India – Still Not “Flat”

1. India – Still Not “Flat”

3. Globalization and India • Thomas Freidman has asserted that globalization has made the world “flat” as evidenced by the growing service sector within India. • This also implies that India is “flat.” • Reality on the ground may differ.

4. Population’s impact • Currently the world’s 2nd largest country with 1,121,800,000 people in mid 2006. • 1.7% natural increase • 2025 – approaching 1.4billion • Will surpass China by 2032 • 70 million have moved to the cities between 1991-2001

5. 70% Rural 600,000 villages

6. Poverty Abounds

7. Open sewage and toilet

8. By the Numbers • Per Capita GDP - $3600 • 60% agricultural/ but only 20% of GDP. • 100 million farmers own NO land. • Approximately 80% of all Indians live on the equivalent of less than $2 a day.

11. Information Technology’s Impact • India produces about 100,000 new engineers a year. About 3 times the number of the U.S. • But still only 1.6 million people are employed in IT and Service Center jobs. • Key centers include Bangalore, New Delhi, Gurgaon, and Hyderabad.

12. U.S. companies in IndiaIT Services-design, support, and or production • Adobe, Cisco Systems, Dell, Google, Hewlett-Packard, General Motors, IBM, Intel, Microsoft, Motorola, Texas Instruments, Yahoo

14. Indian IT and Service Development • IT giants – • Infosys • Wipro • TATA Consulting and Financial • Also TATA Motors • Convergys • World’s largest call center company

15. “Brain Drain” • Young talent leaving India seems to be slowing down. • Average starting salary for an IT engineer in India today is approximately $10-12,000. • Many are graduates of the Indian Institute of Technology • Several campuses located throughout the country • This salary provides a comfortable lifestyle in modern India for the privileged few.

16. Disparate Taxation • Only 35 million people pay income tax to the federal government. • Formal Sector • Over 1 billion pay NO federal taxes! • Informal Sector • Largely agricultural or village based

17. Growing Middle Class • Over 200 million people falling into a growing middle class of consumers. • Technically defined as those earning between $4000-$21,000 a year. • This actually only accounts for 60 M. • “Middle class-ness” seems to include those going from living on $5 a day to $10.

18. Education is far from universal • Compulsory and free education (6-14 yrs.) guaranteed with the Right to Education Bill 2005 • Virtually un-enforceable. • Literacy rate of India stands at 59%

19. Economic conditions necessitate children as day workers in cottage industries or in agricultural. Reality’s impact

20. Mid-day in Delhi

21. Cultural bias reigns supreme • “Other Backward Caste” law to increase quota up to 27% (currently 22%) of students in government higher education was recently put on hold. – March 2007 • Higher caste are increasingly having to share power as OBC’s make up nearly 50% of the population.

22. Private schools are very costly and for the most part exclusive. Rural villages depend on untrained teachers and NGO’s for help.

25. Conditions in the rural village schools are usually far less modern and funded.

28. Lacking Infrastructure • Major cities are not connected at this point by a highway system. • Golden Quadrilateral Highway Project will eventually connect New Delhi-Mumbai-Bangalore-Chennai-Kolkata. - $12 billion • Currently only 3,700 miles of highways!!! • 40% of farm produce goes to waste as a result of poor transportation

29. Scheduled Improvements • New $430 million Bangalore International Airport to be completed by April 2008. (European built and operated) • Roads to the airport are uncertain • Vallapardam Ship Terminal in Kochi (southwest coast of Kerala) to be completed by Dubai’s DP World at a cost of $555 million

30. The Caste System • India’s source of strength and tragic weakness! • Though outlawed in the constitution; it remains a strong force controlling upward mobility. • Changing laws is easier than changing minds. • Compare it to the Civil rights movement in the United States.

31. Yet Hope Springs Eternal! • India’s people is in fact her greatest asset. • An optimistic attitude seems to exist within this country. • India’s ability to function as a democracy despite its massive population, cultural and religious diversity provides hope.

32. To “flatten”? • Provide universally enforced quality elementary and secondary education. • Continue to slow the brain drain. • Improve the quality of its infrastructure such as roads, water treatment and sewage, ports, railroads and airports. • Improve energy reliability. • Continue to provide tax incentives to encourage foreign investment including manufacturing. • Maintain peaceful political posture, in particular with Pakistan.

33. Sources • In Spite of the Gods: The Strange Rise of Modern India by Edward Luce • The World is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman • Planet India by Mira Kamdar • The Trouble with India, BusinessWeek, 3/19/07 • www.prb.org • www.countrywatch.com • www.forbes.com • Trip to India –World Affairs Council of Houston (March 10-20, 2007) • Prepared by Jeff Cherry