Keynes had this to say …

Ideas, knowledge, science, hospitality, travel – these are things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction.

1933

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4 Responses to Keynes had this to say …

  1. Ganesh says:

    Hi rob,
    This is ganesh. I met you at SCMIS conference. I attended your vedio conference at NITtrichy. I understood the importance of logistics in a developing country like india.
    It explained how the existing logistic Techniques can be adapted to suite Indian Scenario. I was discussing this issue with my friend Aditya, Sriram Charun and Ashwin. We had the following questions:

    1) Though the need for improvement in logistics is evident i am confused as to who is supposed to invest towards the improvement?
    Is it the government, in which case the increase in exports will be more?
    Or is it the Private companies who will directly get benefited?

    2) If it is the government of India, then the risk of reverse effect ( Ie: increase in imports and reduction in the price of imported goods, eating the local manufacturer’s and investor’s target market. Now this is a risk that the government may not be willing to take.

    3) If it is the private companies then, for the volume they will be investing , in the improvements of logistics, and the sum they have to spend as bribe(which is lot in developing countries), the maintenance cost, will be too high and the break even point may ages away. It may take years for them to start making actual profit.
    Would the private companies take such a risk?
    Ganesh and Aditya

    • robjbell says:

      Ganesh on investment.

      You raise a crucial question. Depending on who you read, Indian investment in Infrastructure will have to be between $350 and $550 billion. An estimated 40% of this will have to come from private investors. Probably more. So, your questions are key.
      1. Connectivity is crucial for India to realise its undoubted potential. In fact, with China trying to weather thje storm brewing as millions of workers in export industries lose their jobs the opportunity to compete for export markets in the upturn is there for the taking – if the infrastructure is in place to connect producers to local, national and global markets.

      2. You highlight the downside of Imports. This is a concern but, I am not a believer in protectionism. Currently, this is growing in popularity but we must not ignore the major gains from opening global markets in recent years. Sure there are recent issues but on balance we have gained more than we have lost. Just look at what has been gained by India since the bonfire of licenses after 1991.

      Improved connectivity will open up a two way street. It will subject Indian industry to global competition. This is already happening – just have a look at Retail warehouses in India and witness the cheap Chinese products bursting out of poor packaging! However, just look at the Indian IT sector and its expansion since the bonanza of Y2K!

      They say that 50% of the jobs of the future are not yet known. For me, this is the clue. We don’t know what is going to happen but, with the spirit of jugaad, I am confident that India has less to fear from opne markets than most. Exposure to the best does not have to be a disaster.

      Years back, English football teams were banned from European Competitions. This was due to crowd violence during the Liverpool vs Juventus game. When the ban was lifted and the English returned to the competition the cost of isol;ation was plain for all to see. The English teams were rubbish! They had faield to evolve and were no match for those who had developed in a superor competition. I lived in Spain for many years and looked closely at the Franco years. Autarky cut Spain off from the rest of the world and did it no favours at all.

      3. You raise the real issue of whether the Private Sector is going to invest in infrastructure going forward when the pay back will be longer term.

      I would suggest that Equity markets provide part of the answer. Despite people being angry with the quick win culuture that has led us into the current crisis we must not forget that Utilities as an Asset Class has become very popular for those massive Global Equity Funds. This is because they offer long term cash flow. The same can be the case with Infrastructure.

      Have a look at what has happened with Mundra and the work of the Adani Group. This is fantastic stuff. Have a look at the Arshiya Group. Both of these Groups are looking at the longer term and making signficant investments in what I would describe as CAPACITY building. This is the asset class of the future and, Government HAS to recognise this and invest where the market won’t.

      Government has to make it highly attractive for anchor partners to work with them. A crucial driver is going to be to ensure that long term investments do not become long term disasters because of corrupt practices. And the most effective way to achieve this is by:
      – Making ALL project bidding on line and therby transparent. This will expose much of the mark ups for obscure tasks.
      – Making training a mandatory % of ALL project budgets. This will generate Social Responsibility.

      This is a tough question and will require bold actions.

  2. Charun says:

    I am Sriram from NITT I watched the video that showed how difficult it is for large trucks to travel a relatively small distances. And the time wasted due to poor logistics.
    There is this kind o traffic problem all over the Chennai city( where I live).
    For example in one of the busiest roads there are unauthorized shop keepers on the platforms. Consequently people atarted walking on the roads and this has become the major reason for the traffic.
    Now the situation could not be improved as the shop keepers are difficult to remove and some of them have political backing. Now in such cases the improvement of logistics requires us to face issues of political and emotional kind. This could add to the expense.
    In the video also the roads are narrow but people who have been living there for many years will not be willing to move. And if they don’t move the roads cannot be widened.
    So I get the feeling there is a lot of cost and time involved if things should change in a developing country like India. Either that or I have made some bad assumptions. Please clarify.
    Sriram & Charun

    • robjbell says:

      Charum and the Video on the Last Mile. This point is raised often by those who compare China and India.

      It is said that Indian democratic traditions mean that decisions to improve infrastructure have to factor in all of the stakeholders involved. For example, those who live in the the shanty towns that may be located in the middle of area that needs to be developed. This is contrasted with China where regions like the Pearl River Delta were fast tracked to produce the infrastructure that small businesses could use to access local, national and global markets. Compulsory purhase orders dealt with the issue of those living in the footprint of development plans and the political system in place meant that any objections were not capale of de-railing the process.

      In the Last Mile video you refer to, one of the women interviewed provides part of the answer. As I recall, she is asked what would satisfy them if major roads were to be laid down where they live. Her answer was that they would move provided that alternative accomodation can be provided.

      Moving from that response, there is a massive opportunity to explore affordable housing designs and, develop breakthrough thinking on how communities can develop in the yeasr to come. After all, we need to be pro active on this and not reactive or, laissez faire.

      In 1978, 172 million people lived in urban areas in China. This figure has climbed to over 600 million; over 40% of the population. By 2050, Global population will have grown from the current 6 billion to an estimated 9 billion. It is high time that we dealt with what urban communities will look like in the future and not just let it be.

      This will mean a concerted effort to innovate and, find the political will to make things happen. And again, the Last Mile video. Since that video was produced, an impressive group of Stakeholders has started to work together. These stakeholders include the entrepreneurs, the corporates, the traders AND the residents. It is crucial that tehse sorts of pressure groups are heard by the powers that be and, with increaed tansparency, corruption can be reduced as a driver of the democratic process.

      It will not be easy but this is where the demographic dividend can play a role. Your generation does not have to stand solely for a better yesterday.

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