The dawn of India'sIndependence led to the hope that this massive experiment in democracy would usher in hope and prosperity for its people. Unfortunately, while remaining a successful democracy, India'seconomic achievements were nothing great, says the author of the book under review. Nevertheless India'sgrowth has tended to occur despite the government. True, there has been an important deregulatory reform in India over the past 15 years or more, kicking off with the economic liberalisation implemented in 1991, but the key catalyst of the growth has been the success of the increasingly self-confident private sector ? a success mirrored in the extraordinary 490 per cent rally since the beginning of 2003 in India'sbenchmark Sensex stock market index.
Sivakumar'sbook is a detailed analysis of the Indian success story, analysing both the economic context and exploring the investment opportunity while discussing the inevitable risks. The purpose of the book seems to be to bring forth the message that the slow and steady process of economic reforms since July 1991 in India has unleashed new dynamics, a hitherto unknown confidence among Indian companies and professionals that they can excel, compete globally and become world class. The prime argument by the author is that citizens of India (resident as well as non-resident) need to carefully understand the economic and structural changes in the country as these are bound to have a profound impact on their well-being. The culture of passive savings of our forebears may not be optimal now, given the unfolding of investment opportunities and the ease with which every individual can participate in them. The author advises that by actively promoting investing a portion of their savings and owning a piece of the massive economic transformation in India, citizens of the country will benefit directly from the rise of India over a period of time. Such widespread ownership will also minimise the possibility of disruptive events that can derail India'squest for prosperity and pre-eminent position in the comity of nations.
The main aim of the book is to convince the non-investment professionals on the necessity of diversifying their skill-based income with income from investments for the long term. The author wants the global investor base to understand India as it offers exciting possibilities for Fortune 500 companies to lower the cost of innovation and operations by outsourcing to India, which is the fastest growing economy in the world since the last two decades.
The study of the climate, prospects and problems of investing in India is presented in three parts. Part 1 deals with the investment environment and how the socialist pattern of development on which India embarked in the 1950s put the public sector at the centre and the private sector at the periphery. Unfortunately this stifled competition is leading to corruption and sub-par achievement for the economy as a whole. The economic liberation of 1991 has progressively placed the private sector at the centre and the public sector at the periphery, allowing market forces to decide optimal outcomes. Within a span of 15 years, foreign investors have been able to identify the structural change in India'scorporate sector, especially the soft factors, which as global aspirations have renewed their commitment to large-scale investments in India. It is time for retail investors to analyse the changes, understand long-term trends and make decisive long-term investments.
The focus of the book is on three underlying sources of productivity gains: deregulation, globalisation and infrastructural development. Deregulation has led to increased competition in several sectors, thereby unleashing efficiency on an economy-wide basis; globalisation has increased access to resources worldwide, coupled with optimal usage by well-integrated supply chains; and ongoing improvement in infrastructure has lowered the cost of doing business in India. All these suggest that India has a favourable long-term investment environment.
(Macmillan Publishers India Ltd, 2/10, Ansari Road, Daryaganj, New Delhi-110 002.)