1. Read "How Risky is India", an article from the December 4 issue of Businees Weekly at:
http://businessweek.com/magazine/content/08_50/b4112024094731.htm?chan=rss_topDiscussed_ssi_5.
2. Summarize the article and explain how it reflects the structure of politics in India as well as the nation's relationship with Britain and the United States.
3. Mehul Srivastava and Nandini Lakshman (the authors) tell us that "Only in 2001, when a stable government focused on the economy with a brand message "India Shining" did things (economically speaking) take off." They then ask the reader "Which India will prevail- the India that nurtures global industries and rising affluence or the India of stalled hopes and endemic violence?" Answer this question with regard for the information presented in the article.
****If you need further help understanding the recent attacks in Mumbai and the conflict in Kashmir, check out the research and background links at :
http://news.bbc.co.uk/2/hi/south_asia/7754438.stm
19 comments:
Loretta Au
December 16, 2008
Block C
India was motivated by “a mix of good fundamentals and that intangible something that industry calls ‘sentiment.’” However, all the progress that India had made economically was in danger. Three days after the shooting in south Mumbai, a nationwide introspection of India’s future started. India’s government is proved faulty. India’s violence has increased. Since 1993, 13 bombs have killed 257 people, 29,000 people have died in terrorist attacks, thousands have died in anti-Muslim riots, and 4,500 died in a Maoist rebellion. The economy has also been harmed in the acts of violence. There was a train blast in Assam, a northeastern state that produces more than two million dollars of exported tea annually. "It is not just this one unprecedented attack in Mumbai," says Chandrajit Banerjee, director general of the Confederation of Indian Industry, India's most influential trade lobby. "Across the country we see...violence." Employment has been an issue in India as well. The skill one has determines their wage and class. For example, engineers and programmers are first class, whereas skilled workers labor for wages lower than in the West. The violence has affected Ratan Tata, the owner of Taj Mahal Palace & Tower Hotel. The buildings were destroyed in attacks. Even foreign companies suffer the violence. Executives of Korean company Posco in Orissa have been kidnapped. In New Delhi, the Indian CEO of an Italian company's subsidiary was killed by a mob of employees angry over layoffs.
The 110-plus multinationals with regional offices there are potential targets of violence in south Mumbai. "The targets identified demonstrate that the intention is to create panic and shatter the confidence of investors in India and global investors coming to India," says Habil Khorakiwala, managing director of Indian drug maker Wockhardt. These blue-chip clients go to Raman, CEO of Mahindra Special Services Group. They offer a stronger security system for those who want protection. The government has done little to help investors and business owners of Mumbai. "How can I invest more in a city which does not protect me?" asks Abhay Mansukhani, who makes auto parts. Many, Abhay Mansukhani among them, plan to relocate. On the contrary, those like executive Gautam Patel, managing partner of Battery Ventures insist on staying even after experiences of violence. They are moreover disappointed with the government. The government has done little about the attacks, inflation, economy, poverty, and reforms. The government is at risk of collapsing if the conflict with Pakistan continues. It now the question of whether India will overcome the violence and become again a nation that nurtures global industries.
Between the India that nurtures global industries and rising affluence, and the India of stalled hopes and endemic violence, I believe the second India will prevail. Violence has overcome India and has been nearly impossible to stop because of no cooperating people. The government is doing little to improve the current crisis, and the industries are beginning to relocate. While everyone is in danger, there is no one to save the current issue.
Teresa Konopka
Block F
Comparative Government
In Business Week’s “How Risky is India,” the terrorist attack on India is discussed. Apparently, a unique sentiment was inspiring Indian economics to flourish; it also improved investments in Indian markets. However, this sentiment declined severely after south Mumbai was attacked. All of a sudden, the big businesses in India lost their image and prestige internationally. Representatives fear that such decline could pull India back to its early state of chaos before a modern democracy was established. The many bombings and killings show just how fragile India is. This proves to outside investors that India is dangerous and that there is no point investing in a product that will be blown up one day. In fact, many bombings are aimed at large business establishments for the ole purpose of hurting India’s fiscal state. However, the workers in India still keep up their reputation. They are incredibly smart, says Business Week, and they work for much less than what Western workers ask for. Sadly, this is overshadowed by violence. In one attack of terrorism, executives for businesses were kidnapped and CEOs were terribly killed by mobs. Many targets are American and British investments and their offices. Some investors are angry at India for its lack of precaution against terror attacks. Additionally, in this world-wide state of economic decline, India needs all the outside help it can get. However, lately, international investors turn their cheeks to India. Much violence is caused by border disputes between India and Pakistan. Either way, India needs to fix its economic reputation--and quick. When asked which India will prevail, it is almost certainly the one that nurtures global industries. The India of endemic violence is currently declining. In order for India to gain its reputation back, it should nurture business better. This could mean sending Indian representatives for businesses overseas so that, when terrorists attack, India will be backed by other nations whose own people were harmed in their own nation.
Question to peers:
What would you do if you had investments in India for over five years and just learned of the terrorist attacks there yesterday?
Conor McGinn
Block F
December 16 2008
The article explains the way the nation of India had been doing so well in the international market, and then how the recent terrorist activities, coupled with violence that has been going on throughout India for years now, is threatening to undo all of the work India has done. For the past few years, India had become a place with great economic potential, rivaling China in hard work for cheap labor. There had been trouble with riots and violence, but none severe enough to be fully recognized by the world as a cause of major concern. The recent terrorist attacks are threatening all that. It has shown foreign investors just who dangerous and unstable a place India can be, and just how cautious they really should be with investments in India. The recent violence even has many people wondering if all the outsourcing done to India, paired with the investments, is worth it anymore.
This is sad to see how so much business could be lost for an entire nation over the actions of one, or even a few groups, towards violence. It is predicted this may be enough to not only undo the progress India has made in the last several year, but to revert India back to its state of severe struggle.
Being someone who takes a great deal of pride in his nation, and very pro-American as many of you know, I am frustrated to see how our trust in a nation could all be destroyed by the idiocy of terrorism. It is unfortunate we put so much into this nation that was clearly still so very unstable, but to see that this is what it had to come down to, and for this reason, it is upsetting.
I think it is an obvious answer to say that the India that nurtures global business will be the successful India. Before India was so open, the country was not in a good place. The opening to foreign business allowed the nation to flourish. If India were to revert to its former state, I don't think it would even have the chance to be slightly successful in this highly competitive global market, especially in this time of global recession. It is important for the Indian people and government to realize this and do all they can to stabilize themselves, and re-boost foreign confidence in the nation.
In response to Teresa'a question:
I would look at the situation from a holistic perspective, and determine the risk value in my continued investment. If the risk was high, I would pull out, but if it seemed as though India, as a whole nation, would be able to pull through this, I would wait some time before making such a major decision.
Block: F
Name: Michelle Shed
Date: December 16, 2008
Blog: How risky is India? Analyzing International investments in a time of Financial and Security crises.
Mehul Srivastava and Nandini Lakshman’s “How Risky Is India?” in Business Weekly portrays the horrors of the Mumbai shooting, while discussing the structure of India’s political system and India’s political relationship with the United States and United Kingdom. The nation of India prides itself for its 9% growth rate, a modern economic aspect. However, due to the shooting in South Mumbai, there is a global speculation on whether or whether not the nation will revert back to its third world state. Although India is a semi-modern nation, India’s economic achievements are based on stability.
Since 1993, over 29,000 perished due to terrorist attacks. This includes the thousands that have died in Anti-Muslim riots. 257 alone were killed from the shooting in Mumbai. Yet, many investors and companies fail to realize the lack of stability there is in India. Since 2002, in the region of Chattiisgarh, a region where foreign companies yearn to make their investments, 4,500 have died due to the Maoist Rebellion. Chandrajit Banerjee, the director of the Confederation of Indian Industry, India's most powerful trade lobby, states there is violence displayed across the entire country. Assam is a northeastern state that produces more than two billion dollars worth of tea each year. A train blast in the region resulted in the deaths of three civilians and excessive property damage.
The nation of India is known for its engineers and programmers. Most interesting is that India’s workers receive less of a salary than the workers in the West. Yet, there have been many troubling predicaments when it comes to foreign business in India. In Orissa on the east coast, billions of dollars in foreign investment are proffited. However, Korean companies like steelmaker Posco have had executives kidnapped and land promised to them but never delivered. In New Delhi, the Indian CEO of an Italian company's subsidiary was killed by a mob of employees furious over the cutdown on jobs. Further more, Patrick Cescau, the CEO of consumer-products giant Unilever almost lost his life due to the massacre at the Taj Mahal hotel where he was dining with his peers.
If violence once again occurs in the South of Mumbai, corporations such as CitiGroup, Bank of America, and Morgan Stanley, JP Morgan Chase, could be held at serious risk. Habil Khorakiwala, managing director of Indian drugmaker Wockhardt, states that targeters desire to extinguish global business transactions in those areas. As a result, prospective clients seek protection. Indian executives are even more concerned than foreign investors. Abhay Mansukhani, an auto part maker, wishes to relcoate because he cannot live and invest in a city that doesn’t protect him. Many Executives and Investors believe that the government is too weak to prevent bombings and terror attacks. Inflation and a failure of promised reforms are issues that Kafkaesque bureaucracy has to deal with.
Banks in India have dropped from a 9% growth to a subtle 7.6%.Exports have dropped 12.1% in October, compared to a 51% jump in the same month last year. Yet, the issue is that the nation of India fears that they will lose foreign investors because the government cannot protect the nation from terrorist attacks.
India that nurtures global industries and rising affluence is the India that will pre-veil. China wasn’t viewed as a global and economic super power until they started trading with other nations in the 21st century. The greater the economic super power, the more other nations trade with India. I believe that with a great economic power, there will also be political stability in a nation. A wise man/woman once said that money is power.
Mike Orr
C Block
In the article “How Risky is India” Explains how India’s economy was doing good for many years with their “international marketing” . So good as to where they can almost be paired up nest to china. This article explains how the terrorist attacks that have been going on in India for years, are now becoming a huge threat to destroy India’s economy. These attacks will set India so far back in the economy that they will pretty much have to start all of their hard work over again. The most recent attacks on India, have been the worst, killing thousands
of people. This showed many big foreign investors that India is too much of a dangerous place to live in. If the big investors feel that they are not safe in India, then they will no longer buy products from India, which will there economy into a down fall. In India there were attacks, and riots going on in the streets almost every day, but they were not big enough for the world to know about. I feel that if India had brought up the situation, when it first started, then there would be hope in saving the economy. However because India was not able to stop the attacks by themselves, the economy is almost falling into a depression. In my opinion, the India that will prevail, will be the India of stalled hopes and endemic violence, because as of now, I feel that India is not strong enough to stop the violence alone, and that will bring down their economy, and scare away the big investors.
Melissa Coughlin
December 18, 2008
India is a very large country. It has one of the highest populations in the world and is also one of the poorest nations in the world. It seems like all of these somewhat negative statistics add up to major violence. Most people would not believe that India is a violent place, but indeed it is. Recently there were attacks in the city of Mumbai, but that was not the first time that this has happened. In one day thirteen bombs went off and there were two hundred fifty seven deaths. Since 1993, almost thirty thousand people have died due to terrorists attacks in Mumbai and provinces like Kashmir. "Thousands more have died in anti-Muslim riots. At least another 4,500 have perished since 2002 in a Maoist rebellion" says the BusinessWeek article 'How Risky is India?' Although, luckily for India, this has not stopped it from being seen internationally as a place for business. The workers there are very skilled and dedicated even though their wages are much lower than here in the United States. It is seen very similarly to China, but it's value of democracy is higher than its eastern twin. Despite the good aspects of business, there are very bad consequences for investing for work in this violent country. Many businessmen have been kidnapped, and it seems that if there is another attack by Mumbai, various American companies would be targets, mostly banks. That would be terrible because banks in America are currently going through a very hard time because of the economic crisis. The managing director of a large company that makes clothing for J.C. Penny and Target said that India was asking for an attack, ""[The government] was forewarned, so why didn't they act on it? We've been ravaged by terror attacks since 1993." It is very interesting to hear that because you would think that if a country is warned about a large scale attack, that it would try to defend itself and it's people. Many business' are trying to relocate to different parts of India that are known for being less violent. But where the main business' go, the violence will follow. As to agree with Loretta, I also believe that the India which is overcome by violence and stalled hopes will prevail, atleast within this century. Hopefully by attracting international attention with the recent attacks in Mumbai, the government will try to help its people. But I really dont think this is going to happen, due to India's violent history.
Justin Lefkowitz
C Block
Just when many thought that India might have found its way out of its long time financial crisis, new problems start to arise. Originally motivated by “a mix of good fundamentals and that intangible something that industry calls ‘sentiment’,” India’s economy has grown by over 9%. This nine percent boost was stimulated by a great period of well-being and intense happiness. This led to economic greatness and it even brought in foreign investors who wanted to take a part in the growing Indian economy.
On November 26, 2008, a group of Pakistani terrorists were involved in ten coordinated terrorist attacks across Mumbai. Mumbai is the financial capital and the largest city in India. The attacks lasted until November 29, 2008. There was a lot of damage done. The majority of the attacks took place in South Mumbai. Probably the most famous of these attacks to take place, took place in the Taj Mahal Palace & Tower. This world famous hotel was seized by two terrorists. They held many people hostage and they killed many people also. Inside of this hotel, there were several explosions and there was also a load of gunfire.
As a result of these attacks, about 164 innocent people were murdered and 308 innocent people were severely injured. Many journalists have started to title the recent Mumbai attacks as “India’s 9/11”.
The recent attacks on Mumbai, India have led to many problems circulating throughout India. These attacks have not just killed many innocent people, but it also severely crippled the growing Indian economy. These attacks also placed many families into poverty. Many people also lost jobs as a result of these attacks.
Many companies that are based all around the world are thinking about pulling their businesses out of India. Many large scale companies who have been outsourcing in India, plan on stopping outsourcing shortly. Although outsourcing does help out many companies, in a very cheap and efficient manner, if companies like JPMorgan Chase and Goldman Sachs keep part of their business in areas like Mumbai, parts of their businesses might get destroyed. As more businesses start pulling out of India, less jobs start to become available. If more people are becoming unemployed, then many families will just stop making money. This will cause extreme poverty in India.
It really is crazy how one event can totally change the way one country works. One second people are smiling with their families watching television, and one second later, some of the people in those happy families could be killed. We have survived one 9/11 and we definitely do not want another one.
The question posed by the authors is a very difficult one to answer. I feel that India will not be able to survive on either of the choices given. Global industries will not be staying in India for that much longer because of all of these terrorist attacks that have happened there since 1993. The India of stalled hopes and endemic violence can only make India worse. The people of India are going to be going through a tough time over the next several years. A terrorist attack is not a quick and easy recovery. A good recovery takes time, and a lasting recovery will take even longer. Indians just have to hope for the best.
India, India, India...What must go up, must come down, according to the theories of gravity. Thus, India is very gravitational. Previous to November 26, India was a prospering butterfly, breaking away from its ca coon of despondent images. With a recipe of quality principles and untouchale attitude, they were on a righteous path. That path led them to economic bliss and seduced global investors. However, that recipe was put in the oven- and burned. Due to the shooting in Mumbai, which the Indian government has criticized, caused thoughts of an obvious downward future to spark; ultimately, putting India back on the shelf after its fair work to rise. India's violence and deaths have been going on for decades; since their prosper, the bad qualities (over 29,000 terrorist attacks and over 5,000 deaths) have some-what been curtained. I have a feeling that curtain is being pulled back, and exposing the ever so decreasing India. It's a shame because it's not the economy's fault the country is terrorized. India was even compared to China, which have totally emerged from its shell in recent years; being predicted to own up as the most powerful economy. Thus, India must have been doing something right. India doesn't seem to be going down without a fight. For example, the chairman of Tata Group plans to rebuild his hotels that were ransacked. Despite the effort to still lure in foreign investors, that is being decreased by the foreign investors that have been affected in ways such as captivity or death. Many investors continue to invest especially if protected by high security. The companies believe that they're only being intimidated. Indian companies are disturbed more that the government basically knew about the attacks; being that the government was given warning. The Indians don't even believe in their own security, and holding off on any business moves they had planned to make. The economy looks to the government for support, but they are disappointed; the government is not up to standards. The government promises to change that. The economy is behaving fair by mixing in some capitalism and socialism. To India's and its foreign investors dismay, if the unfortunate events keep occurring, the country's wellness can totally deteriorate. More disturbance in India actually relates to the economy, some parts are better off as others are not,but companies are leaving those areas. The future road of India is unpaved, it can either prosper or wither. Either way, the future road seems to be going uphill.
This article reflects the Indian government due to the plethora of thoughts and opinions on future India. This shows a separation of its states. However, it also portrays the government which is main political focus, is unreliable and irresponsible. The political strength can be considered both fair and bad. Fair in the sense that they still have investors investing, so they must be doing something right. But bad in the way that I can see it slipping from their hands. This compares very well to America. We too we terrorized, and our country came back on the weak end seeing as our economy is debt, and were currently in a recession.
I am unsure what India was come out on top, the country in such a sand trap right now. However, something needs to be done. I feel that India has worked so hard to establish a quality name and image, that it's such shame for it to be blow away by terrorists. The government will need to step up, in this case seep down and form some strong roots fro the economy.
kimberly gangemi
i agree with Conor to Ts question. Its all about the risk-reward. The more risk, the more reward. The risk being staying connected to India, and risking your company's money, and the reward being India prevailing. Or fail.
Lo- E: Thoughtful and fact-packed, but I wonder how India's govt. should/ can intervene considering the costs involved in developing such a populous nation.
Theresa- E: As always, a compelling question concluded your post. Thoughtful work that reflects a sophisticated understanding of economics in the modern world.
Connor - E: The reasons so many investors took stock in India are simple: cost effectiveness and a large pool of skilled labor. Wise of you to question the sustainability of investment in a conflict-torn nation.
Michelle - E: Precise and analytical work.
Mike O- G-: Thoughtful work, but I' dappreciate more text based evidence to support your position.
Melissa- G+: Balancend and supported argument. ote that India is NOT one of the poorest nations in the world, that title belongs more to nations where little to no foreign investment exsists and subsistence agricultre promotes traditional local economies.
Justin- E: Analytical and detailed work that reflects you read the article closely. Good job.
Kimmi- E: Intersting US/ India comparison... the difference here is the US WAS a superpower upon attack, India is still a developing nation, but certainly plays a major role in the global economy. I wonder how nations like the US and UK that have become dependent on India's cheap labor resources AND are in a current recession will respond to this crisis of instability.
Christopher Morawed
Sentiment and good fundamentals were what kept India in good shape until twenty- sixth. From this growth occurred along with economic stability, making India a hotspot for outside investors. Shootings started after that and the nation started to question if this could be a factor. Would this make the nation go back to the dark days it had once faced? Bombings one day, killings another; this was an ongoing recurrence. In 1993 13 bombs blew up in one day promising that India was definitely a dangerous place to live. Thirteen bombs is an immense amount of bombs to fall in one place in one day. With this factor, I question how the government lets something like this happen where thousands of people are hurt in these bombings. Along with that bombing, a train was blown up after that as well. India has become a very risky place for many to live. I, 100 %, agree with Justin Lefty’s comment that this was India’s 911.
While reading the news article, “How Risky Is India,” published in Business Week magazine, by Mehul Srivastava and Nandini Lakshman, I had come across a compelling statement the authors had made. “The fear is that India's mounting problems could drag the country back to its pitiful past. Its governments, despite a manufactured public image, have always been unwieldy; its economy, despite the plenty of the boom years, is premised mostly on future potential; and its much-flaunted stability is no such thing, ” written by Srivastava and Lakshman. According to the Central Intelligence Agency World Factbook, India as of July 2008 holds a population of over 1,100,000,000 people. Thanks to Mohandas Gandhi and Jawaharlal Nehru, August 15th marks India’s Independence Day, which was given by the United Kingdom in 1947. Also as stated, “Despite impressive gains in economic investment and output, India faces pressing problems such as significant overpopulation, environmental degradation, extensive poverty, and ethnic and religious strife.” With population, or overpopulation on the rise, India has become a riskier place to reside in. May of 1998, was the start the tension between India their neighbor country, Pakistan. Both countries frightened the world after their nuclear tests were tested. February of 1999, “Indian Prime Minister Atal Vajpayee traveled to Pakistan to meet Pakistani Prime Minister Nawaz Sharif. They signed the Lahore accord pledging again to "intensify their efforts to resolve all issues, including the issue of Jammu and Kashmir," as stated on BBC News. Now with terrorism being a high risk in today’s society, there have been 2,475 deaths terrorism related in India. The article proceeds with stating the strengths of foreign companies are targeted. I must agree with Michael Orr’s statement, “If the big investors feel that they are not safe in India, then they will no longer buy products from India, which will there economy into a down fall.” Not only will they no longer purchase goods from India, but they will be scared to import their goods as well. Yes, Chris, I do question how the government lets something like this happen where thousands of people are hurt in these bombings.
Conrad Mallien
1/8/09
Block C
The article, "How Risky Is India?", Is about how investors, both foreign and domestic, are starting to regret putting their employees and money into India's economy due to the recent terrorist attacks. Investors claimed that they are very worried about these incidents and want security to get tighter and fast. This article greatly shows how closely integrated the economy and government in India is. India's relationship with many foreign countries is mainly connected through the economy. My answer to Srivastava and Lakshman's question is the first choice, the India that nurtures global industries. Either way, the current India right now must prevail or else it will be a long road of hard times for India.
Chris - N: This feels rushed and incomplete; you're capable of more in-depth work.
Michela - G: Thoughtful, informed and analytical but late.
Conrad -N+ : A bit short and late, but the summary here is solid. I'm hoping for more analysis from you in future posts.
Anthony Fontana
Block C
The article, “How Risky is India?” is about how the terrorist attacks might drastically alter the booming economy of India. As we all know the United States number one place for outsourcing is India. The terrorist attacks in India might drastically affect how much or if any more outsourcing will occur in India. People might not take this issue in to serious consideration, when actually this is a very huge deal. Outsourcing is the backbone of our economy. People can pay little for a fruit because the labor has been “outsourced.” Outsourcing means that a company goes out of the country to have foreign people perform a service for a much lower price then a domestic worker. Companies can do this because there is no labor union protecting workers rights, like how little they are paid. Without outsourcing most people would not be able to afford a full gallon of milk because the labor is much more expensive when it is domestic. There are pros and cons to outsourcing. By going to another country for labor, you take jobs away from our citizens. However, on the other hand it is much cheaper and the companies could profit more from it, which means the rest of the economy benefits. The violence in India is a real turn off to companies. For example, a CEO was murdered in a riot. Taking outsourcing away from India would not only affect our economy but would drastically hurt theirs. In the article the author says, “These strengths still attract investors. But foreign companies are not immune from the violence. In Orissa on the east coast, where billions in foreign investment lie tied up, Korean companies like steelmaker Posco have had executives kidnapped and land promised to them but never delivered: Protesters wield slogans and weapons to keep earthmovers at bay.”
B. Jones said….
When, the shooting started in South Mumbai, that when all hell broke loose. There was three terrible days that followed which affected India's image and reality, which sparked a nationwide scare. This fear could really hurt the country in a major way. It would really mess up the economy and their stability. This is starting to look like the old days when there was 13 bomb blasts in one day, which killed 257 in Mumbai. Also thousands more people had died in anti Muslim riots and, 4,500 have died in 2002 from Maoist rebellion that have gotten really heated. Shortly after the Mumbai attacks, three people were killed in a train blast in Assam. In Orissa on the east coast, where billions in foreign investment lie tied up, Korean companies like steelmaker Posco have had executives kidnapped and land promised to them but never delivered: Protesters wield slogans and weapons to keep the justice. In New Delhi the Indian CEO of an Italian company's subsidiary was killed by a mob of employees angry over layoffs and Patrick Cescau, CEO of consumer products giant Unilever narrowly escaped death in the massacre at the Taj Mahal hotel where he was having dinner with some friends. The multinationals with regional offices could be the next potential target. If you ask me I think the India government isn’t doing all it can to protect its citizen, it is too easy too be attack.
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