Is India on The Verge of an Export Miracle?

When bad news comes cascading down like torrential rainfall during monsoon, it is very easy to ignore good news. Something similar is happening in India where scams, scandals, political logjams and widespread fears of an economic slowdown – even as inflation rages on – have become the staple of media outlets. So it was not very surprising when the phenomenal growth delivered on the export front was reported in a matter of fact manner, and then consigned to that dustbin called stale news! But I personally think that the export performance delivered by the Indian economy is not just a silver lining; it holds the promise of transforming India’s economy and its employment generation potential in this decade.

The facts first. In June 2011, the value of exports from India virtually touched $30 billion – up more than 46% compared to the same month in 2010. If you take the first quarter as a whole, the value of exports from India approached $80 billion – an increase of about 45% as compared to the April-June quarter last year. Even die-hard pessimists now agree that Indian exports will cross $300 billion in the current fiscal. This spectacular performance despite two powerfully inhibiting factors: the uncertainty and continued sluggishness in the global economy, particularly Europe and North America and the high rates of inflation in India that should make Indian exports less competitive.

There are two potentially game changing trends visible if you examine the trade figures a little closely. The first: Europe and America now account for just one-third of the total value of exports from India. Clearly, Indian exporters have been smart and have diversified their portfolio of destinations. The second, even more important trend is the fact that exports of products were double the exports of services in the April-June quarter. For long, everyone seems to have swallowed the myth that India will forever be the back office of the world, even as China continues to be the factory. There definitely was some merit in that argument in the past, but you cannot deny facts which indicate a startling structural change in the Indian economy. The fact is that manufacturing is growing and at a healthy rate. This is absolutely crucial for employment generation.

Just one policy announcement from the Prime Minister Dr. Manmohan Singh can make this export miracle a genuine and sustainable reality for this decade and beyond. Labour reforms in India have been largely stuck for about two decades because they are politically sensitive and pampered and powerful unions (that account for just about 3% of the total work force in India) have stalled them. Yet, imagine what could happen if Dr. Manmohan Singh announces that his government will guarantee the salaries of workers in key export industries like textiles, readymade garments, leather and others? The actual cost to the government will not be huge; but there will be a massive increase in investments in these key sectors to propel exports. Just the number of new jobs that will be created as a result – along with schemes like NREGA – will ensure that the UPA will continue to lord it over India.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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IIPM: Indian Institute of Planning and Management

It’s a Dry World, Literally

Desertification of World’s arable land poses a Great Threat to Human Civilization, and Coordinated Action is a must

By the year 1994, when the UN General Assembly declared ‘June 17’ as the “World Day to Combat Desertification and Drought,” one-third of the earth was converted into desert. Shockingly, desertification of the world’s arable land since decades has been slowly and steadily threatening and endangering livelihoods of millions of inhabitants, benefitted by relative ignominy in the minds of global leadership. It first came to public notice during 1968-1974, when the great Sahelian drought and famine in Africa killed 2,00,000 people and millions of their animals. This forced UN to initiate actions to combat desertification, particularly in Africa.

UN responded and addressed the issue of desertification of arable land on a global scale 34 years ago in 1977, by organising the first international conference in Nairobi, Kenya to promote public awareness and the implementation of the UN Convention to Combat Desertification. Since then, efforts have been taken up globally as well as by nations individually, yet fertile dry lands have been continuously becoming deserts at an alarming clip.

The United Nations Environment Programme (UNEP) has indicated a serious threat from desertification. Horrifyingly, according to the US Bureau of Land Management study, over 40% of continental American land is at risk of desertification. Over the last five decades, over 1.2 billion hectares of land – equivalent to the area of China and India combined, has experienced soil deterioration in developing countries. Another research by the journal of Life Cycle Assessment (LCA) that measured the degradation of the planet’s soil concluded that 38% of the world is made up of arid regions at risk of desertification. What is more shocking is that more than 20,000 square miles of land worldwide is getting converted into desert land annually.

This poses the greatest danger to inhabitants as well as to ecology. UNEP has estimated that the livelihoods of over 1 billion people are in danger in over 100 countries, due to arable lands transforming into deserts. Gradual desertification is forcing thousands of people from Africa to migrate to Europe. Researches show that a prime reason for Mexicans to migrate to US is that their dry lands are fast turning into deserts. Over 16.66% of the population of Mali and Burkina Faso has already been displaced due to desertification. Moreover, the economic impact is huge. As per UNEP, it costs the world around $42 billion every year. Desertification in the poorest continent Africa costs some $9 billion per year and a whopping $21 billion per year in Asia. It costs some $5 billion in North America, $3 billion each in Australia & South America and $1 billion in Europe.
 

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting