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India: Political Economic

and Social Challenges

BySusmita Gongulee Thomas

May 25, 2006

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Challenges- Internal, Regional & Global

Social:• Burgeoning population: 1.08 billion, related

problems: environment, poverty, health, education, housing water, food and jobs

Economic: • Jobs, growth and infrastructure, inflation due to

oil price rise, trade Political: • Terrorism, separatist movements, fractures due to

religious divergences despite traditional tolerance

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India's opportunity and challenge

• 56 years we have achieved quantum jumps in many fields. • Technology is the best example. IT, Atomic energy and Space

were indigenously developed and leapfrogged us into 21st century. Similar trends in the manufacturing sector

• Transition from a predominantly commodity-based agrarian economy to a knowledge economy is already underway.

• Challenge before India is how to telescope social, economic and developmental processes with technological growth

• How can we accelerate this, even as we protect the interests and enhance the income of agriculturists?

• How do we move mind-sets from the 19th century to the 21st?

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Turning Challenges Into Achievements- Demographic

• Burgeoning population: 1.08 billion • Well-educated in English language, software

services/medical/technicians • Second largest skilled technical manpower in the

world • 24 years Median age: 700 million people of 1.1

billion are young. Young population will continue till 2050

290,000 engineers graduate annually 300,000 technically trained graduates every year

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Progress of Social Indicators

Poverty (incidence)1980s 1990s 2000

44% 36% 26%

Education (literacy rate)1980s 1990s 2000

44% 52% 65%

Health (life expectancy)1980s 1990s 2000

56 60 69(men) 33.3 58.1(women)

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Turning Challenges Into AchievementsDevelopmental

• Population growth rate fell from an average annual rate of 3.1% in 1947 to around 1.38% in 2006.

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India: Utilising people to advantage

Business Week of 8th December 2003: "Quietly but with breathtaking speed, India and its millions of world-class engineering, business and medical graduates are becoming enmeshed in America's New Economy in ways most of us barely imagine".

It is estimated that there are 120,000 IT professionals in Silicon Valley.

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Turning Challenges Into Achievements- Economic

• Green revolution: 1967 to 1978. a record grain output of 131 million tons in 1978-79. world's biggest agricultural producers. And exporter of food grains today 212.0 million tonnes

• Economic: greater need for water, fertilizer, pesticides, fungicides etc. spurred growth of manufacturing sector, created new jobs, increased country's GDP.

• Increased irrigation created need for new dams, used to create hydro-electric power. boosted industrial growth, created jobs and improved quality of life of rural people.

• India paid back all World Bank loans for Green Revolution. improved India's creditworthiness.

• India supplied Canada with farmers experienced in Green Revolution. Their remittances added to our foreign exchange earnings.

• Sociological: created jobs for agricultural and industrial workers thru creation of factories and hydro-electric power stations

• Political: India transformed itself from a starving nation to an exporter of food. This earned admiration for  India in the comity of nations, especially in the Third World.

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India: Pharmaceuticals Indian pharmaceutical industry $6.5 billion, growing at 8-

10% annually, 4th largest pharmaceutical industry in the world by volume, it is expected to be US$12 billion by 2008, with exports over $2 billion.

India is among the top five bulk drug makers. There are 170 biotechnology companies in India, involved

in the development and manufacture of genomic drugs, whose business is growing exponentially.

Sequencing genes and delivering genomic information for big pharmaceutical companies is the next boom industry in India.

New emerging industries areas include, Bio-Informatics, Bio-Technology, Genomics, Clinical Research and Trials.

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Reviving Secular Tolerance"In India today,

we have a lady born a Catholic (Sonia Gandhi)

stepping aside so a Sikh (Manmohan Singh)

could be sworn in by a Muslim president (Abdul Kalam)

to lead a nation that's 82% Hindu.

I defy anyone to cite another country with such diversity and tolerance to its political

leadership."

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Turning Challenges Into Achievements-Technology

• Indigenous Space technology used to take education and development to remote rural areas, via television. The Satellite Instructional TV Experiment (SITE) 1975-76, used a state-of-the -art US satellite to broadcast TV programmes directly to community sets in villages

• This became today’s DTH, or direct-to-home broadcasting.• India-developed “direct reception system” a cutting-edge

technology enabling remote villages, without electricity, to view TV programmes

• a great stride forward in using satellite TV t reach rural children with high-quality education,

• Reached adults with vital inputs for agriculture, health and empowerment.

• Challenge of reach overcome using technology and with socio-economic benefits.

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India is one of six countries that launch satellites, for Germany, Belgium, South Korea, Singapore and EU countries.

India's INSAT is among the world's largest domestic satellite communication systems.

India’s Geosynchronous Satellite Launch Vehicle (GSLV) was indigenously manufactured, most components manufactured by Indian industry.

India provides aid to 11 countries, and writing off their debts.

India has loaned IMF US$ 300 Million.

It has also prepaid $3Billion to World Bank and ADB

In 1968, India imported 9M tonnes of food-grains. Today, it has a food grain surplus stock of 60 Million tonnes.

India built its own Supercomputer after US denial of a Cray computer sale in 1987.

India is one of 3 countries that have built Supercomputers on their own. (USA and Japan)

India’s new ‘PARAM Padma’ Terascale Supercomputer (1 Trillion processes per sec.) Only 4 nations in the world have this capability.

Self Reliance in Technology

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The Challenges Ahead

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Challenges Lie Ahead

Several formidable challenges remain • Exploding population 1.08bn to 1.63bn people, overtaking

China, (forecast 1.44bn from 1.3bn ), • Resulting environmental degradation• Poverty, • Illiteracy, • Ruptures and cleavages based on region, religion, language

and gender-threatening the social fabric, • Urban congestion, • Wounded eco-systems • Critical power and energy situation. • Water & food shortage

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Recognizing Challenges

India recognizes reform can not be focused only on economic challenges

• Need to integrate social and environmental dimensions

• Encourage widespread participation of civil society, businesses, local governments and non governmental organizations in reform efforts.

• Increasing democratic participation, better positions it to confront growing social and environmental challenges, such as rural distress, resource misuse, and the HIV/AIDS epidemic.

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Strategy For Overcoming Challenges

• Employment generation • Sustaining high growth levels • Encouraging R & D in high technology• Increasing manufacturing base to add jobs• Greater investment in infrastructure to bolster private

sector demand for labour• Reducing poverty levels by boosting manufacturing

output, reducing workers in basic agriculture, & raising agricultural incomes

• labor laws in line with global best practices• Policies to control Environmental degradation

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Challenges Ahead- Economic• India self-sufficiency in food grain production, yields four-

fold. Food Corporation storages possess best-fed rodent population in the world, with starvation deaths in far flung areas. Provision of quality infrastructure is therefore vital

• Address issues of infrastructure bottlenecks, high cost of power, high inland freight cost, high cost of credit

• Targets for development: An investment plan of US$38 billion in the expanded highways programme, US$13.4 billion in ports and US$ 8.9 billion in airports.

• Competitive edge lies in knowledge and technology, so greater investment in R&D.

• Public Private Partnership to adopt policies to ensure long-term technology security/superiority; Indian industry will be able to compete with the best in the world.

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Regional Challenges

India committed to a South Asian Union as ultimate objective, with mutual security cooperation, open borders and a single currency

India has the capacity and tradition to welcome its neighbours in education, in health care, in tourism, in trade and investment

“….Friends, India is ready to do everything that is necessary, to walk as many extra miles as may be required, to make this vision a reality.”

• Regionally, India recognizes it has a major role to play in fostering south-to-south cooperation and strengthening regional economic ties

• Taken pragmatic steps to resolve the long-standing Indo-Pakistan

dispute, address current disputes over resources like water, help return democracy to Nepal.

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Challenges of globalization• The rise of the developing world, particularly of China and

India, is reshaping the world economic and political order.

• Sir Martin Sorrell, Group Chief Executive, Wire & Plastic Products (WPP) United Kingdom; 2006. “The dominance of the US and the dominance of Europe – particularly Western Europe – is eclipsed. What we’re witnessing is a sharp shift in wealth in a relatively short period of time from West to East.”

• Never before in the history of mankind did a country with democratic dispensation have to feed so many poor, teach so many illiterates and simultaneously compete with the most advanced countries for a place under the sun.

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Further Challenges of Globalization• New dimension: globalization of both economy and

geopolitics.• Rapidly growing uneven cross-border flows of goods,

services, people, money, technology, information, ideas, culture, crime, and weapons

• Current globalization unique: revolution in information technology, electronic mail, and instant availability of information.

• Changing economic landscape, need for new jobs, for new mindsets, and changing identities/struggles around the globe, exacerbating imbalances in the global economy

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India: Future Global Leader

India’s Future as an international leader rests on

• Political will to achieve good governance domestically

• Foster constructive partnerships regionally and globally

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GOI TARGETS • Focus to eradicate poverty • GDP growth rate of at least 6% per annum over the next

10 years • Provision of basic minimum services: safe drinking water,

primary healthcare, primary education, public housing to all shelter less, mid-day meal scheme to all primary schools, road connectivity, streamlining public distribution system

• Universal employment to guarantee 100 days of work • Universal literacy. • Agricultural growth thru improved productivity • Efforts to promote rural farm and non-farm employment • Improved access to credit and other resources. • Maintain our competitive edge, thru R& D , knowledge

and technology growth

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India As Role Model

• The history of the 20th Century is behind us; its consequences are with us. We have all come to live with the reality of the new political, economic and social realities of our globe.

• India’s transformation can serve as a blueprint for sovereignty and democratic nationhood for other countries in the developing world that are tackling the challenges of development and leadership.

• Positioned as we are, geographically and economically, India has a pivotal role in the region and in the world.

• India fully prepared to shoulder its responsibilities and provide opportunities and extend cooperation to others.

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Innovative Cooperation with Chile

• TCS purchased Comicrom for US$ 23 million – back office

• Indian pharmaceuticals reach US$22 million from US$ 8 million approximately in one year

• i-Flex Solutions working with Banco de Chile US$ 15 million, + Banco de Desarollo, Security Bank and International Bank - banking software

• Trans-Santiago Consortium awarded to India’s TATA Group -transportation

• Corpora Tresmontes placed an order for bio-mass-fired boilers for US $ 400,000 fromThermax India Ltd- using agrowaste

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CONCLUSION• Confidence in India, in our democracy and in our economy,

has never been higher. • We have been able to restore the pluralistic ethos that is the

essence of India. • We have been able to reverse a dangerous trend of

intolerance that had begun to eat into the vitals of our nation and restore pluralism, tolerance and compassion.

• We have been able to replace debates that sought to divide the nation with debates that matter to everyday living of the people, debates on issues of concern to the common man.

• There is active discussion in government, media and civil society about options for growth, poverty reduction, education, health, employment, basic facilities, infrastructure, empowering people and helping marginalized and weaker sections catch up. Such debates are the life-blood of our democracy.

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Our Focus For the Future

A.P J Kalam President of India

• A nation of a billion people rising to its potential is an exciting feeling.

• As a nation we have collectively decided to sink the differences of the past;

• we have restored to our polity a sense of healing; • we have restored to our society a sense of inclusiveness; • we have given our economy a sense of purpose. • Our economy is on the move and our people are on the

march.• We have recognized our challenges and we are working to

address them.