Transcript “Portals of Education” Key-note Address at State

Global Financial Crisis &
Its Impact on Indian Economy
By
Dr T.H.Chowdary
* Director, Center for Telecom Management & Studies
* Chairman, Pragna Bharati (Intellect India), AP
* Former Information Technology Adviser, Government of A.P
Chairman & Managing Director
Videsh Sanchar Nigam Ltd., Bombay
T: +91 (40) 2784-6137/6667-1191(O)
F: +91 (40) 2784-0058/6667-1111 (O)
[email protected]
Talk @ Sir CRR College, Eluru :7th Mar '09
Free Economies
[which are not State Capitalism economies]
– Boom – Irrational Exuberance
– Bust – Psychological unbalance
– Cycles of Boom & But are endemic in free economies, loosely
regulated
– 1997 – East Asian Economies collapsed. (Thailand, Malaysia,
Indonesia, Korea)
– 1998 – Roaring Nineties – Fantastic Business Plans; IPOs; P/Es
(20 to 100)
– 2001 – Bust: Trillions of dollars wiped out in the USA
– 2005 – US Boom
– 2008 – US Bust drags down the world. Because Globalisationlinked the economies fully
– India did not get affected then because the WTO-mandated
economic/fiscal adjustment policies (like free flow of international
capital) were not fully implemented in India.
Who Get affected
– Those countries which have export-led growth
– Japan, Germany, Korea, China, Exceptions:
Oil exporter countries, Middle East,
Venezuela
– Those which have USA as the largest market
for exports: Almost all developing countries
Indian Sectors which are most
and primarily affected
– IT & SW --75% of our production is exports
– Gems & Jewellery
– Textiles & Hosiery
Secondarily Affected
– Retail, Malls
– Real Estate & Housing
– Automobile
– Engineering Machinery
– Micro & Small Scale Sectors
– Hospitality i.e., Hotels
– Tourism
How to cope up with recession
– Stimulate investment in Infrastructure – Roads,
Bridges, Sea & Air Ports, Rail-lines
– Education: Buildings, Labs, Scholarships, R & D
– Create work, not jobs, so that there are productive
assets
– Encourage entrepreneurship by bank loans with low
interest
– Re-skill workers in preparation for resumed growth
• Plumbers, Electricians, welders, drivers, nurses, hospital
technicians, carpenters, painters, masons, interior
decorators, floor-layers, beauticians, gardeners, agritechnologists [food and fruit processing], surveyors;
IT/Computer literates
Misapplication of Funds
• Short term gains: Long term pains
• Loan waivers instead of moratorium [Rs.65,000 cr on farmers +
Rs.1600 cr in AP; AP’s waivers Rs.1200 BC; Rs.1197 Cr for SCs,
Rs.500 cr for Moslems, Rs.356 cr for weavers…..]
• NREG is a give-away (Rs.65,000 cr/yr); no assets being created
• Free electricity/free Houses
• Rs.100,000 cr to women at pavala vaddi [padi paisalu]
• Rs.100/50 groceries
• Free rice
• 82.5% families BPL white ration cards
• Subsidies for pilgrimages & marriages of Muslims and Christians
• These consumptions detract investment in
– Education (AP’s literacy 65%)
–R&D
– Security & Defence
– Capital formation, Industrialisation, Business
Enterprises
Permanent damages
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Dependency (on government)
Inability to quite poverty (no education, no skills)
Class & caste hatred & strife
Driving out “others” (like Indians existing USA,
Gulf,…..)
• Crime (justified by some in the name of root
causes, inequality, social justice, human
rights,….)
• Job losses leading to domestic strife, violence,
divorce, suicide.
Falling GDP Growth rate grows
unemployment
• No investment, no GDP growth
• We add 18 mn people/year; never created
710 mn jobs/year
• GDP growth coming down from (8/9)% to
5% and less, we add unemployed,
unemployable persons, mouths to feed,
clothe, house, care instead of brains to
create wealth
• So a population/Education Plan
India: Growth of GDP; Population;
Per Capita Income (PCI) &
Years for doubling PCI
Period
GDP
POP
PCI
YRS
1951 to 3.5
2000
2.8
0.7
70
2004-07 9.0
1.8
7.2
10
•Lesson from China: Control population during period of growth [JRD’s
advice to Nehru in 1950s dismissed.]
•BPL ratio is the index: in India it came down from 70% in the 1950s to
about 30% now [BPL ratio in A P is 85% according to white ration cards
& increasing.]
Preparing for the future (1)
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Education for all
Limiting family size
Promote savings [tax rebates]
Reduce taxes & duties (service tax on hundreds of services is an
abomination) – every “Service” except marriage, child-birth,
death, and politicians promises are tax targets)
– Cut down government jobs
– End businessman/politician nexus to cut down corruption
– End Crony Capitalism – the undoing of the East Asian
economies in 1997-99
Andhra Pradesh is the most glaring arena for crony-capitalism
Preparing for the future (2)
– Regulation: professional, statutory, capacity-building [In India all
regulators are politically appointed – not watchdogs & bloodhounds but often, lap-dogs
– Effective and extensive use of RTI
– Ending NGO – government nexus (corruption outsourced to
NGOs)
– Political Party Regulatory Authority of India
– E-elections that cut down need for colossal vote-getting
expenses
• IT-based Registration (not enumeration)
• Electronic media based electioneering (no road-shows & rallies and
cattle-like transport and feed & breed; all-free promises)
• Computer based balloting
– 80% of candidates/parties expenses will be avoided & hence
corruption and degenerate, ignoble politics
What is and why a Financial
Crisis
– Spend more than what you have.
– Borrow but not earn enough to pay back the
loan. Default; Insolvent;
– (Chapter 11 in the USA)
– Ponzi scheme in the US – a classic example
of greed & bust
Overspending/Intent to earn too much, too
soon is the root cause of financial crisis
– US economy ($15 Trillion GDP) accounts for a little
over a quarter of the world’s gross product
– If it is affected, the world is infected
– Immorality/Greed – Dharma viruddha kama
– Opulence [Affluence, Richness, Prosperity]
degenerates people and society and nation
In the US
• Over 50% of the 1st marriages
• Over 67% of the 2nd marriages
• Over 74% of the 3rd marriages
are ending in divorce!
• The American/European hedonistic culture of self
gratification and enjoyment above everything;
• Satiated but not satisfied desires and rights without duties
• Is propagated in India by corporations/banks/
financial institutions; over electronic media
– Hence young Indians are getting deIndianised;
– So they could go the American way
Credit cards – Living in debt
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Buying flats, cars
Shopping Malls, Branded goods
Pubs; Dating; Trial marriages
Divorces, Broken Homes
Dining in Star-Hotels
Week-end bashes
Designer furnishings
Family Bonds Broken
No time to mentor children
KG to Varsity: International Schools – hostels –
Expense Account
My advice to Graduates (1)
– Recession will be deeper than what
government says but will last no more than
two years
– Get a post-graduate degree in your
specialization but better
– Get a degree in another subject i/c history,
literature, management-, accountancy, law,
psychology, business management-, health,
Insurance, Banking, Financial markets,
another language, B Ed, Sanskrit, French,
Spanish, Chinese, etc.
My advice to Graduates (2)
– Cultivate character; learn to live frugally;
develop family bonds; read classics
[Mahabharata, Ramayana, Satakas, Neeti
Chandrika; Bhartrihari’s Subhashitas],
Chanakya’s Artha Sastra, etc.
– Practise Yoga
– Realise the value of Vodi, Badi and Gudi in
shaping your character, personality and social
values
ABOVE ALL DON’T LOSE HOPE