[ppi] [ppiindia] India is booming, but not for everyone

** ppi-india **
 India is booming, but not for everyone  
         Saritha Rai NYT  Saturday, January 31, 2004 



 
Farming, manufacturing and services rebound together 

BANGALORE, India Raghu Shenoy is a tad worried about financial matters. 
.
Though business is booming at Bit by Bit Computer Services, the software 
company he founded here, expenses for his traditional Indian wedding, planned 
for the end of February, are slowly spiraling beyond his budget. 
.
First, he has to entertain his guests lavishly at a riverside resort two hours' 
drive from the city. He has booked it for three days of celebrations. Among the 
guests will be a handful of his overseas clients, mostly from Britain. The 
hotel stay for them and some other guests, along with the wedding feast 
expenses, will add to the bill, which is nearing $25,000. And that does not 
include the cost of the honeymoon in New Zealand. 
.
"The upbeat Indian economy is not helping me," Shenoy, 36, lamented half 
seriously. "I find people's expectations have shot up, and I'm spending 10 
times more than I would have spent some years ago." 
.
The economy is indeed buoyant. Gross domestic product grew 5.7 percent in the 
fiscal first quarter, which ended in June, then jumped 8.4 percent in the next 
quarter, compared with the year before. And the bounce is being felt across 
nearly all business sectors. 
.
The government is expected to take advantage of the positive mood by moving up 
elections, originally scheduled for the end of the year, to as early as April, 
just after the country completes a fiscal year in which growth is forecast to 
exceed 7 percent. 
.
The country is experiencing a rare trifecta, said Amit Chandra, an executive 
vice president at DSP Merrill Lynch in Bombay. "For the first time in the last 
several decades, agriculture, manufacturing and services are showing a 
simultaneous revival." 
.
The best rainfall in more than half a dozen years has bolstered the 
agricultural sector, and that, in turn, has increased consumer demand and 
manufacturing. High-technology businesses continue to grow spectacularly. A 
gradual upturn in the global economy is expected to bring in an even greater 
bounty of outsourced jobs to India. 
.
In addition, despite political and labor opposition, the Indian government is 
slowly loosening its stranglehold on various industries through privatization 
of state-owned companies. 
.
Of course, huge pockets of poverty remain. And experts warn of an economic soft 
spot. 
.
"The outlook for India's mammoth, and growing, fiscal deficit is poor," said 
Jyoti Narasimhan, a principal economist with Global Insight, a research firm 
based in Waltham, Massachusetts. 
.
Still, she said, at least for a while, "consistent, high economic growth rates, 
as well as judicious policies implemented by politicians and technocrats, will 
continue to boost personal wealth of all Indians." 
.
Vivek Kulkarni, a career bureaucrat turned high-technology entrepreneur, said, 
"The euphoric mood in the economy is backed by solid signs. 
.
"Take a one-mile stretch on Bannerghatta Road in southern Bangalore and the 
construction points to 45,000 new software and services jobs right there," he 
said. It is a stretch that includes offices of multinationals like Oracle, 
International Business Machines, Accenture, Hewlett-Packard, PeopleSoft, 
Honeywell and HSBC. 
.
Before becoming chief executive of B2K, a Bangalore-based technology support 
company, in November, Kulkarni led the local government's software services 
department and was responsible for attracting high-technology investment. The 
ripple effects of the Indian economic boom, he said, are being felt in cities 
across the country. 
.
"It is hard to get a hotel booking" in Bangalore, Delhi or Bombay these days, 
he said, adding: "Can you believe that I went to a restaurant for dinner last 
week to find all the tables were reserved for the evening? This used to be 
unheard of in Bangalore." 
.
Other industries, including automobiles and pharmaceuticals, have gained from 
an increased demand for high-quality products made in the country's low-cost 
factories. 
.
Adding to the cyclical upturn, Indian foreign exchange reserves have grown to 
more than $100 billion. Its stock markets increased 73 percent in valuation, to 
$278 billion, with foreign concerns investing close to $7 billion. 
.
Chandra, of DSP Merrill Lynch, said that the economic restructuring of the last 
decade had finally taken root and helped Indian industry become globally 
competitive. 
.
Recent public offerings of companies have met with overwhelming response. 
According to Prime Database, a capital market research firm based in New Delhi, 
about $13 billion worth of public offerings are expected during 2004. 
.
The bounty has been trickling down. 
.
"The spread of roads and cellular phones in rural areas has made development 
tangible even for India's rural population," Chandra said, "and it has become 
abundantly clear that the economy will play a large factor in the election." 
.
Skeptics, however, say that not even 2 percent of the Indian population has 
been directly affected by the boom, and point to the abysmal state of 
infrastructure in urban centers and the stark poverty in the villages. 
.
"For the thousands who have lost government jobs in the privatization process 
and for those involved in traditional occupations such as silk farming, there 
is hardly any good news," said Narendar Pani, an editor at the leading Indian 
financial newspaper, The Economic Times. 
.
The New York Times 


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