India: Asia's Emerging 'Tiger'

- by Keith Carey

August 15th will mark India's 61st "Republic Day," which will be a time to celebrate their independence from Great Britain in 1947. Last year, British Prime Minister Gordon Brown joined them in their fanfare and celebration! Are the British so glad to not have their former colony, that they consider it to be a "good riddance" day? Not really. The British Prime Minister understands that having favorable diplomatic relations with India is good for business. Having a special relationship with India might give the United Kingdom a market within a nation that is increasingly wealthy. Read on and find out why.

In the 1980s and 1990s, there was a lot of attention given to the growing economies of Thailand and South Korea. This decade, the world is looking to the growing economies of China and India. According to a Feb. 12, 2008 article in BBC News, India's economy had an annual growth rate of more than 10 percent in 2006 and the first half of 2007, when their government raised interest rates and reduced the amount of money banks could loan to slow the economic growth. Too much economic growth is a good problem to have!

India's Growing Economy
India has the fourth largest number of billionaires in the world, after the United States, Germany, and Russia, according to a Dec. 18th, 2007 article in the Christian Science Monitor. India's four wealthiest men now have more assets than China's 40 wealthiest individuals combined. A June 4th article in that same publication noted that overall Indian consumption will triple by 2025. There is an emerging global class of consumers who buy luxury items that is expected to grow ten fold to 23 million by that same year. And we thought that China was the country to watch!

Producers are licking their chops over India's potential buying power in the future, partly because their younger generation is falling into the credit card trap. The older generations of Indian nationals were unwilling to go into debt or buy needless luxuries, but the younger generation is willing to do both. "This ability to spend at the drop of a hat is a luxury that only this generation of richer Indians can afford," wrote Karishma Vaswani in a December 27th, 2007 article in BBC News.

Though India has only one million cars on the road, the auto industry is an emerging market. Last year, India's Tata Motors introduced the world's cheapest car, the Nano, which will probably sell quicker than Ford's Model T did in the 1920s in America.

Tech Wizards and India's Future Economy
Manufacturing consumer goods is an emerging market in India, but their star industry is the Industrial Technology (IT) sector. Ever since their independence in 1947, India has invested heavily in training people with technological expertise. Through the decades, the Indian Institute of Technology (ITT) has produced technical wizards that have gained the respect of Indian society that was always reserved for Brahmins. Ironically, the business sector of India's economy was just one small step above the common laborers in the Hindu pecking order.

But one key element was lacking until the early 1990s. India tried to maintain a planned, Soviet-style socialist economy where foreign investments were frowned upon. India manufactured her own goods without competition from other nations. The economy grew very slowly, especially in the IT sector, so the trained technicians went abroad for work.

All this has changed since India's liberalization of her economy. Foreign investments have poured in, along with money earned by Indian technicians in England and the United States. Today, India's economy is producing enough jobs to lure many of their tech-savvy compatriots back to India. There is a marked increase in disposable incomes, and new markets for Indian goods throughout the world. The stagnant economy is now thriving, and Indians are spending like never before.

Who Is Left Behind?
Though India has a population of about a billion people, 400 million of these still earn less than one dollar a day. The World Bank estimates that 750,000,000 people in India are still below the poverty line. When one thinks of it, one knows that it must be those from powerful families that have the opportunities to get training in the prosperous IT sector. Those from India's rural sector (64 percent of the population) may be left out. So are the tribal peoples that have no marketable skills for the 21st Century economy.

There are efforts from the Indian government to help such people rise above poverty. The Indian government promoted the "Green Revolution" of the 1970s, which saved tens of millions from starvation. This same government has a reservation system that reserves a certain percentage of government jobs for people from "backward" castes, to help them climb out of poverty. These "backward" caste members have been limited for millennia from having good job opportunities. One's station at birth kept one from being allowed to rise above that of one's parents. This caste system kept the whole of Indian society from advancing.

Discrimination on the basis of caste was outlawed with the Civil Rights Act of 1976, but discrimination is hard to pinpoint. It is very easy for a company to reject a potential employee because of his caste status, and cite another reason. Some of the other reasons are legitimate. Backward caste people do not have the opportunities for education as do the "forward" castes. Most job openings get known by word of mouth, and people usually get hired because of their social networks. These factors also give forward castes a distinct advantage.

What is Being Done
Backward caste leader Mayawati is getting support for a controversial plan to extend job reservations into the private sector. As it stands, only government jobs are reserved for the backward castes. She wants legislation that would force large Indian corporations like the Tata Group Infosys, and Reliance to reserve 30 percent of their jobs for people from socially disadvantaged backgrounds like the backward castes. Indian corporate leaders are reluctant to allow the government to dictate their hiring policies, but some corporations are taking progressive steps by offering training to the disadvantaged, according to a January 3, 2008 article in "BBC News."

At Infosys's Bangalore campus, they are training hundreds of disadvantaged people in marketable skills for their high tech industries. The seven month training does not guarantee a job, but it is a start. Those who excel have the chance to get a high-paying job based on their merit. Infosys trainers note a marked improvement in their students' confidence levels.

An October 30, 2007 article in the New York Times describes efforts by Indian capitalists to help the disadvantaged get better jobs by networking. Sean Blagsvedt, one of Microsoft's Indian leaders, founded Babajob, a computer based network for the disadvantaged to find jobs. Microsoft has made India one of their major centers of its global research group studying technologies for the poor. For example, they are developing software that reads to illiterate computer users. The Nokia Corporation is developing ultra low cost cell phones so that the poor can use these modern tools. Citibank is experimenting with A.T.M. machines that operate with thumbprints rather than pin codes to help slum dwellers who struggle with pins.

Chris Morris, a writer for BBC News believes that India may have a middle class of half a billion in a couple of years. By their behavior, it seems that the Indian-based and foreign corporations in India are already preparing the way for them to become new customers.

Next month, we will pray for India's Dalit groups, who make up the lowest groups on India's social order. But for this month, we will pray for those affected by the rapidly changing business climate, many of whom are from advantaged groups like the Banias, the Brahmins and the Kayashas.