Friday, May 25, 2007

India to become world's 3rd biggest economy

India will become a bigger economy than Japan and the third biggest behind China and the United States in the next three decades, Lord Swraj Paul, non-resident Indian industrialist and British Ambassador for Overseas Business, has said.

Addressing a distinguished gathering at the Executive Development Centre for UBS AG in Wolfsberg, Switzerland on Monday night, Lord Paul referred to the rapid strides made by China and India and said: "The long-term prospects for India, while from a lower starting point, are, if anything better. Its fifty-year growth rate is put at just above five per cent."

Speaking on 'Manufacturing and Globalisation' Lord Paul, who is the co-chairman of the India-United Kingdom round table, said, "India will not overtake the United States over this period but will become a bigger economy than Japan and thus the third biggest behind China and the United States, in the space of thirty years."

However, "this does not necessarily indicate that these countries with their massive populations will become richer than the West," he cautioned.

Even by 2050, "China's GDP per head will still be half that of Britain, and less than 40 per cent of the United States. India's will be less than 30 per cent and 20 per cent of Britain and the United States, respectively."

"Unmistakable though is the extent of catch up, especially as these countries will retain their labour competitiveness for years to come.

"While the West will remain richer for the foreseeable future, the economic picture of the 21st century is a relentless shift of economic power to the East," Lord Paul, who is also the Chancellor of the Wolverhampton University in the UK said.

He said while many commentators treated these statistics as an example of the threat that "we face in Europe, we should also bear in mind that such growth gave manufacturers greater opportunities to sell into new emerging markets."

Other long-term economic debate has been focused on demographics, and how stagnant or declining populations would slow the global economy.

"As a person who is passionate about manufacturing, I would take the opposite view -- there will be a huge source of global growth in the next fifty years, with the prospects being if anything better than the last fifty.

"This rapid internationalisation, which leaves manufacturing more exposed than any other sector of the economy, is also having a huge impact on the ownership of companies," Lord Paul said.

Noting that different countries have different industrial organisational structures, Lord Paul said twenty years ago, there was concern that Japan had a superior economic model to the US.

"This drove US companies into a healthy re-examination of their flaws and challenges. The same needs to be done today in every developed country," he said.

"We all need to consider the situation in China and India and how best to compete and take advantage of the situation there. These improving economies are creating new and bigger markets. What we need to do is to treat them as partners and not as a threat.

"This is not a war where one economy's victory is another's loss. We all win when things go forward, but if we are not realistic about our strengths and how to act on them, we could go backwards."

The prescription for Europe, Lord Paul said, was that it must invest more in innovative products.

Business experts, Lord Paul said, recognised that the stimulation of innovation in manufacturing is a key issue for the future, but they also knew that innovation is a very complex process since it affected society, as well as the economy.

"On one hand it provides new and more interesting work, with higher pay and better prospects. But it demands more and better skills, continuous learning and commitment, higher professional standards and education in numeracy and information technology. All this depends on how well we teach and encourage science and technology at school and university.

"And this is where China and India are getting ahead because they are improving their educational standards so fast. In fact, the United States is showing a preference for graduates from the Indian Institute of Technology. So we must improve the quality of our educational institutions further."

Lord Paul said Europe must ensure that its policies did not protect and shelter inefficiency, but promoted competitiveness, enterprise, innovation and skills.

India (more than) shining

You read it here first: the UPA is thinking of elections. What else explains reviving moribund publicity plans and putting three of the PIB’s best and the brightest in charge of them? Last week the PMO’s ICE committee-no that’s not the body charged with giving cold shoulders to the Left; ICE stands for information, communication and entertainment-appointed the three most senior information officers to liven up international publicity, the public service campaign and the Lok Seva Sanchar Parishad. ICE is headed by the I&B Secretary, who has asked the three PIB staffers to quickly draw up plans that will make sure the world and the nation know that India is far more than shining under the visionary leadership of the Prime Minister and the chairperson of the National Advisory Committee. There was a hush-hush daylong briefing and the three information officers have been asked to get back to the ICE chief ASAP.

PM says, so she’s here

What’s the difference between George W Bush and Khaleda Zia? New Delhi couldn’t wait for the former to come. For the latter, it couldn’t make up its mind whether she should come. That Begum Khaleda is in the capital today is thanks only to Manmohan Singh. In the weeks before the visit, the Indian mission in Dhaka was convinced that hosting a leader who is not exactly enamoured of India might not be the smartest of ideas. The MEA view was less sharper but the mandarins said they couldn’t see what could be gained from a visit. The Sheikh Hasina factor was playing both ways-she

wouldn’t be thrilled at her nemesis visiting India but India couldn’t be seen sympathising with one side of Bangladesh’s political divide. No one was saying yes, the visit is necessary, we must have it. So it fell to the PM to issue the directions: I want the visit he said, and, of course, everyone agrees.

Judging it right

Law Ministry officials are consumed with this question: should the bill on judicial accountability be sent to the chief justice of India for his views on the grounds that judges are a special case or should Parliament assert its supremacy on matters of framing law and treat the judiciary exactly as it would any other body? For now, officials are buying time by saying that while the English version of the bill was ready, the Hindi translation was in the works. But that argument won’t work for too long as CJIs use English as their professional lingua franca. Officials say if the bill is sent there is the risk of the judiciary wanting some accountability provisions ‘‘softened’’. But if the bill is not sent, there’s the risk of worsening the already none-too-pleasant relationship between the legislature and the judiciary. The decision-a real tough one- rests with Law Minister H R Bhardwaj. How easy, in comparison, it must be to defreeze foreign bank accounts.

Didi vs Dada

Who says Bengal’s influence in Indian politics has diminished? There’s a row brewing in Parliament, and the principals are all from Bengal. Expressing solidarity with the expelled Rajya Sabha MP Jaya Bachchan (nee Bhaduri) is the Lok Sabha MP and

Trinamool Congress chief Mamata Banerjee. Didi, as he is affectionately or otherwise called in Delhi, has targeted Dada, aka LS Speaker Somnath Chatterjee, who hasn’t commanded a lot of affection from MPs expelled in the cash-for-questions controversy. Didi has asked why Dada, whose CV includes chairmanship of the West Bengal Industrial Development Corporation, should not be asked the same questions as Jaya. Enthused by this, the expelled MPs held what they thought was a secret conclave. The meeting decided Didi would have the full support of those ‘‘hard done in’’ by Dada.

On the same page

Sharad Yadav, whose happiness at the Janata Dal(U)’s Bihar victory was tempered by Nitish Kumar hogging all the attention, is finding peace in hectoring economic reformers-and in perusing Page 3 ‘‘news’’. Yadav joined the Left in taking on Praful Patel over airport modernisation. ‘‘You have made airport reform a Page 3 party,’’ he told the minister during a Rajya Sabha debate, ‘‘and you are seen on Page 3 rather too frequently.’’ And added, ‘‘Like your friend sitting behind you,’’ pointing to Subbirami Reddy. ‘‘But you have started seeing the Page 3,’’ was the ministerial riposte. Not exactly a high quality debate, is it? But good news for Page 3 editors.

Yawning gap

Your boss calls you late evening and tells you let’s meet at 11. What would you think, 11 next morning or 11 that night? If you tick on the first option make sure you never work for Ghulam Nabi Azad. The J&K CM reportedly is a night owl; working till 1 at night is perfectly

normal for him. His officials are far more somnolent. So when one of them got a call from the CM’s staff that boss wanted a meeting at 11, he said fine, I’ll be there and went to sleep. Only to be woken at 10.30 that night and asked whether he was going to be in time for the meeting. Of course, the official attended the meeting and no, he didn’t think he’s lucky to have such a conscientious boss.

Singh Parivar

We will never know now how Himachali politics would have been transformed had 100 of Sahib Singh Verma’s finest loyalists landed in the state. Taking a retinue of 100 was the BJP leader’s idea of showing how serious he is about his new party job, looking after BJP affairs in Himachal. When news of this formidable travelling party reached the Himachal unit, its leaders were at Rajnath Singh’s door the next instant. How do we make arrangements for 100 people, they asked the party chief, and what is Sahib Singh’s motive, they asked everyone else. Rajnath seems to have shared their apprehension. Sahib Singh was ordered to travel light.

Aryans for army

Did you know (a) that there’s something called World Military Games (b) that India is hosting it in 2007 and (c) the man charged with giving the games a buzz is a chart buster Indi-pop lyricist and musician? And to think of the boring, boring guys who run other sporting events in the country. D J Narayan is anything but boring, although a casual glance at his CV may make you

think otherwise. He edits Sainik Samachar, an armed forces publication not exactly famous for bold, in-your-face journalism. But the MoD had his other accomplishment in mind when it made him the vice-chairman of the games committee. Narayan is a member of Aryans, the band that, among other things, launched the star who never kissed Kareena Kapoor in that restaurant because both of them are from good families. Shahid Kapur is what he is today because of the Narayan-created music video Aankhon Mein Tera Hi Chehra. The Aryans have, if not conquered Bollywood, made a big impression on it. The MoD is hoping some of the stardust will fall on the military games. Gauge that history

Luv and Kush were born there. Sita pined there, after Ram sent her away. Valmiki had this ashram there. The Rani of Jhansi and Tantiya Tope, fighting the imperialist Brits, took refuge there. But it still doesn’t have a broad gauge line. This shocking anomaly, this manifest indifference of modern India to our glorious heritage was passionately exposed by Ramnath Kovind, BJP’s Rajya Sabha MP, who comes from Kanpur. Kovind told Lalu Yadav that so much history needed at the least a broad gauge railway line. The place? Surely you know it? Bithur, a short distance from Kanpur.

Journeyman

At least one proof that L K Advani’s current political strategy is being taken seriously by his party: a big time lawyer and BJP leader is describing his impending English sojourn as London Yatra.

India shines as women grapple with darkness

India may be shining, but her women for the most part, are still struggling in the dark ages of economic bondage.

The biggest predicament lies in that a woman has no autonomy over her income. There is still no recognition of her contribution as a ‘bread winner’. "With the elections drawing, near people need to recognise that the ‘feel good’ factor is for big corporates and the BJP alone".

‘India Shining’ has failed to spread it’s warm glow to ordinary lower middle class families and women who are increasingly being indebted as a result of home and car loans. We should recognise it for what it is - an electoral stunt," warned Prof Roop Rekha Verma. She was speaking at a workshop on ‘Strategies for Economic Empowerment of Women’ held at the Giri Institute of Development Studies, in Lucknow on Tuesday.

Dwelling on how women have traditionally been assigned the task of carrying out unpaid house-bound duties, Prof Verma stressed on the need for such duties to be considered economic contributions to society. Since this constitutes pre-determined work sans adequate compensation or creativity, mundane tasks such as cooking, washing, raising children get reduced to a drudgery even as the woman is denied the right to choose.

"Without an adequate knowledge pool and skills, a majority of women are employed in the irregularised, marginal or primary sector while her male counterpart continues to dominate the lucrative secondary and tertiary sectors. Globalisation too, unfortunately, appears not to have made a dent, with the result that women are now obliged to carry out their household chores while simultaneously juggle the responsibilities of a job," she said.

Principal secretary, rural development, NC Bajpai noted that it was not till the 9th Plan that the need for an integrated approach for economic, social and political justice was felt, and as part of this, female literacy and economic independence were considered essential. DM Diwakar from Giri Institute stressed that piecemeal efforts were not adequate to tackle exploitation, but that economic and political space needed to be created.

Booming Indian economy a boon for its stock market

India's stock market is scaling new heights, driven by foreign investors -- particularly Americans -- eager to seize opportunities in one of the world's fastest growing economies.

The market's surge cuts across all sectors, from cement, steel and banking, which have been driven up by a housing boom, to the stocks of hotel chains that are putting up more tourists.

So far this year, foreigners have pumped $7.4 billion into Indian equities, up 61 percent from the same period last year, according to Securities and Exchange Board of India, which regulates the stock market.

The foreign investors are lured by India's booming economy and its companies, whose earnings have been steadily rising.

"India's emergence as a new global economic poster boy" is helping the stock market, said Rajeev Malik, a senior economist with J.P. Morgan Chase & Co. in Singapore.

The country's "economic growth outlook for the next two to three years is pretty attractive, and the equity market offers enough depth and breadth for investors to capitalize on this growth," he said.

Until recently, many overseas investors had avoided India because it was viewed as backward, opaque and poor -- a risky bet. Frosty ties between New Delhi and Washington kept some U.S. investors away.

But India is in the throes of economic transformation. Its economy has grown 6 percent a year during the past decade, and officials expect it to grow 7 percent this year -- the results of more than a decade of government moves to liberalize the economy.

Bringing money in and out of the country, once a highly bureaucratic endeavor, is now relatively simple. Rules on how large a stake in Indian firms foreigners could own have been eased. And Indian business has become more transparent, complying with disclosure rules that were often ignored in the past.

"The liberalization process initiated in the '90s has improved the business environment and this along with a robust economy have helped corporate India deliver a good performance," said K.N. Sivasubramanian of Franklin Templeton Investments, based in San Mateo, Calif.

"The rally has been underpinned by strong fundamentals on both corporate and economic fronts," said Sivasubramanian, whose firm currently manages $3.7 billion worth of Indian stocks and bonds.

Foreign investors are expected to sink more than $10 billion into Indian stocks by December, the Confederation of Indian Industry said in a forecast.

With the U.S.-based Institute of International Finance predicting foreign investors will pump about $34 billion into Asian stocks outside Japan this year, that means India should account for nearly a third of all money flowing into Asian markets from outside the region.

All these factors have contributed to a 24 percent gain in the benchmark index of the Bombay Stock Exchange, the Sensex, since late April -- causing some to wonder if a bubble is in the making. The Sensex touched an all-time high of 7,921 on Aug. 18, although it lost some ground recently as investors booked some of their profits.

"The equity indices have gone up too much too fast," said J.P. Morgan's Malik, adding that rising oil prices also posed a big risk.

But Finance Minister P. Chidambaram has dismissed talk of a bubble, and says soaring share prices reflect investor confidence in India's economy.

"Putting money into equity is investing in the economy's growth," said Vijay Gaba, a New Delhi-based investor, who has bought into cement, sugar, technology and hotel stocks over the past several months.

Gaba said he is still buying, although cautiously and selectively, because he believes the Indian economy will grow 7 percent annually in the next three years. "That means the stock market will continue to do well."

While poverty still shackles a huge chunk of the population, a growing middle class that some estimate at about 300 million of India's 1 billion people is driving demand for new houses and shopping malls.

The construction sector expanded 12 percent, going from about $35.8 billion to about $40 billion in the last fiscal year, which ended in March. That's boosted demand for shares of cement and steel companies, such as Larsen & Toubro Ltd. and Grasim Cement Ltd.

Major industrial companies like oil and petrochemicals giant Reliance Industries Ltd. and the Tata group -- which includes divisions that produce steel, automobiles and software -- are thriving on increased exports and strong domestic demand.