Backbone of India's success

If India is shining today, the credit goes mostly to India's southern states. These states have played a major role in making India a global player and a force to reckon with.

According to a Confederation of Indian Industry study on 'Key factors making India a major global player: The Southern Stake,' cities like Bangalore, Hyderabad and Chennai have emerged as growth poles, creating centres of excellence in information technology, biotech and pharmaceuticals.

The study says that South India forms the backbone of India's comparative advantage in the services sector.

The study points out that southern states have also leveraged their traditional strengths in textiles, marine products, gems and jewellery and engineering. The states have led the way in producing 'knowledge workers' by creating centres of academic excellence, according to the CII study.

"Majority of India's H1-B visas are issued to South Indians, and Chennai has the longest waiting list for F1 visas," said Jayanta Roy, senior advisor, International Trade, CII, who prepared the study.

He said that the southern states are performing well above the national average in terms of gross domestic product growth.

The study points out that to be a major economic power and substantially reduce poverty by 2010, the roadmap ahead should be to rein in fiscal deficit, though macro indicators are mostly under control. Steps to reduce the huge transaction costs incurred for doing business in India need to be initiated soon.

"Nurture IT, biotech, pharmaceuticals as growth drivers for the economy and expand niche in the services sector and knowledge economy," states the CII study.

The study also says that it was important to leverage sunrise sectors in manufacturing like auto parts and components and other supply chain engineering products, to propel India as a global economic force.

The CII study also advocates 'work on creating growth clusters and investment in brand equity to recreate the success of Bangalore in other cities.'

The study urges heavy investment on infrastructure and removal of red tape, such measures being in line with the focus on reducing transaction costs on a national level. The study points out that the urban agglomeration of Bangalore alone contributes to around 40 per cent of India's services exports ($8 billion per annum) and around 12 per cent of goods exports ($6 billion per annum).

Dynamic clusters with sectoral specialisation, like Tirupur, exported $800 million worth of goods.

The study mentions that export-oriented growth strategy in China also centered around growth clusters. Currently, the Shanghai-Suzhou growth pole in China accounts for exports worth $182 billion, roughly three times India's national figure.

The CII study vouches for establishment of free ports with world-class logistics. "Make administrative procedures hassle free," asserts the study. It also calls for more investment in agriculture to create effective supply chains and expand value-added food processing industries.

As a way forward, the study also points out that India will have to effectively strategise between multilateralism and bilateralism. Trade liberalisation is inevitable and Indian industry will have to be prepared to grab the opportunities and minimise risks from globalisation, adds the study.
The CII study sets a target of increasing India's exports to 2 per cent of global exports (i.e. $178 billion) by 2010 in order for India to claim its rightful spot as a global player.

A GDP growth at a minimum of 10 per cent for the next decade is imperative if India is to emerge as an economic superpower and effectively address the issues of unemployment and poverty.

It suggests tariff rationalisation as per East Asian standards and liberalisation of consumer goods imports. The study also calls for establishment of dedicated trade policy division in all states to coordinate policy with Union ministry of commerce; such a move will be in keeping with the diversity of needs and priorities in a continental polity like India.

Information Revolution and India

FEW technologies have provoked as much wide-eyed hyperbolic writing anywhere as the information revolution, based on the personal computer and the ever-expanding, apparently limitless power of the Internet. In India, nothing has attracted as much media adulation or official enthusiasm as information technology (IT) - itself seen as a magic wand, a technical "fix", a shortcut to rapid economic growth and development. Even as we integrate ourselves into the global IT market essentially as cyber coolies via the business process outsourcing (BPO) route, many of our policymakers see the growth of IT-enabled services as a substitute for the hard tasks of addressing the basic needs of the people and guaranteeing them minimum food security, health care, education and employment.

All manner of utopian scenarios are painted about India's destiny as an "IT superpower" and a "knowledge-based society". By 2008, if not earlier, India will annually export $50 billion worth of computer software (or about a tenth of its present gross domestic product [GDP]) and "conquer" a substantial chunk of the global IT market even as the bulk of India's domestic population achieves computer literacy. Reality bears a rather sharp contrast to these extravagantly optimistic projections. As of now, India's software exports account for less than 2 per cent of the global market. The IT sector as a whole represents less than 3 per cent of the GDP. Even if these ratios double in the next five years, IT will still be a fraction of the economic size of, say, trade.

True, computer sales in India have grown by leaps and bounds - from just under one million four years ago to a little over three million units in the last fiscal year, up 32 per cent over the preceding year. But they account for less than one-50th of global computer sales. The world over, 100 of every 1,000 people are connected to the Internet. In the high-income Organisation for Economic Cooperation and Development (OECD) countries, 500-plus of every 1,000 people are Internet users. Even in Third World countries such as Mexico, Lebanon and Malaysia, or the United Arab Emirates, Internet connectivity is 100 to 300-plus per 1,000. In India, it is about 20.

Bangalore, with its 1,60,000 IT and BPO workers, is described - without the batting of an eyelid - as India's Silicon Valley, or a serious competitor to it. But California's Santa Clara county alone has over 2,00,000 computerniks. All told, the San Francisco Bay Area has about a million IT professionals. If value addition (and appropriation) is considered, the difference between the real and false Silicon Valley, on a good guess, could be several hundredfold.

The Internet is certainly a great medium of communication, data storage and processing, signal and image generation, and much else - the more so because it is free, open and universally accessible. But it need not have been free or open. It could well have been ridden with patented software and other restrictions, denying one access unless one paid a fee. For instance, had Tim Berners-Lee, who conceived of the World Wide Web, decided to patent his idea in 1989, he would, of course, have made pots of money - as have Jeff Bezos of Amazon.com, Jerry Yang of Yahoo, or Sabeer Bhatia of Hotmail fame.

But there would have been 16 different "webs" on the Internet. Berners-Lee has been quoted: "Goodness knows, there were plenty of hypertext systems before that didn't interoperate. There would have been a CERN Web, a Microsoft one, Apple's HyperCard would have started reaching out Internet roots. And all of these things would have been incompatible."

Berners-Lee thinks software has been patented bloody-mindedly and totally commercially. This runs counter to "the spirit" of the Net and is "terribly stifling to creativity. It is stifling to the academic side of doing research and thinking up new ideas. It is stifling to the new industry and the new enterprises that come out of that."

It is precisely "the spirit of openness and sharing" that makes the Internet an attractive tool or weapon for citizen intervention and "cyber-activism". This use has spread far and wide - witness the global justice movement, or the mass mobilisation against the war on Iraq and its occupation, and the Defeat-Bush campaign in the United States and elsewhere, or the invaluable public service South Asia Citizens' Wire network run by Harsh Kapoor (www.sacw.net) , archived at (www.insaf.net) , which has for years fearlessly trained its fire on communalism.

However, as John Naughton argues, "cyberspace - the most gloriously open, uncensored and unregulated public space in history - could easily become a highly controlled and regulated environment... " This could happen not just through hyper-commercialisation and corporate concentration but through the state's intrusion into the private lives of citizens. This is occurring in countries such as China and Singapore, and in many West Asian, Latin American and European states. In India too, and now in the U.S., the state has armed itself with draconian powers to intercept emails and otherwise monitor and control information flows.

The information revolution is not a substitute for basic, gut-level, and long-neglected social agendas.