DarkUnderbellyGazing

Since the thankful retreat of socialism in the 1990s professional socialists and left wing intellectuals have taken to pointing out the pitfalls of India’s return to the real world. Praful Bidwai is one of them.

While gazing at the dark underbelly performs a useful social role much of what he has written in this article flies against the face of my own observations.

The IT industry created hundreds of thousands of jobs – in software development, in Computer training, cybercafes etc. And it created hundreds of millionaires and pulled many families into the urban middle class. Then came the call centre/BPO wave which created hundreds of thousands of jobs for the arts, commerce, accounting and science graduates. For those who can remember, it were these graduates who formed the educated-unemployed masses in the 1980s. The rising affluence of this middle class has created plentiful economic opportunities in the retail, services, hospitality and healthcare sectors contributing to the India’s healthy economic growth over the past decade.

Bidwai cites the recent targeting of Bihari railway job applicants in Assam and Mumbai as evidence on how difficult life has become for those at the lowest end of the job market. But it is the unwillingness the various state governments to abandon socialism (and the politics of entitlement) that is the cause of these incidents. Politics of entitlement has reduced Bihar and much of central and northern India to a land of no opportunities. West Bengal has been cornered by geriatric communists. The only employment opportunities in these states are in the already bloated government sector. In effect, the rest of India is paying a ‘rent’ to these economic dinosaur states. Yet, instead of pressing these states for reform, our social commentators feel it is the better to slow down the entire railway network to run at the speed of its slowest and oldest trains.

Much of the world is seeing a ‘jobless recovery’ in economic growth. The US, Europe and the Asian Tigers are surprised on how the economy seems to be picking up unaccompanied by the traditional rise in employment. The main reason for this is globalisation. The interconnected economies are able to shift production and services away from raw materials and markets. This means that the jobs are moving to China (production) and India (services) giving a lower cost structure to companies who have embraced globalisation.

India has to repair, refurbish and renew its old and slow trains such that they dont slow down the entire network. Given our democratic dispensation and federal set up it is the people of Bihar, MP, UP, Jharkhand, West Bengal etc who have to rise to a new dawn.

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Sameer Wagle sent me this BusinessWeek cover story titled The Rise of India. There is also an interesting editorial which responds to skeptics from the Bidwai tribe.
Excerpt from the cover story:

In fact, India’s emergence is fast turning into the latest Rorschach test on globalization. Many see India’s digital workers as bearers of new prosperity to a deserving nation and vital partners of Corporate America. Others see them as shock troops in the final assault on good-paying jobs. Howard Rubin, executive vice-president of Meta Group Inc., a Stamford (Conn.) information-technology consultant, notes that big U.S. companies are shedding 500 to 2,000 IT staffers at a time. “These people won’t get reabsorbed into the workforce until they get the right skills,” he says. Even Indian execs see the problem. “What happened in manufacturing is happening in services,” says Azim H. Premji, chairman of IT supplier Wipro Ltd. “That raises a lot of social issues for the U.S.”

No wonder India is at the center of a brewing storm in America, where politicians are starting to view offshore outsourcing as the root of the jobless recovery in tech and services. An outcry in Indiana recently prompted the state to cancel a $15 million IT contract with India’s Tata Consulting. The telecom workers’ union is up in arms, and Congress is probing whether the security of financial and medical records is at risk. As hiring explodes in India, the jobless rate among U.S. software engineers has more than doubled, to 4.6%, in three years. The rate is 6.7% for electrical engineers and 7.7% for network administrators. In all, the Bureau of Labor Statistics reports that 234,000 IT professionals are unemployed.

… As companies rely more on IT engineers in India and elsewhere, the argument goes, the U.S. could cede control of other core technologies. “If we continue to offshore high-skilled professional jobs, the U.S. risks surrendering its leading role in innovation,” warns John W. Steadman, incoming U.S. president of Institute of Electrical & Electronics Engineers Inc. That could also happen if many foreigners — who account for 60% of U.S. science grads and who have been key to U.S. tech success — no longer go to America to launch their best ideas.