Urbanization & Growth : India, China & Asia

Notes from Reuters Special on Urbanization - India & China Story

1. It happens every year. When monsoon rains lash Mumbai, the city turns into a cesspool, which along with its potholed roads and gridlocked traffic, mocks its ambition of becoming a global financial center. India has Asia's third-largest economy and the increasing global clout that goes with it. It is already home to a quarter of the world's 20 most densely populated cities.

2. Indian cities over the next two decades will also house 40 percent of the country's population and generate some 70 percent of new job opportunities, McKinsey Global Institute (MGI), the research arm of consultancy McKinsey, estimates in a report.

"Across all major quality-of-life indicators, India's cities fall well short of delivering even a basic standard of living for their residents," the report said. To cater to this growth, India needs to invest $1.2 trillion in capital expenditure, mainly infrastructure, over that period, an eight-fold increase of current spending levels, MGI said.

3. India will, over the next two decades, see an urban transformation the scale and speed of which has not happened anywhere except China, with many cities becoming larger than many countries, in terms of population size and GDP.

"It's going to be one of the most defining changes that we have yet to see," said Roopa Purushothaman at Everstone Investment Advisors.

Analysis :

Historically, India's politicians and policy-makers have focused on villages. Urbanization has largely been a result of existing cities expanding economically and demographically, rather than anything planned. This is reflected in Sonia Gandhi's approach, who has conceded that the price hike in petrol is to fund the social schemes (read village oriented). This would tantamount to penalize the urban population to help rural population.

Economic plan ensured jobs not heading to India, China: Obama

United States President Barack Obama has said that the new economic plan of his government focused on making the middle class more secure and the country more competitive so that the jobs and industries of the future were not outsourced to China and India.

From: Hindu

A Chinese Innovation - Metro -meets BUS meets TRAM

Finally Chinese have come of age and are now providing innovative solutions to world's problems.

Here is a Metro Meets BUS meets TRAM idea that might be implemented in Beijing Suburb this year. The concept is interesting where Countries like India can leverage on its new road infrastructure to create better Mass Transport Systems.

Deficit Rise foretalls World War III?

Above chart is US federal deficit / GDP ratio, 1900-2010. The two prior peaks (1919=17, 1943=28) coincided with WWI and WWII respectively. Currently we are at the 10.64; 3rd highest in the 110 year series, and not declining yet.

Does this forecast a world war III?

NRI remittances leading to boom in wealth in villages

source :
http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/NRI-remittances-leading-to-boom-in-wealth-in-villages/articleshow/6212272.cms



When Shreyas Vani, a resident of Karamsad in Gujarat’s Anand district, wants to loosen his tired muscles after a hard day’s work, he just ambles into a swanky parlour bang in the middle of the village.

“It is just one of many (luxuries of life). Young people in our village yearn for them and want them right here. Money is not a factor,” he says, as the latest model of iPod deliberately slips out of his jeans’ pocket.

Two thousand kilometers away in Punjab’s Jallandhar district, when potato seed farmer, Santokh Singh, wanted to buy a car, he hitched a cab ride to Chandigarh, only to drive back in a brand new Audi A4. He says his fellow farmers are not settling for anything less, so why should he. “Our village has narrow roads, but a broad vision for BMWs, Mercs and Audis,” Singh laughs.

Stories such as these redefine rural life as we perceive it. Some villages in India are ahead of the curve and when it comes to luxury, they offer an opportunity to brands, no less secondary to businesses in the metros. Here people want the best cars and branded diamond jewellery. They shop for foreign tours-for travelling as well as study, and use Wi-fi enabled laptops. Here, the raw scent of the farmlands get mixed with the fragrance of a Channel and Diesel.

The secret is quite an open one, whether the village be in Punjab, Gujarat or Kerala. Remittances from their NRI sons and daughters have led to an unprecedented boom in wealth. In Kerala, near Thiruvalla, lies the Kumbanad-Kozhencheri belt which has a whopping `5,400 crore parked in bank deposits! In Karamsad village, remittances have topped `1,500 crore in banks and post offices.

Take the example of Kerala. Real estate development, the most visible sign of recent prosperity that provided jobs to 25 lakh people in the state is also roaring in Kochi after being hit by the Gulf crisis earlier this year.

Hoardings at city junctions announce the arrival of new luxury apartments, the kinds which are usually found in posh localities of metro cities. Big builders already have more plans.

“A lot of investment had been planned there on the basis of projected demand linked to the expansion of the technology parks, and in homes,” says SN Raghuchandran Nair, president of the Confederation of Real Estate Developers. What has this done to villages? Well they look more like a wealthy suburb in a western country than an Indian village.

If this sounds unbelievable, wait till you hear about Asia’s richest village. With remittances of over `5,000 crore, people in Madhapar in Gujarat’s Kutch district, live life kingsize. Apart from cars like the Jaguar, or BMW 7-series, they are particularly enthused by the brand of cosmetics they use. Jadhavbhai Varsani, who runs a plush supermarket in the town, says that imported cosmetics, from L’Oreal to Dunhill and Diesel, sell like hot cakes.

Young people buy only top end brands as they are used to it from the trips abroad,” he says. As you enter his huge store, you can see cosmetics from Dove to Armani neatly arranged in long shelves. The supermarket itself looks straight out of a California suburb.

For many jewellery retailers, traditional hoardings and billboards are passe’ in Karamsad. “Today, we hire local models and organise events at marriage parties and business meetings to attract a large number of cash-rich youngsters for our latest jewellery design,” says Rupen Patel, a jeweler.

In Punjab, long among the more prosperous villages in the country, the image of turbaned kurta worn farmer driving a white Maruti car laden with his produce is like a yellowing photograph.

Now, there is big competition amongst companies with farmers opting for Mercs, BMW, Audi and other high-end SUVs, say car dealers in the region. Little wonder then that when Mercedes opened its first showroom in Jalandhar, it immediately saw customers who were from the farming community.

Years ago, these farmers used to buy tractors in groups extracting heavy discounts from the tractor makers or dealers. Now, they are doing the same with car dealers. Says Raghubir Singh, a member of the Jalandhar Potato Growers Association, “We have approached a big car maker, and they have told us we will get a good offer if we all book through the same dealer.”

The difference between the rich rural buyer and the consumers in the big cities is that while the rural rich are willing to pay upfront, the urban rich would take a loan and pay up in instalments.

“There is a tax issue as well, which the farmer doesn’t have to comply with. But more importanly, he has a higher disposable income and hence easy to do business with,” says a diamond jewellery company executive.

Even if living in untold riches, trust young adults in Gujarat to take to stock trading as a duck takes to water. In Ena village in South-Gujarat, which looks more like a glitzy township, most young people are dedicated investors in not just stocks but also complex financial instruments, including derivatives.

Many of them are regular visitors to the US, the UK and Australia, where their relatives have done well for themselves. If anywhere in India airline companies, tour operators and foreign study agents could do roaring business, it is here.

India is the biggest victim of financial crisis-induced poverty

India is the biggest victim of financial crisis-inducedpoverty, according to data obtained by TOI from the United Nations Department of Economic and Social Affairs' (UNDESA). Check out these figures.

The UNDESA data estimates that the number of India's poor was 33.6 million higher in 2009 than would have been the case if the growth rates of the years from 2004 to 2007 had been maintained. In 2009 alone, an estimated 13.6 million more people in India became poor or remained in poverty than would have been the case at 2008 growth rates.

In other words, while a dip from the 8.8% growth in GDP averaged from 2004-05 to 2006-07 to the 6.7% estimated for 2008-09 may be nothing like the recession faced by the West, its human consequences for India were probably worse. The 2.1% decline in India's GDP growth rate has effectively translated into a 2.8% increase in the incidence of poverty.

Link

India puts on hold first GM food crop : Just for Now

BBC reports : India has deferred the commercial cultivation of what would have been its first genetically modified (GM) vegetable crop due to safety concerns.

Environment Minister Jairam Ramesh said more studies were needed to ensure genetically modified aubergines were safe for consumers and the environment.

The GM vegetable has undergone field trials since 2008 and received approval from government scientists in 2009.

My Take : Wait for the next food crisis.. GM Foods would be making a backdoor entry using Disaster Capitalist Strategy