Category: Emerging Economies

A currency cannot unite cultures

Sarat PratapchandranLeave a comment

India celebrates it’s 64th year of independence from the British today, and it’s ironic to say that there are riots in Britain and the European Union is finally realizing that it can’t stay together.

It’s a wonder that India is staying together amid different dialects, languages and cultures. Travel a 100 miles and people’s attitudes, food habits, culture and language change. There are states steeped in poverty and those that have  some of the most literate folks worldwide. Sixty four years after the British left, how is India staying together while the European Union is waiting to split?

A currency cannot unite cultures, nor shared prosperity or the finer aspects of capitalism. What holds countries together is a shared passion for something that they earned together. In Europe, every country in the Union has it’s own culture. The prudent Germans may not be similar to the Italians, the Irish or the Greece. Uniting cultures that wish to stand on their own is difficult unless there is a common thread beyond trade and economic prosperity.

In India, an “Indianness” unites over a billion people-1618 languages, six religions, 6400 castes, 6 ethnic groups, 29 major festivals and one country.

The dollar menu and a 2% economy

Sarat PratapchandranLeave a comment

 In two weeks, I will shift gears from a 2% economy here in the United States to a 7.8% economy, India. In a recent article in Time, columnist Rana Foroohar says the  next five years in America are tough. Foroohar adds that half of all Americans can’t find $2,000 in 30 days without selling their stuff. Sounds grim, right?

The truth is, yes. Unless the housing crisis gets fixed, job creation will be at a standstill and based on a report from McKinsey Global Institute, it will take five years for the U.S. to have a normal unemployment picture (5% from the current9.1%). There are a half billion middle class outside the United States that can do the jobs being done here. Brazil, India and China are churning out 70 million new middle class workers and consumers every year. A recent report from rating agency Crisil says India has 62,000 super-rich households with a combined wealth of $1 trillion. In five years, this is expected to grow to $5.3 trillion. This is more than double the $2 trillion sitting in the balance sheets of American companies now. Very few of them are investing locally. Instead, they prefer investing where they can find adequate talent and consumers.

The way out of this mess is not easy and Foroohar like others says education is the only way out. She says four-year liberal arts colleges are becoming more irrelevant to what the economy needs todayand there should be greater emphasis  on science and technology.

She also suggests that the U.S. needs to create a concrete industrial policy that can bring different sides together to solve this problem, something similar to what the Germans have.