I have briefly described the concept of 'remittance economy' in a previous post . At its basic the concept of Remittance Economy means that remittances by workers abroad becoming a significant source of economic activity in the country; I am extending the definition to remittance money being spent creates growth in large cities, which in turn results in workers in large cities remitting money to their families smaller cities, towns and villages - thus creating a growth chain reaction. Consider this - Syam Sundar lives in San Francisco and remits money regularly to his family staying in Bangalore. Syam's family employs a maid, shops lavishly in the city's malls and employs a driver. The maid, the workers at the mall - from shop salesmen to cleaners all send money to their families in tier 2 cities, towns and villages in India. The family's driver Sreejeeth hails from a small nondescript town in Karnataka called Madhugiri. Sreejeeth sends money to his wife every mon

Another report claiming that "dominance of China and India [would] return to the historic norm prior to the Industrial Revolution of the late 18th and 19th centuries" came through today. Its become so boring to read that India and China will re-emerge as dominant economies unless they goof up on their fiscal policies, urban development, educational growth, demographics .. the list is long! I find most news reports and analyses engaged either in extrapolating the economic trends of the past decade or speculating by generalizing trends from certain sectors like manufacturing (China) and software services (India). The point is - has anyone been able to spot the root cause behind the rise of China and India? And is there any theory which can justify why China and India will rise to become economic super powers - without putting riders to the claim. The reasons for rise of India and China have been different sectors, but the source of both their strengths is the same - cheap

I have been busy off late and here's why - for Diwali we (me & my wife) went to Vadodara and drove to Bhopal with my parents and brother, the last 2 days of Diwali were spent at Indore; on my return to Mumbai I made a trip to Shirdi and office work made me travel to Bangalore - Chennai lined up next. Posted below are my thoughts from my sojourns: I have posted similar thoughts earlier under the same title. You can read them here . This time, I plan to restrict my post to a reality-check and not suggest any solutions. Gujarat Narendra Modi has been hailed for his development model across the country and rightly so - Gujarat boasts of fantastic infrastructure - urban or rural. From Expresshighways between major cities to BRT in Ahmedabad or roads in smallest of villages - Gujarat's prosperity is quite evident. This also manifests from the habits of Gujarat's rural folk who prefer commuting to cities on a daily basis than emigrating to them. What I am not sure is that i

This is the question in minds of gazillion Indians both in India and abroad - offices, homes, streets and cyberspace are full of muted discussions between the calm, quite and most importantly largely secular Indians about the fallout of the Babri Masjid court trial . The Supreme Court cleared the way for the High Court to announce verdict on 30th September 2010 - the date may be seen in future as a historical landmark. People, especially those who remember the 1993 riots which burned the nation for months (after the mosque was demolished by kar sevaks on Dec 16, 1992), are afraid that history may repeat itself - irrespective of the side the verdict takes. There are some optimists also among us - those who think that India has changed. More than 15 years of liberalization, globalization and capitalist mindset has changed the populace which no more cares about religious animosity but is more concerned with progress. Hence, irrespective of the verdict - people will be much more tolerant a

Continued from Part II Having said that India needs to extend the reach of urban amenities like roads, electricity, cooking gas, safe drinking water (and education and internet) to the countryside, there is one major cog missing in the wheel – the pull for the above amenities in rural India. The need for high quality infrastructure in cities gets created by higher productivity and resultant income levels, the same applies to villages as well. In most western nations where villages too have a much better standard of living are those where people in villages have earnings comparable to their city counterparts. In the west the low population density necessitated high productivity in rural activities such as farming or animal husbandry. Thus as an outcome farms were mechanized and villages developed. However, this is not true of a high population density country like India – even today employing 10 labourers in the farm is cheaper than buying a mere tractor. Farmland in India is e

Continued from Part I ' Mamata wants to turn Kolkata into London ' - screamed the headline on rediff.com some days ago. Turning Kolkata into London is definitely a worthy goal - London is one of the most livable cities in the world. However, while the creation of (present day) London was in itself challenging, doing the same in India is even more challenging. Let’s investigate Indian urbanization strategy in a more logical manner by identifying the challenges which India faces today. India’s urbanization effort is challenged by 3 obstacles: A unique combination of large population with high population density never before encountered (in the parts of the world which have been fully urbanized) An existing landscape formed during different periods of history Large sections of populations who have never been exposed to an urban landscape Lack of existing institutions Of these only the last one had been encountered in countries which have previously attempted urbanization, and the

I recently went on a religious tour to Tulzapur via Solapur and then to our ancestral temple in Narsinghpur, near Pune. On way I also visited our ancestral village Indapur 150 kms from Pune. While old Indapur still remains a village with roads just about wide to allow cycle rickshaws run through them, I was astounded to see the newly developed areas of Indapur which were no less than private colonies in Teir 2/3 cities in India. Having read Mckinsey’s India urbanization report just a day before my travel, Indapur’s development opened a new chain of thoughts in my mind. Most urbanization studies about the developing world relate to urbanization as development of new cities or improvement of urban infrastructure (like mass transit, arterial roads, flyovers etc) in existing cities. For example McKinsey’s recent research titled “India’s urban awakening: Building inclusive cities, sustaining economic growth” [ 1 ] highlights the need for India to develop 19 clusters of cities (Page 150); i

Reports go that the above song, Mehangai Dayan from Peepli Live has had offers from the political parties in opposition. No wonder with the so called 'strike' requiring the opposition to put all its goons to force, it is clearly evident that the UPA-II is difficult to defeat in spite of the current state of affairs. Is the UPA-II performing too well for a government to sit at peace cooling its heals. Hell no! UPA-II is definitely a different animal as compared to a typical Congress Govt. It is far more dynamic, its ministers have new ideas - yet, it is reaping benefits of a global wave towards investing in the developing world, not to mention the benefits from momentum of past governments, Vajpayee's NDA govt included. But what is making the UPA-II govt tick and lie in peace is a fragmented opposition which is busy infighting - whether its the NDA or the BJP within the NDA or the communists or the SP-vs-BSP feud. Politics in a democracy is hardly ever about performance - it

Mahesh Murthy argues here that the budget does not matter any more - especially not to entrepreneurs. He laments that the booty being promised for special focus areas is not meant for genuine entrepreneurs but for those who are politically connected. While I may not disagree with Mahesh on the fact that most funds outlay on Govt. schemes benefits the big co's and politically connected, I don't agree a wee bit with him that the budget does not matter to an entrepreneur. For example, here's how this year's budget announcements may help entrepreneurs: Now you can hire an individual for upto 1.6 lakhs and forget anything about paying taxes to the Govt on his behalf - that's substantial admin cost savings for a small firm If you are a bootstrapper, funding your business with your salary or of a spouse/friend - you have a little more cushion for your startup If you are selling a service to end consumer, you know know that they have a little more money in their hands to i

Here are quotes from Leo Tolstoy's " Letter to a Hindu " written to Mahatma Gandhi: If the English have enslaved the people of India it is just because the latter recognized, and still recognize, force as the fundamental principle of the social order. In accord with that principle they submitted to their little rajahs, and on their behalf struggled against one another, fought the Europeans, the English, and are now trying to fight with them again. A commercial company enslaved a nation comprising two hundred millions. Tell this to a man free from superstition and he will fail to grasp what these words mean. What does it mean that thirty thousand men, not athletes but rather weak and ordinary people, have subdued two hundred million vigorous, clever, capable, and freedom-loving people? Do not the figures make it clear that it is not the English who have enslaved the Indians, but the Indians who have enslaved themselves? When the Indians complain that the English have ensla

"Democracy is the worst form of government, except for all the others that have been tried from time to time" - Winston Churchill, 1947 This Op-ed in the Times by Paul Krugman could as well have been written for India. In the 17th and 18th centuries, the Polish legislature, the Sejm, operated on the unanimity principle: any member could nullify legislation by shouting “I do not allow!” This made the nation largely ungovernable, and neighboring regimes began hacking off pieces of its territory. By 1795 Poland had disappeared, not to re-emerge for more than a century. Today, the U.S. Senate seems determined to make the Sejm look good by comparison. Whether its a regional movie like Jhenda (also remember protests against Ashutosh Gowarikar's Jodha-Akbar) or a comment by SRK on IPL, any political party or son of a politician objects and brings half the nation's media to attention and sometimes even holds the Govt's policy decisions to ransom. Just explains that dem

As I picked up the newspaper today expecting more information on what more steps the outgoing RBI Governor Subbarao would take to curb inflation, I was greeted to my utter distaste by a synopsis of the verbal duel between MNS-Sena-Congress. For all the heat being generated in this Mumbai-for-Marathis and Mumbai-for-India debate, no one in particular is actually fighting for Mumbai's own cause. The MNS-Sena is fighting for rights of Marathis in Mumbai, Congress-RSS for rights of non-Marathis in Mumbai. But no one is addressing the problems of the average citizen in Mumbai - Marathi or non-Marathi! The BMC announced its annual budget yesterday - a news which got buried, thanks to the cacophony on Marathi Manoos issue [probably raised on purpose by the Sena to avoid attention to the budget]. The budget at best can be described as 'barely essential' if not insufficient. The budget of Rs 20,417 crore has shown an increase of merely 4 per cent in comparison to last year’s budge

Recently Sam Pitroda recently mentioned that - "too much focus on engineering and medical education has created a situation in India where liberal arts really did not get the kind of attention it deserved." He said: "A good liberal arts education is important to produce leaders. India has now begun to recognizse that we need not only world class engineering education, we also need world-class liberal arts education. And, we agree that the model we have in (University of) Chicago or Harvard is a model that we need to look at , but it needs to be Indianised - it has to be of a local context." Clearly, Pitroda is talking about the skewed model of having competitive exams for professional courses only which has created a void in liberal arts education in India. Unlike US system, Indian universities do not have a uniform SAT for admission across disciplines – so while for entry to professional courses like engineering and medicine we rely on AIEEE/SEEE and PMT/CPMT’s bu

Continuing the chain of thought from my previous post , I got thinking as to whether the changes in the Indian economy since 1990's have been top down and visionary or merely reactionary and ad-hoc. The conclusion which I have reached has been that they are a combination, but above all - they are based on a Groundswell from the masses. While multiple sectors - IT, Retail, Financial Services and even manufacturing - have contributed to rise of the Indian Tiger; to illustrate my point, I would concentrate on the Financial Sector [ related post ]. Pre-liberalization, there were many shackles, like license raj, on the Indian financial services sector. But more gruesome were the factors of immature or absent regulatory supervision and resulting power of large investors to manipulate the free markets. The Banking sector meanwhile was dominated by PSU banks which were slow, bureaucratic and customer unfriendly. Starting the 90s there were many top down reforms starting like Dematerializ

I have previously pointed a lot of links [ 1 ][ 2 ][ 3 ]to Atanu Dey's blog, also praising his RISC model for development of Indian rural/semi-urban areas. However, this comment on his blog (by someone with an alias Human Blasphemy ) sets out some very pertinent doubts on this model - reproducing it here: Dear Atanu, I heard you during your session on RISC at XIMB. One of the members asked you a question whether Rural Infrastructure can be developed through people’s participation and through microfinance. Which according to you is not possible, because large infrastructure projects have to be completed at one go. But the problem is that why will any private company invest in rural infrastructure? You only said that i dont know how it will be possible. I believe you will agree that in future Microfinance will not remain microfinance it will become SM-finance [Small and medium finance. We have already seen the examples of increased limits of credit in Andhra Pradesh, where Mf loans

Image Credit: deen I took about 2½ hours to reach office today. Apparantly some truck has oveturned near Chembur and hence all traffic from the Sion-Trombay highway has been diverted towards the Suman-nagar flyover (where Eastern Express enters the Island city). This has resulted in a huge traffic jam at Sion. The small incident explains how fragile the infrastructure demand-supply equilibrium is in Mumbai. The roads are just about sufficient to support traffic. So, if it rains or a truck/bus stranded on the road side - it creates queues of traffic kilometers long. Image Credit: Marc van der Chijs This is because of multiple reasons - first of course being that road-space is narrow. The others are like: There are no alternate routes to reach the Island city apart from the arterial roads. The JNPT road remains unutilized even at the time of the traffic jams and natural calamities like water logging. The Highway Maintenance services such as towing trucks to clear stranded vehicles are n

The aftermath of the election is that Congress is back in power and national governance will be back in inaction as it has been. [With exception of the NREGA the previous UPA govt has started no new schemes and even existing visionary projects like the Golden Quadrilateral have slowed down].  The lesson for the BJP has come not from where it has lost but from where it has won - Madhya Pradesh, Chattisgarh and Jharkhand; and from its ally in Bihar. And the lesson is governance works, ideology doesn't, religion alienates electorate and hate politics takes you two steps backward. When the BJP came to power in MP in 2005 under Uma Bharti, the state of affairs was dismal - there was more emphasis on where the next Sadhu congregation is going to be than which districts need roads. It was by a stroke of luck that Uma exited and entered Shivraj Chauhan who started concentrating on development from Day 0. In Rajasthan, Vasundhara Raje however repeated the same mistakes as Uma Bharti, but a

Is this the resurgence of the (Nehru-Gandhi) dynasty? With Rahul Gandhi being credited for engineering the Congress's performance in UP, do we see the Gandhi family rising again. Senior Journlist Inder Malhotra felt otherwise on CNN-IBN. And his quite astute analysis of the rise dynasty politics makes one believe that he is correct.  Mr. Malhotra (who is also a biographer of Indira Gandhi) noted that Nehru was known as a vocal opponent of nepotism, and Indira Gandhi did not even contest a seat in the 1962 elections [ 1 ]. And while Sardar Patel's son contested [which then was not seen as nepotism anyway], Indira did not until the death of Panditji. It was actually Indira who brought in the dynasty politics by projecting Sanjay (and later Rajiv) as her heir. What was worse is that in order to ensure the family upperhand in politics, she destroyed careers of any cadre-risers in the party, in effect also weakening the party organization and hence leaving critical issues on the ta

I have been gleaning/ watching a lot of election analysis since yesterday - and have some interesting bits to report. To start with the blogging world, GreatBong is bang on target when he says:  ...but the Mandir issue is just too 90s, like the Spice Girls, to have any further resonance A lot of people I know ... dislike the Congress for their pandering and for their neglect of the urban middle class. They are aware of the Congress’s dismal record on urban violence. They are attracted to the BJP’s more solid commitment to policies (as opposed to handouts) of relevance to urban India, at least in comparison to the Congress. The only thing that prevents them from putting their stamp on the lotus has been the radical hard Right section of the party. Vajpayee, with his demeanor as a statesman and a moderate, was a master at bringing this section over to the BJP. L K Advani in contrast totally dropped the ball and pushed these “undecided but Right leaning” right into the Congress lap.  Tru

I saw two movies today- Pride and Glory Road - coincidentally both of them focus on how the sportsmen overcame racial challenges.  While Pride focuses on a black swimming team from Philadelphia rising above competition and winning under guidance of a black coach; Glory Road is about a underdog basketball team from Texas (comprising of both blacks and whites) beating the champions Kentucky in national championship in spite of all hardships. While the coach in Glory Road ,  Don Haskins is not black himself - the story revolves round the racial undercurrents that he has to struggle against to retain the proportion of blacks in his team (7:5) and the repeated sabotage attempts that the team members have to face. Pride is more about how coach Jim Ellis must fight not only racism, but also protect his swimmers - most of them from poor background - from social evils which surround them. Both movies go a long way to tell the tale of how America as a nation has had to fight a long battle wi