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Small business encyclopedia of India
Official black man
Make in India
Official black man
→ The Indian government is currently soliciting foreign investors more aggressively than seldom before. But the reactions to this are still cautious. It is the bureaucracy in particular that discourages many from becoming involved in India.
Excessive and inefficient bureaucracy, inadequate infrastructure, lack of rule of law, corruption: Despite all reform efforts, India remains difficult terrain for investors. In the current Doing Business ranking of the World Bank, India only ranks 142nd out of 189 - behind countries such as Yemen, Sierra Leone and Papua New Guinea. India also performs poorly in comparison to the other BRICS countries (Brazil, Russia, China and South Africa) and emerging economies such as Mexico and Indonesia. India does not make life easy for entrepreneurs, especially when it comes to obtaining building permits (184th place), enforcing contractual claims (186th place), setting up companies (158th place) and paying taxes (156th place).
It is the declared goal of the government to improve the framework conditions for investments by removing administrative hurdles. But this falls short of the mark, since other problems such as the antiquated labor law, the hopelessly overloaded legal system and the lack of uniform taxes are actually more serious. There are attempts to tackle the red tape here too, but no concrete results have yet been achieved. It is also questionable whether these steps can effectively contain the rampant corruption, since the bureaucratic apparatus tends to be reluctant to simply give up privileges and opportunities for corruption.
The fact that there have not yet been any comprehensive reforms is also due to the fact that the BJP-led government coalition only has a stable majority in the lower house, but not in the upper house, and has no chance of achieving a majority in this legislative period. The situation is not getting any better by the fact that, despite this constellation, the government has not yet tried seriously to seek a consensus on larger legislative initiatives - and that has also fueled resistance from the opposition.
→ The fact that India's IT sector plays a leading role in the global software industry is thanks to a unique mix of technological skills, project management experience and a huge workforce.
“Bangalore instead of Böblingen?” Was the title of a book published in 2005 on the internationalization of the IT industry. There are reasons why Bangalore - also known as “Indian Silicon Valley” - has become a symbol of this development. Almost a million IT specialists work here in Indian and international software companies and continuously produce software codes for banking or for applications in the aerospace industry.
This development is no coincidence. Since independence, India's governments had invested significant sums in technical higher education (albeit at the expense of primary education). This brought forth a considerable potential of highly qualified engineers and technicians who were drawn into the international software industry, which was thirsting for specialists. Western technology companies discovered this potential for themselves, and as a result a system developed in which Indian companies organized recruitment for individual projects. A business model that came to be known as body shopping.
Foreign exchange was a scarce commodity in India in the 1980s. Since the technology industry was dependent on international suppliers, but the government only allowed imports of this kind on the condition that foreign exchange was earned, international markets inevitably had to be opened up. The development of the PC and the decoupling of hardware and software opened up markets for Indian companies, which made it possible to move away from body shopping towards the development of computer programs.
Bangalore became the preferred location because there were a multitude of research facilities there that produced highly qualified workers (apart from the pleasant climate). Initially still mainly working on behalf of multinational companies, Indian IT companies began at the end of the nineties to work their way up the levels of the value chain by concentrating on certain industrial segments and developing expertise there.
This process was accelerated by the representatives of the Indian diaspora in Silicon Valley, who had meanwhile advanced to leading positions. The following decades saw rapid growth and the emergence of technology giants such as Tata Consultancy Services, Infosys and Wipro. International IT heavyweights such as IBM and Google recognized the competitive advantage of a location in Bangalore - they followed suit and founded their own software development centers there. Some, such as IBM, are said to have more employees in India than in the US today.
The combination of innovative projects and increased growth has resulted in productivity per employee multiplying between 1995 and 2014 - from $ 7,000 to $ 38,000. This year, for every billion earned in the industry, 13,000 employees were added. With a total income of currently around 146 billion dollars (of which 67 percent is exported), a total of 3.5 million employees and a share of Indian GDP of 9 percent, the industry aims to break the 300 billion dollar mark by 2020. Around 60 percent of exports go to the United States, followed by Europe with 24 percent.
No wonder that there are now quite a number of Indian CEOs in responsible positions at US giants such as Google, Microsoft and Adobe. Since the financial crisis in 2008, there has been a targeted shift from the USA to Europe and Asia. India is increasingly turning its attention to China as the market for its software services, as the Middle Kingdom has gained strategic importance due to the considerable Indian trade deficit.
The latest trend in India, as in many industrialized countries, is e-commerce. It has the third highest number of Internet users in the world after China and the USA (which should be overtaken this year), namely 240 million (of which 70 percent go online with mobile devices). This has led to a real boom: 3100 registered start-ups make India the fourth largest start-up center in the world. The country has eight “unicorns” (companies that are valued no later than ten years after their foundation with at least one billion dollars); in Europe there are nine. Investors pumped around four billion dollars into the Indian market in 2014. In the meantime, major Indian IT companies are increasingly investing in basic research and acquiring high-tech start-ups. Because a leading position in the wave of automation and constant innovations for software solutions are the key to not losing importance in the industry.
→ “Off to America” is not just the title of a Bollywood film, but still the motto of entire legions of Indians. Around three million people with Indian roots live there today. But the history of the Indians abroad is not limited to the USA.
In his relatively short term of one and a half years, Prime Minister Narendra Modi has now been to the United States twice. And that has only limited to do with his friendship with President Obama, whom he likes to address by his first name Barack. A good three months after his election victory, Modi spoke to 20,000 people in Madison Square Garden in New York in September 2014, which brought him the comparison with a rock star in the American media.
Exactly a year later, Modi was back in the United States. This time to attract investors to India. There are good reasons for Modi's roadshows. “Chalo America” (Off to America) is not just the title of a Bollywood film, but still the motto of whole legions of young Indians. According to UNESCO, more than 200,000 Indians studied abroad in 2010, more than half of them in the United States. According to surveys by the Pew research institute in Washington, around three million people with Indian roots live in the United States.
And they are extremely successful. More than 70 percent have a university degree (Bachelor and higher). Their annual household income, at $ 88,000, is twice that of the average American. Many of them are successful entrepreneurs and board members who would like to invest in India - if the conditions are right. Modi met Microsoft CEO Satya Nadella and Google CEO Sundar Pichai.
But the history of the Indians abroad is not limited to the USA. In total, more than 25 million people with Indian roots live abroad. They are divided into NRI (Indian Citizens Living Abroad) and PIO (Individuals of Indian Origin). There is even a separate ministry in New Delhi that takes care of their affairs: the Ministry of Overseas Indian Affairs.
"The diaspora is something very special for India," it says euphorically on one side of the Indian Foreign Ministry. “Living in distant lands, its members have achieved spectacular success in their professions through determination and hard work. At the same time, they have preserved their emotional, cultural and spiritual relationship with India. "
In addition to the Indians, who mainly go to Western countries for training (other popular countries are Canada, where more than a million Indians live, and Great Britain with 1.4 million), millions of people looking for work are still drawn to the country every year Foreign countries. More than two million Indians currently work in the United Arab Emirates, where they make up more than 30 percent of the population. Most of them come from southern Indian states like Kerala, where the money they send to their families is an important economic factor. It is estimated that these transfers amount to about ten billion dollars a year.
In addition, numerous Indians now live in the fourth and fifth generations on the African continent (almost three million), especially in South Africa, Mauritius and Madagascar. Many came during the British colonial period, either to work on plantations or to take jobs in colonial administration, as did Mahatma Gandhi. Most people of Indian origin live in neighboring Nepal (around four million); thanks to a law passed in 2006, many Indians were able to acquire Nepalese citizenship.
→ India's population is young and growing rapidly. But before the famous “demographic dividend” can be earned, the government in New Delhi still has a lot of homework to do.
Since independence in 1947, India's population has more than tripled, to currently around 1.25 billion, which corresponds to around 18 percent of the world's population. According to the forecasts of the United Nations, India will replace China as the most populous country in the world in about seven years. In the ten years between the last census in 2001 and 2011 alone, India's population has grown by around 181 million people. Although growth has been declining since 1975 and is currently 1.2 percent, a population decline due to the demographic inertia effect still seems a long way off.
The regional demographic development is anything but uniform. Population growth is concentrated in the more backward states in the north of the country; In many southern states, however, a population decline due to low birth rates is to be expected or is already being recorded.
Thanks to rapid population growth and lower child mortality rates, India has a comparatively young population. According to the 2011 census, the proportion of the population under the age of 15 is almost 30 percent, the proportion of the working-age population (15 to 64 years) is around 65 percent and the proportion of those over 64 is just over 5 percent.
The distorted gender ratio to the disadvantage of women is striking. In this context one often speaks of "India's lost daughters". Although the ratio has improved slightly over the past two decades, there are only 940 women for every 1,000 men in India - due to the low status women have. Because of the preference for sons, female fetuses are aborted despite the prohibition, girls are systematically neglected and often mistreated, which in turn increases female child mortality.
For India, demographic change is both an opportunity and a burden. The young population, the labor pool that will grow up to around 2040 and the resulting low level of dependency (employees have relatively fewer children and old people to care for) promise a comparative advantage over aging societies such as China and Japan. The downside: between eight and nine million people enter the job market every year. The number of new jobs will not be able to meet job demand, as the high economic growth (supported by the service sector) has not been very employment-intensive over the past two decades. India faces the challenge of encouraging job creation, including by re-regulating the labor market. But that's not all: Infrastructure as well as education and health systems need to be expanded, agricultural productivity increased, corruption combated and discrimination against women ended. Otherwise it will be difficult for India to sustainably increase its economic growth.
→ Bollywood is booming: Although you make less sales than the big model, this is mainly due to the cheap ticket prices. And the cultural influence exerted by the Indian dream factory can hardly be overestimated anyway.
If the film industry of a country plays a prominent role in a small business dictionary like this, then it has to be pretty big: Bollywood, as the Indian dream factory is affectionately known after Hollywood, is not only big, but also big equipped with a soft power that is hard to imagine for Europeans. The term Bollywood (after the former name of the city of Mumbai), which we use here for the sake of simplicity for the entire Indian film industry, actually only means the Hindi film industry; But industries in different national languages are also economically strong and culturally influential. The first silent film was produced in India as early as 1913; In 1930 India released around 200 films each year.
Today, more than 1500 films are released annually in Bollywood. This makes India by far the largest film producer in the world. According to a report by the Indian Chamber of Commerce FICCI in cooperation with the management consultancy KPMG, the Indian film industry is expected to grow by 11.5 percent every year until 2017 and then have a turnover of the equivalent of 3.1 billion dollars.
Bollywood is making less money than its US competitor Hollywood, but this is primarily due to the cheaper ticket prices in India. In terms of tickets sold, Bollywood leads with 3.3 billion a year, well ahead of Hollywood with around two billion. According to FICCI, the film industry contributed around 0.5 percent to the gross domestic product in 2013 and employed around 1.8 million people.
But the bare numbers say relatively little about the enormous cultural influence that the Indian dream factory exerts at home and abroad. Bollywood actors and actresses like Salman Khan, Shahrukh Khan, Katrina Kaif and Deepika Padukone are not only influencing the fashion of the youth. When Bollywood takes up socially hot topics such as homosexuality, drug addiction in the fashion world or the stress in the Indian school system, the topic is guaranteed to make headlines for several weeks. Films have always made a contribution to India's self-image.
Since Indian films are also widespread in Africa, the Middle East and the rest of Asia, they determine the image of India in these countries and contribute a lot to the soft power of Delhi. In Afghanistan, for example, Bollywood is very popular with young people and thus influences the view of India's political role in the region - no wonder that it is viewed as extremely positive here. The Indian tourism industry also benefits from this pull.
Other industries that benefit from Bollywood are the fashion, advertising, and music industries. 70 percent of the Indian music industry depends directly on Bollywood. Actors are also even stronger than our popular advertising icons.Cinema veteran Amibtabh Bachchan (73) advertises almost everything - from cement and cooking oil to online retail for baby supplies.
Another indication of the high social status of Bollywood is the fact that actors regularly switch to politics - for example Jayalalithaa Jayaram, Prime Minister of Tamil Nadu, or Nara Chandrababu Naidu, Prime Minister in Andhra Pradesh. Amitabh Bachchan, India's most popular actor to this day, was a member of parliament in New Delhi; his wife Jaya is still today.
→ Indian economic growth could be an estimated 2 percent higher annually if it weren't for the infrastructure deficits. Whether road, rail or electricity: the worm is in everywhere. After all, it seems like the government has recognized that.
You know the pictures: Overcrowded streets on which there are obviously no road traffic regulations, overloaded trains with people on the roof, plus news of train accidents, as most recently in August 2015. Most of India's rail network still comes from the former British colonial rulers. Since independence in 1947, it has only been expanded by around 11,000 kilometers.
India today has a comparatively long route network, but it is anything but close-knit. Much of the technology is out of date, only around a third of the network is electrified. The state railways operate in a highly deficit manner. Almost 23 million passengers use the rail network every day, but the fares are far too low to cover costs. The salaries and pensions of the 1.4 million employees of the railway (the world's eighth largest employer) as well as corruption and mismanagement have contributed to the fact that the railway network is hopelessly outdated and ailing. The result is numerous fatal accidents - this year alone there were an estimated 25,000.
If India really wants to compete with China in the long term, the World Bank estimates that around 750 billion dollars in investments in the country's infrastructure will be necessary. If there were no infrastructure deficits, economic growth could be an estimated 2 percent higher every year. Reasons for the inadequate infrastructure are, among other things, the fact that investments have been far too low over decades.
To make the rail network faster, safer and more efficient, the Modi government has planned investments of $ 137 billion in the current budget. In addition to expanding the network, priority is given to creating two freight corridors in order to meet the increasing demand for freight transport capacities. In addition, high-speed roads are to be created - for example between Delhi and Mumbai. However, the concrete implementation of the plans is often rather cumbersome. It is also questionable whether the cost-intensive creation of high-speed lines is not at the expense of modernization and expansion of the existing rail network.
The main mode of transport in India remains the road, on which an estimated 65 percent of goods and around 80 percent of people are transported. 40 percent of this is on the national and regional expressways, which, however, only make up a fraction (2 percent) of the entire road network. In 1998 the “National Highway Development Program” set the ambitious goal of expanding the national expressway network by 20 kilometers per day; currently, however, the average is just ten kilometers.
In addition, the existing roads are often of very poor quality and insufficiently maintained. Due to the growing traffic, the many obstacles (animals, people, objects on the road) and the poor quality of the road, top speeds of 30 to 40 kilometers per hour - even on the expressways - are not uncommon. In addition to the higher transport costs due to the poor road network, the industry complains above all of high costs due to transport damage.
In addition, many rural communities are still not connected to the road network. And where roads are built, they often need to be repaired very quickly due to mismanagement, corruption, bad planning and natural disasters. In the more affluent south of the country, however, the situation looks much better than in the north.
India's export goods are mainly handled by ship, as trade with its immediate neighbors (Pakistan, Nepal, Bangladesh and Bhutan) only makes up a fraction of the total trade and, due to the country's geographical location, foreign trade is only possible by ship in a cost-effective manner. Trading takes place via 13 seaports, which are already operating at the limit of their capacity. One of the main problems is the lack of efficiency in the handling of goods, because it leads to long idle times and thus to higher costs. A modernization of the port infrastructure is urgently needed. After all, India has a usable airport network, which is becoming increasingly important due to the great distances in the country and the comparatively slow and poor alternatives.
And then there are the constant blackouts that affect large parts of the country; an estimated 75 million households, mainly in rural areas, still have no access to electricity. The power grid is ailing and unable to meet demand. This is partly the result of a failed policy that does not allow the mostly state-owned power distribution groups to demand cost-covering tariffs from private customers. Some of the money is being taken back from business customers - with considerable consequences: Due to the high energy and transport costs, many Indian products are not competitive.
In addition to new infrastructure projects, the Modi government is currently planning the creation of large industrial corridors (e.g. between Delhi and Mumbai) and the construction of a hundred so-called smart cities. These plans are correct and were basically overdue. But is it enough? The budget for the expansion of roads, railways, bridges and ports has been increased by 25 percent for the next four years. Whether that will be enough and the money will be used efficiently, however, is just as open as the question of whether there will be enough private investors to cover the costs.
Make in India
→ The goal is ambitious: The Modi government wants to transform India into a global production location, boost economic growth and create jobs for the growing population. Expectations are particularly high in business.
When Prime Minister Narendra Modi gave the opening speech at the Hanover Fair this spring, he took the opportunity to present his “Make in India” campaign to the German business leaders who had gathered. India is a “land of change”, according to Modi, and his campaign is a historic opportunity for India, but also for German companies.
An opportunity, yes - but due to the demographic development and the low employment-intensive growth in the past two decades, it is simply a necessity. "Make in India" is part of a comprehensive plan by the government to get economic growth going again while creating sufficient jobs for the growing and young population.
The declared goal is to transform India into a global production location and to increase the share of production - in direct competition with China - from the current 15 percent to 25 percent of the gross domestic product. Because as Chinese society is aging, wages there are more likely to rise in the future, while India's young population should help to keep wages at a relatively low level. This makes India interesting for companies that are currently still manufacturing in China, for example.
With the “Make in India” campaign, India also wants to use the significantly friendlier economic climate after the change of government to increase the share of direct investments. Since taking office, Prime Minister Modi has already visited 26 countries - including Germany, the United States, China, Russia, Brazil, Japan, France, Australia and Canada - to promote his plans.
At the same time, attempts are being made to improve the framework conditions for foreign investors, for example by introducing e-governance platforms (with the help of which approval procedures can be accelerated and corruption can be contained) and by raising the investment caps in selected industries.
The government has identified 25 branches of industry as investment targets, including automotive production, biotechnology, chemistry, pharmaceuticals, IT, tourism, textiles and clothing, and food processing. In addition, with a view to the government's ambitious infrastructure projects, targeted foreign direct investment in the construction, rail, aviation and energy sectors is being advertised. A number of these industries, particularly the oil, gas, coal and heavy industries, transportation, banking and insurance, are still predominantly dominated by public and semi-public companies. But the government plans to privatize them step by step.
There are also other approaches with which one would like to boost growth: Be it “Skill India”, an initiative to promote vocational training for young people, the introduction of comprehensive digital administration (“Digital India”), the creation of living space for everyone (“Housing for all”), the construction of 100 new satellite cities (“Smart Cities”) or measures to expand the infrastructure and energy supply.
But the response to the “Make in India” campaign has so far been rather restrained, with many investors remaining cautious. This is mainly due to bad experiences in the past; one suspects that a change for the better will not occur overnight.
There is still corruption,
Excessive bureaucracy, poor infrastructure and energy supply, the sometimes poorly trained workforce and the lack of legal certainty are serious obstacles to investment. In addition, in a stagnating global economy it is not necessarily easier to mobilize the necessary foreign capital. The private sector expects India to first take its own steps and invest in the country.
→ Today, when large US companies outsource their business processes, this is called "bangalizing". No wonder, as India is one of the leading players in business process outsourcing. Only: how much longer?
In a seminal article on corporate strategies, the two economists C.K. Prahalad and Gary Hammel introduced the concept of “core competence” in 1990. Your crucial question: What extraordinary resources and skills does a company have, and what routine tasks can it outsource to external service providers?
In the industry, the outsourcing of business processes is called "Business Process Outsourcing" (BPO). Bangalore has become a preferred destination and "to bangalore" has become the established term for digital outsourcing from developed countries to India. The main reasons for the "Bangaloreization" are the aging of the population in the industrialized countries, the rising level of qualifications in the emerging countries, the digitization of services and the rapid development of information and communication technologies. The driving force was the American multinationals, which found inexpensive service providers in India and were able to make use of a huge potential of well-trained workers.
Three categories of services played a decisive role: company administration, supply chain management, and sales and marketing. Here the service providers were able to work their way up from simple data transcription to taking over the entire process. Today, BPO service providers focus on areas such as banking. The Indian subsidiaries of the multinationals, such as GE, have developed from cost centers to profit centers and offer their own services.
In the past ten years the Indian BPO industry has increased its sales enormously: from 3.2 to 26 billion dollars; making it the preferred target of the $ 104 billion global BPO industry. However, new technologies such as cloud computing or systems such as “Business Process as a Service” mean that traditional BPO is becoming less important. In addition, the industrialized countries are increasingly taking legal measures to secure domestic jobs. This has prompted Indian companies to move from mere business process outsourcing to knowledge process outsourcing (KPO). KPO describes outsourcing processes that require judgment and specialization in the organization of processes. The focus is shifting, especially in the financial sector, from pure support to highly qualified specialists who do their work in Bangalore as well as the analysts on Wall Street, but at a fraction of the cost.
But is it sustainable to only compete with a view to keeping costs low? The Philippines and China provide India with tough competition here. On the other hand, Delhi's leading position is more likely to strengthen if one made progress in various industries along the value chain and opened up new opportunities for cooperation with globally operating multinationals.
→ The socialist planning commission has had its day in India. Her successor is a think tank that has launched a number of ambitious initiatives. Its success will show whether it can make a difference to the "old" commission.
One of the first decisions that the government of Prime Minister Narendra Modi took after its spectacular election success in 2014 was the abolition of the so-called planning commission. 65 years of socialist-inspired economic planning came to an end, and critics have long denied that the main purpose of the commission was to find posts for discarded politicians.
The venerable institution was replaced at the beginning of this year by a think tank called “NITI Aayog”, the abbreviation NITI standing for “National Institution for Transforming India”. This commission is chaired by Modi himself; its economic head is vice-chairman Arvind Panagariya, professor of economics at Columbia University in New York and a former economist with the Asian Development Bank.
According to the government, the new think tank is intended to promote “cooperative federalism” and advise the government on “strategic and technical” issues. The “Team NITI”, as it calls itself, includes three other members in addition to Panagariya: the economist Bibek Debroy, the former State Secretary for Defense Vijay K. Saraswat and the agricultural scientist Ramesh Chanda. A sub-group, consisting of the prime ministers of several states, is to take on various government initiatives such as the "Clean India" mission.
In addition, task forces were set up on the subjects of “vocational training” and “rural development” and an initiative on energy security was launched. Arvind Panagariya recently became the sherpa of the Indian government for the G-20 summit. The success of these initiatives will show whether NITI Aayog makes a notable difference to the good old planning committee.
→ Around 400 million Indians will move from the countryside to the city by 2050. Time for sustainable urban living and economic models, time for smart cities. However, the new project will only be successful if it succeeds in attracting sufficient sponsors.
At the end of June this year, Prime Minister Narendra Modi presented another flagship project of his government: The Smart Cities Mission is to turn 100 cities and municipalities into “new engines for growth” - a form of urban development that has never existed here before.
According to forecasts by the United Nations, around 400 million Indians will move from the countryside to the city by 2050. This corresponds to the numerically largest migration of people to cities worldwide. The urban agglomerations of India are already struggling with the crowds. Infrastructure areas such as sewage, transport and electricity are insufficiently developed.
Although India is only around 30 percent urbanized, its cities generate around 60 percent of GDP, and the trend is rising. However, infrastructural deficits make growth prospects more difficult. No wonder that European ideas of smart cities have been adopted and that the idea of functioning, albeit sterile, living environments is worth striving for. However, if the European concept is based on the idea of optimizing and re-networking existing infrastructures through a stronger integration of information and communication technologies, these structures must first be created in many places in India.
The goals of the mission include the introduction of intelligent solutions for the use of the available building fabric, resources and infrastructure, the improvement of the urban quality of life and the safeguarding of a clean environment. A smart city should also be able to remedy the shortage of jobs. The mission is flanked by an urban development program, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which is to support around 500 cities.
The plans for the smart cities can target two different levels with their measures: on the one hand, on the development of existing urban spaces through renovation or redesign, on the other hand, on the planning of completely new projects in the vicinity of existing cities. The Ministry of Urban Development has announced a competition for cities and municipalities to apply online. The government has promised the winning cities around seven billion euros over a period of five years. The 100 future smart cities are determined in a three-stage selection process.
If the method of such an online tender is comparatively new, the procedure for absorbing the tight budgeting with the help of public-private partnerships (PPP) is known. Japanese support was already used when the industrial corridor between Delhi and Mumbai (Delhi-Mumbai Industrial Corridor, DMIC), a high-speed connection between the two cities, was created.
In the Finance-Tec City Dholera project, also located in the DMIC catchment area, the main investor did not receive any payments. The Smart City Kochi project in South India was started in 2007 in cooperation with Tecom Investments, a consultancy from Dubai. The first building was completed in 2015. Disagreements over land use between government and investor as well as political reasons delayed the process.
As part of the Smart Cities Mission, around half of the planned costs for the measures are to be raised by the states, cities or municipalities - with the help of PPP. Multinational companies were involved in the planning and the ongoing selection process. Consulting firms from home and abroad and international support organizations such as the World Bank, KfW or UN Habitat are to draw up the plans for the future smart cities and implement them together with the cities. The success of the mission will also depend on the state and local authorities' ability to attract well-funded supporters.
Luise Lina Schulz
→ How can extreme poverty in India be combated, what can be done about the unequal living conditions? Not all attempts by Indian governments to remedy this have been successful. However, some progress has been made.
India has not only been accompanied by the problem of poverty and an unequal distribution of life opportunities since it gained independence. If the first Prime Minister Jawaharlal Nehru tried to eradicate poverty through controlled development in a semi-socialist economic system, the rare successes of this policy were largely undone by the rapid population growth and the new social challenges.
It is true that the poverty rate has fallen continuously, especially in the past few decades. But more than a quarter of all Indians still live below the international poverty line of 1.25 dollars a day, which corresponds to around a third of the world's poor. A majority of the poor live in the countryside and come from the lower castes or belong to the so-called "registered tribes".
In addition, despite rapid economic growth, inequality has increased since the economy was liberalized in 1991. On a whole range of social indicators, such as child mortality, India performs worse than its poorer neighbors in a regional comparison. The country occupies an inglorious 15th place in the “global hunger index”.
There are many reasons for this: Many poverty reduction programs have been introduced since independence - perhaps too many. The consequences have been fragmentation of programs and chronic underfunding of many of them. In addition, poor target group orientation, mismanagement, corruption, political influence and, finally, a cumbersome bureaucracy have significantly impaired the effectiveness of the programs.
In terms of educational policy, India has achieved some successes: Almost all children are enrolled in school, the gender-specific differences in school attendance have fallen dramatically, and the illiteracy rate has fallen to 29 percent. However, the quality of the educational institutions often leaves something to be desired. And the drop-out rate in secondary school is still comparatively high.
Progress has also been made with regard to various health indicators. Life expectancy has increased significantly, and some diseases such as polio have almost disappeared. However, child and maternal mortality is still at a high level by international standards. And while India has a non-contributory health system, that system is in a precarious state - especially in rural areas, where almost 70 percent of the population live.
The void left by the ailing health system is increasingly being filled by - often expensive - private institutions. The state system is also poorly equipped for the challenges of an aging population and the associated increase in lifestyle diseases such as diabetes, high blood pressure or cardiovascular diseases.
In addition, there are still considerable regional differences in access to education and health. Attempts are made to counteract this by reserving a certain amount of study and public service jobs for disadvantaged castes and tribesmen according to their proportion of the population.
One of the most significant changes in social policy began in 1993. Since it was recognized that centrally controlled programs were more inefficient than municipal or locally controlled programs, development policy tasks were transferred to the lowest administrative level, the village councils. And in 2004 another policy change was made: Since then, the focus has been on rights-based programs, the benefits of which are enforceable and equally accessible to all citizens.
Around 90 percent of the Indian workforce is employed in the informal sector; they have no access to state social security and hardly any protection against illness, accident or unemployment. For this reason, the government plans to introduce new programs, such as a comprehensive social security system for retirement, sickness and accident, and a house and housing program.
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