Sep 22 2014

India and international organisations: Continuing the pursuit of Great Power status

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david_scottDavid Scott assesses India’s interactions with various regional and global organisations and considers which Modi will prioritise as he continues the drive for Great Power status. 

This post forms part of a new series on the India At LSE blog, India’s Foreign Relations Under Modi. Click here to see more posts.

Under Modi, India’s attitude and role in international organisations will most likely continue to reflect a drive for Great Power status, an ingrained stress on “strategic autonomy”, and mixed regional competition and global cooperation with China.

With regard to India’s immediate neighbourhood, the South Asia Association for Regional Cooperation (SAARC) has to date proved of limited success, and Modi will need to decide how much energy to put into galvanising the organisation. His invitation to other SAARC leaders to attend his inauguration in May 2014 suggested he might be so inclined. However, China’s push for SAARC entry is something that India is likely to be reluctant over. India’s efforts may instead go into galvanising BIMSTEC as a useful bridgehead to Southeast Asia, given that BIMSTEC membership is the same as SAARC minus a problematic Pakistan but plus Myanmar.

Modi might look to India’s maritime neighbourhood and put more energy into revitalising the Indian Ocean Rim Association. However, its economic potential remains largely unrealised. Consequently, Modi may find the Indian Ocean Naval Symposium a more practical Look South focus, especially as China is not a member. Such maritime levers for presence and influence may also be reflected in Modi active pushing the IBSA mechanism with South Africa and Brazil; a self-avowedly South-South democratic grouping which does not involve China, and which has already initiated trilateral naval exercises since 2008.

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Sep 19 2014

Rethinking education as an economic good: Analysing the proliferation of private universities across India

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AnamikaDeepanshuPrivately-funded higher education institutions have been materializing across India in the last few years. Anamika Srivastava & Deepanshu Mohan consider how these new universities challenge the traditional value, nature and goals attached to education. They argue that while private investment is necessary to meet increasing demand, new institutions must be careful not to compromise or contradict the larger social goals of higher education.

The ray of optimism in a new ‘Shining’ India under the Modi-led government seems to be primarily focusing on improving access to higher education and recuperating the process of skill development pan India. In recent months there has trend of massive proliferation in the number of new private universities in India as leading corporate honchos like the Ambanis, Baba Kalyani, Munjals, Azim Premji etc. have joined pre-existing ‘edupreneurs’ with proposals for starting new universities.

There is no doubt that a severe infrastructural crunch within the higher education sector in India has been responsible for this paradigm shift. Right from the Ambani Birla report, 2000 to the Narayana Murthy Committee report, 2012 there has been a loud call for relaxing the regulatory environment paving way for corporate sector participation. Until recently, only a dismal 10% of India’s young people were going into higher education (compared to 50% in developed nations). As this changes, the sector needs to adapt to respond to the increasing demand.

The rationale here is to not vilify the upswing in the number of edupreneurs across the country but examine it in context of the rapidly transforming value, nature and goals attached to education, particularly when viewed through the lens of economics. This tryst of economics with education goes back to the writings of classical economists like Adam Smith (1776), David Chadwick (1862) and Alfred Marshall (1890). While the classical economists acknowledged the linkages between education and productivity, it was only in 1960s through the work of Mincer (1958) and Schultz (1960, 1962); and later Becker (1975), the formal economic theory conceptualising expenditure on education as investment, popularly known as the human capital theory, was laid out.

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Sep 17 2014

“The major obstacle which women need to overcome is the public perception about their leadership abilities” – Kalpana Unadkat

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KalpanaAccording to a new report entitled Women on Boards, women make up only 4% of the directors of publicly listed Indian companies. But this is due to change as a result of legislation introduced last year. Sonali Campion talks to Kalpana Unadkat, solicitor and co-author of the report, about the implications of the new law and the challenges facing women who aspire to senior positions in Indian businesses.

Could you give me the background to the new Companies Act? What are the implications in terms of women’s representation in business?

After a long wait, the Companies Bill, 2012 was passed for better corporate governance in India. The Companies Act, 2013 (“the Act”) replaces the old Companies Act of 1956 to introduce more accountability and good corporate governance. The Act and the Rules require every listed company and every public company with a paid up share capital of INR 1 billion or more or an annual turnover of INR 3 billion or more to appoint a woman director on its board. For existing companies, such woman director should be appointed by 26 March 2015 and appointment should be within six month from the date of incorporation. For listed Indian companies, the compliance date has now been extended to 1 April 2015 by Securities Exchange Board of India (SEBI). Previously, SEBI had set the 1 October 2014 deadline for compliance. However, based on various representations by India Inc. SEBI extended this deadline.

Representation of women at the board level is very significant. At present, in about 1,470 listed Indian companies, 8,640 directors are men and a marginal number of 350 are women. The introduction of women to the management of the company as directors is a welcome change as it gives women the opportunity to participate both in day-to-day decisions and strategy of companies. It is a clear signal that women have the opportunity to explore new heights in the business world. We are certain that much like mandatory requirements for membership in legislature in different parts of world (for example, Scandinavian countries), having one woman director on the board of a company would gradually boost the presence of women at senior positions in the corporate world.

Tell me about the origins of the Women on Boards report – what are its aims and how did you personally become involved?

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Sep 15 2014

How the Indian Army increased support for the Great War in the British West Indies

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Richard-Smith-1-158x200The major contribution of the Indian subcontinent to the British effort in the First World War is now receiving renewed recognition, not least by Lord Parekh in his June address to Asia House. As a historian of the Caribbean, Richard Smith has been uncovering how news of Indian mobilisation encouraged support for the war effort in the British West Indian territories.

This post forms part of a series on India and World War I. Click here to view more posts.

On 28 August 1914, the Marquess of Crewe, Secretary of State for India, addressed the House of Lords to support the deployment of Indian troops in Europe in support of the beleaguered British Expeditionary Force. Crewe asserted that the reputation of the Indian Army would be undermined if this suggestion was not acted upon, especially as France had begun to send battalions of the Tirailleurs Sénégalais from their African garrisons to the Western Front. The Marquess’s statement was widely circulated in the British West Indian press which commented favourably on the military prowess of the Indian Expeditionary Force (IEF). The Jamaican Daily Chronicle reported that “Great Britain will throw her splendid Indian troops against the German forces”. By mid-September, even before the first IEF troops had actually disembarked at Marseille, the Jamaica Times printed rumours that the Indians had defeated elite German regiments. The same paper later commented that the Indians were superior to the Germans and the equal of other Europeans, suggesting it was “almost a slur on our Indian troops to praise their success in the fighting in France as if it were a thing to be surprised at”.


West Indian regiment in their camp, France 1918. Image credit: flickr/National Library of Scotland

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Sep 12 2014

Please weight: when confronted by a large Indian statistic, divide by population

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maitreesh-ghatakdebraj_rayThe latest wealth index by New World Wealth that looks at multimillionaires has ranked India eighth in the global rich list. But Maitreesh Ghatak and Debraj Ray contend that looking at absolute numbers can be misleading. Accounting for population and economic differences across countries, it shows that while India does not stand out in terms of income going to the top 1%, it does in terms of income going to the top 0.1%.

The Times of India recently reported, not without a certain self-congratulatory air, that:

“The latest wealth index by New World Wealth that looks at multimillionaires — an individual with net assets of at least US$10 million — has ranked India eighth in the global rich list, below countries such as the US, China, Germany and the UK but above Singapore and Canada.”

This has certainly sent Indian cyberspace into a little tizzy. A common celebratory headline: “India has more multimillionaires than Australia, Russia and France!” And given that the largest number of the world’s poor also live in India, a common admonitory reaction is: “See? Told you so! India is just a corrupt society.”

It’s the population

This isn’t the first time we’ve been gobsmacked by the sort of numbers India can generate. Recently, farmer suicides did the rounds, with the already large numbers (around 300,000 since 1995) helped along by the Indian numbering system: read here for why some participants in a recent BBC debate had it wrong by a factor of 10. All quite understandable: India is so large that nobody has a real sense of the numbers anyway. This is why the following handy little motto should always be clutched close to heart and brain: when confronted by a Large Indian Statistic, consider dividing by the population.

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Sep 10 2014

The underbelly of the Indian boom

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Stuart_CorbridgeAlpaShahIn a new edited volume, Stuart Corbridge and Alpa Shah explore how the Indian economic boom is being experienced by the vast majority of Indians. Here, they offer an overview of the papers included and highlight key themes that emerged.

Talk of India being, or shortly becoming, a major economic power blithely disregards the fact that more than 800 million Indians continue to survive on less than $2 a day, or that just eight Indian states have more poor people than 26 of Africa’s poorest countries put together. Close to 450 million Indians are forced to subsist on less than $1.25 a day in purchasing power parity terms – which is where the World Bank now draws its international poverty line.

In our special issue of Economy and Society, now published as a book by Routledge, we explore how the Indian economic boom is being experienced by the vast majority of Indians, many of whom, far from being excluded from channels of economic circulation and market exchange, are ever more tightly snarled into its underbelly. The papers in the collection take the reader on a journey which offers insight into the themes of growth that fails to reduce poverty, informalisation, the re-emergence of debt bondage and the pacification of les classes dangereuses, as well as an assessment of the prospects for alternative visions.


The Bhilai Steel Plant. Image credit: flickr/Meghdut Gorai

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Sep 8 2014

The ‘Marwari’ business community is now a part of history

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Roy New Photo_238x238Tirthankar Roy looks at how the nature of the “business community” in India has evolved since the 19th century. He argues that modernisation and globalisation has resulted in a fundamental shift away from ethnic business networks to pan-Indian bodies.

For the business historian, India is a fascinating country. For centuries, its coastal regions traded with the world and enormous caravan trains moved grain and cotton overland. The coastal trade encouraged the European East India Companies to set up bases in ports like Surat, Masulipatnam and Hooghly in the 1600s.


Image credit: The Economic Times

Out of Indo-European trading enterprise three new port cities emerged in the 1700s: Mumbai, Chennai, and Kolkata. Between 1860 and 1940, employment in factories using machinery and employing wage-earning workers increased from less than a hundred thousand to two million.

The rate of growth in factory employment was above the world average, comparable with those of the other emerging economies of the time, such as Japan and imperial Russia, and without even a distant comparison in the contemporary tropical world. Who led this capitalist surge? The theory of entrepreneurship defines entrepreneurs as individuals who sense unusual opportunities and take extraordinary but calculated risks.

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Sep 5 2014

Book Review: Reforms and Economic Transformation in India, edited by Jagdish Bhagwati and Arvind Panagariya

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SwatiDhingra238x309How have the policies adopted by the Indian government since 1991 restructured Indian society? In Reforms and Economic Transformation in India, Jagdish Bhagwati and Arvind Panagariya summarise economic and social changes that took place in the post-reform era. Swati Dhingra writes the book is valuable reading for researchers and policy practitioners, but misses out on the interaction between social policy and economic reforms in transforming living standards.

Book coverReforms and Economic Transformation in India is the second volume in a series on Studies in Indian Economic Policies that aims to understand how the new policies adopted since 1991 changed the economic landscape of India. While the first book addressed the role of these policies in poverty reduction, this second volume evaluates their contribution towards structural transformation across sectors and enterprises, and social transformation through income convergence and entrepreneurship across social groups.

In this review, I discuss two overall contributions of the book. First, the book provides an easily accessible summary of a broad range of changes that took place in the post-reform era. Second, it raises the important question of why India experienced limited economic transformation towards modern industry.

While much work on economic reforms focuses on one or two aspects of the reform process, the main contribution of this book is to take up the challenge of examining different economic policies that are often implemented concurrently during liberalization episodes. For instance, the analysis goes beyond formal manufacturing firms to examine the changes that took place in services, public sector enterprises, entrepreneurship among socially disadvantaged groups and informal manufacturing. Further, it contains chapters with careful evaluation of the impact of previous economic reforms such as Chapter 7 by Goldberg, Khandelwal and Pavcnik on product innovation from tariff cuts on imported inputs. At the same time, it ventures into unresolved policy debates such as Chapter 5 by Kohli and Bhagwati on retail trade liberalisation.

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Sep 3 2014

Back to the brink in Pakistan

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S. Mahmud Ali argues the current protests in Pakistan are symptomatic of systemic dysfunction. Despite the peaceful democratic handover of power last year, the essence and purpose of the Pakistani state remain contested and an overarching national identity remains incomplete.

Pakistanis marked their 67th independence anniversary atypically. While tens of thousands ‘marched’ (in two motorised convoys) from Lahore to Islamabad to protest Prime Minister Nawaz Sharif’s leadership, millions of others worried about the outcome of this unusual outpouring of frustration. Led by two charismatic critics of Sharif, cricketer-turned-politician Imran Khan and ‘moderate’ cleric Tahir-ul-Qadri, the marchers vowed to besiege Islamabad until Sharif resigned. Although pro-government activists clashed with the protesters outside the capital, security cordons ensured the latter’s progress remained largely peaceful.

Khan and Qadri, the leaders of the political parties Tehreek-e-Insaf and Pakistan Awami Tehreek respectively, issued similar demands. Since last May’s parliamentary elections, which Sharif’s Muslim League won handsomely, Khan has complained that the polls were rigged and the victors corrupt in office. Qadri has also urged a ‘green revolution’ that would see moderate Islamist beliefs undergirding national governance and state behaviour. Until recently, the ruling party brushed aside all accusations, but as the convoys converged on the capital, leaders offered to investigate alleged vote-rigging. However, with Sharif’s vow to stay in office, and with little sign of compromise on either side, a protracted stand-off appeared inevitable.

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Sep 1 2014

The India-Pakistan relationship: From Delhi to Islamabad via Rawalpindi

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MattNelsonSharif’s presence at Modi’s inauguration was widely perceived by the media as a positive sign for India-Pakistan relations. But Matthew J. Nelson argues that although Sharif might be well-disposed to India’s new administration, increased trade and better relations will rely on India’s support for Sharif’s efforts to persuade the Pakistan Army of the benefits.

This post forms part of a new series on the India At LSE blog, India’s Foreign Relations Under Modi. Click here to see more posts.

Narendra Modi and Nawaz Sharif recognise that expanding economic opportunities via increased trade could pay enormous political dividends—for their countries and their parties. The economic and political landscape of South Asia is shifting rapidly. During the past 20-25 years, labour migration, urbanization, and an entrepreneurial spirit have fuelled a rapid expansion of opportunity (and, some would say, insecurity) across the informal sector. Today, tech-savvy young people rail against old-school forms of corruption tying South Asia’s self-serving bureaucrats to its notoriously venal politicians.

Prime Minister Modi has this young tiger by the tail, at least for the moment, stitching India’s lower castes, business leaders, and urban youth together with his traditional Hindu-middle-class supporters. But, in Pakistan, Prime Minister Nawaz Sharif is struggling. He continues to enjoy the support of most Punjabis—in the Punjab itself as well as in Balochistan and Karachi—but beyond this his outlook is uncertain. In the Punjab, urban youth are toying with the idea of shifting their support to Imran Khan; Karachi and Balochistan remain violently split along ethnic lines; and, across Pakistan, the PML-N’s traditional ties to right-of-centre voters are becoming tangled up with militants bent on tearing the country apart one sect at a time. Modi and Sharif are business-oriented politicians. Each sees the value of increased trade. Each believes that the benefits of trade ‘trickle down’. Each understands that economic optimism (however precarious) equals votes. They want to work together. But can they?

Modi & Sharif

Image credit: flickr/Narendra Modi

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