The dollar downing

 

No seriously, how much lower will the dollar go? It's gone lower beyond Mallika's neckline and even Rakhi Sawant's décolletage seems nun-like proper in comparison to this plunge. Is that how low it goes or will it plunge further?

78 per cent of Americans say that the economy is getting worse, according to a recent Gallup report. So we poor third world types better be ready for some tough times because the greenback today looks increasingly like what the Bangladeshi taka looked like a few years ago. It's safe then to say, "Dollar to do takey ka nahi."

Why if Karzai is given a free hand, the Afghani will be equal to the dollar. The ISI can then trade their ill-gotten dollars with the Afghani.

And those wealthy Indians, who stashed away dollars without Chidambaram's knowledge, weep copious tears because the taxman is having the last laugh. Your dollars are not worth the Samsonite suitcase it is packed away in.

Try traveling anywhere in Europe with dollars instead of Euros. You are met with stony looks at currency exchange counters. One gets the same look that Arab sheikhs got changing dinars few months after 9/11.

Recently in Moscow, I tried paying my hotel bill in dollars. I was politely and firmly ticked off. "No dollars here, or anywhere sir." I presume she meant anywhere in Russia, but she would probably not be too off the mark if she meant the world minus the US and England. Oh yes in England the Bureau de Change (as you would have gathered I hate paying commission fees) accept the dollar as if accepting 'shagun' from a relative. The US is their relative from across the pond, you see.

Once the oil barrel become a $100 and more, Americans will know what it feels like to be Indians, who hesitate to order a double iced, skimmed venti latte at Starbucks wondering how many nimbu paanis you could have bought with those Godforsaken dollars. With the rupee growing stronger there are more Indian billionaires than before we are told. K P Singh of DLF replaced Azim Premji in some billionaire lists. More power to our real estate maharajahs. They are the true blue blooded types in the new millennium.

Now, how about a Sahara Mall or a DLF Plaza in Texas? Right in the middle of Dubya land? The Texan product, George Bush, has brought the dollar where it is today. He just might take the Rupee to new heights. Of course he will welcome us Indians, after all he is our best bet, right Mr Prime Minister?

 

Courtesy: Economic Times

Coz that's where the Money is!

When legendary robber Willie Sutton was asked why he only robbed banks, his answer was rather simple: “Because that’s where the money is”. Investors follow a similar logic on the financial marketplace. They flock towards assets with the strongest growth characteristics, particularly during the later stages of a bull market when growth is in short supply.

Emerging markets have turned out to be the biggest beneficiaries of the Federal Reserve’s rate cut two weeks ago even though the primary objective of the US central bank’s action was to stabilize the US financial markets and limit the negative macroeconomic follow-through from the credit crunch. Within the emerging market complex too, markets with faster growing economies such as China and India recorded outsized gains despite the higher valuations already assigned to stocks in those countries.

This behavioral pattern is consistent with past cycles when any increase in global liquidity following a crisis headed more towards asset classes exhibiting relative strength rather than in the direction of weak performers. After all, most developing countries did not need any monetary help as their economies continue to grow at a rapid clip even in the face of a US slowdown. It is precisely such solid growth credentials that make emerging markets even more appealing for global investors who know it’s difficult to reinvigorate a weak asset class at this late a stage of the economic cycle.

The global economy has followed a remarkably uniform path over the past fifty years. Typically, a new economic cycle gets underway at the start of each decade and the rising growth tide initially lifts all the boats. Midway through the decade, central banks begin tightening monetary policy in order to pre-empt any inflation breakout. Higher interest rates always lead to financial turmoil in some part of the system.

Central banks then begin to adopt an easing bias, as the priority shifts to avoiding a wider crisis especially when inflation is usually not a major issue as yet. This sets the stage for a bubble in the few asset classes unaffected by the crisis as they were never in need of extra liquidity. By the end of the decade, the whole cycle begins to unwind with inflation ending being a more general problem as productivity gains diminish, leading to more concerted central bank action.

Japan in the 1980s and the US in the 1990s were winners of the late cycle boom. The scene is being set for emerging markets to be the mania of this decade. For the first time since the mid-1990s, emerging markets are now trading at the same valuation as developed markets. The price-to-earnings, or P/E, ratio based on one-year forward earnings is currently at 14 for both the asset classes. What most analysts tend to forget is that before the series of crises broke out in emerging markets in the mid-’90s, starting with the Mexican peso devaluation in December 1994, emerging markets used to trade at a premium to developed markets.

At the peak of their relative performance versus developed markets in September 1994, emerging markets were trading at a P/E multiple of 22— a 25% premium. The thinking back then was that emerging markets deserved to trade at a higher valuation given their stronger growth attributes. However, the disappointing earnings growth profile of companies in developing countries — due to their lack of focus on profitability and poor corporate governance — led to a substantial de-rating. Money fled to the US in a massive way later that decade with earnings growth exploding of US companies on the back of a tech-driven boom.

It’s remarkable that despite a more than a four-fold jump in emerging market indices over the past five years it is only now that emerging markets are trading at parity with developed markets in valuation terms. Earnings growth has been the main driver of returns for emerging markets but now it seems investors are once again gaining the confidence to pay a higher multiple for the asset class.

By the time this cycle ends, it’s likely that emerging markets will trade at a considerable premium. The power of P/E expansion is illustrated by the fact that if emerging markets get back to their 1994 P/E ratio of 22 it would translate into another 60% gain for the asset class. In addition, there will obviously be some earnings growth and even currency appreciation for the dollar investor.

P/E expansion is one of the most difficult concepts for financial analysts to comprehend. Many intangible factors drive this ratio, ranging from long-term growth and inflation expectations to just market sentiment. What history suggests is that as the breadth of a global economic expansion begins to narrow during the second half of a decade, investors tend to concentrate their bets in the few remaining growth areas.

Little wonder, capital flows to emerging markets have begun to accelerate following the credit crisis in the US. The challenge will be when inflation begins to rear its ugly head in the US or China — the main suppliers of global liquidity. It is important to understand that the Fed is currently able to respond to the credit crunch and cut interest rates because inflation is well behaved. In China, meanwhile, inflation is turning out to be a bit of a problem. However, the Chinese authorities have so far only taken incremental steps to tighten policy as they view food price inflation to be a non-monetary phenomenon and inflation minus food is rather tame.

Emerging markets are currently enjoying the best of both worlds: growth dynamics remain strong led by China while liquidity is abundant as the Fed reacts to weak US growth. To prevent a bubble, central banks in emerging markets will need to de-link their monetary policy from the US. But with inflation not yet a major concern in many developing economies and China reluctant to let its currency appreciate in a meaningful way, central banks are in no hurry to engage in any major regime shift. It’s no surprise then that global investors are piling into emerging markets, as that’s where the money is.

Blue Shirt With A White Collar

Yuppies have been one of the central characters of the well-chronicled "India Shining" story. No account of the country's economic surge would be complete without glowing references to record salary increments, unheard of perks and a massive consumer spend fuelled by the emergence of the rich twenty something professional. The brightest, smartest, wealthiest and the youngest of footloose Indian executives – mostly living in big cities and swanky offices – hog all the limelight and make it to glossy magazine covers. We've been swamped by heady accounts of freshly minted Bschool grad and IITians striking it rich or of compulsive IT and BPO job hoppers who manage to nearly double their salary with every move.

But in reality, white-collar workers or those in supervisory, non-manual jobs are very different from the popular mediahyped imagery. Contrary to the stereotypes, most of the white-collar employees are over 35, and have put in almost 12 years in the profession. And anybody who spends at least five years in a job won't qualify as a job hopper. Half of the whitecollar workers are plain graduates drawing an average monthly salary of Rs 13,000. Around 70 per cent belong to single-income households and an equally big number of them come from non-metro cities.

Just when you may have decided to switch off on this strange breed, here's what might sound familiar – 8 out of 10 want to change job in the next six months - salary being the biggest grouse.

For the world, white-collar workers in India have a glamorised face often referenced to signal the surging fortunes of a nation on the rise. Dominant themes around fat salaries, multiplying job offers and global work environment for the jet-setting lot provide easy and dazzling imageries of a changing India.

In reality, the world of executives is changing – though not as fast and as dramatic. What's the real face of white-collar workers? Where and how do they livework ? What do they aspire for? Has the job-hopping bug hit all? Is salary 'The Factor'? The Corporate Dossier-Juxt-Consult, an online research arm of Indicus Analytics, conducted one of the largest studies to understand and unravel white-collar workers in India. With 16,500 respondents, covering 4,700 companies in 31 cities, the study has been designed to represent 160 million urban Indians.

They aren't as glossy as often perceived. The survey reveals a face that's middle-aged, conventional, stable, mostly graduates with a majority (8 out of 10) employed in the private sector. With 68 per cent living in non-metro cities and close to 46 per cent drawing a monthly salary of less than Rs 13,000, "their white collars appear greasy – not starched," says Sanjay Tiwari, director, JuxtConsult. Only one in eight are very well off having more than Rs 50,000 monthly income.

But that's a face that's changing dramaticall . In the next seven years, India is expected to add around eight million new workers every year – one in every four new worker in the world will come from India. This will happen at a time when the government's role is increasingly shrinking both as a job creator and attitude influencer in India's job market as private sector outpaces them. "Stable, 9-to-5 job with defined predictable career-paths - everything that defined a government job is getting redefined," says economist Laveesh Bhandari who also heads Indicus Analytics.

These shifting tendencies are already beginning to show.

While in one hand average white-collar workers (surveyed) have spent close to five years in their last job, a high 80 per cent say they will be open to or may consider a job change in the next six months and one in four aspire for ESOPs. The stability-loyalty on the surface is being stirred by a dramatic questioning of norms on the inside. If nothing, this shows a growing willingness to experiment across age, hierarchy and sectors. White-collar workers will change in many other ways. The entry-level age – of 23 years that the survey reveals – too is coming down with the younger generation. It is expected to settle around 20 years, experts say.

So far clerical jobs of accountants, general management, administration dominated the entire pool comprising 33 per cent of the total. Emerging but critical functions of the future like IT, HR, designing comprised barely 7 per cent, 3 per cent and 5 per cent respectively. As the services-led economy grows, some of these new upcoming functions will gain importance even as some of the old clerical jobs get eliminated due to automation and standardisation of processes. "Changing nature of economy will demand a new definition of white-collar workers," says Manish Sabharwal, chairman, TeamLease.

Communication skills, basic computer literacy – softer skills will become critical for gaining entry into this class. Madras University has made it mandatory for postgraduates to clear a course on soft skills. CII in partnership with BPO firms is helping train 250 teachers in Chennai for the course. After the pilots, the course will be made mandatory for the undergraduates as well.

There's another potential area of change in the SME segment. Forty per cent of the white-collar workers are from SMEs where productivity and efficiency levels are poor. The survey reveals that on an average, one senior manager manages only six white-collar workers, the ratio getting better with size. "I see that already changing," says B Santhanam, chairman, national committee (HR), CII.

Absence of processes and lack of standardisation means higher level of human intervention required – this is what explains the poor manager-worker ratio. Smaller companies, growing rapidly, are actively looking at automation and outsourcing of non-core functions to improve efficiency levels. "This is the only way they can handle growth, attrition and employee aspirations, they realise," says Santhanam.

Overall, only 30 per cent of the whitecollar worker households come from multiple income households (read working spouse). This dips further in the government and PSUs to 20 per cent of the families as against 33 per cent in the private . Further, most under Rs 20,000 income households are single income and the likelihood of it being multiple income rises as one moves up the economic ladder. Both the drivers for a working spouse – better incomes and more private sector jobs – will only strengthen in future.

But what doesn't seem to be changing is the geographical skew in jobs available for white-collar workers. So far it's the government and PSUs who have been the biggest creator of these jobs in the north and east whereas private sector has dominated the south and west India (66 per cent of the jobs). As the government vacates its role in larger number of economic sectors and private sector jobs outpaces them, this skew will intensify in future . "You will see lot of political reaction on issues like reservation etc going forward ," says Abheek Barua, chief economist , HDFC Bank.

Simply because a large chunk of new workers will come from the northern and eastern part of the country where fertility rates are still higher whereas more jobs will be created in the west and south. But remember, a large part of India's workforce will remain in the self-employed segment, warns Ajit Ranade, group chief economist, Aditya Birla Group. Poorer BIMARU states like UP and Bihar, with weak educational infrastructure and even weaker job prospects, are adding more workers.

The transition from blue to white will be a long and ardous journey.

Courtesy: Economic Times

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The sweet and sour Indian story from Viswanathan Anand

(The author is world chess champion, Viswanathan Anand)

In 2007, as we complete 60 years of Independence as Indians, we seem to have got a new sense of identity. Not just the kind of identity that comes from having Aloo Tikki burgers or Bollywood pop but a true sense of being a country. As we add to an impressive list of billionaires and top class corporate, Indians are extremely proud of seeing the Indian Tricolor fly high.

For me personally, becoming World No. 1 meant that it was not a first for me but a first for my country. Recently I was with the mayor of a picturesque German town. She mentioned that they were now keen to have Indian tourists rather than Japanese. This was an eye-opener. She said Indians came, stayed at the best hotels and spent on fine food and wine. They were not keen on mass tourism in crowded buses. This is a paradigm shift. India is now seen not as a country with a future but a country where the purse strings are beginning to open and the purse itself is bulging. As the Sensex zooms to new levels, Indians silently feel that the country is prospering. Images of patriotism are now new symbols of prosperity.

All this makes me feel very proud to be part of a country that is rich in its past and more likely in the future.

Recently a Spanish magazine ran an article on the state of Indian women. To say the least it was highly derogatory and general in its assumption. My wife called the editor to complain about the lack of sensitivity and the general assumptions made to call all Indian women subservient and modern-day slaves. It was most saddening to see that some countries perceive us as an impoverished society. The fact that we have elected women as President and Prime Minister, CEOs, traveled to space didn't cut. The answer was coldly that "but most of your women don't have a chance".

Although I hate to admit it, female infanticide still exists in certain states. It is altering the gender ratio in some states that are among our more prosperous states. This is what is disturbing -- economic wealth alone is not an indicator of social progress. We have women at two ends at the spectrum fighting against odds to achieve. For some, the odds are just life and death.

As we power ourselves to be the knowledge powerhouse of the world, we are proud to bring computers to the farmer. I have myself seen such touching examples of women using the stone they use to roll chapattis as mouse pads. Micro credit has been a boon to many farmers and big corporate have come up with novel ideas of giving the farmer a better deal. But being a highly fragmented country you see some farmers self-immolating themselves for the lack of the very same privileges some of their fortunate brothers now seem to use as normal business practices.

I have travelled to many countries and met Indians in countries like Iceland and Estonia. The one striking feature is we blend in very easily. We are able to assimilate other cultures and never impose our beliefs on others. Somehow we are able to leave that baggage at home. When I hear of untouchability being an issue or caste issues being raised it rattles this equilibrium.

It takes just one tale like that to mar 100 perfect images of the Indian story. It then becomes the story we get identified with. When someone asks me which caste I belong to or does my caste mean I go to heaven, I, honestly, have to say I don't think of it. My main aim in life is that I play chess. They always find that answer irritating or rather un-mystic. But somewhere they have been given to believe that that is what India is.

There are two perceptions of India. One, of the people who have interacted with India from the economic side, have worked with Indians or travelled on business and they generally have a fairly positive one. The others get their perceptions from reading general articles. Most articles are fairly complimentary when they talk about culture, colors or customs. But sometimes dowry, female infanticide or caste violence will raise its ugly head. There are foreigners who have been to India and have been mesmerized by the experience. There are some who have gone and the only thing they seemed to have noticed are the cows and poverty. In some western countries you do notice similar things but somehow I find it difficult to tell a person that "in your country you know, I hate the way the trains are".

We now seem to shop the same way as our American cousins and truffles and foie gras are something you buy in your local delicatessen. But you look closer. These brightly lit stores need generators to battle the unstable electricity grid that is reeling under the weight of our consumption. The water has to be specially brought and the roads feel like one roller coaster journey until you arrive at the cool Indian mall. We need to go beyond the shop window and actually look at how to improve basic utilities. Not just in cities but also in rural areas. That is how progress is measured .Many of our people still having no access to drinking water. Roads need to exist and electricity at times becomes a luxury. I am not against consumerism. Brightly lit malls are also providing employment. I think each one of the Indians has a right to be a consumer not only for goods but also for utilities and we need at least a basic level of service. Aspiration and the need to live better will make Indians more competitive and drive the need to study more. Aspiration, albeit not for just luxuries, but also equality, education and emancipation.

I recently travelled on the Delhi metro. This was one of the best public transport services I have ever been on. I am one of those people who take my carbon emissions seriously. So I love using public transport if and when possible. The Delhi Metro is much cleaner and safer than its European avatars. We handle more crowds but still the people seemed to be almost proud of it and that dirtying it would be a crime. It is the same India with its same bureaucracy that made this possible.

Similarly certain roads in India are just world class. If we could do it in a few sectors why can't we be able to take it to the whole country?

It takes time, resources and initiative. We have the talent to make it happen.

All of us feel extremely proud when we watch the Incredible India campaign. But sometimes we need to look beyond the glossy picture and look at the real story. The real story in India is not always sweet or always sour. Taking both together may make it the best taste yet.

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In London, more chronicled and more vibrant India at 60 forced little blood-brother into shadow!!

Pakistan was forced into the forlorn shadows even as it marked its 60th birthday, as British and European news coverage focused on Indian Independence day and "the arrival of a golden (Indian) age".

In an unusually thoughtful, if nuanced, nod to India's rise to prominence on the world stage, the former Raj marked the eve of Indian Independence Day with a paean to India, almost ignoring the fact that it was the 60th year of Pakistan's existence.

Mainstream British newspapers have been running 'India at 60' series, while The Times , London produced a special India supplement and The Guardian devoted its entire features pull-out to "The New India". The Guardian's India special's theme was expressed by its cover headline: "This is the best place in the world to be born right now".

Tuesday's India specials are the culmination of a fortnight-long focus on India by the British press.

They include The Independent 's attempt to answer the question, "60 years after Partition, why is India doing so much better than Pakistan?"

The paper said, "Now, at the age of 60, India's image is that of a resurgent, confident regional power racing to compete with China and the West. Meanwhile, Pakistan's image - at least in the West - is as a broken, backward country that provides a safe haven for extremists."

But in an acid corrective, it said these perceptions may not be entirely accurate. It pointed out that while India's "economy is currently growing at about nine per cent a year. Pakistan's is also growing.

One government minister said recently it was the third fastest-growing economy is Asia. Over the next four years it is expected to grow at about six per cent. The UN Human Development Index - which measures a series of economic and lifestyle indicators - ranks Pakistan 134th out of 177 and India 126th. In India and Pakistan, life expectancy is 63.6 and 63.4 years respectively, the adult literacy rates are 61 per cent and 49 per cent and the GDP figures are $3,139 and $2,225."

The Daily Telegraph , meanwhile, headlined the third part of its 'India at 60' series, "Independence has failed to reduce poverty". The piece quotes 60-ear-old Nanu Singh, "an almost toothless villager" on "what six decades of freedom and 20 years of economic growth had brought him... kuch-nahi ...I was a poor boy then, and I am still a poor man now."

The paper points out that "Without education or good health - 49 per cent of Indian children under six are malnourished, as can be seen from their stick-thin limbs and vacant stares - it is impossible to break the poverty trap."

The sobering assessment of India's astounding failures and equally eye-catching successes is seen to be typical of Britain and much of Europe's cautious optimism about 21st century India.

South Asia-watchers here point out that every Western article about India's remarkable rise is balanced by eye-watering accounts of its poverty, casteism, corruption, poor governance and the growing divide between rich and poor. But this, they say, is not necessarily a negative thing.

"There is no such thing as bad publicity," said one British academic, pointing to Pakistan's unmissable half-life as the country less chronicled than its bigger, more vibrant blood brother.

Source: TOI

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Time celebrates India's awakening as a young giant

There is hardly a board-meeting finishes in the world without discussing India, and there is yet a lot to be done, Time comes up with an special article on the awakening of India ...the most prosperous economy of tomorrow!! Here is the gist sourced from economic times...

Sixty years after independence, India is beginning to deliver on its promise, "unleashing a torrent of growth and wealth creation that is transforming the lives of millions", says Time magazine in a special cover issue.

"India's economic clout is beginning to make itself felt on the international stage, as the nation retakes the place it held as a global-trade giant long before colonial powers ever arrived there," says the US magazine's Aug 13 issue.

The special issue on "A Young Giant Awakes" has articles looking at the country's middle class, religion, politics and the transformation of its economy, besides a write-up profiling the conflicts, trends and turning points that shaped modern India.

"Twenty years ago the rest of the world saw India as a pauper. Now it is just as famous for its software engineers, Bollywood movie stars, literary giants and steel magnates," notes Time.

"It is worth remembering this as India aspires to superpower status, economic futurologists all agree that China and India during the 21st century will come to dominate the global economy," says William Dalrymple, author of "The Last Mughal: The Fall of a Dynasty, Delhi 1857".

"Various intelligence agencies estimate that China will overtake the US between 2030 and 2040 and India will overtake the US by roughly 2050, as measured in dollar terms. Measured by purchasing-power parity, India is already on the verge of overtaking Japan to become the third largest economy in the world," he says.

"Today, things are slowly returning to historical norms. Last year the richest man in the UK was for the first time an ethnic Indian, Lakshmi Mittal, and Britain's largest steel manufacturer, Corus, has been bought by an Indian company, Tata.

"Extraordinary as it is, the rise of India and China is nothing more than a return to the ancient equilibrium of world trade, with Europeans no longer appearing as gun-toting, gunboat-riding colonial masters but instead reverting to their traditional role - that of eager consumers of the much celebrated manufactures, luxuries and services of the East," says Dalrymple.

Another article notes how real estate prices have skyrocketed in India. A 2006 study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and professional-services firm Ernst & Young found that total revenue from sales of commercial and residential property throughout India had grown 30 percent a year for the previous three years.

Land prices in some areas have tripled in value since 2004, while office rents in Mumbai and New Delhi are now more expensive than those in Paris, Hong Kong or midtown Manhattan, Time says citing a 2007 survey by real estate consultant CB Richard Ellis.

"Yet the boom may still have room to run. Merrill Lynch forecasts India's property industry will grow to $90 billion by 2015, up from $12 billion in 2005," it says, noting that "as its economy grows, India will need millions more square feet of offices as well".

"Industry analysts estimate India has less modern urban office space than a single large American city. India's infrastructure demands too should keep plenty of companies in business. The government estimates the country needs $320 billion of investments in roads, ports and bridges by 2012.

"It's not a bubble," says Arjun Divecha, the California-based manager of investment firm GMO's $15 billion emerging-markets fund. "In India the reason why prices have risen so rapidly is because there has been so little increase in supply. If you look at the experience of other emerging markets, the real wealth escalator has been real estate and I expect the same in India."

Another article on "India's Democratic Advantage" says "sixty years of freedom have bound all Indians, rich and poor, to a single commitment: democracy".

"With a sixth of humanity living within its borders, India is more linguistically diverse than Europe. But apart from a few hiccups along the way, it remains one of the most stable and unified societies in all of Asia," Time notes.

Source: Economic Times

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India calling

If America makes it too difficult for immigrants to start their companies in the US, these entrepreneurs will be welcomed in India

The United States Congress recently considered reforms to the US immigration policy. While no reforms were enacted, the debate in Congress — and across America — revealed that many Americans still think of immigration as an issue about low-skilled people, mostly from Latin America, who drive down wages for native-born Americans. Very little attention was paid to the high-skilled, highly educated immigrants from countries such as India, China, the United Kingdom and Russia who seek to enter America legally but are often dissuaded by the lengthy wait required to receive a small number of green cards.

The US ignores the needs of these immigrants at its own peril. A recent study completed at the Pratt School of Engineering at Duke University showed that these entrepreneurial immigrants are using their skills, as well as the opportunities for business development present in the United States, to boost economic output and create more jobs for American workers. The effect of Indian entrepreneurs on US economic growth is particularly noteworthy.

The study, of engineering and technology companies created between 1995 and 2005, found that in 25% of these companies either the chief executive or lead technologist was foreign born. In 2005, these immigrant-founded companies alone produced $52 billion in sales and employed 450,000 workers — enough jobs to hire all the skilled engineers the US has admitted over the last decade, and then some.

The study also found that most immigrant entrepreneurs in America did not enter the country with the intention of starting a new business. In fact, less than 2% did. The vast majority came to pursue work or educational opportunities. On average, immigrant founders launched their firms 13 years after they arrived in the US.

This makes sense. Immigrants may not be fully aware of the opportunities for business development in the United States. Furthermore, coming from countries that have less developed and often more bureaucratic economies, they may not realise how relatively easy it is to start a business in America. The US economic environment is one that's supportive of entrepreneurship — reasonable taxes and regulation, enforceable contracts, and a highly motivated, well-educated workforce.
Most of the companies started with the help of immigrants are small and growing technology and science firms. But some have already reached global prominence. Yahoo's Jerry Yang is originally from Taiwan, Google's Sergey Brin is from Russia, and Vinod Khosla, a founder of Sun Microsystems, hails from India.

The study also found that in science and technology fields, innovative entrepreneurship is correlated with high levels of education. We infer that people with advanced degrees possess the qualifications, and the confidence, to bring novel and useful contributions to the market. Among the immigrant founders surveyed, 96% held advanced degrees, mostly from US institutions. Most of these advanced degrees were in science, technology, engineering, and mathematics.

Indian immigrants, in particular, tend to be better educated than both native US citizens and other immigrant groups. While less than a quarter of US citizens hold a bachelor's degree, more than two-thirds of Indian immigrants have a college education. And nearly 40% of Indian immigrants in the US hold a graduate or professional degree — the highest rate of any immigrant group studied.

While one might have expected that most Indian entrepreneurs in America were trained at the elite Indian Institutes of Technology (which graduated Vinod Khosla), the reality is that just 15% of Indian entrepreneurs in America earned degrees from an IIT. We were surprised that Delhi University graduated as many such entrepreneurs as did IIT-Bombay, and Madras University graduated more than IIT-Madras. Indian entrepreneurs we surveyed attended more than 40 different universities in India before arriving in the US.

India's education system appears to offer a growing range of opportunities for students to pursue the kind of science and technical education they once could only find at elite schools or abroad. Perhaps because of the advanced educational achievements of Indian immigrants, they alone have generated a substantial portion of the jobs and economic output created by foreign-born entrepreneurs in the US. In fact, Indians founded more engineering and technology companies in the US in the decade leading up to 2005 than the next four immigrant groups combined — those from the UK, China, Taiwan, and Japan. Indian entrepreneurs accounted for 26% of all immigrant-founded start-ups, about 117,000 jobs, and $14 billion in revenue in 2005. In a very real sense, Indian immigrants have helped drive US high-tech leadership.

But the US faces a problem. While Indians who emigrated to America for education and work traditionally remained in the country in great numbers, more and more are now returning home, choosing to put their skills to use in India's growing domestic tech sector rather than waiting up to ten years for a green card in the US. According to NASSCOM, some 20,000 Indians living in the United States have moved back to India in just the last two years. We believe there are over 100,000 more who may be forced to leave because of visa processing delays.

Until now, the United States has been seen as the premier centre of both education and job opportunities in innovation industries. But with globalisation and communications technology driving the growth of high-tech centres outside the United States, today's scientists and engineers have many more options for launching a successful career.

Given the growing prominence of India's high-tech sector, the United States could also face a situation in which Indian students who once would have gone to study in America — and then stayed to help launch new, job-creating ventures — decide instead to remain at home. Sure, this would make some immigration-sceptical Americans happy, but it would do no favours for those who want to keep the US at the top of the global high-tech industry.

America's loss could be India's gain. While once the Indian government lobbied US lawmakers to provide more green cards for Indians seeking training and education in America, we expect it will not do so in the future. In building its own high-tech industry, India has used the United States as a training ground for its own scientists and engineers. And while Indian emigrants remained in America, the Indian government benefited from revenues they sent home.

But now India is booming — clearly one of the world's most promising emerging economies. It wants its own citizens to come home, or to stay home. It needs all the skilled workers it can get in order to continue the progress already made in attracting world-class talent and businesses to its shores. Indians who have the skills, the connections, and the business savvy to launch entrepreneurial ventures will be encouraged to do so at home. The message is clear: if the United States makes it too difficult for immigrants to start their companies in Silicon Valley, New York, or Boston, these entrepreneurs will be welcomed in Hyderabad, Bangalore, and Delhi.

(Co-authored by Robert Litan, Vice President for research and policy at the Kauffman Foundation. Wadhwa is executive in residence at the Pratt School of Engineering at Duke University and a founder of two software companies.)

Source: Economic Times

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TCS and Ferrari - A strange combination or is it?

At 2 pm on race day when rubber hits the road and the world's eyes are on the race track – TCS is ready to deliver certainty with speed for Ferrari- even at 350 km per hour Cutting-edge solutions delivered with speed and precision and the constant search for excellence and innovation had led to a partnership between the makers of one of the world's fastest and most famous red car and Asia's largest software company. TATA Consultancy Services and Scuderia Ferrari have crossed yet another milestone on their journey, completing three years of a successful relationship. In 2004, in a unique initiative both the companies had come together where teams of engineers and specialists from TCS provided IT and engineering services and assist in the development of the Formula 1 racing car and the Ferrari sports car. The F1 car is the most complex and advanced car platform in the market, packing research in aero dynamics, engine technology, brakes, tyres and modelling to name just a few. An F1 car is a feat of engineering in many domains. It has more in common with a jet fighter than it does with a normal car. Experts compare it to a moving solutions platform that tests not only the stamina of the drivers but also mechanical and electronic systems that have to perform under levels of extreme stress. Goalposts shift dramatically every moment and pressure to deliver is a constant. From car electronics to safety, aerodynamics to trouble-shooting, TCS works with the F1 team to provide IT-based solutions before, during and between races. A Formula 1 entry, as part of Ferrari's technology team is a feather in the cap for TCS, showing that the Indian industry leader is now part of an elite group that is driving the future of technology worldwide. Collection and processing of millions of data elements with speed and accuracy is daily business at Scuderia Ferrari, the Maranello, Italy-based home of the car manufacturers. While glamour and speed is what attracts millions of viewers to the races, a lesser-known fact is that increasingly, TCS has also delivered cutting edge engineering solutions to several customers in Europe in the automotive, aerospace, heavy engineering and automation domain. TCS remains the first and only Indian company to enter the F1 stadium alongside the most famous occupant of this global arena.

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The Indian growth story is widely inclusive

The leftist critics are right when they say India's record GDP grow-th is bypassing rural millions. This tragedy arises from massive government failure to provide decent education and infrastructure to every village despite 60 years of gargantuan but wasteful spending. India's cities have been connected to the global economy and have taken off. The villages have not.

But does this justify criticism that 9% GDP growth benefits only a thin upper crust of the population? Not at all.

No economy can grow at 9% unless a wide swathe of people simultaneously increase their productivity and output. Caveat: in small economies, a single mineral deposit can raise GDP without widespread citizen involvement. These exceptions apart, 9% growth is rare across the world precisely because it is so difficult to rapidly improve the productivity of most of the population.

The plain fact is that 9% growth cannot be non-inclusive. It can be achieved only by aggregating the efforts of hundreds of millions. Now, widespread inclusion is not the same thing as complete inclusion. Significant sections are excluded in India, especially in badly-governed states. Still, 9% growth is widely inclusive, and could never have been achieved by a thin upper crust.

Mobile phone connections in India are growing at the rate of six million per month, or 72 million per year. With telecom towers coming up in rural areas, the number of mobile connections is expected to soon hit 500 million. Clearly, this represents wide inclusion, not a thin upper crust.

The number of households with TV sets was just one million in 1980, mostly black and white TVs. Today, 120 million households have TV sets, mostly colour TV. When close to two-thirds of all households have what was an elite privilege in the heyday of socialism, let us celebrate this as a success of inclusion.

Forbes magazine's list of dollar billionaires has two new Indian entrants, K P Singh of DLF and Ramesh Chandra of Unitech. Critics find it awful that Singh and Chandra have so much wealth when others have so little. But Singh and Chandra used to be non-entities, and have become billionaires only because the price of the few thousand acres they own has skyrocketed. The same price rise has benefited every home and farm owner. Urban land in Delhi goes for Rs 2 lakh/square yard, and rural land in Haryana sells for up to a crore per acre. So, rising real estate prices are actually very inclusive. They benefit all from the jhuggi owner to the small farmer. Even those recorded as landless in rural India have homesteads. A small minority with no house or land at all have missed the bonanza. But the vast majority of Indians have gained.

India's 9% growth is not, as some people think, due largely to the information technology (IT) exports. Indeed, India's National Accounts do not even list IT services as a separate category. These services are lumped into the category 'real estate, ownership of dwellings, business and legal services'. The real impact of IT is grossly underestimated by official data, since GDP is based on a historical composition of the economy, where IT had a tiny role. If you exclude IT altogether from GDP, the growth of the rest of the economy will probably be 9%.

Services account for most of the economy. The largest services sector is 'trade hotels and restaurants', which has been growing at 8-10% for many years. This is not run by the Ambanis or software giants.

Millions of urban and rural folk are employed in trade. Hotels and restaurants mean, overwhelmingly, dhabas, pavement vendors in cities and tea-shop owners in villages. Our formal statistics have no good way of measuring this unorganised sector, and so unfortunately miss large parts of it.

Activist Madhu Kishwar estimated some time ago that almost half the households in Delhi were engaged in street hawking and cycle rickshaws. Both these activities are largely illegal, and hence, poorly captured properly by official data.

The fastest-growing sector is communications (23.9% in 2005-06). The telecom revolution benefits a wide swathe of people, not an upper crust. Transport, another fast-growing sector, also benefits a wide swathe. Finance and insurance are booming. Millions of the uninsured now have cover. Consumer credit has spread the benefits of credit to millions of buyers of TV, white goods, vehicles and homes. Micro-credit has reached over 10 million poor women.

Official data show that almost 60% of Indians are engaged in agriculture. This is misleading. Agriculture is a seasonal occupation. Most rural workers do multiple casual jobs. A rural worker who spends 51% of his time in agriculture is classified as agricultural, even though 49% of his work may be in services, construction and rural processing. One study estimated that 70% of new rural jobs for women were in construction (which is growing by 14%, and employs millions).

If all Indians participated in today's boom, i imagine GDP growth would be 15%. Clearly, we need more inclusion of those left out today. But equally we must scotch the notion that only a thin upper crust of Indians is benefiting. India's growth is widely, though not fully, inclusive.

Source: TOI

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It’s not size, but quality & price that matter!!

At a time when the economy is growing, it's not surprising that corporate India's need for capital to finance expansion and acquisitions too has increased manifold. Consider this: In CY 2007 till date, the total amount of capital raised from the primary market has reached a whopping Rs 12, 041.68 crore. But June 2007 will be remembered for witnessing India Inc's largest fund-raising exercise ever. Of the total Rs 12,041.68 crore raised till June 20, nearly Rs 10,000 crore has been raised in June alone.
A couple of issues are lined up to hit the street, where more than Rs 13,000 crore will be mobilised from the primary market in June alone. This will take the total resource mobilisation in June 2007 to more than Rs 25,000 crore. Also, nearly 17 issues which has got approval from the Securities and Exchange Board of India (SEBI) will shortly hit the market whose total fund-raising plans are around Rs 7,400 crore.

Says Girish Nadkarni, COO-Institutional Banking & Institutional Equity, IL&FS Investmart: "The Indian IPO market has become really strong with variety of companies from different sectors approaching the primary market for raising capital. There is a huge potential in the Indian IPO market and the total capital raising activities in 2007 will surpass all previous figures. Liquidity in the Indian market has never been a major issue as most of the money has been coming from institutions." In CY07, it is not the number of issues that mattered the most, but the sheer size of each issue, which grabbed the headlines. Market players expressed a lot of concern about these mega issues, which could potentially suck out the available liquidity in the market. But to everybody's surprise, these mega issues did not have any negative consequences on other activities of the capital market.

Shrugging off liquidity concerns, mega issues of DLF Ltd and ICICI Bank's follow-on public offer (FPO), which is currently on, received good response from various categories of investors.

The Indian market has proved it several times that those issues, which are well priced, were able to successfully sail through, receiving good response from all categories of investors compared to those issues, which were overpriced. Market experts say size doesn't matter but the quality of the company and pricing decide the success of any IPO.

According to Arun Kejriwal, director, KRIS Capital: "The expectation of investors on post listing is a key factor for the success of any IPO. If the issue is well priced and investors think that they can make money post listing, those issues have received good response from investors."

Citing the example of ICICI Bank, Kejriwal says, "The ICICI Bank FPO is the single largest issue by any company in India. Still, it received good response from investors on the first day of subscription. But at the same time if we take the example of Cairn India, it got poor response from investors, which was considered overpriced."

Most of the issues in CY07 generated more response from the qualified institutional buyers (QIB) category, which one could easily argue is because 50% of the total issue size is reserved for them. But if we carefully see the figures, with special focus to oversubscription in this category in each IPO, one fact which is proved beyond doubt is the confidence reposed by foreign investors on the long-term India growth story. But on the other side it also reveals the stark reality of the hegemony enjoyed by these institutional fund houses over the Indian market.

Source: The Financial Express

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Camels in the desert ...One of the best pictures of the year!!

Watch it closely and you'll get what is so great about this pic.

Thanks to: Bhargavendra Tripathi

ICICI played mindful and tricky game in pricing its FPO

As I was pretty tired yesterday evening, I didn't get a chance to go through business pages, which is unusual, but sometimes it happens. Being an auxiliary activity for me since last two years now, equity market has become a very real part of my daily life. It so happens that in late evening a friend of mine conveyed me that ICICI has declared its price-band and its 885-950. My first reaction was "oh my God its another DLF, it has put an aggressive price as well". But as I started going through its RHP and other news, I realized it's mindful and tricky too!

Huge money is involved in market, talented minds too… Institutional buyers are getting smart and the firms smarter…

Well, for all those who are wondering what I am talking about, read this, where I've put whole saga about ICICI FPO in financial and technical terms.

If you have even niggling idea about equity market and how it goes, you must be knowing, its more unpredictable than a cricket match where India plays and much more vulnerable than wendy house made in sand-heap at sea-sore and much more filled with floating information than any page of well known matrimonial site.

When you go finding about ICICI FPO in news, amid all brouhaha, you'll be left confused. I am trying to make a point here.

Somebody said to me once, if you have to find how rich a person is, don't look for his branded cloth, watch, perfume or tie; instead look for his shoes… the idea is very clear, if you have to find how a firms fundamentals are, don't look for those orbits where everyone is managing beautifully, but look for how it is performing where others concentrate very little. Look how fundamentally strong a company is where others don't care…

When it comes to ICICI, I read somewhere its Hinterland to foreign soil, and it certainly is.

With a strong franchise, the parent bank has its growth drivers firmly in place. Offering a wide range of products from credit card to mortgages, the bank is a clear market leader in the retail segment, which constitutes about 65 per cent of its loans.

While the retail market has grown in the range of 30-40 per cent over the last three years, ICICI Bank has consistently beaten the industry with a 60 per cent growth each in 2004-05 and 2005-06, and 39 per cent in the last fiscal, a slowdown mainly due to fluctuation in interest rates.

The retail market is expected to grow at 20-25 per cent in next few years and going by the past track record ICICI Bank should outpace the industry growth rate. Brushing aside the rising interest rate impact on loans, Kalpana Morparia, joint managing director, ICICI Bank, said that the bank expects to grow its retail business profitably.

After making its presence felt in the urban retail segment, the bank is turning to opportunities in the rural sector. Though the urban retail segment will continue to be the bank's growth engine, ICICI Bank wants to reach the consumers in the hinterland, not serviced by banks currently.

"We feel that if properly serviced, rural areas can offer greater opportunities than even retail," says Mulye. To grab this opportunity, the bank has formed a multi-product and multi-channel strategy primarily by partnering with various micro-finance organisation, self-help groups and even corporate targeting the retail as well the SME customers.

Also, looking at the big volumes of cross border M&As, growing aspiration of Indian companies to have a global size and to meet the needs of the NRI population, the company is looking forward to enhance its international presence. Currently, the bank has the largest international business among Indian banks with presence in 18 countries outside India.

Currently, this forms 19 per cent of its total consolidated balance sheet. Going forward, the bank will also focus on the international retail i.e. fees and liability (deposits) generation business. It already has a 25 per cent market share in inward remittance market of $28-30 billion.

In total, banks shoes are firm and robust and certainly a branded one.

There is real good scope for good medium/long-term returns, given the prospects for the core banking business, strong brand value and possible contributions from the insurance subsidiary. Moreover ICICI strategically has provided Rs. 50 discount to lure retailers, which certainly is a plus point and it diminishes downside risk to a large extent. Unlike Vishal retail, here the scenario of having " too good a news is a bad news" can be ruled out, as its huge issue size won't let it oversubscribed in double digit in any case in Retail section.

Having said all that, one cannot expect it to grow overnight, may be in adverse situation its price may come below issue price in short term, but when it comes to medium to long term story, its only win situation. Be there, and remain firm for a longer period. You'll get reward.

The bank was expected to be mindful in its pricing strategy of the fact it is following close on the heels of one of India's largest initial public offerings last week. DLF, the property group, raised $2.25 billion. Yet the deal is still far behind the benchmarks set by China. Industrial and Commercial Bank of China, China's largest bank, raised $19 billion last year. That tells how far Indian equity market has to go to mature globally.

Also read ICICI meant for medium to long term investor.

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TCS: First Mover In India - CEO speaks to Forbes.com

To what extent and for how long will you and the industry be able to weather the impact of the rising rupee [which has appreciated over 8% against the dollar since January]? What do you expect from the government on that front?
The rupee's appreciation vis-à-vis the dollar is definitely of concern to the industry and TCS. Hedging is a mechanism by which you cover your losses. We've done that fairly well in the last quarter. But because of the mechanism and costs involved, we can only go to a certain point. So anything below 43 rupees vs. the dollar will continue to worry us.
To what extent the government will succeed in the short term in addressing inflation will determine how the rupee's rise will play out. The industry has expressed its views on a number of policies, and we've said what interventions are possible from our perspective.

TCS has a huge workforce, to which you're adding substantially every quarter. What percentage is global and how much is that going to expand in the next few years?
We have a network model where we deliver from multiple global locations, including Uruguay, Chile, Mexico and China. It's becoming a scale play even outside the country. At present, 9.6% of our employees are from other nationalities; it'll grow to 10.5% in two years.

We're hearing so much about the talent crunch today. What are you doing to attract and, more important, retain employees in India? How much is the fight for talent contributing to rising costs per employee?
The war for talent will only get tougher. [In India] the demand is not from IT alone--there are also industries like retail, financial services, banking. The brand which TCS has built has some attraction for young graduates. The number of colleges we go to in India alone each year just crossed 300. We've been successful in ensuring we get invited [to campuses] early in the game. We also engage students through summer projects, training and have strong ties with the faculty. We have centers of excellence on campuses, fund projects there.
Having gotten people from campuses, the second level is the quality of work, what kinds of opportunities they have. We have a dedicated [two-month] training program for all new employees. Experienced professionals have two-week trainings every year. Our attrition rates are 11.3%, way below the industry average. We trained 32,000 professionals last year.

What are your favorite global locations for TCS centers? Why?
North America tops the list because of its proximity to our customers. Another favorite is Uruguay, from where we are able to address European and North American requirements and cater to companies that need Spanish capabilities support. Canada is another asset.
In China, we can address the domestic as well as Asia-Pacific market. Countries in Eastern Europe and Africa help us to identify talent and draw professionals. They want us to employ their graduates. And in India, tier-two cities are definite destinations of the future.

There's growing interest from global firms in setting up captive centers in India. For how long will our infrastructure and talent pool be able to sustain that?
This will be one of the mechanisms global corporations will adopt for their own strategic reasons. They see India as a good destination, but the size of such centers will not exceed a couple of thousand employees. And some global majors also exit these centers after a certain period of time. Some will never have captives. Most companies realize their main brief is to run their business rather than run their IT capabilities. The bigger portion [of their technology needs] will always be outsourced.

What keeps TCS ahead of the competition? What do you do that makes the firm unique?
The experience of the last 38 years is a very clear and powerful differentiator. We're present across geographies. We do strong deployment of capabilities in the domestic market, where 12% of our revenue comes from. Our ability to handle large turnkey, total-responsibility projects is also a very important differentiator. Another factor is, we've integrated our global workforce and reached out to markets that are far beyond traditional non-English-speaking markets. We did it successfully in Uruguay and China. We're a global player with a global presence.

How will a reduction in discretionary spending in the U.S. affect TCS and the industry as a whole? Is a global slowdown good for Indian tech growth?
When discretionary spending gets reduced, that plays out well to our strategy and the India strategy, because of our ability to take costs out through process improvements and by shifting from high-cost to low-cost locations. We provide value-added, low-cost arbitrage for firms. The ability to ramp up in offshore locations rapidly is a dimension we bring in.
But I don't see any such indication of a slowdown in spending as we speak. About 18% of our revenues last year came from new services that we launched.

Opponents of an increase in the H1-B visa cap argue that since Indian firms file the highest number of those applications for visiting Indian professionals, the program isn't really being used to retain talent. Is that a fair argument?
To us, whether the number of visas gets increased or decreased or stays the same, we look at our business model differently, where we should not be dependent on just the movement of people from here to there. How do you localize, globalize, how do you hire the locals as well as distribute the workforce, not just in the U.S. alone. We view this in totality. We don't make recommendations saying, "Increase the number of H1-Bs...we're having problems."
Our whole view is the mobility of employees, and the ability to execute projects in any part of the world, is going to be critical for any global company, whether you go for one year or a couple of weeks. The same is for whether a U.S. company needs access into India or any other country. That's the way we need to look at this, rather than as a U.S. "visa situation."

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