Is India A Super Power? 

An IDC Analysis


New Delhi, 20 January 2005

As a sequel to our article India’s Dream, done over two years ago, which attracted a record number of hits on our site, we now analyse whether India’s dream is going to come true –– with not too much pain!

Super India

The recent hype in the Indian media sparked by TOI front page news –– whose reporters from America are adept at rehashing scoops and stories from the American media, but never give credit to the authors or indicate the dates when the report was originally published –– about a CIA report that India would be an eastern and possibly world super power by 2050 after China –– comes as no surprise to us. We have been saying it again and again and add that swifter liberalisation and good governance could make that date come closer and India could bridge the economic gap with China faster.

The way the new Government is thinking "out of the box" suits India (see latest Newsweek story on our PM) and our problems with Pakistan can be resolved, as the US woos us more and more. The US is in deep trouble in Iraq. More recently even angry Bangladesh agreed to allow energy pipelines through its countryside from Myanmar.

Mani Shankar Iyer wants to invest in Yukos for India’s future energy needs and the gamble may work as Putin is behind it. He is telling ONGC to stick to exploration and India could solve some energy needs on its own with new finds. Things are looking very good for the Indian economy and money is bulging out of most seams and companies.

As an example take the case of Singhvi, a lawyer, who duped clients of crores and is in jail in Nasik. Today top lawyers, professionals and doctors talk in terms of crores because clients can afford to pay. This is a very healthy sign even though some of the money is in black.

Rasik Dhariwal of Gutka gave his daughter the most expensive Mercedes Maybach as a birthday gift, but now his wealth is showing even more as he can afford a Dubai residence like Win Chaddha did!

When the Army Chief Gen N C Vij in his Army Day speech on 15th Jan told the Army that in the future every Army officer with 34 years service would retire with a Colonel’s rank and Rs 24 lakhs in terminal benefits, and jawans with Rs 7 lakhs, it was taken in stride. This means with other savings like PPF even Army Officers will be crorepatis in the future! One may need that much money to survive. However, very little expertise is available in the country on how to make the three services synergise or modernise the Army and that could be a hindrance.

It was actually Ray Cline the then Dy. Director of CIA in the 1980s who wrote the first report alerting CIA that nations with geography, population and space would dominate the 21st Century and he had cited China and India in that report. Later he wrote a book in which he explained the rise of the East, which was hyped about in the 90s, but the East Asian financial crisis of 1997, which many including Mahathir Mohammed say was engineered partly by George Soros, put paid to it.

China has learnt lessons and has even kept the Yan pegged. Luckily Dr Manmohan Singh and his team are economists and they know India too should never fall into the trap of short-term debt or easy flow of money out of the country. In fact he and Montek Ahluwalia and Chidambaram steered India out of dire straits from 1991. PM VP Singh and company had hawked India’s gold and Swiss banks especially UBS gained. It cannot happen again and that is why we are so bullish.

In 1990 Lee Kuan Yew then PM of Singapore speaking at the Thai Staff College said India would be enmeshed in internal debate and economic plans of its future, but in 10 years it could well have an economy with per capita nearing $1000. He asked them to multiply that figure by 1.2 billion and see what a powerhouse it would be. His prediction has more or less come true. Today the panwallah, the domestic help and some 700 million in India earn that figure in cash and more in perks. We are not including the gold that Indians hoard, which too will come into use in the years ahead.

There is a great deal of interest in Indian companies even if they are in trouble and the West is willing to invest and bail them out and then go on to make profits. Examples are India Cements who defaulted to banks but now have foreign private equity and have cleared debts and with the infrastructure boom coming up they will make money. Another company is Vam Organics or, which was not making money and the list can go on but the reason is the world sees the potential and that is what Ray Cline had talked about. We are not citing the profit making companies because takers for investment are many and even small time airlines like Deccan and Kingfisher are talking billions of dollars. Vijay Mallya in fact could possibly finance the whole show with his own dollars as many Indians are doing. We hear that Jet Airways has lost 30 pilots to Kingfisher.

Luckily the CIA report warns of the pitfalls that could make India slow its progress and stumble. Indian analysts, media, NSC and Indian intelligence agencies must study them carefully and keep Government properly briefed and see that India does not stumble.

India is lucky to be able to copy and gain technology cheap. We cite the example of the Internet and the government is doing well by using this to advantage and bureaucrats need to cooperate. The Railways missed the bus and with Laloo their chances of success are low. To maximise the use of broadband in India we can use Power Line Technology (PLT).

BSNL and MTNL are now in the fray. Broadband use is expected to rise to bring the India in line with UK and the quickest and cheapest way is to take it down power lines as opposed to fibre optic cable. Cable TV operators know this and they have minted money. This open-wire system does radiate RF energy from the lines, the amount of which is largely dependent upon the radio spectrum used by the transmission system.

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