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India - News
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Economic Times (6 June 2000) - ADP
report on Indian economy CNNfn web site (9 June 2000) - Lucent expands in India Times of India (6 June 2000) - Microsoft appoints Indians at key positions in US Business Week (June 2000 issue) - Beauty-pageant wins spark a cosmetics boom ADB sees India as fastest-growing economy INDIA could well begin the new millennium as the world's fastest growing economy. The Asian Development Bank has once again reposed confidence in the capability of the Indian economy to record 7 per cent growth in 2000 and 2001, in its latest Asian Development Outlook 2000, (April 2000). From 1900 to 1940, British India recorded a growth rate of near zero per cent. Between 1947 and 1980 India's average annual rate of growth was just about 4 per cent. Between 1980 and 2000, the average rate of growth works out to between 5.5 and 6 per cent. If the ADB's forecast for China of 6.5 per cent growth is borne out, then India will clearly emerge the fastest growing economy, unless some of the Asian economies, in particular South Korea, register even higher rates of growth. Most economic indicators confirm the ADB's optimism this year. While the rate of inflation is creeping up from the historic low of around 3 per cent to 6 per cent this month (due to higher oil and food prices), export growth is back into double digits and industrial growth rate is getting there, the current account deficit is low at 1.5 per cent of gross domestic product, and foreign exchange reserves are moderately high. It may be recalled, however, that even last year the ADB forecast a 7 per cent rate of growth for India but the weak monsoon, an unexpected political crisis at home, with an unwanted election and a war, slowed down the economy. In the event, India recorded 6 per cent growth, while China did much better than expected with a 7 per cent rate of growth, thanks to some government-directed production. While China-watchers remain divided on the health of the Chinese economy, with skeptics not willing to accept a growth rate of anything more than 6 per cent (in fact some say just about 5 per cent), China's official data still claim almost 8 per cent growth. In short, last year ADB underestimated China's potential to sustain growth and overestimated India's ability. Analysts of the Indian economy are almost unanimous, whatever their differences on specifics, that India is capable of sustaining 7 per cent growth in the medium term. A critical requirement is increased investment in infrastructure. Equally important is political stability. Political uncertainty during the 1996-99 period has cost India dear. If the Vajpayee government had settled down to business and if India was not faced with an avoidable election and an unwanted war in 1999, the economy may well have bounced back. With political stability restored and the government finally adopting some forward-looking economic policies, the hopes of sustained above-average growth have once again resurfaced. Indeed, if the ADB forecast of 7 per cent growth over the next two years is borne out, the long-term average rate of the growth of the Indian economy will itself shift upward. Those responsible for the economic policy changes in the early 1990s like to divide these time periods slightly differently in order to draw attention to what exactly happened in 1992-97. They remind us that in the 1980s, average annual national income growth was 5.5 per cent, while in the crisis years of 1990-92 it was down to almost nil, and then bounced up all the way to an average rate of growth of over 7 per cent in 1992-97, the five years of the P V Narasimha Rao-Manmohan Singh government and the first year of the United Front government. The late 1990s was a washout by comparison, even though the average rate of growth during this period, of between 5.5 per cent and 6 per cent, remained well above the long-term averages of the pre-1980 period and the 1980s. How important are all these numbers? Has anything really changed or are economists just getting excited with spurious statistics? The debate is on. For one thing, critics of the policies of the 1990s have repeatedly reminded us that despite this acceleration of national income growth, there has been no commensurate decline in poverty nor has there been a dramatic increase in employment. On the poverty statistics, the jury is still out, since everyone is not comparing like with like and even when they do so, they are looking at thin samples that do not necessarily tell the truth. The critics may be right, but they have not been conclusively proven to be so. Hence, the Planning Commission is planning to set up a group that will study the issues closely and pronounce a judgment. On employment, the data are not adequate to pronounce a final judgment but the story has two parts. Organised sector employment has not grown in the 1990s, but employment in the so-called non-farm unorganised sector has grown significantly. What this means is that the higher growth of the 1990s has not translated itself into more jobs in big factories, in the large industrial sector. Understandably so, since this sector is in fact trying to deal with slack where jobs are being cut. On the other hand, in the small scale and the "non-farm" rural sector there has been a sustained growth in employment. Low paid jobs, but jobs nevertheless. What these trends mean, no doubt, is that the "quality" of growth in India, in terms of job availability and quality of life for the poor and the middle classes, has to improve further and the growth acceleration of the 1990s has not adequately addressed this task. In short, even as India sustains 7 per cent growth over the next two or three years, this must be accompanied by more jobs, reduced poverty and higher productivity. Too much of the growth of the 1990s has come in the services sector where these challenges have not been adequately addressed. In the next decade, not only must the services sector create new jobs, but more of the growth should come from industry and agriculture and the export sector. That, in brief, is India's economic challenge today. - India Abroad News Service. (Bell Laboratories) expands India unit NEW DELHI (Reuters) - Bell Laboratories, the research and development (R&D) arm of Lucent Technologies, the world's largest telecommunications equipment maker, will open a third R&D center in India, a senior executive said Thursday, June 8th. "We are opening another Bell Labs in Hyderabad now...so there will be an expansion in the number of people working in R&D in India," Vijay Gupta president and CEO of Lucent Technologies India, told a news conference. Bell Laboratories already employs about 300 people at its two existing Indian laboratories in the western city of Pune and Bangalore in the south. "The Indian centers are researching wireless and optical networking among other things. Bell Labs also has relationships with various Indian Institutes of Technologies...and works jointly with its faculty on projects," Bell Laboratories President Arun Netravali said. Bell Laboratories conducts research in telecommunications and networks and employs 29,000 people in 29 countries. Netravali said Bell Laboratories introduced more than 130 innovations globally in 1999 alone, launched 18 new business ventures to bring new technology to the market rapidly and has more than 30,000 registered patents. Microsoft appoints Indians at key positions in US Global software major Microsoft Corp on Tuesday announced the appointment of three Indian employees - Sanjay Parthasarathy, S Somasegar and Amar Nehru - to key positions in the company's headquarters in the US. Parthasarathy, who played a key role in establishing the company's presence in India during his tenure as regional director, south Asia region, has been appointed as vice-president, strategy and business development, at Microsoft, a company release said here. Somasegar, now the vice-president of the Windows engineering service group responsible for the overall project and release management of the Windows 2000 family of products, was directly involved in setting up Microsoft's development center in Hyderabad, it said. Amar Nehru has been appointed vice-president, corporate development group, which focuses on emerging market opportunities and negotiates strategic alliances that involve the company's capital or equity, it added. India: From the Runway to Runaway Sales Blame it on the beauty queens. Ever since India's loveliest began bringing home international crowns five years ago, the nation's beauty business has never looked so--well--attractive. Not so long ago, Indian women were limited to two brands of lipstick and cold cream. Now, thanks to market liberalization, they have plenty of choice--be it hair mousse, foot cream, or sparkly nail polish. And, inspired by the likes of Lara Dutta, crowned Miss Universe 2000 in May, they are spending with abandon. The result is a boom in the beauty business that's lifting sales at department stores and humble stalls alike. The stampede to the cosmetics counter is only part of it: In their newfound obsession with looking hip and trim, Indian women are also rushing to join fitness centers. Even cosmetic surgery is experiencing a boom. Indian girls increasingly see Dutta and other beauty queens as role models: You can't buy advertising like that. ''The impact [of the contests] on middle-class India has been huge,'' says Nirav Sheth, an analyst at SSKI Securities in Bombay. ''Awareness has boosted demand.'' DREAM CUSTOMERS. The beauty pageants are yet another manifestation of the liberalizing forces at large since India opened its economy 10 years ago. The proliferation of cable television and foreign films has made Indians more open to international images of health and beauty just when Western cosmetics had become widely available. Women such as Chaaya Momaya, a 35-year-old restaurateur in Bombay, now think nothing of devoting several hours a week searching for the perfect lipstick. During a recent visit to the tony Benzer department store, Momaya dropped $150 on stick-on tattoos, glitter creams, and lipsticks. ''It keeps one young and looking good,'' she says. Momaya is a dream customer for global beauty merchants such as L'Oreal, Revlon, and Clarins. And there are plenty more shoppers like Momaya. Analysts estimate that India's beauty market is worth $1.5 billion and growing 20% a year--twice as fast as in the U.S. and Europe. Unilever PLC subsidiary Hindustan Lever Ltd. is launching 50 new beauty products each year. ''The Indian woman no longer compares herself to other Indians,'' says Lever's new-ventures chief Dalip Sehgal. ''She uses the international concept of beauty.'' New arrivals, such as L'Oreal, which has spent $30 million on local manufacturing since 1994, have branched out from shampoos to cosmetics. Dinesh Dayal, chief operating officer of L'Oreal's local subsidiary, says Indians will pay for what he calls ''innovative products.'' Anti-wrinkle creams, say, are commonplace in the West but a revelation in a market that was closed for decades. Homegrown cosmetics companies are profiting from the general boom in demand as well. Dabur India Ltd., a $250 million maker of traditional medicines, has launched an herbal hair oil and shampoo that boast sales growth of 22% a year. In 1999, Dabur made $18 million in profit, up 20% from the year before. The beauty boom since Aishwarya Rai became Miss World in 1995, is likely to pick up even more as Indians cast aside traditional notions of modesty. In Bombay, overachieving parents send kids to ''personality classes'' and, later, to society dames who teach the arts of diction, grooming, and deportment--a very new trend. According to Imam Siddique, a Bombay talent and casting consultant, four years ago, he would have been lucky to get four aspiring models and actors a week. Now, he gets six times as many. Western companies wouldn't dream of giving up this market. With the beauty market projected to grow fourfold, to 60 million women by 2004, India is an opportunity that slinks down the catwalk just once in a lifetime. - By Manjeet Kripalani in Bombay for Business Week.
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