In a nation where a quarter of eligible voters are now between the ages of eighteen and twenty-five, the 2009 elections will see a potential 100 million young Indians heading to the polls for the first time between 16 April and 13 May. This isn’t any old India, as PepsiCo’s recent series of TV commercials suggests, this is “Youngistaan,” the Land of the Young. And just as the demographic reality of India’s youth bulge hasn’t passed soft drinks corporations by, neither has it escaped the attention of India’s political hopefuls. In the run-up to the elections, national and regional parties alike have been anxiously reworking their campaign strategies to appeal to youth – or what the media now chummily refers to as Young India.

At the heart of this drive is Obama-inspired online campaigning. Stirred by the Democrats’ success in the United States, India’s major parties have been eagerly integrating the internet into their election drives.

However, they have two big pan-India challenges to overcome: the myriad languages of India and the limited reach of the Internet. Read more here

Amit Varma, India’s foremost blogger and award-winning columnist, has been busy recently.

His first novel, My Friend Sancho releases this week in fine bookstores all across India. Click here for launch details — so far, it’s Mumbai, Delhi, Kolkata, Bangalore and Chennai. If you’re in any of these towns, this is bound to be a fun event. Amit is a delightfully witty and amiable chap, if we say so ourselves.

And, by the way, it appears that we may have to add another adjective while describing the multi-faceted Mr Varma. According to Business Week magazine, Amit is one of the (ahem) 50 most powerful people in India. Who knew?

Blogger Amit Varma brings a particular libertarian point of view to his columns and blog items, but also a risqué sense of humor that keeps readers hooked. He won the 2007 Bastiat Prize for his columns in Indian business paper Mint, and for a select group of Indians, he represents a libertarian, anti-tax and anti-government sensibility that is still quite rare in the country.

Another friend of ours, Reuben Abraham, who is among many other things, a professor at the Indian School of Business has been selected as one of the Young Global Leaders by the World Economic Forum. By the way, Reuben is a true citizen of the world. He visits more countries than almost anyone else we know — we suspect he adds new booklets in his passport twice a year. So, if you’re an IEB reader in Patagonia, rest assured that you’ll get a chance to meet Reuben sooner rather than later.

Salman Khan, a portfolio manager in California has created hundreds of free educational videos, available on his web site, the Khan Academy and on YouTube. These videos cover the basics of banking, finance and the current credit crisis — I saw a couple and they’re quite good.

Even more importantly, there are hundreds of videos on mathematics (algebra, calculus, trignometry, probability and more) and physics. Salman has three degrees from MIT and one from Harvard, so he knows what he’s talking about.

Anyone, anywhere in the world can benefit — all you need is access to the Internet. A good idea, fantastically implemented.

Thank you, Salman for investing all this time and energy.

“For what it’s worth, a key conclusion from the IMF’s new World Economic Outlook is that recessions caused by financial crisis typically end with export booms, with the trade balance improving,on average, by more than 3 percent of GDP. I find this a disturbing result: we’re now suffering from a global financial crisis, which means that the usual driver of recovery will only be available if we can find another planet to export to.”
Paul Krugman

With results still coming in, projections show the United Progressive Alliance is likely to win about 250 seats, making it a shoo-in to form the next government and provide continuity, a stable administration and progress on key economic and corporate reforms.
Wall Street Journal, May 16 2009

Prime Minister Manmohan Singh’s electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the country’s economic growth as it struggles to free half a billion people from poverty…..Political stability will make India a more attractive investment destination as Singh, 76, seeks the funds to stimulate Asia’s third largest economy.
Bloomberg, May 18 2009

Many are called, but few are chosen, as the saying goes. But could it just be that this time around, and on a one-off, never to be repeated basis, India might find itself right there in the midst of things, with a 50-50 opportunity to add its name to that select and noble band, the chosen few. After all, someone has to lead the next global charge? The majority of the developed economies are either bogged down in the substantial quantities of debt that they desperately need to pay off, or weighted down by those elderly populations who are weakening consumption growth and leading to export dependence (Germany, Japan…). And as Krugman humorously points out, someone will have to add the extra demand which will allow global trade to start to grow again, so why should India not supply a significant part of this new demand, after all we are more likely to find consumers in India than we are on Mars. (more……. )

Despite slowing from highs of 8% to 9% growth, India’s economy will grow close to 6% in 2009. Amid domestic and global liquidity crunch, large domestic savings and corporate retained earnings are financing investment. Sluggish labor market and wealth effects have hit urban consumption. But low export dependence, a large consumption base and the high share of employment (two-thirds) and income (one-half) coming from rural areas has helped sustain consumption. Pre-election spending, especially in rural areas, and high government expenditure, are also pluses. Timely monetary and credit measures have played a key role in improving private demand, liquidity and short-term rates and reducing the risk of loan losses. Credit is largely channeled by domestic banks, especially state-controlled ones, which have low loan-to-deposit ratios and little exposure to toxic assets….link

Given Roubini’s track record over the last three years, he’s certainly built some cred. Do you agree with his assessment on India, though?

Here’s the link.

As with most other places in the world, India is facing a significant economic slowdown that is aggravating an already serious liquidity crisis. The government is finding it increasingly difficult to implement additional fiscal or monetary measures, and as a result, has tried to bring liquidity by lifting FDI restrictions and attempting to lure back foreign investment. But politics is getting in the way. The government cannot allow political expediency to derail the progressive lifting of FDI restrictions, even during tough times like these. Many international companies are still looking to enter the country, despite facing enormous uncertainties about their financial health in their existing markets. With a more open India, they will enter and bring with them a significant amount of capital investment and managerial expertise. This will help India pull out of the recession in the short to medium term and also help establish the conditions to sustain economic growth over the long term. Indian companies will use the additional funds from their foreign partners to keep their staff employed and continue with capital expansion plans. Indian companies with global ambitions will have greater access to world-class infrastructure and managerial knowledge that will enable them to better compete around the globe. With increased competition, Indian consumers will be able enjoy the highest-quality products at the lowest cost.

Take the retail sector, for example. Large international retailers such as Wal-Mart and Tesco want to enter India, but have been mostly reluctant so far since they cannot have majority ownership. The government in early February tried to ease this restriction by allowing foreign companies to make indirect investments through Indian companies. However, merely two weeks later, amidst pressure from certain political circles, the government backed off and stated that these indirect investments will also be subject to sectoral ownership limits.

These limits are hindering India’s economic progress, both in the short- and long-term. Many Indian retailers have recently run out of cash to pay their employees, keep existing stores in operation, and open new ones. Foreign investment can help meet these short-term needs. In fact, some Indian retailers are now seeking foreign partners to obtain additional liquidity and attract consumers with the strength of the partner’s global brands. For example, Tata-owned Trent recently teamed up with Spain’s Inditex to open Zara outlets in India.

Besides fulfilling short-term needs, lifting regulations will help build the foundation for India’s continued development. It will allow global retailers to make large investments in cold-storage, distribution centers, and transportation in India. The Indian farmer, consumer, and retail employee will all benefit. For example, an estimated 35% of produce currently spoils on its way from the farm to the market, due to slow transportation and lack of cold storage capabilities. Investment by foreign multinationals will help rectify this situation. In the process, the Indian farmer will have more to sell. The consumer will have more product choices and greater value for money. Many retail jobs will be created.

The automotive sector is a great example of where India gradually lifted regulations, foreign companies entered, and domestic companies, workers, and consumers tremendously benefited. Until 1983, the government protected domestic auto manufacturers with high import tariffs and a ban on foreign investment. As a result, consumers had only two models from which to choose, both of which were high-priced and based on outdated technology. Then the government permitted a Japanese automaker, Suzuki, to partner with state-owned automaker, Maruti Udyog. The Japanese brought with them technology and efficient manufacturing processes, significantly improving productivity and quality. Industry output grew at 13% per year from 1983-1993, compared to 1% per year in the decade before. In 1992, the government further eased restrictions on foreign entrants. Many more global manufacturers subsequently entered the market. Today, more than 20 major automotive manufacturers operate in India, selling hundreds of models and variants. The sector is employing an estimated 10 million people directly and indirectly, which is on par with the number employed in the IT sector. In addition, over the last few years, auto prices have been decreasing by 8 percent to 10 percent annually. India is now positioned to become a major manufacturing hub for global players such as Toyota, General Motors, and Ford.

In this time of cash-poor consumers, continued intense global competition, and beleaguered shareholders seeking better returns, multinationals are eagerly searching the globe for sales and profit. As India further opens, more multinationals will certainly enter. What will be good for the consumer will also be good for Indian businesses and workers.

Full disclosure: Suresh is an independent management consultant based in New York city, with a focus on the retail and FMCG sectors. Prior to this, he worked with Unilever’s Home and Personal Care Division.

Now, with the cancellation of the IPL tournament in India and its move to South Africa, what message has gotten sent out?

Is the “offshoring” of the tournament a signal that the government is unsure of the overall security situation? Is this an indication of how over-stretched and creaky the governance infrastructure is?

What signal does this send to investors? After all, perception is everything, and for really large investments, it is typically “which BRIC ie, Brazil or Russia or India or China” which is often key.

Of course, it is also possible to read too much into one thing. Apparently England also got pushed out because their security would be over-stretched, so the questions raised above need to be qualified.

India’s elections ARE a mammoth exercise, and even more so, with terrorism threats.

What do you think?

India’s Underground & Hinterland seem to be the topics du jour

In the Wall Street Journal, Peter Wonacott says India Defies Slump, Powered by Growth in Poor Rural States.

Rama Lakshmi of the Washington Post said as much last month: Vast Rural India Sparkles As an Expanding Market

About 72 percent of India’s billion-plus people live in rural areas. For years, the poverty of rural India was seen as reining in the country’s economic growth. But today, analysts say, rural India is a critical audience for marketers because it has been relatively insulated from the crippling blow of the global slowdown.

India’s rural destiny still depends on good monsoon rains and robust agricultural production, but four years of bumper crops and heavy government investment in rural infrastructure have given birth to what some analysts call an emerging economy within India.

Last month, Patrick Barta of the Wall Street Journal called it The Rise of the Underground.

Given this, it’s not entirely coincidental that The American, the journal of the American Enterprise Institute wonders how Lalu Yadav managed to turn around the Indian Railways, the world’s 2nd largest employer (the Chinese Army is #1) and in doing so, morph from Huey Long to Jack Welch — The Indian Railway King

Hygiene doesn’t make it too often to the media. However, as anyone who’s spent more than 24 hrs in India knows, the lack of adequate toilets is a huge, huge issue.

Two links on that subject: Bloomberg – India Failing to Control Open Defecation Blunts Nation’s Growth and a more rigorous analysis from Nimai Mehta -The Preference Bias in Sanitation: Explaining Failures in Public Provision