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| | The Bangalore Business Network Network is not currently active and cannot accept new posts | | 'India poised', but may fail to take off | Views: 595 | | Jan 11, 2008 6:32 pm | | 'India poised', but may fail to take off | # |
NON-WORKING A/C | | 11 Jan 2008, 2014 hrs IST,Rashmee Roshan Lall,TNN
LONDON: 'India Poised' may dismally remain exactly that – a nation poised but failing to take-off – unless it does "a lot" to improve productivity scores, according to the man who invented the BRICS theory six years ago.
In a shock indictment, Jim O'Neill, Goldman Sachs' managing director and head of global economic research, has said that it is striking "India has the lowest productivity scores among G7 and BRIC countries and Korea, even though India has vast productivity potential".
O'Neill's comments, to an audience of more than 200 of the great and the good of British business, are seen as a devastating 'downer' to the incredible highs of the years since Goldman Sachs unveiled the BRICS thesis positing India as a likely economic superpower by 2050.
O'Neill was speaking at the Emerging Markets Forum, a day-long seminar attended by leading British businesses, legal firms, economic analysts, banks and tech firms.
The seminar was also addressed by Britain's trade and investment minister Lord Digby Jones, who urged British firms to look beyond BRIC nations and seek new business in high-growth markets.
Jones, who will be in Delhi on Monday, said that Brazil, Russia, India and China are not the only rapidly emerging markets that UK companies can benefit from and there are several other high-growth markets, not least Mexico, South Africa, and Turkey.
The depressing progress report on India came as economic analyst John Kay warned in a piece for the Financial Times that "India cannot take economic growth for granted...It is attractive to believe that economic growth in India is inevitable given the potential of its vibrant society and the achievements of individual Indians. But the magnitude of the relative economic failure of both India and China across the 19th and 20th centuries demonstrates that nothing is inevitable".
In a cautionary put-down to all the hype and hoopla surrounding the India success story, Kay warned, "The capacity of politics to get in the way of economic growth has dominated most of the economic history of most of the world".
Meanwhile, in another surprising, if supremely pragmatic assertion, O'Neill warned against Western attempts to re-make the BRIC countries in a Western template, particularly China. He said it was not a given that democratic India had better conditions for growth than one-party ruled China because "democracy is not needed" and all that is required is "strong stable political institutions".
In a clear admonition to the interventionist Western do-gooder tendency, he said it was important for businesses to remember "we are dealing with societies, which don't want to live like us, particularly China".
O'Neill leavened his unexpected criticism of Indian productivity with an upbeat overall summing up of the BRIC nations, Brazil, Russia, India and China, declaring that they "are not emerging countries any more" and were slowly taking control of global output in contrast to the G7 countries' declining share.
In his robust progress report on BRIC, O'Neill said that three out of four (all but Brazil) were outstripping forecast levels of growth, with India's exceeding the assumed level of 6.7 per cent; China pelting ahead of the forecast 9.5 per cent and Russia pushing beyond the 5.4 per cent prediction.
He said, "We are living in a BRICs'-influenced world" even as G7, G8 and IMF lose influence. Pushing an interesting mental great leap forward, O'Neill also highlighted Goldman Sachs' next big idea, the N-11 or Next 11 developing countries, including Bangladesh and Pakistan, which are expected to be powerhouses of economic growth by the middle of the century.
Picking Korea and Mexico out from among them, he suggested the latter could be the world's sixth-largest economy by 2050, while Korea may be richer (in income per capita) than any of the current G7 nations except the US by a hair's breadth. Private Reply to NON-WORKING A/C | | Jan 12, 2008 8:08 am | | re: 'India poised', but may fail to take off | # | 
vinod manvi | | A timely warning by O'Neill, as the Indian industry and particularly the media is obsessed with India Shining story.
At a micro level, I see a disdain for all those who want to talk about India failing to take off. We have been fed with stories of us doing so well, that we are inured about the ground realities.
While O Neill rightly pointed out productivity lag as one of the downers, I feel the greatest threat to the India story is the lack of skilled manpower.
As the IT,ITES and lately BFS/Insurance hogging the resources and leaving a huge vaccum of skills in the technical sectors, it is bound to affect Indian brick and mortar sectors.
The Construction sector in India is already facing an acute resource crunch.
I hope we see a correction in this regard, else a decade down the line BRIC story shall be without the "I".
Bye for now
Vinod Manvi
Private Reply to vinod manvi | | |
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