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Thursday, June 23, 2011

India's role in global economy???




  
"I want to be able to say to the American people when they ask me, well, why are you spending time with India, aren't they taking our jobs?" Obama told reporters in New Delhi Monday. 

"I want to be able to say, actually, you know what, they just created 50,000 jobs. And that's why we shouldn't be resorting to protectionist measures. We shouldn't be thinking that it's just a one-way street." 

India is not simply emerging; India has already emerged. And it is my firm belief that the relationship between the United States and India-bound by our shared interests and values-will be one of the defining partnerships of the 21st century. This is the partnership I have come here to build. This is the vision that our nations can realize together. President Obama's Parliament speech.

Soon there were others from P5 who descended on India in no time, I watched it all as I would a rare celestial phenomenon occurring, this was happening on earth in India. I belong to the first generation of Indians born post Independence, who are witness to all round extreme scarcities, importing wheat under PL480, high income tax regime, government of that era busy in setting up multiple behemoths along socialist lines, involved in baking bread to manufacturing most intricate high end engineering goods, until it all lead to a predictable dismal situation in the ’80 where gold had to be mortgaged and finally the first baby steps in ‘1991.The turn around did happen, and as they say rest is history.

Can there be more emphatic statement on “India’s role in global economy” than the common thread that stretched through the meetings with all the P5 members, there was but one clear message trade & economy and the importance of India to the world. Global economies are still grappling with the aftermath of the economic meltdown that was experienced a few years back. Prescriptions for treating the maladies were provide by our good doctor Manmohan Singh Prime Minister of India.


 While the world records low GDP figures India is reporting growth at the rate of 8%+, if only the government of India was to play the role of a facilitator we would soon see a double digit GDP growth on par with what a few states in India have been recording 11% plus for the last few years. Government moves have a decisive impact on shaping the costs, risks, and barriers to competition in a location, which influence investment and productivity improvements that can benefit both workers and consumers. The governments that can successfully manage these issues in turn determine their rate of success in collecting revenues they require to remain self-sustainable and responsive to the needs of the citizens. The State of Gujarat in India serves as a good example, which not very long ago was struggling to meet its fiscal obligations, but has, just in the last few years, reformed its management and become an example of good governance that should be emulated by other state or provincial governments. Link.


Any discourse debate or discussion on economy is incomplete without comparing the 3 most important ones. USA, China and India! USA being number one, has the challenge of maintaining that position in the face of some very serious and stiff competition from China. While USA and India are open societies and economies are driven by entrepreneurial skills of its people. China’s is a government controlled and driven economy how long will it be able to sustain and compete is anybody’s guess? "China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050," : Citi report.


US has been in the forefront as an inventor nation and that is its strength, however manufacturing must also match consumption level hence the dependence on China and other manufacturing hubs. India is not a nation known for inventing but has acquired a reputation of being a skillful innovator and supply source for top notch management personnel. A young population of a few 100 million, soft skills is a plus which provide impetus to a centuries old tradition of International trading. Indian names figure in Forbes who’s who of rich and powerful, as also the top honchos of MNC's world over.

India has been more than genuine and honest in adhering to international trade treaties be it GATT or WTO, while maintaining and protecting it national interest it has also ensured that it has spoken on behalf of the developing world and always strives for an equitable world economic order.

Indian companies are leading the pack in recent spate of mergers and acquisition on the international stage, from automotive industry to steel manufacturing and with some very positive results. Recently reported Jaguar Land Rover zooms towards £1bn profit - Telegraph.  India is playing it role with utmost responsibility by providing a level playing field to all who wish to invest in India. Looking at the current scenario it would be much cheaper for India to raise loans from overseas banks for new ventures as against permitting FDI in those sectors.

The question that the world must ask itself is will it play the game by rules which promote equitable all round economic growth or the old mindset will dictate the new world order? Let us not overlook the fact India with 1.20billion population is a big consumer society, which generate high demand and has the wherewithals to service this demand by domestic production.

Additional points to ponder.


1. India has a massive advantage with 60% of its population being born after 1980. As the youngest nation at this point of time while the world ages, would be able to supply manpower to all corners of the globe ensuring that the Industrial wheels do not come to a grinding halt anywhere. Simultaneously Indian companies have started to outsource their jobs to many other nations! Rub your eyes in disbelief, its a fact! 

2. India still maintains its status as the world’s spiritual leader, of the eight major religions of the world half of them are headquartered in India. Yoga is not new to the world, India and Indians have been instrumental in taking it beyond Indian shores.

3. Lower costs with comparable if not better standards of medical treatment, has made India a popular destination with patients in the developed world. This is medical tourism to India.  Patient beat the long waiting list in their own countries by traveling to India for treatment. Over the years modern medical facilities and all the sophisticated equipment being installed and employed by hospitals has instilled the required confidence. 

4. Aviation is one of the fastest growing sectors in India. India besides purchasing huge numbers of commercial Aircrafts, also providing employment to large number of pilots of foreign origin.

5. Newspapers elsewhere on the globe are becoming extinct. But India leads the world in the industry. 



India most certainly would not wish to be an island, or exist in isolation neither does it have the tendencies of riding roughshod over others. The world at large will have to decide how and where it wants to position itself with India. The ball in your court India is a willing partner.

  
Updated on 31st July 2010
 
 
China’s growth has been led by the state, India’s growth is often impeded by the state.  Dynamism Meets Dysfunction 
 


I welcome a debate and discussion on this…As always, please keep your tone civil, your language polite…no sweeping generalisations please and no personal abuse.  Thank you.





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