Sarsij speaks.....

Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. Has an annual trade surplus of over $100 billions. Yet Japanese economy is considered weak, even collapsing.
Americans spend, save little. Also US import more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger. But where from do Americans get money to spend? They borrow from Japan, China and even India. Virtually others save for the US to spend. Global savings are mostly invested in US; in dollars. India itself keeps its foreign currency assets of over $50 billions in US securities. China has sunk over $160 billion in US securities. Japan's stakes in US securities is in trillions.

Result:
The US has taken over $5 trillion from the world. So, as the world saves for the US, Americans spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2 billion a day, to the US! Otherwise the US economy would go for a six. So will the global
economy. The result will be no different if US consumers begin consuming less.

A Chinese economist asked a neat question. Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested in US. The same is the case with India. We have invested in US over $50 billion. But the US has invested less than $20 billion in India. Why the world is after US? The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income.
That the US spends is what makes it attractive to export to the US. So US imports more than what it exports year after year.

The result:
The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money. It's like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is like the lucky customer. And the world is like the helpless shopkeeper financier. Who is America's biggest shopkeeper financier? Japan of course. Yet it's Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted it self, reduced the savings rates, even charged the savers. Even then the Japanese did not spend (habits don't change, even with taxes, do they?). Their traditional postal savings alone is over$1.2 trillions, about three times the Indian GDP. Thus, savings, far from being the strength of Japan, has become its pain.

Hence, what is the lesson?
That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend. Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told Manmohan Singh that Indians wastefully save. Ask them to spend, on imported cars and, seriously, even on cosmetics! This will put India on a growth curve. "Saving is sin, and spending is virtue." Before you follow this neo economics, get some fools to save so that you can borrow from them and spend.

This is really irritating to know that petrol prices have been hiked by Rs 3/- once again........I really can't understand the philosophy behind this, but I have to accept it like any other  Indian.

Just feel like knowing more about the petrol pricing philoophy.

will be back soon, with my own petrol pricing ecominics and its effects.

till then take care and good night!

hi friends, yesterday I wanted you all to read about the IT guys and their present state through an article which appeared in rediff.com recently. Well, today's topic is just an extension to yesterday's thoughts.

Recently I got in touch with one of my school friends who has recently launched his own organization (Known as Techkriti Software ). I put the same question before him, and he had several things to say, as was expected from him. He was optimistic about India's growth and independence in terms of innovation and quality work being done here. I just would like to wish him luck, may his organization become a forerunner in this cherished endevour.

you can read my firends reply  here. (I would suggest you to go through my earlier blog before reading his reply.)

I really admire the thoughts of my friend and all those young entrepreneurs who are all set to change the future of Indian Economy. But my bigger concern is related to an issue which is really fundamental in nature and it has nothing to with a particular industry.

So before I can begin with my concerns, I would also like to bring upon some economics in this discussion. I have tried to analyse China economy a lot and I really admire their way of managing their economy. If I have to explain their economy then I can sum-up saying that : China Believes in this Philosophy.... "any economy can achieve a balanced growth through this path.......first Agriculture......then Manufacturing.......and lastly Services". Which is the case with China........as it has revealed its entire strategy showcase to the world.......it was definitely a closed economy till recently..........when it was at the peak of manufacturing.......and now when Services have come into the picture,it opened up.

well my point is just that in India there has been little done for Manufacturing........and it has straight-away jumped from Agriculture to Services........I really can't anticipate its future consequences, but definitely its having some ill-effect.......like why are we still dependent on other countries for most of our needs.

Now I would like to leave this question to young entrepreneurs - how to nullify the effects which could effect our economy b'coz of our large dependence on other nations for even the basic needs.

What we say in support of the services companies is very true, that we have to first concentrate on the mundane job (in order to employ the large population and several other reasons), and then concentrate on the Quality of Work........in lay man's language......first I have to fulfill my day-to-day needs and then only I can concentrate on the Long term goals of self-dependency (or in other words relying on my innovation).......but how long will it take for companies like Techkriti.....or TCS.....or Infosys......to get going with their own products and refining their technology base in order to produce something which becomes an Intellectual Property or their sole proprietary.

There is no doubt that Services are rocking right now and it has been a boon to India (because of so many reasons), but what might happen if something like 9/11 happens again? So, wont it be a great idea to act in a proactive manner.......by having something like a subsidiary in each organization (which is around 5-10% of the total organization, in terms of size as well as the financial share)........I am definately not trying to say that a company should blindly get into this field but is it not worth a thought in order to become self dependent?

give it a thought. and if possible do write back.

hi all......recently I read an article on the web, it just made me think about the future of we IT guys......where are we standing today.....and where are we heading to. I differed from the views presented by the author in some ways....but also, there were several points where I absolutely agreed with his interpretations.......with these mixed feelings I just wanted that there should be a healthy debate on this matter. And thats why I have attached the original article here in this blog. Please read this article and send your comments.

Bangalore: Silicon Valley or Coolie Valley?

March 01, 2004

Politicians, bureaucrats and residents of Bangalore take pride in the fact that they live in what they call the Silicon Valley of the East. The city is considered high tech because of the number of software and software services companies located here.

But is Bangalore really Silicon Valley?

California's Silicon Valley

In 1933 Frederick Terman, a professor of engineering at Stanford University, mentored two undergraduates named Bill Hewlett and Dave Packard, and was instrumental in getting them to start a company.

They went on to form the company Hewlett-Packard. This was the first seed from which Silicon Valley grew.

Today around 2,000 electronics and information technology companies, along with numerous services and supplier firms, are clustered in the area.

Silicon Valley contains the densest concentration of innovative industry that exists anywhere in the world, including companies that are leaders in fields like computers, semiconductors, lasers, fiber optics, robotics, medical instrumentation, and consumer electronics.

Some products that went from dream to reality in Silicon Valley are the first video game, the ink-jet printer, the video recorder, the mouse, the personal computer, and much else that we take for granted in the information age.

Here's a sample of some Silicon Valley firms, familiar to most of us because of their products: Adobe Systems (Acrobat Reader), Apple Computer (computer), Hewlett-Packard (printer), Intel (the CPU in your PC), Netscape (Internet browser), Seagate Technology (the hard disk in your PC), Yahoo (Internet portal), VeriFone (credit card terminals in shops), Symantec (Norton anti-virus software), etc.

Such firms are called technology companies, because their chief resource is the technologies that they develop and own, not the real estate that they are sitting on or the equipment that they possess. Stocks in a technology company are called 'tech stocks.' Scientists and engineers working in these companies are called 'techies.'

Indicative of the inventive spirit is the fact that residents of Santa Clara County, which includes San Jose and other Silicon Valley computer hotbeds, were granted 27,617 patents during the 1990s.

Silicon Valley thrives on risk. Business in the Valley is about placing bets on people, ideas and inventions.

If the Silicon Valley were an independent country, its economy would be about the tenth largest in the world.

Bangalore or 'Coolie Valley'

If you ask the president of any of Bangalore's software development companies what his company does, he'll say "We provide end-to-end solutions for Xxxx." Xxxx could be any or all of these -- e-commerce, banking, telecom. . .

What he means to say is this: 'We'll do the software coding in any of these areas for you. Just tell us what you need. We have a huge mass of engineers who know various programming languages.'

These companies do not develop any technologies or products. They provide development services. They have engineers who specialize in programming languages rather than in technologies.

Their chief resource is the huge mass of low-cost labour that they have taken the trouble to recruit.

Ask them about patents, and you get the reply "Huh, what's that?"

These companies start with zero risk. They do not bet on their ideas or inventions. A company is started after getting some contracts in hand.

A typical engineer in these companies has no specialization in any technology. He does not use his engineering knowledge. You could say his body is employed, but his brain is severely under-employed.

Here is a sample of some prominent Bangalore software companies with what they specialize in: Tata Consultancy Services (end-to-end solutions), Wipro (end-to-end solutions), Infosys (end-to-end solutions)

DSQ Software (end-to-end solutions), Kshema Technologies (end-to-end solutions), Ivega Technologies (end-to-end solutions), MindTree Consulting (end-to-end solutions).

The comparison

Silicon Valley companies are based on 'know what.' They know the market, they know the technology and they know what products to make to earn money.

Coolie valley companies are based on 'know how.' They do the software coding for other companies that have the 'know what.' If you tell them what to do, they know how and will do it for you.

Silicon Valley companies invest huge sums of money on R&D. They generate new ideas and are constantly developing new ways of doing things.

Coolie Valley companies have nothing called R&D. They do not generate any new ideas.

A typical Silicon Valley engineer is a specialist in a particular technology, like inkjet printing or virus detection. He spends all his life working in this technology area.

A typical Coolie Valley engineer is a specialist in a few languages. He is not concerned about the technology that he is working on and is willing to develop any software with the languages that he knows.

A typical Silicon Valley engineer's education and work experience all relate to a technology. When he changes jobs, he changes to another company working on the same technology.

A typical Coolie Valley engineer's work experience does not teach him any technology. He may be a mechanical engineer currently working for three months on banking software, and then the next three months on shoe retailing software.

Silicon Valley is all about the excitement of creating things out of nothing. Companies like HP actually started in the garages of their founders.

Coolie Valley does not know the meaning of creativity. Some companies are started by people who quit other companies and take some of the parent firm's software development contracts with them.

Silicon Valley's entrepreneurs bet on people, ideas and inventions.

Coolie Valley's entrepreneurs bet on certainties. They start a firm after getting software development contracts.

Silicon Valley's firms are about technology management.

Coolie valley's firms are about man management.

It is extremely presumptuous to compare Bangalore with Silicon Valley, so all you Bangaloreans, please do me a favour and

• Don't call your city Silicon Valley ('pub city' or 'garden city', I have no problem with -- lots of pubs and lots of trees, but very little silicon).
• Don't call one of your new software companies a 'high technology start-up.'
• Don't call your engineers 'techies.' They've forgotten their engineering long ago.
• Don't say you've invested in 'tech stocks' ('body stocks' maybe ?).

If you are from Delhi or Mumbai and encounter a Bangalorean 'techie' spouting off about his work or about his Silicon Valley, you no longer need to develop an inferiority complex.

G V Dasarathi is director of a software products development company

wow......thats the only way I can express my immediate response to the news I got just now.......and thats really an amazing step taken by govt.........Bangalore Police Goes Online......great!!!! I tried to visit the page and you can also visit the page here

The only thing which will make it effective in actuality will be response time of Police.

Lets see if it actually works or just becomes one of the defunct portions of this system.