India’s Republic Day: Just Think What Can Be Achieved

Business, China, Company Strategy, Economics, India

By John Richardson

IndianflagTODAY is Republic Day in India and so I hope that what comes next will not be seen as overly negative.

But I think it is essential, as the New Normal develops, that we have an open and frank debate about the biggest economic challenge and opportunity that we all face over the coming decades: Poverty alleviation.

This is not just in India and in other development countries, where the problems seem the most obvious. In Europe and the US, too, poverty, even if often less extreme, is a huge impediment to growth. This is a subject that I shall focus on many times over the next year and more.

The fantastic news is that India’s prime minister,  Narendra Modi, has made it his priority to deal with one of the biggest single reasons for poverty in India: Lack of enough toilets.

When nearly 600 million Indians have to defecate in fields because of lack of sanitation, the lost economic growth is obviously enormous. You cannot even hope to get a good-enough education to climb out of poverty if you are constantly sick with diarrhoea.

Other challenges include:

  • A government that still does most of its business on paper, literally walking thick files from one office to the next for signatures. Decisions on new buildings, mines, power stations, and industrial plants are slow. They’re also influenced by “chai pani” (tea and water) – payoffs that agency personnel expect and business executives provide.
  • Electricity demand is outpacing supply. Brownouts and blackouts are endemic in almost every part of the country. India’s utilities last year registered 237,000 megawatts of generating capacity, less than a quarter of US generating capacity and about 20% of China’s. Ten percent of that electricity is stolen and 20% more is lost on India’s inefficient and old transmission grid. Four hundred million Indians, roughly a third of India’s nearly 1.3 billion people, live without electricity. As is also the case in Africa, under-electrification is holding back growth.

These problems have resulted in these four very telling statistics:

  1. One-third of the world’s poor live in India.
  2. According to the World Bank, about 400 million Indians live in poverty and earn less than $1.25 per day.
  3. According to UNICEF, 42% of children under five years of age are underweight, and 58% of children’s growth.
  4. Inadequate sanitation, nutrition and safe water results in what the World Health Organisation estimates to be 93,000 to 153,000 deaths each year due to diarrhoea.

The end result for chemicals and polymers consumption is clear from the chart below, which details just one polymer – polystyrene. India, despite having a similar population to that of China, is a long, way behind China in terms of consumption.

IndiaChinaPS26Jan

Even if India can get within just 50% of China’s consumption levels, the opportunities are still  enormous.

How can the chemicals industry help?

By, for example:

  • Providing low cost polyvinyl chloride piping to help with the sanitation drive.
  • Supplying, again at realistic prices, the water treatment chemicals needed to boost potable water supply.
  • Devoting more money to research and development. This shouldn’t just be the R&D necessary for working with the manufacturers of the next generation of high-end smartphones and tables. Far from it. It should instead be the kind of R&D that will result in another breakthrough similar to that of the Hippo Water Roller Project.
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