An Important Milestone in India's Growth Story

I am glad that the UPA government has defeated the NDA and acquired close to a majority simply because it will become easier for the ruling coalition to enact its policies without the hindrances from the Left.Dr Manmohan Singh who will continue as the Prime Minister after all is the architect of Indian reforms and is well respected by much of the business community. The UPA government in its last tenure has taken a number of steps to spread the wealth around and reduce poverty whose results should be seen during the government's current tenure.

We have also said a big "No" to the politics of religion and all parties big and small must learn from this for the future that the Indian population no longer appreciates regionalism and religion based politics. All debates in the future must be on core issues and not over building a temple or a masjid(mosque).

Though this is the right step for India for the long term much of the core issues of poverty, terrorism and lack of education remain. I hope that the government formed at the center after this election will help India grow faster by enacting out the right policies.

But I also know that the UPA itself is rampant with corruption and it will be the job of the UPA leaders to root out the corruption and make the government an efficient institution that truly works for the welfare of the people.

Let hope prevail!

Why do we have an Indian Mujahideen?

Terrorism is not new to India but having home grown terrorists has taken the country by surprise. India had got used to blaming a "foreign hand" for all terrorist attacks. Now India has to face up to a brood of homegrown Islamic terrorists feeding off popular and growing Muslim resentment toward the purported injustices and atrocities of the Hindu majority.

Its time for Introspection
All the parties across the political spectrum have contributed to the situation. Congress the biggest party that claims to be secular contributes to the insecurities of the minority Muslim community to maintain an electoral base; BJP (Bhartiya Janta Party) on the other hand fans anti-Muslim sentiment for similar reasons. At the receiving end of decades of such politicking and social bias, the Muslim community — which forms 13.4% of India's population — remains impoverished and is increasingly alienated.

A commission instituted by the ruling Congress Party–led government found Muslims underrepresented in government jobs and faring badly in social indicators like household income and literacy.

Every time you have a community that has been brutalized, it is inevitable that there will be a pool of ready recruits. It is a very serious situation, which has arisen because our government has failed to accept the ground reality.A growing percentage of India's Muslim population is getting alienated.

The Indian political parties must focus on issues facing the country and India has so many of them. However seldom do we see Indian politicians give speeches on Climate Change, Homosexuality, economy, jobs or poverty. For India to be truly secular, it is very important that all the political parties stop dividing people on a communal basis or on a caste basis. I am of the opinion that India should enforce a law that any politician that attempts to divide people must be immediately arrested and must not be allowed bail. Alas in a democracy like India, I wonder even if that is ever possible!

Can India be energy independent?

The Indian Scenario
India is a country occupying 2% of the world's land mass and currently generating about 2% of the global electricity, mostly using low grade coal of which it has about 5% of the world reserves.

India has, however a share of 16% in the world's population. To achieve a modestly high level of economic growth, the domestic generation capacity needs to be increased at least tenfold. Even with full utilization of all existing commercially exploitable domestic hydrocarbon, hydroelectric and non-conventional resources, this level of increased generation capacity cannot be sustained for more than a few decades. For a large country like India, bulk imports of fuel or energy are neither affordable nor strategically prudent.

So what options is the Indian government looking at?

Thorium
The Indian Uranium reserves, about 0.8% of the world - cannot contribute to any significant improvement in the situation if this Uranium is used on once-through basis and then disposed off as waste. However, with a carefully planned program, the available Uranium can be used to harness the energy contained in non-fissile thorium, of which India possesses about 32% of the world's reserves.

1. The first stage of this programme involves using the indigenous uranium in Pressurised Heavy Water Reactors (PHWRs) which efficiently produce not only energy but also fissile plutonium.
2. In the second stage, by reprocessing the spent nuclear fuel and using the recovered plutonium in Fast Breeder Reactors, the non-fissile depleted uranium and thorium can breed additional fissile nuclear fuel, plutonium and uranium-233 respectively.
3. In the third stage thorium and uranium-233 based nuclear reactors can meet the long term Indian energy requirements.

The Indian concerns and priorities are thus quite unique. For its long term energy security India has no option but to deploy nuclear power according to a strategy precisely tuned to its needs and resources.

Solar Energy
For power hungry India, solar energy is a source that has not been adequately tapped. Rapid advances have been made and advanced solar technologies can be leveraged to power at least the remote and inaccessible parts of the country.

• The Ministry of State for Non-conventional Energy Sources announced plans to expand government programs supporting the development and utilization of solar energy resources in 2005 and 2006.
• Additionally, they announced that the government has established a commission for additional sources of energy to plan and oversee the implementation of programmes relating to solar energy and other renewable energy sources.
• To popularize its usage the government has been offering rebate on electricity bills to those who install solar systems. Some banks provide soft loans to buy solar equipment.
• There are many big names that have entered the solar industry. Tata being one of them. It sells approximately 30,000 kw of power. Tata BP Solar India Ltd claims to export approximately 60 per cent of its solar products.

Bio Fuels
The Prime Minister’s Council on Climate Change has prepared a strategy for sustainable development known as the National Action Plan on Climate Change. Like the Philippines’ bio-fuels program, which promotes plants such as jatropha, which is not a food crop and does not substitute agricultural land.

• New Delhi is in the process of formulating a national policy on bio-fuels and the setting up of a National Bio-fuel Development Board, which will likely follow the Philippines approach.
• Jatropha oil is produced from the seeds of the Jatropha curcas, a plant that can grow in wastelands across India. Jatropha oil is considered to be an excellent source of bio-diesel.
• The Government of India has identified 400,000 square kilometers (98 million acres) of land where jatropha can be grown, hoping it will replace 20 percent of India’s diesel consumption by 2011

For further details on India's renewable energy initiatives you can check out http://www.newenergyindia.org

Although a number of energy initiatives are going on in India, I wonder if they will produce enough energy to make India energy independent. Given the bureaucracy in the Indian government it is highly unlikely that the Indian government's measures will alone make India energy independent. Hopefully in the next few years we will see more participation by the private sector which has the potential to revolutionize the energy production industry

How American greed collapsed the financial system

In the USA in 1998, many people decided that real estate was very cheap. At the same time, Wall Street was making it easier for buyers to get loans.

Since most of these loans go to people wanting to buy a house, they come with higher interest rates — even if they’re disguised by low initial rates — and thus higher returns. These mortgages packaged together and bundled into investments, often known as collateralized debt obligations(CDO).

Investors then boosted their returns through leverage. For example they made a $100 million bet with only $1 million of their own money and $99 million in debt(backed by a CDO). If the value of the investment rose to just $101 million, the investors would double their money.

Similarly the American home buyer did the same thing, by putting little money down on new houses. The Fed helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years

All these investments, of course, were highly risky. Higher returns always come with greater risk. People assumed that that the usual rules didn’t apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher — so high, that they appeared riduclous when compared with real wages.

Then what happened....

The American home seemed so lucrative and easy money that all the banks in the global financial system ended up owning a piece of it. In a strategy to distribute risk many banks sold complex insurance policies on the mortgage debt. That meant that they would now have to pay up in case the mortgage owner defaults

If that $100 million investment I described above were to lose just $1 million of its value, the investor who put up only $1 million would lose everything.

This is the fear that is crippling the financial market these days. Banks dont seem to think they can lend to each other because no one knows how much a bank is leveraged. Uncertainity is the worst thing for markets so investors are losing confidence. This is bringing down the market.

With so many small investors invested in the market through retirement funds, brokerage accounts this is bound to effect the common man on the street. With a declining net worth and lack of credit it is difficult for the American consumer to purchase products leading to low earnings for non-financial companies.

American markets are caught in this vicious circle and rather than only blaming folks on wall street people must also realize that spending beyond your means always leads to financial trouble.

India's Improved Foreign relations

With the nuclear deal approved in the US and India getting a NSG waiver to begin trade in nuclear material it is evident that India has much improved its relations with all the developed nations. India's relations with Pakistan has dramatically improved over the last few years. But how are its relations with countries like Afghanistan, Iraq and Iran which generally worry the developed nations around the world?

India Afghanistan relations

The government of President Hamid Karzai is currently focused on securing continued assistance for rebuilding the economy, infrastructure, and military of the country. It has continued to maintain close ties with the United States, India, Iran,the European Union, and the Islamic world.

During the U.S.-led invasion of Afghanistan in 2001, India offered intelligence and other forms of support for the Coalition forces. After the overthrow of the Taliban, India established diplomatic relations with the newly-established democratic government, provided aid and participated in the reconstruction efforts.India has provided USD 650-750 million in humanitarian and economic aid, making it the largest regional provider of aid for Afghanistan. India's support and collaboration extends to rebuilding of air links, power plants and investing in health and education sectors as well as helping to train Afghan civil servants, diplomats and police. India also seeks the development of supply lines of electricity, oil and natural gas

India Iraq Relations
The bilateral relations between the Republic of Iraq and the Republic of India have been traditionally friendly and collaborative. They advanced considerably during the rule of Saddam Hussein in Iraq in the 1990s over strategic issues, oil and commerce. Although initially disrupted during the 2003 invasion of Iraq, diplomatic and commercial ties between India and the new democratic government of Iraq have since been normalized.

India had preserved its neutrality over the U.S.-led invasion of Iraq, criticizing the lack of U.N. approval, but also hinted that it would consider sending troops to post-war Iraq to help maintain security and peace after a unanimous vote in the U.N. Security Council over the Coalition's presence and mission in Iraq.However this was ruled out after protests from public and political parties which have been opposing USA. It normalized its ties with the new democratically-elected government of Iraq in 2005, seeking to restart trade and co-operation. Indian businesses applied for contracts for reconstruction projects to the Coalition Provisional Authority, and more recently the activities of Iraqi businesses in India have been growing rapidly.

India Iran Relations
Currently, the two countries have friendly relations in many areas. There are significant trade ties, particularly in crude oil imports into India and diesel exports to Iran. Iran frequently objected to Pakistan's attempts to draft anti-India resolutions at international organizations such as the OIC. India welcomed Iran's inclusion as an observer state in the SAARC regional organization.Lucknow a city in India continues to be a major centre of Shiite culture and Persian study in the subcontinent. There are also small communities in India who trace their ancestry to Iran.

No matter what the media reports, in my opinion India has done very well to improve its relations with all countries around the world. This is an important but much overlooked aspect of globalization. Good political relations with all countries is the first step to increasing trade and India must continue on this path to further improve relations with all countries

Financial Crisis - The Potential Impact on India

America's financial markets have been hit by a credit storm. Companies that once symbolized Wall Street have disappeared thanks to the tons of mortgage securities that were purchased by these companies. So how does this crisis impact India?

Credit Markets

Interbank lending has been slow globally. This means that banks are lending to each other at high rates which further implies more expensive credit .In short, capital has suddenly become more expensive than a few months ago and, in many cases, it may not be available at all. Many consumers today in India are quite leveraged. More expensive money means that floating rate loans begin to get more and more expensive.

Real Estate Market

The big risk is a possible repeat of what happened in 1996.Projects that are halfway to completion, or companies that are stuck with cash flow issues on businesses that are yet to reach break even, will run out of cash. The big sector that potentially could be hit would be real estate, where building projects are half-done all over the country and some developers who touted their 'land banks' find now that these may not be bankable.The only way out of the mess is for builders to drop prices, which had reached unrealistic levels and assumed the characteristics of a property bubble, so as to bring buyers back into the market, but there is not enough evidence of that happening.

Stock Market

Any uncertainty in global markets always proves to be a poison pill for the stock markets.The drop in real estate and stock prices robs a much larger body of consumers of the wealth effect, which could affect spending on a broader front. The stock market values can fall further if the foreign institutional investors start pulling out money in large numbers over a short period of time.

Employment Market

As I write this, a number of companies in India especially in the IT and financial sectors are downsizing to cut costs. More than the downsizing itself, these companies will not be hiring in the near future and that will change the complexion of the job market.

A financial crisis of this magnitude is bound to affect India and other emerging economies. The scale of damage will depend upon what the American Congress does to minimize the effect to the global economy

India benefits the American worker

There is a strong public opinion regarding outsourcing (especially when combined with offshoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all.

A number of hi tech jobs have moved to India from the US and people often wonder whether this trend benefits the US in anyway. So, how does a developing India benefit the American worker?

Outward Indian FDI

The increasing number of home-grown Indian firms (e.g. Tata Group, Infosys,Ranbaxy) and their improving ownership-specific advantages, including financial capability, are among the key drivers of outward FDI. In addition, the growing competitiveness of Indian firms involved in providing outsourced business and IT-services to foreign clients has provided a push for these firms themselves to go offshore to operate near their clients and to look for new markets. All this requires considerable investments and hiring local candidates who understand the market.

Examples

• The Tata Group that operates 16 companies in the US -- from luxury hotels and beverage business to manufacturing, telecom and IT consulting -- employs over 5,000 Americans.
• Ranbaxy is creating jobs and stimulating the economy in North Carolina, New Jersey and Florida
• Mahendra & Mahendra is planning to launch a car in the US.
• Infosys and other IT companies are employing US workers for their American operations in search of newer markets.

Some of the Indian companies with a strong US presence include Bharat Forge, Essar Group, HCL America, ITC Kitchens of India, Jet Airways, Mahindra USA, Ranbaxy, Tata Group, Thermax and Wockhardt USA. Together these companies are in industries as diverse as steel, airlines, pharmaceuticals, auto parts, healthcare, hotels, chemicals and information technology.

According to one study Indian companies have created 30,000 new jobs in the US.

India - US Nuclear deal

India plans to import eight 1000 mw nuclear-powered reactors by 2012 and the US hopes to win at least two contracts, which it feels will significantly boost its atomic industry. The envisaged sale of at least two reactors, to what it calls ‘lucrative and growing Indian market’, would create 3000-5000 direct jobs and 10,000-15,000 indirect jobs in the US nuclear industry, the US Department of State has said.

Government support

The Indian government's adoption of liberal measures and various monetary relaxations paces up India's economic progress. Indian companies are now increasingly being encouraged to open units in the US and other developed nations. The same Indian companies that were blamed for "outsourcing" are now providing large-scale employment opportunities in the USA giving rise to a ''reverse outsourcing'' trend.

Increasing US Exports

Over the last five years, U.S. exports to India have more than doubled, helping to create better-paying jobs in the United States. The United States and India agree that trade is essential to promoting global economic growth, development, freedom, and prosperity. A richer India will have a greater purchasing power to buy US goods indirectly impacting job growth in the US.

Trade will always be a two way street and the India- US trade relations is only the beginning. With the growing strategic ties between the US and India coupled with people to people contact both countries are poised to mutually benefit from this cooperation. In years to come, USA is likely to receive more investments leading to job creation in the USA. Hence, the American worker should not view India as a threat but as a partner.

Why does India not excel in sports?

To understand this question we must understand why certain countries do excel in sports -

• In most developed nations kids have an an opportunity to select any sport as a choice of career and even discontinue education.
• Government provided facilities are available will help them in confidently selecting any particular sport as career.
• The membership fee to utilize the facilities is also nominal given the average income.

In a developing country like India

• Most schools in India don't even have a ground; forget getting kids exposed to sports like swimming.Let us consider an average Indian child. Think about the access to sports facilities that he has at the school age. The facilities probably will be there for one or two sports that too shared by so many other children.
• No parents in India would like to encourage their children to discontinue their studies as there is no guarantee of earning a livelihood in a nation where not all the sports are patronized by its citizens.
• At the same time the nation cannot create such facilities even if it funds the same due to the high population density.
• In addition to the basic problems, there are some created reasons as well that trouble the sports persons in the country. Cricket is the only sport in India which is truly patronized and a lot of private enterprises support the game. For almost every other sport the payscales for sportspersons is low and recieve very limited support from private enterprises. Many of India's sportsperson maintain day jobs with companies and only participate in events as time permits. There is no adequate support for sportspersons and families from the government.
  

Reasons to be optimistic

• At least urban Indian citizens are moving away from idolizing cricket icons and are beginning to take interest in foreign sports thanks to television and broadcast media.
• With a growing awareness,income and globalization parents are taking extra efforts to expose their kids to other sports besides Cricket.
• This bottom up change is beginning to get noticed by advertisers who are looking to sponsor events in India which is helping sports persons to be focused.

As many other things in India, the bottom up approach will take time and hopefully we should see better results in the next decade.