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 Economic Freedom
 
India’s global image is driven by private initiative
The Economic Times, India Monday, January 10, 2011

Swaminathan S Anklesaria Aiyar
India is now called a potential economic superpower, and political counterweight to China. India was seen as a bottomless pit for foreign aid, holding world records in starvation and poverty. Once the Cold War ended and economic reform began, these private initiatives spearheaded the transformation of India’s global impact. India is most famous for computer software and BPO. Indians are successful within the country and abroad. The failures of India are that of Government action and crony capitalism, writes Swaminathan SA Aiyar in The Economic Times.

What’s India’s position in the world as we enter a new decade? In 1990, India was seen as a bottomless pit for foreign aid, holding world records in starvation and poverty. India tried to project itself as a Third World leader , but at international conferences other developing countries saw India mainly as an expert drafter of documents, not an economic or political role model. Many other developing countries outpaced India.

How things have changed in the last 20 years! India is now called a potential economic superpower, political counterweight to China, and probable permanent member of the UN Security Council .

...

I would have given a totally different lecture, emphasizing the role of corporations and individual Indians. These have altered India’s global position beyond recognition, not the government.

During the Cold War, despite thorny governmental relations with the US, corporate and individual relations boomed. The US became India’s largest trading partner. No Indian migrated to the USSR, but a million migrated to the US, and lakhs more flooded western universities. Once the Cold War ended and economic reform began, these private initiatives spearheaded the transformation of India’s global impact.

...

India is most famous for computer software and BPO. This instills fear in US workers and analysts, and has inspired a TV series “Outsourced .” A new word, “Bangalored” has entered the dictionary.

Indian industrial houses have become global giants through acquisitions. Lakshmi Niwas Mittal is the world’s biggest steel producer . Tata Steel took over Corus, six times its size. Tata Motors acquired and turned round Jaguar Land Rover, reviving world famous brands that had languished under Ford and BMW earlier. Birla has taken over Novelis to become a global name in aluminum.

...

After decades of minimal relations, Indian companies are now making a big impact in Latin America and Africa. The software majors have major operations in several Latin American countries, and so have pharma and truck producers. Jindal Steel is building Bolivia’s first steel plant.

...

Economist Arvind Subramanian says India holds the world record in outward foreign investment as a proportion of GDP. Never before has a low-income country made such an impact globally.

Indian individuals have also become globally prominent. One lakh Indians now study in the US, its largest contingent of foreign students. The US now has three million people of Indian origin, three of whom have won Nobel Prizes. Indians account for nearly a quarter of all start-ups in Silicon Valley. Hundreds of Indians occupy top positions in academia (Jagdish Bhagwati, Amartya Sen), corporations (Vikram Pandit, Indra Nooyi), media ( Fareed Zakaria )) and Wall Street. Two Americans of Indian origin, Bobby Jindal and Nikki Haley, have become state governors, and Jindal could be a future US president.

The government has played a supporting role in these private initiatives. India’s economic rise has translated into political clout, and explains why the US decided to waive the nuclear rules for India and back its bid for Security Council membership.

However, India’s global image remains dismal in relation to social indicators and corruption. These are mainly government failures, though corporate crooks have also gained through crony capitalism. India’s image here needs transformation in the coming decade.

This article was published in the The Economic Times on Monday, January 10, 2011. Please read the original article here.
Author : Mr Aiyar is consulting editor of Economic Times and writes the Swaminomics column in Times of India
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