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  • Transcript

    • 1. India - Politics and Business Rafiq Dossani [email_address]
    • 2. India’s puzzles till 1989
      • Governance: democracy’s near failure, civil society’s failure
      • Business: high-growth big businesses, low-growth small businesses
      • Poverty: 700 million left behind
      • Workforce: talent produced, unused
    • 3. Governance: fundamental change
      • In 1989, single party rule (by Congress) yielded to national-regional coalitions.
      • The BJP and Congress now each get 25%, the rest with 20 regional parties.
      • Regional parties interested in regional development.
    • 4. Up to 1989, the ruling class was a person – the Prime Minister MP: dormant species, reports to SCM Cabinet ministers: fixers, coterie member. Bureaucrat: intellectual arm of coterie State Chief Minister: manages MPs Reports to PM
    • 5. Why governance was ineffective and unstable
      • Ineffective:
      • Frequent changes in pols and bureaucrats in order to control their power also destroyed their incentive to perform
      • Public sector (SOE) dominance led to underperformance
        • Big private business occupied niches unoccupied by SOEs, eg., automotive; combined with SOEs to thwart SME growth.
      • Unstable:
        • Rural and urban elite were left out of politics.
        • Rural and urban middle-class turned anti-incumbent due to rising poverty
    • 6. Post-1989 Coalition MP: still dormant species State Chief Minister: regional party leader National party executive committee: fixers, coterie members Bureaucracy: depoliticized
    • 7. Why governance is effective and stable
      • Effective:
      • State chief ministers are centers of regional power
      • Bureaucrats are independent of ministers
      • Small and regional businesses have gained access to decision makers via state chief ministers
      • Stable:
        • Regions have influence
        • Anti-incumbency is focused on the national party not regional parties
        • Trade unions’ power reduced due to rising share of regional and small businesses
        • Big business is involved in big opportunities
    • 8. Impact of regionalization of politics
      • New Delhi’s bureaucracy revitalized
        • Bureaucrat’s future is no longer dependent on the taskmaster, but on the task
          • Improvement in regulation and transparency
      • Regional enterprise takes-off
        • Business policies favor small and regional businesses
      • Regional social welfare spending shifts to poor citizens
        • Social spending favors primary and secondary education, and rural development
    • 9. Doing Business in India
    • 10. Impact of good regulation: 3 new cellphone users/s
      • Yes, that is per second
        • China: 2.3 per second
      • Yet, Indian per capita income is one-third of China
        • There is more than one cellphone per Mumbai resident
        • Every family in the slum shown likely owns a cellphone
      • The catch-up factors vs China:
        • Bureaucrat-driven regulation
        • Private service provision
          • Shared infrastructure
        • 6-8 providers per region
        • Foreign service providers can own up to 74%
    • 11. The media – lively, newsworthy, but reflects weak civil society
    • 12.  
    • 13.  
    • 14. 2008 Ambassador 1962 Fiat 1100D 1943 Willys MB 2008 Mahindra Jeep 1956 Morris Oxford 2004 Premier Padmini 2008 Tata Nano Business wasn’t always easy
    • 15. Big business is thriving The IT industry will add 360,000 jobs in 2008, or 3 jobs for every minute of a working day. 13 19 18 21 29 26 OPM 112000 46000 44000 46000 49000 56000 Rev/Emp p.a. 71000 49000 55000 80000 88000 108000 Employee NA 11 7 10 6 6 Qoq 48 54 48 26 32 37 Yoy 2000 560 600 920 1100 1500 Q.Rev $m (4Q2007) Accenture* Satyam Cognizant Wipro Infosys TCS
    • 16. So is small business
    • 17. Servers of a NY bank maintained from Indore, India
    • 18. The source of daytime power
    • 19. India’s Skills: English Dawa Doma Sheupa Debbie White 50 million speak good English
    • 20. Another 250 million speak some English Literacy 60%
    • 21. Even as 1 new college opens daily, 700 m are left behind
    • 22. A.K.Ramanujan’s definition of Indian Village Time: indefinite, continuous, anywhere between a few decades ago and the medieval centuries. 30% of rural population consumes less than1600 calories/day % or underweight rural children below 5 years: 50%(40%) % of rural adult females with severe anemia: 80% (50%)
    • 23. Space at $700/square foot $6,000 for 20’x15’ City of hope
    • 24. The slums of Dharavi in Mumbai have an average of one toilet per 1440 persons.
    • 25. Long-term business view
      • Positives:
        • Balanced growth - across regions, sectors and sizes
        • Solid relations and trade with US and China
        • Mature capital markets
      • Negatives:
        • Rural India still a problem
        • Industry faces infrastructure and people challenges
        • Regional challenges (5% of international trade is within the region vs 26% for ASEAN).
    • 26. Entry Strategies
      • Domestic markets v exports
      • Small business v big business
      • Media management
      • J.V.
      • Government (state v national v none at all)
      • Professional services
    • 27. India V China
      • Differences:
        • Democracy
        • Literacy and health care
        • Infrastructure
        • Regulation
        • Power of big business
      • Similarities
        • Devolution of power
      • Destinies
        • Urbanization
        • Services v manufacturing
    • 28. Questions?

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