India – Still Not “Flat”

Globalization and India

 Thomas Freidman has
asserted that globalization
has made the world “flat” as
evidenced by the growing
service sector within India.
 This also implies that India is
“flat.”
 Reality on the ground may
differ.
Population’s impact
 Currently the world’s 2nd
largest country with
1,121,800,000 people in mid
2006.
 1.7% natural increase

 2025 – approaching 1.4 billion

 Will surpass China by 2032

 70 million have moved to the

cities between 1991-2001
 70% Rural
600,000 villages
Poverty Abounds
Open sewage and toilet
 By the Numbers
 Per Capita GDP - $3600
 60% agricultural/ but only
20% of GDP.
 100 million farmers own NO
land.
 Approximately 80% of all
Indians live on the equivalent
of less than
$2 a day.
 Information
Technology’s Impact
 India produces about 100,000 new
engineers a year. About 3 times
the number of the U.S.
 But still only 1.6 million people are
employed in IT and Service Center
jobs.
 Key centers include Bangalore,
New Delhi, Gurgaon, and
Hyderabad.
 U.S. companies in India
IT Services-design,
support, and or production
Adobe, Cisco Systems,
Dell, Google, Hewlett-
Packard, General Motors,
IBM, Intel, Microsoft,
Motorola, Texas
Instruments, Yahoo
 Indian IT and Service
Development
 IT giants –
– Infosys
– Wipro
 TATA Consulting and Financial

– Also TATA Motors

 Convergys

– World’s largest call center

company
 “Brain Drain”
 Young talent leaving India seems to be
slowing down.
 Average starting salary for an IT
engineer in India today is approximately
$10-12,000.
 Many are graduates of the Indian
Institute of Technology
– Several campuses located throughout
the country
 This salary provides a comfortable
lifestyle in modern India for the
privileged few.
 Disparate Taxation
 Only 35 million people pay
income tax to the federal
government.
–Formal Sector
 Over 1 billion pay NO federal
taxes!
–Informal Sector
–Largely agricultural or
village based
 Growing Middle Class
 Over 200 million people falling into a
growing middle class of consumers.
 Technically defined as those earning
between $4000-$21,000 a year.
 This actually only accounts for 60 M.

 “Middle class-ness” seems to include

those going from living on $5 a day
to $10.
 Education is far from
universal
Compulsory and free
education (6-14 yrs.)
guaranteed with the Right
to Education Bill 2005
Virtually un-enforceable.

Literacy rate of India

stands at 59%
 Reality’s impact
 Economic
conditions
necessitate
children as
day workers
in cottage
industries or
in
agricultural.
Mid-day in Delhi
 Cultural bias reigns supreme
 “Other Backward Caste” law to
increase quota up to 27%
(currently 22%) of students in
government higher education
was recently put on hold. –
March 2007
 Higher caste are increasingly
having to share power as OBC’s
make up nearly 50% of the
population.
 Private schools
are very costly
and for the
most part
exclusive.
 Rural villages
depend on
untrained
teachers and
NGO’s for help.
Conditions in the
rural village
schools are
usually far less
modern and
funded.
Lacking Infrastructure
 Major cities are not connected at this
point by a highway system.
 Golden Quadrilateral Highway Project
will eventually connect New Delhi-
Mumbai-Bangalore-Chennai-Kolkata.
- $12 billion
 Currently only 3,700 miles of
highways!!!
 40% of farm produce goes to waste
as a result of poor transportation
 Scheduled Improvements
 New $430 million Bangalore
International Airport to be
completed by April 2008.
(European built and operated)
– Roads to the airport are
uncertain
 Vallapardam Ship Terminal in
Kochi (southwest coast of Kerala)
to be completed by Dubai’s DP
World at a cost of $555 million
 The Caste System
 India’s source of strength and tragic
weakness!
 Though outlawed in the constitution;
it remains a strong force controlling
upward mobility.
– Changing laws is easier than
changing minds.
– Compare it to the Civil rights
movement in the United States.
 Yet Hope Springs Eternal!
 India’s people is in fact her
greatest asset.
 An optimistic attitude seems to
exist within this country.
 India’s ability to function as a
democracy despite its massive
population, cultural and
religious diversity provides
hope.
 To “flatten”?
 Provide universally enforced quality
elementary and secondary education.
 Continue to slow the brain drain.
 Improve the quality of its
infrastructure such as roads, water
treatment and sewage, ports, railroads
and airports.
 Improve energy reliability.
 Continue to provide tax incentives to
encourage foreign investment
including manufacturing.
 Maintain peaceful political posture, in
particular with Pakistan.
 Sources
 In Spite of the Gods: The Strange Rise of
Modern India by Edward Luce
 The World is Flat: A Brief History of the
Twenty-First Century by Thomas L. Friedman
 Planet India by Mira Kamdar
 The Trouble with India, Business Week,
3/19/07
 www.prb.org
 www.countrywatch.com
 www.forbes.com
 Trip to India –World Affairs Council of
Houston (March 10-20, 2007)
 Prepared by Jeff Cherry