Stifled yet growing, how?

I am sure you read all those ’emerging India’ stories everywhere on the net. There is a full spectrum of those, from the ones that sound emotionally and overly bullish about India (rediff/ET types), to the ones that say India/China have a long wait before they get to be super powers.

Sitting here in Bangalore, India, one way to think about all this is – oh my God! Such big urban rural divide (as that Yale article mentions), such horrible infrastructure, so many people to feed and house, do we have a bleak future or what? I am sure my willfully-NRI readers can add to that list of miserable observations.

I am not giving you the classic ‘cup is half full or half empty’ story. Though you may say that being a stakeholder (a resident), I will tend to see the cup as half full. And as many NRI bashers say, those who dont have ‘real’ stakes, will justify their choices by seeing it has half empty.

Whatever. But I have a simple observation that I cant explain.

So much red tape and corruption, but somehow things run, and your work does get done. Short on power, third world roads – yes most of it, serious shortage of skilled labor, visibly poor governance and ever so slow justice system (which, incidentally, is seen by many as our strength). But still, industrial growth was an impressive 12-13% the most recent quarter. Even with such horrible conditions for doing business, entrepreneurship seems to be somewhat thriving, even in many small towns and not just the metros. And it shocks me that people are thinking of talking big time manufacturing in a country where 24-by-7 electricity is still unthinkable.

Look no further than Bangalore, the city has been sucking – most say – for over 8 years now. You hear this talk of X shutting shop and Y moving out every day. But there still are no signs of a serious slowdown. On the contrary, I only see growth.

Okay, alright, it is all a matter of luck. These are the days of low cost IT and BPO organizations. But these companies still do business here, in these harsh environments, don’t they? And by the way, IT still accounts for only 5% of our GDP, and employs no more than 1.2 million workers.

What I am saying is this. What would happen if all these shackles of laggard infrastructure, red-tape-ism, snail-paced justice and inept legislators were to loosen up? Going by what I see, do I predict a possible economic explosion?

BTW, I am no economist. But from the little I have read and heard, I figure economics to be a complicated thing, so complex that things can mostly be explained after they happen, you can’t predict many of those.

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7 Responses

  1. I agree with you SB..When the going gets tough, the tough get going. I agree with whatever NRIs, RNRIs(Returned NRI), or RUUIs(Resident Unhappy Uttering Indian) complain about Indian system. But still system works very well in India. Lot of MNCs are floating new companies in India despite all the chaos and poor infrastructure. Money is rolling and economy is spinning. You can still see smile on the face of common man…Right from Dabbawalla of Bombay to President Kalamji….Definitely India is changing.

  2. Growth cannot be avoided – it happens. We only have the choice of the direction we want to grow.

  3. India unleashed….Economic Explosion…Think Atomic Bomb : it would be equivalent to a few atomic bombs dropped on the developed countries. India can go places and will go only if we dont hold ourselves back. We are the most enterprising people : Remember the chai stall on the moon joke !!; We are amongst the most intelligent people and ever willing to face any obstacle in our lives ! Despite all the Bangalore traffic horrors, see how we go about our commuting lives without raising a finger about it !!

  4. Much of the growth in IT happened – because:
    – it happened too fast.
    – govt. did not know how to (mis)manage this new field.
    – the clients were exclusively abroad. Even today, there is hardly any IT company worth its name, which has reasonable business in india.

    That still does not take away the fact that there were smart people around to take advantage of this opportunity. Wonder if the astounding growth of Wipro and Infy would have happened if Y2K did not happen.

    In Manufacturing Sector – except for the Auto Industry – others don’t seem to be making a big dent yet.

    Our Agricultural Output – is actually said to be not good at present and in near future.

    India continues to be ranked one of the lowest in terms of ease of starting and running business.

    But yes – it is becoming increasingly clear that people want to progress.

  5. “India continues to be ranked one of the lowest in terms of ease of starting and running business.”

    This is true. In fact there are lot of countries that are corrupt and have red tapism but in India the corruption is with an attitude. For e.g. I met someone who does business in India and China. He says both the countries are corrupt and he factors it in his cost. The difference he cites is, In Indian even after paying you are still at the mercy of the official and his whims and always have to approach him with folded hands. In China it is more like “Professional and Institutionalised Corrupton”

    But despite all that India is doing good for itself. As someone has noted before, “Businesses in India have grown not because of the State but Despite the State”. So true!

  6. Polite – that “despite the state” statement is a classic. But ever thought why businesses grow ‘despite the state’? Is it because growth just happens- as Scarlet says?

    NRIKaAwaaz – I am as hopeful as you are. This way or that way things do work. your postcard does reach 95% of times, Lalu/Nitish or Paswan, trains do reach destinations, crowded airports, but airplanes do take off and land without accidents.

    Back to the topic, ApunKaDesh and NammaNadu said two things that may explain the “despite the state” phenomena.
    – “people want to progress”. When we want it, it will happen. will vs way types.
    – “… without raising a finger about it”.
    That is perhaps our biggest weakness and a strength at the same time. Instead of wasting time in complaints, we find ways around things (bribe him, beat him up types). Though, if all of us start complaining a lot more and do it ‘together’, progress could come a lot faster :)

  7. Dear Sir
    Please write for me about Polimer and Polyethilen Industry in Bangalore.
    We are a company in Iran and our product is Pipe and fitting,Now we have visit of Bangalore,We like know about plastic there ,and about Manufacturing in
    polimer ,
    Regards
    Ghafari

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