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.
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.