Retail Updates

India's boom time for the few

By Mark Tully Former BBC India correspondent:

Sixty years after Partition and the violence and upheaval which followed, India has begun to prosper as the world's largest democracy. Mark Tully was the BBC's India correspondent for 22 yearsWhen I came to India in 1965, I was surprised to find that diplomats, at the end of their postings, would sell all the possessions they had imported including partly used lipsticks and second-hand underwear.

The shops only stocked Indian goods and they were distinctly second class.
I still remember the pain of shaving with an Indian razor blade and being taught how to remove the glycerine from Indian beer. The trick was to turn the bottle upside down in a glass and an oily liquid would ooze out clouding the water.

Now I shave in great comfort with Indian blades and pour beer straight into my mug.
Raising the siege. When I went back to Calcutta, my early childhood home, to indulge in a bit of nostalgia, I found what had once been the commercial capital of India dying on its feet. One British town planner had forecast it would be the first city ever to collapse.

India's Tata Steel owns the Anglo-Dutch steel manufacturer Corus:

Trees were growing out of the offices of some of the once-great names in British commerce. At least Gillanders House, where my father had worked, was still reasonably well preserved but his firm was a pale shadow of what it had been in his day.
Now Calcutta is enjoying something of a boom and a whole new city is springing up on the way to the airport.

I once complained to an Indian ticket inspector that I had paid a surcharge to travel on a super-fast train, which was not very fast. He corrected me saying, "It is a super-fast train, it's only going slowly."

For years the Indian economy used to chug along at what was known as the Hindu rate of growth of 3%, with perhaps a little plus. Now it clips along at 8-plus%, which is by any standards fast, if not super-fast.
All this has been brought about by the unscrambling of what was known as the licence-permit Raj.

That was a siege economy, which kept out all foreign competition to India's nascent industry.
But in the name of allocating scarce resources, one of which was power, bureaucrats - known as the "abominable Indian no-men" - were also empowered to prevent competition within India.

No-one could start manufacturing without a licence given by the bureaucrats, and existing manufacturers would bribe them to refuse licences for potential competitors.
India abroad. India started to dismantle the wall it built around its economy when in 1991 it faced bankruptcy, and the International Monetary Fund demanded the reform of the licence-permit Raj as the price for bailing the country out.

Some shopkeepers are against big foreign stores moving to India:

The demolition has released India's remarkable entrepreneurial talent. America has coined a new word - "Bangalored" - to describe the fate of the large number of IT employees who lose their jobs to India's IT capital, Bangalore. The big international names in the motor industry now have plants here and they are all being given a good run for their money by cars designed as well as made in India.

Indian companies are now taking over foreign companies like the Anglo-Dutch steel manufacturer Corus. But international businesses complain that the demolition job has not been completed. Foreign bankers, insurers, retailers, and manufacturers compare the restrictions India still imposes unfavourably with the freedom they enjoy in China.
India argues its specific political and economic problems mean that it must retain freedom to direct its economy, and to control the market.

Retail is a good example:

The government rightly fears the political impact of destroying the livelihood of the millions of small shopkeepers who dominate the trade if Tesco and Wal-Mart, who are knocking on the door, are allowed in and given free rein. India is also a land of small farmers and they cannot be left to fend for themselves against farmers in other parts of the world with their giant acreage farmed by one man and a tractor.

Left out:

The biggest problem for India is that the rapid economic growth has only led to stunning changes in the lifestyle of the rich and the middle classes. There is still widespread poverty in the cities as well as the countryside.

Many economists argue that the present top-down economic growth will never trickle down to the poor and so the economy needs to be directed more towards them. The trouble is that the direction has to be done by the government and that means the same "abominable no-men" who created the nightmare of the licence-permit Raj.

No matter how many arguments there are for the Indian train going at its own speed there can be no argument for allowing them to be on the footplate, driving the engine.