Recently I attended the US-India Business Summit West, in Silicon
Valley. The stellar array of speakers was capped by a closing keynote
from former US Secretary of State, Condoleezza Rice, making the case for
a global alignment of nations to promote “free people and free
markets”. The US-India Business Council, which represents US business
interests in India, naturally expressed concern over the policy
uncertainties and lack of some key economic reforms in India. The pause
on FDI in multi-brand retailing and the recent Budget pronouncements on
taxes, seemingly threatening arbitrary discretion in making tax claims
retroactively, figured prominently in these concerns.
Panels on innovation and investing were the most enlightening,
however, almost exclusively featuring entrepreneurs and investors of
Indian origin. As one would expect from those trying to make the future,
either through implementing new ideas or funding them, there was a
quiet optimism that provided some balance to the macro concerns
expressed at other times during the day, which also dominate the
headlines. This is not to say that the only optimism came from Indian
Americans. Senior executives from Cisco, VMWare and Walt Disney
International also gave examples of how India represents opportunities,
or how it can take advantages of emerging opportunities.
More....
Showing posts with label entrepreneurship. Show all posts
Showing posts with label entrepreneurship. Show all posts
Friday, June 15, 2012
Tuesday, November 29, 2011
Entrepreneurship and Jobs in India
India needs more jobs than it is creating. Without enough job creation, its demographic dividend—adding a million people to the workforce every month—will become a disaster. One possible source of job creation is entrepreneurship. Recently, Ejaz Ghani, William Kerr and Stephen O’Connell (GKO) have been systematically exploring this hypothesis for India, in several research articles. What do we learn from their work?
More...
More...
Tuesday, August 23, 2011
Navigating the Next Crisis
Is a new economic crisis coming? Is it just a playing out of the financial crisis of 2008? What should India’s policymakers do? These may seem like just a tough set of questions from a civil service exam. But they are real challenges that face India's leaders. Unlike their counterparts in the US, Europe and China, India’s leaders actually have significant room to maneuver. What should they do, and why?
More...
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Sunday, March 27, 2011
Thoughts on Innovation, Entrepreneurship and Growth
These four pieces have a common theme of how to encourage innovation and entrepreneurship in India
India's Missing Growth Driver
India’s Union Budget has been presented, the Economic Survey has been published and attention has returned to day-to-day governance and politics as usual. Stories about big business, big sums of money and large-scale corruption are the ones that grab headlines. Ultimately, though, key policies that will shape India’s future may be suffering from neglect. Sustained inclusive growth requires innovation and job creation across a broad cross-section of the economy. This includes labour-intensive manufacturing, but, more generally, an industrial dynamism that extends beyond large incumbent firms, foreign entrants, or the relatively few recent domestic success stories.
A few years ago, prominent economist Anne Krueger labelled India’s problem that of a “missing middle” in its distribution of firms—a gap between small firms in the unorganised sector, and the large firms that grab headlines in billionaires’ lists and mega-mergers and acquisitions.
More...
India in 2011: What's Next?
What’s in store for India in the new year? The short-term economic outlook is good. Growth of 9% seems to be a reasonable forecast. Looking ahead, growth rates in this range seem to be sustainable for awhile, based on the assumption that investment stays at about 35% of GDP, and that the efficiency of this investment doesn’t decline compared to recent years. In one way, this is a remarkable achievement. The government has struggled to implement new structural reforms, and to do its core tasks more efficiently; yet the economy remains robust. Perhaps this is a tribute to what stability and reasonably adequate governance can achieve, when the private sector is in a position to take advantage of such an environment. The accelerating recovery in the US will presumably help India’s growth rate as well.
More...
Innovation and Taxes
India is continuing with major reforms of its tax system. These reforms began with liberalisation, and included cutting tax rates and rationalising enforcement and administration. Tax reform has been an important contributor to the country’s improved economic performance. The latest effort on indirect taxes is the move towards a unified national goods and services tax (GST). On the direct tax front, the new direct taxes code (DTC) Bill has just been tabled in Parliament.
A major guiding principle for tax reform is the goal of reducing distortions in economic activity that taxes can create. Tax rates that are too high, or taxes that apply to narrow groups, are more distortionary than lower rates and broader tax bases. Reforms of indirect and direct taxes are meant to cut down on distortions and improve economic efficiency. Lower rates applied more broadly and evenly, without overlapping taxes or exemptions, are part of the GST and DTC. Another principle, aligned with the first, is simplicity. Simplicity makes tax administration easier and more transparent. The GST and DTC are both simpler than their predecessors.
More...
Schumpeter and Three Idiots
Economic headlines in India focus on macroeconomic management. Soaring inflation, a burgeoning fiscal deficit or gyrating exchange rates all affect the economy’s health, but prudent macroeconomic policies only go so far. Long-run growth depends on factors like investment, innovation and trade (a different expansion of the initials IIT!), which do not receive as much attention. Investment is perhaps the most basic driver of growth, since capital accumulation raises labour productivity and per capita output. High rates of investment helped East Asia grow at rates never seen before. India, too, has seen higher growth associated with higher rates of investment.
International trade in goods and services has also helped India grow faster. According to economic theory, liberalising trade in goods should have just a one-time effect on output, rather than a permanent effect on growth, but the one-time effect could be spread over decades. Openness to trade also brings new capital and ideas along with products and services, and these can give boost to long-run growth.
More...
India's Missing Growth Driver
India’s Union Budget has been presented, the Economic Survey has been published and attention has returned to day-to-day governance and politics as usual. Stories about big business, big sums of money and large-scale corruption are the ones that grab headlines. Ultimately, though, key policies that will shape India’s future may be suffering from neglect. Sustained inclusive growth requires innovation and job creation across a broad cross-section of the economy. This includes labour-intensive manufacturing, but, more generally, an industrial dynamism that extends beyond large incumbent firms, foreign entrants, or the relatively few recent domestic success stories.
A few years ago, prominent economist Anne Krueger labelled India’s problem that of a “missing middle” in its distribution of firms—a gap between small firms in the unorganised sector, and the large firms that grab headlines in billionaires’ lists and mega-mergers and acquisitions.
More...
India in 2011: What's Next?
What’s in store for India in the new year? The short-term economic outlook is good. Growth of 9% seems to be a reasonable forecast. Looking ahead, growth rates in this range seem to be sustainable for awhile, based on the assumption that investment stays at about 35% of GDP, and that the efficiency of this investment doesn’t decline compared to recent years. In one way, this is a remarkable achievement. The government has struggled to implement new structural reforms, and to do its core tasks more efficiently; yet the economy remains robust. Perhaps this is a tribute to what stability and reasonably adequate governance can achieve, when the private sector is in a position to take advantage of such an environment. The accelerating recovery in the US will presumably help India’s growth rate as well.
More...
Innovation and Taxes
India is continuing with major reforms of its tax system. These reforms began with liberalisation, and included cutting tax rates and rationalising enforcement and administration. Tax reform has been an important contributor to the country’s improved economic performance. The latest effort on indirect taxes is the move towards a unified national goods and services tax (GST). On the direct tax front, the new direct taxes code (DTC) Bill has just been tabled in Parliament.
A major guiding principle for tax reform is the goal of reducing distortions in economic activity that taxes can create. Tax rates that are too high, or taxes that apply to narrow groups, are more distortionary than lower rates and broader tax bases. Reforms of indirect and direct taxes are meant to cut down on distortions and improve economic efficiency. Lower rates applied more broadly and evenly, without overlapping taxes or exemptions, are part of the GST and DTC. Another principle, aligned with the first, is simplicity. Simplicity makes tax administration easier and more transparent. The GST and DTC are both simpler than their predecessors.
More...
Schumpeter and Three Idiots
Economic headlines in India focus on macroeconomic management. Soaring inflation, a burgeoning fiscal deficit or gyrating exchange rates all affect the economy’s health, but prudent macroeconomic policies only go so far. Long-run growth depends on factors like investment, innovation and trade (a different expansion of the initials IIT!), which do not receive as much attention. Investment is perhaps the most basic driver of growth, since capital accumulation raises labour productivity and per capita output. High rates of investment helped East Asia grow at rates never seen before. India, too, has seen higher growth associated with higher rates of investment.
International trade in goods and services has also helped India grow faster. According to economic theory, liberalising trade in goods should have just a one-time effect on output, rather than a permanent effect on growth, but the one-time effect could be spread over decades. Openness to trade also brings new capital and ideas along with products and services, and these can give boost to long-run growth.
More...
Wednesday, September 23, 2009
Doing business in Punjab
Came across a story titled Punjab plans to revitalise biz, investment spirit
It talks about various things the state government and others are doing to promote the entrepreneurial spirit and create an ecosystem favorable to business and investment. I really hope that happens, though I am a bit skeptical of the government's capacity to deliver.
Anyway, what I want to focus on is the World Bank's ranking of Indian cities, mentioned in the article. According to that ranking, Ludhiana is the best of 17 Indian cities for ease of doing business.
Here is the ranking:
Some of the positions are plausible, others less so. Without going into the ranking methodology too much, I checked where Ludhiana stands on various subcategories:
Ease of starting a business 7
Ease of dealing with construction permits 7
Ease of registering property 11
Ease of paying taxes 1
Ease of trading across borders 12
Ease of enforcing contracts 4
Ease of closing a business 2
Looking at these ranks, I am not sure that Ludhiana necessarily deserves to be ranked 1st (which means that the overall index has some problems).
It talks about various things the state government and others are doing to promote the entrepreneurial spirit and create an ecosystem favorable to business and investment. I really hope that happens, though I am a bit skeptical of the government's capacity to deliver.
Anyway, what I want to focus on is the World Bank's ranking of Indian cities, mentioned in the article. According to that ranking, Ludhiana is the best of 17 Indian cities for ease of doing business.
Here is the ranking:
| Ludhiana | 1 |
| Hyderabad | 2 |
| Bhubaneshwar | 3 |
| Gurgaon | 4 |
| Ahmedabad | 5 |
| New Delhi | 6 |
| Jaipur | 7 |
| Guwahati | 8 |
| Ranchi | 9 |
| Mumbai | 10 |
| Indore | 11 |
| Noida | 12 |
| Bengaluru | 13 |
| Patna | 14 |
| Chennai | 15 |
| Kochi | 16 |
| Kolkata | 17 |
Some of the positions are plausible, others less so. Without going into the ranking methodology too much, I checked where Ludhiana stands on various subcategories:
Ease of starting a business 7
Ease of dealing with construction permits 7
Ease of registering property 11
Ease of paying taxes 1
Ease of trading across borders 12
Ease of enforcing contracts 4
Ease of closing a business 2
Looking at these ranks, I am not sure that Ludhiana necessarily deserves to be ranked 1st (which means that the overall index has some problems).
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