Indian investigators suspect as many as 500 illegal transplants have been performed.
By Jason Overdorf
Newsweek Web Exclusive
Updated: 5:41 PM ET Feb 1, 2008
Mohammad Salim Khan, 33, was squatting on a corner where unemployed day laborers congregate, looking for work, in the Uttar Pradesh town of Meerut, when a bearded man offered him a three-month job in Delhi that would pay about $3 a day. Khan jumped at the chance. But when he eventually reached Delhi, the promised job never materialized. Instead, Khan was taken to a house in Gurgaon where two men held him at gunpoint and knocked him out with an injection of sedatives. When he woke up hours later, he had a horrible pain in his abdomen, and a man in a surgical mask was leaning over him. "Your kidney has been removed," the man said. "Don't tell anyone after you leave here. Not your friends or family or relatives or anyone. If you say anything, one of our guys will find you and shoot you."
It sounds like a sci-fi movie or an urban legend. But Indian police, who broke into the house where Khan was being held not long after his surgery, say that organized gangs who steal, or buy, kidneys and other organs for illegal transplant operations are an all-too-common reality here, where some 320 million people survive on less than $1 a day. The authorities believe that this ring—which was allegedly run by a man calling himself Dr. Amit Kumar, though he was not a doctor of medicine—may have performed as many as 500 illegal transplants without being detected over the past eight or nine years. The criminal network apparenlty involved four doctors, five nurses, 20 paramedics, three private hospitals, 10 pathology clinics and five diagnostic centers, police believe, and drew patients from as far afield as the Canada, Greece and the United States. Authorities are trying to talk to U.S. patients who may be involved, saying the patients will not be in trouble and that they are only seeking further information on the doctors involved.
Christened "Dr. Horror" and "Dr. Dracula" by Indian tabloids, the man who allegedly ran the Gurgaon-based racket had been arrested on a similar charge in Mumbai in 1994, but police allege that he jumped bail, changed his name from Dr. Santosh Raut to Dr. Amit Kumar and set up a new operation in Delhi. His Gurgaon clinic was raided by the police in 2000, and police reportedly failed to investigate after television and newspaper exposes alleged that Kumar was performing illegal surgeries. "In the maximum number of these cases, they [the accused] are under trial for many years, and there are very few convictions," said Bhuwen Ribhu, a lawyer and activist who specializes in cases of human trafficking. "It is quite sad. Even when the person is arrested, he gets bail within three or four months and continues as he was doing before." Comparing this case to a 2006 scandal in which police ignored complaints from poor parents, allowing a serial child murderer to go on killing for months, Ribhu adds, "In most of these incidents, I'm sure the police [are] not even registering cases."
The Gurgaon ring was broken because a former victim who had joined the gang as a recruiter approached the police with his story, but a leak allowed Kumar to escape before the police raid, and despite a national and international manhunt he remains at large. So far, police have arrested only one of the four main doctors, as well as a nurse, cook, driver and other minor figures in the gang. However, officials suspect that several private hospitals in Delhi and its suburbs may have known about the illegal transplants—or at least have avoided asking too many questions. "Due to its scale, we believe more members of the Delhi medical fraternity must have been aware of what was going on," Gurgaon police commissioner Mahinder Lal told reporters.
Similar organ-theft rings have been unearthed across the country in the past. But if these estimates can be confirmed by testimony and evidence, this would be the largest illegal-transplant network uncovered to date in India—and even so it may be just a fraction of the cases.
"It is clear that a large number [of transplants] are not being documented within the system, which means that they are being done elsewhere," said Dr. Amit Verma, chief operating officer of a Delhi hospital run by Fortis Healthcare that is one of only a few institutions to use an independent screening committee to evaluate potential donors. "For a country of our size, and for the number of renal failures that we have, we should be doing at least a thousand times the number of transplants that we do officially." Indian surgeons perform 3,000-4,000 legally documented kidney transplants per year, in part because India has strict laws that mandate that organ donors must be close relatives to the recipient.
Those laws help create a huge gap between supply and demand, and illegal transplants go on because the legal system is ill-equipped—and some say unwilling—to deal with the problem. "Most of these cases are never reported," said Manjit Ahlawat, joint commissioner of the Gurgaon police. "The person who wants a kidney benefits, and the person whose kidney has been taken benefits, because he gets a lot of money, so nobody files a complaint." He believes that the three donors that the police found in Gurgaon were likely promised large sums of money—by their desperate standards—and in exchange for their organs. Now, they must claim that they were compelled by force, because otherwise they could be prosecuted as criminals. "If they admit that they did this willingly, they will be arrested, too," Ahlawat said.
Apart from evidence derived from the interrogation of suspects and five foreigners whom the police believe were waiting for transplants and the testimony of Khan and other men whose kidneys were allegedly stolen, the police recovered letters and e-mail messages from 48 foreigners inquiring about transplants from Dr. Kumar's office. According to Gurgaon police, touts canvassed Delhi and other cities to recruit donors, focusing on the poor and unemployed. Some were allegedly asked if they wanted to sell a kidney for $1,000 to $2,500.
Khan, an unemployed laborer who earns about $2 a day when he is lucky enough to find work, says that the offer of a steady job was simply too good to pass up, and even though he was kept waiting for almost two weeks in a house with a couple guys with rifles stationed outside it, he didn't complain because he was well fed and they promised he would be paid for his time. Only when the blood test was administered did he begin to catch on. "I asked why I needed a blood test, and one of the guys pointed his gun at me and told me not to ask pointless questions if I wanted to live," he said, casually leaning against the wall on the balcony outside the isolation ward at Gurgaon Civil Hospital. Lifting up his shirt, he reveals a puckered, 10-inch incision in his side, stitched together with broad exes of black surgical thread. "When I heard that my kidney had been removed, for a long time I was in shock," he reflects. Khan, who supports five children, his mother and two sisters, has no marketable skills, and doctors say that he will no longer be able to perform the backbreaking labor that he's used to doing. "I keep thinking about how I will live now." He says he received no payment for his kidney.
Naseem Mohammad, a 25-year-old laborer from Ahmedabad, in Gujarat, has a similar story. He was waiting for work at a labor market near the Old Delhi Railway Station when a man approached him with an offer for a three-month painting contract. He was taken to a house in Uttar Pradesh for two weeks, where his recruiters told him that they were waiting for a tender to be passed before the work could begin. "I didn't try to run, because I still thought I was going to get the job," he said outside the isolation ward. "Then one day they didn't give me anything to eat. They tested my blood. Then they gave me an injection. I asked them what was in it and why they were giving it to me, and they told me it was for my own good. Then I passed out." When he woke up, his kidney was gone. "I've gone before like this with people for 15-20 days work," he said. "Nothing like this has ever happened. Once I went to Mehrauli with a labor contractor to do road work. I didn't know this will happen. I'm in shock after this. What will I do?" He, too, says he received no money for his stolen organ.
Whether they volunteered and were cheated of their payoff or were drugged and robbed of their kidneys, there is no doubt Khan and Mohammed were victims of an inescapable, suffocating poverty that made them--like millions of others--vulnerable to all kinds of exploitation.
"They were easy prey," said Gurgaon deputy police commissioner Rakesh Arya.
URL: http://www.newsweek.com/id/107448
Friday, February 01, 2008
Friday, January 11, 2008
how green is a mini?
Tata's Nano may put millions of new drivers on the roads. It also may herald a new source of pollution.
By Jason Overdorf and Fred Guterl
Newsweek Web Exclusive
Updated: 9:26 AM ET Jan 11, 2008
The unveiling of Tata Motors' People's Car—perhaps the most anticipated vehicle in a decade—had the frenzied atmosphere of a blockbuster movie opening. For four years Tata kept every detail of the car's development top secret, and now a hundred or more photographers jostled to get the first shot. When chairman Ratan Tata, citing the first flight by the Wright brothers and the invention of the computer, pulled back the curtain on the newly named Nano, it turned out to be a four-seater, a bit more than three meters long, with a 642cc engine and made of plastic and glue instead of welded steel.
Despite speculation to the contrary, the car will retail for 100,000 rupees, or $2,500. ("A promise is a promise," Tata said.) At less than half what Maruti Suzuki, the current market leader in India, charges for its cheapest model, the Nano is priced to get urban Indians off their motor scooters and motorcycles and into a car. It is expected to inspire other manufacturers to develop cheap cars and force Maruti Suzuki and others to slash prices, bringing millions more new cars onto Indian roads over the next five years. But the prospect of a flood of new drivers in a nation of 1 billion people has inspired a backlash against the Nano from environmentalists, who fear it's a major new source of pollution.
The concern is that a supercheap auto will encourage development on the American model—relying on the car rather than mass transit. More drivers will add to air pollution, already a critical problem in more than half of India's cities, and to the carbon in the atmosphere that causes global warming. "This car promises to be an environmental disaster of substantial proportions," says Daniel Esty, an environmental expert at Yale.
Tata has worked hard to get out in front of its critics, at least on air pollution. The first models to roll off the company's assembly line in Singur, West Bengal, will get about 20 kilometers per liter of gasoline (50 miles per gallon) and meet stringent European emissions standards that have yet to be adopted in India. Tata insists that the Nano will pollute less than the two-wheelers it is intended to replace and get roughly the same gas mileage as the Maruti models. The Nano's catalytic converter appears to reduce most pollutants by about 80 percent—not as much as the 99 percent Western models do, but still a big reduction. Environmentalists, though, say that it will probably fail after a few years on the road. The reason: Indians typically don't keep their autos in tip-top shape. When the catalytic converter fails, emissions of pollutants could shoot up fivefold.
The story gets worse when you consider greenhouse gases like CO2, which escape catalytic converters. The more gas burned, the more CO2 released. The Nano is likely to replace motor scooters and motorbikes, which get about 54 kilometers to the liter, more than twice what the Nano gets, according to Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis, who has studied the situation in Delhi. That means fuel consumption and carbon emissions will almost certainly rise. "Every new purchase of this vehicle is increasing fuel use [per passenger] by a factor of two to seven, depending on how many people are in the car," says Sperling. That doesn't even account for a decline in fuel efficiency if the cars are not maintained well.
Western environmentalists know they have little moral standing to criticize Indians for wanting cars, particularly one that meets the highest Western emissions standards. But they're rattled in part because they didn't see this coming, and will have to recalculate projections for the buildup of greenhouse gases based on a world of many more drivers. "In none of our reports did we assume there'd be a car like this," says Judy Greenwald, director of innovative solutions at the Pew Center on Global Climate Change. "This is a new category. It will affect everybody's projections."
Indian leaders must also now grapple with the prospect that their nation will become an auto-based society like the United States much faster than expected. Tata's chairman chafed at the suggestion that his firm should be held responsible for the state of pollution in India—or the planet. "Were we to succeed and sell 500,000 small cars every year, we would then, at the end of five years, constitute approximately 2.5 percent of all passenger vehicles in this country," Tata said. "We could hardly be considered a nightmare."
URL: http://www.newsweek.com/id/91380
By Jason Overdorf and Fred Guterl
Newsweek Web Exclusive
Updated: 9:26 AM ET Jan 11, 2008
The unveiling of Tata Motors' People's Car—perhaps the most anticipated vehicle in a decade—had the frenzied atmosphere of a blockbuster movie opening. For four years Tata kept every detail of the car's development top secret, and now a hundred or more photographers jostled to get the first shot. When chairman Ratan Tata, citing the first flight by the Wright brothers and the invention of the computer, pulled back the curtain on the newly named Nano, it turned out to be a four-seater, a bit more than three meters long, with a 642cc engine and made of plastic and glue instead of welded steel.
Despite speculation to the contrary, the car will retail for 100,000 rupees, or $2,500. ("A promise is a promise," Tata said.) At less than half what Maruti Suzuki, the current market leader in India, charges for its cheapest model, the Nano is priced to get urban Indians off their motor scooters and motorcycles and into a car. It is expected to inspire other manufacturers to develop cheap cars and force Maruti Suzuki and others to slash prices, bringing millions more new cars onto Indian roads over the next five years. But the prospect of a flood of new drivers in a nation of 1 billion people has inspired a backlash against the Nano from environmentalists, who fear it's a major new source of pollution.
The concern is that a supercheap auto will encourage development on the American model—relying on the car rather than mass transit. More drivers will add to air pollution, already a critical problem in more than half of India's cities, and to the carbon in the atmosphere that causes global warming. "This car promises to be an environmental disaster of substantial proportions," says Daniel Esty, an environmental expert at Yale.
Tata has worked hard to get out in front of its critics, at least on air pollution. The first models to roll off the company's assembly line in Singur, West Bengal, will get about 20 kilometers per liter of gasoline (50 miles per gallon) and meet stringent European emissions standards that have yet to be adopted in India. Tata insists that the Nano will pollute less than the two-wheelers it is intended to replace and get roughly the same gas mileage as the Maruti models. The Nano's catalytic converter appears to reduce most pollutants by about 80 percent—not as much as the 99 percent Western models do, but still a big reduction. Environmentalists, though, say that it will probably fail after a few years on the road. The reason: Indians typically don't keep their autos in tip-top shape. When the catalytic converter fails, emissions of pollutants could shoot up fivefold.
The story gets worse when you consider greenhouse gases like CO2, which escape catalytic converters. The more gas burned, the more CO2 released. The Nano is likely to replace motor scooters and motorbikes, which get about 54 kilometers to the liter, more than twice what the Nano gets, according to Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis, who has studied the situation in Delhi. That means fuel consumption and carbon emissions will almost certainly rise. "Every new purchase of this vehicle is increasing fuel use [per passenger] by a factor of two to seven, depending on how many people are in the car," says Sperling. That doesn't even account for a decline in fuel efficiency if the cars are not maintained well.
Western environmentalists know they have little moral standing to criticize Indians for wanting cars, particularly one that meets the highest Western emissions standards. But they're rattled in part because they didn't see this coming, and will have to recalculate projections for the buildup of greenhouse gases based on a world of many more drivers. "In none of our reports did we assume there'd be a car like this," says Judy Greenwald, director of innovative solutions at the Pew Center on Global Climate Change. "This is a new category. It will affect everybody's projections."
Indian leaders must also now grapple with the prospect that their nation will become an auto-based society like the United States much faster than expected. Tata's chairman chafed at the suggestion that his firm should be held responsible for the state of pollution in India—or the planet. "Were we to succeed and sell 500,000 small cars every year, we would then, at the end of five years, constitute approximately 2.5 percent of all passenger vehicles in this country," Tata said. "We could hardly be considered a nightmare."
URL: http://www.newsweek.com/id/91380
the man behind the $2500 car
CEO Ratan Tata defends the Nano's environmental credibility
By Jason Overdorf
Newsweek Web Exclusive
Updated: 1:03 PM ET Jan 11, 2008
Four years ago Tata Motors embarked on an ambitious project to bring millions of people in India and elsewhere into the car-owning class. Today Chairman Ratan Tata unveiled the result: the Nano, a stripped down car with a 624 cc four-stroke engine that can seat four passengers. The car is a feat of engineering-it's made from plastic parts held together with adhesives-and meets all India's environment standards. Partly because of the visibility of the project, the Nano has become a lightening rod for criticism on the environmental impact of cars. Tata talked with NEWSWEEK's Jason Overdorf at the Delhi Auto Expo on the eve of the announcement. Excerpts:
NEWSWEEK: Some people have said this car is going to be a disaster for the environment. What impact will the introduction of these vehicles have on pollution levels in India?
Ratan Tata: Our car will meet all emissions requirements in India and in fact the emissions requirements overseas, present and future. Our engine today will meet Euro 3 [emissions standards] today and with small tweaking will meet Euro 4. It will therefore meet all the specifications of emissions that exist in India. We will emit less pollutants than the best two-wheelers in the country. I don't mean per passenger mile or anything. I mean per vehicle. So I am both amused and intrigued by why we are being panned as an environmental disaster before anyone even knows. And in fact the major NGO that's making much of the noise [the Center for Science and the Environment] already knows because I responded to them in great detail with what our numbers were. That appears to have been ignored.
One other point you made is that the sales numbers are not going to be so huge initially, right?
We're building a plant for 250,000 [cars]. It will be expandable to 300,000, and if you mirrored it that would be 500 or 600,000. It would be a challenge to get vendors and a whole infrastructure in place that would enable us to just endlessly build cars, apart from the resources that would be required. So if somebody thinks that we will be putting 2 million cars or 4 million cars into the market, I think that's a bit absurd. Today, with 4, 2 and 3-wheelers, every year [India adds] about 7 million [vehicles] in the market. [India] produced 1.4 million passenger cars last year, so it's kind of flat. What would this car do? Would it sit on top of that by adding 2 and 3 and 4 million? Would it wipe out everybody else? Would we produce and sell 7 million cars? No. It's reasonable to assume that we might be looking at in the next four to five years, maybe a half a million cars, which would be a very good number. No single platform would have that kind of number. What would half a million cars be as a part of an annual production that at that time, with 2-wheelers, 3-wheelers and 4-wheelers, might be 12 to 15 million vehicles? I don't see what the concern is, unless people are seeing ghosts.
I just want to raise one other thing. The noise is being raised by people who are doing nothing about pollution in a holistic manner. Nobody is doing anything about the total population and pollution from two-wheelers, from power stations, from generators. All of this has to be viewed together if one is truly worried about the environment. There are two scooter plants being established today-Honda and Suzuki-each one has about 250,000 unit capacity when they come online. They're not said to be polluting, they're not said to be congesting, they're not said to be unsafe. It's only us.
The other big question for everyone is how you brought down costs so dramatically. Is there a shortlist of two or three big innovations you made to cut costs?
When you start an exercise like this you dimension your product, and we dimensioned the size of our product. When you shrink the size of the product you obviously reduce the amount of material and material is the largest single element in [the cost of] a product. Then there are hundreds of innovative ideas that have brought the price down, or have in fact generated the kind of low costs that we have developed. And there are more on the anvil that will come from vendors, and not all of them will be based on volume.
Are there any that have the potential to change the way the traditional big guns in the auto industry are making cars?
The whole process of putting a car together perhaps needs to change by welding going to adhesives at some point in time. [Among] the most expensive parts of an assembly process are the paint shop and the press shop, so [global manufacturers will move to] materials that will lower the [capital investment] and operating costs [for] those types of units.
India has been talked about as becoming a small car manufacturing hub. What impact will the Nano have on that future?
It will only enhance it. It won't hurt it in any way. Finally, the people are going to decide if this car is going to do what everybody fears it will do or not. Not us. We have as a company put together a concept and converted it to reality, and we believe it is a very interesting value proposition but finally the market will need to decide. Who enters and who competes and what that product is going to do to us is a function of who addresses what the customer wants.
Renault-Nissan has already announced they are going to get into this game. Do you anticipate that this will be an active space that a lot of companies want to get into?
It will be. There's been self-denial that this space is a real space until we addressed it. We will have several people following us, including big companies, and we will need to raise the issue of why those big companies did not address those areas earlier. But possibly the first national car company to address it will be a Chinese company. The day they consider this to be an important segment of the market we will see a Chinese company come closest to us or even break our barrier.
Your coming into this market is somewhat similar to the entrance of Suzuki in the 1980s, in that it has the potential to create huge volumes. In working with suppliers, have you seen inklings of the kind of sea change that the launch of the Maruti 800 engendered?
We have. There was first a lot of disbelief among suppliers that we were really serious about this business. In West Bengal we conceived of a situation where they would be a campus-with ourselves and our vendors on the same campus. The acceptance of this and the investment in this was minimal at first. But now we can't provide enough space in our campus. Suddenly vendors are seeing large volumes, the ability to amortize investments they would have to make that they were not willing to do, and they've ceded their place to other vendors who were willing to do it. Now some of the majors want to come back in and play a role. In fairness, somebody else did take the risk, did place their faith in us, and they're there.
URL: http://www.newsweek.com/id/91447
By Jason Overdorf
Newsweek Web Exclusive
Updated: 1:03 PM ET Jan 11, 2008
Four years ago Tata Motors embarked on an ambitious project to bring millions of people in India and elsewhere into the car-owning class. Today Chairman Ratan Tata unveiled the result: the Nano, a stripped down car with a 624 cc four-stroke engine that can seat four passengers. The car is a feat of engineering-it's made from plastic parts held together with adhesives-and meets all India's environment standards. Partly because of the visibility of the project, the Nano has become a lightening rod for criticism on the environmental impact of cars. Tata talked with NEWSWEEK's Jason Overdorf at the Delhi Auto Expo on the eve of the announcement. Excerpts:
NEWSWEEK: Some people have said this car is going to be a disaster for the environment. What impact will the introduction of these vehicles have on pollution levels in India?
Ratan Tata: Our car will meet all emissions requirements in India and in fact the emissions requirements overseas, present and future. Our engine today will meet Euro 3 [emissions standards] today and with small tweaking will meet Euro 4. It will therefore meet all the specifications of emissions that exist in India. We will emit less pollutants than the best two-wheelers in the country. I don't mean per passenger mile or anything. I mean per vehicle. So I am both amused and intrigued by why we are being panned as an environmental disaster before anyone even knows. And in fact the major NGO that's making much of the noise [the Center for Science and the Environment] already knows because I responded to them in great detail with what our numbers were. That appears to have been ignored.
One other point you made is that the sales numbers are not going to be so huge initially, right?
We're building a plant for 250,000 [cars]. It will be expandable to 300,000, and if you mirrored it that would be 500 or 600,000. It would be a challenge to get vendors and a whole infrastructure in place that would enable us to just endlessly build cars, apart from the resources that would be required. So if somebody thinks that we will be putting 2 million cars or 4 million cars into the market, I think that's a bit absurd. Today, with 4, 2 and 3-wheelers, every year [India adds] about 7 million [vehicles] in the market. [India] produced 1.4 million passenger cars last year, so it's kind of flat. What would this car do? Would it sit on top of that by adding 2 and 3 and 4 million? Would it wipe out everybody else? Would we produce and sell 7 million cars? No. It's reasonable to assume that we might be looking at in the next four to five years, maybe a half a million cars, which would be a very good number. No single platform would have that kind of number. What would half a million cars be as a part of an annual production that at that time, with 2-wheelers, 3-wheelers and 4-wheelers, might be 12 to 15 million vehicles? I don't see what the concern is, unless people are seeing ghosts.
I just want to raise one other thing. The noise is being raised by people who are doing nothing about pollution in a holistic manner. Nobody is doing anything about the total population and pollution from two-wheelers, from power stations, from generators. All of this has to be viewed together if one is truly worried about the environment. There are two scooter plants being established today-Honda and Suzuki-each one has about 250,000 unit capacity when they come online. They're not said to be polluting, they're not said to be congesting, they're not said to be unsafe. It's only us.
The other big question for everyone is how you brought down costs so dramatically. Is there a shortlist of two or three big innovations you made to cut costs?
When you start an exercise like this you dimension your product, and we dimensioned the size of our product. When you shrink the size of the product you obviously reduce the amount of material and material is the largest single element in [the cost of] a product. Then there are hundreds of innovative ideas that have brought the price down, or have in fact generated the kind of low costs that we have developed. And there are more on the anvil that will come from vendors, and not all of them will be based on volume.
Are there any that have the potential to change the way the traditional big guns in the auto industry are making cars?
The whole process of putting a car together perhaps needs to change by welding going to adhesives at some point in time. [Among] the most expensive parts of an assembly process are the paint shop and the press shop, so [global manufacturers will move to] materials that will lower the [capital investment] and operating costs [for] those types of units.
India has been talked about as becoming a small car manufacturing hub. What impact will the Nano have on that future?
It will only enhance it. It won't hurt it in any way. Finally, the people are going to decide if this car is going to do what everybody fears it will do or not. Not us. We have as a company put together a concept and converted it to reality, and we believe it is a very interesting value proposition but finally the market will need to decide. Who enters and who competes and what that product is going to do to us is a function of who addresses what the customer wants.
Renault-Nissan has already announced they are going to get into this game. Do you anticipate that this will be an active space that a lot of companies want to get into?
It will be. There's been self-denial that this space is a real space until we addressed it. We will have several people following us, including big companies, and we will need to raise the issue of why those big companies did not address those areas earlier. But possibly the first national car company to address it will be a Chinese company. The day they consider this to be an important segment of the market we will see a Chinese company come closest to us or even break our barrier.
Your coming into this market is somewhat similar to the entrance of Suzuki in the 1980s, in that it has the potential to create huge volumes. In working with suppliers, have you seen inklings of the kind of sea change that the launch of the Maruti 800 engendered?
We have. There was first a lot of disbelief among suppliers that we were really serious about this business. In West Bengal we conceived of a situation where they would be a campus-with ourselves and our vendors on the same campus. The acceptance of this and the investment in this was minimal at first. But now we can't provide enough space in our campus. Suddenly vendors are seeing large volumes, the ability to amortize investments they would have to make that they were not willing to do, and they've ceded their place to other vendors who were willing to do it. Now some of the majors want to come back in and play a role. In fairness, somebody else did take the risk, did place their faith in us, and they're there.
URL: http://www.newsweek.com/id/91447
Tuesday, January 08, 2008
the world's cheapest wheels
When Tata Motors set out to build a $2,500 car, people said it couldn't be done. This week the company will unveil its vehicle of the future.
By Jason Overdorf
Newsweek (January 14, 2008)
Tata Motors is best known as a maker of industrial trucks from India's rust belt that launched the country's first completely indigenous passenger car, the Indica, 10 years ago. Next week the company will unveil another revolutionary new vehicle that will throw down the gauntlet in the highly competitive race to capture the first-time-buyer segment of the world's automobile market. Tata's not-so-secret weapon: the car is cheap. Unbelievably cheap.
Back in 2003, when chairman Ratan Tata revealed his plans to build a car that would cost less than 100,000 rupees (about $2,500 in today's dollars), rival carmakers said it couldn't be done. As time passed, and Tata kept at it, they hedged. Maybe it will be more like an enclosed motorcycle, they said. As tantalizing details about the car's design leaked, they started to get worried. Finally, in April, Renault-Nissan's Carlos Ghosn announced his own plans to build a $3,000 car in partnership with Indian motorcycle maker Bajaj Auto.
The move signaled that the race to create the world's best-selling starter car was on. The stakes are incredibly high, which is why the international auto industry is descending in unprecedented numbers on the New Delhi Auto Expo, where Tata will reveal the design for its People's Car for the first time on Jan. 10. The vehicle could have almost as large an impact in India as the original Volkswagen had in Germany back in 1938—perhaps doubling the size of India's passenger-car market overnight, and delivering a much-needed boost to the manufacturing sector in a country that has long suffered from so-called jobless growth. By encouraging parts suppliers to develop innovative ways to slash costs, it could also help build a highly efficient supply chain for the Indian automotive industry.
But the tremors won't be felt only in India. Small cars like VW's Gol, Nissan's Tsuru and Renault's Clio are already the top sellers in Latin America and Europe, and PricewaterhouseCoopers estimates that about half the growth in automobile sales between 2006 and 2011 will come from Brazil, Russia, India and China, countries that are expected to buy mainly small, cheap vehicles. Even in gas-guzzling America, where the cheapest car is today the $10,000 Chevy Aveo, buyers are warming up to subcompacts. As a result, virtually all of the world's major automakers are striving to develop cheap, fuel-efficient small cars that can first be sold in emerging markets, then exported to the West.
Until the past year, these cars were meant to be sub-$10,000 vehicles like the Renault Logan. Now, with Tata setting the limbo stick much lower, the price target has been slashed to below $5,000. Add to that Tata's pole position in the bidding to buy the premium Jaguar and Rover brands from Ford Motor Co., and it truly looks like the Indian carmaker has arrived.
If successful, the People's Car could help shift the growth dynamic of the entire Indian economy, which has until recently been based more on service than manufacturing expertise. When Suzuki first brought the Maruti 800 (currently the world's cheapest car at about $5,000) to India in 1983, it completely transformed the domestic component business, laying the foundation for India's current emergence as an auto-parts hub. Suzuki's Indian factories have always built for the domestic market, but recently it announced it will sell an Indian-made hatchback in Europe next year. Others have also set up production in India, attracted by its large domestic market and growing components expertise. Hyundai has been the most aggressive in its efforts to make India a manufacturing hub. It exported more than 100,000 cars built here to Europe, South Africa and Latin America last year, and it chose India as the site for the global launch of its new compact model, the i10. But even Ford and General Motors, slower to see India's potential, have ramped up their efforts.
Analysts are even more bullish on Tata's plans. "There's no doubt this car is going to create a new [automotive] segment altogether," says Abdul Majeed, a partner in the automotive practice of PricewaterhouseCoopers. "If you look at the Indian automotive market, the bulk of it—over 70 percent—is two-wheelers. But the price gap between two-wheelers and four-wheelers has been very significant." The price tag for the People's Car is a bit more than double the cost of a midrange motorcycle, like Hero Honda's 100cc Splendor. Majeed forecasts that Tata's new car could encourage 10 to 20 percent of India's scooter and motorcycle buyers to purchase a car instead. If that happens, it would mean an additional 1.8 million vehicles sold per year—almost equal to the current size of the entire Indian passenger-car market.
Most analysts are waiting for a view of the car before pegging sales estimates—a task made difficult because Ratan Tata has played his cards very close to the vest in the three-year lead-up to the launch of the People's Car, revealing almost nothing about the design and features of the vehicle, or how the company managed to slash costs—both of which will define how the car affects the global industry. Prototypes have been as jealously guarded. Virtually all that is known for sure about the car so far—courtesy of a scripted "leak" by one of the company directors after Nobel Prize-winning climatologist R. K. Pachauri suggested the People's Car could be an environmentalist's nightmare if it vastly increases numbers on the road—is that it gets 25 kilometers per liter (59 miles per gallon) of gasoline, meets European emissions standards and matches the Maruti 800 in acceleration. It was also revealed that the car uses more plastic and fewer bolts than conventional designs, lending credence to rumors that Tata engineers visited Lotus in Malaysia to study adhesive bonding as an alternative to welding.
But its other cost-saving measures could have the biggest impact. Promising huge sales volumes, Tata has worked closely with components suppliers to bring the price of each part into a predetermined target range. The efforts are reminiscent of the techniques Tata used a few years back to bring down the price of the Ace, India's first mini-pickup truck, to about $6,000—close to the cost of the three-wheeled vehicles generally used for small jobs. In a considerable feat of engineering, the company came up with a design that allowed it to cut two engines for the Ace from the same block it used for the Indica. Not only did that allow the company to avoid building a new assembly facility, it also allowed it to capitalize on further economies of scale. If the People's Car shows more of the same, Tata—and India—may well win the race to miniaturize the automobile.
URL: http://www.newsweek.com/id/84503
By Jason Overdorf
Newsweek (January 14, 2008)
Tata Motors is best known as a maker of industrial trucks from India's rust belt that launched the country's first completely indigenous passenger car, the Indica, 10 years ago. Next week the company will unveil another revolutionary new vehicle that will throw down the gauntlet in the highly competitive race to capture the first-time-buyer segment of the world's automobile market. Tata's not-so-secret weapon: the car is cheap. Unbelievably cheap.
Back in 2003, when chairman Ratan Tata revealed his plans to build a car that would cost less than 100,000 rupees (about $2,500 in today's dollars), rival carmakers said it couldn't be done. As time passed, and Tata kept at it, they hedged. Maybe it will be more like an enclosed motorcycle, they said. As tantalizing details about the car's design leaked, they started to get worried. Finally, in April, Renault-Nissan's Carlos Ghosn announced his own plans to build a $3,000 car in partnership with Indian motorcycle maker Bajaj Auto.
The move signaled that the race to create the world's best-selling starter car was on. The stakes are incredibly high, which is why the international auto industry is descending in unprecedented numbers on the New Delhi Auto Expo, where Tata will reveal the design for its People's Car for the first time on Jan. 10. The vehicle could have almost as large an impact in India as the original Volkswagen had in Germany back in 1938—perhaps doubling the size of India's passenger-car market overnight, and delivering a much-needed boost to the manufacturing sector in a country that has long suffered from so-called jobless growth. By encouraging parts suppliers to develop innovative ways to slash costs, it could also help build a highly efficient supply chain for the Indian automotive industry.
But the tremors won't be felt only in India. Small cars like VW's Gol, Nissan's Tsuru and Renault's Clio are already the top sellers in Latin America and Europe, and PricewaterhouseCoopers estimates that about half the growth in automobile sales between 2006 and 2011 will come from Brazil, Russia, India and China, countries that are expected to buy mainly small, cheap vehicles. Even in gas-guzzling America, where the cheapest car is today the $10,000 Chevy Aveo, buyers are warming up to subcompacts. As a result, virtually all of the world's major automakers are striving to develop cheap, fuel-efficient small cars that can first be sold in emerging markets, then exported to the West.
Until the past year, these cars were meant to be sub-$10,000 vehicles like the Renault Logan. Now, with Tata setting the limbo stick much lower, the price target has been slashed to below $5,000. Add to that Tata's pole position in the bidding to buy the premium Jaguar and Rover brands from Ford Motor Co., and it truly looks like the Indian carmaker has arrived.
If successful, the People's Car could help shift the growth dynamic of the entire Indian economy, which has until recently been based more on service than manufacturing expertise. When Suzuki first brought the Maruti 800 (currently the world's cheapest car at about $5,000) to India in 1983, it completely transformed the domestic component business, laying the foundation for India's current emergence as an auto-parts hub. Suzuki's Indian factories have always built for the domestic market, but recently it announced it will sell an Indian-made hatchback in Europe next year. Others have also set up production in India, attracted by its large domestic market and growing components expertise. Hyundai has been the most aggressive in its efforts to make India a manufacturing hub. It exported more than 100,000 cars built here to Europe, South Africa and Latin America last year, and it chose India as the site for the global launch of its new compact model, the i10. But even Ford and General Motors, slower to see India's potential, have ramped up their efforts.
Analysts are even more bullish on Tata's plans. "There's no doubt this car is going to create a new [automotive] segment altogether," says Abdul Majeed, a partner in the automotive practice of PricewaterhouseCoopers. "If you look at the Indian automotive market, the bulk of it—over 70 percent—is two-wheelers. But the price gap between two-wheelers and four-wheelers has been very significant." The price tag for the People's Car is a bit more than double the cost of a midrange motorcycle, like Hero Honda's 100cc Splendor. Majeed forecasts that Tata's new car could encourage 10 to 20 percent of India's scooter and motorcycle buyers to purchase a car instead. If that happens, it would mean an additional 1.8 million vehicles sold per year—almost equal to the current size of the entire Indian passenger-car market.
Most analysts are waiting for a view of the car before pegging sales estimates—a task made difficult because Ratan Tata has played his cards very close to the vest in the three-year lead-up to the launch of the People's Car, revealing almost nothing about the design and features of the vehicle, or how the company managed to slash costs—both of which will define how the car affects the global industry. Prototypes have been as jealously guarded. Virtually all that is known for sure about the car so far—courtesy of a scripted "leak" by one of the company directors after Nobel Prize-winning climatologist R. K. Pachauri suggested the People's Car could be an environmentalist's nightmare if it vastly increases numbers on the road—is that it gets 25 kilometers per liter (59 miles per gallon) of gasoline, meets European emissions standards and matches the Maruti 800 in acceleration. It was also revealed that the car uses more plastic and fewer bolts than conventional designs, lending credence to rumors that Tata engineers visited Lotus in Malaysia to study adhesive bonding as an alternative to welding.
But its other cost-saving measures could have the biggest impact. Promising huge sales volumes, Tata has worked closely with components suppliers to bring the price of each part into a predetermined target range. The efforts are reminiscent of the techniques Tata used a few years back to bring down the price of the Ace, India's first mini-pickup truck, to about $6,000—close to the cost of the three-wheeled vehicles generally used for small jobs. In a considerable feat of engineering, the company came up with a design that allowed it to cut two engines for the Ace from the same block it used for the Indica. Not only did that allow the company to avoid building a new assembly facility, it also allowed it to capitalize on further economies of scale. If the People's Car shows more of the same, Tata—and India—may well win the race to miniaturize the automobile.
URL: http://www.newsweek.com/id/84503
Thursday, January 03, 2008
objective observations of a ludicrous freak
Often, it all ends up as a strange, involuntary, one-man circus act by a bald, white man
By Jason Overdorf
Outlook India (Jan. 14, 2008)
There is no one moment that has defined my experience in India, no epiphany when it was all made clear. Rather, my time here has been a confusing blur. A synaptic overload. In the course of my job (I’m a journalist), I travel to strange places and try to catch the essence of what is going on. I try to record a mental image of the scene—what the principals are wearing, what the hawkers are selling (and for how much), the particular sort of stink (nullah? body odour? diesel?)—and at the same time to get "the story". I’m not sure I ever succeed.
When I show up, everybody surrounds me to scrutinise my every word and gesture. Somewhere I have run across the idea that the presence of the observer has a subtle, often unreported influence on the phenomenon he’s meant to be observing. My experience is nothing like that. It’s more like the phenomenon I’m meant to be observing comes to a complete halt and normal life is replaced by a strange, involuntary, one-man circus performance by a bald white man. If I were to be truthful, I’d headline all my stories the same way: Objective observations made by a ludicrous freak, while ignoring the woman staring into his ear and trying to take notes with a serious and dignified air.
You think I’m exaggerating. But that is because Indians are capable of doing many things at once. You can conduct a heated argument while brushing off a beggar tugging at your sleeve, accepting a cup of tea from a servant and ignoring a religious figure of some sort who is chanting, setting something on fire, or just making some kind of piercing noise over a loudspeaker. You don’t even think about it. For you this is normal.
I’ll give you an example. Before the last national election, I took a taxi to Gorakhpur to write about Sonia Gandhi’s "road show". I’d managed to track down Salman Khursheed, then president of the UP Congress, and wangled my way into his fancy jeep (a Scorpio or Sumo or something) for the ride out to the villages where Sonia was supposed to whip up enthusiasm for her campaign. It was the only time I was going to have for an interview, and it wasn’t likely I’d get any time with Sonia herself.The convoy took off as though somebody had waved a green flag, all the drivers jockeying for a position close to Sonia’s car, bumping quarterpanels like some kind of khadi-clad nascar final. Every so often, a policewallah would come alongside in an open jeep, lean out like a polo player, and clout one of the Scorpios or Sumos or Qualises with his lathi to force it back in line. All the while, I’m firing interview questions at Khursheed and the other UP Congress bigwigs, with my eyes riveted to the road ahead so I won’t miss my last moment on earth. If I hadn’t had a tape recorder, the only thing I’d have gotten out of the whole experience would have been the thwack of a lathi on the roof and, when the driver made a move to off-road it through a deep ravine to inch closer to Sonia’s car, the sudden interruption of Khursheed’s erudite explanation of the caste equation in UP so that he could exclaim: "Mat karo! Mat karo!" Later, I listened to the tape. Sure enough, Khursheed had given me articulate, even eloquent, answers.
Another time, near Vidarbha in Maharashtra, I went to visit the families of some farmers who’d committed suicide. In one house, I remember, the man had killed himself only the day before, and his wife, probably in shock, lay without speaking in a bed in a darkened room in the back. There I was being shepherded around by an activist for the farmers who was really just a politician by another name. My usual circus-act arrival had attracted a lot of attention when we rolled in, and now we had an entourage of a dozen or so villagers who all wanted to go on record with the story of the tragedy.We trooped into the widow’s house, all the way to her bedside. It was a horrible invasion. But she didn’t react. If she had, she wouldn’t have been able to get a word in edgewise, there were so many people competing to tell me how bad things had become, watching my reactions, cataloguing the expressions of sympathy and concern I was able to muster. I was trying to look at the widow so that I could describe her in her anguish—steeling myself for a part of the job I’m not sure that I believe in—and everybody else was rubbernecking at me.
Sometimes, too, it’s the great Indian instinct for hospitality that throws my observations off kilter. I’ll be sent to a Dalit village someplace, or to the home of a notorious goonda, or to an encampment of bonded labourers, and everything will come to a stop as first a plastic chair is unearthed for me to sit on, then discarded in favour of a charpoy. Then tea appears. A conference develops: perhaps the foreigner won’t drink tea, foreigners get the loosies from all manner of things, and so on. The tea disappears and is replaced with Pepsi. Everyone talks at once. The translator summarises five minutes of narrative with a single sentence. I stupidly write down "woman in blue sari" and "boy in Nike T-shirt". I should be cutting my subjects, who earn all of 50 rupees a day if they are lucky, in on the proceeds from my article—which will affect a tone of outrage and perhaps occasion a coffee-table discussion or two. But instead they’re buying me Pepsi.
Those are, I suppose, after all, my defining experiences of India. It’s too immediate for definition. There are too many interpreters. Too many guides for me to look and listen properly. So I don’t experience India at all. I just try my best to stop it from experiencing me.
Jason Overdorf is a Delhi-based American freelance journalist and a frequent contributor to Newsweek
By Jason Overdorf
Outlook India (Jan. 14, 2008)
There is no one moment that has defined my experience in India, no epiphany when it was all made clear. Rather, my time here has been a confusing blur. A synaptic overload. In the course of my job (I’m a journalist), I travel to strange places and try to catch the essence of what is going on. I try to record a mental image of the scene—what the principals are wearing, what the hawkers are selling (and for how much), the particular sort of stink (nullah? body odour? diesel?)—and at the same time to get "the story". I’m not sure I ever succeed.
When I show up, everybody surrounds me to scrutinise my every word and gesture. Somewhere I have run across the idea that the presence of the observer has a subtle, often unreported influence on the phenomenon he’s meant to be observing. My experience is nothing like that. It’s more like the phenomenon I’m meant to be observing comes to a complete halt and normal life is replaced by a strange, involuntary, one-man circus performance by a bald white man. If I were to be truthful, I’d headline all my stories the same way: Objective observations made by a ludicrous freak, while ignoring the woman staring into his ear and trying to take notes with a serious and dignified air.
You think I’m exaggerating. But that is because Indians are capable of doing many things at once. You can conduct a heated argument while brushing off a beggar tugging at your sleeve, accepting a cup of tea from a servant and ignoring a religious figure of some sort who is chanting, setting something on fire, or just making some kind of piercing noise over a loudspeaker. You don’t even think about it. For you this is normal.
I’ll give you an example. Before the last national election, I took a taxi to Gorakhpur to write about Sonia Gandhi’s "road show". I’d managed to track down Salman Khursheed, then president of the UP Congress, and wangled my way into his fancy jeep (a Scorpio or Sumo or something) for the ride out to the villages where Sonia was supposed to whip up enthusiasm for her campaign. It was the only time I was going to have for an interview, and it wasn’t likely I’d get any time with Sonia herself.The convoy took off as though somebody had waved a green flag, all the drivers jockeying for a position close to Sonia’s car, bumping quarterpanels like some kind of khadi-clad nascar final. Every so often, a policewallah would come alongside in an open jeep, lean out like a polo player, and clout one of the Scorpios or Sumos or Qualises with his lathi to force it back in line. All the while, I’m firing interview questions at Khursheed and the other UP Congress bigwigs, with my eyes riveted to the road ahead so I won’t miss my last moment on earth. If I hadn’t had a tape recorder, the only thing I’d have gotten out of the whole experience would have been the thwack of a lathi on the roof and, when the driver made a move to off-road it through a deep ravine to inch closer to Sonia’s car, the sudden interruption of Khursheed’s erudite explanation of the caste equation in UP so that he could exclaim: "Mat karo! Mat karo!" Later, I listened to the tape. Sure enough, Khursheed had given me articulate, even eloquent, answers.
Another time, near Vidarbha in Maharashtra, I went to visit the families of some farmers who’d committed suicide. In one house, I remember, the man had killed himself only the day before, and his wife, probably in shock, lay without speaking in a bed in a darkened room in the back. There I was being shepherded around by an activist for the farmers who was really just a politician by another name. My usual circus-act arrival had attracted a lot of attention when we rolled in, and now we had an entourage of a dozen or so villagers who all wanted to go on record with the story of the tragedy.We trooped into the widow’s house, all the way to her bedside. It was a horrible invasion. But she didn’t react. If she had, she wouldn’t have been able to get a word in edgewise, there were so many people competing to tell me how bad things had become, watching my reactions, cataloguing the expressions of sympathy and concern I was able to muster. I was trying to look at the widow so that I could describe her in her anguish—steeling myself for a part of the job I’m not sure that I believe in—and everybody else was rubbernecking at me.
Sometimes, too, it’s the great Indian instinct for hospitality that throws my observations off kilter. I’ll be sent to a Dalit village someplace, or to the home of a notorious goonda, or to an encampment of bonded labourers, and everything will come to a stop as first a plastic chair is unearthed for me to sit on, then discarded in favour of a charpoy. Then tea appears. A conference develops: perhaps the foreigner won’t drink tea, foreigners get the loosies from all manner of things, and so on. The tea disappears and is replaced with Pepsi. Everyone talks at once. The translator summarises five minutes of narrative with a single sentence. I stupidly write down "woman in blue sari" and "boy in Nike T-shirt". I should be cutting my subjects, who earn all of 50 rupees a day if they are lucky, in on the proceeds from my article—which will affect a tone of outrage and perhaps occasion a coffee-table discussion or two. But instead they’re buying me Pepsi.
Those are, I suppose, after all, my defining experiences of India. It’s too immediate for definition. There are too many interpreters. Too many guides for me to look and listen properly. So I don’t experience India at all. I just try my best to stop it from experiencing me.
Jason Overdorf is a Delhi-based American freelance journalist and a frequent contributor to Newsweek
Tuesday, December 25, 2007
fifteen killed as bridge collapses after hindu festival
By Jason Overdorf in Delhi
Published: 26 December 2007
At least fifteen people were killed and hundreds missing feared dead last night after the collapse of a suspension bridge over a river in a remote part of rural Nepal, a local official said.
The bridge across the Bheri River, near Chunchu village in western Nepal, collapsed when 300-400 local people crowded on to it on their way to a Hindu religious festival. As many as half of them swam to safety, but many others were swept downstream and are feared to have drowned. Last night police officers at the scene predicted the death toll would rise.
"It was not an old bridge, but there were too many people on it," said Yam Prasad Suvedi, the district administrative officer of Surkhet District, the area where the accident occurred. The steel suspension bridge was about 350 metres long, Mr Suvedi said.
The Bheri River is said to have strong currents and be difficult to swim in, although the winter flow is said to be slower than at other times of the year. Some people were seen scrambling to safety.
In the immediate aftermath of the incident, local agencies deployed a helicopter ambulance. After dark, the rescue efforts continued with boats. One local report estimated that rescuers helped about 40 people swim to safety and about 150 others managed to reach shore on their own.
The Nepalese Army, Armed Police Force, Nepal Police and Nepal Red Cross Society were mobilised along with several helicopters to search for survivors. The remote location of the bridge, however, about 240 miles from the capital, Kathmandu, delayed some of the relief efforts.
The timing of the incident, which occurred during the Bheri's low winter ebb, may have mitigated the effects of the disaster by allowing some of the victims to swim to safety.
The incident took place at around 1.30pm, as the victims made their way to a temple to celebrate the occasion of Dhanya Poornima, a full moon festival.
Last night hopes that a significant number of the missing would be rescued were fading. Anil Pandey, chief district officer in the area, said: "There were possibly 500 people on the bridge when it collapsed because of the weight. Some of them managed to climb to safety, some fell on the banks, but the ones who plunged into the river are the ones still missing."
Police and troops had been called in to help the rescue effort. Mr Pandey told the AFP news agency: "The rescue work has been halted for today as darkness has gripped the area. Police and army have set up temporary camps to begin rescue works from early Wednesday morning. "The remoteness of the area and poor communication facilities has delayed rescue efforts," Mr Pandey added.
According to some local reports, the majority of those missing are women and children. Deputy Inspector General at the regional Armed Police Force Office, Krishna Bahadur Bista, said that most people crossing the bridge had been women and girls.
Published: 26 December 2007
At least fifteen people were killed and hundreds missing feared dead last night after the collapse of a suspension bridge over a river in a remote part of rural Nepal, a local official said.
The bridge across the Bheri River, near Chunchu village in western Nepal, collapsed when 300-400 local people crowded on to it on their way to a Hindu religious festival. As many as half of them swam to safety, but many others were swept downstream and are feared to have drowned. Last night police officers at the scene predicted the death toll would rise.
"It was not an old bridge, but there were too many people on it," said Yam Prasad Suvedi, the district administrative officer of Surkhet District, the area where the accident occurred. The steel suspension bridge was about 350 metres long, Mr Suvedi said.
The Bheri River is said to have strong currents and be difficult to swim in, although the winter flow is said to be slower than at other times of the year. Some people were seen scrambling to safety.
In the immediate aftermath of the incident, local agencies deployed a helicopter ambulance. After dark, the rescue efforts continued with boats. One local report estimated that rescuers helped about 40 people swim to safety and about 150 others managed to reach shore on their own.
The Nepalese Army, Armed Police Force, Nepal Police and Nepal Red Cross Society were mobilised along with several helicopters to search for survivors. The remote location of the bridge, however, about 240 miles from the capital, Kathmandu, delayed some of the relief efforts.
The timing of the incident, which occurred during the Bheri's low winter ebb, may have mitigated the effects of the disaster by allowing some of the victims to swim to safety.
The incident took place at around 1.30pm, as the victims made their way to a temple to celebrate the occasion of Dhanya Poornima, a full moon festival.
Last night hopes that a significant number of the missing would be rescued were fading. Anil Pandey, chief district officer in the area, said: "There were possibly 500 people on the bridge when it collapsed because of the weight. Some of them managed to climb to safety, some fell on the banks, but the ones who plunged into the river are the ones still missing."
Police and troops had been called in to help the rescue effort. Mr Pandey told the AFP news agency: "The rescue work has been halted for today as darkness has gripped the area. Police and army have set up temporary camps to begin rescue works from early Wednesday morning. "The remoteness of the area and poor communication facilities has delayed rescue efforts," Mr Pandey added.
According to some local reports, the majority of those missing are women and children. Deputy Inspector General at the regional Armed Police Force Office, Krishna Bahadur Bista, said that most people crossing the bridge had been women and girls.
Tuesday, December 18, 2007
cashless in the hinterlands
Mobile banking might save the government and banks money and reduce fraud that plagues the public-distribution system.
By Jason Overdorf
Newsweek (Dec. 17, 2007)
Mobile phones are making life better for people in remote, underserved areas of India. They no longer have to walk kilometers to public call offices to use a telephone—an essential tool for buying and selling goods based on the latest market data, getting credit from lenders and other commonplace activities. So far, most of the benefits have come from one of the phone's simplest features: voice calls.
With more than 250 million mobile users and 6 million new ones added each month, India now has the "teledensity" to support more-sophisticated mobile technologies, which could have a big impact on Indian society and the economy in the next few years. (An extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.59 percentage points of growth in GDP per person, according to a London Business School study.) These include "voice broadcast" services that would let a truck owner inform residents of a village about a scheduled trip to the city, or doctors announce the availability of polio vaccinations. A more complex system would allow a small business, say, to keep track of shipments. What's holding up these services is the lack of mobile banking.
With urban markets nearing saturation, global giants like Nokia are now looking to appeal to the hinterlands. Reliance Communications, which has offered Internet service over its mobile phones since 2002, is sponsoring a contest this year for developers to invent new rural services. "We want to really take advantage of our mobile platform, our data network, and our ability to provide the mobile Internet experience to bridge the digital divide," says Mahesh Prasad, president of applications and development.
Several small companies are at work on mobile banking for small businesses. New Delhi-based ekgaon technologies has developed a system for tracking transactions made by so-called Self Help Groups, which pool members' money and offer small loans to poor people. The system uses a camera-equipped mobile phone to scan forms and a voice-recognition system. A.Little.World, a mobile software business in Mumbai, has developed a microfinance and payment system that lets customers perform banking transactions through a local agent affiliated with a bank (a practice allowed for the first time in January 2006). Customers get a secure electronic identity via phone or smart card; agents take deposits and dispense cash. Biometric data, such as fingerprints, make the phones and smart cards more secure than paper-based banking. A.Little.World has extended such services to about 400 local businesses acting as agents. And it's now working on a national rollout with the State Bank of India—the biggest player in the rural market. Meanwhile, ekgaon, whose partners include CARE, WorldVision and the World Bank, has a pilot transaction-management system for 10,000 Self Help Groups, with plans to extend it to 14 Indian states.
Mobile banking services can reduce the cost of transactions for loans and other services—the main obstacle to providing banking for the poor—by as much as three quarters, according to ekgaon's chief operating officer Rohit Magotra. Mobile transactions could have an even broader effect applied to India's social-security payments and public-distribution system, which sells essential goods to the poor at subsidized rates. By March 2008, people in 8,000 villages in Andhra Pradesh will get their benefits zapped via mobile phone to their smart cards, which they may eventually use instead of cash to buy goods at the ration shop. A.Little.World, which is building the system, says a nationwide service could help reduce fraud in the public-distribution system. It would also mean going from a bankless world to a cashless one, maybe even faster than America or Europe.
URL: http://www.newsweek.com/id/74440
By Jason Overdorf
Newsweek (Dec. 17, 2007)
Mobile phones are making life better for people in remote, underserved areas of India. They no longer have to walk kilometers to public call offices to use a telephone—an essential tool for buying and selling goods based on the latest market data, getting credit from lenders and other commonplace activities. So far, most of the benefits have come from one of the phone's simplest features: voice calls.
With more than 250 million mobile users and 6 million new ones added each month, India now has the "teledensity" to support more-sophisticated mobile technologies, which could have a big impact on Indian society and the economy in the next few years. (An extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.59 percentage points of growth in GDP per person, according to a London Business School study.) These include "voice broadcast" services that would let a truck owner inform residents of a village about a scheduled trip to the city, or doctors announce the availability of polio vaccinations. A more complex system would allow a small business, say, to keep track of shipments. What's holding up these services is the lack of mobile banking.
With urban markets nearing saturation, global giants like Nokia are now looking to appeal to the hinterlands. Reliance Communications, which has offered Internet service over its mobile phones since 2002, is sponsoring a contest this year for developers to invent new rural services. "We want to really take advantage of our mobile platform, our data network, and our ability to provide the mobile Internet experience to bridge the digital divide," says Mahesh Prasad, president of applications and development.
Several small companies are at work on mobile banking for small businesses. New Delhi-based ekgaon technologies has developed a system for tracking transactions made by so-called Self Help Groups, which pool members' money and offer small loans to poor people. The system uses a camera-equipped mobile phone to scan forms and a voice-recognition system. A.Little.World, a mobile software business in Mumbai, has developed a microfinance and payment system that lets customers perform banking transactions through a local agent affiliated with a bank (a practice allowed for the first time in January 2006). Customers get a secure electronic identity via phone or smart card; agents take deposits and dispense cash. Biometric data, such as fingerprints, make the phones and smart cards more secure than paper-based banking. A.Little.World has extended such services to about 400 local businesses acting as agents. And it's now working on a national rollout with the State Bank of India—the biggest player in the rural market. Meanwhile, ekgaon, whose partners include CARE, WorldVision and the World Bank, has a pilot transaction-management system for 10,000 Self Help Groups, with plans to extend it to 14 Indian states.
Mobile banking services can reduce the cost of transactions for loans and other services—the main obstacle to providing banking for the poor—by as much as three quarters, according to ekgaon's chief operating officer Rohit Magotra. Mobile transactions could have an even broader effect applied to India's social-security payments and public-distribution system, which sells essential goods to the poor at subsidized rates. By March 2008, people in 8,000 villages in Andhra Pradesh will get their benefits zapped via mobile phone to their smart cards, which they may eventually use instead of cash to buy goods at the ration shop. A.Little.World, which is building the system, says a nationwide service could help reduce fraud in the public-distribution system. It would also mean going from a bankless world to a cashless one, maybe even faster than America or Europe.
URL: http://www.newsweek.com/id/74440
Wednesday, November 28, 2007
clear skies ahead?
India's economy reaches the "takeoff" point. But will tumultuous politics put it in a holding pattern?
By Jason Overdorf/New Delhi
(Newsweek Web Extra - November 24, 2007)
India's politics may be in turmoil, but so far the chaos hasn't put a crimp in the country's economy. Last quarter, GDP grew by more than 9 percent, a huge improvement over the 3.5 percent the country averaged in its first 30 years.
The explanation for the disconnect, according to a recent report by Lehman Brothers, is that India's economy has reached what experts call a "takeoff" point where the "old blocks and resistances to steady growth [have been] finally overcome." The report predicts that India's economic momentum has become virtually unstoppable, thanks to two main factors: an average 6.9 growth rate in per capita GDP since 2003, and a trade-to-GDP ratio that has doubled over the past seven years.
The surge in per capita GDP to about $800—from less than $350 in 1995—has more than doubled the size of India's middle class to about 50 million, increasing demand for consumer goods and stimulating manufacturing. The increase in the trade-to-GDP ratio shows that India's economy has finally opened up to the world as dramatically as China's and South Korea's did before it. Meanwhile, a boom has boosted India's investment-to-GDP ratio into the 30 to 40 percent range, from about 15 percent in the early 1990s—hitting the level many analysts believe was essential to the rapid growth experienced in other parts of Asia. And the trends, according to Lehman Brothers, suggest that India is just getting started. If it continues to make economic reforms, such as simplifying taxes, loosening labor laws and changing the pension system to help build a healthy corporate bond market, the economy could soon hit China's mythic 10 percent annual growth rate.
But that's a big if. Prime Minister Manmohan Singh's reforms—most of which he made as finance minister between 1991 and 1996 (one reason he doesn't get credit for them now)—succeeded so well that they eliminated any sense of urgency. In this sense, the prime minister may be a victim of his own achievements. The problem, says Subir Gokarn, chief economist at Crisil, a credit-rating agency, is that "when the economy is doing so well, you cannot create a constituency for reform." The ability to make big changes, he explains, is "independent of the individual, independent of the party, independent of the system. When there's a widespread perception of crisis, then reform happens. When there isn't, it doesn't." In 1991, such a crisis atmosphere came from an exchange-rate drop that nearly depleted India's foreign-exchange reserves. But the country has faced no similar threat since 2004.
Thus reform has slowed dramatically. Singh's government has failed to take steps like relaxing India's stringent labor laws and selling off state-owned industries. That said, it has managed to make some important improvements in recent years—despite fractures within the governing coalition and the lack of an outside prod. For instance, after becoming prime minister in 2004, Singh, despite local opposition, began measures to allow foreign direct investment in the retail sector and to facilitate the creation of large domestic retail chains. He also moved to encourage public-private partnerships in infrastructure projects—potentially bringing more money and better management to one of India's biggest laggards. And he unleashed what could be the biggest stimulus for India's manufacturing sector since 1991, setting up a huge number (386) of special economic zones last year, where industry will enjoy preferential tax policies and government assistance in acquiring land. (Between 1965 and 2004, by contrast, India established only eight.)
The alignment of economic agendas between India's two largest political parties—Congress and the BJP--is perhaps the best sign of all for the country's economic future. Politics in India can prove unstable; four different governments ruled during the 1990s; the BJP-led alliance held sway from 1998 to 2003, and a coalition led by the Congress Party has ruled since 2004. But as the politicians have traded seats, economic reforms have continued apace. This suggests that despite some resistance and reluctance to make further changes, both of the major parties believe there's no going back on reforms already undertaken. Moreover, as the Lehman Brothers report points out, "The general pattern in democracies worldwide is that governments find it easier to push through reforms—and other potentially controversial legislation—earlier in their term of office." That means the 2009 general elections might give the Indian snowball another push, bringing 10 percent growth into view at last.
URL: http://www.newsweek.com/id/72071
By Jason Overdorf/New Delhi
(Newsweek Web Extra - November 24, 2007)
India's politics may be in turmoil, but so far the chaos hasn't put a crimp in the country's economy. Last quarter, GDP grew by more than 9 percent, a huge improvement over the 3.5 percent the country averaged in its first 30 years.
The explanation for the disconnect, according to a recent report by Lehman Brothers, is that India's economy has reached what experts call a "takeoff" point where the "old blocks and resistances to steady growth [have been] finally overcome." The report predicts that India's economic momentum has become virtually unstoppable, thanks to two main factors: an average 6.9 growth rate in per capita GDP since 2003, and a trade-to-GDP ratio that has doubled over the past seven years.
The surge in per capita GDP to about $800—from less than $350 in 1995—has more than doubled the size of India's middle class to about 50 million, increasing demand for consumer goods and stimulating manufacturing. The increase in the trade-to-GDP ratio shows that India's economy has finally opened up to the world as dramatically as China's and South Korea's did before it. Meanwhile, a boom has boosted India's investment-to-GDP ratio into the 30 to 40 percent range, from about 15 percent in the early 1990s—hitting the level many analysts believe was essential to the rapid growth experienced in other parts of Asia. And the trends, according to Lehman Brothers, suggest that India is just getting started. If it continues to make economic reforms, such as simplifying taxes, loosening labor laws and changing the pension system to help build a healthy corporate bond market, the economy could soon hit China's mythic 10 percent annual growth rate.
But that's a big if. Prime Minister Manmohan Singh's reforms—most of which he made as finance minister between 1991 and 1996 (one reason he doesn't get credit for them now)—succeeded so well that they eliminated any sense of urgency. In this sense, the prime minister may be a victim of his own achievements. The problem, says Subir Gokarn, chief economist at Crisil, a credit-rating agency, is that "when the economy is doing so well, you cannot create a constituency for reform." The ability to make big changes, he explains, is "independent of the individual, independent of the party, independent of the system. When there's a widespread perception of crisis, then reform happens. When there isn't, it doesn't." In 1991, such a crisis atmosphere came from an exchange-rate drop that nearly depleted India's foreign-exchange reserves. But the country has faced no similar threat since 2004.
Thus reform has slowed dramatically. Singh's government has failed to take steps like relaxing India's stringent labor laws and selling off state-owned industries. That said, it has managed to make some important improvements in recent years—despite fractures within the governing coalition and the lack of an outside prod. For instance, after becoming prime minister in 2004, Singh, despite local opposition, began measures to allow foreign direct investment in the retail sector and to facilitate the creation of large domestic retail chains. He also moved to encourage public-private partnerships in infrastructure projects—potentially bringing more money and better management to one of India's biggest laggards. And he unleashed what could be the biggest stimulus for India's manufacturing sector since 1991, setting up a huge number (386) of special economic zones last year, where industry will enjoy preferential tax policies and government assistance in acquiring land. (Between 1965 and 2004, by contrast, India established only eight.)
The alignment of economic agendas between India's two largest political parties—Congress and the BJP--is perhaps the best sign of all for the country's economic future. Politics in India can prove unstable; four different governments ruled during the 1990s; the BJP-led alliance held sway from 1998 to 2003, and a coalition led by the Congress Party has ruled since 2004. But as the politicians have traded seats, economic reforms have continued apace. This suggests that despite some resistance and reluctance to make further changes, both of the major parties believe there's no going back on reforms already undertaken. Moreover, as the Lehman Brothers report points out, "The general pattern in democracies worldwide is that governments find it easier to push through reforms—and other potentially controversial legislation—earlier in their term of office." That means the 2009 general elections might give the Indian snowball another push, bringing 10 percent growth into view at last.
URL: http://www.newsweek.com/id/72071
Tuesday, November 20, 2007
deal or no deal
By Jason Overdorf/New Delhi
Newsweek Japan (published in Japanese)
Not long back, Indian Prime Minister Manmohan Singh told a group of executives that his fractured mandate has made it difficult for his government to do “what is manifestly obvious” to maintain his country's impressive economic growth. For Singh, who is renowned, and sometimes even criticized, for his humility, that was as acerbic as it gets. But the message hidden between the lines is the one that international observers should heed: If doing the obvious is difficult, then achieving the unexpected and controversial is well-nigh impossible. And unfortunately, by pushing forward a nuclear deal with the United States, that is exactly what the man often called India's weakest prime minister in history has set out to do.
To many, the nuclear pact, which was clinched between the two governments in August, does indeed seem obvious. For India, it is essentially an invitation to come in from the cold without substantially altering its nuclear policies. The pact would finalize the rollback of sanctions imposed when India tested its first nuclear device in 1974, allowing for the free transfer of technologies classified as “dual use” because they can be used for both peaceful and military projects. That in turn would spark a boom in the construction of nuclear power plants in a country which desperately needs more electrical power to meet its future targets for economic growth. For the US, the deal would provide a measure of international oversight for India's nuclear program by requiring international inspections of some of its facilities, even though it would not bring India under the ambit of the Nuclear Non-Proliferation Treaty. It would facilitate billions of dollars worth of business agreements. And, perhaps most importantly, it would put an official stamp of sorts on India's gradual alignment of its foreign policy objectives with America's, making the one-time leader of the Cold War's Non-Aligned Movement into a full-fledged, bankable US ally.
But there's the rub, according to policy analyst Pratap Bhanu Mehta, president of New Delhi's Centre for Policy Research. India's left sees the deal as the first step in a major overhaul of India's foreign policy that will force it to take a strong position against Iran—which some see as a natural regional ally; reorient its military spending from Russia and other former principal allies toward the US; and take on a pre-scripted role as the US-friendly counterbalance to China in Asia. “Part of it is a trust deficit,” says Mehta. “The prime minister wants to say, 'Trust me, I'm not going to sell India out to the US. And the others are saying, 'Well.... you sort of are.'” Many in the left, in fact, believe it was only their opposition that prevented India from sending troops into Iraq. As a result, India's communists--who hold 59 seats in the parliament and thus have the power to bring down Singh's United Progressive Alliance coalition government if they choose—said in no uncertain terms that they will withdraw support for the UPA and force new elections if Singh moves to implement the pact. This week, the deal received a new lease on life as the left relented and agreed to allow the government to send negotiators to talks with the International Atomic Energy Agency (IAEA) on a nuclear safeguards agreement that needs to be signed before the pact can be implemented. But many observers suggest the move is designed to allow Singh to save face by conveniently letting the IAEA talks fail.
Because the question of a strategic alignment with the US is a sticky one, Singh, who has yet to give up, has of late begun to emphasize the economic benefits of the deal. India desperately needs more electrical power, the argument runs, and foreign-built nuclear plants will help meet that need while decreasing India's reliance on oil and gas imports and improving carbon emissions. "It's imperative for India to diversify its energy portfolio and enhance the share of nuclear energy because its heavy and growing reliance on [imported oil and natural gas] is going to be expensive and inflationary," argues Professor Anupam Srivastava, director of the Asia Program at the University of Georgia's Center for International Trade & Security. "The government cannot subsidize energy imports beyond a point, which makes 8-10 percent economic growth simply unaffordable. And as this growth slows down to around 5%, foreign capital and technology investment will also slow down, and in turn reduce India's ability to leverage economic gains in other strategic sectors."
To avert that problem, India plans through the pact with the US to increase the share of nuclear power in its energy mix from around three percent to as high as 20 percent by 2050—a goal that would involve building more than 40 new nuclear facilities. For US nuclear suppliers, but also for French, Canadian and Russian firms, this could mean orders running into many billions of dollars over the next several years. However, the deal's opponents argue that India's nuclear power targets may be overly ambitious, and may not even be necessary. In one recent study, for instance, the international development consultancy Dalberg found that even though India will need to increase its power generation capacity from today's 127 gigawatts to around 960 gigawatts by 2032 to meet its GDP growth target of 9%, that increase can be achieved without a dramatic increase in nuclear power production and the biggest gains in emissions will come through the use of clean coal technologies. “[The government's] projections are essentially doubling what they have done historically, so there are big questions about whether they'll be able to hit these numbers,” says John Stephenson, a senior consultant at Dalberg. “And even if they do hit these numbers, it [nuclear power] is a marginal energy source.”
However, focusing on the energy aspect of the agreement—whether to insist it is necessary or to denigrate it as trivial—is to ignore its real significance. And assuming, as do many pundits in India, that the ever closer political and economic relationship between India and the United States has attained an inevitable momentum may be a mistake. “India above all wanted to end its status as a 'nuclear outcaste,'” explains Teresita C. Schaffer, director for South Asia at Washington's Center for Strategic and International Studies. “The deal would accomplish this.” On the other hand, if Singh fails to push it through after the US has agreed to virtually all of India's demands, it could have serious consequences for India's future ability to conduct bilateral negotiations with the US and other nations. “It [India] will start to look like a country that can't take yes for an answer,” Schaffer says.
Meanwhile, this deal could be a “now or never” proposition. President George W. Bush's status as a conservative hawk who was willing to invade Iraq over the perceived threat of the proliferation of nuclear weapons grant him an authority to revisit the usefulness of the NPT in much the same way that former President Richard Nixon's anti-communist credentials made rapprochement with Mao Zedong politically feasible. If India blinks now, the deal will run into next year's American electoral campaign—guaranteed to put it on hold—and whatever president succeeds Bush will likely have neither the desire nor the mandate to put it back on the table. “I genuinely doubt that any successor, whether Republican or Democratic, would be in a position to make the same offer,” says Sumit Ganguly, a professor of political science at the University of Indiana.
Likely, that's music to the ears of India's communists.
Newsweek Japan (published in Japanese)
Not long back, Indian Prime Minister Manmohan Singh told a group of executives that his fractured mandate has made it difficult for his government to do “what is manifestly obvious” to maintain his country's impressive economic growth. For Singh, who is renowned, and sometimes even criticized, for his humility, that was as acerbic as it gets. But the message hidden between the lines is the one that international observers should heed: If doing the obvious is difficult, then achieving the unexpected and controversial is well-nigh impossible. And unfortunately, by pushing forward a nuclear deal with the United States, that is exactly what the man often called India's weakest prime minister in history has set out to do.
To many, the nuclear pact, which was clinched between the two governments in August, does indeed seem obvious. For India, it is essentially an invitation to come in from the cold without substantially altering its nuclear policies. The pact would finalize the rollback of sanctions imposed when India tested its first nuclear device in 1974, allowing for the free transfer of technologies classified as “dual use” because they can be used for both peaceful and military projects. That in turn would spark a boom in the construction of nuclear power plants in a country which desperately needs more electrical power to meet its future targets for economic growth. For the US, the deal would provide a measure of international oversight for India's nuclear program by requiring international inspections of some of its facilities, even though it would not bring India under the ambit of the Nuclear Non-Proliferation Treaty. It would facilitate billions of dollars worth of business agreements. And, perhaps most importantly, it would put an official stamp of sorts on India's gradual alignment of its foreign policy objectives with America's, making the one-time leader of the Cold War's Non-Aligned Movement into a full-fledged, bankable US ally.
But there's the rub, according to policy analyst Pratap Bhanu Mehta, president of New Delhi's Centre for Policy Research. India's left sees the deal as the first step in a major overhaul of India's foreign policy that will force it to take a strong position against Iran—which some see as a natural regional ally; reorient its military spending from Russia and other former principal allies toward the US; and take on a pre-scripted role as the US-friendly counterbalance to China in Asia. “Part of it is a trust deficit,” says Mehta. “The prime minister wants to say, 'Trust me, I'm not going to sell India out to the US. And the others are saying, 'Well.... you sort of are.'” Many in the left, in fact, believe it was only their opposition that prevented India from sending troops into Iraq. As a result, India's communists--who hold 59 seats in the parliament and thus have the power to bring down Singh's United Progressive Alliance coalition government if they choose—said in no uncertain terms that they will withdraw support for the UPA and force new elections if Singh moves to implement the pact. This week, the deal received a new lease on life as the left relented and agreed to allow the government to send negotiators to talks with the International Atomic Energy Agency (IAEA) on a nuclear safeguards agreement that needs to be signed before the pact can be implemented. But many observers suggest the move is designed to allow Singh to save face by conveniently letting the IAEA talks fail.
Because the question of a strategic alignment with the US is a sticky one, Singh, who has yet to give up, has of late begun to emphasize the economic benefits of the deal. India desperately needs more electrical power, the argument runs, and foreign-built nuclear plants will help meet that need while decreasing India's reliance on oil and gas imports and improving carbon emissions. "It's imperative for India to diversify its energy portfolio and enhance the share of nuclear energy because its heavy and growing reliance on [imported oil and natural gas] is going to be expensive and inflationary," argues Professor Anupam Srivastava, director of the Asia Program at the University of Georgia's Center for International Trade & Security. "The government cannot subsidize energy imports beyond a point, which makes 8-10 percent economic growth simply unaffordable. And as this growth slows down to around 5%, foreign capital and technology investment will also slow down, and in turn reduce India's ability to leverage economic gains in other strategic sectors."
To avert that problem, India plans through the pact with the US to increase the share of nuclear power in its energy mix from around three percent to as high as 20 percent by 2050—a goal that would involve building more than 40 new nuclear facilities. For US nuclear suppliers, but also for French, Canadian and Russian firms, this could mean orders running into many billions of dollars over the next several years. However, the deal's opponents argue that India's nuclear power targets may be overly ambitious, and may not even be necessary. In one recent study, for instance, the international development consultancy Dalberg found that even though India will need to increase its power generation capacity from today's 127 gigawatts to around 960 gigawatts by 2032 to meet its GDP growth target of 9%, that increase can be achieved without a dramatic increase in nuclear power production and the biggest gains in emissions will come through the use of clean coal technologies. “[The government's] projections are essentially doubling what they have done historically, so there are big questions about whether they'll be able to hit these numbers,” says John Stephenson, a senior consultant at Dalberg. “And even if they do hit these numbers, it [nuclear power] is a marginal energy source.”
However, focusing on the energy aspect of the agreement—whether to insist it is necessary or to denigrate it as trivial—is to ignore its real significance. And assuming, as do many pundits in India, that the ever closer political and economic relationship between India and the United States has attained an inevitable momentum may be a mistake. “India above all wanted to end its status as a 'nuclear outcaste,'” explains Teresita C. Schaffer, director for South Asia at Washington's Center for Strategic and International Studies. “The deal would accomplish this.” On the other hand, if Singh fails to push it through after the US has agreed to virtually all of India's demands, it could have serious consequences for India's future ability to conduct bilateral negotiations with the US and other nations. “It [India] will start to look like a country that can't take yes for an answer,” Schaffer says.
Meanwhile, this deal could be a “now or never” proposition. President George W. Bush's status as a conservative hawk who was willing to invade Iraq over the perceived threat of the proliferation of nuclear weapons grant him an authority to revisit the usefulness of the NPT in much the same way that former President Richard Nixon's anti-communist credentials made rapprochement with Mao Zedong politically feasible. If India blinks now, the deal will run into next year's American electoral campaign—guaranteed to put it on hold—and whatever president succeeds Bush will likely have neither the desire nor the mandate to put it back on the table. “I genuinely doubt that any successor, whether Republican or Democratic, would be in a position to make the same offer,” says Sumit Ganguly, a professor of political science at the University of Indiana.
Likely, that's music to the ears of India's communists.
Tuesday, October 16, 2007
in the comfort zone
India has wealth-building consumers rather than export riches. In today's market, that's a good thing.
By George Wehrfritz and Jason Overdorf
Newsweek (October 21, 2007)
By many measures, the economic picture in Asia looks pretty good. Despite subprime-induced global recession worries, stock markets from Hong Kong to Mumbai hang at dizzying heights and today's growth rates are faster than they've been in a decade. Of course, this prompts the question of whether the region is headed for a big fall—there's no avoiding the fact that cash-strapped American shoppers still undergird all the major economies. With one exception: India. As a credit crunch unfolds in the world's financial centers, the country of 1.1 billion is arguably Asia's most sheltered economy. The reason: "India is the only economy in Asia driven primarily by domestic demand," says Christopher Wood, chief strategist of the Hong Kong-based brokerage CLSA.
In short, India's weaknesses have become its strengths. The country's oft-lamented inability to challenge the Chinese manufacturing juggernaut means that today's growth isn't as tied to ever-increasing toy, apparel and electronics exports. The relatively high cost of borrowing in India is one reason its roads and bridges are so bad, but that looks almost like a plus compared with China's near-zero interest rates and widespread overinvestment. And India's vibrant service sector is more insulated against a global slump than Chinese manufacturing. Services historically fare better in down markets, because of their lack of inventory issues.
Not that India set out to become recession-proof. While China's boom was planned from the center and executed by state companies, India's welled up from the private entrepreneurial and business classes, set loose by market reforms in the early '90s. Unlike China, India never forced consumers to funnel their savings to state export industries. The result is more flexibility and more balance, with India's GDP growth running at a 9 percent pace in 2007 for the third year running, sustained mainly by domestic consumption and a burgeoning middle class.
Already, India's domestic market is larger than South Korea's, at about $370 billion. By 2025, concludes a recent study by the McKinsey Global Institute, its consumer class will swell tenfold from today's tally of 50 million, making it the fifth largest market on the planet. This year India's per capita income will break through the $1,000 threshold on its way to tripling by the late 2020s. "India's lower level of investment relative to GDP has meant that consumption has played a bigger role in its growth story," says the McKinsey study. "Consumption in India is closer, proportionally, to developed countries such as Japan and the United States than it is to China."
China's spending on construction of roads, factories, condos and other infrastructure is approaching 50 percent of GDP, compared with India's healthier 32 percent. China's trade surplus is also roughly twice India's in percentage terms and, in 2006, China took in $63 billion in foreign direct investment to sustain its manufacturing boom, whereas India grew slightly slower but needed just $16 billion from abroad to do it. The net effect is that India's economy will feel less pain should the global economy weaken. "India's exposure to the global trade cycle is one of the lowest in the region," concluded a Morgan Stanley report to clients, issued in mid-September, "and therefore the impact of slower foreign trade [on India's economy] is likely to be one of the lowest."
Policymakers deserve some credit. Reserve Bank of India has kept the economy on a lean burn, setting interest rates in the 6 percent range, which is low enough not to stymie economic activity but high enough to discourage profligate investments. Elsewhere in Asia, ultralow rates—be they 2 percent mortgages in Hong Kong or near-zero loans from China's state banks—have driven overinvestment in both real estate and industry. And whereas India's passbook savings rates of 3 to 4 percent encourages household savings, negative returns in China have driven money into the only high-yield option available to average households: speculative stock and real-estate plays. Because India's boom has not been driven by dirt-cheap money, analysts argue, it is therefore more resilient to global credit tightening.
Recent forecasts back up the picture of Indian economic resiliency. One from Citibank in September analyzed the likely impact of a U.S. recession on Asia's two giants. The bank estimated that its 2008 GDP growth forecast for China would fall from the 11 percent level to 8.5 percent, whereas India's would dip about half that amount, from 9.4 to 8.1 percent. A new study by the Organization for Economic Co-operation and Development concluded that, by further liberalizing its labor markets, India could push its sustainable growth rate above 10 percent by 2011. Pai Panandikar, president of the the RPG Foundation, a prominent economic think tank in Mumbai, wrote last week that a U.S. recession would hit goods exporters hardest, while driving American companies to cut costs with further use of Indian software and technology services. "It is possible that the growth of merchandise exports may dip, but the [demand for] service climb," he argues.
What comes next in the resilient India story? Ironically, it could be a manufacturing boom akin to China's in the 1990s. India's huge domestic market, ultralow average wages and potential as an export platform to the Middle East, Africa, and Europe are attracting interest like never before, as manufacturers seek to limit their vulnerability to future political or economics changes in China. A handful of foreign carmakers such as Ford, General Motors, Hyundai and Suzuki have already opened plants, aiming to service customers abroad, as well as India's own large and rapidly growing domestic market for small cars. Lucrative Korean electronics and white-goods ventures already dominate the local market. In a new survey of more than 300 global manufacturing companies released last week, European consultancy Capgemini found "very keen interest" in India as a manufacturing base, says Roy Lenders, the report's author, who predicts that "India could challenge China as the manufacturing center of the world in the next three to five years." Such a shift would soak up millions of surplus rural workers, thereby widening the country's already formidable consumer base. "Thinking of China as a benchmark for successful development is still very strong in India," says Shankar Acharya, an economist with the Indian Council for Research on International Economic Relations. China has been growing much faster than India, for much longer. But the eventual lesson of this period of global uncertainty may be that India should just build on its own strengths, not worry about China's.
URL: http://www.newsweek.com/id/43340
By George Wehrfritz and Jason Overdorf
Newsweek (October 21, 2007)
By many measures, the economic picture in Asia looks pretty good. Despite subprime-induced global recession worries, stock markets from Hong Kong to Mumbai hang at dizzying heights and today's growth rates are faster than they've been in a decade. Of course, this prompts the question of whether the region is headed for a big fall—there's no avoiding the fact that cash-strapped American shoppers still undergird all the major economies. With one exception: India. As a credit crunch unfolds in the world's financial centers, the country of 1.1 billion is arguably Asia's most sheltered economy. The reason: "India is the only economy in Asia driven primarily by domestic demand," says Christopher Wood, chief strategist of the Hong Kong-based brokerage CLSA.
In short, India's weaknesses have become its strengths. The country's oft-lamented inability to challenge the Chinese manufacturing juggernaut means that today's growth isn't as tied to ever-increasing toy, apparel and electronics exports. The relatively high cost of borrowing in India is one reason its roads and bridges are so bad, but that looks almost like a plus compared with China's near-zero interest rates and widespread overinvestment. And India's vibrant service sector is more insulated against a global slump than Chinese manufacturing. Services historically fare better in down markets, because of their lack of inventory issues.
Not that India set out to become recession-proof. While China's boom was planned from the center and executed by state companies, India's welled up from the private entrepreneurial and business classes, set loose by market reforms in the early '90s. Unlike China, India never forced consumers to funnel their savings to state export industries. The result is more flexibility and more balance, with India's GDP growth running at a 9 percent pace in 2007 for the third year running, sustained mainly by domestic consumption and a burgeoning middle class.
Already, India's domestic market is larger than South Korea's, at about $370 billion. By 2025, concludes a recent study by the McKinsey Global Institute, its consumer class will swell tenfold from today's tally of 50 million, making it the fifth largest market on the planet. This year India's per capita income will break through the $1,000 threshold on its way to tripling by the late 2020s. "India's lower level of investment relative to GDP has meant that consumption has played a bigger role in its growth story," says the McKinsey study. "Consumption in India is closer, proportionally, to developed countries such as Japan and the United States than it is to China."
China's spending on construction of roads, factories, condos and other infrastructure is approaching 50 percent of GDP, compared with India's healthier 32 percent. China's trade surplus is also roughly twice India's in percentage terms and, in 2006, China took in $63 billion in foreign direct investment to sustain its manufacturing boom, whereas India grew slightly slower but needed just $16 billion from abroad to do it. The net effect is that India's economy will feel less pain should the global economy weaken. "India's exposure to the global trade cycle is one of the lowest in the region," concluded a Morgan Stanley report to clients, issued in mid-September, "and therefore the impact of slower foreign trade [on India's economy] is likely to be one of the lowest."
Policymakers deserve some credit. Reserve Bank of India has kept the economy on a lean burn, setting interest rates in the 6 percent range, which is low enough not to stymie economic activity but high enough to discourage profligate investments. Elsewhere in Asia, ultralow rates—be they 2 percent mortgages in Hong Kong or near-zero loans from China's state banks—have driven overinvestment in both real estate and industry. And whereas India's passbook savings rates of 3 to 4 percent encourages household savings, negative returns in China have driven money into the only high-yield option available to average households: speculative stock and real-estate plays. Because India's boom has not been driven by dirt-cheap money, analysts argue, it is therefore more resilient to global credit tightening.
Recent forecasts back up the picture of Indian economic resiliency. One from Citibank in September analyzed the likely impact of a U.S. recession on Asia's two giants. The bank estimated that its 2008 GDP growth forecast for China would fall from the 11 percent level to 8.5 percent, whereas India's would dip about half that amount, from 9.4 to 8.1 percent. A new study by the Organization for Economic Co-operation and Development concluded that, by further liberalizing its labor markets, India could push its sustainable growth rate above 10 percent by 2011. Pai Panandikar, president of the the RPG Foundation, a prominent economic think tank in Mumbai, wrote last week that a U.S. recession would hit goods exporters hardest, while driving American companies to cut costs with further use of Indian software and technology services. "It is possible that the growth of merchandise exports may dip, but the [demand for] service climb," he argues.
What comes next in the resilient India story? Ironically, it could be a manufacturing boom akin to China's in the 1990s. India's huge domestic market, ultralow average wages and potential as an export platform to the Middle East, Africa, and Europe are attracting interest like never before, as manufacturers seek to limit their vulnerability to future political or economics changes in China. A handful of foreign carmakers such as Ford, General Motors, Hyundai and Suzuki have already opened plants, aiming to service customers abroad, as well as India's own large and rapidly growing domestic market for small cars. Lucrative Korean electronics and white-goods ventures already dominate the local market. In a new survey of more than 300 global manufacturing companies released last week, European consultancy Capgemini found "very keen interest" in India as a manufacturing base, says Roy Lenders, the report's author, who predicts that "India could challenge China as the manufacturing center of the world in the next three to five years." Such a shift would soak up millions of surplus rural workers, thereby widening the country's already formidable consumer base. "Thinking of China as a benchmark for successful development is still very strong in India," says Shankar Acharya, an economist with the Indian Council for Research on International Economic Relations. China has been growing much faster than India, for much longer. But the eventual lesson of this period of global uncertainty may be that India should just build on its own strengths, not worry about China's.
URL: http://www.newsweek.com/id/43340
bowling for big bucks
A burgeoning middle class is giving the nation's beloved slow sport, cricket, new sex appeal
By Jason Overdorf
Newsweek (October 21, 2007)
By today's sports logic, cricket should be dead. In its purest form, the game takes five days to play. Its upper lip remains so stiff that a batsman who declares himself out when the umpire blows the call gets cheers instead of boos. Its heroes aren't giants, either of height or girth. Some players, like Australian spin bowler Shane Warne, look like they have just set down a plastic cup of beer and climbed out of the bleachers.
But strangely, cricket is thriving. Over the past month or so, two new cash-rich professional leagues have been unveiled, ESPN Star Sports has launched a 24-hour cricket channel and a new, faster-paced version of the Cricket World Cup is gaining steam. Based on sponsorship rights being paid to the International Cricket Council, it's likely that cricket over the next few years will earn well in excess of $2 billion, twice what it has since 2000. The reason: new competitive forces within India, and a cricket-crazed Indian middle class, are making the sport big business. Australia may have won the last two World Cups. But James Fitzgerald, ICC spokesman, says, "It's no secret that India is becoming the sport's financial powerhouse."
Cricket is the cultural unifier of India, the most populous and most passionate of the cricketing nations (which also include England, Australia, New Zealand, Pakistan, South Africa and Sri Lanka). Even bigger than Bollywood, televised cricket matches can capture 60 percent or more of the Indian viewing audience, some 450 million people. Yet the country has won a World Cup only once, thanks in part to the sclerotic Board of Control for Cricket in India, which has been failing to promote talent over the past few decades. Political concerns dictate the selection of the national team, and local and state feeder teams are chronically underfunded.
Media tycoon Subhash Chandra, chairman of India's largest listed television company, Zee Entertainment, aims to change all that. Last month he unveiled plans for a breakaway Indian Cricket League, with a $1 million prize for the champions and player salaries as high as $400,000 (top players in domestic leagues currently make about $32,000 in India, and rarely more than $80,000 even in England).
The Board of Control responded swiftly, threatening to ban players who join the new league from the international squad. When that proved unsuccessful, it announced 40 percent raises and revealed plans for its own new conference—the Premier Cricket League—which will include players from many nations and pay out $3 million to the winning team.
The new leagues will be backed by global advertisers, including Unilever, LG, Hutchison, Honda and others eager to reach Indian consumers. Average Indian incomes will triple by 2025, making India the fifth largest consumer market in the world, according to the McKinsey Global Institute. Cricket, notes Guru Prasad Rao, vice president of the Mumbai-based media-buying firm Network Media, "is the one language that unites the country." Ad rates for matches are skyrocketing. Spots for a recent India-Pakistan championship game sold for $25,000 for 10 seconds (prime-time movies net $5,000).
Sponsorship rates are rising, too. Indian mobile operator Reliance Communications and PepsiCo India have reportedly paid between $60 million and $100 million apiece for rights to various contests over the next eight years, more than double what was paid between 2000 and 2007. Similarly, ESPN Star Sports is reported to have paid $1.1 billion for the broadcast rights for a package of games including two Cricket World Cups between 2007 and 2016.
What will it all mean for the sport? Just as football's English Premier League attracts the world's top players through powerful franchises backed by fanatical fans, the future could well see India displace both England and Australia as the home of the biggest cricket matches and best players.
In the short term, there will simply be more cricket—a lot more. In a country where replays of classic cricket matches draw better ratings than live broadcasts of other sports, ESPN Star Sports recently launched a 24-hour cricket channel—which will show domestic matches from Australia and England—to supplement its two existing sports channels. "I did not know how to fulfill the demand for cricket with just two channels," explained ESPN Star Sports' managing director Jamie Davis. "Forty-eight hours of cricket a day is not enough." Not for India.
URL http://www.newsweek.com/id/43341
By Jason Overdorf
Newsweek (October 21, 2007)
By today's sports logic, cricket should be dead. In its purest form, the game takes five days to play. Its upper lip remains so stiff that a batsman who declares himself out when the umpire blows the call gets cheers instead of boos. Its heroes aren't giants, either of height or girth. Some players, like Australian spin bowler Shane Warne, look like they have just set down a plastic cup of beer and climbed out of the bleachers.
But strangely, cricket is thriving. Over the past month or so, two new cash-rich professional leagues have been unveiled, ESPN Star Sports has launched a 24-hour cricket channel and a new, faster-paced version of the Cricket World Cup is gaining steam. Based on sponsorship rights being paid to the International Cricket Council, it's likely that cricket over the next few years will earn well in excess of $2 billion, twice what it has since 2000. The reason: new competitive forces within India, and a cricket-crazed Indian middle class, are making the sport big business. Australia may have won the last two World Cups. But James Fitzgerald, ICC spokesman, says, "It's no secret that India is becoming the sport's financial powerhouse."
Cricket is the cultural unifier of India, the most populous and most passionate of the cricketing nations (which also include England, Australia, New Zealand, Pakistan, South Africa and Sri Lanka). Even bigger than Bollywood, televised cricket matches can capture 60 percent or more of the Indian viewing audience, some 450 million people. Yet the country has won a World Cup only once, thanks in part to the sclerotic Board of Control for Cricket in India, which has been failing to promote talent over the past few decades. Political concerns dictate the selection of the national team, and local and state feeder teams are chronically underfunded.
Media tycoon Subhash Chandra, chairman of India's largest listed television company, Zee Entertainment, aims to change all that. Last month he unveiled plans for a breakaway Indian Cricket League, with a $1 million prize for the champions and player salaries as high as $400,000 (top players in domestic leagues currently make about $32,000 in India, and rarely more than $80,000 even in England).
The Board of Control responded swiftly, threatening to ban players who join the new league from the international squad. When that proved unsuccessful, it announced 40 percent raises and revealed plans for its own new conference—the Premier Cricket League—which will include players from many nations and pay out $3 million to the winning team.
The new leagues will be backed by global advertisers, including Unilever, LG, Hutchison, Honda and others eager to reach Indian consumers. Average Indian incomes will triple by 2025, making India the fifth largest consumer market in the world, according to the McKinsey Global Institute. Cricket, notes Guru Prasad Rao, vice president of the Mumbai-based media-buying firm Network Media, "is the one language that unites the country." Ad rates for matches are skyrocketing. Spots for a recent India-Pakistan championship game sold for $25,000 for 10 seconds (prime-time movies net $5,000).
Sponsorship rates are rising, too. Indian mobile operator Reliance Communications and PepsiCo India have reportedly paid between $60 million and $100 million apiece for rights to various contests over the next eight years, more than double what was paid between 2000 and 2007. Similarly, ESPN Star Sports is reported to have paid $1.1 billion for the broadcast rights for a package of games including two Cricket World Cups between 2007 and 2016.
What will it all mean for the sport? Just as football's English Premier League attracts the world's top players through powerful franchises backed by fanatical fans, the future could well see India displace both England and Australia as the home of the biggest cricket matches and best players.
In the short term, there will simply be more cricket—a lot more. In a country where replays of classic cricket matches draw better ratings than live broadcasts of other sports, ESPN Star Sports recently launched a 24-hour cricket channel—which will show domestic matches from Australia and England—to supplement its two existing sports channels. "I did not know how to fulfill the demand for cricket with just two channels," explained ESPN Star Sports' managing director Jamie Davis. "Forty-eight hours of cricket a day is not enough." Not for India.
URL http://www.newsweek.com/id/43341
Friday, September 14, 2007
kashmir's glacier opens to climbers as tensions thaw
By Jason Overdorf in Delhi
The Independent - 14 September 2007
Kashmir's treacherous Siachen glacier, battleground for the high-altitude standoff between India and Pakistan – sometimes termed "the coldest war" – is now set to become a tourist attraction.
In what has been pitched as a vote of confidence in a ceasefire that began in 2003, the Indian army announced yesterday in Delhi that it plans to open the 72 kilometre-long Siachen glacier to civilian trekking expeditions.
India and Pakistan – which have fought three wars for possession of Kashmir – are perhaps closer to a peaceful resolution than ever before. But to cynical observers, the move fits neatly into the tradition of oropolitics – or using mountaineering for political purposes – that has framed the conflict for many years.
Cadets from Indian military academies will begin a climb to the 16,000 feet Kumar Post next week, according to local reports.
If that expedition is successful, regular civilian expeditions – including some catering to foreign climbers – will be launched next year.
"The glacier can become a major tourist attraction. Since the ceasefire agreement with Pakistan, things have been safer and it is possible to hold such activities," a senior army officer was quoted as saying.
The first batch of trekkers, scheduled to set out from Leh on September 19, will be provided with basic training at the Siachen base camp by the Indian army. Ten experts on glaciers will guide the expedition, and the Indian army will provide equipment, lodging and logistical support for the trekkers.
An army spokesman indicated that the move to open Siachen to trekkers was inspired by Indian Prime Minister Manmohan Singh's call to turn the glacier into a "peace mountain" in 2005.
India and Pakistan have battled intermittently on the forbidding glacier since 1984.
The Independent - 14 September 2007
Kashmir's treacherous Siachen glacier, battleground for the high-altitude standoff between India and Pakistan – sometimes termed "the coldest war" – is now set to become a tourist attraction.
In what has been pitched as a vote of confidence in a ceasefire that began in 2003, the Indian army announced yesterday in Delhi that it plans to open the 72 kilometre-long Siachen glacier to civilian trekking expeditions.
India and Pakistan – which have fought three wars for possession of Kashmir – are perhaps closer to a peaceful resolution than ever before. But to cynical observers, the move fits neatly into the tradition of oropolitics – or using mountaineering for political purposes – that has framed the conflict for many years.
Cadets from Indian military academies will begin a climb to the 16,000 feet Kumar Post next week, according to local reports.
If that expedition is successful, regular civilian expeditions – including some catering to foreign climbers – will be launched next year.
"The glacier can become a major tourist attraction. Since the ceasefire agreement with Pakistan, things have been safer and it is possible to hold such activities," a senior army officer was quoted as saying.
The first batch of trekkers, scheduled to set out from Leh on September 19, will be provided with basic training at the Siachen base camp by the Indian army. Ten experts on glaciers will guide the expedition, and the Indian army will provide equipment, lodging and logistical support for the trekkers.
An army spokesman indicated that the move to open Siachen to trekkers was inspired by Indian Prime Minister Manmohan Singh's call to turn the glacier into a "peace mountain" in 2005.
India and Pakistan have battled intermittently on the forbidding glacier since 1984.
Monday, September 10, 2007
outsourcing goes upscale
By William Underhill and Jason Overdorf
Newsweek International
Sept. 10, 2007 issue - The infamous "race to the bottom" may not be over. But increasingly, service industries are moving operations not to nations at the bottom—which is to say, nations like India, where labor is cheapest—but to where the work will be done best. The new race is to find the most-competitive service. And it speaks volumes about the rapid modernization of India that its companies are still out front.
This is even more remarkable if you consider how many new players and new kinds of services are crowding into the outsourcing market. According to consultants A.T. Kearney, there are now 55 countries, from Vietnam to Poland and Brazil, actively selling themselves as "remote service locations" to multinationals. And the kinds of services on offer continue to expand from call centers and back-office functions into new areas of information technology and R&D for industries as diverse as consulting, law and medicine. Western giants like IBM are getting in the game by setting up their own outsourcing arms (usually in developing nations). IDC research predicts that the world market for offshore IT services will grow to $37.8 billion by 2011, more than double last year's figure. Yet no new rival has derailed India's rise.
In the past decade, India's outsourcing revenue has increased tenfold. By some reckonings, Indian companies still capture more than 80 percent of the IT offshoring business. With growth in the Indian industry still running at a healthy double-digit rate, the top companies—Wipro, Tata Consultancy Services and Infosys—are evolving as fast or faster than the outsourcing market itself. Each now has a total stock-market value of more than $20 billion, when none were even listed 10 years ago. They are, in short, flourishing in a market that is now far more complex than the old caricature of Western firms' "exporting" well-paid jobs to poor nations, where salaries are far lower. "The smart companies are seeing outsourcing and offshoring not as a cost play but as a strategic way to transform their business," says Nandan Nilekani, CEO of Indian IT giant Infosys. "The customer is no longer just paying for 100 people to work for him, [but for a specific business outcome]. Therefore, the Indian companies have to improve the capacity of their people, so we have more people with a consulting mind-set. And we have to be willing to take risks."
The reason Indian companies can stay out front seems pretty clear: India, on the whole, remains poor and backward, but its leading companies are already world-class. Once humble and happy to take the IT drudge work of big U.S. or British multinationals, Indian firms are now multinational in their own right. The skills of their employees are improving fast, so they are able to offer higher-level services to Western blue-chip clients. And the sheer scale of past savings that Indian firms have delivered to Western clients puts them in a good position to win future contracts when those and other clients look to move more-sophisticated operations abroad. Kiran Karnik, president of India's National Association of Software and Services Companies, puts the matter simply: "While cost continues to be an important consideration, it's not the only one."
Geography is reasserting itself. Indian outsourcers are maintaining their edge in part by moving closer to clients, establishing their own bases in the West. Last month Wipro paid $600 million for an American infrastructure-management firm called Infocrossing, creating a beachhead that allows Wipro to deliver services and recruit U.S. talent more easily. (Last year Wipro hired more than 200 college and business-school graduates from the United States and Europe.) Proximity matters, says Suresh Vaswani, president of Wipro's global IT practice. "Data centers [for U.S. clients] have to be in the U.S., fundamentally because of customer comfort," says Vaswani. "That way all my servers ... are not so far away."
Trendspotters would do well to watch Sashi Reddi, whose relatively new Indian company is already moving to base employees overseas. A 42-year-old serial entrepreneur, Reddi founded AppLabs six years ago with a staff of less than 10, and it is now the world's leading independent software-testing firm, with 1,900 on its payroll and a client list that includes Sun Microsystems and Cisco. Already, some 400 of his employees are based in Britain and America, ready to bag ever more ambitious projects—with labor paid at Western rates. "You can only do so much with an offshore cost advantage," says Reddi, noting that customers want work done close at hand. Location can trump labor costs, says Reddi. "All the decent players are faced with the same decision."
Competition is helping to force the evolution of India's big players. A clutch of big-name operators has muscled into the business even on India's home territory. IBM Global Services, Accenture and Electronic Data Services now have a combined work force in India of about 100,000. And many nations are entering the outsourcing industry with built-in advantages. The Philippines, for example, has an edge in accounting services because it is well known for producing a generous supply of graduates. Bilingual Mauritius is rebuilding itself as a "cyberisland," and has an edge pitching to corporations that need services delivered in English and French. And new EU members, like Bulgaria and Romania, can help fellow members avoid violating EU regulations on matters like privacy, which insist that certain types of work must be handled inside the Union's borders.
For entrepreneurial Indians, the answer is simple: set up alongside emerging rivals. Look around any promising IT hot spot in Central or Eastern Europe and the Indians are there. Infosys already employs 250 people—almost all recruited locally—at a service center in the Czech city of Brno, handling business in 25 languages. And next month Infosys will open a facility across the border in Poland as part of a $250 million deal with Royal Philips Electronics. "Central Europe can't compete with countries like India on cost alone but it can better meet specific European customers' outsourcing needs due to the local talent and language skills and being in the same time zone," says B. G. Srinivas, the head of Infosys operations in Europe.
Nor are the Indians about to relinquish the low-cost advantage that provided their initial selling point. Inevitably, white-collar Indian salaries are climbing fast, but a staffer in Bangalore will still cost barely a tenth of his counterpart in Baltimore, and a youthful population should prevent serious labor shortages or wage spikes. And when it makes sense, India is now outsourcing the routine work to new outsourcing nations, some (like Vietnam) with even cheaper labor rates than its own. Satyam Computer Services, founded less than 10 years ago, now runs operations centers in Malaysia, Brazil and China and has plans to add more in the Czech Republic, Russia, Vietnam and Thailand. It was perhaps inevitable—Indian offshoring has finally gone offshore. That's the kind of flexibility it needs to stay ahead in this game.
With Katka Krosnar in the Czech Republic
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20546427/site/newsweek/
Newsweek International
Sept. 10, 2007 issue - The infamous "race to the bottom" may not be over. But increasingly, service industries are moving operations not to nations at the bottom—which is to say, nations like India, where labor is cheapest—but to where the work will be done best. The new race is to find the most-competitive service. And it speaks volumes about the rapid modernization of India that its companies are still out front.
This is even more remarkable if you consider how many new players and new kinds of services are crowding into the outsourcing market. According to consultants A.T. Kearney, there are now 55 countries, from Vietnam to Poland and Brazil, actively selling themselves as "remote service locations" to multinationals. And the kinds of services on offer continue to expand from call centers and back-office functions into new areas of information technology and R&D for industries as diverse as consulting, law and medicine. Western giants like IBM are getting in the game by setting up their own outsourcing arms (usually in developing nations). IDC research predicts that the world market for offshore IT services will grow to $37.8 billion by 2011, more than double last year's figure. Yet no new rival has derailed India's rise.
In the past decade, India's outsourcing revenue has increased tenfold. By some reckonings, Indian companies still capture more than 80 percent of the IT offshoring business. With growth in the Indian industry still running at a healthy double-digit rate, the top companies—Wipro, Tata Consultancy Services and Infosys—are evolving as fast or faster than the outsourcing market itself. Each now has a total stock-market value of more than $20 billion, when none were even listed 10 years ago. They are, in short, flourishing in a market that is now far more complex than the old caricature of Western firms' "exporting" well-paid jobs to poor nations, where salaries are far lower. "The smart companies are seeing outsourcing and offshoring not as a cost play but as a strategic way to transform their business," says Nandan Nilekani, CEO of Indian IT giant Infosys. "The customer is no longer just paying for 100 people to work for him, [but for a specific business outcome]. Therefore, the Indian companies have to improve the capacity of their people, so we have more people with a consulting mind-set. And we have to be willing to take risks."
The reason Indian companies can stay out front seems pretty clear: India, on the whole, remains poor and backward, but its leading companies are already world-class. Once humble and happy to take the IT drudge work of big U.S. or British multinationals, Indian firms are now multinational in their own right. The skills of their employees are improving fast, so they are able to offer higher-level services to Western blue-chip clients. And the sheer scale of past savings that Indian firms have delivered to Western clients puts them in a good position to win future contracts when those and other clients look to move more-sophisticated operations abroad. Kiran Karnik, president of India's National Association of Software and Services Companies, puts the matter simply: "While cost continues to be an important consideration, it's not the only one."
Geography is reasserting itself. Indian outsourcers are maintaining their edge in part by moving closer to clients, establishing their own bases in the West. Last month Wipro paid $600 million for an American infrastructure-management firm called Infocrossing, creating a beachhead that allows Wipro to deliver services and recruit U.S. talent more easily. (Last year Wipro hired more than 200 college and business-school graduates from the United States and Europe.) Proximity matters, says Suresh Vaswani, president of Wipro's global IT practice. "Data centers [for U.S. clients] have to be in the U.S., fundamentally because of customer comfort," says Vaswani. "That way all my servers ... are not so far away."
Trendspotters would do well to watch Sashi Reddi, whose relatively new Indian company is already moving to base employees overseas. A 42-year-old serial entrepreneur, Reddi founded AppLabs six years ago with a staff of less than 10, and it is now the world's leading independent software-testing firm, with 1,900 on its payroll and a client list that includes Sun Microsystems and Cisco. Already, some 400 of his employees are based in Britain and America, ready to bag ever more ambitious projects—with labor paid at Western rates. "You can only do so much with an offshore cost advantage," says Reddi, noting that customers want work done close at hand. Location can trump labor costs, says Reddi. "All the decent players are faced with the same decision."
Competition is helping to force the evolution of India's big players. A clutch of big-name operators has muscled into the business even on India's home territory. IBM Global Services, Accenture and Electronic Data Services now have a combined work force in India of about 100,000. And many nations are entering the outsourcing industry with built-in advantages. The Philippines, for example, has an edge in accounting services because it is well known for producing a generous supply of graduates. Bilingual Mauritius is rebuilding itself as a "cyberisland," and has an edge pitching to corporations that need services delivered in English and French. And new EU members, like Bulgaria and Romania, can help fellow members avoid violating EU regulations on matters like privacy, which insist that certain types of work must be handled inside the Union's borders.
For entrepreneurial Indians, the answer is simple: set up alongside emerging rivals. Look around any promising IT hot spot in Central or Eastern Europe and the Indians are there. Infosys already employs 250 people—almost all recruited locally—at a service center in the Czech city of Brno, handling business in 25 languages. And next month Infosys will open a facility across the border in Poland as part of a $250 million deal with Royal Philips Electronics. "Central Europe can't compete with countries like India on cost alone but it can better meet specific European customers' outsourcing needs due to the local talent and language skills and being in the same time zone," says B. G. Srinivas, the head of Infosys operations in Europe.
Nor are the Indians about to relinquish the low-cost advantage that provided their initial selling point. Inevitably, white-collar Indian salaries are climbing fast, but a staffer in Bangalore will still cost barely a tenth of his counterpart in Baltimore, and a youthful population should prevent serious labor shortages or wage spikes. And when it makes sense, India is now outsourcing the routine work to new outsourcing nations, some (like Vietnam) with even cheaper labor rates than its own. Satyam Computer Services, founded less than 10 years ago, now runs operations centers in Malaysia, Brazil and China and has plans to add more in the Czech Republic, Russia, Vietnam and Thailand. It was perhaps inevitable—Indian offshoring has finally gone offshore. That's the kind of flexibility it needs to stay ahead in this game.
With Katka Krosnar in the Czech Republic
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20546427/site/newsweek/
Saturday, September 01, 2007
bollywood: a primer
By Jason Overdorf
Newsweek Web Exclusive
Sept. 2, 2007 - In its heyday from the 1950s through the 1980s, Bollywood produced dozens of beloved films. These classics made superstars out of actors like Dev Anand, Dilip Kumar, Raj Kapoor, Rajesh Khanna, Hema Malini, Zeenat Aman, Rekha and Amitabh Bachchan—a hero so well-loved the nation came to a standstill when an on-set injury in 1982 left him at death’s door for two months. Colorful song-and-dance spectacles that encompass melodrama, slapstick, high romance and cheap thrills—all in the same three hours—these movies rank second only to yoga among India’s most successful cultural exports. Here’s a primer on some of Bollywood’s best films—including a few from the “New Bollywood.”
Awaara (1951)
Directed by Raj Kapoor
Bollywood bwana Raj Kapoor directed, produced and starred in this melodramatic tale of a boy cast out of his law-abiding home and raised by bandits. When his father, an unforgiving judge, throws out his mother because he suspects her of infidelity, Raj (Raj Kapoor) finds succor with Jagga (K. N. Singh), only to discover years later that Jagga was the one who spread the lies that caused his mother’s disgrace. Enraged, Raj kills Jagga but fails to kill the judge, and is sentenced to years of rigorous imprisonment—by his own dear old Dad (Prithviraj Kapoor). The movie was a sleeper hit abroad in China, Romania, Turkey and Russia, where some still cherish fond memories of its signature song, “Awara Hoon” ("I Am a Tramp").
Mother India (1957)
Directed by Mehboob Khan
Nominated for an Oscar in 1957 in the best foreign film category, this sentimental, patriotic tribute to Indian womanhood stars Nargis as a poverty-stricken village mother whose marriage has left her in the clutches of an unscrupulous local moneylender. Even though her husband abandons her, she spurns the moneylender’s offer to marry her and cancel her debts. In what would become a classic Bollywood trope, one troublemaker son is driven from the village to become a bandit, while the other toils away as a farmer. In the end, the bandit (played by Sunil Dutt) returns to kill the moneylender and steal his daughter. But “Mother India,” who has vowed her son will do no wrong, shoots him and he dies in her arms. In real life, Sunil Dutt and Nargis married a year after the film was released.
Mughal-e-Azam (1960)
Directed by K. Asif
This epic period flick about a Mughal emperor and his son took nine years to complete, set the bar for lavish productions and held the all-time box-office record until 15 years after its release. In the film, the Mughal prince Salim (Dilip Kumar) falls in love with a beautiful slave girl named Anarkali (Madhubala) when she dances for him in a palace of mirrors to the song “Pyar Kiya to Darna Kya” ("I Have Loved, So What Is There to Fear?"). But when the prince tries to marry the slave, his father, Emperor Akbar, throws the girl in jail. A battle ensues. The prince is defeated and sentenced to death, but the slave girl bargains for his life by offering her own in return.
Padosan (1968)
Directed by Jyoti Swarup
"Cyrano De Bergerac" meets "Romeo and Juliet" meets Milli Vanilli in this tearjerker. Village simpleton Bhola (Sunil Dutt) wins the love of his neighbor Bindu (Saira Banu) with his beautiful songs. The only trouble is, Bhola can’t sing—he’s lip-synching tunes crooned by his buddy Guru (Kishore Kumar). When Bhola finds out he’s lied, she dumps him and decides to marry her music teacher. But Bhola wins her back by faking his suicide. Tears pour, and a wedding ensues.
Sholay (1975)
Directed by Ramesh Sippy
A crackling Bollywood-style Western—chapati Western, some call it—Sholay brings together two lovable crooks, a principled policeman and a ruthless gangster in a tragicomic, action-filled caper. The story of two convicts (Amitabh Bachchan and Dharmendra) who help a retired policeman capture the ruthless bandit Gabbar Singh (Amjad Khan) who massacred the policeman’s family, Sholay was loved by audiences so much that one Mumbai theater ran the film for 286 consecutive weeks—more than five years. Even today, millions of Indians can quote rafts of the superstylized dialogue from memory.
Amar, Akbar, Anthony (1977)
Directed by Manmohan Desai
Undoubtedly one of the zaniest Bollywood movies, this film may be the greatest of all the stories to follow the once-beloved “lost and found” formula. With three major stars (Amitabh Bachchan, Vinod Khanna and Rishi Kapoor) and three equally big heroines (Parveen Babi, Shabana Azmi and Neetu Singh), "Amar, Akbar, Anthony" was an old-school blockbuster about the three sons of an ex-convict who are abandoned when their father is forced to flee his old mob boss and their mother goes blind. One son (Amar) is adopted by a Hindu policeman and becomes a policeman himself. Another (Akbar) is raised by a Muslim tailor and becomes a singer. The third (Anthony) is raised by a Catholic priest and becomes a rebellious scofflaw. In the end, the boys are reunited and join forces in fighting, singing and dancing; they find their mother, and take revenge on the evil mob boss—and Mom miraculously regains her sight. Throughout it all, Amitabh Bachchan delivers the goods—tears, guffaws, funny accents, goofy costumes—as Anthony. And the smash song “My Name Is Anthony Gonzalves” remains on most Indians’ list of desert island discs.
Umrao Jaan (1981)
Directed by Muzaffar Ali
Set at the time of the Indian Uprising (or Mutiny, as the British called it) of 1857, this poetic and atmospheric film tells the story of a young girl—Umrao Jaan, portrayed by the incomparably gorgeous Rekha—who is kidnapped by a neighbor and sold to a brothel to be trained as a courtesan. Skilled in poetry, song and dance, she charms the local prince (Farooque Shaikh) but winds up running away with a handsome bandit (Raj Babbar). But when the police kill him and the British attack Lucknow to put down the mutiny, she is forced to flee the city and winds up—can you guess?—back in her old village, where she meets her old mother and younger brother and sings a heartbreaking song.
Mr. India (1987)
Directed by Shekhar Kapoor
Not many non-Indians know that Shekhar Kapoor—a former model in ads for “suitings and shirtings”—directed this crowd-pleasing fantasy before moving to Hollywood to make "Elizabeth." But its goofy comedy and good-natured spoofing of James Bond hijinks made "Mr. India" a smash. The story pits Arun Verma (Anil Kapoor), an orphan who makes his money busking with a violin, against Mogambo (Amrish Puri), a dastardly villain as absurd as Dr. Evil with his own high-tech island. It’s a mismatch until Verma receives a mysterious letter revealing that his late father invented an invisibility cloak. After that, the common man becomes a crimefighting superhero—Mr. India—and takes down Mogambo and his mad scientists.
Hum Aapke Hain Kaun ...! (1994)
Directed by Sooraj R. Barjatya
Perhaps the first of the lavish “family dramas” that became the staple, and then the bane, of Bollywood, "Hum Aapke Hain Koun ...!" ("Who Am I to You") is the story of two Indian families brought together by the (of course) lavish wedding where musclebound pretty boy Salman Khan and curvaceous screen siren Madhuri Dixit meet and fall in love. The three-and-a-half-hour spectacle with 14 songs and big dance numbers is hard to beat.
Dilwale Dulhaniya Le Jayenge (1995)
Directed by Aditya Chopra
The first and most successful of the “NRI movies” (films featuring, and in part targeting, nonresident Indians), "DDLJ" as it came to be known was a megablockbuster, attracting enough fanatics to keep it running for 600-plus consecutive weeks at one Mumbai theater. Shah Rukh Khan and Kajol play Raj and Siman, Indians living in the U.K. who meet and fall in love on a tour of Europe. But Siman’s father insists that his daughter will have an arranged marriage with the man of his choosing—a pompous, arrogant ass (of course). In a socially regressive turn typical of later NRI movies, Raj refuses to elope with Siman, but insists on convincing her father that he’s the right choice with lots of (smarmy, but in a good way) singing and dancing.
Dil Chahta Hai (2001)
Directed by Farhan Akhtar
Many consider "Dil Chahta Hai" ("What the Heart Desires") to be the spark that began the current stylistic revolution in Bollywood filmmaking. The story of the lives and loves of three friends (Aamir Khan, Saif Ali Khan and Akshaye Khanna) leaving college for the adult world, the movie was the first film to depict India’s modern, urban youth. Though it didn’t do well in the hinterland, it won critical and popular acclaim for its easygoing, realistic humor and its postmodern tributes to classic Bollywood songs. And for the upwardly mobile kids of India’s cities, it provided as seminal a cultural touchstone as the TV series "Friends" did in the U.S.
Lagaan (2001)
Directed by Ashutosh Golwarikar
One of the earliest films to break away from the romance formula, Lagaan tells the story of a 19th-century Indian village under the thumb of a ruthless (and racist) British officer. When the British officer doubles the tax on the village crops despite a ravaging drought, a rebellious villager (Aamir Khan) wagers him that the villagers—who’ve never played before—can beat the legation team at a game of cricket. If the village wins, the tax will be canceled instead of doubled. If the British win, the tax will be tripled. The story unfolds with all the gimmicks of Hollywood’s classic sports flicks, as well as a few Bollywood twists—like the village untouchable whose mangled hand turns out to make him a wicked spin bowler! As usual for Bollywood, the English-language songs were dismal. But the high drama, British villains and terrific Hindi soundtrack made "Lagaan" a moderate success around the Commonwealth.
URL: http://www.msnbc.msn.com/id/20537192/site/newsweek/
Newsweek Web Exclusive
Sept. 2, 2007 - In its heyday from the 1950s through the 1980s, Bollywood produced dozens of beloved films. These classics made superstars out of actors like Dev Anand, Dilip Kumar, Raj Kapoor, Rajesh Khanna, Hema Malini, Zeenat Aman, Rekha and Amitabh Bachchan—a hero so well-loved the nation came to a standstill when an on-set injury in 1982 left him at death’s door for two months. Colorful song-and-dance spectacles that encompass melodrama, slapstick, high romance and cheap thrills—all in the same three hours—these movies rank second only to yoga among India’s most successful cultural exports. Here’s a primer on some of Bollywood’s best films—including a few from the “New Bollywood.”
Awaara (1951)
Directed by Raj Kapoor
Bollywood bwana Raj Kapoor directed, produced and starred in this melodramatic tale of a boy cast out of his law-abiding home and raised by bandits. When his father, an unforgiving judge, throws out his mother because he suspects her of infidelity, Raj (Raj Kapoor) finds succor with Jagga (K. N. Singh), only to discover years later that Jagga was the one who spread the lies that caused his mother’s disgrace. Enraged, Raj kills Jagga but fails to kill the judge, and is sentenced to years of rigorous imprisonment—by his own dear old Dad (Prithviraj Kapoor). The movie was a sleeper hit abroad in China, Romania, Turkey and Russia, where some still cherish fond memories of its signature song, “Awara Hoon” ("I Am a Tramp").
Mother India (1957)
Directed by Mehboob Khan
Nominated for an Oscar in 1957 in the best foreign film category, this sentimental, patriotic tribute to Indian womanhood stars Nargis as a poverty-stricken village mother whose marriage has left her in the clutches of an unscrupulous local moneylender. Even though her husband abandons her, she spurns the moneylender’s offer to marry her and cancel her debts. In what would become a classic Bollywood trope, one troublemaker son is driven from the village to become a bandit, while the other toils away as a farmer. In the end, the bandit (played by Sunil Dutt) returns to kill the moneylender and steal his daughter. But “Mother India,” who has vowed her son will do no wrong, shoots him and he dies in her arms. In real life, Sunil Dutt and Nargis married a year after the film was released.
Mughal-e-Azam (1960)
Directed by K. Asif
This epic period flick about a Mughal emperor and his son took nine years to complete, set the bar for lavish productions and held the all-time box-office record until 15 years after its release. In the film, the Mughal prince Salim (Dilip Kumar) falls in love with a beautiful slave girl named Anarkali (Madhubala) when she dances for him in a palace of mirrors to the song “Pyar Kiya to Darna Kya” ("I Have Loved, So What Is There to Fear?"). But when the prince tries to marry the slave, his father, Emperor Akbar, throws the girl in jail. A battle ensues. The prince is defeated and sentenced to death, but the slave girl bargains for his life by offering her own in return.
Padosan (1968)
Directed by Jyoti Swarup
"Cyrano De Bergerac" meets "Romeo and Juliet" meets Milli Vanilli in this tearjerker. Village simpleton Bhola (Sunil Dutt) wins the love of his neighbor Bindu (Saira Banu) with his beautiful songs. The only trouble is, Bhola can’t sing—he’s lip-synching tunes crooned by his buddy Guru (Kishore Kumar). When Bhola finds out he’s lied, she dumps him and decides to marry her music teacher. But Bhola wins her back by faking his suicide. Tears pour, and a wedding ensues.
Sholay (1975)
Directed by Ramesh Sippy
A crackling Bollywood-style Western—chapati Western, some call it—Sholay brings together two lovable crooks, a principled policeman and a ruthless gangster in a tragicomic, action-filled caper. The story of two convicts (Amitabh Bachchan and Dharmendra) who help a retired policeman capture the ruthless bandit Gabbar Singh (Amjad Khan) who massacred the policeman’s family, Sholay was loved by audiences so much that one Mumbai theater ran the film for 286 consecutive weeks—more than five years. Even today, millions of Indians can quote rafts of the superstylized dialogue from memory.
Amar, Akbar, Anthony (1977)
Directed by Manmohan Desai
Undoubtedly one of the zaniest Bollywood movies, this film may be the greatest of all the stories to follow the once-beloved “lost and found” formula. With three major stars (Amitabh Bachchan, Vinod Khanna and Rishi Kapoor) and three equally big heroines (Parveen Babi, Shabana Azmi and Neetu Singh), "Amar, Akbar, Anthony" was an old-school blockbuster about the three sons of an ex-convict who are abandoned when their father is forced to flee his old mob boss and their mother goes blind. One son (Amar) is adopted by a Hindu policeman and becomes a policeman himself. Another (Akbar) is raised by a Muslim tailor and becomes a singer. The third (Anthony) is raised by a Catholic priest and becomes a rebellious scofflaw. In the end, the boys are reunited and join forces in fighting, singing and dancing; they find their mother, and take revenge on the evil mob boss—and Mom miraculously regains her sight. Throughout it all, Amitabh Bachchan delivers the goods—tears, guffaws, funny accents, goofy costumes—as Anthony. And the smash song “My Name Is Anthony Gonzalves” remains on most Indians’ list of desert island discs.
Umrao Jaan (1981)
Directed by Muzaffar Ali
Set at the time of the Indian Uprising (or Mutiny, as the British called it) of 1857, this poetic and atmospheric film tells the story of a young girl—Umrao Jaan, portrayed by the incomparably gorgeous Rekha—who is kidnapped by a neighbor and sold to a brothel to be trained as a courtesan. Skilled in poetry, song and dance, she charms the local prince (Farooque Shaikh) but winds up running away with a handsome bandit (Raj Babbar). But when the police kill him and the British attack Lucknow to put down the mutiny, she is forced to flee the city and winds up—can you guess?—back in her old village, where she meets her old mother and younger brother and sings a heartbreaking song.
Mr. India (1987)
Directed by Shekhar Kapoor
Not many non-Indians know that Shekhar Kapoor—a former model in ads for “suitings and shirtings”—directed this crowd-pleasing fantasy before moving to Hollywood to make "Elizabeth." But its goofy comedy and good-natured spoofing of James Bond hijinks made "Mr. India" a smash. The story pits Arun Verma (Anil Kapoor), an orphan who makes his money busking with a violin, against Mogambo (Amrish Puri), a dastardly villain as absurd as Dr. Evil with his own high-tech island. It’s a mismatch until Verma receives a mysterious letter revealing that his late father invented an invisibility cloak. After that, the common man becomes a crimefighting superhero—Mr. India—and takes down Mogambo and his mad scientists.
Hum Aapke Hain Kaun ...! (1994)
Directed by Sooraj R. Barjatya
Perhaps the first of the lavish “family dramas” that became the staple, and then the bane, of Bollywood, "Hum Aapke Hain Koun ...!" ("Who Am I to You") is the story of two Indian families brought together by the (of course) lavish wedding where musclebound pretty boy Salman Khan and curvaceous screen siren Madhuri Dixit meet and fall in love. The three-and-a-half-hour spectacle with 14 songs and big dance numbers is hard to beat.
Dilwale Dulhaniya Le Jayenge (1995)
Directed by Aditya Chopra
The first and most successful of the “NRI movies” (films featuring, and in part targeting, nonresident Indians), "DDLJ" as it came to be known was a megablockbuster, attracting enough fanatics to keep it running for 600-plus consecutive weeks at one Mumbai theater. Shah Rukh Khan and Kajol play Raj and Siman, Indians living in the U.K. who meet and fall in love on a tour of Europe. But Siman’s father insists that his daughter will have an arranged marriage with the man of his choosing—a pompous, arrogant ass (of course). In a socially regressive turn typical of later NRI movies, Raj refuses to elope with Siman, but insists on convincing her father that he’s the right choice with lots of (smarmy, but in a good way) singing and dancing.
Dil Chahta Hai (2001)
Directed by Farhan Akhtar
Many consider "Dil Chahta Hai" ("What the Heart Desires") to be the spark that began the current stylistic revolution in Bollywood filmmaking. The story of the lives and loves of three friends (Aamir Khan, Saif Ali Khan and Akshaye Khanna) leaving college for the adult world, the movie was the first film to depict India’s modern, urban youth. Though it didn’t do well in the hinterland, it won critical and popular acclaim for its easygoing, realistic humor and its postmodern tributes to classic Bollywood songs. And for the upwardly mobile kids of India’s cities, it provided as seminal a cultural touchstone as the TV series "Friends" did in the U.S.
Lagaan (2001)
Directed by Ashutosh Golwarikar
One of the earliest films to break away from the romance formula, Lagaan tells the story of a 19th-century Indian village under the thumb of a ruthless (and racist) British officer. When the British officer doubles the tax on the village crops despite a ravaging drought, a rebellious villager (Aamir Khan) wagers him that the villagers—who’ve never played before—can beat the legation team at a game of cricket. If the village wins, the tax will be canceled instead of doubled. If the British win, the tax will be tripled. The story unfolds with all the gimmicks of Hollywood’s classic sports flicks, as well as a few Bollywood twists—like the village untouchable whose mangled hand turns out to make him a wicked spin bowler! As usual for Bollywood, the English-language songs were dismal. But the high drama, British villains and terrific Hindi soundtrack made "Lagaan" a moderate success around the Commonwealth.
URL: http://www.msnbc.msn.com/id/20537192/site/newsweek/
bollywood takes on hollywood
By Jason Overdorf
Newsweek International
Sept. 10, 2007 issue - Ronnie Screwvala is the front runner in the race to become Bollywood's Jack Warner—the man who began the transformation of parochial U.S. cinema into its modern global form. Yet Screwvala is rarely picked out of a crowd in India, let alone in the United States. But Hollywood insiders know him well, for producing the "The Namesake," the groundbreaking hit about Indian immigrants, and for coproducing a Chris Rock comedy ("I Think I Love My Wife"). Now he is coproducing "The Happening," a new sci-fi thriller starring Mark Wahlberg and directed by M. Night Shyamalan ("The Sixth Sense") that seems destined to vault him into the big leagues. With a budget of $57 million, it will cost as much as 10 Indian blockbusters, setting a new bar for Bollywood. "Our ambition is to be a global Indian entertainment company—there's no reason we can't make big-budget Hollywood movies, too," says Screwvala.
At 45, Screwvala is a stocky, soft-spoken man whose urbane colonial English is a far cry from Jack Warner's notorious bluster. But his innovations are fast putting his Mumbai-based company, UTV Software Communications, on the world map and setting the modern standard of studio efficiency in Bollywood, the way Warner did in Hollywood. A multimedia conglomerate with interests in film, TV, animation and videogame production and distribution is also the closest thing to the diversified Warner Bros. that India has ever seen.
Indeed, over the past five years Screwvala has led the transformation of India's prolific but chaotic film industry. India makes about 1,000 movies a year, including Bollywood's 200-odd Hindi pictures and others in regional languages—about 10 times Hollywood's total. But until recently, every Bollywood movie was an independent film made by a producer-director who ran his operation like a mom-and-pop shop. Deals were cut off the books between film families. Marketing was left to theater owners. And writers scripted scenes on the day of shooting, following stock formulas: brothers separated at birth; village rebel vs. rapacious landlord, or cops vs. robbers. It was considered the height of innovation simply to meld these elements, creating, say, a story about brothers separated at birth who grow up on opposite sides of the law but then ultimately join forces against an evil landlord after much singing, dancing and weeping.
In its heyday, from the 1950s through the early 1980s, Bollywood managed to pack cinemas throughout this movie-crazy country with such fare. But its formulaic plots grew stale at just about the time that TV penetrated middle-class homes. Film revenues virtually stagnated between 1985 and 2000 at about $1 billion annually —less than one third the box office of a single major Hollywood studio. India's poverty and low ticket prices started making foreign markets more alluring. But Bollywood couldn't produce a global hit.
That may finally be changing. Indians are getting wealthier. The younger generation is spending more on entertainment. And innovators like Screwvala have begun professionalizing the business, bringing in outside investors and accounting standards and aggressively marketing films with novel plots. His production company has cut the old three-and-a-half-hour marathons to between 90 and 120 minutes, and has hired Hollywood scriptwriters to make its features more watchable. He's also gone straight to foreign shores—backing Mira Nair's New York-based production of "The Namesake," a story about the Indian diaspora—to prove that his model will work. The film grossed about $14 million at the box office—nearly 95 percent from the United States, more cash than any other Indian production has earned abroad to date.
Indian movies are also enjoying an impressive domestic boom. In 2006, India's film business grossed about $2 billion, up from $1.5 billion in 2004, and PricewaterhouseCoopers forecasts that revenue will leap to more than $4 billion over the next five years. "Our growth rates are much higher than Hollywood's, but in value terms we are way below [the U.S. movie industry]," says Timmy Kandhari, head of PWC's media and entertainment practice. But that will change as ticket prices—which now average less than $1 in India—swiftly catch up with the racing Indian economy.
This anticipated boom has foreign and domestic players scrambling to get in. Disney bought a 15 percent stake in Screwvala's UTV for $14 million in 2006. This year, Viacom inked a 50-50 joint venture with budding news-media mogul Raghav Bahl, head of the Indian entertainment conglomerate Network 18. The venture, called Viacom 18, will produce and distribute TV shows, digital media and (eventually) 10 to 12 movies a year. A separate entity called the Indian Film Company—in which Network 18 and Viacom own stakes—will begin financing about 40 to 45 films a year within three years. Billionaire Anil Ambani's Reliance ADAG conglomerate has acquired a 51 percent stake in a leading movie company called Adlabs Films for a little under $90 million. And three Indian studios held IPOs in London this year, raising a combined $220 million.
That's big money in a nation where until recently the average film budget was only about $150,000, and should dramatically increase the number and quality of Indian films. But very little cash will likely flow into coproductions with Hollywood, an area where Screwvala remains at least several years ahead of his competitors, most of whom still shy away from big Hollywood gambles. Screwvala is contributing $27 million—more than an Indian hit would gross—to the $57 million budget for Shyamalan's "The Happening." But the returns can be huge: "The Sixth Sense," which cost Shyamalan around $40 million to make, grossed nearly $700 million.
Screwvala has more than one wager in play. UTV has also forged coproduction deals with Fox Searchlight and Sony Pictures, and with Will Smith's Overbrook Entertainment. Hollywood—which requires endless cash injections and has for years been looking for outside funding from sources as diverse as German pensioners and private-equity funds—is only too eager to cut more such deals. "I think [these coproductions] are going to become more common," says Jose L. Rodriguez, Shyamalan's U.S.-based coproducer on "The Happening." "Ronnie is sort of leading the pack."
He's also shaking up Bollywood. Until recently, India's film industry was controlled by a few powerful producer-directors, like Yash Chopra, who enjoyed strong family or personal ties to Bollywood's fickle superstars, many of whom were also related. The heads of these "film families" never worked out a budget in advance and started shooting with only a fraction of the cash they needed in hand. Preproduction was a 20-minute meeting. Writers made up the dialogue as they went along. There were no production schedules or contracts; stars walked in and out of projects at whim. With hundreds of local distributors and tens of thousands of theater owners who habitually underreported box-office returns, it was hard to tell who, if anybody, was making money. "Nobody thought of this as a profit-and-loss [business]," says Screwvala. "They thought of it as a cash-flow [business]. So if a producer-director made a movie and it lost $5 million, but he got advances to make his next movie of $5 million, [in his mind] he'd broken even."
UTV, by contrast, went public on the Mumbai Stock Exchange in 2005, becoming one of the first listed film companies in India and introducing modern methods. The studio spends as long as two years in preproduction selecting scripts and setting casts, budgets and distribution plans. UTV has also taken control of marketing and raised spending to 25 percent of each film's production costs, nearing the Hollywood average (about 50 percent). And UTV shoots pictures in three months—on budget. To improve collections from the foreign market, UTV has avoided selling the overseas distribution rights to its films and built its own distribution network instead, setting up offices in the United States, Canada, Britain and the United Arab Emirates. Now the company is focusing on turning the 20-odd other countries where Bollywood films have established a niche market into a meaningful part of the business.
Screwvala says he shook things up out of necessity. "I was an outsider," he explains. "I hadn't grown up with these stars and directors." The son of a businessman (his father retired as managing director of a cosmetics firm), he was hardly destined for the movies. But after graduating with a degree in commerce from Mumbai University, he cut his teeth in television. He was the first to launch multichannel TV in India, schlepping around to meet with the residents' associations of Mumbai apartment buildings to sell closed-circuit cable at a time when the only other option was a single, state-owned broadcaster. Later, his company produced India's first daily afternoon soap opera, "Shanti." Working with Disney to dub its library of films into Indian languages in 1996 gave Screwvala the idea to try and create a modern, Western-style film company himself.
With little capital and without the family ties needed to attract big stars, he attacked the industry's fringe first. UTV got into film distribution in 1996, and then in 1997 Screwvala produced a typical low-budget Bollywood romance named "Dil Ke Jharoke Main" ("In the Windows of the Heart"). It bombed, convincing Screwvala of the need to work with a new generation of actors, directors and writers who were willing to experiment. UTV then inked deals to coproduce three films with big budgets (for Bollywood) and A-list stars. All three strayed from the Bollywood formulas and laid the foundation for the company's subsequent hits, including "Rang de Basanti"—a realistic film about Delhi youth.
UTV wasn't the first to make innovative movies; director-producer Ram Gopal Varma preceded Screwvala on this count. And Yash Raj Films, the perennial box- office leader, was quick to adopt many of UTV's Hollywood-studio-style practices. But Yash Raj was slow to see the potential of genre-breaking films, making its first such attempt this year with "Chak De," a movie about women's field hockey. This delay let Screwvala harness new-style films to new corporate structures more quickly than his rivals.
Hollywood is impressed. James Lassiter, Will Smith's partner in Overbrook Entertainment, says he and Smith were blown away last year when they met Screwvala in India. "We connected with Ronnie," Lassiter says. "He's more ambitious [than other Bollywood players], the way we're more ambitious [than Hollywood] ... He's smart, he has excellent taste, he has a global perspective and I think ultimately he'll be a big winner in worldwide cinema."
At home, Screwvala has already come a long way. He has crept steadily up the charts to become the second biggest box-office success in Indian film after Yash Raj, which still focuses on romances and big-budget song-and-dance extravaganzas. And Screwvala now takes in more than any of the other big producers from India's film families, many of whom are now scrambling to adopt his basic business model. Where there were once scores of director-producers who made one or two films a year, operating by the seat of their pants, now many of the best directors have been absorbed by the three major studios, which produce eight to 10 films a year. Thanks to the recent IPOs and other deals, three more studios—each with serious financial muscle—will produce their own slates next year.
The next challenge for Bollywood is to branch out into the broader media and entertainment business, which is expected to grow in India from about $11 billion to $25 billion by 2011. Screwvala is building UTV into what he calls a 360-degree media and entertainment company. He already has ventures in animation, gaming and TV content production, and he has eight to 10 TV channels in the works. UTV's animation division is producing four features for the world market this year, including one starring Will Smith and another directed by Simi Nallaseth, one of the animators of "Ice Age." Earlier this year, UTV acquired a British videogame company called Ignition Entertainment Ltd. Ignition is set to release Wardevil, a high-end game for the Sony's PS3, in 2008 and hopes to turn it into the linchpin of a multimedia franchise. UTV is also partnering with Richard Branson's Virgin Comics on a line of superheroes based on Indian mythology.
UTV can expect plenty of competition, with many big Indian media players now seeking out foreign partners and new markets. With Viacom's backing and marketing muscle, Network 18 is also building a media and entertainment empire. Apart from its fast-growing film operation, it is already one of the biggest players in Internet content and TV broadcasting, where it has teamed up with NBC Universal and Time Warner as well as Viacom. With its dominance in TV news, it could soon play News Corp. to UTV's Warner Bros. Deep-pocketed Reliance ADAG, one of India's biggest conglomerates, is going into satellite broadcasting, launching 45 radio stations, and recently established a second film production company, Big Motion Pictures, to complement its majority stake in Adlabs.
It's difficult to predict where the deal making will end. Hollywood, which has been going global for the past several decades, now earns more than 60 percent of its revenue abroad. While it's tough to imagine Indian films ever developing as broad a global market, the PricewaterhouseCoopers projections show the ticket sales for Indian productions rising fastest outside India, even as its increasingly wealthy middle class heads to the box office at home for more unconventional fare. Meanwhile, Bollywood seems set to continue its development as a financier and marketer of global products—whether created at home or abroad. As the muscle of the new media titans like Screwvala increases, it won't be long before they truly become household names—in India and beyond.
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20546429/site/newsweek/
Newsweek International
Sept. 10, 2007 issue - Ronnie Screwvala is the front runner in the race to become Bollywood's Jack Warner—the man who began the transformation of parochial U.S. cinema into its modern global form. Yet Screwvala is rarely picked out of a crowd in India, let alone in the United States. But Hollywood insiders know him well, for producing the "The Namesake," the groundbreaking hit about Indian immigrants, and for coproducing a Chris Rock comedy ("I Think I Love My Wife"). Now he is coproducing "The Happening," a new sci-fi thriller starring Mark Wahlberg and directed by M. Night Shyamalan ("The Sixth Sense") that seems destined to vault him into the big leagues. With a budget of $57 million, it will cost as much as 10 Indian blockbusters, setting a new bar for Bollywood. "Our ambition is to be a global Indian entertainment company—there's no reason we can't make big-budget Hollywood movies, too," says Screwvala.
At 45, Screwvala is a stocky, soft-spoken man whose urbane colonial English is a far cry from Jack Warner's notorious bluster. But his innovations are fast putting his Mumbai-based company, UTV Software Communications, on the world map and setting the modern standard of studio efficiency in Bollywood, the way Warner did in Hollywood. A multimedia conglomerate with interests in film, TV, animation and videogame production and distribution is also the closest thing to the diversified Warner Bros. that India has ever seen.
Indeed, over the past five years Screwvala has led the transformation of India's prolific but chaotic film industry. India makes about 1,000 movies a year, including Bollywood's 200-odd Hindi pictures and others in regional languages—about 10 times Hollywood's total. But until recently, every Bollywood movie was an independent film made by a producer-director who ran his operation like a mom-and-pop shop. Deals were cut off the books between film families. Marketing was left to theater owners. And writers scripted scenes on the day of shooting, following stock formulas: brothers separated at birth; village rebel vs. rapacious landlord, or cops vs. robbers. It was considered the height of innovation simply to meld these elements, creating, say, a story about brothers separated at birth who grow up on opposite sides of the law but then ultimately join forces against an evil landlord after much singing, dancing and weeping.
In its heyday, from the 1950s through the early 1980s, Bollywood managed to pack cinemas throughout this movie-crazy country with such fare. But its formulaic plots grew stale at just about the time that TV penetrated middle-class homes. Film revenues virtually stagnated between 1985 and 2000 at about $1 billion annually —less than one third the box office of a single major Hollywood studio. India's poverty and low ticket prices started making foreign markets more alluring. But Bollywood couldn't produce a global hit.
That may finally be changing. Indians are getting wealthier. The younger generation is spending more on entertainment. And innovators like Screwvala have begun professionalizing the business, bringing in outside investors and accounting standards and aggressively marketing films with novel plots. His production company has cut the old three-and-a-half-hour marathons to between 90 and 120 minutes, and has hired Hollywood scriptwriters to make its features more watchable. He's also gone straight to foreign shores—backing Mira Nair's New York-based production of "The Namesake," a story about the Indian diaspora—to prove that his model will work. The film grossed about $14 million at the box office—nearly 95 percent from the United States, more cash than any other Indian production has earned abroad to date.
Indian movies are also enjoying an impressive domestic boom. In 2006, India's film business grossed about $2 billion, up from $1.5 billion in 2004, and PricewaterhouseCoopers forecasts that revenue will leap to more than $4 billion over the next five years. "Our growth rates are much higher than Hollywood's, but in value terms we are way below [the U.S. movie industry]," says Timmy Kandhari, head of PWC's media and entertainment practice. But that will change as ticket prices—which now average less than $1 in India—swiftly catch up with the racing Indian economy.
This anticipated boom has foreign and domestic players scrambling to get in. Disney bought a 15 percent stake in Screwvala's UTV for $14 million in 2006. This year, Viacom inked a 50-50 joint venture with budding news-media mogul Raghav Bahl, head of the Indian entertainment conglomerate Network 18. The venture, called Viacom 18, will produce and distribute TV shows, digital media and (eventually) 10 to 12 movies a year. A separate entity called the Indian Film Company—in which Network 18 and Viacom own stakes—will begin financing about 40 to 45 films a year within three years. Billionaire Anil Ambani's Reliance ADAG conglomerate has acquired a 51 percent stake in a leading movie company called Adlabs Films for a little under $90 million. And three Indian studios held IPOs in London this year, raising a combined $220 million.
That's big money in a nation where until recently the average film budget was only about $150,000, and should dramatically increase the number and quality of Indian films. But very little cash will likely flow into coproductions with Hollywood, an area where Screwvala remains at least several years ahead of his competitors, most of whom still shy away from big Hollywood gambles. Screwvala is contributing $27 million—more than an Indian hit would gross—to the $57 million budget for Shyamalan's "The Happening." But the returns can be huge: "The Sixth Sense," which cost Shyamalan around $40 million to make, grossed nearly $700 million.
Screwvala has more than one wager in play. UTV has also forged coproduction deals with Fox Searchlight and Sony Pictures, and with Will Smith's Overbrook Entertainment. Hollywood—which requires endless cash injections and has for years been looking for outside funding from sources as diverse as German pensioners and private-equity funds—is only too eager to cut more such deals. "I think [these coproductions] are going to become more common," says Jose L. Rodriguez, Shyamalan's U.S.-based coproducer on "The Happening." "Ronnie is sort of leading the pack."
He's also shaking up Bollywood. Until recently, India's film industry was controlled by a few powerful producer-directors, like Yash Chopra, who enjoyed strong family or personal ties to Bollywood's fickle superstars, many of whom were also related. The heads of these "film families" never worked out a budget in advance and started shooting with only a fraction of the cash they needed in hand. Preproduction was a 20-minute meeting. Writers made up the dialogue as they went along. There were no production schedules or contracts; stars walked in and out of projects at whim. With hundreds of local distributors and tens of thousands of theater owners who habitually underreported box-office returns, it was hard to tell who, if anybody, was making money. "Nobody thought of this as a profit-and-loss [business]," says Screwvala. "They thought of it as a cash-flow [business]. So if a producer-director made a movie and it lost $5 million, but he got advances to make his next movie of $5 million, [in his mind] he'd broken even."
UTV, by contrast, went public on the Mumbai Stock Exchange in 2005, becoming one of the first listed film companies in India and introducing modern methods. The studio spends as long as two years in preproduction selecting scripts and setting casts, budgets and distribution plans. UTV has also taken control of marketing and raised spending to 25 percent of each film's production costs, nearing the Hollywood average (about 50 percent). And UTV shoots pictures in three months—on budget. To improve collections from the foreign market, UTV has avoided selling the overseas distribution rights to its films and built its own distribution network instead, setting up offices in the United States, Canada, Britain and the United Arab Emirates. Now the company is focusing on turning the 20-odd other countries where Bollywood films have established a niche market into a meaningful part of the business.
Screwvala says he shook things up out of necessity. "I was an outsider," he explains. "I hadn't grown up with these stars and directors." The son of a businessman (his father retired as managing director of a cosmetics firm), he was hardly destined for the movies. But after graduating with a degree in commerce from Mumbai University, he cut his teeth in television. He was the first to launch multichannel TV in India, schlepping around to meet with the residents' associations of Mumbai apartment buildings to sell closed-circuit cable at a time when the only other option was a single, state-owned broadcaster. Later, his company produced India's first daily afternoon soap opera, "Shanti." Working with Disney to dub its library of films into Indian languages in 1996 gave Screwvala the idea to try and create a modern, Western-style film company himself.
With little capital and without the family ties needed to attract big stars, he attacked the industry's fringe first. UTV got into film distribution in 1996, and then in 1997 Screwvala produced a typical low-budget Bollywood romance named "Dil Ke Jharoke Main" ("In the Windows of the Heart"). It bombed, convincing Screwvala of the need to work with a new generation of actors, directors and writers who were willing to experiment. UTV then inked deals to coproduce three films with big budgets (for Bollywood) and A-list stars. All three strayed from the Bollywood formulas and laid the foundation for the company's subsequent hits, including "Rang de Basanti"—a realistic film about Delhi youth.
UTV wasn't the first to make innovative movies; director-producer Ram Gopal Varma preceded Screwvala on this count. And Yash Raj Films, the perennial box- office leader, was quick to adopt many of UTV's Hollywood-studio-style practices. But Yash Raj was slow to see the potential of genre-breaking films, making its first such attempt this year with "Chak De," a movie about women's field hockey. This delay let Screwvala harness new-style films to new corporate structures more quickly than his rivals.
Hollywood is impressed. James Lassiter, Will Smith's partner in Overbrook Entertainment, says he and Smith were blown away last year when they met Screwvala in India. "We connected with Ronnie," Lassiter says. "He's more ambitious [than other Bollywood players], the way we're more ambitious [than Hollywood] ... He's smart, he has excellent taste, he has a global perspective and I think ultimately he'll be a big winner in worldwide cinema."
At home, Screwvala has already come a long way. He has crept steadily up the charts to become the second biggest box-office success in Indian film after Yash Raj, which still focuses on romances and big-budget song-and-dance extravaganzas. And Screwvala now takes in more than any of the other big producers from India's film families, many of whom are now scrambling to adopt his basic business model. Where there were once scores of director-producers who made one or two films a year, operating by the seat of their pants, now many of the best directors have been absorbed by the three major studios, which produce eight to 10 films a year. Thanks to the recent IPOs and other deals, three more studios—each with serious financial muscle—will produce their own slates next year.
The next challenge for Bollywood is to branch out into the broader media and entertainment business, which is expected to grow in India from about $11 billion to $25 billion by 2011. Screwvala is building UTV into what he calls a 360-degree media and entertainment company. He already has ventures in animation, gaming and TV content production, and he has eight to 10 TV channels in the works. UTV's animation division is producing four features for the world market this year, including one starring Will Smith and another directed by Simi Nallaseth, one of the animators of "Ice Age." Earlier this year, UTV acquired a British videogame company called Ignition Entertainment Ltd. Ignition is set to release Wardevil, a high-end game for the Sony's PS3, in 2008 and hopes to turn it into the linchpin of a multimedia franchise. UTV is also partnering with Richard Branson's Virgin Comics on a line of superheroes based on Indian mythology.
UTV can expect plenty of competition, with many big Indian media players now seeking out foreign partners and new markets. With Viacom's backing and marketing muscle, Network 18 is also building a media and entertainment empire. Apart from its fast-growing film operation, it is already one of the biggest players in Internet content and TV broadcasting, where it has teamed up with NBC Universal and Time Warner as well as Viacom. With its dominance in TV news, it could soon play News Corp. to UTV's Warner Bros. Deep-pocketed Reliance ADAG, one of India's biggest conglomerates, is going into satellite broadcasting, launching 45 radio stations, and recently established a second film production company, Big Motion Pictures, to complement its majority stake in Adlabs.
It's difficult to predict where the deal making will end. Hollywood, which has been going global for the past several decades, now earns more than 60 percent of its revenue abroad. While it's tough to imagine Indian films ever developing as broad a global market, the PricewaterhouseCoopers projections show the ticket sales for Indian productions rising fastest outside India, even as its increasingly wealthy middle class heads to the box office at home for more unconventional fare. Meanwhile, Bollywood seems set to continue its development as a financier and marketer of global products—whether created at home or abroad. As the muscle of the new media titans like Screwvala increases, it won't be long before they truly become household names—in India and beyond.
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20546429/site/newsweek/
Monday, August 13, 2007
do-it-yourself education
By Jason Overdorf
Newsweek International
Aug. 20-27, 2007 issue - In India, education is supposed to be free and universal through age 14. In fact, it often doesn't work out that way. Consider Dhiraj Sharma, the 10-year-old son of a bicycle rickshaw driver in Dehli, who was forced to stay home last year after the local state denied him admission because he didn't have the right papers—a common problem. So Dhiraj is now applying to a private school. For just $6 a month, the R.S. School offers a much better education than the state, says Dhiraj's father, Ramesh, complaining that his son "finished class three in government school, and he can't read anything!"
Such problems have sparked a boom in private schooling throughout the developing world. In 2000, James Tooley, an administrator for Orient Global, a Singapore company that invests in education for the poor, went walking in Hyderabad, India, and was startled to find private schools on virtually every corner. He launched a full-scale study in India, China and Africa, and everywhere, officials and aid agencies told him such schools for the poor didn't exist. But when his researchers explored the villages and slums, they found that not only did they exist, they were flourishing. "It's a tremendous success story," says Tooley. "Entrepreneurs are catering to poor, low-income families, and they're achieving better than the government at a fraction of the cost."
The story was perhaps most dramatic in China. Tooley and his chief researcher, Qiang Liu, traveled to the poorest, most remote villages of Gansu province. Officials there insisted there were no private schools. And so it seemed, until Qiang woke up one morning at dawn and canvassed the vegetable market. Sure enough, women who'd traveled there from the neighboring countryside told him about private schools farther up in the mountains. "In the end, our survey found 586 of them in these remote villages, where the government and [aid workers] said there were none."
Elsewhere the private schools were easier to spot and even more numerous. In Delhi, hand-painted signs advertise low-cost private schools at every twist of the narrow lanes. In Hyderabad, 60 percent of the schools serving poor neighborhoods are private. None of them get state aid, and two thirds are not recognized by the government at all—meaning they are essentially black market. In the hinterlands of Accra, Ghana, Tooley's team found the same phenomenon: 65 percent of kids there attended private, unaided schools. In Lagos, in three different slums, the figure jumped to 75 percent.
The numbers suggest that despite the low prices (as little as $1.50 a month), parents believe such schools do a better job than the government. And they're generally right. Harvard's Michael Kremer found that though private-school salaries were lower in India than in public schools, teachers at the former skipped fewer classes (absenteeism is a notorious problem in India's state-run schools). Similarly, a 1999 survey conducted by Delhi University's Centre for Development Economics found that while teachers in state schools spent their time sitting idle, the makeshift private schools enjoyed "feverish classroom activity."
Harder-working teachers, of course, get better results—even when they lack qualifications. Kremer's 2002 study of Colombia's PACES program, one of the largest school-voucher projects ever implemented, found that three years after switching to relatively low-cost private schools, students had accomplished more, repeated fewer grades and scored higher on tests, and were less likely to have dropped out to take jobs, than were their counterparts still stuck in the government system. Other studies have reported similar results in Thailand, Tanzania, the Dominican Republic, the Philippines and elsewhere.
Indeed, it's remarkable how many cheap private schools manage to do more with less. In Uttar Pradesh, one of the poorer Indian states, for instance, Oxford University's Geeta Kingdon has found that private, unaided schools are about twice as cost-effective as government schools, achieving better results in math and comparable results in reading at half the cost. The explanation lies in basic market forces. Competition forces these schools to work effectively. It also produces greater accountability.
In India, teachers' unions are so powerful that educators are almost never fired or transferred for transgressions. And parents are powerless. "At government schools, parents won't even be allowed into the compound, let alone to meet a teacher, but in private schools, in most cases, they have parent-teacher associations," says Parth Shah, president of New Delhi's Center for Civil Society and coordinator of India's School Choice Campaign—a program that promotes vouchers to allow poor kids to attend private school. "Parents feel they have a right to ask a question of a private school."
This higher standard is on view at Priya Adarsh School, another low-cost private operator in northeast Delhi. Here the principal—keen on keeping customers—watches his teachers on a closed-circuit television while he pecks away at a spreadsheet on his desktop PC. The standards aren't perfect, of course; when NEWSWEEK visited, the camera caught one teacher whacking a pupil with a ruler. But at least every teacher was in his or her classroom teaching, and every student was sitting at a desk and paying attention.
Skeptics decry this "at least they're trying" argument. In many regards the cheap private schools are substandard—with poor infrastructure, high teacher-student ratios and poorly qualified instructors—even if they are better than state schools. R. Govinda, head of the department of schools and nonformal education at New Delhi's National University of Educational Planning and Administration, says embracing cheap private schools is defeatist. "I'm not ready to settle for a substandard alternative," he says. "Comparing them is like comparing two people who are drowning. One is drowning in 20 feet of water, the other is drowning in 30 feet of water. Does it make a difference?"
Other opponents, both in India and elsewhere, argue that ceding the educational field to private players will put an end to any hope of an equal education for all. A study based on a survey of parent satisfaction published earlier this year by researchers at Columbia University found that relying on private markets can undermine educational equity and universal access. Furthermore, it argues, private schools strive for superior quality only where they compete with government schools; otherwise they offer "lower-quality, second-chance" educations to children without any other option. "There is no reason to assume that private markets will necessarily improve the quality of education," the study concludes.
School-choice advocates respond that it is a fantasy to suggest public education is providing a quality education to all. "You can't compare the reality of private education with some myth of what public education has been like," says Tooley. At least cheap private schools are responsive to parents, and the more parents who choose this route, the better private schools will get, thanks to increased capital, higher demand, more competition and economies of scale. "These are [now] small cottage industries," says Tooley. "They're mom-and-pop stores. There are thousands and thousands of them. Some of them are beginning to consolidate, and you're getting small, embryonic chains."
That's where he's looking to invest much of the $100 million education fund he manages for Orient Global. Already the fund has given grants to six private-school associations or institutions in Kenya, Nigeria, Zimbabwe and Nepal, and Tooley's team is conducting research in India ahead of opening a chain of budget private schools for the poor there that would set new benchmarks in quality. "It's an inadequate analogy," says Tooley. "But when I go shopping in a supermarket, I go to one of several chains, and poor people also go shopping there. Poorer people. They have the same diversity of choice and the same quality. The chain doesn't discriminate between us. Also, some of them have food stamps or social-security payments, which are like school vouchers. So when you have competing chains of schools, when the market system develops, that inequality will become less relevant." In the meantime, as the slums of Delhi, Lagos and Accra show, black-market schools will continue to thrive, ensuring that, even in places where government has failed them, poor kids can get an adequate education—on the books or off.
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20226757/site/newsweek/
Newsweek International
Aug. 20-27, 2007 issue - In India, education is supposed to be free and universal through age 14. In fact, it often doesn't work out that way. Consider Dhiraj Sharma, the 10-year-old son of a bicycle rickshaw driver in Dehli, who was forced to stay home last year after the local state denied him admission because he didn't have the right papers—a common problem. So Dhiraj is now applying to a private school. For just $6 a month, the R.S. School offers a much better education than the state, says Dhiraj's father, Ramesh, complaining that his son "finished class three in government school, and he can't read anything!"
Such problems have sparked a boom in private schooling throughout the developing world. In 2000, James Tooley, an administrator for Orient Global, a Singapore company that invests in education for the poor, went walking in Hyderabad, India, and was startled to find private schools on virtually every corner. He launched a full-scale study in India, China and Africa, and everywhere, officials and aid agencies told him such schools for the poor didn't exist. But when his researchers explored the villages and slums, they found that not only did they exist, they were flourishing. "It's a tremendous success story," says Tooley. "Entrepreneurs are catering to poor, low-income families, and they're achieving better than the government at a fraction of the cost."
The story was perhaps most dramatic in China. Tooley and his chief researcher, Qiang Liu, traveled to the poorest, most remote villages of Gansu province. Officials there insisted there were no private schools. And so it seemed, until Qiang woke up one morning at dawn and canvassed the vegetable market. Sure enough, women who'd traveled there from the neighboring countryside told him about private schools farther up in the mountains. "In the end, our survey found 586 of them in these remote villages, where the government and [aid workers] said there were none."
Elsewhere the private schools were easier to spot and even more numerous. In Delhi, hand-painted signs advertise low-cost private schools at every twist of the narrow lanes. In Hyderabad, 60 percent of the schools serving poor neighborhoods are private. None of them get state aid, and two thirds are not recognized by the government at all—meaning they are essentially black market. In the hinterlands of Accra, Ghana, Tooley's team found the same phenomenon: 65 percent of kids there attended private, unaided schools. In Lagos, in three different slums, the figure jumped to 75 percent.
The numbers suggest that despite the low prices (as little as $1.50 a month), parents believe such schools do a better job than the government. And they're generally right. Harvard's Michael Kremer found that though private-school salaries were lower in India than in public schools, teachers at the former skipped fewer classes (absenteeism is a notorious problem in India's state-run schools). Similarly, a 1999 survey conducted by Delhi University's Centre for Development Economics found that while teachers in state schools spent their time sitting idle, the makeshift private schools enjoyed "feverish classroom activity."
Harder-working teachers, of course, get better results—even when they lack qualifications. Kremer's 2002 study of Colombia's PACES program, one of the largest school-voucher projects ever implemented, found that three years after switching to relatively low-cost private schools, students had accomplished more, repeated fewer grades and scored higher on tests, and were less likely to have dropped out to take jobs, than were their counterparts still stuck in the government system. Other studies have reported similar results in Thailand, Tanzania, the Dominican Republic, the Philippines and elsewhere.
Indeed, it's remarkable how many cheap private schools manage to do more with less. In Uttar Pradesh, one of the poorer Indian states, for instance, Oxford University's Geeta Kingdon has found that private, unaided schools are about twice as cost-effective as government schools, achieving better results in math and comparable results in reading at half the cost. The explanation lies in basic market forces. Competition forces these schools to work effectively. It also produces greater accountability.
In India, teachers' unions are so powerful that educators are almost never fired or transferred for transgressions. And parents are powerless. "At government schools, parents won't even be allowed into the compound, let alone to meet a teacher, but in private schools, in most cases, they have parent-teacher associations," says Parth Shah, president of New Delhi's Center for Civil Society and coordinator of India's School Choice Campaign—a program that promotes vouchers to allow poor kids to attend private school. "Parents feel they have a right to ask a question of a private school."
This higher standard is on view at Priya Adarsh School, another low-cost private operator in northeast Delhi. Here the principal—keen on keeping customers—watches his teachers on a closed-circuit television while he pecks away at a spreadsheet on his desktop PC. The standards aren't perfect, of course; when NEWSWEEK visited, the camera caught one teacher whacking a pupil with a ruler. But at least every teacher was in his or her classroom teaching, and every student was sitting at a desk and paying attention.
Skeptics decry this "at least they're trying" argument. In many regards the cheap private schools are substandard—with poor infrastructure, high teacher-student ratios and poorly qualified instructors—even if they are better than state schools. R. Govinda, head of the department of schools and nonformal education at New Delhi's National University of Educational Planning and Administration, says embracing cheap private schools is defeatist. "I'm not ready to settle for a substandard alternative," he says. "Comparing them is like comparing two people who are drowning. One is drowning in 20 feet of water, the other is drowning in 30 feet of water. Does it make a difference?"
Other opponents, both in India and elsewhere, argue that ceding the educational field to private players will put an end to any hope of an equal education for all. A study based on a survey of parent satisfaction published earlier this year by researchers at Columbia University found that relying on private markets can undermine educational equity and universal access. Furthermore, it argues, private schools strive for superior quality only where they compete with government schools; otherwise they offer "lower-quality, second-chance" educations to children without any other option. "There is no reason to assume that private markets will necessarily improve the quality of education," the study concludes.
School-choice advocates respond that it is a fantasy to suggest public education is providing a quality education to all. "You can't compare the reality of private education with some myth of what public education has been like," says Tooley. At least cheap private schools are responsive to parents, and the more parents who choose this route, the better private schools will get, thanks to increased capital, higher demand, more competition and economies of scale. "These are [now] small cottage industries," says Tooley. "They're mom-and-pop stores. There are thousands and thousands of them. Some of them are beginning to consolidate, and you're getting small, embryonic chains."
That's where he's looking to invest much of the $100 million education fund he manages for Orient Global. Already the fund has given grants to six private-school associations or institutions in Kenya, Nigeria, Zimbabwe and Nepal, and Tooley's team is conducting research in India ahead of opening a chain of budget private schools for the poor there that would set new benchmarks in quality. "It's an inadequate analogy," says Tooley. "But when I go shopping in a supermarket, I go to one of several chains, and poor people also go shopping there. Poorer people. They have the same diversity of choice and the same quality. The chain doesn't discriminate between us. Also, some of them have food stamps or social-security payments, which are like school vouchers. So when you have competing chains of schools, when the market system develops, that inequality will become less relevant." In the meantime, as the slums of Delhi, Lagos and Accra show, black-market schools will continue to thrive, ensuring that, even in places where government has failed them, poor kids can get an adequate education—on the books or off.
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/20226757/site/newsweek/
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