India – India – Still NotStill Not “Flat” “Flat”

Globalization and IndiaGlobalization and IndiaThomas Freidman has Thomas Freidman has

asserted that asserted that globalizationglobalization has made the world has made the world “flat”“flat” as as evidenced by the growing evidenced by the growing service sector within India.service sector within India.

This also implies that This also implies that IndiaIndia is is “flat.”“flat.”

Reality on the ground may Reality on the ground may differ.differ.

Population’s impactPopulation’s impactCurrently the world’s 2Currently the world’s 2ndnd

largest country with largest country with 1,121,800,0001,121,800,000 people in mid people in mid 2006.2006.

1.7%1.7% natural increase natural increase2025 – approaching 2025 – approaching 1.41.4 billionbillionWill surpass Will surpass ChinaChina by by 2032203270 million have moved to the 70 million have moved to the

cities between 1991-2001cities between 1991-2001

70% Rural 70% Rural 600,000 villages600,000 villages

Poverty AboundsPoverty Abounds

Open sewage and toiletOpen sewage and toilet

By the NumbersBy the NumbersPer Capita GDP - $3600Per Capita GDP - $360060% agricultural/ but only 60% agricultural/ but only

20% of GDP.20% of GDP.100 million farmers own NO 100 million farmers own NO

land.land.Approximately 80% of all Approximately 80% of all

Indians live on the equivalent Indians live on the equivalent of less thanof less than $2 a day$2 a day..

Information Information Technology’s ImpactTechnology’s Impact

India produces about 100,000 India produces about 100,000 new engineers a year. About 3 new engineers a year. About 3 times the number of the U.S.times the number of the U.S.

But still But still only 1.6 million peopleonly 1.6 million people are employed in IT and Service are employed in IT and Service Center jobs.Center jobs.

Key centers include Bangalore, Key centers include Bangalore, New Delhi, Gurgaon, and New Delhi, Gurgaon, and Hyderabad.Hyderabad.

U.S. companies in IndiaU.S. companies in IndiaIT Services-design, IT Services-design,

support, and or productionsupport, and or productionAdobe, Cisco Systems, Adobe, Cisco Systems,

Dell, Google, Hewlett-Dell, Google, Hewlett-Packard, General Motors, Packard, General Motors,

IBM, Intel, Microsoft, IBM, Intel, Microsoft, Motorola, Texas Motorola, Texas

Instruments, YahooInstruments, Yahoo

Indian IT and Service Indian IT and Service DevelopmentDevelopment

IT giants – IT giants – – InfosysInfosys– WiproWipro

TATA Consulting and FinancialTATA Consulting and Financial– Also TATA MotorsAlso TATA Motors

ConvergysConvergys– World’s largest call center World’s largest call center

companycompany

““Brain Drain”Brain Drain” Young talent leaving India seems to be Young talent leaving India seems to be

slowing downslowing down.. Average starting salary for an IT Average starting salary for an IT

engineer in India today is engineer in India today is approximately approximately $10-12,000$10-12,000..

Many are graduates of the Indian Many are graduates of the Indian Institute of TechnologyInstitute of Technology– Several campuses located Several campuses located

throughout the countrythroughout the country This salary provides a comfortable This salary provides a comfortable

lifestyle in modern India for the lifestyle in modern India for the privileged few.privileged few.

Disparate TaxationDisparate TaxationOnly 35 million people pay Only 35 million people pay

income tax to the federal income tax to the federal government.government.– Formal SectorFormal Sector

Over 1 billion pay NO federal Over 1 billion pay NO federal taxes!taxes!– Informal SectorInformal Sector– Largely agricultural or Largely agricultural or village basedvillage based

Growing Middle ClassGrowing Middle Class Over 200 million people falling into a Over 200 million people falling into a

growing middle class of consumers.growing middle class of consumers. Technically defined as those earning Technically defined as those earning

between $4000-$21,000 a year.between $4000-$21,000 a year. This actually only accounts for 60 M.This actually only accounts for 60 M. ““Middle class-ness” seems to include Middle class-ness” seems to include

those going from living on $5 a day those going from living on $5 a day to $10.to $10.

Education is far from Education is far from universaluniversal

Compulsory and free Compulsory and free education (6-14 yrs.) education (6-14 yrs.) guaranteed with the guaranteed with the Right Right to Education Bill 2005to Education Bill 2005

Virtually un-enforceable.Virtually un-enforceable.Literacy rate of India Literacy rate of India

stands at 59%stands at 59%

Reality’s impactReality’s impactEconomic Economic

conditions conditions necessitate necessitate children as children as day workers day workers in cottage in cottage industries or industries or in in agricultural.agricultural.

Mid-day in Delhi Mid-day in Delhi

Cultural bias reigns supremeCultural bias reigns supreme ““Other Backward Caste” law to Other Backward Caste” law to

increase quota up to 27% increase quota up to 27% (currently 22%) of students in (currently 22%) of students in government higher education government higher education was recently put on hold. – was recently put on hold. – March 2007March 2007

Higher caste are increasingly Higher caste are increasingly having to share power as OBC’s having to share power as OBC’s make up nearly 50% of the make up nearly 50% of the population.population.

Private schools Private schools are very costly are very costly and for the and for the most part most part exclusive.exclusive.

Rural villages Rural villages depend on depend on untrained untrained teachers and teachers and NGO’s for help.NGO’s for help.

Conditions in the Conditions in the rural village rural village schools are schools are

usually far less usually far less modern and modern and

fundedfunded..

Lacking InfrastructureLacking Infrastructure Major cities are not connected at this Major cities are not connected at this

point by a highway system.point by a highway system. Golden Quadrilateral Highway Project Golden Quadrilateral Highway Project

will eventually connect New Delhi-will eventually connect New Delhi-Mumbai-Bangalore-Chennai-Kolkata. Mumbai-Bangalore-Chennai-Kolkata. - $12 billion- $12 billion

Currently only 3,700 miles of Currently only 3,700 miles of highways!!!highways!!!

40% of farm produce goes to waste 40% of farm produce goes to waste as a result of poor transportationas a result of poor transportation

Scheduled ImprovementsScheduled Improvements New $430 million Bangalore New $430 million Bangalore

International Airport to be International Airport to be completed by April 2008. completed by April 2008. (European built and operated)(European built and operated)– Roads to the airport are Roads to the airport are

uncertainuncertain Vallapardam Ship Terminal in Vallapardam Ship Terminal in

Kochi (southwest coast of Kerala) Kochi (southwest coast of Kerala) to be completed by Dubai’s DP to be completed by Dubai’s DP World at a cost of $555 millionWorld at a cost of $555 million

The Caste SystemThe Caste System India’s source of strength and tragic India’s source of strength and tragic

weakness!weakness! Though outlawed in the constitution; Though outlawed in the constitution;

it remains a strong force controlling it remains a strong force controlling upward mobility.upward mobility.– Changing laws is easier than Changing laws is easier than

changing minds.changing minds.– Compare it to the Civil rights Compare it to the Civil rights

movement in the United States.movement in the United States.

Yet Hope Springs Eternal!Yet Hope Springs Eternal!India’s people is in fact her India’s people is in fact her

greatest asset.greatest asset.An optimistic attitude seems An optimistic attitude seems

to exist within this country.to exist within this country.India’s ability to function as India’s ability to function as

a democracy despite its a democracy despite its massive population, cultural massive population, cultural and religious diversity and religious diversity provides hope.provides hope.

To “flatten”?To “flatten”? Provide universally enforced quality Provide universally enforced quality

elementary and secondary education.elementary and secondary education. Continue to slow the brain drain.Continue to slow the brain drain. Improve the quality of its Improve the quality of its

infrastructure such as roads, water infrastructure such as roads, water treatment and sewage, ports, treatment and sewage, ports, railroads and airports.railroads and airports.

Improve energy reliability.Improve energy reliability. Continue to provide tax incentives to Continue to provide tax incentives to

encourage foreign investment encourage foreign investment including manufacturing.including manufacturing.

Maintain peaceful political posture, in Maintain peaceful political posture, in particular with Pakistan.particular with Pakistan.

SourcesSources In Spite of the Gods: The Strange Rise of In Spite of the Gods: The Strange Rise of

Modern IndiaModern India by Edward Luce by Edward Luce The World is Flat: A Brief History of the The World is Flat: A Brief History of the

Twenty-First CenturyTwenty-First Century by Thomas L. by Thomas L. FriedmanFriedman

Planet IndiaPlanet India by Mira Kamdar by Mira Kamdar The Trouble with India, The Trouble with India, BusinessBusiness WeekWeek, ,

3/19/073/19/07 www.prb.orgwww.prb.org www.countrywatch.comwww.countrywatch.com www.forbes.comwww.forbes.com Trip to India –World Affairs Council of Trip to India –World Affairs Council of

Houston (March 10-20, 2007)Houston (March 10-20, 2007) Prepared by Jeff CherryPrepared by Jeff Cherry