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F E A T U R E S
India’s new
consumption levels
Gobind Thukral
Man’s
first needs are food and shelter, besides the desire to procreate. As
civlisation advances and more goods and services are created, the emphasis often
shifts. Essentials hardly change. Yet man is not just a consuming animal. He is
a creating being. He is different from other fellow creatures courtesy his
brain. His sensibilities and aesthetics are far more developed. He is a social
being, a rational person and above all capable of creating and destroying. How
he earns and spends his earnings is significant to understand the
kind of society he is creating and the direction it is going to.
India is witness
to a new trend. The rising middle class is not only consuming more but its
pattern of expenditure is changing fast. This 25 crore lower and middle bracket
Indian population is spending more on luxuries than basic necessities. As
you earn more, you spend less on food items. The latest National Sample Survey
Organisation report reveals that urban India spent only 43% of its total
consumption expenditure on food items in 2004-05. That's a major drop from 64%
in 1974-75. This testifies to rising incomes across the country as it points out
to increasing disparities.
Interestingly
this trend holds good for rural India also. The share of food in total
expenditure in rural areas has fallen from 73% in 1974-75 to 55% in 2004-05. Any
one can go around Punjab or Haryana and even mountainous Himachal to find the
truth.
Of every rupee
spent by an average urban person on consumption, 43 paise were spent on food. Of
this, 10 paise were spent on cereals and
eight paise on milk and milk products, six paise on beverages, refreshments and
processed food and four paise on vegetables.
In 2004-05, out
of every rupee spent by a rural Indian on consumption, 55 paise were spent on
food. Of this, 18 paise was spent on cereals and cereal substitutes, eight on
milk and milk products, six on vegetables, five on edible oil, five on sugar,
salt and spices, and five paise on beverages, refreshments and processed food.
The spending on
consumption of non-vegetarian items is more in urban than rural areas. Urban
households, which consumed egg, fish or meat at least once in 30 days, spent on
an average Rs 215 as against rural households, which spent Rs 155.
In both rural
and urban India, fuel and light took up 10% of the total consumer expenditure,
while clothing, bedding and footwear took up 5%. Medical expenses formed 7% of
the total expenditure in rural India and 5% in urban India. Who said rural folks
are healthier. What is more important traveling or education? Indeed traveling
as Rural India spent less on education at 3% of consumption expenditure than
urban Indians at 5%. Conveyance took away 7% of expenditure in urban India and
4% in rural India. Educational expenses formed small fraction of total consumer
expenditure in rural India as well as urban India. Indeed an unsettling trend.
This would hardly make India a knowledge society as our Prime Minister Dr
Manmohan Singh wants it to be.
The percentage
of spending on food tends to be low for states with higher average monthly per
capita household expenditure. For the urban sector, the share of food was
highest for Bihar (51%), being also high (50%) in Orissa and Assam, and lowest
in Punjab (38%). The richer the state, less expenses on food, the survey
revealed.
But there are
other disturbing aspects. Despite the booming economy, about one-third of the
rural population or over 20 crore people still live on less than Rs 12 per day.
Average monthly per capita consumer expenditure was Rs.559 in rural India and
Rs.1052 in urban India at 2004-05 prices. In 2004-05, 5% of the Indian rural
population belonged to households with monthly per capita consumer expenditure;
spending less than Rs.8 per person per day on consumption. Another 5% of the
Indian rural population belonged to households with monthly per capita
expenditure of Rs.8-9 per person per day. About 5% of the rural population
of India had monthly expenditure of Rs.1155 or more. Another 5% had between
Rs.890 and Rs.1155.
The poorest 5%
of the urban population of India (ranked by per capita spending levels) belonged
to households with monthly consumer expenditure per person of less than Rs.11
per person per day. Another 5% of the Indian urban population belonged to
households with monthly per capita expenditure of about Rs.11-13 per person per
day. What could they be eating?
The National
Sample Survey reports also highlighted that Orissa, Chhattisgarh, Madhya
Pradesh, Bihar, and Jharkhand and UP still remain the poorest states in
terms of monthly per capita expenditure of rural population.
In 2004-05,
compared with 30% at the all-India level, in Orissa and Chhattisgarh as many as
55-57% of villagers were living below the MPCE level of Rs 365, which is Rs 12 a
day. And, 10% of the all-India rural population was living on just Rs 9 per day.
In Madhya
Pradesh, 47% of the rural population is living on Rs 12 a day followed by Bihar
and Jharkhand (46%), Uttar Pradesh (33%), Karnataka (32%) and Maharashtra
(30%).However, the urban poor appeared to be faring slightly better as 30% of
such people were found to be spending Rs 580 per month, that is Rs 19 a day. But
10% of the urban population had to live on just Rs 13 a day in 2004-05. In
Bihar, as much as 55% of urban population is living on Rs 19 per day, followed
by Orissa (50%), UP and Chhattisgarh (44%), Madhya Pradesh (43%) and Rajasthan
(36%). This is why poor from the rural areas rush to cities to seek better
living and each Indian city has 30 t0 40 percent of its population living below
the poverty line.
In rural areas
of Haryana and Punjab, expenditure on cereals formed only 9% of total consumer
expenditure. But in rural areas of West Bengal and Assam cereals contributed 23%
or more to total consumer expenditure, and in rural areas of Orissa,
Chhattisgarh, Jharkhand and Bihar, they formed 27-28% of consumer expenditure.
This survey
should be an opener for the policy makers and rulers in Delhi and in the state
capitals as things are changing but only for a minority of people.
BACK
Poor
in the Rich Land of Canada
Canada
is a land of prosperity. It dominates with its vast resources and size. It is
the world's second-largest country occupying most of northern North America.
Extending from the Atlantic Ocean to the Pacific Ocean and northward into the
Arctic Ocean. Canada occupies a total surface area of
9,984,670 km . Its population is only 32,793,700 as per 2007 estimates. Yet
poverty remain very high among its children.
 Its rich mineral
wealth and sparse population makes it enviable for other countries. And, its
phenomenal growth in science and technology, all are well-recognized facets of
Canada; the country of a giant size which the United Nations has declared it as
the best country, even beating its powerful rich neighbour the United States of
America for its quality of life. Its total GDP is counted at $1.105
trillion and per capita GDP at $34,273.
For the past
decade or so, the Canadian economy has been growing rapidly with low
unemployment and large government surpluses . Today Canada has its
market-oriented economic system, pattern of production, and high living
standards. Yet Canada’s unemployment rate of 6.3% though
lowest in 30 years is disturbing.
Much worse is
Canada’s child and family poverty rate that remains stubbornly high at 17.7
per cent – that's one in every six children. The average low-income family
lives in deep poverty and would need an additional $10,400 a year of income just
to reach the poverty line. Yet, low-income families are working harder than ever
– one-third of all low-income children are in families where the parent or
parents work full-time, all year. A job is also does not ensure less poverty,
though it does help.
Despite
continued economic growth Canada's record on child poverty is worse now than it
was in 1989. There have been cyclical variations, reflecting economic recessions
and recoveries, but the rate of one in six has remained tenacious. This figure
does not include the shameful situation for First Nations communities where one
in every four children is growing up in poverty.
In 1989, the
House of Commons unanimously resolved to "seek to achieve the goal of
eliminating poverty among Canadian children by the year 2000."
Yet, close to
1.2 million children - almost one child out of every six in Canada - still live
in poverty. It's Time to Honour Canada's Commitment to Children Canada has
failed to honour its commitments to children, including: the unanimous, 1989
House of Commons all-party resolution to end child poverty; the UNICEF World
Summit for Children in 1990 which agreed on the principle of first call for
children;
The U.N.
Convention on the Rights of the Child ratified by Parliament and all provincial
legislatures by 1999, that recognized an adequate standard of living for
children.
Poverty in First
Nations and Aboriginal Communities is worse. Indian and Northern Affairs
reported a 70 per cent increase in child welfare cases from 1995- 2003. The key
reason for taking children into care is physical neglect due to poverty. Only
through a comprehensive plan supported by real investments can First Nations
finally and forever break free from the prison of poverty.
According to
Campaign 2000, an agency that works the poor ,“Tackling child poverty
once and for all requires a bold and sustained approach. Provinces like Quebec
and Newfoundland and Labrador are leading the way with anti-poverty strategies
that include raising and indexing social assistance benefits to inflation,
investing in child benefits, employment supports, affordable housing and early
learning and child-care services.” An economist commented recently.”
There is a
need to evolve strategies that take care of Canada-wide
poverty reduction programme. These should be based on healthy public policies
and improved labour market conditions. As one of the wealthiest countries in the
world, Canada can do better. It should not be difficult for a country that
has no dearth of resources and whose federal government coffers are full to the
brim.
BACK
Read
Charan Singh, Dr. Manmohan
Sharat Chandra Nair
 THE
economics, which Prime Minister Manmohan Singh knows, is far too elementary for
him to get the feel of India's agrarian crisis. Better he does a reorientation
course. For a start he can read the works of Charan Singh, the only intellectual
and economist the country ever had in the Prime Minister's post.
At the 52nd
meeting of the National Development Council, the Prime Minister performed
another round of breast beating on the plight of agriculture in India. As if we
do not know, we were told that the agriculture growth rate is a bare 2% since
the mid-90s. "Agriculture as a whole is in crisis" Dr. Singh
authenticated. So what should we do?
Simple: "We
must revitalise the agriculture". For that "we should focus on
achieving higher productivity and incomes of all farmers in both crop and
non-crop agriculture". What is he planning to do for that? Already he has
ordered the agriculture ministry to make "specific" recommendations by
early next year. Everyone will live happily and in peace thereafter.
 So on and so
forth. Sorry for reproducing the passages. You would have been bored. For it was
all so silly, repeated several times over. Your patience will be tested in the
coming months and years. Beyond the words nothing will (or can) move. Many more
farmers will take premature farewell from the world. The rising trend in farm
production will also go over.
Are we telling
you that agriculture in India is finished forever? In effect that is what we
say. More investments in irrigation and infrastructure are welcome. But that
will not be enough to save farming from slipping into decline. The malaise is
much deeper and Dr. Singh's magic wand is nothing but eyewash.
As the late
Charan Singh often pointed out, Indian agriculture has not recovered from the
hammer blows it received from the import of food grains from US under PL-480
five decades ago. The terms of trade which had turned against agriculture as a
result of the overemphasis on industry and urban development has gone from bad
to worse. The resultant losses suffered by rural India would run into billions
and billions of Rupees. Unless the trend is reversed there is no hope for Indian
agriculture. Does the Prime Minister have the guts even to make a suggestion in
this respect?
Across the
world, rich countries included, let us admit, the farmers are at the receiving
end when it comes to terms of trade. Hence the heavy subsidies which India's
commerce minister, Kamal Nath, foolishly wants to do away with. In the name of
free trade we are only trying to make others pay for our sins, omissions and
commissions. In India rural life is more miserable than anywhere else because
the 70% of the population is glued to agriculture. The ratio is in digits in
rich countries.
Indian farming
community bore the brunt of Nehru's Fabian socialism, experiments with mixed
economy, Indira Gandhi's hypocritical Garibi Hatao, Rajiv Gandhi's
liberalisation drive, Narasimh Rao's reform tamasha and finally, Dr. Singh's
embrace of globalisation.
The recent
decision to import half a million tones of wheat is evidence enough that the
crisis in agriculture has reached a flash point. In a way, globalisation is
unstoppable. Being the inscrutable law of nature. The question before us is what
shape we are in to absorb the shocks from the onrush global market forces.
In a bad shape.
That is the plain answer. Because of poor or negative earnings the farmers'
tribe is not increasing. The widespread disillusionment provides traction to the
growing Naxal movement, which has heavy presence in about a third of the total
number of districts in India. High-tech law and order measures will not stop its
growth. Sangur, in West Bengal, is a high profile reaction to the flawed
economic policies. 1000 acres (for the TATA project) is fleabite in a country
rich in landmass. The resistance therefore is symbolic. For an insight into the
mess we are all in, Dr. Singh, read Charan Singh. You may even find a way out.
BACK
Indo-America
Immigrants New Wealth Creators
Saru Thukral
THERE
are reasons for America to look towards India with benign eyes. Indian
immigrants have out classed other immigrants in crating innovative companies and
providing employment to huge number of people, besides creating big wealth. Good
economics should not be bad politics indeed. These companies [450,000] are not
only wealth creators [$ 52 billion in 2005], but also political stablisers in
the sense that wealth distribution is more equitable than what America can boast
of with upper crust taking away nearly half of the cake.
For the last few
months, Vivek Wadhwa and his team at Duke has worked to produce a comprehensive
study on the contribution of skilled U.S. immigrants. In partnership with
AnnaLee Saxenian, Dean at UC Berkley, the study is based on interviews of 2054
technology and engineering companies founded from 1995-2005.
The results show
that the trend that Saxenian documented for Silicon Valley, a pattern of skilled
immigrants leading innovation and creating jobs and wealth has become a
nationwide phenomenon. Here are some characteristics of the engineering and
technology companies started in the U.S. from 1995 to 2005.
* At least one
key founder in 25.3% of these companies was foreign-born. States with an
above-average rate of immigrant-founded companies include California (39%), New
Jersey (38%), Georgia (30%), and Massachusetts (29%). Below-average includes
Washington (11%), Ohio (14%), North Carolina (14%) and Texas (18%).
* Nationwide,
these immigrant-founded companies produced $52 billion dollars in sales and
employed 450,000 workers in 2005.
* Indians have
founded more engineering and technology companies in the US in the past decade
than immigrants from the U.K., China, Taiwan and Japan combined. 26% of all
immigrant-founded companies have Indian founders.
”We have
substantial data on where immigrants are founding companies, what industries
they specialize in and what their nationalities are”, says Wadhwa.
The study
analyzed the international patent databases and came up with an interesting
statistics showing the contribution of foreign nationals residing in the U.S.
who have not received citizenship. “After analyzing the data, my view is that
America does not need more temporary workers. It needs more immigrants. This is
quite an extreme view from someone who has been one of the staunchest supporters
of H1B's! Visa”, Wadhwa explains.
The study looked
in depth at two tech centers -- Silicon Valley and RTP. We were surprised to
learn that over half of the startups in SV had immigrant founders.
According to
Wadhwa, the data on Indians is particularly surprising. Saxenian had reported in
her 1999 paper that, of all Silicon Valley high-technology startups started
since 1980, Chinese-run companies were at the helm of 20% and that Indians were
running 9%. Wadhwa’s analysis shows that of all immigrant-led startups from
1995-2005, Indians were key founders of 25.8% and those of Chinese origin
founded 24.4%.
“This reversal
reflects the dramatic increase in Indian immigration to the region over the past
decade” the report notes. For example, between 1990 and 2000, the population
of Indian scientists and engineers (S&E) in Silicon Valley grew by 646%
(while the total foreign-born S&E workforce grew by 246% and the region’s
total population of S&E, both native and foreign-born, grew by only 103%).
Foreign-born
talent is a driving force in American technology entrepreneurship. Nearly a
quarter of US engineering and technology companies established between 1995-2005
had a foreign-born person on their founding team. These companies produced $52
billion in sales and employed 450,000 people in 2005. Silicon Valley is
dependent on foreign-born talent. Immigrant entrepreneurs were on the founding
team of more than half of all Silicon Valley high-tech startups established
between 1995 and 2005.
Foreign-talent
is also a major contributor to America's role in global innovation, accounting
for nearly a quarter of all global patents from inventors located in the
United States in 20o6, up from 7.3 percent in 1998.
The data on
Indians was particularly surprising. For example, in New Jersey, 47% of all
immigrant founded hi-tech startups in the last 10 years had Indians as key
founders. Indians have overtaken the Chinese as the leading group of immigrant
founders in Silicon Valley.
Almost 80% of
immigrant-founded companies in the US were within just two industry fields:
software and innovation/manufacturing-related services. Immigrants were
least likely to start companies in the defense/aerospace and environmental
industries. They were most highly represented as founders in the semiconductor,
computer, communications, and software fields.
[Vivek Wadhwa
is Executive in Residence/Adjunct Professor
Pratt School of Engineering, Duke University. He is a technology entrepreneur on
sabbatical. He is currently Executive in Residence/Adjunct Professor for the
Pratt School of Engineering at Duke University. He is an active mentor and
advisor to various start- up companies and recently helped to produce a
Hollywood film in India 's Bollywood. He is a regular columnist for BusinessWeek
Online. Wadhwa's own experience as an IT executive, and his experience with
Seer's customers led him to appreciate the desperate need that organizations had
to deal with their legacy infrastructure. With the explosion of the Internet,
Wadhwa saw an even greater opportunity to help businesses adapt to new and fast
changing technologies, and started Relativity Technologies. As a result of his
vision, Forbes.com named Wadhwa a “Leader of Tomorrow”. Fortune Magazine
named Relativity as one of the 25 “coolest” companies in the world for its
vision in helping businesses "recycle" legacy systems.
He can be reached at 001- (919)
660-5424]
BACK
Indian-backed
Approach could Aid Poor Nations and Cut Health Costs
TWO
UK-based medical researchers have developed a method to invent new medicines and
get them to market at a fraction of the cost charged by big multinational cash
rich drug companies. This would enable millions of poor in many countries to be
cured of infectious diseases and cut the drug bill at many levels.
Sunil Shaunak,
professor of infectious diseases at Imperial College, based at Hammersmith
hospital, terms this revolutionary new model "ethical
pharmaceuticals". Shaunak and his colleague from the London School of
Pharmacy, Steve Brocchini have linked up with an Indian biotech company that
will manufacture the first drug - for hepatitis C. If clinical trials in India
sponsored by the Indian government, are successful. These would benefit million
as Hepatitis C affects 170 million people across the countries.
Improvements
they devise to the molecular structure of an existing, expensive drug turn it
technically into a new medicine that is no longer under a 20-year patent to a
multinational drug company and can be made and sold cheaply.
Since this
process has the potential to undermine the monopoly of the big drug companies
and bring cheaper drugs not only to poor countries but back to England,
multinational drug companies would engage them in bitter costly fights under
intellectual property rights and other patent laws.
Multinational
drug companies put the cost of the research and development of a new drug at
$800m Professors Shaunak and Brocchini say the cost of theirs will be only a few
million dollars.
Imperial College
will hold the patent on the hepatitis C drug to prevent anybody attempting to
block its development. The college employs top patent lawyers who also work for
some of the big pharmaceutical companies.
Professor
Shaunak believes time that time has come when the monopoly on drug invention and
production by multinational corporations - which charge high prices because they
need to make big profits for their shareholders - was broken.
"I'm not
only an inventor of medicines - I'm an end user. We have become so completely
dependent on the big pharmaceutical industry to provide all the medicines we
use. "Why should we be completely dependent on them when we do all the
creative stuff in the universities? Maybe the time has come to say why can't
somebody else do it? What we have been struck by is that once we have started to
do it, it is not so difficult." there are many takers among the researchers
and scientific community worldwide of this line of thinking, yet the hold which
the multinational drug companies have over the ruling parties and politicians
make the whole issue look twisted.
The team's work
on the hepatitis C drug has unimpeachable institutional credentials, supported
by a grant from the Wellcome Trust and help and advice from the Department for
Trade and Industry and the Foreign and Commonwealth Office. This could help them
to fight the battle royal when it comes challenging this pro poor and pro
patient approach. Success would have far reaching consequences for the
poor and not so poor.
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