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Views on India's future -

nabadip - Thu, 09 Jun 2005 00:18:09 +0530
Bangalore: Hot and Hotter

Bangalore, India

Every time I visit India, Indians always ask me to compare India with China. Lately, I have responded like this: If India and China were both highways, the Chinese highway would be a six-lane, perfectly paved road, but with a huge speed bump off in the distance labeled "Political reform: how in the world do we get from Communism to a more open society?" When 1.3 billion people going 80 miles an hour hit a speed bump, one of two things happens: Either the car flies into the air and slams down, and all the parts hold together and it keeps on moving - or the car flies into the air, slams down and all the wheels fall off. Which it will be with China, I don't know. India, by contrast, is like a highway full of potholes, with no sidewalks and half the streetlamps broken. But off in the distance, the road seems to smooth out, and if it does, this country will be a dynamo. The question is: Is that smoother road in the distance a mirage or the real thing?

At first blush, coming back to Bangalore, India's Silicon Valley, that smoother road seems like a mirage. The infrastructure here is still a total mess. But looks can be deceiving. Beneath the mess, Bangalore is entering a mature new phase as a technology center by starting to produce its own high-tech products, research, venture capital firms and start-ups.

"The ecosystem for innovation is now starting to be created here," said Nandan Nilekani, the C.E.O. of Infosys. For several years now, when venture capitalists funded companies in the U.S., they insisted that the R.&D. for the products be done in India. But now, increasingly, Western companies will come up with a new idea and then tell Infosys, Wipro or Tata, India's premier technology companies, to research, develop and produce the whole thing.

As one Wipro executive put it, "You go from solving my problem to serving my business to knowing my business to being my business." What will be left for the Western companies is the "ideation," the original concept and design of a flagship product (which is a big deal), and then the sales and marketing.

"We're going from a model of doing piecework to where the entire product and entire innovation stream is done by companies here," Mr. Nilekani added. All of this means that innovation will happen faster and cheaper, with much more global collaboration.

The best indication that Bangalore is becoming hot is how many foreign techies - non-Indians - are now coming here to work. P. Anandan, an Indian-American who worked for Microsoft for 28 years in Redmond, Wash., just opened Microsoft's research center in Bangalore, which follows the ones in Redmond, Cambridge and Beijing.

"I have two non-Indians working for me here, one Japanese and one American, and they could work anywhere in the world," Mr. Anandan said. He added that when he got his engineering degree in India 28 years ago, all the competition was to get a job abroad. Now the fiercest competition is to get an I.T. job in India: "It is no longer, 'Well I have to stay here,' but, 'Do I get a chance to stay here?' "

In the past year, Infosys received 9,600 applications from abroad, including from China, France and Germany, for internships, and it accepted 100. I asked one of these interns, Vicki Chen, a Chinese-American business student from the Claremont Colleges, why she came. "All the business is coming to India, and I don't see why I shouldn't follow the business," she said. "If this is where the center of gravity is, you should go check it out, and then you become more valuable."

Even more interesting is how Indian firms are taking the skills they learned from outsourcing and using them to develop low-cost products for the low-wage Indian market: a medical insurance plan for the poor for as little as $10 a year, a $2,000 car, a $200 laptop, supercheap cellphones, a low-fare airline ($75 one-way for the three-hour Bangalore-Delhi flight) that sells tickets from Internet kiosks in gas stations. Indian companies know that if they can make money producing low-cost technology for poor Indians, it gives them an incredible platform to then take these products global. (Imagine the profit potential if they work in the West?) China is doing the exact same thing.

Indeed, I now understand why, when China's prime minister, Wen Jiabao, visited India for the first time last April, he didn't fly into the capital, New Delhi - as foreign leaders usually do. He flew directly from Beijing to Bangalore - for a tech-tour - and then went on to New Delhi.

No U.S. president or vice president has ever visited Bangalore.
nabadip - Thu, 09 Jun 2005 00:56:42 +0530
ND Batra: Globalisation exposes India’s dilemmas

The Statesman, Kolkata

(ND Batra is Professor of Communications, Norwich University, Vermont. He can be blogged at

Globalisation has raised the curtain on India, exposing its strength and its weaknesses. So it is not unusual to come across a person asking a question, such as: If Indians are so smart, why are there so many poor?

The quick answer is that corruption and poor fiscal management have bogged down India. But on the other hand, many fast growing Asian countries, including China, have not been free from these problems either. Of course, one could blame the socialist politics of the post-Independence generation that believed that a bad shaving blade made in India was a sign of self-reliance and spiritual strength. It is true to some extent that protectionism and crony capitalism of the socialist era proved a poor substitute for the challenge and response of the competition of the marketplace.

Initially the foreign exchange crisis of the early 1990s forced India to open up its doors to privatisation and market economy. But India was sucked into globalisation aided by the information revolution that had begun to sweep the world.

India’s diaspora, especially in the IT field, began to show its unusual ingenuity for developing new products and services as well as for solving complicated problems, including those arising from Y2K. Bangalore was able to leapfrog its poor infrastructure and transformed itself into a cyber module that smoothly docked with the rising digital world, thanks to Indian satellite technology, which ironically developed during the era of socialism and self-reliance.

While the spectacular success of Bangalore and IT showed what India could do for the world, at the same time it exposed India’s vulnerabilities, its slow-moving rural economy, massive shortfalls in investment for infrastructure development, more than 300 million illiterate people, and a high rate of underemployed and unemployed people.

The world began to look at India’s underbelly, as it were, and the exposure has challenged Indian sensibilities. Indian policymakers and intellectuals began to grapple with the problem of slow growth and rising expectations as never before.
Bimal Jalan, former Governor of Reserve Bank of India, has argued in his book, The Future of India: Politics, Economics, and Governance, that the euphoria created by IT and other industries might not last, not unless India develops the political will to succeed.

Mr Jalan suggests that a stronger Parliament and more powerful judiciary would make politicians and bureaucrats more accountable and responsive to public needs. Individuals who exercise political power should be made answerable for not only how they make use of the power vested in them but also whether they achieve their goals.

“If ‘powers’ can be exercised without collective responsibility, then there is an equally strong case for ministers to take individual responsibility for their ‘duties’ in certain vital areas like poverty alleviation,” says Mr Jalan.

But some problems are systemic and individuals can do so much, howsoever honest they may be. Poverty reduction depends on the rate of economic growth and how widespread and decentralised are the economic opportunities. The system as a whole has to be geared to growth, which means a national consensus on growth strategies rather than holding any individual minister responsible for poverty reduction.

Mr Jalan leaps to a surprising generality: “If there were no corruption, India’s growth rate would have been eight per cent per annum in the 1980s and 1990s, rather than close to six per cent.”

I don’t know how Mr Jalan came to this 20/20 hindsight of econometric calculations, but being a banker and economist he must have done his homework before writing the book. If economic growth jumps to eight-nine per cent, would that be an indication that corruption level has dropped in India?

How strong is the correlation between corruption and economic growth? How strong is the correlation between infrastructure and economic growth? What are the other factors of growth? If India cannot eliminate corruption immediately, or to put it in another way, if corruption is a social constant ©, are there other factors that can be manipulated to spur growth to a double digit?

That’s the challenge; nevertheless, that does not obviate the necessity of reducing corruption. The source of corruption is unaccounted exercise of power, of course. Elected officials can be removed, though one might say cynically, only to be replaced by another bunch of corrupt people. But democracies do have methods of dealing with corrupt people in high places.

There is a two-fold solution to the problem. Public accountability through media exposé, especially the Internet and television, as the American experience shows, is a strong corrective. Second, privatisation could act as an antidote to corruption because it takes power away from bureaucrats and gives it to entrepreneurs and corporate leaders.

But they too, as the American experience shows, abuse power. Nevertheless, if laws were enforced rigorously, the corrupt would find their rightful place in jails as many American CEOs have discovered. Fighting corruption is a never-ending process. So is the case with poverty.

Dedicated ministers no doubt have a crucial role to play and some do so with great gusto, for example, India’s energy minister, Mani Shankar Aiyar, who has put India on the world energy map. India has begun to make a giant, energy sucking sound.

A person of similar zeal and dedication is needed for controlling the spread of AIDS. India should appoint a high-powered AIDS czar and give him necessary funds and authority and make him accountable for fighting the disease, which is much more widespread than we have been given to believe.

There are other areas where individual ministers could be held accountable for doing their duties well and fulfilling their political commitments, but on the whole in a parliamentary system, as Mr Jalan knows, it is the collective responsibility that matters. It is not only the captain who matters, but it is the ship as a whole. No captain could have saved The Titanic.