Re-Imagining India

Everyone wants to make a buck, and rightfully so. However, when you want to make that in India, on India’s prospects, it is imperative that you understand where India is today and where it will be in the near future and even more importantly, what factors will drive that change. Below are excerpts from the book “Re-Imagining India”, edited by McKinsey, which I believe will greatly improve your understanding and conviction  of investing into India.

Fareed Zakaria – The Rediscovery of India

India gives diversity a new meaing. With 15 major languages, hundreds of dialects, several major religions and thousands of tribes, castes and subcastes.

India has historically been a STRONG SOCIETY with a WEAK STATE, that is about to change, and maybe even completely flip.

Economic growth has created one more common element in the country – an URBAN MIDDLE CLASS whose interests transcend religion, caste and region.

The city had primarily been a site of extraction, and the countryside a site of legitimacy and power, the countryside is where is the vote was and the city where the money was. This equation is also changing rapidly, with urbanisation and more money in the hands of the the farmers.

It was assumed that to get rich one needed the political connections, today one can simply dare to have good ideas and work hard.

Anand Mahindra – toward a uniquely indian growth model

The best way to propel the economy is to encourage different parts of the country to go their own way. There is just no point in pretending India is a single investment destination or even a coherent unified economic entity. We are a varied people and that should be brought out by celebrating and  encouraging these differences.

India’s biggest long term challenge is how to urbanite a population of more than a billion people.

Modi’s 200 new cities is right on track. At double or triple the current population our mega cities will become completely ungovernable.

Instead of directing where the capital should go, or funding white elephant infrastructure projects, the central govt should set the rules and then step back. This is exactly what Modi said in his Australian speech.

Foreign direct ideas should be valued as a commodity as traditional FDI.

Gurcharan Das – how to grow during the day

India and its people have achieved this prosperity in the face of their nations appalling governance. Indians cynically sum up this paradox of private success and public failure with an aphorism: “India grows at night while the government sleeps”.

The state is in fact the “first order” of importance, essential if its citizens are to flourish. Succeeding despite the state may be heroic, but not sustainable.

Difference from China :

The type od intrusive governments that emerged in china and divested people of their property and rights has never existed in India

India is a rising economy from the bottom, quite unlike China whose success has been scripted from above by an amazing technocratic state.

India has found its reformer of institutions in Narendra Modi.

The aspiring younger generation, now about a third of the population – and destined to make up have of the electorate in a decade – has just one vote – Modi !

People who aspire to a better life will soon outnumber those who see themselves as victims.

India as nation offers astonishing religious and political freedom, but at the same time fails to provide economic freedom, this, in a country where 2/5 people are self employed.

India has traditionally been one with a weak state. Fortunately, history is not destiny.

Mukesh Ambani – making the next leap

The Indian middle class exceeds 40 cr today and by 2040 it could conceivably top 100 cr – which would create a new wave of demand with the power to inspire new products and services in  banking, education, entertainment, healthcare and retail.

India has 13% of the worlds arable land, but Indian agriculture is still languishing at the low end of the agroeconomy value chain.

India desperately needs to get rid of its antiquated system of agricultural middlemen.

Irrigation systems, farm mechanisation and cold chains need a lot more knowledge, investment and experience.

Sunil Bharti Mittal – the promise of connected growth

Technology has always been a game changer for India.

The business opportunity at the bottom of the pyramid is not only going to be enduring, but will also constitute the pivotal base of India’s future growth story.

We are at the dawn of a data driven civilisation.

In india the doctor patient ratio is 1:1700.

Philip Clarke – bricks and clicks

Changes that are sweeping the Asia Pacific are now gathering momentum in India.

My view is that over the next 10 years, new technologies will have a profound and lasting impact on the way Indians shop, altering consumers’ lives far more meaningfully that the size or glitziness of their towns shopping malls.

India’s 12 cr internet users are the 3rd largest base of users in the world and with 20 cr of the population in the age of 25-35 this is probably the most lucrative base in the world.

Internet through a mobile or a tablet is expected to account for 75% of the new users by 2015.

Technology keeps changing, while consumers’ instincts and mindsets and values tend to remain constant. They will continue to be Value, Choice and Convenience based.

Vikash Daga and Vivek Pandit – decoding digital india

Digital india is on the cusp of major change for three mutually re-inforcing reasons:

The billions being invested into 3G/4G and the governments national broadband plan to expand digital access to 16 cr more users.

The evolution of low-cost smart devices and India’s well established local content

A strong desire to replace corrupt political accountability .

The governments relative secerecy about its inner workings and it’s claim about India’s progress no longer goes unchallenged.

Assigned identities on case, religion, ethnicity and other politically convenient divisions have long shackeld the aspirations of many youths.

In a country where 85% of the marriages are arranged, there is now a multibillion dollar industry with over 3 crore online profiles.

No other emerging market is nearly as mobile dominant as India. By 2015, 75% of all new users will have smartphones.

40% of india’s urban residents and more than 50% of its rural population do not have a bank account

India has only about 6% as many secure servers as South Africa.

Electricity and not affordability is the single largest problem for digital opportunities.

Eric Schmidt – the next five hundred million

In 2012, india has a population of 120 cr with more than 60 crore mobile phones but only 15 crore people who REGULARLY connect to the internet. The number of broadband users  is even more abysmal with just 2 crore people on it. In every sense India is still an internet laggard.

Connecting its next 50 crore will make India the LARGEST OPEN ACCESS INTERNET MARKET IN THE WORLD. I predict it will be impossible for any child in India imagine life without the internet.

Fiber optic cables are by far the best way to promote higher connectivity and will last thirty , even forty years and can scale to almost infinite bandwidth. However, Indian conditions are best suited for wireless connectivity such as 4G and 3G.

Investing in bigger, faster telecommunications network will have big and far reaching payoffs in India.

India born entrepreneurs account for 40% of the start-ups in silicon valley.

If India plays its cards right we can see Indian engineers and small businesses tackling Indian problems first, then exporting the solutions that work best.

The freer a countries internet, the better chance that country has of exposing deep rooted problems and confronting them honestly.

Louis R.Chenevert – solving indias most pressing challenge

Indian households will invest more capital up front if they can be assured that products such as automobiles, air conditioners, and other household appliances will generate economic benefits throughout the products life cycle.

Frank D’Souza and Malcolm Frank – why virtual infrastructure is a real problem

TCS, Wipro, Cognizant, Infosys and HCL employ more than 8,00,000 people as of 2012.

Main technology clusters are Mumbai, Bengaluru, Pune, Chennai and Hyderabad.

With proper virtual work platforms, such as internet connectivity and electricity, the work can come to the individual instead of vice versa, and the whole country will benefit and not just the technology clusters.

Many indians regard the superhighways, strip malls, and the concrete jungles of development with ambivalence. An information infrastructure, by contrast is inherently “green”.

Vinod Khosla – how to win at leapfrog

There is a general tendency in life to want to do what others have done. It’s and understandable implies but a short sighted one. One of the greatest things about being a relatively poor, trailing, but rising power like India is that you have the opportunity to see what you want to imitate – and, more important, what you want to skip.

Rushing to do specific things is a big mistake. Technology advances in a ways that are quirky and unpredictable. It’s unwise to rely on plans that presume to see the future way too clearly; strategic planning and consultant forecasts almost invariably mislead.

Instead of trying to predict the future, India’s leaders should be trying to fit into the future as it happens.

We don’t know what the big winners of the future are – and it would be foolish to attempt to determine it. Governments with an evolutionary mindset – the ones that seek to encourage rather than prescribe – can use tax incentives and standards to push in broad directions without trying for specific solutions.

Every policy contains some kind of bias in one direction or the other. The question is: What do you want to bias your system toward ?

Education is seeing a paradigm shift from fixed time and variable learning to fixed learning in variable time.

The doctor-to-population ratio in india is 10 times lower than the ratio in the United States.

The vast sums of money being invested into roads, ports, power plants etc can be reduced through alternative electronic infrastructure, which is also way cheaper and more convenient to build.

Jean Pascal Tricore – power switch

India has < 1% of the world oil reserves and the 4th largest coal reserves.

India’s transmission and distribution losses are a staggering 25%.

The number of people in India with 4-6 hours a day of electricity is way over the entire population of europe.

Indian electricity prices are amongst the highest in the world.

Current Installed capacity : 200GW. Required capacity to keep pace : 600GW, that is 600MW per week for the next 20 years 

And it needs transmission and distribution lines.

We need to marry india’s strength in IT to its faltering energy sector by implementing smart grids, smart storage technologies and smart cities.

Renewables and LED will paint a different look in the future of India.

John Chambers – smart cities, sustainable cities

India today has only 20% of the total floor space it will need by 2030 to accommodate the millions expected to migrate to its cities.

India needs to build a staggering 968 crore square feet of new, urban residential space in less than 16 years.

We have to stop commuting to compute.

Telecommuting can save money and reduce traffic, but only if the digital and energy infrastructure is reliable.

Till date, post independence the only New Major cities created are Chandigarh and Gandhinagar

The DMIC ( Delhi Mumbai Industrial Corridor ) will be the worlds largest infrastructure project across 1500 kilometre improving the lives of more than 18 crore people.

This will reduce the time it takes to ship goods between Delhi from the current 14 days to 1 day.

India has 5,00,000 civil engineers and 45,000 architects. We need 40,00,000 civil engineers and 3,66,000 architects.

10 crore people will migrate to the cities by 2020.

83 crore people live in villages today.

Naveen Tiwari – jump starting india’s start ups

India has employed over 30,00,000 in BPO jobs directly and 1 crore people indirectly. But this is far from sufficient.

500 companies are incubated in India annually, compared to about 8,000 in China.

The only indian city that is ranked in the Startup Genome report is Bengaluru, which is in the 19th position, way behind Tel Aviv, Sao Polo and Moscow.

Nandan Nilekani – a technology solution for india’s identity crisis

Most of the 1.2 billion people cannot prove their formal identity.

60 cr people or half the population now has been enrolled in the Aadhar scheme.

The indian govt spends about 3,60,000 crore on subsidy programs such as food, fertiliser and petroleum and more than 30% of this went to better off households instead of the poor.

With the indian workforce being increasingly migrant, people need a payment infrastructure that provides access to financial services and resources anytime and anywhere in the country.

10,00,000 aadhar enabled micro-ATM are in the process of being added.

Technology is probably the greatest leveller of the indian society.

Salman Khan and Shantanu Sinha – the ed – tech revolution

Society is on the verge of hitting another printing press moment. When the printing press came along, it broke the elite’s grip on the essentials of literacy and education, and made contact available to a broadly dispersed population.

The future of education will not be to simply pass a course and get a degree but to develop mastery of a broad set of specific skills that one can continuously build upon.

We need to agree upon a system in which micro credentials, continuously updated, become what really matter.

In general, traditional education is a terribly inefficient way to train a broad population and match those efforts against the skill employers truly need.

This trend is already clear in the silicon valley. What they value are the skills an employee has and the portfolio of work that he has created.

Admission tests will be as valuable as degrees in the future.

Zia Mody – the creaky wheels of indian justice

For every 1,00,000 people the US has 10.8 judges, Canada and Australia 3 and 4 and India has j.

Sonalde Desai – it takes more than a village

Only those villages that are economically linked to cities will survive.

75% of the richest rural households now earn money from non-agricultural activities.

The average chinese farm is half the size of an indian farm and still 2 times as productive.

One might think that as villagers’s fortunes improved, old fault lines of caste and religion would gradually fade away. Instead they appear to grow stronger.

In cities ambition matters more than background.

Adil Zainulbhai – india’s farms : harvesting the future

<10% of india’s agricultural output goes into food processing.

The best wheat producers produce 12 tons per hectare, india produces 3.

Indian dairy production is about 1,000 kgs per year which is half the world average.

As the per capita rises, peoples eating habits change, specifically away from cereals and legumes, and towards fruit, vegetables, seafood, meat and poultry.

I imagine india will have a food processing GDP of 120 billion $ by 2030,  up from 24 billion $ in 2011.

Despite being the worlds largest producer of mangoes india ranks 60th in terms of yield.

india has 18% of the worlds population and just 3% of its water. Scary !

By converting just 3% of its total banana area to dedicated export zones, India could match the export volume of the second-largest exporter, Costa Rica, at the current yields.

india needs to create a master plan that maps current and future agricultural flows, and then build sorting, harvesting, packaging storage and transportation ( particularly cold chains ) infrastructure linking producing regions to export hubs.

We need world class agricultural universities.

Anil Agarwal – a roadmap for energy security

India’s poorest, most marginalised inhabitants live atop our countries richest lands.

India has explored only 22% of known sedimentary areas.

Cairn India accounts for 20% of the total crude oil production.

India has completed only 4% mapping of its geophysical and geochemical mapping. Australia has completed 100%.

We need to have atleast 30% reliable data for the same.

Ramchandra Guha – day of the locust

This is an era of specialists, each of whom sees his own problem and is unaware of or intolerant of the larger frame into which it fits. It is also an era dominated by industry, in which the right to make a dollar at whatever cost is seldom challenged.

The government has allowed industry to indulge in a systematic assault on land, forest, river and atmosphere. In India environmental stewardship is not a luxury, but the very basis of human survival.

The western ghats, a natural treasure more precious than even the Himalayas, whose forests, waters and soils nourish the livelihoods of several million Indians.

If India blindly followed the Western model of development, it would strip the world bare like locusts.

India, like China is trying to ape the West, attempting to create a mass consumer society whose members can own cars, live in air-conditioned homes, eat in fancy restraints, and travel to the ends of the earth for family holidays. As their economies grow, will India and china strip the world like locusts ?

India has over the past few years witnessed large-scale depletion of ground water aquifers, the loss of bio diversity, the destruction of forests and the decimation of fish stocks.

There is absolutely no point in owning land that cannot sustain itself. Buy land only where sustenance is awesome.

Suhel Seth – fixing the fourth estate

India has a circulation of 37 cr news papers published by 87,000 privately owned newspapers.

The Times of India is the worlds most widely published english daily with 40 lakh circulation, 2x that of Wall street Journal and 4x that of the new York Times.

Dianik jagran has 1.6 cr circulation and Dainik Bhasker has 1.4 cr circulation.

Dainik Bhasker has 1.4 cr circulation.

India’s broad cast media has 800 private channels with over 100 being news channels.

Sadly India’s press has gone from a  watchdog to a lapdog. The press has become entangled in a corrupt nexus of politics and industry. The fundamental cause is that the very abundance of media outlets has created competitive presures that has made survival dependent on holding onto the advertising business of powerful corporations as well as on pandering to the lowest common denominator in audience taste.

No market can sustain so many channels even if they are run for motives behind financial return, so a shakeout and then consolidation are inevitable.

More emphasis on the craft of real journalism than on craftiness of garnering profits in the short term could help trigger the second coming of Indian media.

Kishore Mahbubani – the closing of the indian mind

The united states is the greatest human laboratory in the world. And who has come out ahead in this unparalleled global free for all ? INDIANS. Their per capita income now ranks highest of any ethnic group in the Sates. In 2010 Indians earned $ 37,931 annually, compared to the national average of $ 26,708.

The gap between India’s potential and its actual performance is huge perhaps the biggest of any country in the world.

Although China has a closed society, it has an open mind. The country’s leaders are pragmatic rather than ideological, focused intently on which policies work rather that which ones reaffirm their preconceived world views.

India should be one of the worlds leading champions of globalisation rather than insecure and fearful about it.

One could blame india underperformance on a host of factors; overpopulation, corruption, illiteracy, political incompetence, stubbornly persistent poverty. But the real factor is, to a large extent, one of imagination.

Many indian leaders still seem unable to conceive of their country as confident, open-minded, rising – power —- one that can afford to take risks and can be generous with its supposed adversaries.

In recent years indians abroad have been able to regain their creative and imaginative capacities. It is time for their leaders to follow them.