Problems and Issues Facing India

1. Problems and Issues Facing India

2. Major problems & Issues in India today • Overpopulation  1 billion & climbing. • Economic development. • Hindu-Muslim tensions. • Gender issues  dowry killings. • Caste bias  discrimination against untouchables continues. • The Kashmir dispute and nuclear weapons. • Political assassinations.

3. India and the Subcontinent • Conflict over Kashmir – India & Pakistan • Irrigation • Pride • Nuclear Weapons – India & Pakistan • Flood control – India & Bangladesh • Humanitarian Aid – India & Bangladesh

4. Economic Strength Why is India becoming an economic superpower?

5. Even though the world has just discovered it, the India growth story is not new. It has been going on for 25 years old

6. 1) Rising GDP growth India Story % average annual GDP growth 1900 – 1950 1.0 1950 – 1980 3.5 1980 – 2002 6.0 2002 – 2006 8.0 Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001), 2000-2005 Finance Ministry

7. 2) Population growth is slowing India Story % average annual growth 1901 – 1950 1.0 1951 – 1980 2.2 1981 – 1990 2.1 1991 – 2000 1.8 2001 – 2010 1.5 Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)

8. The Population Factor • The world’s 2nd largest country with 1,121,800,000 • Only 1/3 the size of the U.S. • 1.7% natural increase • 2025 – approaching 1.4 billion

9. World’s largest! • Will surpassChina by 2032 • 70 million have moved to the cities between 1991-2001 • Growing massive cities such as: Mumbai, New Delhi, Kolkata, Chennai

10. India’s demographic advantage means that its high growth will continue longer term while China will slow

11. India has law, China has order-India got democracy before capitalism and this has made all the difference-It will be slower than China but its path will be surer-India more likely to preserve its way of life

12. “By 2010 India will have world’s largest number of English speakers”“When 300 million Indians speak a word in a certain way, that will be the way to speak it.”-Prof. David Crystal, Cambridge Encyclopedia of the English Language

13. 3. Literacy is rising India Story % 1950 17 1990 52 2000 65 2010 (proj) 80 Source: Census of India (2001)

14. India Story 4. Middle class is exploding % Million People 1980 8 65 2000 22 220 2010 (proj) 32 368 Source: The Consuming Class, National Council of Applied Economic Research, 2002

15. INDIA WILL GRADUALLY TURN MIDDLE CLASS % 1980 8 2000 22 2010 32 2020 50 West of the Kanpur-Chennai line 2040 50 East of the Kanpur-Chennai line

16. 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.

17. 5. Poverty is declining India Story 1980 46% 2000 26% 2010 (proj) 16% 1% of the people have been crossing poverty line each year for 20 years. Equals ~ 200 million.

18. 6. Productivity is rising India Story 30% to 40% of GDP growth is due to rising productivity

19. India Story 7. Per capita income gains (US$ ppp) 1980 1178 2000 3051 Source: World Bank

20. This means a per capita income roughly of (on a ppp basis): ($) 2000 2100 2005 3050 2020 5800 2040 16,800 2066 37,000

21. 8. India is now the 4th largest economy India Story And it will cross Japan between 2012 and 2014 to become the 3rd largest

22. Government and the Economy • India is the world’s largest democracy. • India is one of the strongest nations in Asia. • One of India’s largest industries is its moviemaking industry—called Bollywood. • Although India is one of the world’s top five industrial countries, millions of Indians live in poverty.

23. 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.

24. DRIVERS OF GROWTH IndiaEast and S.E. Asia Domestic Exports Services Manufacturing Consumption Investment High tech, capital Low tech, labour intensive industry intensive industry

25. India’s “mixed economy” • The “mix” refers to private and public ownership. Socialism… • Foreign aid and foreign investment are crucial (also something Gandhi disagreed with). • Urban areas have high-tech companies. • Three quarters of the population are farmers living in small villages.

26. Reasons for SuccessIndia’s success is market led whereas China’s is state induced. The entrepreneur is at centre of the Indian model

27. “Licence Raj” • Licence Raj, also the Permit Raj refers to the elaborate licenses, regulations and the accompanying red tape that were required to set up and run businesses in India between 1947 and 1990. • The Licence Raj was a result of India's decision to have a planned economy where all aspects of the economy are controlled by the state and licences are given to a select few. • Up to 80 government agencies had to be satisfied before private companies could produce something and, if granted, the government would regulate production. • The social democratic plan is too optimistic for Inidan immature environment.

28. Rise of globally competitive Indian companies: Reliance, Jet Airways, Infosys, Wipro, Ranbaxy, Bharat Forge, Tata Motors, TCS, Bharati, ICICI and HDFC Banks

29. India has a vibrant private space > 100 Indian Companies have market cap of US$ 1 billion > 1000 Indian Companies have received foreign institutional investment > 125 Fortune 500 companies have R&D bases in India > 390 Fortune 500 companies have outsourced software development to India. < 2% bad loans in Indian banks (vs ~ 20% in China) > 80% credit goes to private sector (vs~10% in China)

30. Public space is a problem + Dynamic democracy + Free, lively media and press - Poor governance - High subsidies High fiscal deficit - Creaky infrastructure - Inefficient government companies

32. What explains India’s economic success? • Even slow reforms add up-state getting out of the way • Young minds are liberated 3) India has found its competitive advantage in the knowledge economy

33. Key Reforms • Opened economy to trade and investment • Dismantled controls • Lowered tariffs • Dropped tax rates • Broke public sector monopolies

34. Agriculture

35. 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.

36. 2 Agriculture • Farming methods have improved, but few families own enough land to support themselves. • Many farmers have set up cottage industries to add to their income. • India is a leading industrial nation, and advances have been made there in technology and consumer industries. • The growing middle class forms the market for consumer goods.

37. INDIA: ECONOMIC GEOGRAPHY Primary Sector: • Indian agriculture is inefficient and labor intensive. • Animals are frequently used for power. • The village is the focus of life for 74 percent of the Indian population with an estimated 580,000 villages. • Approximately 2/3 of India's huge working population (63 percent) depends directly on the land for its livelihood. • Substantial progress toward modernization has been made in the Punjab's wheat zone. • In the early 1980s more than 1/4 of India's cultivated area was still owned by only 4 percent of the country's farming families. • Half of all rural families either owned as little as a half hectare (1.25 acres) or less, or no land at all. • Land consolidation efforts have had only limited success, except in the states of Punjab, Haryana, and Uttar Pradesh.

38. INDIA: ECONOMIC GEOGRAPHY • Major crop zones: • Wheat. Dry northwest notably in the Punjab and neighboring areas of the Upper Ganges. Many gains from the Green Revolution through the introduction of high-yielding varieties developed in Mexico. • Rice. Moist east and a summer monsoon drenched south. More than 1/4 of all of India's farmland lies under rice cultivation, most of it in the states of Assam, West Bengal, Bihar, Orissa, and eastern Uttar Pradesh. This area has more than 100 cm (40 inches) of rainfall. India has the largest acreage of rice among the world's countries. Yields per hectare are still low at below 1,000 kg (900 lbs./acre), however. • Coconut. Malabar Coast. (Kerala) • Millet. Southwestern India. A cereal grass, Setaria italica, extensively cultivated in the East and in southern Europe for its small seed or grain, used as food for man and fowls, but in the U.S. grown chiefly for fodder. • Groundnut. Kathiawar Peninsula. • Cotton. West-Central India (Deccan Plateau). • Chick Peas. Northwest. • Plantation. Northeast.

39. INDIA: ECONOMIC GEOGRAPHY • Livestock: • India has more livestock than any other country in the world. • Cows - 200,000,000 • water buffalo - 60,000,000 • Goats and sheep - 60,000,000 • Horses, donkeys, and elephants - 5,000,000 • Sheep are of major importance in the drier west where the Islamic population is clustered. • Water buffalo is dominant in the Ganges Delta and coastal regions. • Cattle (particularly the Brahman or Zebu breeds) are found throughout India.

40. INDIA: ECONOMIC GEOGRAPHY • Cattle are an integral element of the Indian agricultural economy. • They are the primary source of draft power (plowing, pulling carts, grinding grain, and a host of other tasks). • Cattle graze on forage which would otherwise be wasted during a dry season. • Cattle consume secondary agriculture byproducts (straw, rice husks, and corn stalks). • Cattle produce an estimated 771,000,000 metric tons (850,000,000 tons) of cow dung, the principle source of domestic fuel a year. • Dung is also mixed with mud and used for plaster; also a major source of fertilizer. • Cattle also produce most of India's milk (the bulk of which comes from the water buffalo). • When a cow dies, it is consumed by the untouchables (who have no prohibitions about consuming beef when it is available) of the large Hindu population. • Cow hides are a major source of leather. • The maintenance of the large numbers of cows and buffalo is a completely rational activity in the Indian agricultural economy.

41. India’s “Green Revolution” • Introducing higher-yielding varieties of seeds in 1965. • Increased use of fertilizers & irrigation. • GOAL make India self-sufficient in food grains. • India's "Green Revolution" allowed RICH farmers to triple their crop by using modern science and technology.

42. INDIA: ECONOMIC GEOGRAPHY • Green Revolution describes the development of extremely high-yielding grain crops that allow major increases in food production, particularly in subtropical areas. • In 1953, scientists developed rust-resistant dwarf wheats which doubled Mexico's per acre production in the next decade. • After a major drought in India in 1965, Mexican dwarf wheat was widely planted in the Punjab region, producing dramatic increases in wheat yields. • The improved rice (IR)- IR-8 was spotted in 1965 at the Los BaZos research institute in the Philippines, which was set up using aid from the Ford and Rockefeller Foundations. • Its first harvest, from 60 trial tons of seeds, produced a six-fold increase of rice under field conditions. • About 10% of India's paddy land is now planted with IR-8 varieties.

43. INDIA: ECONOMIC GEOGRAPHY • Green Revolution benefits: • Two to four times the yield of indigenous grains. • A shortened growing season allows two crops per year. • “Miracle grains" have a wider tolerance for climatic variations. • Green Revolution problems • Need for high application of fertilizer and insecticide, and in the case of rice, there is a need for copious irrigation. • "Miracle grains" have been adopted in the most prosperous areas and among the most prosperous farmers. As a result, interregional and social gaps have widened. • Traditional marketing patterns have been upset. Thailand and Myanmar (Burma) have found their traditional markets disappearing, and Japan now looks for exports.

44. Industries

45. INDIA: ECONOMIC GEOGRAPHY • Secondary sector: • At the time of independence (1947), Indian industries emphasized textiles and food processing. • Gandhi championed development of the cottage industries that existed prior to the intervention of Britain. • A cottage industry involves small scale production using high labor inputs. • Cottage industries are very important because they are labor intensive. • They employ 40 individuals for every one employed in a large automated factory producing the same products. • A total of 750 products is produced by small industries which use <=$100,000 in capital. (Receivers, tools, plumbing fittings, etc.). • Manufacturing employs only 13% of the labor force.

46. INDIA: ECONOMIC GEOGRAPHY Manufacturing Regions: • Kolkata (Calcutta) and Jamshedpur form an emerging industrial region in northeastern India. • Calcutta forms the center of the Bihar-Bengal area where jute manufacturing dominates, but engineering, chemical and cotton industries also exist. Jute: a strong, coarse fiber used for making burlap, gunny, and cordage; it is obtained from two East Indian plants-Corchorus capsularis and Corchorus olitorius of the linden family. • The Jamshedpur region 240 km (150 mi) west of Calcutta has the Tata Steel Works, India’s single largest steel making complex (Indian Ruhr). • In the nearby Chota-Nagpur district, coal mining and iron and steel manufactures have developed, and Bhilai is a growing nucleus of heavy industry.

47. INDIA: ECONOMIC GEOGRAPHY Manufacturing Regions: 2. Western Zone-Mumbai (Bombay)-Ahmadabad: This Maharashtra, Gujarat area specializes in cotton and chemicals with some engineering and food processing, automobiles, and petrochemicals. 3. Southeastern Zone- Chennai (Madras): specializing in textiles. 4. Bangalore supports diversified electrical manufacturing, machine tools, the construction industry, and food processing.

48. Technology

49. India’s Economy Today • 60% of people work in agriculture • 28% of people work in new service industries • New Technology has helped expand the economy • Important Industries • Textiles, chemicals, steel, software, mining

50. India: Technology Superpower • Geneva-based STMicroelectronics is one of the largest semiconductor companies to develop integrated circuits and software in India. • Texas Instruments was the first to open operations in Bangalore, followed by Motorola, Intel, Cadence Design Systems and several others. • 80 of the World’s 117 SEI CMM Level-5 companies are based in India. • 5 Indian companies recently received the globally acclaimed Deming prize. This prize is given to an organization for rigorous total quality management (TQM) practices. • 15 of the world's major Automobile makers are obtaining components from Indian companies. • This business fetched India $1.5 Billion in 2003, and will reach $15 Billion by 2007. • New emerging industries areas include, Bio-Informatics, Bio-Technology, Genomics, Clinical Research and Trials. • World-renowned TQM expert Yasutoshi Washio predicts that Indian manufacturing quality will overtake that of Japan in 2013. • McKinsey believes India's revenues from the IT industry will reach $87 Billion by 2008. • Flextronics, the $14 billion global major in Electronic Manufacturing Services, has announced that it will make India a global competence centre for telecom software development.