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December 2006 - January 2007

Business Forum

Reincarnation of East India Company

by P. Venkataramana

“History repeats itself” is a much-bandied slogan among moralists and teachers of social-studies at the school-level of one’s education, the world over. But do we recollect these junkets of wisdom when we grow up and get entrenched in the whirlpool of activity and the cauldron of emotions? It makes interesting study indeed to the discerning mind…Yes, a cool analysis shows that it takes the strength of one’s character when tested against a stormy path and the power of resilience to forge back into the foray when the rat-race seems uneven, unfair or unequal; when the mind of the individual appears to be his weakest muscle and only brawn-power appears to rule the roost; and when God, the oft-uttered yet most mysterious word in the dictionary, is the only refuge to come alive again…Indeed, as Rabindranath Tagore said, “Where the mind is held high and without fear” only such a person would be a winner in life’s sojourn – be it in making it good in the business arena or in fulfilling domestic duties or carrying out social responsibilities!

And here we shall focus our attention upon the re-discovery of India. History tells us the manner and the circumstances in which India as a nation was carved out of the ‘Jewel in the Crown’. And then we are also told of the many minds which went into the shaping of the vast resource-rich land-mass comprising diverse cultures, speaking various languages, holding different philosophies and yet celebrating a grand sixtieth year of being the world’s largest democracy. When viewed against the backdrop of a strife-torn planet where even the wealthiest of democracies and the strongest of military regimes live in constant fear of terrorism perpetrated by bigoted mindsets and fear even the trace of something out of the normal in daily surroundings, it is quite remarkable to notice the steering of the economy of India from the initial indigenous and self-sufficient system of mixed-economy to the waves of glee at liberalisation measures, to the ongoing ride atop the wave of real globalization where the outsourcing of predominantly the western hemisphere of the world has become fodder for sustainability to this Jewel of the Planet …Truly, to the patriotic mind, this dispassionate analysis would bring smiles of glee but to others, it might seem biased or overly zealous. Yet, this is the stark reality of the times we live in. India has emerged the global leader in software and business process outsourcing services; it has the fourth largest economy in the world and by the turn of the decade is to become the third largest Economy overtaking Japan. How has all this been possible? As importantly by sheer dint of effective population control measures as with enjoying the benefits of a democratic system of governance of the mass of human-resources, as well as with the right thought of clearing the investment climate, out of recognition of the fact that a key challenge in fiscal reforms will be the reconciliation of the need for fiscal consolidation with an appropriate tax reform (as indirect taxes not only affect the efficiency of resource allocation but also the investment climate). A major step has been removal of age-old red-tapism by simplifying procedures and relaxing entry barriers for business activity. Major Initiatives have been taken in a number of sectors like telecoms, roads, ports, aviation and railroad bridges. Truly, the control of population explosion is a major reform which has taken place. Added to this, spreading of education amongst illiterate masses living in the remotest nooks and corners of this vast country has helped elevate the standards of the Indian economy. All things considered, the eradication of appalling levels of poverty and unemployment amongst its citizens has been the paramount concern of the government of India in formulation of its various policies, programmes and guidelines for investment by overseas bodies, individuals or institutions in its territory - a wise measure since a strong balance of payments position in recent years has resulted in a steady accumulation of India’s foreign exchange reserves. In the result its currency, the Rupee, has been strengthened, which eventually encourages investor confidence greatly. The service sector is the fastest growing sector in India and among the other fastest growing sectors are business services, communication services, financial services, community services, hotels and restaurants and trade services. And the most-attractive arena for the overseas individual investor vis-à-vis heavy industry and agricultural sectors .

The singularly happy feature about investing in today’s Indian economy is that the power of information technology has allowed the new economy to largely bypass the ‘ills’ of caste differentiation, reservation for minorities, or such other social-welfare measures to bring about equitable distribution of resources in a secular state under a democratic system of governance of its mass of humanity. This is a notable feature and very unique and would certainly make India’s growth rate more durable than, say, the now much-compared China. Also, the control of the birth rate is both an indication of the rise of the middle class in India as well as a contributing factor in its development. Needless to say, India has been rediscovered as a happy nation to join hands for furthering the interests of those who live in other parts of the world and are looking to brighten up their profit-levels for the foreseeable decades of their lifetime. Corporates have grasped this reality so why not individuals or well-informed investor groups? Indeed, it can be anybody’s hour of joy and interestingly, there’s plenty for everybody too.

So, to the historian, it is a case of reincarnation of the East India Company. To test it, yourself, just pick the bedside telephone and call up your card company, bank or the phone company to ask a question regarding your bill and you are almost certain to hear a friendly voice with a marked accent, taking you step-by-step from a call centre halfway across the world in India. But it is just the beginning and not ending there.

(‘Is a non-resident Indian taxed ?’
Read it in the next issue ).

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