Sunday, March 05, 2006

Who is better? - India or China

Continuing from my previous post I start off with the nuclear issue. After the landmark INDIA – US nuclear deal, a very funny (at least I felt so) thing happened. China called on INDIA to completely disarm its Nuclear arsenal and sign the NPT. To which Indian government gave a pleasant and fitting reply “Aap pehele” – “you first”.

I am sure anyone of you would agree what China asked for was completely hilarious. On one can oppose the fact that China is a superpower. But here I try to compare INDIA and China. Both will be the 2 most happening countries of this century. By 2050 China is expected to be the largest economy (much larger that US) and INDIA is expected to be the 3rd largest. Together India and China will account for more than a third of the world’s economy.

On the defense too China spends almost 3.5 times what the INDIA government spends (China around 70 Billion $ compared to India’s 20 Billion $ budget – US spends around 320 Billion, much larger that India’s and China’s annual budget).

Both INDIA and China face the major problem for corruption. But with the open and free media which we have, we are in a better position to get rid of this problem. China has a very highly regulated media, much of it is state controlled. You don’t obviously expect the state to write against the state itself. We should be proud of channels like Aaj Tak and Tehelka. The greatest gift that we people in INDIA is the political freedom. We still have the confidence that we can oppose things, and these oppositions will be heard by the government. We also have a free judiciary – independent of government control.

Much of the capital that’s driving the Indian economy is generated internally. The FDI into INDIA this year was around 4b$ compared to 60b$ that China got. Inspite of this we were showing a tremendous growth. This will in turn encourage more FDI and hence more growth. We have a very strong banking industry - banks like ICICI, SBI, HDFC are among the best managed ones in the Asia region. Chinese banks on the other hand are in dismal state with more that 200b$ for NPAs – much of it caused due to lending to state owned companies

Also the Chinese population is expected to grow older faster than any other country in the world, thanks to its one family one child policy. This cycle of growing old will be much slower for India. By 2020 INDIA would have reached the peak of her youth, when a significant percentage of the population will be in the working force.

The single most major problem that INDIA faces today is Red tapism and infrastructure. China has been investing heavily on infrastructure projects. A fact – the Shangai city in China has 7 outer ring roads, we here in Bangalore have just 1 ring road that was completes only 2 years back, after it was conceived more that 30 years ago. It has an excellent road infrastructure. We here in INDIA wait for the problem and then look for the solution. We just don’t want to see the problem coming.

INDIA with the right people to lead her should easily be able to outpace China’s growth rate. For this we need a political system that is much younger. The old should make for the new. People like Lalu Prasad, Deve Gowda should resign from politics and give way for the young blood. We as learned individuals should take up responsibilities. If everyone keeps complaining who will solve the problem. This would certainly make INDIA way better than any other country.

Saturday, March 04, 2006

Nuclear INDIA

On the 2nd of March at 12 noon, a major agreement took place between INDIA and the US that could have long lasting effects on the world politics. The deal is a de facto recognition of INDIA as Nuclear power.

Let me start off with some facts, INDIA at present produces much of its nuclear power from Uranium. And unfortunately INDIA has less than .5% percent of the total known reserves of uranium. This means that it has to fetch much of this element from the outside world. To get access to this material INDIA should have signed the NPT (INDIA along with Pakistan and Israel are the only 3 countries who are outside this treaty). Now what this deal will ensure that INDIA will get access to his element without much problems, except that it will have to send back the spent fuel (which is otherwise used to produce weapons) back to the source country.

INDIA generates about 3% of its total energy from nuclear power stations – that’s around 3300MW. By 2050, it is planned to generate 25-30% of its power from nuclear power that’s around 100000-150000MW. It would certainly be an almost impossible task for INDIA to do this all on her own.

INDIA due to its lack of Uranium resources had started working on a new technology called Fast Breeder Reactors (FBR). INDIA has 1/3rd of the world Thorium resources. Though this material can not be used directly to generate energy, it can be used after it is processed in the breeder reactors. INDIA is way ahead of the world in the Breeder Reactors and expectedly it has not been made a part of the deal. Also the amount of plutonium that can be generated by FBR is much larger.

INDIA is way behind the world in other nuclear technologies. It still does not have the capabilities to built 1000MW reactors (only the 5 countries have this knowledge). What this deal will ensure is that INDIA will get access to these technologies.

We cant be dependent on Oil for all our energy deals. Ours is a rapidly growing economy. Oil will only get costly from here and we can’t always trust the countries who supply them. Iran is one such example. Though the previous regime had reached an agreement on selling the oil, the present one is sitting idle on the deal. Annually around 25-30 billion dollars is spent by Indians to import oil. And this bill is growing rapidly.

Also if this deal really comes through, its not mandatory for INDIA to buy the technology or the fuel only from US, it can do so from France, UK or Russia.

INDIA has been a responsible nuclear state. It has developed much of its technologies independently, with little or no help from others. It has an impeccable record of non proliferation. Pakistan has been the source of most of nuclear proliferation supplying the technology to countries from N Korea to Iran. Israel too has been secretly helping South Africa in their nuclear quest.

Non of the world powers are opposing this deal (except for China which is very cautiously looking at the deal for obvious reasons). It just shows the confidence the world has in the INDIA System. IAEA too has welcomed the deal.

The deal I feel will certainly change the status quo of INDIA in the international arena. It will help her produce clean power for her giant economy. It is a recognition of her clean records. Certainly there will be people in INDIA who will make noises about the deal, the left parties ( when have they not made noise anyways), the SP ( Mulayam after attending the anti Bush and anti deal rallies quietly went for the dinner hosted for Mr Bush ), etc, for some short term political gains and to tell the nation that they are still alive. It should also be noted that it was the BJP ( especially Brijesh Mishra) which actually started negotiations on the deal and like a mature party have welcomed the deal and supported the government on the issue.