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TECH TALK: India Rising: Challenges

January 25th, 2006 · No Comments

The India success story is not without its darker side. There are many issues that need urgent attention. These, if not addressed quickly, will hamper growth in the coming years.

Perhaps, the most important challenge is with infrastructure. From roads to ports to airports, India suffers from five decades (post-Independence) of inadequate investment in infrastructure. And even now, our policymakers quibble about building it out. Indian cities suffer from a lack of planning. The Bangalore success has been stymied by rising traffic jams and commute time, with a consequent deterioration in quality of life for many. Pune may be headed the same way. In cities like Mumbai, the need is for a metro and sea links. The ideas are there, but action is scarce. A significant portion of the city population now lives in slums. Delhi may be an example for others to emulate in terms of a city that has rebuilt its infrastructure but even that pace has been slow.

A look at our airports is enough to make one want to go back! And yet, the airport privatisation process has slowed to a crawl. The Golden Quadrilateral project had a good start, but it has not yet been completed. A hundred such equivalent projects are needed to build the transport infrastructure in the country.

Water and electricity are other big problems. As a nation, India is still too dependent on the monsoon. The risk of drought is never too far. The rising cost of oil, a lack of investment in alternative sources of energy, and poor power distribution within the country leaves much of the country susceptible to daily power cuts. Education and healthcare are other areas which need attention. Other than levying special taxes to raise revenues for these, the government seems to be doing little about it.

Fortune wrote about India in a cover story last October:

India, by contrast, is the global economy’s idiot savant. It excels at the impossible, turning out hundreds of thousands of brilliant engineers a year. Its software houses manage complex data across thousands of miles of undersea cable for the world’s most sophisticated clients. India has world-class business leaders and, unlike China, solvent banks. And yet India flubs the obvious stuff. The national roadway network is a shambles and the power grid even worse. Nearly a third of India’s population–and more than half its women–can’t read or write. India has moved grudgingly to lower tariffs and balked at turning money-losing state-owned enterprises over to the private sector. Red tape and corruption discourage foreign investment, as do restrictions on how firms deploy workers.

This bipolar development model is reflected in the crazy-quilt of wealth and squalor in cities like Mumbai, where billboards touting Mallya’s Kingfisher beer and Standard Chartered Bank’s investment-planning experts tower above sprawling slums, and urchins approach cars at gridlocked intersections hawking copies of Harvard Business Review. In Bangalore, executives visiting the immaculate campuses of software firms like Infosys and Wipro marvel that while their data can travel to the other side of the earth at the speed of thought, they must crawl along in bumper-to-bumper traffic for more than an hour to get back to their hotels.

In cricket, we have seen India repeatedly snatch defeat from the jaws of victory. Are we likely to do the same in the world of business? There are times when even the diehard optimist in me gets angry and frustrated. India has at its helm a set of smart people. President APJ Abdul Kalam, Prime Minister Manmohan Singh and Finance Minister P Chidambaram are respected around the world. The mystery, to me, is why they cannot bring about the much-needed obvious change. To understand this, we will need to turn to a Singaporean and another Indian.

Tomorrow: Lee Kuan Yew on India


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