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  Home > Socio-Economic Factors > FDI, Employment, GDP
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1. World Class Governance - why India must do it!

The Central and State Government and Quasi Government organizations must put their "House in Order", without it, we will continue to grow slowly and not as per our full potential. Good Governance & Effective Administration, which requires a precondition of effective high quality human capital, needs to be put in place, ASAP. Our notes bring up this one issue, which will solve most of the problems of our Nation.
After 54 years of experience, both good and bad, we should be convinced. If not, kindly study the China - India comparison one page chart, and see for your self, where we are after 54 years of Independence!
A lot of our effort, time and money is spent doing other people's work in India, who are paid to do the same, but due to the details as mentioned in our notes, the 1000 million people, NGO's & others, have to do it. The Governance & Administration of India MUST be improved ASAP. It will set off a positive Chain Reaction, which should propel our economy to a growth rate of 10 to 12% per year, from the present, 5 to 6 %.

2. Why NRI investment is so low into India?

Employment generation is only possible if the basic fundamentals of the economy are in place. The same goes for Infrastructure development and Investments into India. The "acid test" is to catch the NRI funds. They invest in Europe, USA, S.E Asia, M.E., Thailand, Singapore, Indonesia, Malaysia, etc. but practically NIL in India! Why? Ask them for advice! We should study the manner in which up to 70% of infrastructure projects in the cities and provinces of China, are being promoted by local municipal bonds, via the Non-resident Chinese. In turn they get a quid pro for Industry and business development in China. No foreign investor is going to invest in 30 year municipal and local government bonds, only the NRI and PIO who understands India will invest, provided he is encouraged to do so!

3. India's world trade & buying power

India has 17% of the world population, 2.2% of the land mass, 1.4% of the world's GDP but only 0.6% of the world's trade! In the last 54 years our foreign trade has had a negative growth from 3% to 0.6% of world trade, or minus 500%! It is obvious that 98.6% of the world's buying power [based on GDP], is outside India and 99.4% of the world's trade is also outside India. We MUST export more! India must become a base for manufacturing & services for the world markets. This will enhance our Buying Power.

4. Advantages of long term & Integrated Planning

Some significant planning is required. Kindly study the 2020 plan of the state of Andra Pradesh one cannot plan from year to year, a long term Vision & Plan must be made out, for India. Do we have it? Why cannot the Planning Commission and the States have a 2020 integrated plan?

5. Vocational Training - the Big Employment Generator!

We should concentrate on the German system of Vocational Training, where children after the 10th standard, have a choice of 2500 vocations, they work for 2 to 4 years part time in various establishments. During this period, they study part time in their area of Vocation. It's a win-win situation, since the establishment gets low cost human capital at minimum wages and also the person is fully developed to work, any where in the world in his or her field of work. Nearly 80 to 90% of youngsters, after the 10th opt for this. The universities are empty in Germany! For every one IIT we need 500 to 1500 vocational training institutes! While India needs IITs & IIM's, the real growth in the economy will come from Primary, Secondary Education and Vocational Training.

6. Increasing exports will boost the Indian Economy

We must Concentrate on exports! How will Indian companies sell their products to such a small and shallow market, in India, since the GDP is only 1.4% of the World GDP? How will India pay the Import bill for Petroleum crude at US$17 billion per year when our exports are only US$42 billion per year, including software exports. India's oil imports alone, will surge by three times by 2007! Exports will boost India's Buying Power.
Obviously India has to export much more, to the outside world. This has many advantages. Exports will improve Governance, Administration, Efficiency in manufacturing and services, cost competitiveness, FDI inflow, latest & best technology will come into the country, more jobs will be created, the infrastructure will have to improve and the standard of living of the people will go up.
Indian organizations, in manufacturing or services, will start bench marking with the best, and not with each other, as was mentioned by Claude Smadga, last year at the WEF.

7. The Indian definition of Small Scale units needs to be reexamined & redefined!

The present definition of small scale industry is a farce and will eventually harm this country. It has outlived it's usefulness. Please study what is happening in other parts of the world. SME's in all other countries means companies up to 500 employees. In India it should mean the same. If we change our employee laws, and other operating parameters, India could take on any compitition on this Planet. Give Indians a level "Playing Field". In USA, Europe, Japan, Korea & Taiwan, which account for nearly 75% of the world's GDP, SME's account for nearly 50-75% of the GDP & exports in activities such as manufacturing, trading & services. SME's are nimble, fast, flexible, can change direction & policy and have "flat organisations". They are like the "Cheetah" in a forest. Large organisations are like the "elephant" in a forest. Nearly 99.3% of all organisation's are SME's & they provide about 70-75% of all employment. We should redefine the meaning of SME's in India and give a level playing field, in terms of cost of finance, adequate & good infrastructure, freedom in choice of Human and other resources. Reservation of items, for SSI units, in a changing world technology, needs to be scrapped! In USA, SME means an organisation of upto 1500 employees and turnover of US $ 0.75 to 29 million, depending upon the type of business.

8. Agriculture has a great future for India. - exploit it to the hilt, to improve GDP!

India is endowed with a lot of water, sunshine, many rivers and good knowledge about agriculture. This needs to be better planned to improve yields, cold chains, marketing and exports of packaged and fresh products. The land holdings are getting smaller and smaller. Look at co-operative farming, with bigger land holdings and modern methods of farming. We should follow the model of Milk Co-ops also for fruits and vegetables. We should talk to experts within our country, eg., ICICI's Mr. K V Kamath, as how the villagers will get immediate payments, for their products and loans for improving their yields and productivity. We should get the big NRI's and International companies to look at our Fruits and Vegetables. India produces the maximum of fruits and vegetables in the world about 55 million and 75 million tons per year and 40% is wasted. What are we doing about it? Should we let it rot? Or should we let others pick it up and export or market in India. The answer is obvious. Can we allow our waste lands to be leased to International firms & NRI's for agriculture?

9. Tourism has a very large potential for employment generation & increase of GDP

Concentrate on Tourism, this is a International Industry which is 7 times the size of Information Technology. I.T. world wide, is only US$500 billion. Tourism is about US$3700 billion business per year! The employment generation is very high. Nearly 2 to 4 jobs per tourist are generated!
Let's learn from China, Malaysia.Don't you think India has something better to offer? A 10,000 old history with nearly 21 different cultures and languages! But here again we have to put our "House in Order", otherwise forget it. It is a shame how our heritage and tourist spots are being damaged and defaced. China has ten internal airlines, we have three, [Air-India, Indian Airlines and Jet Airways.] China is building 400,000 hotel rooms per year, while we have, in total about 600,000 hotel rooms. China attracts 87 million vs 2.5 million tourists/year, who visit India. Much smaller countries such as Nepal, Malaysia, Singapore, Hong Kong, etc attract many more tourists than India! The foreigner has very little confidence to travel here. We need better Governance!

10. Planning, execution & maintenance require the Best & Effective Human Resources

Bring in the best Human Capital, in our think tanks. Let's learn from the rest of the world. We must Bench Mark India with the best on this Planet, then only will we improve!

11. The Call for Swadeshi

At present, we cannot use the Best "Swadeshi" Effective Human Capital to run our own country and our own public and private sector. When future generations of Indians read Indian History, this will go down as the biggest tragedy for India.

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