Let me ask a question first.
What type of economic strength is preferable to India?
A) A strong Indian economy fueled by its cheap labor due to a weaker rupee against dollar, where the Indians end up working in shifts, late nights, whole nights and what not only doing low profile jobs which foreign companies want to offload to India, so that they can concentrate on high end works and become even better. For instance in IT field, providing BPO services, support and maintenance work for products
OR
B) A strong Indian economy fueled by its strong innovations and products, no matter whether the rupee is strong or weak against dollar.. where Indians work only in regular office hours of 9 to 6, developing cutting edge technologies and solutions, selling our world class products both inside and outside India. For instance in IT field, imagine operating systems, compilers, databases etc all coming out of India..
I do not deny the fact that the IT boom in India came to a large extent because of (A). Well and good, we have had the benefits of our cost being cheap in western markets due to a weak rupee against dollar.. We have had our share because of this advantage in the past 2 decades..
But at the same time doesn’t it make sense to move towards (B), instead of crying foul against rupee becoming stronger against dollar?
What a pity! Indian IT companies are feeling bad because rupee is becoming stronger against dollar! Reason, their profits will go down when the value of rupee is stronger, as every single dollar that comes into their account now means lesser rupee than earlier..(if for instance earlier they used to get 47 rupees for every dollar that comes in, but today its about 40!)
But isn’t this a matter of celebration? Our rupee is gaining importance internationally and is becoming stronger again.. How many of us know that in 1947 when India got independence 1 Rupee was 1.2 US dollars?
These Indian IT companies instead of relying on a weaker rupee for their profit should now look at coming out with innovative products and technical solutions. What have these companies done in the arena of core system products? Why don’t we have any operating systems, compilers, database systems, development platforms etc coming out of India? Why don’t we develop tools like photoshop or flash? We have talent, but they all are working in American companies on these products.. Cannot our Indian IT companies setup at least small teams to develop such products?
Instead they are planning to make their employees work on saturdays too ! So that their profits can increase due to extra hours the employees put in.. As if India doesnt have any other option other than cheap labour, workaholic labor!! Are there no brains in India who can setup companies developing products and make money just by printing out more serial numbers and burning their product DVDs?
If Indian companies continue to depend on its weak currency, then how would Indian economy survive in a world where all currencies have equal value? Survival of the fittest.. Only greater innovation can help us in that case..
We need to have knowledge and technological advantage if India wants to become a superpower, not low cost based cheap labor advantage! Let the Chinese do it..
I hope that rupee becomes more and more stronger so that Indians are forced to use their brains and come up with innovative products and next generation technologies, than to provide low end services
We need to create a situation where other countries line up to buy our F-16s, to buy our operating systems, to buy our mobile phones and I-pods, to buy our Boeing, to buy our Mercedes
A stronger rupee means we can easily afford foreign trips! This is what I wrote in one of my earlier blogs
A stronger rupee means Indians can buy things anywhere in the world on par with developed economies! We dont have to spend crores of rupees then to buy a Boeing! We don’t have to pay tens of thousands of rupees for international air travels! A stronger rupee means greater international exposure! There wont be a difference between buying a Maruti and buying a Mercedes! One can go on a trip to the Grand Canyon just like the way one goes to Ladakh or Nepal ! How do you think american citizens are able to tour all over the world? Because they earn more? No. But because their currency USD is stronger.. and this is where a strong rupee will lead us to!
I am not saying providing low end services is wrong .. It gave us a very good start in the 90s. But that should definitely not be the bread and butter fueling our economic boom indefinitely in the future.. For the simple reason that it can’t continue to do so any longer.. other low cost destinations, cheaper than India are already coming up in the world Let us move ahead become more innovative.. the journey has just started This is just the beginning of all the beginnings
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“We need to have knowledge and technological advantage if India wants to become a superpower, not low cost based cheap labor advantage! Let the Chinese do it..”
Superb. That would be awesome if I could buy super PCs for just 10000 rupees from cyberpower.com
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Very well said Ramana, I completly agree with the points put by you…but i am not yet sure that stronger rupee is completly superficial or bogus….
Many of my friends say that due to British Raj we(indians) got english and some technology and this helped us in the current scenario and slowly we are making our mark in global market, which is true….. but i ask them this is only 1 side we think of, if we had not got english and that kind of technology…may be we would have been progressed in some different better direction may be spiritual and self developed and self confident with our own thinking….
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Gurudev,
The chicken or egg first is the situation while you are solving the problem between rich and poor.
I am sure, you are all going to be upset what I am going to say but truth to be told.
The “”stronger rupee”" is artificial , superficial and bogus .
Artificial “Stronger rupee is created by off shoring. Purely off shoring nothing but off shoring and only off shoring. There is no manufacturing and no infrastructure buildup in India.. Where this “stronger Rupee” come in the picture? They say when United States sneezes India and other countries gets cold and we all witnessed last month when US stocks were shaky Indian stock market took a dive.
The IT companies like WIPRO , Infosys, Satyam limit their growth to big cities like
Bangalore , Madras and Hyderabad. How about other cities like Madhurai, Vizag , Kochin etc.. with one billion population in India how come companies are struggling to find employees in Hyderabad and Bangalore. Some times these salaries are higher than US salaries to my amazement, while second tier cities are struggling with massive unemployment. Once the knowledge and skills are transferred to second tier cities you see the decline in salaries .in the big cities which is natural.
The value of rupee is superficial because the companies that make money they are not spending any money on infrastructure. That they left to the government .
Infrastructure costs billions of rupees and if we are serious to implement it , the wealth spreads to rural Indian population ( labor force) to build that infrastructure.
The last but not least India completely ignored the funding for research and development, where once the India was cradle for basic research, produced Noble laureates like CV Raman, Chandrasekhar and equally great scientists like Narlikar, Satyandera Nath Bose, Homi Baba,.
It is more important to all Indians to be fair to the rest of the population in rural areas and caring for old and young than “Stronger Rupee”.
I do all these things because I love India , I want India to be righteous than rich,
I want India to be ethical than salesmanship and I want India to be more spiritual than
tall buildings.
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I completely agree with you Dhanya. We need the best politicians to bridge the rich and poor divide in the system, and the best innovations from our young brains to liberate us from the risky offshoring model. Offshoring suits best for a developing economy, but as growth increases the rupee is bound to become stronger and in turn cost effective offshoring will be affected by this! So the solution is innovation and products, instead of offshoring and services.
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gurudev,
I was planning to write an article on stronger rupee and was going through.. It stopped me in your article and the opinions.. I felt they are really informative. My comment is that we should not be afraid of this stronger rupee.. It is right that we might lose some of our business to China and so.. But don’t u think that those business will lack talents?. I think only the BPO and Call centers business will be a bit effected.. IT companies might lose profit but not business.. Skilled labor work will be there in India..I think should take fast steps in innovative ideas as you have mentioned. Our politicians should think about making India a super power other than opposing each and every step of development. I feel ashamed to hear politicians comments on US. India lack young brained Politicians.. We should not be slave for a weak rupee.. we should become stronger and stronger with talents as the rupee turns stronger….
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gurudev,
I was planning to write an article on stronger rupee and was going through.. It stopped me in your article and the opinions.. I felt they are really informative. My comment is that we should be afraid of this stronger rupee.. It is right that we might lose some of our business to China and so.. But don’t u think that those business will lack talents?. I think only the BPO and Call centers business will be a bit effected.. IT companies might lose profit but not business.. Skilled labor work will be there in India..I think should take fast steps in innovative ideas as you have mentioned. Our politicians should think about making India a super power other than opposing each and every step of development. I feel ashamed to hear politicians comments on US. India lack young brained Politicians.. We should not be slave for a weak rupee.. we should become stronger and stronger with talents as the rupee turns stronger….
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gurudev,
i had posted my comments before but made a mistake… i mean to say we should not be slave for a weak rupee.
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gurudev,
i had posted my comments before but made a mistake… i mean to say we should not be slave for a weak rupee.
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gurudev,
i made a mistake… i mean to say we should not be slave for aweak rupee..
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gurudev,
I was planning to write an article on stronger rupee and was going through.. It stopped me in your article and the opinions.. I felt they are really informative. My comment is that we should be afraid of this stronger rupee.. It is right that we might lose some of our business to China and so.. But don’t u think that those business will lack talents?. I think only the BPO and Call centers business will be a bit effected.. IT companies might lose profit but not business.. Skilled labor work will be there in India..I think should take fast steps in innovative ideas as you have mentioned. Our politicians should think about making India a super power other than opposing each and every step of development. I feel ashamed to hear politicians comments on US. India lack young brained Politicians.. We should be slave for a weak rupee.. we should be become stronger and stronger with talents as the rupee become turns stronger….
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Sumit
Even though the dollar is weakening, there are other currencies which have become still weaker!! The strength of the Indian rupee owes a lot to the growing economy, increased purchasing power and investor faith in the system.
UN is the decision making system? Its actually US on behalf of UN. UN is becoming irrelevant these days with all rubber stamp countries of US. The proposed nuclear deal is a step towards trying to include India in that list of rubber stamp nations.
Yes, we need to be more creative, be more innovative and do a mark on a macro level. Having said that, there is nothing called insignificant improvement. We have obviously achieved a lot in the last 8-10 years. Its a great going with a lot more scope available to do even better.
We need to remember that, what India is today is INSPITE of its politicians!
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Hi gurudev
You are right in what you have written though only in parts…if today rs has risen to 39 levels its got nothing to do by the success of RBI or any measures taken..this has been pure dollar depriciation.
All of us wld want India to be a super power…but we need to keep few things in mind…we ain’t in g8..we aint anywhr..in the decision making team be it in UN even…unless india makes a mark in the macro scenario…micro can never get going
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India is getting outsourced work from US or UK firms due to (not necessarily in order of importance):
(1) India has English language skills
(2) India has lower costs
(3) Indians have more than adequate technical education/talent that they can perform outsourced tasks
(4) Indians work hard and aim to please foreign clients
(5) Outsourced tasks are not highly risky to transfer
(6) Research and Development tasks that are transfered are under the guidance and control of foreign MNC top managements
(7) Outsourced tasks are those that are not hampered by inadequate infrastructure (especially various services, R/D, bio-tech, design services, etc.)
(8) India is a liberal, secular and open democracy, hence Westerners feel comfortable in investment and trade even though they have doubts on corruption, IP, rule of law and other issues, and
(9) NRIs working in the US/UK and Indians (from India) interacting with US/UK companies have convinced American /British managers of “”India”" (as a country) or “”Indian”" (as people/culture) brand. In short, India/Indians have created a great brand value which has increased in the last decade significantly. This is evident form pairing of India with China (India and China) as opposed to pairing of India with Pakistan
(India and Pakistan) in Western thinking. Needless to say, China also has an excellent brand name in the globalized world as a country and for its low-end-value products.
Given above advantages, India should not worry about possible shrinkage in US/UK outsourced work, as India is the most favored destination for IT (and some other) outsourced work. INR appreciation will not affect Indian IT companies as the outsourcing demand is inelastic (specially wrt India). US/UK are countries that have inelastic demand wrt many goods and services. For example, with petrol price prices 3 time higher than 2-3 years ago, the demand for petrol has not substantially decreased in the US. Hence, Indian companies should raise prices or price their products in INR.
But, I totally agree with the premise that India needs to move up to the value-added tasks, products and services through creativity and risk taking and create “”branded”" products in the select areas of fashion, jewelry, clothing, food, and of course, in India and Indians themselves (as cited above). Also, we should not forget powerful and increasingly appealing “”Bollywood”" brand.
To create branding or high-end-high-value products requires either superbly crafted product or service AND astute marketing. To this day even Japanese have not been able to match Europeans/Americans in the number of well-known brands.
To create branding and company power/reputation (or legend), we need effective leaders and risk takers like Sir Richard Branson, Steve Jobs, Bill Gates, et al.
India’s emphasis on services is a problem in this area. It is somewhat difficult to create brand name in services. Local “”powerful brands are not easily transferable internationally. It took McDonalds 35+ years to be a globalized brand. It took Coke to be 20+ years to be an international brand. It took Microsoft less than 15 years (some would say 10 years) to make “”Windows”" a powerful global brand. It took Adidas and Nike about 15 years to be global brands. It took Hyundai to be 15 years to an international brand.
While China has 55%, 35% and 10% (of GDP) in manufacturing, service and agriculture sectors. India has 27%, 51% and 22%. Thus, Indian economy is more service and agriculture oriented. Hence, it has more of a “”problem”" compared to China due to its service orientation.
The best chance for India to create a global brand is in the manufacturing sectors like auto, pharma, bio-tech, energy, or some emerging sun-rise industry like IT, telecommunications etc. in some unique technologically advanced niches (coupled with strong cross-border marketing, PR, and brand building ) which do not depend on scale (China has already ahead in appliance, PCs, electronic parts, etc) .
Sorry for the long post….
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This topic is deinately interesting and educational. I compare this to formation of life it self according to science.
The dynamic conditions not dead like atmosphere produce life. Here I see that dynamism and thought provoking discussions , may be sometimes emotional, but evetually they willl set the right course for the country and the people.
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I think this is the best blog on the internet if one wants to get a lateral perspective of the world we live in. Keep up the great work.
After reading the articles in your blog, I know a lot more about India and world now than ever before and can say with true pride that I am a proud Indian. Your blog articles should be made part of school and college textbooks in India.
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Hi Mahmood
Nice to see you back
Yes at a personal level when we look from their perspective these Indians in dubai are right because they went to those far away countries many staying away from their families to make some quick money and come back to India. Now as rupee gets stronger, it means that they have to stay there for longer to earn their target money!
Looking at the national interests however in the long run, stronger rupee is good because in the days ahead people will not have to go to dubai to make money when the rupee itself is much stronger!! The current situation of some liking and some not liking the stronger rupee, happens in any transition phase when people from one side of the fence have to make a jump to the other side of the fence, because most of the people are allergic to ‘change’
However ‘change’ is the only truth, and we should always welcome positive changes with a wide open arm
It might be a bit difficult to stay up in the night and study a bit longer.. but in the long run it helps when we get good marks in the exams
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Thanks Harsh for your comments.. yes you are right!
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HI All,
Guys i was not able to check the site i was on a personal visit to Dubai,i just wanted to add something to this blog ie stronger rupee the guys working and earnign their living are curbing for the fact that indian rupee is growing stronger and they get very few rupees per dirhams i just want to make a point that we have become so selfish that we are not able to see our economy growing as it wil give the gusy out there in dubai lesser saving iam just shell shocked as what can we do or how can we become united and progress our country if we are so selfishhh iam completely broken,having said that i just want to understand from all those who visit this site and gurudev from you as well are they ie people working in dubai justified in curbing and not wanting rupee to grew stronger
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Infy is now trying to take over Capgemini!! It was a rumour and nothing short of a runour!! As per Dollar Vs Rupee i agree completely with the article that indian companies must find innovative ways of increasing their topline and must stop depending on a depreciating rupee for support.
A lot of companies will have to change course to make it big in the nest decade. Infy is on the right lines as it will try to convert from a pure tech provider to a Technology Consulting firm in the next 10 yrs. BTW india does have a world class product called FINACLE (by infy again) which is a banking information system so companies have started investing in inoovative products rather than being the back office of north america!!
thats my two cents!!
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It is Saahacharyam ????????
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what is the word for synergy in sanskrit??
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