We are rising up at a rate of 9 pc GDP on a year on year basis and are eyeing a growth rate of 10 pc in near future. This indeed is great and one doesn’t require statistics to prove it. For sample answer the following questions: How many house holds could afford multiple cars in 1992.What choices did consumers have at the same time even for a tooth paste? Could you have afforded making an ISD call at that time leave alone the prospect of affording a cell phone? Thanks to the liberalized economic policies and the growth of services sector in developing countries that the prices of all the items are coming down.
a) Because of the cheap labour arbitrage, technology worldwide is becoming more affordable and is thus being leveraged
b) The jobs in service sector are providing the economy a lot of spending power, since every job in IT/BPO industry generates six other jobs.
This has resulted in a huge consumer boom and thus more money in the economy.
Now since we have reached here we have to worry that whether this growth is sustainable? What would happen If the costs of labour would increase here in India ten years down the line. Is the model of cost arbitrage that is fuelling the services sector in India sustainable in the long run? If we study history of nations we can conclude that most nations have been powered by technology. Name any Country that comes to your mind as a super power and you will instantly link its growth with path breaking technology discovered in those countries that helped them capitalize markets due to increasing productivity. The growth story of India is however different, it is about cheap labour. Is it sustainable?
I am optimistic about the intellectual capital of Indians. However, the worrisome thing is that we are not seeing any high value research from our institutions and also even that would have been okay, if we keep in mind the infrastructure available and the absence of an atmosphere that facilitates and encourages risk taking, if the students in the various premier colleges of the country were at least making an effort to contribute to doing good fundamental work. The rise of services sector has made India a backend office of the world. Is there any high end technology company run by Indians? Is there any company that is bringing its global R&D facilities here? It is the support R&D that is done here.
The quantum of salaries being dished out today are huge as compared to what our parents’ generation are earning and has resulted in complacency among students who believe that the ticket to social mobility is securing a decent job. All of campuses you see people working to improve their programming skills which they know will surely land them a good job and are neglecting other core subjects and thus not only inhibiting their own growth but also the sustainability of their present status.
I am throwing the question to the house: What should be done?
