformation, I'm really not sure what will cause dramatic change.

The reason is that the government still has a stranglehold on two things needed most for societal transformation -- education and healthcare. There has been zero liberalisation in these. Entrepreneurs have now got freedom to produce goods without needing a license from Udyog Bhawan, but this will have no impact on education or healthcare of the masses. Only some people will get rich who are lucky enough to have been educated in cities. Where are entrepreneurs in education and healthcare?

Abhijeet · Post by **Abhijeet** » 29 Jan 2013 02:21

Theo, we may be talking past each other. My main point is that however much we may want a skills based economy, we're unlikely to get it with the level of human development we have now. I don't know where that mass of under-educated, unskilled people is going to go, but they definitely aren't going to be participating in the global high skills services economy that so excites Mr. Das.

varunkumar, there's probably too much entrepreneurial activity in basic education and healthcare -- in the VC world in India a lot of funding goes to companies which set up primary schools or hospital chains. I don't think this is a great thing, because it's a reflection of the fact that the goverment has basically abdicated its responsibility towards the education and health of its citizens. For a country as poor as India, a strong public primary education and healthcare system is absolutely essential.

Theo_Fidel · Post by **Theo_Fidel** » 29 Jan 2013 02:49

Abhijeet,

I agree. But extend the analogy a little further. Do the unskilled have a place in manufacturing?

What happens if they don’t?

RamaY · Post by **RamaY** » 29 Jan 2013 03:54

Theoji

Often you ask is Gold hoarding by common Indians is good. Today's eenadu news paper has an article by S.S Tarapore.

Interesting points

1. KUB Rao team recommended that the gold deposits from temples are collected by the bullion fund

2. Ex RBI governor YV Reddy questioned how is it fair to allow imports of a Benz Car (which has no economic value to India) but not allow gold imports?
3. As long as the government economic policies and environment do not give proper rate of return, the citizens have a right to collect and hoard gold.
4. "Gold should be treated as any other reserve asset, enabling RBI to undertake any type of operation in gold as it can in other reserve currencies," said the former RBI deputy governor.

Arjun · Post by **Arjun** » 29 Jan 2013 08:32

Workforce from India more relevant than China: Manpower

India has a big advantage over China in the global labour market, as its young and English-speaking literate workforce is much more relevant on the global level, as per leading human resource consultancy giant Manpower Group.

However, the Indian government and companies need to focus on understanding the skill sets they would need in the future and train the country's young population accordingly to maintain the supply-demand balance of the job market, Manpower Group President (Global Corporate and Government Affairs) David Arkless said in an interview here.

Arkless, who was here to attend the World Economic Forum Annual Meeting, maintained that he remains optimistic aboutthe Indian labour market, although the conditions remain volatile and uncertain globally.

"In terms of job market, our views are a little different from the 'Resilient Dynamism' theme of Davos meeting.

"We are telling our customers that only one thing is certain in future and that is the uncertainty. We know that there is going to be volatility... We are telling all our associates that this is the new normal. It is not going to go back to what it was five years ago," he said.

Asked about the Indian labour market, Arkless said: "India is not a typical emerging market economy. It is a very specific talent market and Indian economy operates totally differently from Chinese or any other emerging market or global growth economy.

"In terms of human capital benefit, India has a highly literate and very driven young people. We see that the big benefit for India is that it has a much bigger young, literate English speaking relevant workforce, which is more relevant on the global level, as compared to the Chinese young people for instance. That's going to be the biggest strength in future for Indian labour market".

Theo_Fidel · Post by **Theo_Fidel** » 29 Jan 2013 11:36

Ramay,

We make Mercedes Benz cars, and even make many of the components here. So unless it is a fancy model It very much contributes to our economic income. There would not have been any question about gold either if the import bill was not $60 Billion annually and rising, approaching our oil bill.

Just to give you a heads up, this is more than was spent on housing by the entire nation of India. In fact this amount is enough to provide a proper sewerage system for 300 million Indians, including proper toilets. This is annual cost. So we don't have houses, we can't be bothered to develop to invest in a proper toilet but we will waste money on buying a yellow metal. Something that is marked up every step of the way by the west, making nice profits off us.

This is not how a society that wants to develop itself thinks.

amit · Post by **amit** » 29 Jan 2013 11:52

RamaY wrote:Theoji

Often you ask is Gold hoarding by common Indians is good. Today's eenadu news paper has an article by S.S Tarapore.

Interesting points

1. KUB Rao team recommended that the gold deposits from temples are collected by the bullion fund
2. Ex RBI governor YV Reddy questioned how is it fair to allow imports of a Benz Car (which has no economic value to India) but not allow gold imports?
3. As long as the government economic policies and environment do not give proper rate of return, the citizens have a right to collect and hoard gold.
4. "Gold should be treated as any other reserve asset, enabling RBI to undertake any type of operation in gold as it can in other reserve currencies," said the former RBI deputy governor.

I'd like to respond to these four points. However, the caveat is I haven't read the article by Tarapore - a very respected figure.

1) No comment on this.

2) If YV Reddy really said this, I think we need to look a the context of his statement. In dollar value the number of Benz Cars - or any type of luxury car - being imported is minuscule compared to the dollar value of gold being imported. Another point: A Benz car is usually imported by folks with lots of disposable income - in fact obscene amounts I would reckon. As a result the $$$ value of the Benz Car that they pay for is - I would guess - a fraction of their total disposable income. OTOH, many middle class folks buy gold - maybe of their daughter's marriage - at an amount which is a significant portion of their disposable income. And most of that gold sits in lockers either in banks or at home. Yes maybe in 20 years time the price in rupee terms that they get from selling the jewellery (mind you there would be a 20-30 per cent deduction of value due to various reasons including alleged "impurities" in 21 carat gold, making charge etc) could be greater - but you would have to factor in depreciation of the rupee.

3) What exactly is a proper rate of return? The rate of return is a function of many things. For example if you put your money in a fixed deposit in a bank you'd probably get, what in today's world, is a very healthy rate of return of around 8 per cent. However, you get that 8 per cent because if you were borrow money to buy a house you'd pay around 11-13 per cent interest. If you were to do a business and would need to borrow money for working capital you'd probably pay even more interest rate. Which is why you'd probably buy a smaller house and would most probably not go into business. OTOH if you got a rate of return for your FD which was in the region of 1-2 per cent then you'd probably be able to get a housing loan for around 3-4 per cent and working capital at a similar rate. The net result could be that you do well in business and actually become richer and that could have cascading effect - you'd probably build a bigger house, buy a car employ servants etc - all this increases economic activity in the country. In the past decade, India enjoyed high growth rates in those years/periods when interest rates (the so-called rate of return) were at their lowest.

So it's not as simple as blaming the government for "not providing a proper rate of return." In fact, I don't know if you know this RamaYji. Blaming the government for "not giving a proper rate of return" is a Leftist coinage made popular by the CPI(M) in West Bengal. Blame the government for all ills.

And in the meantime, just what kind of "proper rate of return" does gold (again remember the vast majority of folks who buy gold in the form of 21 carat jewellery and not in the form of 22 carat gold ingots) give to the aam admi?

4) I think this is a very sensible suggestion.

amit · Post by **amit** » 29 Jan 2013 12:13

Arjun wrote:Bhagwati has been tearing his hair out for the last 2 decades, trying to convey the same basics to dynastic morons.

Jean Dreze and the Dynasty are responsible for the complete mess of the last several years...lets not get carried away by articles penned by their cohorts in academia.

Actually Arjun, it's easy to find scapegoats in the form of Dreze and the Dynasty and then put all blame on them. Mind you I'm not saying they are not guilty for pulling back the economy, I'm just saying they are not the only culprits. When you just concentrate on them you are just treating the symptom and not the disease.

In my discussion with Suraj a few pages back this is exactly the point I've been trying to make. From an economic perspective IMO we need both high skill services oriented manufacturing as well as low cost, low skill volume manufacturing to employ those whom Theo calls the class 5 fails.

And from a purely economic perspective - and as Suraj pointed out - it's a tall ask but not impossible.

However, whether we like it or not economic policy cannot be delinked from politics and that is where I find the situation very depressing. In the late nineties and early 2000s there was a political consensus built up on the need for reforms and the need to get our economy linked to the global economy. This was more so across the two major political groupings - the BJP and INC.

The problem as I see it is that as regional parties gain dominance and as the INC and BJP get desperate to get back their influence in places like UP, West Bengal and a host of other places the consensus is being sacrificed on the alter of short term political gain. Look at what happened in Singur, Mamata Banerjee killed the project, not because she cared for the people of Singur - those poor farmers will never get their land back - or because she hated the Tatas. She did so because if the project went through the Left might have regained their lost ground. And the Centre as well as the opposition stood by and watched her kill the one project that could have transformed West Bengal.

And Singur is just one example. Look at what's happening with the steel plants in Orissa, and other parts of Eastern India. Mittal has practically washed his hands off India. Posco's first stage steel mill should have been up and running by now.

Then there's legislation. There are important ones which the BJP is opposing for the sake of opposing and come 2014 if they come to power INC would be doing the same to give back their own medicine.

Look at the farce being enacted on FDI in retail.

These are just a few instances. While it's tempting to pick out people to hate, one shouldn't lose sight of the bigger picture. The political consensus on the need for reforms has been hijacked by regional parties and the two national parties can do diddly squat about it - that's the problem you should concentrate on instead of getting distracted by personalities.

Just a rant. Take it for what's it worth.

subhamoy.das · Post by **subhamoy.das** » 29 Jan 2013 12:38

I was skimming tha pages of a UK based well known economics magazine and an ad caught my attention. It was an add by the IT gear manufacturer CISCO. There was a picture in the ad - along with other pictures of networks etc - of a INDIAN lady doctor. I became curious and read into the lines of the ad and it read "doctors in INDIA using our equipment to diagnose patients in DENMARK". Voila - there u go . This kind of high skill service jobs are the future of the INDIA ecomony and is already happening courtsey IT and skilled grads from INDIA. Now as Theo said - unskilled workers - will have to be fitted into this economy and I feel low skills have a much better chance of fiiting into the service model than the factory model as it is now very clear that factories of today are either highly automated, moving back to US/Europe or needs high skilled folks to use the automation tools. Also consider the ripple effect of a high skill service in that it provides indirect jobs to 5 low skilled folks for every service jobs - drivers,cooks, courier, watch man etc. It is true the quality of our grads has a lot be improved but that is something that is getting fixed while on the job.

subhamoy.das · Post by **subhamoy.das** » 29 Jan 2013 12:43

Arjun wrote:Workforce from India more relevant than China: Manpower

India has a big advantage over China in the global labour market, as its young and English-speaking literate workforce is much more relevant on the global level, as per leading human resource consultancy giant Manpower Group.

However, the Indian government and companies need to focus on understanding the skill sets they would need in the future and train the country's young population accordingly to maintain the supply-demand balance of the job market, Manpower Group President (Global Corporate and Government Affairs) David Arkless said in an interview here.

Arkless, who was here to attend the World Economic Forum Annual Meeting, maintained that he remains optimistic aboutthe Indian labour market, although the conditions remain volatile and uncertain globally.

"In terms of job market, our views are a little different from the 'Resilient Dynamism' theme of Davos meeting.

"We are telling our customers that only one thing is certain in future and that is the uncertainty. We know that there is going to be volatility... We are telling all our associates that this is the new normal. It is not going to go back to what it was five years ago," he said.

Asked about the Indian labour market, Arkless said: "India is not a typical emerging market economy. It is a very specific talent market and Indian economy operates totally differently from Chinese or any other emerging market or global growth economy.

"In terms of human capital benefit, India has a highly literate and very driven young people. We see that the big benefit for India is that it has a much bigger young, literate English speaking relevant workforce, which is more relevant on the global level, as compared to the Chinese young people for instance. That's going to be the biggest strength in future for Indian labour market".

Gem of an article here. So nicely put. INDIA will excel in high skill service due to two points - scientific mind and self drive. I have seen example after example of self driven when folks from un heard of engineering schools rose quickly through the ranks by being driven and building up on what ever little they acuired in their educational schools. Often i see children of destitue parents get crashing into top 10 in 10+2 exams. Some here will be tempted to call it poetic rambling. But i see them as every day proof of the scientific minded and self driven young INDIA who will drive the knowlegd driven economy of the future.

Arjun · Post by **Arjun** » 29 Jan 2013 14:08

amit wrote:These are just a few instances. While it's tempting to pick out people to hate, one shouldn't lose sight of the bigger picture. The political consensus on the need for reforms has been hijacked by regional parties and the two national parties can do diddly squat about it - that's the problem you should concentrate on instead of getting distracted by personalities.

Amit, I completely agree with you that an understanding of the big picture is critical. Only point of difference is that my 'big picture' seems to differ very markedly from yours.

Here's the way I see it, Amit:

Reforms etc are means to an end. We need to be clear in our minds what the end objective is. And, as far as I am concerned, the end-goal is quite straightforward - a) Continued High Growth, b) Effective Governance and c) Leadership.

Continued High Growth is what will provide the funds for long-term, all-round development of Infrastructure, HDI, Security and Welfare. Effective governance, sans Corruption - is obviously a big lacuna that all Investors have identified and which needs to be remedied immediately. Finally, Leadership that can deliver and inspire the country is completely missing today and is the first prerequisite before even attempting all of these changes. If we don't find the right person / party for these three criteria - I am afraid the situation facing the country is Dire, with a CAPITAL D.

Having identified the fundamental criteria - the next step is to look for who can deliver on these criteria. It is staring at any rational person with even moderate IQ as to which individual has delivered continuously for several years on all these fronts and who stands the best chance for continuing to deliver - and conversely which party has the worst track record on all these fronts.

The Dynasty, you have to remember Amit - is fundamentally Anti-Growth. It came to power, as you know, after defeating an economically strongly performing government - on the sole platform that growth was not everything. It then went about the task of completely destroying the fiscal and current account books of the country - which led to the obvious consequence of growth shrinking and India again becoming the world's favorite punching bag over the last 3 years.

The Dynasty is obviously not interested in growth because the larger the urban middle-class becomes - the more the vote-swing away from its abhorrent dynastic feudalism towards more modern and progressive alternatives.

Fundamentally, Amit - Indians tend to over-intellectualize things which are fairly basic. You DO NOT need a Ph.D in economics to run this country - all you need is a person who understands basic business and knows what is required to market and sell the country's potential aggressively.

FDI in Retail etc is not the end result we need to be worried about. We need to only worry about whether we remain on a high-growth path, and if those in government are focused on doing everything possible to maintain this growth.

I do think it is the duty of those who have been around a fair bit in the corporate world and understand things somewhat to be able to articulate these very simple messages to others whose don't see how dire the situation is.

Arjun · Post by **Arjun** » 29 Jan 2013 15:03

Rate cuts won't revive India's stalled growth: Andy Mukherjee

India's latest interest rate cut won't revive growth. The central bank's quarter-percentage point reduction in the policy rate, to 7.75 percent, is just as futile as the last one almost a year ago.

GDP will pick up when New Delhi curbs its own profligacy and improves the investment climate. The February budget may be the current government's last chance to do both.

If companies aren't investing, it isn't because monetary policy is too tight. With 10.6 percent consumer-price inflation, the base rate for borrowing in 10-year bonds was already negative in real terms before this last rate adjustment. Rather, the government's quest to fund itself is crowding out the private sector. Banks are forced to buy up government bonds, meaning two-thirds of what households save in a year is reinvested in public debt.

Bottlenecks choking growth are also in need of attention. A debilitating coal shortage is hurting electricity production.

Meanwhile, road builders are wriggling out of contracts with the highway authority on the pretext that the environmental clearances promised to them are taking too long to materialize. Such factors help explain why GDP growth for the financial year is expected to slow to a ten-year low of 5.5 percent.

Deep interest-rate cuts are currently impossible because of inflation. Rural wages are rising at an annual 18 percent pace.

If more money isn't matched with greater investment and output, the result would merely be a further boost to imports, widening India's 5.4 percent current account deficit. For now foreign investors are helping to finance that through their purchases of Indian stocks and bonds, but it would be unwise to rely on that, especially if India's broader economic improvements don't take hold.

Growth thus depends on what New Delhi unveils in February. Finance minister Palaniappan Chidambaram has promised fiscal consolidation and other reforms. If he avoids the temptation to indulge instead in vote-buying populist measures that increase the government's spending commitments, there may be hope not just of another rate cut, but of a recovery too.

amit · Post by **amit** » 29 Jan 2013 15:19

Arjun

Let me stick my neck out and name the Man Who Must Not Be Named: Narendra Modi!

But before that let me point out something. I think Narendra Modi and Nitish Kumar are two of the best Prime Minister material politicians we have today. Far better than Rahul Gandhi whom I think would be disaster as PM.

Of the two, Modi certainly has the track record of being a man who has delivered as far as economic policies are concerned. Nitish Kumar is still a work in progress - but promising.

However, if you look at Modi's work in Gujarat and to a lesser extent Nitish's performance in Bihar you'll notice something. And that is they have absolute control of the Assemblies and have the political capital to push through economic reforms, even ones where there are agent provocateurs who try to undermine things. Just one example: When the Tatas were relocating to Gujarat after the fiasco in Singur, there were suddenly protests about land acquisition. It was handled with a finesse that comes from a position of strength.

However, come 2014 if Modi becomes the leader of NDA (remember for better or worse, there's going to be a lot of rumblings within the alliance - Nitish is on record saying his party would walk out) he'd still be head of a ragtag coalition government which will be dependant on regional parties for survival. Heck there's a good chance that Mamata Didi would be a crucial alliance partner who would lord over the Railways Ministry. (Note: She walked out of UPA2 on the FDI issue and had the temerity to table a no-confidence motion with just 19 MPs! - I mean how stupid can you get?)

Believe me, I sincerely would love to be proved wrong, but sadly I'm convinced that Modi as PM wouldn't be half as effective as Modi the CM. At the end of the day the same short-term coalition politics dictated by opportunistic regional parties would get the better of sound economic policies.

Call me cynic if you will but I don't see how a Modi led BJP can escape what has been the bane of UPA2 (minus their own inefficiency): regional parties hijacking the economic vision. At the end of the day Modi is a good, nay great administrator but even he can't overcome the numbers game in Parliament. I don't think you need a high IQ to come to this rather depressing conclusion, common sense should do.

JMT

Added later: Oh OK its been a long time since I looked at the General Discussions dhaga, I see there's an enter thread on this topic. Well. My last post on the Man Who Shall Not Be Named on this thread. Don't want the mob after me...

But Arjun Boss, you're point about over-intellectualising is well taken I see.

Arjun · Post by **Arjun** » 29 Jan 2013 16:18

Call me cynic if you will but I don't see how a Modi led BJP can escape what has been the bane of UPA2 (minus their own inefficiency): regional parties hijacking the economic vision. At the end of the day Modi is a good, nay great administrator but even he can't overcome the numbers game in Parliament. I don't think you need a high IQ to come to this rather depressing conclusion, common sense should do.

My only comment on that is that I think Modi has the potential to be a game-changer here.

First, the Dynasty could never enforce an agenda on its partners, in part because it didn't have the ability to take the moral high-ground itself on these criteria. I mean, Growth, Governance, Leadership are hardly what the INC was focusing on even within its own party. So, Modi's reputation on these fronts should come in handy in enforcing an agenda with the NDA partners - a luxury that the UPA does not enjoy.

Second - what this also means is that those here who are interested in Growth need to do all they can to ensure that the word spreads and Modi gets in with a comfortable majority of his own.

Muppalla · Post by **Muppalla** » 29 Jan 2013 17:03

amit wrote:Arjun

Let me stick my neck out and name the Man Who Must Not Be Named: Narendra Modi!

But before that let me point out something. I think Narendra Modi and Nitish Kumar are two of the best Prime Minister material politicians we have today. Far better than Rahul Gandhi whom I think would be disaster as PM.

This is another equal-equal BS. Sorry for being blunt. Have you ever compared the Nitish with person called Chauhan from MP? Or compared with the economic progress of Rajasthan during Vijaya Raje's regime. The one Chauhan from MP is a quite and let me do job kind of person. Modi has caught the imagination of India but Chauhan is as equivalent as Modi but confined to rapidly growing and well governed MP.

Nitish will be a disaster in politics with similar traits of Mulayam and Laloo in terms of appeasement politics. It is not just economics when you talk about PM material.

Having said that, there is no alternative to Modi for now. Let us all work towards a system where if you do not support Modi you are not Indian

Gus · Post by **Gus** » 29 Jan 2013 18:57

^ i don't know if that is possible or if it is even the right way.

personally, I would like to see him consolidating his 'base' and reach to all segments with targeted appeal on what makes that segment click. Plenty of people will vote just for a development plank, hindutva or moditva or whateveritva be damned.

There are many things he can learn from the successful Obama campaign, where his 'get out the vote' campaign brought in so many new voters that overcame his poor numbers (relatively) with the majority voting bloc. And god knows there are so many new voters and 'vote eligible but don't vote' in India.

subhamoy.das · Post by **subhamoy.das** » 29 Jan 2013 18:58

http://economictimes.indiatimes.com/tec ... 240001.cms

NEW DELHI: Software services major HCL TechnologiesBSE -0.71 % today said it has entered into a multi-year, multi-million dollar pact with technology firm Cobham to deliver cost-efficient engineering and R&D services.

Mihir · Post by **Mihir** » 29 Jan 2013 20:23

subhamoy.das wrote:I feel low skills have a much better chance of fiiting into the service model than the factory model as it is now very clear that factories of today are either highly automated, moving back to US/Europe or needs high skilled folks to use the automation tools.

Some factories are automated, and the need for skilled workers goes beyond the requirement to just use the automated tools. There are several sectors (in India and in the West) where the need for skilled human hands is unlikely to diminish even in the face of increased automation.

Examples. A worker who is an expert at using a hand-held grinding machine tool to smoothen and deburr parts created by CNCs cannot easily be replaced by machine that will carry out the same task without supervision. Neither can a welder who repairs piping. Automotive assembly lines are also notoriously hard to automate. And even in places where there's a significant level of automation, the need for human workers need not necessarily go down. Automated systems are complex and need regular maintenance, part replacement, and adjustment/calibration if they are to operate properly. And they need to be monitored closely during operation to ensure quality and safety. All this is still done by human workers. Quite often, these are the same workers who used to manually manufacture parts but were trained and equipped with an enhanced skillset to use the new machinery.

This applies not just to factories, but every place where automation is being introduced. Buildings, for instance. Earlier, there was this idea that automating the HVAC and lighting controls in large buildings would allow facilities management departments to trim their workforce. That didn't happen. The new systems required so much maintenance and upkeep, that these departments soon ended up employing greater numbers of technicians to ensure that everything was running smoothly!

In any case, not every industrial setup can afford to automate everything. The small and medium sized manufacturing units that form the backbone of industrialized economies still employ workers to do a majority of the manufacturing work – even if options for automation exist, these often are too expensive for the smaller players. A mid-size injection moulding shop that produces lunch boxes and foot rulers is as much a part of the industrialised economy as a high-end semiconductor fab where the process is automated from start to finish. The former cannot automate to the extent that the latter can.

nachiket · Post by **nachiket** » 30 Jan 2013 03:38

Amit, after the UPA govt. failed to push through any economic reforms during its first term, it was blamed on the CPI(M) (which was then supporting the govt. in parliament) stalling all their efforts. In the second term, we see that they have made an even bigger mess of things despite the commies not being in the picture. So now, we see the blame being shifted to the "regional parties" and their petty politics. This is simply not borne out by the facts.
The Singur fiasco did hurt WB, but the plant eventually did come up in another part of the country. MB only ended up hurting her own people, which they themselves apparently failed to realize. The central govt. had little to do with both the failure in WB and the success in Gujarat. MB's opposition to FDI in retail also failed eventually. But which regional party are you going to blame for the GoI's biggest blunders which have hurt the Indian economy as a whole far ore than anything within the capabilities of the regional parties? Profligate vote winning schemes like NREGS, mammoth scams which skimmed off billions of dollars of public money, doing nothing to reduce the mounting subsidy bill and the increasing budget deficit, unending red tape that stalled various mega projects, the environmental clearance problems which stalled road projects (probably more important than anything else), no large disinvestment initiatives in PSU's, the list is endless. I am a mango abdul. More knowledgeable individuals here can list the important reforms that the govt. failed to even try to push through.
I am sorry. Your argument lacks substance.