Luck had nothing to do with it.
Indian Economics Thread II
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Luck had nothing to do with it.
They are leaving because they cannot compete with the superior domestic Indian companies, Jai Hind
The religious conflicts and riots are on a downward trend (atleast the data that I saw says that) so it isn't a big turnoff really. I mean plenty of money from Russia and Arabs are flowing in India.
The problem that I see after talking to a lot of Indian friends is that that money is not really going into low growth infrastructure projects but high growth IT Companies. I mean the wages in IT is really good in India. The annual minimum that I know is around 10K USD and plenty of my friends are earning around 100k USD after 4-5 yoe.
There's a lot of nuances but all in all I don't really beleive that Arabs and Russian money is enough to transform the infrastructure of a nation as huge as india. And the ego of Indian political class is too much for Chinese money to enter so....
India needs to solve its issues with lack of electricity and clean water, not to mention lack of modern mass transport.
For this India should invest into coal power plants and closing the nuclear cycle with fast reactors.
The IT sector could turn out to be a vulnerability in the Indian economy, because let's be honest here, today it is not that rare for someone to know English as a second language anywhere in the world. And most of these services are being provided to clients in the US, which could use this as a way to push India into making economic choices to their own detriment, like they already did in the past by pushing India to cut oil purchases from Iran. The more India relies on exports of IT services to the West, the more wedded to their policies for good or bad they will be.
India's IT sector suffers from lack of independence. Since most of it is consulting services, how many Indian software brands can you remember that market their own software products? And they are wholly dependent on Western hardware to run that software. So it is basically a house of cards which can implode in an instant with US sanctions.
For this India should invest into coal power plants and closing the nuclear cycle with fast reactors.
The IT sector could turn out to be a vulnerability in the Indian economy, because let's be honest here, today it is not that rare for someone to know English as a second language anywhere in the world. And most of these services are being provided to clients in the US, which could use this as a way to push India into making economic choices to their own detriment, like they already did in the past by pushing India to cut oil purchases from Iran. The more India relies on exports of IT services to the West, the more wedded to their policies for good or bad they will be.
India's IT sector suffers from lack of independence. Since most of it is consulting services, how many Indian software brands can you remember that market their own software products? And they are wholly dependent on Western hardware to run that software. So it is basically a house of cards which can implode in an instant with US sanctions.
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Another thing. I invest in Indian market. So until recently government allowed the benefits of indexation in debt instruments such as debt mutual funds, govt bonds etc and as a result I only had to pay tax on around 1-2% of gains( adjusted to inflation) and it was a really good deal since I could comfortably get a risk free return of around 7-8% after tax. Now the government has scrapped it, without any discussion in parliament, not a word of this new rule was spoken and passed without discussion. Talk about democracy. But now it's not really that attractive anymore because it will be taxed as a regular income.
Here the problem that I see. The government issues a number of infrastructure related bonds that come under these debt assets so until now plenty of people used to invest in these bonds as they were better than fixed deposits returns but now they aren't anymore. So what happens due to that? Well the money that government was getting from retail investors is not going to come that easily anymore so even a domestic source of funding infrastructure has been curtailed.
Precisely my point but India doesn't have the money to do that.
China has its huge exports and savings rate going for it along with a competent government to upgrade the infra to such a good level.
Tell me what source of funding does india really have? And even the little they have they choose to squander it on corruption. There is a reason the IT capital of the country Banglore still has power cuts, potholes in its roads and a joke for metro. It wasn't lack of funds the corrupt politicians.
So india is stuck in a cat and mouse game. It need infrastructure to make it's exports competitive but don't have enough funds for it. While other countries such as china , or asean members do, so they can't really compete much in exports leading to lesser funds leading to less infra upgrades leading to uncompetetive exports and so on and on....
Tell me how would one break such a cycle...it's tough really and add to that the sheer arrogance of a lot of Indians who somehow beleive they are in superpower in making and don't need much advice
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