Wallowing unaware!

Recently in a survey a group of people representing various countries of the world were asked, How many liked Japanese people? A few hands rose up. Then how many people liked Chinese people? Slightly higher number of hands went up and finally the crowd was asked, How many liked Indian people? Almost all hands went up. The same crowd was asked, How many liked Indian products? A few hands went up and, How many liked Chinese products, A sizeable number of hands went up and, How many liked Japanese products, Almost all the hands went up.

Yes, I am going to talk about this populist and pluralistic Indian population which has taken the world by surprise. But don’t mistake my tone, to be optimistic or pessimistic. It’s a mix of both :)

India has been a developing economy since 2-3 decades but the true sense of development and its percolation has been felt only recently. Growth by far, for any country is measured in terms of its GDP. And 9-10% growth is not something unseen in the developing economies around the world. But the path by which India has achieved and to some extent maintained the growth is unique. It’s through Services. And the reason I started writing this article was to analyse and assimilate whether a growth that relies heavily on services would be sustainable.

I myself represent the Information Technology sector, a sector that has given huge growth potential and generated employment for a sizeable chunk of individuals. After having worked for more than 2 years, Infact I believe, we were forced to rely on services since we lacked Infrastructure and the expertise to manufacture. And by the time we realised we have to focus on Manufacturing, the Japanese and Chinese became masters, and it was tough competing with them.

I have a very simple parallelism. If somebody wanted to start a textile manufacturing facility in coimbatore or Erode he knows well that he would fail. The focus is heavily on Tirupur and it’s very tough to shift that focus. Tirupur has distinct advantages which are difficult to be offset. Similar it is to shift the focus away from China!

And now I have a statement to make :)

“GDP growth has been directly and indirectly driven by the liquidity, that comes from the FDI that the, services sector has magnetized towards India”

But I have a firm belief that we cannot be wallowing in this boom forever. Because Services don’t have guaranteed returns. If you outsourced a manufacturing contract the chances of you being replaced by someone else is remote, unless you deliver very low quality goods. This is due to the Investment made in Infrastructure and SCM.

But in case of services the only investment is Human brain and it will take hours to cut down a contract. The contract that came to X from Y can as well go to Z. And Z can be a small company in any part of the world other than India. The only motivation would be the cost. If they can create a belief that they can deliver on time, that’s all it takes to do Services business.

I would leave it here and I will continue this article sometime later with few instances which hold a sign of caution for this country and its citizens, who have been wallowing unaware of the fast changing world and the fast changing economics around the world!

Until then Happy learning!!

9,10 and a BIG FAT HEN!

I had decided the topic for this blog last week on the Budget day itself. And yes, the HEN is our Indian economy. Growing at 9% and a gazelle towards 10%.

The expectations much unlike yester years was too much for this year’s budget. And PC ended up with an Ordinary, Lukewarm, Innocuous (As experts called it) budget. For me the only disappointment was not the tax proposals but that, the FM missed an opportunity to launch some exciting development projects. The FDI stands at a staggering 180 billion dollars with no proposals launched in Infrastructure side or even allocations made. I must remind the reader of the Golden Quad project that the NDA launched during the previous rule. This budget which has seen the maximum growth in the economy lacked the grit.

In spite of all the parallelisms we draw with China we lack in making massive investments in Infrastructure like China. The FM is only interested in restructuring the ITI’s which has been receiving funds YOY.

We are the fastest growing economy in the world.

1)We also have a high inflation that’s catching up with our GDP growth.

2)We have the longest rail network in the world. But we have to plan 40-50 to get a rail ticket. (or even more since laloo allowed booking 90 days in advance.

3)We have to give a cushion of 30 minutes for traveling 4-5 kms to office on our roads.

4)We have to plan a week ahead to book a ticket for watching a movie ticket.

5)We have to book tickets a month ahead for traveling to USA/Europe.

6)We have to book a Hotel room 3-4 days ahead for getting accommodation in even 5 star hotels.

The above points are just indicators that we haven’t planned our infrastructure well to match our growth rate, both in economy and in population. And this is where China, has and is, racing past us.

Before closing, I am just going to say what Narayanamurthy said about the Budget “ The FM has missed a great opportunity”!!

Happy reading!