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Books on India
REPUBLICAN REFERENCE
Area (sq.km)
3,287,590
Population
1,049,700,118
Capital
New Delhi
Currency
Irdian Rupee (INR)
President
Abdul Kalam
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Update No: 019 - (30/08/05)
POLITICS
The frequent spate of criticisms from the Left opposition parties had begun to
affect India's economic progress. In an interview to the global management
consultancy firm McKinseys, Prime Minister Manmohan Singh said that coalition
politics and a rigid labour policy are affecting the country's economic growth
potential. In his words, "extreme rigidities in the labour market and
inflexibility of the labour market is not consistent in achieving our goals in a
world where demand conditions are changing so fast and technological conditions
are changing so fast." Singh also stated that until some form of consensus
is achieved, progress on the economic front will be impeded. Referring to the
government's Left allies, Singh said that if the Left responded more positively
or if there was a shift in their approach, then the situation could well
improve. Therefore, while being cognizant of the criticisms, Singh expressed his
faith in the Left's support for the central government's policy on economic
reforms. However from the perspective of the Left, things look a bit different.
CPI(M) Politburo member Sitaram Yechury reacted to the government's economic
program strongly by saying the Left will continue to oppose anti-people reforms.
The Left parties believe that the reforms are not really going to benefit of the
populace at large. If reforms help the lot of the people, then they would favour
the government's policies. The Left seems to have a set of conditions that must
be met before they favour the economic program. For instance, they are in favour
of foreign direct investment if it increases productivity, upgrades technology
and generates further employment.
On the eve of India's Independence Day celebrations, Prime Minister Manmohan
Singh delivered a powerful speech drawing on India's cultural history and the
recounting the country's achievements in the last 58 years. Much of his speech
was directed towards advancing a vision for minorities in India. Referring to
Mahatma Gandhi, the Prime Minister said his dream was "an India where the
poorest of the poor feel that this country and this nation belong to them."
The Prime Minister also focused on the issue of economic reforms. Singh stated
that "the economy is growing at a rate of 7 per cent. If we keep doing that
for the next 5-10 years, we will be able to eradicate poverty." Among other
issues addressed by the Prime Minister was the extending of opportunities for
scheduled castes and scheduled tribes outside of government employment which
include establishing agricultural science centres, tribal rights to forest land,
development of border lands and launching a national campaign for water and
cleanliness. Last year in his speech, the Prime Minister made no promises, but
called for codes and ethics for those in public life, appealing to the
conscience of the nation. This year's speech was different from last year's in
that the Prime Minister refrained from making any lofty promises. Instead, he
provided a critique of the government's policies and advanced a more realistic
time frame and vision for achieving the goals outlined. Addressing the relations
between India and Pakistan, Prime Minister Manmohan Singh said that Pakistan
needs to do much more to curb terrorism in the Kashmir valley. Singh said that
Pakistan needs to take concrete steps to eradicate the recurring threat of
terrorism.
ECONOMY/ BUSINESS
According to a latest news report, Indians working abroad remit huge sums of
money back home every year but they often complain that the Indian government
does little when they face difficulties. A per new regulations which still need
to be approved by the Ministry for Overseas Affairs, Indians travelling abroad
for work will soon carry a smart card in addition to their passport. This
smartcard will carry more information on individuals in addition to the
information contained in their passport. "This card will carry all the
information carried in a usual passport but it will also be a tool that will
enable their relatives to claim their bodies or their money if something happens
to them", according to Jagdish Tytler, Minister for Overseas affairs. Many
Indian workers especially those working in the Gulf countries have their
passports taken away by their employers and are then forced to serve in inhuman
conditions. People in the travel trade feel that this will be a good step for
helping Indians abroad if implemented. Indians working abroad remit
approximately US$22 billion home every year. In states like Punjab and Kerala
this amount forms a significant chunk of the local economy. But many Indians
working abroad often complain that the Indian government does not look after
their needs as well as it should. The government hopes to change all that with
this new smart card (Times of India Report).
This month, Infosys Technologies board member Srinath Batni flew to China to
kick start the company's most important initiatives this year which included
signing letters of intent with Shanghai Zhangjiang Co Ltd and the administrative
commission of the Hangzhou Hi-Tech Development Industry Zone to set up two
development centres. The two new facilities expected to cost US$65 million over
the next five years will boost the number of software engineers employed by
Infosys's Chinese subsidiary from the current 250 to 6,000. From a mere US$2
billion in offshore revenues this year (compared to India's US$17 billion),
China is expected to pull in US$27 billion from IT services (including call
centres and back-office work) by 2007, according to Gartner, which predicts
Indian companies will carve out 40 per cent of that figure (PTI Report). China
is being seen not just as an offshore hub. Its domestic market is growing, too.
Chinese companies will spend over US$25 billion on information technology this
year, and the market is growing at a rapid 30 per cent annually. According to
research house IDC, US$9.4 billion will be spent on technology services alone in
2006, up from US$3.74 billion in 2002. Little wonder Indian companies are hoping
to use their Chinese operations to gain a domestic foothold. Hyderabad based
Satyam Computer Services has similar projects outlined with the Chinese. Satyam
has around 300 engineers, mostly Chinese, at its facilities in Shanghai and
Dalian. With plans to set up a third development centre in one the Chinese
metropolitan cities, the company hopes to multiply its workforce to 3,000 by
2007 and 5,000 by 2010. NIIT, another company which promotes software education
also has had a presence in China for almost a decade and is adopting a different
model by collaborating with local universities and setting up education centres
on their campuses.
Another issue that came up this month is the process of divestment which
according to the Tata Group should be aimed at taking public sector undertakings
to the stock market instead of finding a strategic partner as the government
would like. While stating that the process must be allowed to find its own
level, Tata, however, said that some constraints must be put so that no single
block or no single group can acquire more than a certain percentage to ensure
that control is not taken away. Taking a shot at unions and political parties
opposing divestment he also said that "those public sector units don't
belong to any one specific political group but belong to all of us in the
country."
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EXPORTS
India's Exports Surge
India's exports surged by 27 per cent year-on-year in July as a resurgent
economy pushed up industrial output, the commerce ministry said recently, AFP
reported.
Exports during July rose to US$7.23 billion from US$5.70 billion a year earlier.
Exports rose 21.33 per cent year-on-year between April-June, the first quarter
of the fiscal year, to US$28.13 billion. Imports in July grew by 33.21 per cent
to US$9.9 billion from US$7.4 billion in July 2004. Imports grew by 36.36 per
cent during April-June to US$42.10 billion.
The trade deficit swelled to US$13.97 billion during the quarter from US$7.69
billion in the same period a year earlier.
"With this trend in exports and our concerted efforts to sustain it, I am
confident that we will reach and even surpass the export target of US$92 billion
which has been set for this fiscal year," Commerce Minister, Kamal Nath,
said. He played down worries over the rising trade deficit, saying the country's
foreign exchange reserves of over US$140 billion were enough to cover it.
The minister said much of the imports were industrial machinery which would
boost national income.
Nearly 2.4 million new jobs would be added over the next two years because of
buoyant exports, he added.
Government data shows that industrial production and foreign and domestic
investments are all experiencing strong growth. Industrial production grew by
11.7 per cent in June, nearing a 10-year record as India's increasingly affluent
consumers bought new cars, refrigerators and other manufactured goods.
Foreign investment between April to June grew 50 per cent to US$1.2 billion.
Nath said the government had set a target of more than US$5 billion in foreign
investment for the fiscal year, compared with 3.75 billion last year.
The government, he said, hoped to complete a trade agreement with Persian Gulf
countries in the next six months along the lines of a pact with Singapore
comprising accords on trade in goods and services and investment protection.
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INFORMATION TECHNOLOGY
Indian pioneer of outsourcing to expand in Hungary
Tata Consultancy Services, a pioneer of India's fast-growing outsourcing
industry, is expanding its own international outsourcing operations, The
Financial Times reported.
TCS, India's largest software developer, is investing in Hungary in a sign of
the increasing complexity of the global outsourcing business and of the growing
sophistication of India's software industry.
Other big Indian software groups may follow suit in investing in eastern Europe,
notable Wipro, which says it is considering sites in Hungary, Romania, Russia
and Ukraine.
TCS first opened a software centre in Hungary in 2001 and is planning to
transform the site by hiring about 700 new workers over the next three years to
take the total staff to more than 1,000.
SV Mani, head of TCS's Hungarian operations, says the group was already serving
clients all over the world, with 52 per cent of its turnover in the US and 25
per cent in Europe. But it is now building a global delivery network so that
projects can be completed closer to the customer where necessary, he said.
In Europe, British companies have no companies have no difficulties in the
outsourcing of business processes to India. But for continental European
companies, India seemed remote, says Mr Mani.
TCS chose Hungary because, as well as English, many Hungarians can speak other
European languages, including German, French and Italian. "We want to
provide a European from end (point of contact) for our European customers,"
he said.
TCS preferred eastern Europe over western Europe because it was much cheaper.
Hungary had been chosen over Poland, the Czech Republic and Romania because it
offered a good infrastructure, a firm currency, a stable political environment
and highly skilled workers.
The group, which employs 6,500 of its 40,000 staff in Europe, is now looking to
establish at least one more development centre in eastern Europe - in Poland,
Russia or Romania - probably employing more than 500 people. "We have
identified eastern Europe as a thrust area for 2005," says Mr Mani.
TCS's move highlights the growing importance of eastern Europe in the global
business process outsourcing industry, especially for centres serving
continental western Europe.
Outsourcing specialists with east European business service operations include
Accentrue, IBM and Cap Gemini. Companies that have established service centres
for in-house requirements include Citigroup, the US bank, Lufthansa, the German
airline, Ahold, the Dutch retailer, and General Electric, the American
industrial group.
Everest Partners, a US based consultancy, said in a recent report that while
India remained the global leader in the outsourcing of business processes, the
"real competition" was just beginning. The key drivers of expansion
included lower costs, language skills, and geographical and cultural affinities,
said the report.
"Ten years ago, India didn't register a blink on the radar of western
companies. Eastern Europe today is where India was a decade ago."
PwC, the consultancy, says Indian costs are much lower than eastern Europe's. It
estimates that if the cost of running a financial services centre is about 200
in the UK or Ireland, it is 100 in Poland and jus 37 in India.
However, Rafal Krasnodebski, from the central and east European operations of
PwC, says that as well as language and technical skills, the region has an
advantage in the minimal time difference between western and eastern Europe.
Offshore financial centres generally operate 24 hours a day, but their managers
usually work only local office hours.
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