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Califronia diary | Interview with Dr Rafiq Dossani

Excerptsfrom Shalini Narang's interview with Rafiq Dossani, author of the book, India Arriving-How This Economic Powerhouse is Redefining Global Business.

world Updated: Feb 20, 2008 12:06 IST

Rafiq Dossani, a senior research scholar and executive director of the South Asia initiative at Shorenstein Asia Pacific Research Center at Stanford University recently wrote a book titled; India Arriving-How This Economic Powerhouse is Redefining Global Business.

In a recent interview with Business Standard , he spoke about his new book and other issues.

Shalini Narang: Please elaborate your angle that an unwitting change in India's political structure rather than changes in economic policy or civil society have acted as a significant factor in the nation's progress and how it has important implications for the direction, speed and sustainability of India's emergence.

Rafiq Dossani: The causes of the remarkable turnaround of India's economy tell us a lot about how India has unleashed its citizen's entrepreneurial energy and initiative.

Since 1989, India's been ruled by coalitions consisting of one of the two national parties and about a dozen regional parties. Power has started shifting from the national government to the regions.

Many of the new regional parties led by charismatic local leaders are one-man shows, not above corruption or other political ills. Though this may sound like a recipe for deep crisis, in reality, the opposite has happened. The weakened national parties have been unable to control bureaucrats to fulfill their party's political machinations. India's talented bureaucracy is free to focus on tasks, rather than on unpredictable and corrupt taskmasters.

Regional parties have tended to leave the national party in charge of national governance while focusing on regional issues. This has kept the national coalition quite stable, while opening space for regional and small businesses, unleashing local enterprise resulting in high and robust rates of growth. It has also meant that the old power of big business to muzzle the growth of those less privileged has considerably weakened.

The other effect is that the voices of the poor are being heard. For the first time, rural health and education are being attended to, although there is still a long way to go in overcoming rural poverty.

Not all the outcomes of regionalization of governance are positive. Regionalization opens up space for undesirable civil society, such as local religious differences. Even within the regions, those with more power, such as urban elites, will move ahead at the risk of leaving the rural areas behind.

Today, India's growth offers the opportunity for enterprise of all scales and talents, located around the country. The old barriers of corruption, privileged access, inherited endowments of wealth are becoming weaker and in its place, a meritocratic society is emerging.

Shalini Narang: Can you describe your experience on working with the telecommunications ministry?

Rafiq Dossani: I worked closely with India's telecommunications ministry on reforming the rules for telecommunications provision. I observed and experienced the change that bureaucratic empowerment has brought. Freed from the minister's whims, the bureaucrats that I worked with were responsive to sensible suggestions that would open up the markets to competition. As a result, India now has one of the best-regulated telecommunications markets in the world. For instance, cell phone costs average less than 2.5 cents per minute and the country adds three new cell phone users every second, a rate nearly a third higher than China.

Shalini Narang: What are your thoughts on the impact on Indian economy in view of the business and political clime in US?

Rafiq Dossani: The Indian economy will not be immune to the US downturn, but will be far less affected than many other economies. Firstly, the global trade intensity (exports and imports as a share of GDP) is still low, at below 20%, less than half of China. Secondly, the exports of certain items like IT services are sufficiently cost competitive, that the likely affect of a US downturn will be an increasing competitiveness of such services. Thirdly, the export industry has been diversifying. For example, in IT, Europe and Middle East are important destinations for IT services exports.

Shalini Narang: Is there scope of collaboration between Indo US firms on green technologies and other emerging industries?

Rafiq Dossani: Green technology development in the US is focused on managing carbon emissions. India's environmental focus is on clean air, freer of particulate matter; clean water, clean sewage systems, etc. I think the collaboration will be limited to using Indian engineers to work on carbon issues.

Shalini Narang: Your closing observations on Indo US business relations in the next few months.

Rafiq Dossani: The stalled nuclear fuel agreement has reduced the prospect of growth in this area. However, India has made commitments to buy from the US defense industry, which will help business relations. The real story is the link between small businesses in both countries in areas such as financial services, legal services, etc., which is doing very well.