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New and old India: Open and shut

Stephanie Flanders | 11:45 UK time, Thursday, 29 July 2010

Mumbai: When the Indian central bank raised rates this week, for the fourth time this year, the Bank's governor, Duvvuri Subbarao, said he hoped the change would help keep a lid on the country's inflation - but to really make a difference he was counting on the rain.

Duvvuri Subbarao"If it rains, the monetary policy works", he said. "We are all of us chasing the monsoon." A poor rainy season last year was the big factor pushing food prices up.

The best reason for thinking inflation may come down in the autumn are the heavy rains that lashed down on the UK delegation in Mumbai (it has rained a lot, as I think I may have mentioned before).

The day after his comments, local papers splashed with the news that two of the lakes that provide the massive city's water supply had already overflowed, weeks earlier than last year. It's a reminder that some facts of life about India have remained the same, even as its economy has started to take off.

Another thing that hasn't changed is India's suspicion of global finance. As I noted in my piece for the TV bulletins last night, George Osborne spent most of his time in Mumbai courting business for Britain's financial services firms.

Before the crisis, people used to say that India's closed financial system was a source of weakness. Not any more.

As you would expect, the Western-oriented businessmen and women attending the receptions and events in the chancellor's honour were often on the side of reform. They would tell me they were hoping to use Mr Osborne as their proxy, pushing the case for greater openness with the likes of governor Subbarao.

But these same pro-market voices also had to admit that with the crisis of 2008 the case for reform was not what it was.

Even when world trade collapsed in the autumn of 2008, the India only shrank by 0.2%. That was the only quarter in which the economy went backwards. There has been no banking crisis in India. There have been no bailouts. (Or, at least, no exceptional ones.)

George OsborneThe chancellor rather danced around the issue in Mumbai. In his big speech to the city's bankers he made a strong pitch for releasing the constraints on UK financial firms in India. As he noted, the likes of HSBC and Standard Chartered have been in India for many decades.

The sticking point is they can only set up a fixed number of local branches, and there's a limit on how much they can own (see my post Osborne in India). Business is good - Standard Chartered made a decent chunk of its profits in India last year - but it is capped.

Mr Osborne was careful to distinguish the question of openness to outside firms from that of regulation, praising the Indian authorities for their "highly effective macro-prudential policies" before the crisis. But I wonder whether the Indian regulators would recognise the distinction.

India's most effective "macro-prudential" tool in the lead-up to the crisis was simply not to let banks do stuff that banks in more open markets could do. Invest in US sub-prime assets, for example.

One senior Indian banker told me about a recent conference of financial regulators from countries - like Canada, Australia and India - that had come through the crisis fairly unscathed.

Along with the mutual congratulation, and surreptitious gloating over the travails of others, they also considered some of the lessons of their experience.

The "most subversive", this banker told me, was an official from Canada. "He said the main reason that Canada didn't get into trouble was they didn't let any foreign firms operate to any great extent in the domestic market. Even the Americans." Naturally, the Indian participants were all ears.

In the wake of this crisis, the case that Mr Osborne - and the domestic supporters of financial reform - have to make now in highly regulated countries like India is that not all financial innovation is dangerous. Even if it is made in the UK.

No wonder Mr Osborne jumped at the chance to launch Monitise, a British joint venture with Visa to bring mobile banking, not just to the 200 million people in India who have a bank account, but also to the much larger number - 600 million plus - who now have a mobile phone.

Even in this new India, people still rely on cash for more than 90% of their transactions - just as they still rely on the monsoon.

That may change in the next few years as a new digital generation comes of age. But after watching what Europe and the US have been through over the past few years, Indians will hold on to its traditional scepticism of clever western banks.

Comments

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    Interesting contributions; I think we're entering into a very precarious time in world affairs, both in the UK and all over the world. I had lived in India during the early 90s, and witnessed at least the beginnings of partial economic liberalisation enacted by the Congress party (which used to be a truly democratic socialist party, but not anymore). Although as I lived in Kolkata (in West Bengal, a communist controlled state), I perhaps didn't witness the true effects of the liberalisation process. But whenever I watch a report on India on Newsnight, I realise the effect it has had.

    Sure, economic liberalisation has helped speed up the development of a large Indian "middle class". However, while that suggests a degree of social mobility, we shouldn't fall victim to the convenient conclusion that this was purely as a result of economic liberalisation. A lot of the burgeoning "middle class" may well have had rich or successful parents, or had been born in fortunate circumstances (i.e. had been a upper caste Hindu Brahmin) so it is a fallacy to assume that all the nouveau riche were those who used to be working class, but had been able to climb up the social ladder.

    The truth is that India still is a (and has become more in many states) deeply unequal society, and while the middle class with comfortable employment in professional services, IT, industry etc may flaunt their success with conspicuous consumption in the many malls that have sprung up in cities like Bangalore, the severe grotesque poverty in rural backwaters and in cities like Delhi is still obscene. However, this story is swept under the carpet by the free market theologists, who want to display India's story as a success of free market liberalisation (even though India's retreat of state direction of the economy was only partial in any case).

    We can talk of New India and Old India, and the automatic assumption is that New India is superior, and in many ways it may be. Some of the more backward rituals and views (like Casteism, Sati, honour killing, discrimination based on skin tone) may give way to more liberal social views. However, the inherent conflict between Old and New (and not just in India, but in all countries) is exemplified by the current argument over Vedanta Mining Corporation's attempts to mine for bauxite, therefore displacing the Dongria Kondh tribe and leading to potential human rights abuses. The neoliberals bemoan the tribe's stubbornness, with claims that this is impeding economic growth and adversely affecting productivity.

    In another example, watch the ongoing conflict between the Maoists and the Indian Army, the former believing that the encroachment of their lands by big business is destroying their culture and their way of life, especially after the Indian government signed MOU documents enabling corporations to have the right to use their land for production operations. All this highlights the inherent conflict between a more traditional way of life, based on customs and tribal cooperation, and the modern imperatives of free market capitalism, where the inherent assumption is that anything that impedes production and GDP growth is negative. The neoliberals then claim that they are doing this for the benefit of the poor, because as well know, GDP growth will leave everyone better off (a perfect example being Thatcher's regime in the UK, where obviously the North East benefited equally well as the South East, right?)

    It was also interesting to note Manmohan Singh's comments about the Maoist threat, bemoaning the conflict as putting a spanner in the works of economic growth. But we must ask, is economic growth really benefiting the poor? India is registering fantastic growth rates, but the benefits of growth all seem to be accruing to the burgeoning middle classes, who are simply using their extra income to supplement their thirst of consumption. What is this consumption then doing for the environment? And why is it that the poor are having to suffer from the attempts to combat climate change with increased fuel prices due to removal of subsidies by the Indian government? I believe strongly in taking action against climate change, but why are the "burgeoning middle classes", the so called jewel in India's crown, a perfect exemplification of the New India, being let of the hook? The perversity of the situation is galling.

    So, all in all it is not possible to simply talk of Old and New India. India, like almost all other countries of the world, is at a crossroads, and the government is having to tackle several issues at once. Attempting to maintain strong economic growth, ensuring an equitable distribution of the benefits of growth, all whilst operating within ecological constraints, and trying to make sure the cultures and traditions of Old India don't get eroded by the push for even greater production. It is a very difficult task, and if India (and the rest of the world) don't get the decisions right, I see a very gloomy future ahead for all. I believe a simple primary step would be stop this ridiculous spending on defense and on nuclear weapons, and attempt to broker peace with Pakistan and give the Kashmiris a referendum on self determination. We face so many economic, social, environmental problems without engaging in a ridiculous conflict with our neighbours (who should also stop spending on defence), which is damaging the ordinary people of both countries.

  • Comment number 3.

    Stephanie,

    Where does this arrogance that we can do finance better than anyone else come from?

    Is is because we have sod-all else to offer?

  • Comment number 4.

    Stephanie, you mention the voices of the pro-market brigade calling for financial deregulation. I already think India has moved too far in the direction of economic liberalisation. If these free market theologists get their way, we will see more economic instability, and what's more we shall see even greater economic inequality. It's all very well for the financial analyst from Bangalore earning a lot of money, being able to buy the latest iPhone 3G and display their affluence. However, this sort of consumption is neither economically nor environmentally sustainable.

    I was watching NDTV yesterday (Indian news channel available on Sky), where the presenter was nodding approvingly about Cameron's claim about the UK having extremely low corporation tax. Moreover, the presenter was also quizzing Cameron about having a market for talent. This displays that, despite the relatively regulated markets and state involvement in the Indian economy, there are calls for EVEN MORE liberalisation. What these people don't realise is that if India liberalises the economy and supplements it with lower and lower income and corporation taxes, how is the government going to fund its anti-poverty projects? The PM has already stated he wants growth that benefits ALL, and that a large reason for the emphasis on production is to ensure India can lift its sizable population out of poverty. Without tax receipts from income and corporations, the government will struggle to fund its projects for expanded opportunities for ethnic and minority communities, provision of better health-care and education in the poorest areas, improvement in infrastructure and transport, communications, social security and welfare provisions so that unemployment doesn't become so unbearable, adequate subsidies to poor farmers so they earn a decent wage to protect them from global competition etc.

    But I forget, the neoliberal doctrine is that these people, the poor, impoverished, uneducated, physically and mentally disabled don't matter, because they don't contribute to production and subsequently to economic growth. We should simply brush them under the carpet and carry out as if nothing has happened. But if that is so, what is the point of production? The only reason I am tolerant of production is because (as we are told constantly) economic growth will be the vehicle for poverty eradication. If the poor don't matter, why are we so obsessed with production? Let's be honest, a significant percentage of production is completely useless in any practical sense. This just contradicts another one of the contradictions and the wholly immoral values of free market neoliberalism.

  • Comment number 5.

    So to control the countries inflation, the governor is out doing a rain dance?

    Mervin, take note!

  • Comment number 6.

    I wonder how many of them sleep with a wad of cash tucked under their pillow - perhaps only half actually, cause the other have no money - but at least the half that do perhaps prefer the risk of it been stolen from them by poorer thief than a greedy banker.

    Anyway on a more serious note, I thought coalition were proposing to redress the imbalance between the service sector and manufacturing, so why are they spending so much time perpetuating the next banking crises instead of getting behind our best manufactures to showcase the true skills of this country.

    I posted this yesterday in Steph's Dubai blog for those who might like to read.

    “A unique £30m knowledge transfer package between UK-based Sheffield Forgemasters and India’s largest power equipment maker, Bharat Heavy Electricals Limited (BHEL), has been agreed in a landmark deal.”

    Link : http://www.sheffieldforgemasters.com/news/2010/06/sheffield-forgemasters-exchange-landmark-deal-with-indian-engineering-giant1

    Maybe the Condems should have taken more business members like this with them on their ‘begging bowl’ trip instead of all those financial parasites, - and when they get back, they might explain why they didn’t see the value of making a small LOAN to this company who have the potential of employing many thousands of those British public sector workers they are just about to make redundant.

    The user 'writingsonthewall' (many thanks by the way) helped shed a little light on the matter and the linked doc is well worth a read,

    "....because Government always look after their friends first and their subjects second.

    http://www.bbc.co.uk/news/uk-england-south-yorkshire-10726896

    The actors have changed - but the play remains the same."

    I add: Some people in Sheffield must be furious what this coalition is actually doing in reality to redress the imbalance between the service sector and manufacturing. I wonder if they’ll be moving Clegg to safer seat at the next election.

  • Comment number 7.

    The UK shows up with the unethical bankers who gambled away retirement accounts of a nation and crashed the economy and wonders why India, that did not allow such gambling and thus escaped the great financial theft of 2008, does not see them as a model to follow. The self embraced superiority of the West lives outside the world of reality. India has over 400 million people in poverty and does not think that foreign firms have any interest in solving that situation but would rather proceed as in the past and look to enrich themselves to little or no benefit to India. There is a history there and it has not been forgotten. India is looking out for India, unfortunately the UK is not looking out for the UK, thus the problem. India's internal corruption is the biggest problem and when that is addressed things will move forward in more even applications for economic opportunities for the poor. UK bankers view the poor as non-customers and therefore of no value in their schemes.

  • Comment number 8.

    re #2
    Thanks for taking the time to post a really helpful and informative contribution.

    It raises all sorts of questions in my mind. Here are three:
    Is there any sign that attempts to help the Dalit population are bearing fruit yet?
    What was India's relationship to the USA when you were there and what changes do you think have occurred since?
    In China, the government are having to hold together a country with a huge disparity of wealth. Do you think the Indian Government are doing better - and likley to go on doing so - than China?

  • Comment number 9.

    Mass subsistence poverty combined with racing relative poverty created by the 'success' of the middle classes suggest future political instability and violent direct action. Just how much of India's growth is due to sweat shop wages and the great reserve army of 400 million poor Indians?

  • Comment number 10.

    @Up2snuff, attempts to improve the condition of Dalits have been made by both governments and NGOs. Affirmative action policies have been enacted by the government to ensure a quota of Dalits in government jobs and with respect to university places. Also attempts were made to encourage widening participation in education and employment, to ensure social mobility for the Dalits. However, legislation and anti-discrimination policies are not always successful, and while there has been some success in helping the Dalits (K. R. Narayanan, a Dalit, was the first Dalit president of India) and some have achieved relatively prosperity and freedom from discrimination, there is still significant discrimination, especially in some rural areas, and in the private sector. While laws and the constitution of India give Dalits equality under law, it is manifest that many are not treated as equals. I would say the situation is improving, but the pace of improvement is slow, and the lack of enforcement of laws against discrimination in some states doesn't help the situation.

    When I was in India, relationships were relatively cold, certainly in my state, which was controlled by the Indian Communist Party. India's non alignment during the cold war, as well as India's warm relations with the USSR meant there was a residual mistrust between the two governments, although I wouldn't say the relationship was confrontational, because it wasn't that. Recently, relationships have warmed, which is a positive development, but unfortunately, in my opinion, the motivations for a stronger relationship is wrong.

    The foreign policy hawks in India believe both countries have a common enemy in Islamic fundamentalism, and India's hawks see the US as a powerful ally against Pakistan. Recent examples of the warming in relations was the nuclear deal signed between the two countries. I say I am uncomfortable about the deal because some of the rhetoric coming out of New Delhi is unnecessarily hostile, and I fear the type of relationship we have with the US could, unfortunately appear as if there is a growing chasm between the Muslim and the non Muslim world, and we are sending the wrong signals to Muslim countries, who may think they are being squeezed unfairly.

    Whether the Indian government is doing a better job dealing with inequality than the Chinese is debatable. Theoretically, a Communist government (as in China) should be better capable of dealing with inequality, but in all honesty I think both countries have failed to deal with inequality, and that the benefits of economic growth have accrued mainly to the affluent, and few of the benefits in India are extending to the poor. The Congress Government of India talks a good game about dealing with poverty and inequality, but there is not enough enforcement of policy.

  • Comment number 11.

    6. At 1:09pm on 29 Jul 2010, Sand_Castles wrote:

    "Anyway on a more serious note, I thought coalition were proposing to redress the imbalance between the service sector and manufacturing, so why are they spending so much time perpetuating the next banking crises instead of getting behind our best manufactures to showcase the true skills of this country. "

    Classic nail in the coffin - this shows that the Tories can only play one tune. they don't know what else to do

    Maybe Cameron still lives in a by gone age and he's trying to ressurect the East India Trading Company - quite frankly it's embarrassing.

    If I were India - I'd be asking for my gold back first!
    http://socyberty.com/history/the-stolen-wealth-of-india-during-british-rule/

    ....or diamonds...

    http://en.wikipedia.org/wiki/Koh-i-Noor

    Imagine....Cameron arriving and being greeted with "you got my money?, where's my money?, gimmie my money, I want my money"

    When no money appears they turn him around and stick him on the next slow boat home. Now that would be justice.

  • Comment number 12.

    Perhaps we need some countries, like India, to reject current western ways of doing things.

    Perhaps that will awaken the people in this country to the fact that things don't have to be like they are now, they can be different, they can be better.

    Perhaps people in the UK will then demand change and reject the direction we have taken over the last 40 years.

    If David Cameron's trip does not produce a change in India-UK relations and business, will we collectively get the message and realise we should learn from those who reject us? I hope so. We aren't always right and we are no longer so powerful that we don't care what others think.

    Perhaps now for many and various reasons, we need them more, much more than they need us.

  • Comment number 13.

    A few things are obvious. First that to develop better contacts with dynamic and emerging economies can have some macro economic benefits for the UK. Second that India represents a highly attractive potential target – much easier for the UK for example than China or Brazil. Third that not all the potential aspects of this love fest will be positive and last that low skilled manual workers/unskilled unemployed in the UK are the least likely to benefit and may indeed be disadvantaged whilst others with higher skills, better standards of living benefit. The posts above suggest that exactly the same is true in India. Anyhow as the issue is essentially divisive and the debate therefore triggers some strongly held views about immigration, globalisation and market economies.

    The UK/Global Oil and gas sector can be used to illustrate the point. The UK (especially Scotland !!!) has a significant hydrocarbon natural resource which it decided to exploit (no side tracks please about carbon foot print – pollution etc etc etc – the resource is just used as an example – it could be any resource indigenous to the UK).

    Today a typical medium size north sea field is likely to be exploited by a floating structure i.e by a ship. The field license will be issued by the UK government and taken up by international investors some UK – but lots from elsewhere – in the past US and Canada – increasingly far east china, Malaysia etc, perhaps in the future india. The exploration rig will probably be American – or Scandanavian. There may well be some brits in the management and the UK will supply many of the supporting services, legal, banking, some high end engineering, construction and operations management etc. There will be UK SME’s doing some of the clever stuff eg sub-sea technology, machines on the facility etc, but the volume engineering work could well go to the far east or to india (either in india itself or Indian nationals working in the middle east (eg. in Sharjah). The production facility (ship) will be constructed or converted in the Far East, eg China, Singapore, Korea, Malaysia or perhaps in one of the middle east tax free zones using migrant labour. It might have some high end completion work or be commissioned at a European yard – but the period in Europe will be quite short and in some cases all of this work will be done in the Far East and the facility will just be towed direct to field. Basically depends upon the cost saving on the conversion versus the fuel required to tow it across from the far east. In the past few years though it was more driven by availability of yard space rather than cost – although that problem is easing as the recession bites. The sub-sea production facility will be assembled and installed from a UK or European base – although some of the materials might be from China – pipelines etc. The offshore operating workforce will be some from the UK, but also from the former soviet eastern block and some from further afield.

    In oil and gas, engagement with India not only allows us to sell services to the Indian Offshore Oil industry (Bombay High) and other fields, but (probably more importantly) put together offerings for development in UK and other countries using Indian volume engineering skills (for example employed by a UK owned company based in India or in the Middle East) and UK high end engineering, management and commercial skills. As the large majority of the opportunities are Global many of the target markets will be outside UK and outside India – eg in Brazil, West Africa, Middle East Far East etc. I’m guessing that although the details might vary the same basic model works for other technology sectors in Aerospace, IT, mechanical engineering etc etc etc. Posts about deals between sheffield forgemasters and Indian parters also suggest this is so. So the example is more about globalisation in general than just oil and gas in particular.

    Just some of the many benefits of all this kind of cooperation are – UK companies make some profits that help pay for all our pensions. The govt gets significant tax revenue to help pay down the deficit. The UK gets some limited volume high end jobs and the far east gets some large volume lower skilled jobs. More North Sea fields are developed (although some would of course see this as a bad thing – but if so just think of this as wind farms instead – same basic issues – oops a lot of people hate those as well !!). Anyhow many UK fields could not support the cost base of a wholely UK/European supply chain and multiply this up to planet scale and that’s why we have globalisation.

    Just some of the many downsides are; the tax revenues are fragile – if the UK makes it too expensive the business can move especially where they don’t involve UK natural resources, the system is open to the exploitation of migrant workers and (for the tree huggers) the net carbon footprint could well be larger than building the oil rig in north shields using drift wood and plastic bottles. Any how the key point is that the benefits offered from these activities to low skilled workers/unskilled unemployed in the UK are small – there are some cleaning jobs in the offices and pizza delivery for the late night work sessions but no large volume jobs eg in heavy engineering or construction. The government might have a bit more cash to splash on policies to cover up for the resulting social exclusion but otherwise that’s it.

    The last 2 UK governments talked a very good game about putting an end to exclusion but seem to have spent a great deal of money without achieving very much (my perspective). They also presided over a significant increase in immigration – which if entirely welcome to large parts of the population (especially the business community) and beneficial in many other ways does nevertheless introduce a direct threat of competition in the low skilled labour sector both for jobs and for public services.

    Its not clear to me exactly what Condem – lib or whatever they are called plan to do about this exclusion apart from trying to fix the economy and hope that this part gets better too – oh and squeezing the availability of benefits - which if it appears logical not to encourage whole scale idleness – can still has a very real effect upon some of the weakest in our society. Certainly it will be pretty desperate for those for whom benefits are the only source of income unless there is a significant job creation success that runs in parallel. However, its also pretty desperate for the economy as a whole if we keep paying for the current shambles which is just another way of indirectly increasing the UK cost base.

    However, whilst observing that governments have been pretty poor at relieving the pressure from globalisation on the low paid and the unemployed its pretty hard to come up with any more realistic plan for making it better (whilst remaining within the western consensus for mixed economies).

    Options include;

    End globalisation – establish protectionism – just about feasible in 1900 when Britain still had an empire but likely to be disastrous now especially for the low paid/unpaid. All the jobs will go to the far east and the managements to some tax haven – game over.

    Slash the cost base of UK production – reduce the regulation and overhead costs. Some of this would undoubtedly help – but you have to go big time to reduce base costs to the same levels as india or china – and this would mean wages well below UK minimum wage and safety standards back to the 1900’s. So we have to wait until the rest of the world has also developed to the point where it carries the same type of costs and that whilst 'fair' in the global sense could be a long wait. That having been said some moves down this road make sense i.e trying to cut out some of new labours corporatist project and hence making it easier for SME’s to grow and operate. The end of the road is not however that attractive as an end point.

    Secure a permanently low exchange rate – this certainly helps the low paid compete for work vs other global workers – but the exchange rate has to fall a long way to compete at the low skilled end of the market and meantime the cost of imports increases – increasing cost of living for all. More expensive BMWs for the middle classes but also increasing global commodity prices for stretched household budgets of the poorest.

    Increase the skill level of the low skilled work force by education and training. This is basically quite a good idea and was one of the key reasons TB was elected. However in 2004 there were 174k personnel employed in the UK with Doctorates in Science, Engineering and Technology (SET) and the rate of new graduates in Engineering was falling at 10% per year. I can’t find any data from the office of national statistics since then – but it is reported that China has been producing about 60k doctorates (phd’s) per year in Engineering alone and goodness knows how many technicians. So I think we can guess where we might stand today in 2010 in terms of our core engineering skill pool vs China. So much so that I understand Indian economists are worried that they may need to ramp up a bit as well.

    Anyhow I’m not saying that all the low skilled can get phd’s in engineering, but if we cannot significantly change the game in terms of the skilling of the UK workforce under a government elected to do it and against the background of record spending – I’m afraid the outlook is pretty bleak for the low paid in the coming period of fiscal retrenchment. None of which makes it less important to establish strong trade links with India – but it does mean that we will still be left with many of the problems we had in the first place together with significant (some would say justifiable) anger from those who will still remain excluded to one extent or another.

    This problem can potentially give Vince and the Condems a bit of a headache so he better start doing some real thinking if he wants to stay in government rather than just responding directly to the anger with populist bank bashing and graduate taxes. Thinking about how to position the UK with the right partners to develop businesses other than financial services would be a good start.

  • Comment number 14.

    I wonder if India is really interested in producing more 'wealth creators' like this?
    (can't say anymore - heed the warning on the article)

    http://citywire.co.uk/wealth-manager/evershed-claimed-duffield-undermined-fund-managers-confidence/a418352

    Good to know the Economy is in safe and reliable hands....

  • Comment number 15.

    Does anyone not find it strange that the countries we now are looking to lead us out of our recession are the ones we give aid to. Both India and China are in receipt of aid from the UK. In fact China is the largest recipient of aid globally by far.
    So paradoxically on the one hand these are the emerging countries who's economies who are going to save the global economy from melt down. And on the other they are in need of so much assistance from the countries they are supposed to be rescuing.
    A bit like Greece giving aid to Germany. Perhaps it just helps things flow. Just for interest I am lead to believe that the US gave China more than $5.5 billion in aid last year.....

  • Comment number 16.

    India is largely shut to westerners viz a viz the way Britain is open to any foreign investor.

    For those who watched Newsnight the last couple of nights ... the executive from Ta-ta in the UK made it clear that Indian firms use Britain as the easiest place in the EU to set up a port for EU trade... this is their ownly real interest in the UK as restaurant trades have reached saturation point with UK consumer incomes under pressure.

    Britain is just being 'used' ... it is not receiving investment of the kind that will substantially benefit the wider British population.

    But the key point is...

    'The "most subversive", this banker told me, was an official from Canada. "He said the main reason that Canada didn't get into trouble was they didn't let any foreign firms operate to any great extent in the domestic market. Even the Americans." Naturally, the Indian participants were all ears.'

    This is directly opposite to what our UK politicians are telling us ... that Britain must be 'wide open' for all foreign business ... no wonder the UK is in such a mess.

  • Comment number 17.

    13. At 3:36pm on 29 Jul 2010, feedbackloop

    So to summarise.....

    It's either create a niche by providing 'high quality labour' to other nations....or it's back to the 1900's for us.

    Considering the cuts lined up for primary, secondary, higher and further education - I guess it's time to party like it's 1899!

    ....now where did I park my handsome cab?

  • Comment number 18.

    'No wonder Mr Osborne jumped at the chance to launch Monitise, a British joint venture with Visa to bring mobile banking, not just to the 200 million people in India who have a bank account, but also to the much larger number - 600 million plus - who now have a mobile phone.'

    ..........................

    'British Banks' will never capitalise on the Indian economy and population ... the Indians will ensure that Indian next generation commerce is achieved either through a new start up bank ... or by way of purchase of a western bank that is transferred overseas to India.

    Simples ... British and 'western' banks are going to be cut out of the Indian economy ... 'By George ... I think they've got it!'

    This is what the Chinese did with western industrial and other technology in the past ... and this is what China and India will do to the global banking sector over the next ten years.

    I hope you're following this ... its 'serious stuff'!

  • Comment number 19.

    I appreciate your insights into the Coalition governments "tour of India" Stephanie. At least they are trying to generate some trade and deserve some credit for it.
    However you comment on the Indian central bank raising interest rates to combat inflation reminded me that ours chose not to. Whilst have been away Mervyn King has been speaking to the Treasury Select Committee and according to the analysis of the notayesmanseconomics web blog.
    "I think that the obvious conclusion is that we are much more likely to see an increase in monetary stimulus than a reduction in 2010 and perhaps for much of 2011 too. Whilst Andrew Sentance is a dissenter to this line of thought we heard yesterday from 3 members of the MPC who appear to be in favour of such a policy."
    Interesting thoughts and more on this can be found on http://notayesmanseconomics.wordpress.com

  • Comment number 20.

    Some interesting points raised here. In particular, how does the UK compete in the future with countries like India. Unfortunately, and no doubt due to the fact they have the most time on their hands, the default position from most respondents seems to be that what is required is more centrally Goverment led action / spending - as if the last 13 years hadn't happened. The point on education being an impediment to our future growth in this country is correct - we do now churn out lots of poorly-educated people and students have in the last decade or so increasingly turned to easy option degrees with questionable or no value to the real world. I for one am convinced that Labour's "prizes for all" culture and pathologically mis-guided social engineering attempts are responsible. It is no coincidence, although frequently ignored by the left as it represents the kind of inconvenient truth they don't want to hear, that social mobility has steadily declined in this country since the almost total annihilation of the Grammar School system - for decades previously the only prospect of some kid from a poor background getting a quality education. There's no prospect of that system returning sadly (so we can continue to enjoy the unedifying spectacle of Labour ministers miraculously getting their kids in the best state schools / resorting to private education). Nevertheless, hopefully the graduate tax together with decent information will encourage more wouldbe students to do courses that business actually values and it may also encourage the less academically inclined to give University a miss and learn a trade that gives them better earning potential and the commensurate prospect of a better quality of life and better aspirations for their own kids.

    That rant aside, the UK naysayers also forget that this country remains quite an attractive place to do business compared to India for alot of reaons not least a predictable and stable legal and tax (ignoring good old GB / AD's most recent efforts) system and an overall friendly business environment e.g. ease of getting Visas for suitably qualified overseas workers. I was quite heartened to see that one of the main fiscal goals of the coalition was to steadily reduce corporation tax as this will do more than any of the silly "initiatives" espoused by the left to actually promote business in this country.

    I could go on but can't be bothered as I'm too busy.

  • Comment number 21.

    15. At 4:33pm on 29 Jul 2010, Chris London wrote:

    "Does anyone not find it strange that the countries we now are looking to lead us out of our recession are the ones we give aid to. Both India and China are in receipt of aid from the UK. In fact China is the largest recipient of aid globally by far. "

    Merry-go-round perhaps?

  • Comment number 22.

    So George and co are on a trade mission to India, what have we go to sell ?
    A couple of state owned banks, a rail link and some canals and that's about it.
    Presumably they are trying to get 'investment' into the UK, pushing access to the EU as a USP. Presumably the rest of the cash strapped Eurozone will be doing the same but with the advantage of only one currency conversion.

    Our economy was shot the moment QE was taken out of the box, trundling along the bottom Japanese style is what we now have.
    There will be periods of austerity interspersed with periods of stimulus for the foreseeable future.

    Of course we can try to get a developing country to help pick us up by our bootstraps but they have their own problems which are only now becoming apparent.
    After years of exporting our inflation to the BRIC nations it is now starting to kick in.

    Interest rates are rising in the BRIC nations stifling internal demand just as external (Western) demand is drying up.

    They haven't had their banking crisis yet, they will.

  • Comment number 23.

    I can't really make any constructive comment on this particular bog not having any real idea what is happening in India other than what I read and see in the meeja which I have a particular distrust of. However a friend has property in India and two things he said to me recently may be of interest to correspondents on here.

    Usually he gets a six month visa to spend the UK winter in India, the longest he can get now is three months. But most significantly, a treble measure of the finest malt whisky costs the equivalent of 25p and when you walk down the street with a fiver in your pocket you're a rich man.

    Those two facts tell me a lot, they don't want foreign money and we can't compete with them on cost.

  • Comment number 24.

    #13 feedbackloop,

    An interesting interpritation of the future options. However, it is based upon a continuance of the present free-trade policies and that is not so sure anymore.

    You dismiss the possibility of protectionist policies out of hand. If it were a unilateral move by the UK then I would agree with you. However, if protectionist policies were adopted on a pan-European basis protectionism would be a very viable policy - and one that is becoming more and more likely as the financial markets continue to damage the very economies that it relies upon.

    Your analysis is very cost-effectively orientated. If the western hemisphere is to survive then it has to maximise its resources. The major one that it has is its population. Therefore putting that resource back to work will be the prime driver. Hence cost efficiency will have to give way to social effectiveness based upon value rather than capitalist profitability.

  • Comment number 25.

    #20 a_sensible_comment,

    As you yourself say a meaningless rant.

  • Comment number 26.

    21. At 5:34pm on 29 Jul 2010, writingsonthewall wrote:

    15. At 4:33pm on 29 Jul 2010, Chris London wrote:

    "Does anyone not find it strange that the countries we now are looking to lead us out of our recession are the ones we give aid to. Both India and China are in receipt of aid from the UK. In fact China is the largest recipient of aid globally by far. "

    Merry-go-round perhaps?

    -------------------------------


    Trust me, when the roles are reversed the aid won't flow in our direction.


    "It reported that over $3 billion had been openly (ie officially recorded) as having flown out of the country in the past three years, often in sums so large that it was piled on to pallets. Since Afghanistan's GDP is only $13 billion that means almost a quarter of it left the country in cash in three years, some of it aid money meant to help some of the poorest people in the world. Most of it went to Dubai, which means aid money has probably bought more million-pound condos there that it has built schools in Afghanistan."

    'It didn't quite work out that way'
    http://www.bbc.co.uk/blogs/dailypolitics/andrewneil/


    It's not a merry-go-round....It's what's otherwise known as...slush funds!

  • Comment number 27.

    #17 writings on the wall

    good summary - if you have a low skill set in a developed high cost economy you are likely to have a tough time especially if everyone else has a handsome cab and you dont grow roses.

    #24 foredeck dave -

    take your point that my assumptions may be a bit complacent (to say the least).

    and I wish I could get a nice warm feeling about a european protectionist zone - feasible though it might be. The current EU is basically that but with relatively weak tarifs and an ever expanding membership - so it cant really be called a real test of the principle.

    Last one to try it seriously was napoleon I think - although of course adolf put up a bit of a local trade barrier as well. In both cases membership was compulsory with smaller nations desperate to leave as opposed to the EU desperate to join.

    Napoleans continental system was broken by the fact that the europeans wanted so many of britains manufactured goods that the whole thing leaked like a seive. A smugglers paradise was established. Just imagine these days trying to stop the flat screen tellies and the branded trainers coming in. Nightmare.

    Anyhow the whole thing crashed and burned with help from the british navy, that bloke called blucher and the rothschilds -

    those bankers eh - you've got to hand it to them -

    sorry if this is a bit flippant - but in summary I remain skeptical about the benefits of tarif 'reform' as it used to be called.

    The point about social effectiveness is to my mind much more thought provoking - but for me at least about as hard to put into practical effect as it is to dismiss it out of hand. That may of course be because I'm too dim.

  • Comment number 28.

    11. At 3:10pm on 29 Jul 2010, writingsonthewall wrote:
    If I were India - I'd be asking for my gold back first!
    http://socyberty.com/history/the-stolen-wealth-of-india-during-british-rule/
    ----------------

    Wow, thanks for the link, WOTW. I didn't know the British stole such vast amount of wealth from India and I suppose other countries.

    Has this country ever created any real wealth with sucking it from other nations?

    Come to think of it the British Empire (still alive and kicking today) has been the biggest parasite known to human kind.

  • Comment number 29.

    Re #10
    Thanks for that.

    With regard to the last question, my thinking was how well are they holding everything together. While the Chinese states have a measure of independence, and districts within them likewise, the impression I have is of (still) rigid overall control from Beijing.

    The impression I have of India is that the central government affords more elasticity and independence to the individual states but the control within a state is more strict, depending of course on what is decided at state level. Is that so?

    Will the present government find the pressure of inequality becomes too much? Could a war break out within India between some states?

  • Comment number 30.

    re #23
    Your friend's situation tells me that we are truly in a global village now. And that it is good to get to know the neighbours! But we are still at the slightly wary stage!!

  • Comment number 31.

    22. At 6:45pm on 29 Jul 2010, BobRocket wrote:
    So George and co are on a trade mission to India, what have we go to sell ?
    --------------------------------------------------------------------
    1. Education. Indian children appear to love learning more than British kids.

    2. Our knowledge economy. We will have to move fast. Will not be long before India leapfrog us on that.

  • Comment number 32.

    17. At 4:49pm on 29 Jul 2010, writingsonthewall wrote:
    13. At 3:36pm on 29 Jul 2010, feedbackloop

    So to summarise.....

    It's either create a niche by providing 'high quality labour' to other nations....or it's back to the 1900's for us.

    Considering the cuts lined up for primary, secondary, higher and further education - I guess it's time to party like it's 1899!

    ....now where did I park my handsome cab?
    ------------------------------------------------------------------------
    What?! Has WotW gone all Imperialist on us?

  • Comment number 33.

    #27 feedbackloop,

    "That may of course be because I'm too dim."

    Now I truly believe that you have your tounge in your cheek :)

    You are right about the current shape of the EU. I believe that it will take the collapse of the Euro and a deepening of this depression before a consensus could be achieved. Both of those possibilities amy be closer than we think.

  • Comment number 34.

    Anyone else BBC parliament yesterday re: meeting between Treasury Select Committe and Mervyn King BoE.

    TSC still puzzled as to why UK banks will not lend to UK SME's ... they really are out of it (the TSC that is)

    Mervyn King says he does not issue 'Coded messages' ... pull the other one Mervyn!

    Inreterestly, Mervyn King saying that the trade surpluses of some countries e.g. China with UK are a major problem to global economic recovery.

    Mervyn King I think intimating that the banks should put some of their 'profits' into lending for small businesss .... I that is what he was getting at ... but please see it for yourself

    Paul Tucker interesting also, on clearing banks etc

    Well worth a watch on 'I player' if you missed it ... but the TSC looks feeble to me and needs replacing with something else.

    Re: India ... the UK will have a much smaller banking system in the longer term ... difficult to see how the UK can have much, if indeed any financial impact on India.

  • Comment number 35.

    When the differential between labour rates and prices squeeze out the dynamics of the East-West trade imbalances, which are currently driving all the world's economic growth, there will be a tsunami-sized depression that will make our current retrenchment look like a stormy afternoon on Blackpool beach in comparison. The sub-continent will then be torn apart by the inherent imbalances in its social structure.

  • Comment number 36.

    India's cautious financial system is good as it is and it should never allow these financial casinos to get a foothold in the country. There is absolutely nothing which UK can offer to India in terms of financial "innovation" going by the situation of the british economy.

    Good on India that they have the game right this time, because the last time a huge "trade delegation" from UK arrived in India, with false smiles pasted on their faces and cunning plans in their minds, we all know where that ended!

  • Comment number 37.

    Its laughable to be trying to export our banking expertise ???? we have shown we dont have any !!!!

    India would do well to keep doing what they are doing and take no heed of any westerner who is in the pay of the banks.....

    The people of India want to take note of which of their politicians, start advocating changes to their banking system and look ever more closely at their bank accounts.

  • Comment number 38.

    India should be a natural trading partner for UK business. Most Indian workers I met whilst working in the middle east regarded UK with huge respect and were appreciative of the greatest gift we gave India, our language which enabled them to travel and do business abroad. All we have to do is live up their opinions of us and do business with integrity and hard work,if only I had such confidence in those words after watching some of our most dishonest politicians in my lifetime recently.

  • Comment number 39.

    This country is stark raving bonkers. We're now allowing one foreign company to sell of our utilities to other foreign companies and in this case it's a bunch of communist chinese. Madness!

    http://uk.reuters.com/article/idUKTRE66T0MP20100730

  • Comment number 40.

    32. At 10:29pm on 29 Jul 2010, Up2snuff wrote:

    "What?! Has WotW gone all Imperialist on us?"

    ...well you know what they say, if you can't beat 'em...BEAT THEM HARDER!

    Now get me a child to clean out my drains, the smell is awful since we lost the last one down there, I've got to get to Soho by 7 so I can leave for Africa in the morning to shoot some Boer - travelling in Ferdinand's new Zepplin contraption - promises me it's perfectly safe - no smoking apparently - not even my pipe old bean.

  • Comment number 41.

    28. At 10:15pm on 29 Jul 2010, plamski wrote:

    "Come to think of it the British Empire (still alive and kicking today) has been the biggest parasite known to human kind."

    Ah yes - the ultimate hypocriscy. You see this country wasn't built on greatness, ingenuity or cleverness - it was built on theft and bullying. We stole from other nations who were more peaceful than us - and gave us such a head start they couldn't catch up (until now).

    For all the talk of 'what we provided our colonies' - we rarely hear about what we took in return. I'm sure the Indians were grateful we taught them how to build roads - but the price they paid was far in excess of what they received. Of course you won't find that in any English history books - people who write that sort of stuff are 'unpatriotic lefties'. Much better we live in a hypocritical stew and look like total charlatans to the rest of the world. We took your people for slavery - but left you with some infastructure - which we paid with the wealth we took from you...

    ...but people in this country don't want to talk about that "oh you can't expect us to pay it all back now can you?" - is what I am asked. Well paying it back is one thing - but going back to extract more (as Cameron is doing) is totally arrogant and rather embarrassing. This is why I wouldn't blame the Indian government from banning this delegation and throwing them out of the country after stripping them all of their watches and jewellery

    Still - I suppose it's the only thing Dave knows - like Bush followed his father into Iraq, Dave follows his grandfather into India...

    http://www.dailymail.co.uk/news/article-1191155/Claims-David-Cameron-30m-fortune-sit-uneasily-taxpayers-So-truth-money.html

    "David Cameron, elected Tory leader in December 2005, was brought up immersed in family wealth amassed in the City over generations.

    This tradition of making money in finance goes back to his two great-great-grandfathers. One was Emile Levita, who was brought up in a family of Sephardic Jews. Married to a non-Jew, he came to Britain as an immigrant from Germany in the 1850s and was granted citizenship in 1871.

    Emile enjoyed considerable financial success and became a director of the Chartered Bank of India, Australia and China, which had offices in Threadneedle Street in the City."

    ...and what do we now know bankers do.....? - Steal wealth - well done, top of the class.

    P.s. - How do you 'become' a director of a bank? - is it like a butterfly emerging from the pupae phase? Is it like an egg which simply becomes a chicken? - or is it in fact that you are selected for your ability to demonstrate your "wealth stealing ability" from the poor?

    Yes - I hope you bear this in mind as you're wandering around the streets of Mumbai Stephanie - those begging children were put there by our ancestors - makes you proud doesn't it?

  • Comment number 42.

    38. At 11:53am on 30 Jul 2010, treetop91 wrote:

    "India should be a natural trading partner for UK business. Most Indian workers I met whilst working in the middle east regarded UK with huge respect and were appreciative of the greatest gift we gave India, our language which enabled them to travel and do business abroad."

    ...much good that was - most people in the world speak Chinese now, and following the recent collapses the english speaking world has nothing which to trade (except Australians - although they speak Aborigionie)
    ...and I like the way you describe it as 'our' language - don't you know the history of our mutant words? - all sounds German to me... http://en.wikipedia.org/wiki/English_language

    Some people have some odd views of history - what were they teaching you at school?
    Did you think Superman was English too?

  • Comment number 43.

    36. At 11:50am on 30 Jul 2010, billion_plus wrote:

    "Good on India that they have the game right this time, because the last time a huge "trade delegation" from UK arrived in India, with false smiles pasted on their faces and cunning plans in their minds, we all know where that ended!"

    ...now that's what I'm talking about!

  • Comment number 44.

    Indians thankfully have a long memory and will remember that the European domination of India was spearheaded by a private corporation (The East India Company) and are wise not to let this happen again.

    Once bitten twice shy (as I believe the English say).

  • Comment number 45.

    India is in our field of vision because the PM has led a delegation visit. Building a strong business relationship with India after years of neglect is going to take time. Our financial services businesse haven't helped matters by locating service operations there to exploit the relatively low labour costs. Meanwhile there are other countries where similiar efforts will be required. We can't rely on the EU for everything.

  • Comment number 46.

    Bit OT but check out adam smith latest article -

    http://www.bbc.co.uk/blogs/adamcurtis/2010/07/let_them_eat_plastic.html

  • Comment number 47.

    39. At 2:51pm on 30 Jul 2010, Wee-Scamp wrote:

    This country is stark raving bonkers. We're now allowing one foreign company to sell of our utilities to other foreign companies and in this case it's a bunch of communist chinese. Madness!

    http://uk.reuters.com/article/idUKTRE66T0MP20100730
    ..............................

    Wee-Scamp
    I quite agree ... it is absolute 'madness'!

  • Comment number 48.

    42. At 4:18pm on 30 Jul 2010, writingsonthewall wrote:

    Have you been on the plonk early today ? Quite unnecessary to be snide, my knowledge of history is generally good ,no doubt you think Clark Kent jumps in and out of Indian telephone boxes ! Lighten up bonny lad.

  • Comment number 49.

    #46 farmertg

    your link is not the slightest bit OT.

    The fourth video says a great deal 'He borrows money he says as a protest against those around him who are richer. "To fling away the pittance that I have is a protest."', a man before his time.

    There is now a race to become indebted before the inflation kicks in (when inflation is rampant, debtors win and creditors lose)

    NS&I no longer sell index linked savings, why ?

    Shares rise above their natural value when excess money cannot find any other home.

    All the signals are inflation is on the up (although I can't believe it will reach 22% by Q4 2010), recession and inflation at the same time, the prospects are not good.

  • Comment number 50.

    Morning Stephanie,
    it would seem that Mr Cameron's visit to India has only one purpose and that is to persuade the UK politicians that to impose immigration restrictions will hurt the UK recovery by denying access to Indian workers.
    India's politicians argue that their country produces 700,000 graduates PER YEAR and clearly they need somewhere to go, work and gain experience (presumably India cannot absorb them all).
    The much vaunted headline of Mr Cameron signing a $1 billion order for jets from UK will produce 200 jobs in the UK since assembly will be performed in India (they are much smarter at business in the country's interest than we are).
    Mr Cameron and his new Government still use the same civil servants in the Foreign Office, so British foreign policy hasn't changed since the last lot.
    This all smacks of an expensive foreign junket which will not help the UK recovery one iota. Mr Cameron and his expensive team of intellectuals would be better off touring the large industrial cities of the UK to see if and how business could be revitalized there, but that wouldn't make him appear to be an important Statesman, would it?

  • Comment number 51.

    http://mkaccdb.eu.int/madb_barriers/barriers_details.htm?barrier_id=085179&version=4

    http://www.iptu.co.uk/content/india_economy.asp

    http://www.telegraph.co.uk/finance/economics/7917108/Vince-Cable-warns-against-economic-nationalism.html

    Mr Cable and the government visit to India is right and proper and diplomatic ... but succesive UK governments have been good on occasions at issuing warnings but never follow up with actions.

    India may not be the worse offender in terms of British Trade ... but they have a strong regime of import and export tariffs in operation and their centrally planned and administered economy is impregnable to any foreign business interests other than what what they are prepared to consider at some length and then impose carefully guided restrictions or indeed a complete rejection.

    I've never once heard any British politicians discuss UK import and export tariffs in public and which in effect are years out of date and require comprehensive review and in many cases ... UK tariffs operate as subsidies and overseas aid for some countries as they are that over generous.

    Failing to get to grip with these vital import and export tariff controls which are a massive carrot and stick lever to our own UK productive economy and output and an important brake and incentive for preferred UK consumption ... is major government incomptence.

    The UK export and import tariffs are the tool by which the UK economy can be rebalanced ... and have an immediate and beneficial effect and higher tariffs on e.g. imported white goods can not only raise a lot of vital government money ... but can also incentivise the banks to start lending again to UK businesses i.e the producers of those products subject to higher import tariffs.

    Import and export tariffs are generally outside of EU control, interference and bureacracy. Import and export traiffs can be overhauled to provide subsidy to indiviudal countries as enabling overseas aid to be phased out as the subsidies and aid can be directed at individual countries ... and give them goods rather than money to leech into the hands of dictators.

    We have a global trade war ... let's us now fight our corner as we are losing hands down ... it's here ... it's upon us and we're sinking fast as our UK politicians will not defend us ... but instead start other wars in Iraq and Afghanistan and make our situation fast.

    WE reduce our imports of damaging white and other goods, vehicles etc with tariffs ... to the point where it becomes worthwhile SME's expanidng their businesses and banks become eager to lend again to British based business. Obvious great care is needed in adminstering the tariffs and will need nerves of steel ... someone unknown to step in and sort it out

    What are we waiting for Mr Cable? We do or die ... this is it ... this our time?

    Is Mr Cable up for it?

  • Comment number 52.

    #51 nautonier,

    I agree with the drift of your argument. I fail to see how any government is going to reduce our reliance upon imports without creating the environment for local production to take place without adopting protectionist policies.

    Perhaps where we disagree is that I feel that it has to be a pan-European stategy.

  • Comment number 53.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 54.

    52. At 1:49pm on 31 Jul 2010, foredeckdave wrote:

    #51 nautonier,

    I agree with the drift of your argument. I fail to see how any government is going to reduce our reliance upon imports without creating the environment for local production to take place without adopting protectionist policies.

    Perhaps where we disagree is that I feel that it has to be a pan-European stategy.
    ..............................
    FDD

    Yes, I think that some elements would be better agreed at EU level but the structure of each country viz a viz imports and exports is different and therefore import and export tariffs should ideally be effective to the national and even regional and local level with regard to e.g. agricultural produce.

    Therefore pan european stretegies may or may not work for the benefit of individual countries as some countries are net importers like the UK and some are net exporters like e.g Germany.

    The other issue is that the EU is already sneaking through another major trade agreement with India and other countries to take effect next year ... what is the effect of this trade agreement on the UK ... have 'we' been consulted.

    Unforunately, much foreign trade from outside of the EU in the UK, is simply using the UK as a port to give easiest set up access to the EU and is disproportionately failing to create British jobs.

    Also, as an aside ... just heard Digby Jones on R4 programme at 1.15pm saying that Britain needs open immigration because of 'what we have here' ... I think that this is a direct insult to our British unemployed and workers ... I think that man and his ilk are a national back stabbing disgrace. We already have open immigration to the EU which is our major trading market - all other countries want to do is to get into the EU and not necessarily have any beneficial interest in Britain.

    There are hundreds of thousands of graduates coming out of UK universities each year (admittedly, many without relevant skills) and China and India produce a couple of million high standard science graduates each year ... why should we keep taking these in and leaving UK graduates/workers on the dole when junior British doctors are emigrating for lack of UK job opportunities?

    Why do all UK government business policies seem to omit the UK unemployed?

  • Comment number 55.

    A topic of conversation in many of our grandest houses has been "How can we get India back?"

    Cometh the man..

  • Comment number 56.


    I think somethings should never change. Like Indians depending on mansoon and paying with cash.

    One needs to take a look at what going away from traditional ways to social and economic inventions have done to the UK.

    The geniouses from finance told people, companies and governtment- you do not need to earn first to spend later. Borrow and spend. Pay a little, borrow more, spend more. Instead of being producers become consumers. Our economy would be driven by consumption and not production. Results are for all to see.

    Now UK government wants people to work till they drop dead because there are not enough young and working people to support the old. But the same social engineers told people no need to have kids to look after you when you grow old. Government and big business will take care of you. Just pay a lot of taxes and join contributary schemes now and everything will be hunky dory in the future. That scam could only continue when there were lots of working people and few pensioners. About 16 workers to 1 pensioner is nicely workable. But 3 working to 1 pensioner is unworkable. We have reached that level. Hence this problem.

    Just having money sitting in bank accounts does not generate any real interest to be passed on to the investors. Money has to be invested from where a decent return can be obtained.

    This is why David Cameron has taken his circus to India. He wants Indians to open up in banking, insurance and legal sectors for UK's investment. What he wants is Indians to open their markets to foreign investment in the most useless and parasitical sectors as if Indians do not have enough home-grown scammers.

    If Indians open their markets to these sectors inherently designed for scams, a regular flow of money can be assured out of India and into the UK. With Indian population rather young and still growing, India can be expected support UK for long time which India did before. 1 billion to 60 million is better than 16 to 1. Hence, this sudden desire for a special relationship.

  • Comment number 57.

    At the end of the day it will be the business men who will have to sign the deals and deliver the goods, It can only be good that the politicians are out there it will be really good if they come back and complete plans and policies that will smooth the path so that their opposite numbers real fears can be put to rest.

  • Comment number 58.

    42. At 4:18pm on 30 Jul 2010, writingsonthewall wrote:
    ...and I like the way you describe it as 'our' language - don't you know the history of our mutant words? - all sounds German to me... http://en.wikipedia.org/wiki/English_language

    WOTW followed your link to the origins of English but I think the entry is somewhat biased to the Germanic origin of English. We have a basis of our language from German, and particularly latin, but I spend some time in France and I am staggered with the number of words in our language with a French origin (often with a different context). I believe the Germanic roots play a lesser role to the Norman language influence. The Wiki entry is not balanced enough to the later influences of French!

  • Comment number 59.

    re #58
    Don't mention the Danes! Oh, you didn't? That's OK then.

  • Comment number 60.

    Re #41

    P.s. - How do you 'become' a director of a bank? - is it like a butterfly emerging from the pupae phase? Is it like an egg which simply becomes a chicken? - or is it in fact that you are selected for your ability to demonstrate your "wealth stealing ability" from the poor?
    -----------------------------------------------------------------------
    Four ways:

    1. Buy a bank

    2. Work for a bank, be good enough to get promoted

    3. Get 'parachuted' in (or bought) by the existing board, like Fred The Shred, or

    4. Be asked to join the Board as a non-Executive Director.

    Take your pick.

    Thought you deserved an answer.

    Just standing in for Kevinb.

    Bye!

  • Comment number 61.

    The problem with criticising the British empire and overlooking things like e.g. stopping the cannibals from eating each other, abolition of slavery etc, teachings of christianity and establishement of global commerce and trade is that the British empire died along time ago ... and the former colonies have had plenty of time to show that they are equal or better than us ... in finding a platform for their poisonous anti-British rantings and criticism - Have they succceeded?

    Many of the historic crimes of which we British are accused of having committed going back hundreds of years ... are now being committed today in 2010 by the same former British colonies that criticise Britain for their history and to many which Britain's politicians now 'kow-tow' to and supply billions of pounds in taxpayers money in aid... I won't mention any countries in particular ... to be diplomatic:

    - quelling public demonstrations by crushing people with tanks ... ?
    - thouands of people disappearing, being executed and dying in prisons in respect of alleged misdemeanours ... ?
    - hundreds of millions of starving people and creating massive gulf between rich and poor with record numbers of billioniare nationals ... ?

    Looks like some of Britain's critics have found a sick prattling hypocritical theme of historic mumbo jumbo that appeals to the weak and feeble minded in the UK with some form of absurd guilt complex for things which happended before most of in the UK were even born ... this seems to appeal to Britain's more libertarian back stabbing sell out politicians ... like Digby you know who

    This is no more than an excuse to exact an economic trade war on Britain to their own financial advantage.

    The only relevance in this prattle is that it is has and is still being used as an excuse for a trade war against Britain and we need UK politicians who can recognise this ... that Britain is at war on many fronts ... this is a fight for our UK survival of reasonable living standards for the UK silent majority and as a democratic and prosperous British nation ... this isn't just about recession or depression, growth ... it is a trade war ... we have a global trade war and we're losing out heavily.

    Foreign countries need to ask themselves how many people did we execute last year? How many people starved to death last year? How many people died in our jails last year? How many people were dispossessed from land and shelter last year without compensation? How many terrorist acts did we fund/organise last year? How many political prisoners? How many 'gays' did we execute/imprison last year.

    Can we please have a proper economic debate? History is history ... the only thing that matters about history is that it is accurate, properly recorded and freely accessible.

    What I think that this all shows is that the UK must not now delay from protecting its vital UK business and economic interests in the global trade war that is actively and relentlessly targeted against those with the anglo-saxon business model and their related business/economic interests.


  • Comment number 62.

    @ #56 Dr Alok Bhattacharyya

    I see the point you are making.
    Bharat (India) can be more creative (actually it has already been)
    We have already noticed the ratio of 1:16 and have taken the first steps
    to work it in our favor.

    European countries refused to open their Banking industry to Indian investment. Even U.S. refuses permission to grant more branches to State Bank of india !! We reciprocated by stiffling the U.S. and European banks by allowing them to open similar number of branches in India.
    Fair enough.

    However, we know that capitalism works on self interest and NOT on nation's interest. We started kiking open the labor market.

    India and China are already flooding other countries with their people.
    and yes, both India or China especially are not bothered (too much)
    when these immigrants eventually end-up in taking citizenship of the
    country of immigration.

    Initially the host country is a big-time gainer (they get relatively
    well qualified people just at the verge of their productive age band
    virtually without a dime of investment)

    1. But over the time of a century, they tend act as the India
    supporters, bridge between host and India.

    2. Eventually the local employers of the host country actively
    lobby their own interest to get more economically cost effective
    and hard working labor to work at their host factories, banks,
    service industries and educational institutions and thus Indian
    labor moves up the command/value chain.

    Today the Indian immigrant population in U.S. is well above both the
    average and median U.S. per capita income.

    We will promote free movement of people which are essentially the
    component of free market.

    I will not be defensive. We should be fearless and assertive in our
    business approach.

    If they have anglo-saxon model, then we have Aryan model.

    That's how "Zero" of our initially condemned as Infidel -
    (Hindu) weight-place Number system prevailed over the now
    extinct other systems (that are only seen in musiums of
    wrist watches) purely because it was superior !!

    And now adopted by their religious texts too ...

    Over the long run, we want rational, open minded, fearless, non-protectionist people no matter if they are Europeans, Mangolians Africans or Asians as our friends ..

    They will tell them their definition of free market, we will tell them ours. As simple as that.



  • Comment number 63.

    #62 jjoshi2008,

    Make the most of your free market ride whilst you can because it will soon come to a shattering stop.

    Your definition of free market is unsustainable in the long term and Western protectionist policies will eventually be enacted at which point India will have an ovestretched economy with only internal growth to sustain it. As China is already experiencing that will place it in jepourdy of rampant inflation.

    If you actually read the majority of posts in this thread you will find numerous references to protectionism and immigration. These posts are not presented by racists or fringe economists. IF you look carefully you will find them repeated in blogs across Europe and the USA. In the dire economic crisis that is playing itself out they are not extreeme.

    There is no way that the Western economies will settle for carrying the vast hordes of peasant underclass that India accepts. Neither will they accept your levels of poverty. Therefore, they will ultimately protect themselves either by economic policy or by war.

  • Comment number 64.

    Oh those lucky citizens of India, Australia and Canada!!!!!

    Those fecklessly overborrowed individuals in the UK have been for the most part been saved from ruin by incredibly low interest rates whilst those savers and more prudent citizens have been hung out to dry.
    The effect on pensioners income has been profound.
    As for the average wage earner investing in a pension (less Gordon's tax raid on pension funds)- why bother when the minimum pension guarantee is standing behind you?
    Thirteen years of Labour's crowd pleasing profligate spending has resulted in the current mess.
    Light touch financial regulation?
    Open markets and freedom for banks?
    Unless you want a revolution forget it....
    Vaunting political ambition and sheer carelessness with taxpayers money may have coloured peoples attitude towards politicians and individual spending and savings choices forever.
    Be warned - We are on the brink of a national decline....

  • Comment number 65.

    #15

    Does anyone not find it strange that the countries we now are looking to lead us out of our recession are the ones we give aid to. Both India and China are in receipt of aid from the UK.

    That's one of the reasons that Britain gives aid. It is the global variant on: remember your friends on your way up because you will need them on the way down.

  • Comment number 66.

    #64

    Be warned - We are on the brink of a national decline....

    But had Labour (so-called, though they abandoned the working man) been returned to power by its client voters, it would be a national economy in free-fall.

  • Comment number 67.

    #17 >>....now where did I park my handsome cab?

    You toff !! Us peasants have to walk everywhere !!

  • Comment number 68.

    #18 >>This is what the Chinese did with western industrial and other technology in the past ... and this is what China and India will do to the global banking sector over the next ten years.

    http://www.bbc.co.uk/news/business-10834902

    Considering that it just moved its HQ back to Hong Kong, it's not exactly a "UK" bank anymore !! It's more of a British-run International bank based in East Asia !! This is what "GLOBALISATION" is about.

  • Comment number 69.

    #61 >>Many of the historic crimes of which we British are accused of having committed going back hundreds of years ... are now being committed today in 2010 by the same former British colonies that criticise Britain for their history and to many which Britain's politicians now 'kow-tow' to and supply billions of pounds in taxpayers money in aid

    Surely, the Aussies are not transporting their criminals to Britain now ??

  • Comment number 70.

    68. At 10:09pm on 02 Aug 2010, ishkandar wrote:
    #18 >>This is what the Chinese did with western industrial and other technology in the past ... and this is what China and India will do to the global banking sector over the next ten years.

    http://www.bbc.co.uk/news/business-10834902

    Considering that it just moved its HQ back to Hong Kong, it's not exactly a "UK" bank anymore !! It's more of a British-run International bank based in East Asia !! This is what "GLOBALISATION" is about.

    ...............................

    You have contradicted yourself!
    and
    'Globalisation' is based on those with power ... the power base has shifted

  • Comment number 71.

    69. At 10:36pm on 02 Aug 2010, ishkandar wrote:

    #61 >>Many of the historic crimes of which we British are accused of having committed going back hundreds of years ... are now being committed today in 2010 by the same former British colonies that criticise Britain for their history and to many which Britain's politicians now 'kow-tow' to and supply billions of pounds in taxpayers money in aid

    Surely, the Aussies are not transporting their criminals to Britain now ??
    ...............................

    True to form ... you've found one of the few exceptions although the Aussies reciprocate and take in a good many British nationals as immigrants and I don't hear any Aussies seeking revenge over the British Empire.

    Even the transportation of criminals to Australia in the 18th century is better treatment than many now get in their own British hating countries in 2010!

  • Comment number 72.

    Stephanie, could you explain why India (or Canada) think that a foreign-owned bank will always act worse than a domestically-owned bank? Surely they all subject to the same rules and regulations?

  • Comment number 73.

    72. At 3:34pm on 03 Aug 2010, tom_p_willis wrote:
    Stephanie, could you explain why India (or Canada) think that a foreign-owned bank will always act worse than a domestically-owned bank? Surely they all subject to the same rules and regulations?
    -------------

    IT IS ALL ELEMENTARY MR TOM-P-WILLIS!!

    KEEP THINKING, YOU SHALL GET THE ANSWER!!

  • Comment number 74.

    Good report and good opinion. Not many people have ability to think being in other people's shoes..its difficult. However, sometime you have to do that. Indians still rely on monsoons, because thats what their geography produces: two months worth of rain, the rest of the year is dry and sunny. Well, not like UK or US or Europe where it can rain anyday !! or there is no lake michigan or lake superior so abundunt in fresh water. Two months of monsoon and 1.1 billion people...do the math...there is no alternative. Yes, irrigation and conservation can help but can not meet the math !! So, people can keep wondering about when old India will change...but...hey 5000 year old civilizations know how to live.

  • Comment number 75.

    Slight Change:
    "What these people don't realise is that if India liberalises the economy and supplements it with lower and lower income and corporation taxes, how is the government going to fund its anti-poverty projects?"

    Currently only about 2% of India's vast population pays taxes. A large % is protected owing to tax-free agricultural income. Another large portion goes with tax evasion. Conservative estimates suggest that India's real GDP is atleast twice that of the reported GDP because of a lot of tax evasion going on.

    A big effect that lower income and corporation taxes would have is to bring some of that tax evasion into the mainstream. Noone wants to live an illegal lifestyle at the risk of exposure and subsequent harrassment by the taxman.

    India is in the process of providing a national ID number to Each and Every one of its citizens - you can bet that with such an infrastructure in place that links all individual activity to 1 number, a lot of evasion will be automatically curbed over the next many years. This coupled with lower taxes will lead to more voluntary disclosures.

    A decade back, the VDIS (Voluntary Disclosure of income Scheme) run by the govt was a runaway success because it allowed tax evaders to disclose income, pay taxes and not get prosecuted. the govt raise a lot of money.

  • Comment number 76.

    #63, foredeckdave:

    I'll break your comment into 2 parts:

    1. "Your definition of free market is unsustainable in the long term and Western protectionist policies will eventually be enacted..."

    You forget why the Western countries opened up their markets and why corporations resorted to cheaper places in the first place. As long as there is someone who will provide the same/equivalent quality of goods/services for a lower price, there will be a 'free market' and demand for such services. 'Protectionist policies' sounds very nice and fancy when an election is near, but they will not work for economies used to cheap and (increasingly) high quality stuff from China and India. Try producing those things in UK/US and try selling it to the consumers in the same country. Good luck! Business will not buy 'protectionist policies' and neither will consumers who have been benefiting from cheap goods and services. The 'consumer boom' on which US and UK rode high for 2 decades was built on cheap imported stuff. Weaning them off cheaper countries will be the political equivalent of harakiri. So it will remain relegated to fiery speeches around elections and crisis-budgets.

    2. "...at which point India will have an ovestretched economy with only internal growth to sustain it."

    Mind you, India's population is about 18.6 times that of UK's population. Most of that population in India is not currently served by any market. You are being rather naive in thinking that India's internal growth will not sustain it. I grant you that an entirely different kind of a product/service will be needed for most of India's population. It wont be the Jaguar car or the likes of it for sure. It will well be the Tata Nano and the likes of it.

    It is no wonder that the Brits and Americans are falling over themselves to access this market of 1.1Billion plus. That is where future growth is going to come from. And it will be quite a specatcle to see what will happen if India/China suddenly decide to go 'protectionist' in about 10 years from now. It is the West now that has a begging bowl - the tables are turning slow but turning for sure.

  • Comment number 77.

    notoappeasement wrote: "IT IS ALL ELEMENTARY MR TOM-P-WILLIS!! KEEP THINKING, YOU SHALL GET THE ANSWER!!"

    Nope, still don't get it. Please enlighten me.
    All banks operating in a given country have to obey the rules and regulations of that country. HSBC Canada has to obey the same rules as the Bank Of Montreal. They both seek to maximise returns for their shareholders. What can a foreign bank do that is so bad that a domestic bank can't?


  • Comment number 78.

    I feel that Indians do not need nobel prize winning ideas that have put the entire world in economic chaos. They have elected clever guys into important offices for last 50 years or so after independance and have done reasonably well.

  • Comment number 79.

    Forget the economics - just done a version of 'The gas man cometh' at our 25th wedding anniversary accompanied by a pal on the piano. Not a patch on your dad's but brought a lot of joy to a lot of people. Many thanks to him.

  • Comment number 80.

    U.K growth recovery is far better than any other Europian countries except Germany. Of course the leading coutries with high growth powers are China and India. USA can never recover the situations again in at least for 5 years. With in that time U.K can make itself better with India. India is becoming a major country in every field. Please check top 5 millionaires of India and contribution towards their countries including Tata. India is friendly compared to China for U.K. It has got a big banking world for which the entry is closed from outside. U.K and India have something in common. India learned from England.

    When the world changes in order to be there in the top with China, Brazil, Russia ....U.K should make free trade with india and both countries togethere can make a big difference.

  • Comment number 81.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 82.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 83.

    There is one phrase that the Coalition Government needs to ban with immediate effect: 'Britain is open for busines'. The penalty should be instant transportation to an 'emerging' country, the loss of UK citizen's rights and the adoption by the speaker of the social security norms of that 'emerging' nation.

    Why are all my fellow UK citizens so dumstruck over the international trade and business issue? Nautonier and Foredeckdave have it exactly right; so in a different way does WOTW.

    I work for an Indian owned company that is now being Indianised. Before I start this is NOT a racial thing. I know many Indians individually and find them intelligent, charming and often delightful to interact with. This about the balance of power between states and a collision of cultures.

    Some posters here are saying that the low skilled and poor have the most to worry about. On a relative basis that is nonsense. Indian owned companies have no wish to repatriate low skilled jobs to India. Not at all; they have plenty of their own. What they want to do is take the senior management function to India. This then controls the company and invests massively in Indian facilities for their home market, often dangerously leveraging the former UK operation.

    The UK operation then becomes a satellite manufacturing arm and a Trojan horse for sending goods to the EU. We get to keep most of our low skilled jobs - oh goody! What we don't keep are the high skilled posts in commerce, operations or R&D. So we have no need for the professional services those posts need - legal teams, financiers, intellectual property specialists and so on. It's the middle and professional classes that will be dumped.

    Only a fool would say that the UK would sit back for ever and let this happen.

    Marxism talks about the alienation of the worker. What could be more alienating than making rich people even richer in grotesquely unequal societies thousands of miles away. It also says that Capitalism is a necessary phase en route to a more evolved system. Well, the West has no choice, that evolution will start with the protection ,via trade, of the knowledge, social sophistication and freedoms of Western society.

  • Comment number 84.

    Re my own points @83:

    - The key thing is that Indian entities/shareholders won't take on debt - its their UK subsidiaries that bear that risk. Hmmmm....

    - WOTW is right in that Capitalism has to change for the West's survival. The answer won't be socialism but an untainted hybrid yet to evolve.

    - As for all this garbage about the British Empire. Lets recognise the reality:

    (i) None of us alive and here built it.

    (ii) For the global social mores of the time it was on balance progressive.

    (iii) Just get over the 'Sins of the Fathers' argument'. We all here deal with reality. Which society would most prefer - India, Iran or China. Check the answer. It is the EU (UK onboard) - rapidly overtaking the USA.

    (iv)In any period there is one dominant culture. We can choose from the Greeks, the Romans, Attila's empire, the French(?) the US (?), the Russians in the 80s/90s or the Chinese from 2020. I'd rank the Brits in the top quartile.

    (v)Look to the future. The Brits did - Saltaire, Bournville, M&S. Pretty much Utopia - compared with stuff elsewhere - eh WOTW?

    So, the future is not yellow, green or red. It's Protestant orange.



  • Comment number 85.

    84. At 5:57pm on 26 Aug 2010, LostatHome wrote:

    "So, the future is not yellow, green or red. It's Protestant orange."



    =================================================================

    Protestant 0 range was once Tony BlAAAir ,now things can only get marjanaly bet err again with more feeAAArt powerr injected into the nations bottom line by the lAAAvAAA QE RAAAkAAAtopians east of JAAAvAAA.


    The future is dim the future is orang....utAAAn, the futerr is FOR lobottomayesed homosAAApiens

  • Comment number 86.

    The futuerr is bruit the futuerr is oweranger as the bankster crAAAsh test dumease will get back their geared stick ups from the buggs bunnies that have finnished nibbling on the suspended carrots, plus a plaintive "whats up ducAAAtti" from the bugAAAtti types

  • Comment number 87.

    83. At 11:06am on 26 Aug 2010, LostatHome wrote:


    Only a fool would say that the UK would sit back for ever and let this happen >

    Indeed and AAA's usual they would PROBABLY be right!

    ---------------------------------

    Marxism talks about the alienation of the worker>

    No Marxism says any club that would acceptit as a member is'nt worth belonging to and that inkludes AAA lien nations.

 

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