Apparently, part of the answer to David's question regarding the timing of the arraignment of Raj Gupta's arraignment was Gupta's desire to surrender on Diwali, the Indian festival of lights.  The WSJ quotes a childhood friend Anand "Bill" Julka: "He believes he is innocent and the gods will protect him if humans fail." 

Apropos of Diwalki, this image has been making the Facebook rounds, captioned "India during Diwali NASA."

Which makes it seem like India is all lit up at night during Diwali, which is pretty cool.  According to Business Insider, though, that's not quite right:

The photo is an overlay of shots highlighting India's burgeoning population over several years. The white lights were the only illumination visible before 1992. The blue lights appeared in 1992. The green lights in 1998. And the red lights appeared in 2003.

Current speculation suggests the lights are a result of the Hindu celebration Diwali, or the celebration of lights, held from mid-October to mid-November, but NASA was unable to confirm what time of year the shots were taken.

For his sake, hopefully Gupta's story holds up better than the picture...

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A recent New Yorker issue carries a fascinating piece on water--the politics, economics, and culture affecting the provision of clean drinking water around the world.  Besides being substantively interesting, the piece contains a number of great statistoids, some detailed below.

The diamond-water paradox (as Adam Smith referred to it) is that although water is essential for life, and diamonds are valued mostly for aesthetic reasons, the price of water has always been far lower than the price of diamonds.  In general, people simply resist having to pay for water.  Only within the last twenty years, for example, has New York City even required water meters.  So water is overused, and shortages result. 

Why don't people want to pay for water?  One explanation is that we generally don't think of water as being used up when it's consumed.  Unlike oil, which is gone forever once it's used, water "never actually disappears:  when water leaves one place, it simply goes somewhere else.  Water that dinosaurs drank is still consumed by humans, and the amount of freshwater on earth has not changed significantly for millions of years."

For developing countries, water shortages are especially problematic.  Increasing urbanization and middle-class prosperity cause people to eat more meat, and meat is enormously more water intensive to produce than agricultural products.  It takes  1000 tons of water to produce a ton of grain, but 15,000 tons to produce a ton of cow.  Great statistoid:  one hamburger requires 1300 gallons of water to produce!  For a steak, it's double that.

Other great statistoids in the piece:

[A] standard cup of coffee require[s] a hundred and forty litres of water, most of which is used to grow the coffee plant.  This means that it takes more than a thousand drops of water to make one drop of coffee.

On the same amount of land that Chinese farmers grow four thousand kilograms of rice each year, Indians grow no more than sixteen hundred, and they use ten times more water to do it than is necessary.

For a large rural and agrarian population like India's, there is strong political pressure to supply water cheaply to farmers.  But that skews farmers' decisions about what crops to plant.  Rice is quite a popular crop, but it's also the most water intensive.  Add in the government's price guarantees, and farmers have no incentive to grow anything else or use less water.  Without rational pricing of water, needy areas do without.  The article goes on to discuss competition for groundwater among farmers sharing the same aquifer. They race to dig deeper and deeper wells to suck out as much water as they can and sell it in times of need--the paradigmatic common pool problem. 

Solutions?  The "hard" path includes more dams, but their ecological costs and toll in human disruption have made them unpopular.  The Three Gorges Dam, for instance, is predicted to provide one-ninth of China's electricity needs when it is fully operational, but 1.2 million people will have been displaced, and 200,000 acres of farmland and forests submerged.  Moreover, sixty percent of the world's largest rivers are already dammed. There is even talk of dismantling existing dams.  The soft path involves simply using less water, which at least in the US has surprisingly been the trend since 1980.  Per capita water consumption since then has fallen by twenty-five percent, driven largely by higher energy costs, environmental laws, and conservation (think lo-flow toilets).  How this all works out on a global basis is up for grabs.

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That's from a billboard in India. It continues, "Dress up decently, no alcohol, no nonvegetarian foods."

If you an American planning a trip to India, get your shots and be prepared for culture shock. According to the W$J, officials in Pushkar are cracking down:

In recent weeks, they've been reminding tourists as they arrive at hotels that it is inappropriate to hug and kiss, and even issuing penalties to couples that run afoul of those customs. The move marks an escalation of an ethics campaign by the government that aims to address the occasionally jarring clash between local customs and the influx of Western tourists. The potential for these kinds of clashes is greater as travel by Americans to India increases rapidly.

How long will India be able to resist Western norms? Earlier this week, Maxim India released its first issue:

The first edition has Bollywood star Pryianka Chopra on its cover. But this is not the typical coy, sari-clad Bollywood pose, rather a scantily clad woman who looks directly at the camera.

The Indian edition will not be anywhere near as explicit as the UK edition which Mehra says is too "in your face" for Indian readers. He aims to be closer to the less smutty US edition, from which quite a lot of content will be taken. In fact, he says he plans to steer clear of smut and sleaze altogether: no full frontal pictures and not even any nipples.

Seems like a slippery slope ...

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WaPo's article on Indian call centers mentions one of the centers I visited last year in Gurgaon, just outside of Delhi. This article is a bit scattered -- touching on clashes between work and traditional holidays, the use of American management practices, and the newfound wealth of India's youth -- but the most interesting piece of the article is the suggestion that working at a call center has suddenly become déclassé. Surely, the story is more complex, but even the suggestion that these jobs have become less desireable than others is a big shift.

The NYT also wrote a feature story about India in yesterday's paper, this time about first- and second-generation Indians who are returning to work in the high tech sector. India will continue to be one of the big stories in the business of technology, and I am watching with interest.

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India's new highway system will change the country in uncertain ways, and the NYT offers an excellent view of the project, including an interactive feature. The central themes are economy, bureaucracy, and religion. Consider the issue of trees:

Neem. Mango. Sisam. Most delicate of all, holy peepul, the Indian fig, which could not be cut without prime ministerial dispensation. In work contracts several phone books thick, every tree that would be felled for the highway's construction was documented before its demise.

As for the economy, highways need gasoline stations:

Allahabad - Reliance Industries Ltd., one of India's largest private conglomerates and a petroleum giant - is planning 5,000 stations. Perhaps more than any company, it has grasped the highway's commercial potential....

Reliance has leapfrogged that process, making itself the Golden Arches of the Golden Quadrilateral. Its British-designed gas stations are identically bright and streamlined, with computerized billing and clean, airy dhabas, or restaurants.

That the stations feel American is not accidental: Reliance had hired as a consultant the Flying J Company of Ogden, Utah, which runs diesel stations and travel plazas across the United States.

There is the inevitable comparison to China ("Having invested more than 10 times as much as India since the mid-1990's, China now has 15 times the expressway length."), but India has more problems than just the length of its highways. Consider the border crossings between Indian states, where local officials demand bribes from truckers. The trip from New Delhi to Calcutta -- 811 miles -- still takes truckers three days. That's better than the five days that were required before the highway, but that's a (long) one-day trip in the U.S.

I haven't even mentioned the bandits and the Maoists. Read the whole story and watch the interactive feature. Both are well done.

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Thomas Friedman has a column on Bangalore, India today. Most of the column could have been written by the local chamber of commerce, but as he implies in the first paragraph of the column, the big question with both India and China is whether their respective political systems will enable the fantastic growth that everyone foresees.

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Just a few months ago, it was hard to buy a business magazine without reading something apocalyptic about outsourcing to India. In tomorrow's NYT, Saritha Rai reports that all of the furor had little or no effect on business for Indian companies, with Infosys reporting a 39.2% increase in quarterly profit. Still, the story contained this sobering tidbit:

Though the furor in the United States has died down some, the National Foundation for American Policy, a research group, says more than 100 bills are pending in 38 states to curb the use of offshore contractors by state and local governments, and legislation has been passed in 5 states and vetoed in 2.

This story comes as I am writing a report on my India experience for CIBER. At that time of that visit, anti-outsourcing sentiment was peaking in the U.S. Our group visited a GE call center in Delhi, and I was very impressed by the professionalism of the employees. In addition, the importance of this sort of activity for the development of an Indian middle class was obvious. Moreover, the broadening of the Indian middle class would lead to a more stable democracy and a more fruitful trading partner for the U.S. This seems like a big win for both sides, and not just in the long run.

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When I returned to my office this morning, I found a nice surprise: a box of souvenirs from India. When the folks at the University of Connecticut heard about my disastrous luggage adventure returning from India, they offered to restore some of my lost souvenirs, including the fun wooden Cobra toys for my sons. Double bonus for my kids!

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In a positive development for India, the suddenly popular Sonia Gandhi has agreed to step aside, recommending Manmohan Singh to take her place. Singh, widely described in news reports as "the architect of India's free-market reforms of the early 1990s," is an Oxford-educated economist. When the election results came in earlier this week, I suggested that one of the big questions was whether India would continue the fast pace of economic reform. While the pace remains uncertain -- after all, the Communists are still part of the ruling coalition -- but forward progress seems more likely than it did a few days ago.

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Sonia Ghandi, that is. The widow of former Prime Minister Rajiv Gandhi, Sonia has done something no one could have expected: she led the Indian National Congress back to power in India. The New York Times story notes that she has not yet decided whether to become the Prime Minister -- some Indians object to the idea of a non-Indian at the helm -- but this is a huge story regardless.

When I was in India earlier this year, several of my hosts spoke about Sonia. Invariably, they downplayed her influence on contemporary India. In my view, there is one huge positive from this: more religious tolerance, at least at an official level. The two big uncertainties: economic reform (began with Congress in 1991, but will they pursue further reforms?) and Pakistan (who knows how this affects that volatile situation).

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It didn't take long before India's white-hot outsourcing market peaked, at least that's what The New York Times is suggesting. The problem -- believe it or not -- is a labor shortage. India is awash in people, but most of those people cannot write code or speak English well enough to staff a call center telephone. Those who have these highly marketable skills are demanding and receiving higher pay ... thus defeating the primary advantage of outsourcing -- cheap labor. The problem is so severe that some Indian companies are reportedly considering outsourcing their outsourcing to China and other Asian countries.

Having just visited India in January, I suspect that this story is a bit premature, but it signals something important about the rapid development of India. Outsourcing was never intended to be a permanent stop for India. Instead, it is a way station on the road toward greater prosperity for a much larger segment of the population, people who will never write code or speak English. In my view, the importance of outsourcing to India is twofold: (1) it develops technical and managerial talent which will build a new generation of indigenous Indian firms; and (2) it facilitates the growth of the still slender consumer class, a development that must occur alongside the development of indigenous firms. India is well-positioned to move quickly toward prosperity, if only the Indian government will stand clear.

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Thomas Friedman is writing about India again. This time he is featuring software firm Infosys, which he characterizes as a spawn of globalization. He compares Infosys to another creation of globalization, al Qaeda:

Infosys was spawned in India, a country with few natural resources and a terrible climate. But India has a free market, a flawed but functioning democracy and a culture that prizes education, science and rationality, where women are empowered. The Indian spawning ground rewards anyone with a good idea, which is why the richest man in India is a Muslim software innovator, Azim Premji, the thoughtful chairman of Wipro.

Al Qaeda was spawned in Saudi Arabia, Pakistan and Afghanistan, societies where there was no democracy and where fundamentalists have often suffocated women and intellectuals who crave science, free thinking and rationality. Indeed, all three countries produced strains of Al Qaeda, despite Pakistan's having received billions in U.S. aid and Saudi Arabia's having earned billions from oil. But without a context encouraging freedom of thought, women's empowerment and innovation, neither society can tap and nurture its people's creative potential — so their biggest emotional export today is anger.

Hayek anyone?

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I have written about India and outsourcing before (here and here). In general, the near-hysteria in the U.S. is unwarranted, in my view. Thomas Friedman agrees:

America is the greatest engine of innovation that has ever existed, and it can't be duplicated anytime soon, because it is the product of a multitude of factors: extreme freedom of thought, an emphasis on independent thinking, a steady immigration of new minds, a risk-taking culture with no stigma attached to trying and failing, a noncorrupt bureaucracy, and financial markets and a venture capital system that are unrivaled at taking new ideas and turning them into global products.

...

This is America's real edge. Sure Bangalore has a lot of engineering schools, but the local government is rife with corruption; half the city has no sidewalks; there are constant electricity blackouts; the rivers are choked with pollution; the public school system is dysfunctional; beggars dart in and out of the traffic, which is in constant gridlock; and the whole infrastructure is falling apart. The big high-tech firms here reside on beautiful, walled campuses, because they maintain their own water, electricity and communications systems. They thrive by defying their political-economic environment, not by emerging from it.

Well done.

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My posts on India attracted a new crowd to Venturpreneur. Welcome to all! If you are interesting in things entrepreneurial in India, take a look at SlowRead. The title is appropriate, as it contains a lot of information. Nice work, Raj!

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India is a country with a long and fascinating history. Since gaining independence in 1947, however, India has struggled to find itself after 200 years of British rule. One of the professors I have met here described India's early post-independence relationship with the U.S. as one of "unrequited love." Of course, that history is complicated, but India ultimately turned to the Soviet Union for guidance and aid. The legacy of that decision still weighs heavy here.

India was a typically unsuccessful socialist state that began the process of gradual reform in the 1980s. The country hit bottom in 1991 and undertook more dramatic government liberalization. While the effect of these reforms is much debated, free marketeers agree that India has not gone nearly far enough.

Not a day passes without a news story about the effect of the IT revolution on India. (Look here if you don't believe me.) As a newcomer to India, I found the need to adjust my vision a bit -- Delhi is not Silicon Valley (though some claim that Bangalore is) -- but the evidence is indisputable. Software exports, BPO (business practice outsourcing), and ITES (information technology enabled services, like call centers) appear to have had an enormous psychological effect on this country, even if the real impact on this country of over one billion people is modest. Many of my hosts proclaim, "India has found its niche" in IT.

But IT will not save India. The country is too large for that. Other big issues loom. Most importantly, agriculture reform and education reform. Antiquated farming techniques and inadequate public schools threaten to stop India in its tracks.

The other big issue is infrastructure. Roads are horrible, but improving quickly. Telecommunications is booming. Mobile phones and wireless internet will speed adoption rates. Power supplies are the most contentious issue. Continued growth will demand more power, and India does not yet have a reliable system in place.

As you can see, the challenges here are enormous. Conquering those challenges would be difficult under the best of circumstances, and these are not the best of circumstances. India's multi-party democracy is broken and needs to be fixed. Strangely, the paralysis of India's government has made some here long for the efficiency of a totalitarian regime, like China's. Let's hope that's just talk.

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