.. Indian scenario

Today India’s foreign exchange reserves are around USD 219 billion and in spite of the fact that Foreign Direct Investments (FDI’s) are on the increase and India’s economy is showing an upward trend, the basic infrastructure still is far from what it should have been for a country of its size and population. Reason: the infrastructure projects – irrigation, power generation, roads, ports, airports, railways, residential and office complexes, health care, education etc. all need a lot of funds. (more…)

Numbers:(”350″,”900″,”Tons”,”2006″)

Gold is considered a store of value and given as gifts on special occasions in both the countries; China is now the world’s third-biggest gold consumer while India has been topping the list from decades.

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China and India are set to begin joint military exercises in October, just another example of the two nations growing bilateral relations. The decision to begin military exchanges and cooperation has focused on two areas: counterterrorism and joint military exercises. 

In June we reported on India Army Chief of Staff General Joginder Jaswant Sigh’s visit to China and the subsequent announcement that China and India would hold the first ever joint army exercises between the two nations. Both countries hope that the joint exercises will strengthen Sino-Indian defense ties and build up confidence within each another.

Jagannath Panda comments in a report for The Jamestown Foundation’s China Brief, that China has increasingly relied on its military diplomacy to advance its strategic ambitions overseas. Indeed, China’s military is a very active ambassador for the country abroad, supplying arms and training across the developing world. In India, the Chinese have looked to overcome a historical mistrust by increasing the breadth of the exchanges, as Panda’s report states:

Perhaps, the significance of these exchanges is their unprecedented nature; not even in the prime days of the “bhai-bhai” Sino-Indian relations did this type of relationship exist. It seems that the proposed “joint military operations” are intended to bridge the communications gap between the two militaries. Both armies are in favor of inviting observers to their exercises, which suggests a “degree of comfort” with each other more than anything else. (more…)

India is undergoing an unprecedented consumption boom. Indian consumers have never felt better before. They are confident shopping as they are contended on major fronts such better job prospects, easy loans and increasing salaries.

The International Marketing firm, ACNielsen conducted an international survey covering 47 countries to study Consumer Confidence and Opinions. The results for the first half of 2007 shows India as the topper for the 5th consecutive year scoring 135 points while the global average was just 97. The figure has been in line with India’s booming economy reported to be at an 18 years all time high at 9.4% last month. China was at 99 just close to the average figures.  Below is a bar diagarm depicting trends in the Consumer Confidence Index in 2006 and for first half of 2007.

More on this can be read at http://www.business-standard.com/common/storypage.php?autono=291308&leftnm=6&subLeft=0&chkFlg=

According to the survey,

- 93 % of the Indian consumers felt that their job prospects in the next 12 months were excellent or good

- 90 % thought great about their personal finances in the next 12 months

- 61 % consider it the right time buy things that they ever wanted, and

- 53 % of Indians wanted to invest in shares of stock or mutual funds

The urban middle class in China and India are spending on durables, home decoration, clothes, mobiles, cars, equity investments, and travel and latest gadgets. A third of Chinese consumers and one fifth of Indians say clothes shopping is their favorite thing to do.

India has never seen so many shopping outlets that it has in the last 4 years. Indians were (had to be) contended with Kiranas (little family owned grocery shops and there are millions & millions of them) when it came to buying dailies and for clothing and accessories there were a few branded outlets. Shopping was an eventful activity mainly on dedicated shopping streets, often open to the vagaries of the weather, sweating it out in Janpath or Karol Bagh in New Delhi or Crawford market & Linking Road in Mumbai. Each Locality within Delhi still has a weekly Bazar and they sell everything you ever wanted. Its like an open shopping complex. Even until 2002-3 we didn’t have many reasonable sized shopping malls. Today there has been an explosion of supermarkets and hypermarkets in India with modern retailers coming in to serve the “new” consumer.

According to a survey about 32 percent of Indians go for shopping once a month where as 22 percent of them indulge in it once a week. Both in China and India mobile phones and cars is almost a status symbol. I believe the rise in Confidence levels in the Indian Consumer (similar in China in many ways) can be attributed to

1. Higher salaries and expectations of its increase with regard to rapid high growth in the economy

2. Increase in double income families

3. One and two leading to higher affordability and disposable incomes.

4. Significantly better job prospects.

5. Easy access to variety of branded goods (The word branded was earlier connected with gifts from foreign relatives visiting us in India in summer holidays)

6. Change in fashion and trends following the more developed countries – obviously is attributed to higher dispensable incomes

7. Increased competition from international players and growing domestic market thus lowering down prices thereby bringing goods within reach of the middle class

8. Loans on easy terms thus moderating the ideology of every Indian household to “save & Invest” only

9. Concept of shopping in multiplexes being new and they are loving the “discovery”. These malls are more than just about buying. They are entertainment hubs and millions of Indians living in congested accommodations find themselves easing out in a one stop shop with movies, food courts, and clothing outlets.

To conclude: The consumer in India and China is changing rapidly. The young middle class, below 30 years and constituting majority of their population are aspirational of their needs, ambitious, hard working and have money to spend on trends. They are brand-conscious and aware of what the West is doing in fashion and style, making shopping almost a national pastime.

Numbers:(”501″,”185″,”Millions”,”As on 3oth June 2007″)

Today, China has more mobile subscribers than the population of USA and to know whats happening in the Indian Telecom Industry read our article “India Ringing”.

The Indian Telecom market is amongst the largest in the world and 2nd among emerging economies in Asia with an estimated 5-6 million subscribers being added every month.

Indian telecom is more than 160 years old, beginning with commissioning of the first telegraph line between Kolkata and Diamond Harbour in 1839. Reforms in the Indian Telecom sector began in the 1980s when equipment manufacturing was opened to private players and the Centre for Development of Telecommunication (DOT) was established for the development of indigenous technologies. It was in 1986 that DOT was converted into two wholly owned Government bodies like Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were set up. In 1997, Telecom Regulatory Authority of India created.

With the coming into force of the National Telecom Policy (NTP) in 1994 and the New Telecom Policy in 1999, the telecom industry was heading towards a significant change. Now comes 2000, when DOT was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is today India’s leading telecommunications company and the largest public
sector undertaking. (more…)

Numbers:(”63″,”16″,”Billion US$”,”Fiscal Year 2006″)

While China has been the star in attracting FDI since the late 1990s, capturing $40bn-$50bn a year of global capital, India has trippeld its FDI inflows since 2005, when it was as low as 5.5 bn.

India elected its first woman President on Saturday, with a huge margin over her opposing candidates with a total level of support of some 65.82% of all votes cast. Mrs. Pratibha Patil had endured a rather nasty campaign against the opposition party, the National Democratic Alliance. The Chairwoman of the ruling United Progressive Alliance, Sonia Gandhi, and Prime Minister Dr. Manmohan Singh both hailed the victory as “A vote against divisive forces”.

The role as President is largely a symbolic one, being democratically elected but with limited powers, akin to Britains Queen Elizabeth’s position within the UK Parliament. With the greater onus on national sovereignty, the President is supposed to be above the political whims of opposing parties, and instead to have three rights “the right to be consulted, the right to encourage, and the right to warn”, thus maintaining an element of stability should the democratic process be subverted.

The election is an effective massive endorsement for the continuation of the work by the ruling coalition government, and satisfies both business interests, liberal reformers and those concerned by the welfare of the rural population. Indeed, her background marks her out with achievements both political and personal in all three.

Mrs. Patil, who was born in 1934, is a lawyer by training. She was a member of the Maharashtra Legislative Assembly, representing Edlabad constituency in Jalgaon District from 1962 to 1985. Under the mentorship of senior Congress leader and ex-Chief Minister Yashwantrao Chavan, she became a deputy minister for education after re-election in 1967 (in the Vasantrao Naik ministry). In her next terms (1972-78) she was a full cabinet minister for the state. From 1986 to 1988, she held the post of deputy chairperson of the Rajya Sabha. As a member of parliament, she represented Amravati in the Lok Sabha from 1991 to 1996. She later became the 24th Governor of Rajasthan and, notably, was also the first female governor of this state. In successive congress governments, she handled the portfolios of tourism, social welfare and housing under several chief ministers, Vasantdada Patil, Babasaheb Bhosle, S. B. Chavan and Sharad Pawar. She was continually re-elected to the assembly, either from Jalgaon or the nearby Edlabad constituencies, until 1985, when she was elected to the Rajya Sabha as a Congress candidate. She has never lost an election that she has contested.

Together with her husband, she set up an educational institute, Vidya Bharati Shikshan Prasarak Mandal, which runs a chain of schools and colleges in Jalgaon and Mumbai. She has also set up Shram Sadhana Trust that runs hostels for working women in New Delhi, Mumbai and Pune and an engineering college in Jalgaon. She also founded and was the chairperson of a cooperative sugar factory known as Sant Muktabai Sahakari Sakhar Karkhana and a cooperative bank named after herself as Pratibha Mahila Sahakari Bank, specialising in providing micro-credit to impoverished women and their families. She was also involved in setting up an Industrial Training School for the visually challenged in Jalgaon and running a school for poor children of Vimukta Jamatis & Nomadic Tribes.

Wider Implications Based On Growing Acceptance of Female Powerbrokers

The softer implications may well be interesting in terms of continuing and growing acceptance of women in high powered and responsible roles regionally, and it may have a psychological voter impact in the forthcoming US Presidential elections in terms of growing gender acceptance irrespective of sex in business and politics.

With Madam Wu Yi, China’s Vice-Premier, being regarded by Forbes as the worlds 3rd most important woman, and Condoleezza Rice as the 2nd, with both generally being well-regarded in the US, Sonia Gandhi’s endorsement of Mrs. Patil provides a growing acceptance of women in regional and international positions of responsibility, and may passively assist Hillary Clintons attempts to run for President. The trend at the moment, US polls indicate, is that the US electorate seek to move away from a Conservative and war-like male figure. Images of Angela Merckel, Germanys Chancellor, cannot fail to have been noticed by the American electorate, who still by and large admire the figure of Britain’s Margeret Thatcher - a women who took her country into war in a far-off foreign land - and unlike Bush, managed to win. Other powerful regional women figures that spring to mind are Khaleda Zia, Prime Minister of Bangladesh, Wu Xiaoling, Deputy Governor of the Peoples Bank of China, Lalita Gupte & Kalpana Morparia, Joint Managing Directors of the ICICI Bank of India, Gloria Arroyo, President of the Phillipines, Helen Clark, Prime Minister of New Zealand, and Nahed Taher, Chairman of the Gulf One Investment Bank of Saudi Arabia. All are well known and powerful regional figures well known to the American political establishment and it’s senior business leaders.

Additionally, a whole raft of American businesswomen have held or still hold very senior roles in the United States, including within companies as diverse as CBS Paramount, The New York Times, PepsiCo, The Ford Foundation, Prudential, Dow Corning, Deloitte Touche, Ogilvy & Mather, Southwest Airlines, Time Inc, Royal Dutch Shell, Citigroup, Morgan Stanley, Kraft Foods, Hewlett-Packard, Oracle, e-Bay, Procter & Gamble, Lucent, Johnson & Johnson, Goldman Sachs, Avon, Ernst & Young & MTV. And women as heroes, standing up to a miliary regime ? The regions own Aung San Suu Kyi, a Nobel Peace Prize Winner and still opposing the ruling Burmese junta.

Such a wardrobe full of enlightened women appearing on the world political stage and in America’s most respected boardrooms and institutions cannot fail to have impacted on the average American voters psyche, and Mrs. Clinton may well be able to take advantage of this. Reliable and strong woman ? Established political and business trends are being broken, and with Mrs. Patil being India’s first ever President in 60 years of democratic independence, who would bet against Mrs. Clinton achieving a similar feat in a now war-weary, tediously macho posturing America with Bill there as “World Ambassador” to assure the rest of the world that the last eight years were all a terrible mistake and that a womans touch pan-globally is now what is needed ?

China overtook Britain to be the worlds 4th largest economy in 2005. Predictions in January 2007 (considering China growing rapidly) were that it would go up the ladder to number 3 position by 2008. It’s mid of the year 2007, China has already reached there leaving Germany behind and there seems to be nothing stopping it.

So does China has an unstoppable growth or is it heading for a negative development?

Check out the article, ‘What might stall the “Great Chinese Growth Engine”? by the friend and contributor of 2point6billion, Shantanu Bhagwat of Global Themes blog as he shares his learnings from the lecture of Wing Thye Woo, Professor of Economies at the University of California, on “The Real Challenges to China’s Continued High Growth”. Professor Wing has compared the Chinese growth model to a speeding car which could lead to crash in the absence of required actions. These failures are hardware (breakdown of economic mechanism), software (societal disorders) and power (environmental degradation).

On the probability of occurrence of these failures, Professor Wing commented in one of his write ups- “ What are the High-Probability Challenges to Continued High Growth in China? “

“My assessment is that the highest probability event in hardware failure is the weakening of China’s fiscal position; the highest probability event in software failure is social disorder, and the highest probability event in power supply failure is water shortage. And my ranking of the probability of these three specific negative events in descending order is social disorder caused by outmoded governance, water shortage as a result of inept environmental management, and fiscal crisis generated by the repeated recapitalization of the state banks and the rapid aging of the population.”

China needs to gear up for necessary institutional reforms if it wants to continue shining at that 11 % plus GDP rate. China knows this and wants it, though might be surprising to many that it needs them while it has survived the 30 years of speed!