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News Updates - August 2005
India's untold story - Business Week magazine
CEO Showdown (China v/s India) - Newsweek magazine
India's Untold Story
For those at the bottom, standards of living are inching higher
Business Week, By Manjeet Kripalani, August 2005 issue
The road to the remote village of Kharonda winds around the gentle slopes of
the Sahayadri hills in the western Indian state of Maharashtra. Most of the
road is well-paved, a black ribbon wrapped around hills washed a brilliant
green by the abundant rainfall this year. Along the way, other small hamlets
peep out of the misty hillsides, their red-tiled roofs flashing in the sun.
The people of Kharonda and the other villages have a lot invested in this
road. Through the seasons, even during the fierce monsoons, they use it to
send the mangoes, guavas, and cashews they grow into nearby towns and
distant cities for sale. They've got a new commercial activity, too, selling
grafts of their flourishing mango trees to other communities in Maharashtra
and the neighboring state of Gujarat.
Just a few years ago, Kharonda and the Jawhar district of which it is part
were typical of the rural villages where 650 million of India's 1 billion
people live. There was no road, and there were no orchards. There was only
grinding poverty. Today the district's transformation proves what can be
done, even with limited funds, to combat the poverty that many have thought
would always be the fate of most Indians.
A 2005 study by New Delhi economists Surjit Bhalla and Nirtha Das,
who evaluated several anti-poverty programs over the last 30 years, found
that less than 27 cents of every dollar allocated actually reaches the poor.
The rest is misappropriated and misdirected by local politicians and
bureaucrats, the study says. Still, progress, often through self-help, has
been made.
Gujarat-based NGO BAIF’s workers found their way into these pathless
mountains on motorcycles, carrying seed and fertilizer with them. They
helped the farmers plant saplings and fruit grafts on the hillsides. They
taught them to level the small patches of land and harvest rainwater by
building small stone dams at the front edge of each patch. In the first
year, 90% of the mango and other trees planted survived. Until the trees
could bear fruit -- it takes four years -- the foundation taught farmers
modern farming practices for the millet they were still sowing. When the
trees finally bore fruit, each participating family netted an average of $35
-- way over the $7 savings they generally had upon returning from the city,
recalls Sudhir Wagle, BAIF's chief program coordinator in Jawhar, who helped
initiate the project.
In fact, the income of the entire district has increased. The grass huts
typical of less prosperous times are gradually being replaced by brick
homes. Inside, the house boasts electricity, running water drawn by motor
from the local well, satellite TV, a sofa set, and a large bed in the master
bedroom. Last month, Mahale bought himself a motorcycle with one of the
consumer loans so easily available in India these days. His wife, Sintar, a
stately woman with a confident smile, helps her husband. Their income is now
nearly $4,000 a year, the fruit of the 20 mango trees, 40 cashew trees, and
a stand of eucalyptus, plus the 6,000 mango-sapling grafts they sell
annually.
The successful program in Kharonda shows that, in its fight
against poverty, "the government has kept space for human, social
interventions -- more in India than anywhere else," says BAIF Executive
Vice-President Girish G. Sohani. The program "catapults people from poverty
right into the market economy," he adds. It's a model that is giving the
abject poor of India hope, and could do the same for others who live in
poverty around the world.
CEO Showdown
The managerial edge
goes to India, with its charismatic globe-trotters
Newsweek
International, 29 August 2005 issue
India has precious
few competitive advantages over China, but one is in the corner office. It
produces far more business managers, and far more with global name
recognition. India's Westernized business practices help explain why its
CEOs move more easily than China's in global circles. Though India entered
its period of free-market reform only in the early 1990s—a full decade after
China—it was never as closed to the world. India has long had a large
private sector, a network of Western-style business schools and a
globe-trotting elite of English-speaking executives. Indian CEOs make their
names largely on their charisma and financial talents. Nilekani says his
sense is that Chinese managers "think large scale, have tremendous drive and
are quick at execution, but lack experience dealing with global stock
markets, marketing, profitmaking and communicating a vision."
Indians have
operated in a basically capitalist democracy for decades. Almost 50percent
of India's GDP comes from its private sector, compared with 33 percent in
China. Indians have faced the discipline of a stock market for much longer.
The Shanghai Stock Exchange was shut down in 1941 and did not reopen until
1984. In contrast, the Bombay Stock Exchange, established in 1875, is the
oldest in Asia. "India has a longer history of businesses," says Gabriel
Hawawini, dean of INSEAD, Europe's top business school. "For generations, it
has had a culture of family-run enterprises. In China, the business
environment is very new and, hence, it has a —proliferation of
entrepreneurs."
India's first
B-school was set up in collaboration with Harvard University and MIT in 1961
(when China was sending merchants for "re-education" through manual labor).
The first Indian Institute of Management (IIM), located in Kolkata (formerly
known as Calcutta), became a prototype for IIMs that now cover the country.
India's business
schools are excellent, with what Hawawini describes as "probably the
hardest" entrance test of any business program in the world. Bakul Dholakia,
the dean of IIM Ahmedabad, says that "what makes Indian business graduates
different from others is that about 60 to 70 percent of the M.B.A. s in
India are engineers," a rare blend of technical and managerial training.
India now has 600
management programs graduating 5,000 students a year. China has only 95
programs, which are struggling to grant degrees. China has produced fewer
than 20,000 M.B.A.s in the past 10 years. In 2001, the last year for which
full data are available, business programs drew 12,173 recruits, of whom
only 3,580 (29 percent) got their degrees. One reason: the state administers
a graduation test that requires grueling study but is not seen as vital to
landing a good private-sector job.
China began
allowing students to go overseas to school only in the late ' 80s, and many
are still adapting. Some Chinese students who have lived in New York for 10
years still "have difficulty understanding an English play," but Indians
"quickly learn the lingo," the humor, and even baseball, says Marti
Subrahmanyam, a professor at New York University's Stern School of Business.
While China expelled multinationals in the 1930s and let them back in a half
century later, India has hosted multinationals since the 1930s when Brooke
Bond, Philips and Unilever arrived. Venkatesh Kasturirangan, a former COO at
Unilever USA, says that many of today's senior Indian managers were trained
by multinationals in the 1970s.
Some experts say
China is producing the "pathbreakers," the leaders willing to take on the
"top challenges of the world," even if the world doesn't know their names.
That's something for India's slick managers to ponder.
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