Indian Economy By Neil McInroy

Neil McInroy - Chief Executive, Centre for Local Economic Strategies. He is visiting Poland, Portland, USA; Culiacan, Mexico; Coimbatore, India; Haiphong; Vietnam and Yokkaichi, Japan.This blog is written in Coimbatore. The economic downturn has made us reflect on the fact that we are entering a new economic era and new shape to the global economy. We in the UK, have seen the knowledge economy as a driver of the economy and a sector of growth.

Here in India and Tamil Nadu it is the same. However this knowledge economy is arguably deeper and more voracious and is a heady brew of knowledge in terms of engineering and technological skills, coupled with an inherited passion for entrepreneurialism and collective family and kin endeavour. We started of our trip in the state capital Chennai and are now 450km south in Coimbatore – traditionally a cotton area dubbed the Manchester of India. Tamil Nadu has enjoyed GDP growth of 12% in recent times and Coimbatore and its neighbouring locations have enjoyed even higher growth levels, with suggestions this has been as high as 16%.

This is not the call centres, as in Bangalore and other parts of India. This place makes things and has a population that devours learning and wanting to be the best. Such industry and entrepreneurialism, fuelled by this passion for knowledge and learning has come through a pulsing desire for self and family improvement, which has driven the numerous technical, engineering and niche colleges which pepper the city. The startling thing about the Coimbatore - and a city of around 2 million - is that its stunning economic success has come about without significant public sector intervention of the type we would expect in the UK. As indicated in a previous blog as regards Culiacan in Mexico, public services are taking a time to catch up and there are environmental issues.

Economic growth is working ahead of the system and the bureaucracy. However, unlike Mexico, there is a collective consciousness here which instead of seeing the state as the provider of collective social goods and services, looks to the broader civil society as a key contributor. The local state does not play a big role in creating the context for growth via public services. Instead it responds and is led by significant social sector activity, allied to industry. Corporate social responsibility is embedded here in the psyche of how one does business. This basis to economic growth, means that the local state is having to respond and the 'systematic rigidities' of the bureaucracy are reducing and creating new forms of partnership and arrangement.

The 'pulse' of this place is beating strong … and as such it is resilient. Of course it feels some global effects - a 30% drop in textile exports to the US for example. However, it exports to more than 100 countries and has a strong domestic market. Our research is hearing and getting a strong impression of this thirst for know-how amongst a growing and young population and it is an irrepressible force. Taking the pulse of this place, tells us that coimbatore and many places in Tamil Nadu and the wider India, are and will increasingly be, the heart of the global economy. Neil McInroy is Chief Executive of the Centre for Local Economic Strategies.

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