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India Shining—Taking Stock

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DQI Bureau
New Update

So much has happened in the last few months. It is

difficult to fathom whether India is making progress or sliding again into its

usual bureaucratic and political tangles with detrimental effects for all of us

building companies or careers in the exciting world of Indian IT. Talking to

people abroad, one gets mixed views-from admiration to guarded appreciation to

a cynical “this won't last very long” view.

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A more balanced view on where we are as a nation came at a

recent CII discussion in Mumbai from none other than the extremely erudite and

logical Nasser Munjee, former chairman of IDFC. On the positive side he listed

many of India's achievements in the recent past-the turnaround time in ports

has come down from over eight days to less than two. Moreover, over a hundred

million people have been brought out of poverty in the last decade and the

subscriber base for telephones has crossed a 100 mn with 80% of those being

mobile. Munjee further added that growth of IT and BPO services supported by the

emergence of manufacturing exports and path-breaking research in the pharma

sector shows the widespread confidence that now pervades Indian industry.

India must

invest at least 8% of its GDP on infrastructure, up from 3.5%—and

compared with China's 10.5%

But a comparison with China shows that we still lag on many

points. While the mandarins in India worry about our ability to manage a $150 bn

of forex reserves, China manages over $800 bn through its policy of investment

led growth. China has brought over 700 mn people out of poverty. And in a clear

testimony to its strategy of investment, in 2003 alone, China invested $150 bn

on infrastructure or 10.5% of its GDP while India invested $21 bn, which is 3.5%

of GDP. To reach any level of economic parity with China, argued Munjee, India

must invest at least 8% of its GDP ($100 bn) on infrastructure.

One clear example of the hijacking of economic imperatives

for narrow political gains is the proliferation of special economic zones (SEZ)

clearances in the last few weeks. Over 140 SEZs have been notified-a land grab

activity that can be contrasted to the Chinese practice of developing one zone

at a time, which has seen the entire coastline, transformed first and now

spreading inwards into every region of the country. Our kind of SEZ

proliferation deprives the country of much needed taxes in future. This might

lead to profit of real estate developers and the neglect of the SME sector.

Otherwise, they would have been much better served by the development of

clusters of planned growth.  This

would create flourishing ecosystems, healthy for lot of organization and

communities around the country.

Amidst the ups and downs, the continuing growth of IT and

BPO exports with 30% plus growth recorded for the fourth year in succession is a

heartening sign of a maturing industry. The rise of the domestic market for IT

and early successes with e-Government projects in many states is motivating. It

enables all of us to innovate and succeed against all odds. These will continue

to spur the industry and the country to further growth and international

success. After all we today have over 1.3 mn young people who will bear

testimony to this transformation. Whether they work in STPs or SEZs, IT youth

will ensure that Indian success is recorded in history as one of the inflection

points of economic success in the 21st century.

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