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India Presentation

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  • In December, a bridge in eastern India collapsed which resulted in the death of 34 passengers in a train passing by underneathTrans-shipment necessary which leads to fees, delays, inability to achieve economies of scale
  • Transcript

    • 1. Kevin Hassel Dana Wei Nick Lenard Ben Knudsen Challenges andINDI
    • 2. The macro- economicenvironment
    • 3. India At a Glance 1.21 billion people 2nd largest workforce at 478.3 million people Competitive advantage is centered around labor More than half of the Indian work force is in agriculture (52%), but its major source of economic growth comes from the services industry (34%)
    • 4. India At a Glance(cont…) An estimated 25% of Indian’s live on less than $2 a day, making inequality and quality of life real issues for India. Unions exist in India mainly in smaller concentrated industries and have declined over the past few decades, so poverty is rising Protectionism exists overwhelmingly within India, which has led to the takeover of a majority of the private sector by the government.
    • 5. India At a Glance(cont…) India is currently involved with multiple trade agreements that include: SAFTA, APTA, BIMSTEC, and PTA in efforts to:  Hasten economic growth through increased trade  Increase national security and protection for local cultures. However, challenges with labor and infrastructure remain the key hindrances to India’s growth.
    • 6. LaborChallenges
    • 7. Overview of IndianLabor Labor is India’s competitive advantage 6% economic growth through the 1990s  Job growth decelerated during the same time Estimated 30-40% of manufacturing jobs have been lost from over regulation 45 Central Laws and 170 State Statutes that regulate Labor
    • 8. Labor Inefficiencies 15 million human days of work lost from work stoppage  Unions have little power Less than 10 million workers are employed in the private sector  Indian firms are forced to be inefficient by the labor laws Lack of Economies of Scale  India’s Industrial Disputes Act: 1947
    • 9. Regulation Reform Allow the market to take control  Eliminate inefficient processes Stop Over-Regulating  6 attendance logs, 10 overtime accounts, etc. Stop Protectionism  Allow creative destruction  Allow more efficient businesses to develop Limit Government Takeovers/Allow market to naturally eliminate jobs  Leads to inefficient practices
    • 10. Unions Trade Union Leadership Too Many Unions & Too Much Rivalry  Not enough power  68544 Unions with  893 average membership Firms do not have to recognize Unions  Limited negotiations
    • 11. Opportunities andChallenges Jobs will be lost as inefficiencies are eliminated  Similar to China’s privatization  Lost jobs, unemployment, etc. Reduce Inequality  25% of Indian’s live on $2 a day Natural Balance of Union/Firm Power Able to exploit both skilled and unskilled labor Incorporate labor in current and future trade agreements
    • 12. Labor reforms “Countries that assume that their physical resourcessustain prosperity are economic dwarfs. Countries that regard their human resources as their eternal wealth are economic giants.”
    • 13. Independence: 1980’s India gained independence in 1947 Trade Union Act 1946  Allows for the formation of a trade union by 7 or more workers, including outside members under different employment, which causes disputes to span many years. In 2000: 533,038 disputes pending in Indias labor courts  28,864 had been pending for over 10 years
    • 14. Industrial DisputesAct: 1948 India’s heavy regulation includes over 45 national laws and 200 state laws that derive the Industrial Disputes Act of 1948. The Act requires organizations in the formal sector, as well as any organization with more than 100 workers, to seek government approval before firing an employee.
    • 15. Effects of Rigidities Jobless growth in organized sector Organized: accounts for 6% GDP  seeking more capital-intensive methods of production  set up several plants instead of a single large one to get around labor laws Unorganized: accounts for 94% GDP
    • 16. Infrastructur e challenges
    • 17. Key ImprovementsNecessary: Transportation Power Water
    • 18. Transportation Airports, bridges, and highways in short supply and crumbling away, placing the country’s citizens at risk. Lack of efficiency a big issue:  Absence of mass transit system has led to overcrowding  In turn, overcrowding has led to traffic jams  In turn, many laborers spend up to 4 hours a day commuting Ports are incompetent  Turnaround rate is 3 days in India vs. 8 hours in countries like China  Cannot handle many of the world’s largest cargo ships
    • 19. Power Power failures are a major obstacle  Last up to multiple hours are also an obstacle  Can and should be expected daily  Prevalent even in the highly commercial and developed areas such as Delhi, Mumbai and Bangalore India is losing out investment opportunities as a result  Last year, Intel Corp. chose Vietnam over India as the site for a new chip assembly plant
    • 20. Water Availability  Steel production, chemical manufacturing, and India’s rapidly growing population all require huge amounts of water  Shortage of water will devastate the agricultural sector as well as industrial sector  Global warming and reduction in size of India’s glaciers have had a hand in this Sanitation
    • 21. Source: World Bank Report on Water in India
    • 22. In 1980 India ChinaGross NationalIncome ($ current 182 188billion)Average AnnualGrowth Rate 3.30% 6.90%GDP Per Capita (2000Constant $) 223 186Populaiton Less than$1 day (million) 382 634Poverty at less than$1 day (%) 54.40% 63.80%
    • 23. Policy Making:
    • 24. Air Transported Freight by Year 14000 12000Total Airtransported Freight (millions of tons) 10000 8000 6000 Air transport, freight (million ton-km) China Air transport, freight (million ton-km) India 4000 2000 0 Year
    • 25. Container Port Traffic by Year140,000,000.00120,000,000.00100,000,000.00 80,000,000.00 Container port traffic (TEU: 20 foot equivalent units) China Container port traffic (TEU: 20 foot 60,000,000.00 equivalent units) India 40,000,000.00 20,000,000.00 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
    • 26. Electricity Production (kWh) 4E+123.5E+12 3E+122.5E+12 2E+12 Electricity production (kWh) China Electricity production (kWh) India1.5E+12 1E+12 5E+11 0
    • 27. Quality of Infrastructure4.504.30 4.32 4.284.103.90 3.983.70 Quality of port infrastructure, WEF (1=extremely underdeveloped to 7=well developed and efficient by international3.50 standards) 3.49 3.47 Quality of port infrastructure, WEF3.30 (1=extremely underdeveloped to 7=well 3.33 developed and efficient by international standards)3.102.902.702.50 2007 2008 2009
    • 28. Total Rail Lines (km)70,000.0065,000.0060,000.0055,000.00 Rail lines (total route-km) China Rail lines (total route-km) India50,000.0045,000.0040,000.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
    • 29. Cellphone Subscriptions800,000,000.00700,000,000.00600,000,000.00500,000,000.00400,000,000.00 Mobile cellular subscriptions China Mobile cellular subscriptions India300,000,000.00200,000,000.00100,000,000.00 - 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
    • 30. The Results: India China 1990 2005 1990 2005Gross National Income($ current billion) 313 800 356 2244Average Annual GrowthRate 6.50% 6.40% 10.40% 10.90%GDP Per Capita (2000Constant $) 317 588 392 1449Populaiton Less than $1day (million) 357 327 375 173Poverty at less than $1day (%) 42.10% 30.70% 33.00% 13.40%
    • 31. Questions?