FUTURE OF INDIAN ECONOMY

Less than three months after trimming its India growth forecast, the International Monetary Fund (IMF) on 4th Oct'2016 raised it by a tad, citing the resilience of its economy and robust growth momentum.

The IMF now expects the economy, Asia’s third largest, to expand 7.6% in 2016-17, up from its earlier projection of 7.4%.

Although economic growth has been shifted from Western countries to Eastern countries long back,Indian growth has been sluggish for its own reasons despite studies suggested India's potential to grow. But all these years other countries have been allowed to grow at the cost of India. Thanks to superfluous, covetous and narcissistic political system of India.

Recent action of the government to scrap higher denominations by no means is superfluous. It cannot be incidental to collude with US Presidential election process too.

One thing for sure, Americans are fed up with global guardianship that has cost them dearly. American mandate, admittedly and evidently, proves national issue as the prime factor shedding of national and global politics. Donald Trump, a business person and economic student, will have to live up to the expectation to Americans. But every country has its economic limitation.Given the extent of economic damage already done, new President will be bound by his actions to ensure economic development which cannot be limited to USA alone. Lowering corporate tax, restricting HB1Visa and allied actions that isolates USA will certainly not improve economy.

Results of Indian election, Brexit and now USA clearly proves, globalization at the cost of national issues cannot be tolerated. Economy cannot be confined to certain pockets.

Narendra Modi government is smart enough to read between the lines to initiate drastic action that has long term effect , both economically and politically, although such a move was in the card as is apparent from his gradual move.

The degree of seriousness can be gauged from NaMo's action to lock its own cabinet ministers, with no mobile, after cabinet meeting till announcement was made except for few people in loop. Indian govt is going to keep a hawks eye  on all cash deposits above ₹2.5 lakh. Penalty of 200% will be slapped if the amount is not reflected in annual returns.

All these days, people in power with knowledge of monetary operations have allowed fake currency in the system to the extent amount siphoned out of the system. Shortage of money has its impact over price, value and overall growth. Free ride has caused fake currencies to grow to the extent of 109% over Indian economy leading to route of collapse. Such a move gives a strong apprehension of not sparing such people with strong direct or indirect message to others.

The move was also essential to avoid neutralizing effect of GST implementation that will ensure industry and overall economy to grow.

Rupee appreciation through economic correction will ensure good return both to domestic and international market who have all along been skeptical. Balance of economy through economic collaboration and international participation is now expected that will allow citizens across nations and economy to grow.

The real big worry of Indian economy

Narendra Modi government's efforts to pump-prime the economy are failing to yield the desired result. The piffling growth of 0.1% in industrial output in March 2016 from 2% in the previous month is a huge disappointment for the markets and economists where the consensus view was about 2.5%. Industrial output grew by only 2.4% in 2015-16, down from 2.8% in the previous financial year.

Data released by Central Statistical Organisation (CSO) measured in terms of Index of Industrial Production (IIP) reveals growth in the manufacturing sector which accounts for over 75% of the index has declined by 1.2% in March'2016 as against growth of 2.7% in corresponding previous year. 

                       Index of Industrial Production (IIP) growth

India Inc desires more stimulus to boost demand and overall economy while admitting the fact that weak consumer and investment demand is adversely impacting the growth of manufacturing industry.

All out effort by Central government " Make in India", "Skill India","Stand-up India", Startup India" etc will go in vain unless industry co-operate & support the campaign. Narendra Modi in strengthening the economy and finding new consumers amongst unprivileged class of society and rural population is trying to strengthen bottom of social pyramid to boost demand. This need to be reciprocated by Indian industry in capturing competitive advantage provided.

Micro analysis of drivers impacting weak consumer demand must be addressed by industry itself.

1) Not responding to global supply chain & business practice that represent new organizational model, traditional practice still prevails- leaving behind Indian industry to connect globally.

2) Failed Start-ups, defying the very concept and innovative practices to offer customer solutions, preferring traditional business practice.

3) Not optimizing operational efficiency, human capital still soft target to reduce costs.

4) Salary not commensurating  Indian currency value depreciation- 14.52% over decade and real-time market inflation. Meagre salary of INR 10000-15000 per month for a family of 2-3 is not sufficient to increase demand.With over 500 Millions workers in India, second largest after China, over 94% are employed in unincorporated, unorganised enterprises.This class has tremendous potential to generate demands if taken care of properly.

                          Indian Rupee performance over US Dollar

5) Change in employment strategy, from regular employee to contract employee with no intention to engage mentally, take ownership and accountability undermines growth strategy and restricts opportunity to earn and generate demand.

6) Employment discrimination based on caste,creed & religion preferred by many organizations undermining potentials & growth strategy.

7) Contract of Personal Service involving Master & Servant relations still prevalent defying professional skill & talent governed by Contract for Service.

8) Preferring one-size-fit-all/ready made skills with no attempt to train, develop and remove cultural mismatch.

9) Discriminating through age & generations is adding up to poverty line and social liability burden reducing opportunity to generate demand.

10) Powerful dominance and power of might of Real Estate developers through their over-delayed projects is dearly costing consumers through payment of rent & EMI leaving no cash in hand to boost economy.

11) Allowing China to prevail upon Indian market disturbing not only balance of payment but also capacity utilisation.

12) Under capacity utilisation adversely affecting employment opportunities.

13) No aggressive & proactive approach by Indian industry to counter Chinese dumping policy. Merely depending upon government to increase duty and restrict dumping will not help. 

14) PwC survey of economic crime in India reveals more than one in four organisations is impacted by economic crime. Although 94% of industry have stated to have clear code of conduct in place, introduction of Whistle Blower Act and Bankruptcy Code has necessitated good governance.

Nevertheless, India's economy, which accounts for over 70% of South Asia's GDP is expected to achieve 7.5% GDP growth by 2017 as per  "The World Economic Situation and Prospect report", in its mid-2016 update.

India has much higher potential if governed consciously and fairly micromanaged to generate demand and boost economy. Equal participation by industry, improving operational efficiency, implementing innovative business model moving away from traditional practice, business integration and alignment, shifting focus from profit to progress are few business essentials of 21st century.

The author renders his services in capturing competitive advantage through operational efficiency and micromanage to improve organizational economy.He may be reached through E-mail: trivedi.k.manoj@gmail.com or Mobile: (91)9433013863 

21st Century Skills enduring growth

India and its manpower is at the center stage of the world. It’s not a predicament, but it is the source of hope to the so called ‘aging’ developed nations.With an expected population of 1.3 billion by 2020, 60% of which would be in the working age group (15-59 years). India will be the powerhouse of the coming decade. According to a research by Boston Consulting Group, estimate is that by 2020 India will have a surplus of active population - about 47 million people. Greatest challenge before entire active population is to acquire much needed advance skills.

Simultaneously, in ever changing global economic scenario success of Indian economy lies on how Indian Companies and its supply chain bring perceptual change in doing business. Paradigm shift in organizational behavioral shift to decentralize decision making process, flattered organizational structure, cross-organizational and cross-functional networking & information sharing and flexible work arrangements is ineluctable. In order to achieve this, all employees should be made to undertake more responsibility and contribute in value chain ensuring productivity and innovation.

Need for innovation driven growth

Economic success is increasingly based on the effective utilization of intangible assets, such as knowledge, skills, and innovative potential in all the activities of supply chain as the key resource for competitive advantage. Biggest challenge before the nation is, for arriving at GDP growth from 1.9 Trillion USD to 10.4 Trillion USD by 2034 requires complete transformation both at organizational and talent level by steering knowledge economy and innovation.In the New Economy, knowledge, rather than natural resources, is the raw material of business. Both corporate world and Government will have to share the burden to achieve common goal.

New, Different Skill Demands

Advanced economies, innovative industries and firms, and high-growth jobs require more knowledgeable employee with the ability to respond flexibly to complex problems, communicate & collaborate effectively, manage information, work in teams and produce new knowledge. 21st Century demands skills categorized broadly in four categories:

1. Ways of thinking: that includes creativity, innovation, critical thinking, problem-solving, decision-making and learning.
2. Ways of working: that refers to communication, collaboration and teamwork.
3. Tools for working: most of them based on new information and communications technologies and information age literacy, including capabilities to learn and work through digital social networks.
4. Skills for living in the world: such as sense of global and local citizenship, life and career development; and personal and social responsibility.

21st Century Supply Chain Talent Demand with Financial, Economic,Business & Entrepreneurial literacy

Supply Chain function has evolved from the legacy role of procurement and logistics/distribution into a strategic business function involving entire industrial activities and business functions. Traditional supply chain function and responsibility is undergoing paradigm shift for better business integration and collaboration to a strategic decision-maker with deep economic sense, cross-functional expertise, strong customer and stakeholder relationship to demonstrate as a change agent. Spencer Stuart proposed core competencies across 5 core skill areas

1. Global Orientation
2. Operational Excellence
3. Leadership
4. Strategic Thinking
5. Technologically Savvy

Age of Responsibility

Age of high competition and challenging economic scenario demands every participants across supply chain to be PESTLE Analyser ( Political,Economic, Social, Technological, Legal and Environmental factors). Responsibility for economic value addition is ought to be undertaken by each position, by whatever name called. Every investment requires good return exceeding cost of finance. Human Intellect Capital investment is not an exception.Conservative, non-contributory and supportive positions and functions are no more affordable.

Responsibility and sustainability principles have become indispensable if not imperative for public policy, business and consumer behaviour due to planetary limits and increasing global convergence.The sustainability and responsibility principles pose major issues of governance and standards in companies’ own operations and along their supply chains securing good knowledge economy at all levels. The responsibility of companies to invest in skills and talent and engaging in education and training in innovative ways to meet the requirements of the 21st Century workforce is but one example of this much broader responsibility and sustainability agenda.

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Author undertakes improving knowledge economy that reduces gap between market orientation and performance relationship.