Keep going... But how?

The PM says that there is no shortage of development money, and he has committed Rs.50,000 crores for infrastructure improvement over the next 4-5 years towards upgrading roads, bridges, and the transport system.

But this might quite well be an underestimate, considering the immediate needs for an additional 100,000 MW of energy, new airports, waste disposal systems, and better water supply. It is argued that the answer to solve these problems is not by providing funds, but by creating policies that will attract more investment. Currently, there are some things very difficult to do in India. The Bangalore airport proposal has not seen the light of day since the last decade. Enron was quite a disaster. Even though cheap and skilled labor is available, the red tapism is so extensive that it actually takes half the time and 70% of the cost to set up BPO centers in Singapore than in India. Even though the operating costs are lower in terms of salaries, but electricity is more expensive and the infrastructure is very poor to be able to sustain the rapid growth in IT.

This is what is feared even in the latest McKinsey-NASSCOM report, and India must act now to brace itself for the future. Not only should the infrastructure and the set-up processes be improved, but even manpower, which has been the selling point so far, might run out if the problems are not tackled. The dwindling manpower is not because enough students are not graduating, but because the students are not well qualified, or in other words, the education system is broken. Presently, the total strength of people in IT employed today is 700,000, and this is likely to grow to 2.3 million in 2010, but India can provide only 1 million. The reason is that only 10% of the 2.5 million new graduates each year are fit for being employed in BPOs. And only 25% of the 350,000 diploma holders are fit for working in the IT sector. The trend is not restricted to IT alone, but to other sectors like real estate, FMCGs, airlines, textiles, pharma, chemicals, biotech, telecom, and automotive industry as well.

The solutions might not be so simple. The government is trying to frame a national semi-conductor policy where chip manufacturers will be given access to free power and free land, to bring India up to speed in the manufacturing sector. This is something like the SEZ (Special Economic Zones) policy of China, and should be extended to other industrial sectors as well. Simply speaking, if it is difficult to change Bangalore, then a new Bangalore city should be created stocked up with all the essential infrastructural amenities. Things are moving towards this, but only very slowly.

Narayan Murthy has proposed a 4-point plan to improve higher education in India, because education is the only solution to narrow the demand-supply gap. He says that education should be liberalized and the role of government should be kept to a minimum. Private money should be funneled into the education system by the formation of long sighted socialist companies rather than short sighted capitalist companies. Meritocracy should be introduced in the salary structure of the faculty. Subsidies should exist only for basic education and not for higher education. If an economically backward student desires to study, then support should be provided not on the basis of caste, but on the basis of the financial situation. In other words, the reservation system should be de-emphasized. In my opinion, all of these are ideal points, but the ills of an easily hackable democracy will prevent their implementation. Take for example the 104th constitutional amendment that was just passed, which allows the government to micro-manage private schools in terms of the ethnic background of the students for "fair representation" of the minorities.

In short, quite a lot needs to be done, and done soon, keeping a vision of the future in mind.