All this talk of new tigers pushing forward neglects the profound cultural inhibitions that will only hold back places such as India.

While it is touted as 'booming' and the only place to be, & that will eclipse the moribund developed world, it is also true that it is undeveloped not for reasons of underinvestment but of misplaced, inefficient investment. Of course, its demographic profile and the emergence of a moneyed middle class points to that cusp of growth that hot capital loves. So it will grow, but..

The following article expresses what I have felt about the place, that the lack of maintenance, itself a function of a society with differently prioritised responsibilities, will contain the seeds of its failure to capitalise on present opportunities.


http://www.bloomberg.com/apps/news?pid= ... jvqYhd99xo

India Must End `Build-Neglect-Rebuild' Culture: Andy Mukherjee
Aug. 3 (Bloomberg)

-- The World Bank calls it India's ``Build-Neglect-Rebuild'' model.

It's a malaise that plagues the delivery of transportation, electricity, water and most other services that the Indian government provides -- or, more appropriately, attempts to provide -- to its citizens.

Typically, the charges that users pay for a service cover only a fraction of the operational and maintenance costs.

A perverse sense of social justice ensures that most of the shortfall faced by state-owned utilities -- including the wages of their surplus manpower -- is recouped from taxpayers.

In the bargain, no one pays for the replacement of aging, badly maintained assets, such as the 100-year-old rain sewers of Mumbai. It's only when the neglect becomes unbearable for users that there's a desperate attempt to rebuild the service -- with no effort to change the conditions responsible for its decline.

Fixing this culture of neglect will not only improve the quality of government services in India, it will also bring the country much-needed private investments in infrastructure -- roads, ports, bridges, highways and urban services.

This is one of the crucial findings of a recent World Bank study, titled ``India: Inclusive Growth and Service Delivery.''

The bank's researchers estimate that if private investments in infrastructure were to rise to 3 percent of gross domestic product, from an average of 1 percent in the past 10 years, India would get about $20 billion a year, an amount that could considerably ease the country's woeful shortage in that area.

Anti-Poor

And those who aren't able to pay the full cost of a good- quality service won't lose if their access to a water tap or an electricity connection is directly subsidized by better-off consumers. In fact, they would stand to gain because being indirectly -- and inefficiently -- compensated by taxpayers actually hurts the interests of the poor.

The current system, political rhetoric notwithstanding, is blatantly anti-poor.

Marginal farmers in India spend a 10th of their gross income on rewiring irrigation pumps that get burnt out because of voltage fluctuations in the erratic power supply they receive from bankrupt utilities.

The ``free electricity'' that politicians routinely dish out to villagers to win their votes is free only for big landowners, for whom the cost of repairing motors is negligible in proportion to income. Meanwhile, taxpayers' largesse keeps afloat power utilities whose annual losses exceed 1 percent of the country's GDP.

Similarly, slum-dwellers in New Delhi pay $3.50 a month to collect water. Most of this expense is accounted for by the opportunity cost of the time they have to spend queuing up at public taps, the bank's research shows.

Private Investments

Privatizing the delivery of water need not work against the poor. The 1997 renegotiation of the water contract in Buenos Aires shows that a fee can be levied on all consumers to keep connection costs low for the poor.

At the same time, stringent norms on the quality of water supplied by the concessionaire can reduce water-borne diseases and the attendant risk of child mortality, as has happened with private water supply in Argentina, the World Bank says.

Private participation in Indian infrastructure has the potential to become an important source of financing. In August last year, the government announced rules for ``viability-gap funding,'' or the monetary support it would provide to private entrepreneurs who undertake infrastructure investments.

Last week, the Finance Ministry said that out of the 21 proposals it had received so far for viability-gap funding in transportation, power and urban services, it had identified 12 road projects that would receive $114 million of public money.

The private sector, which will build, maintain and operate the roads, will invest the remaining $444 million.

Viability-Gap Funding

This is a good start, the World Bank says, though India may need to create a national organization to run the viability-gap fund and help transfer best practices in project design and management to state and municipal governments, which may lack the technical capacity to benefit from private investments.

Even after many successes, private investment in urban infrastructure has earned a bad name in Latin America, which in the 1990s was the biggest recipient of non-state capital in utilities. India, which in 2004 overtook Brazil and China in attracting private investments in infrastructure, has a good opportunity to learn from the errors other governments made in executing the projects and communicating their benefits.

Ultimately, it's impossible to run a decent utility unless users are made to pay for what they get.

Even the most foolproof of concession agreements won't work if the organs of the state -- regulatory, executive and judicial -- renege upon their obligations to enforce rules, especially in restricting the availability of substitute goods to customers who have the ability to pay for quality.

`Few Incentives'

Why should the urban rich in India bother about the sorry state of publicly funded educational institutes, hospitals or municipal water supply when they have already made substantial personal investments in alternative arrangements -- private schools, nursing homes and tube-wells?

``There are few incentives,'' the World Bank report notes grimly, ``for more privileged citizens to mobilize in favor of radical reforms.''

The state's neglect of infrastructure services has made the citizens apathetic. And that has given the government some room to be even more slipshod. One of India's foremost challenges is to break this vicious cycle.

(Andy Mukherjee is a Bloomberg News columnist. The opinions expressed are his own.)

Thank you for that Ben.

It is always interesting to read a more internalised reality check of a nation.

In the same vein, the highlight of my weekly dose of tv was Salam Pax, the Baghdad Blogger. Twaz, tragically comic ...
http://www.abc.net.au/foreign/content/2006/s1697895.htm

But back to India. What is it their model seeks to acheive? Look at an industry which they have swarmed into:- IT and software. It seems as though they so need to maintain the cycle that they seek to commoditise all goods and services. Can always be built better (they think) second time around. Give everything a shelf life and you will have a job to rebuild it within 5 years. The disposable nature of technology is beginning to annoy me. I feel things should last half a lifetime and development efforts should go to developing something new and better instead of rebuilding something old (and worse). Like the Indian sales consultants trying to get us to change utility companies. The attitude is, you are not participating in the economy unless you are changing.

Cheerio

Don't forget, in most of rural Bihar, the morning question to neighbours is not "What did you have for breakfast this morning?" but "Did you have breakfast this morning?"

Abject poverty is still a way of life for hundreds of millions. A rigid caste system, inadequate education and lack of any opportunity looms much larger that anything else.

Another problem with India is that most of the wealth is controlled by the the top 10 family businesses. The Tata's , Birlas, the Reliannce group and so on. These family companies have thier fingers in everything from energy , tea plantations, investment banks , steel, mobilephones, you name it they are in it. And these families have great influence in the way the country is run.

the thread title says it all

While India has more than 1.5 million places in engineering colleges, a recent analysis of assessment results by the National Association of Software and Services Companies found 85 per cent of general graduates were unemployable.

"The key for India is training," says Mr Waugh.

"There's no shortage of intelligent people in India. The shortfall is in the training and to my mind the greatest shortfall of all is in the trades; plumbers, electricians, plasterers, welders -- that whole skill set is missing."

So desperate is India's skills shortage, the Indian government has set a training target of 500 million Indians in more than 20 key growth industries over the next decade.

http://www.theaustralian.com.au/nationa ... 6061468198

the 'bureaucratic, 'box-ticking" approach by our Labor government to fill 'our' skills shortage runs up against this great truth. And the unstated issue of caste, with its minutiae of rules and observances that deliver bugger all but frustration to outsiders. Kun jhat indeed. Most Indians are happy to have the position, but as to whether they perform the job....

Paul Theroux, in his recent book Ghost Train to the Eastern Star, did a neat chapter on India, and came to the conclusion that its "Greatest resource is its poverty" meaning there is an unending supply of poor to fill the ranks. Worth reading the whole chapter for a snapshot, and book, for pleasure.