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Macro
level management issues in Indian Economic Planning and Marketing-A
short appraisal
Prof R K Gupta, Director AIMT Ambala City
Indian Economy has strange complexion.
The country having population of 1.05 Billion people of which almost 30%
are younger than 25 years age (A big market in absolute terms for youth
and children products) is full of debate on survival of Companies in
India, post-liberalization and the ensuing opening up of Economy to
foreign goods and services.
The country that has more than 100
Institutes including Central and state Government, private and NGO
sector, University system and some of companies for entrepreneurial
development and training, hardly throws out 10 new entrepreneurs in a
year worth noting.
Although exports from India is increasing
at a good pace as claimed by Union Government and other data of world
economic fora, in many sectors hyped about, the share of India in world
trade into these sectors is peanuts and even lesser than countries like
Pakistan-for example yarn and textiles*.
India boasts of largest pool of talent in
terms of technically and managerially qualified graduates and diploma
holders, but the employability and quality of this talent is far from
satisfactory even in eyes of domestic corporate sector, forget about
Global employment arena. The University system in India barring a
handful is virtual failure in terms of standards, quality and relevance
and is more focused on quantity and numbers. It is badly throttled by
Bureaucrats and politicians and worthless teaching staff.
“Some
simple analysis of last year's results for the 1,000 largest companies,
done by the Business Standard Research Bureau, shows that the 100
largest companies accounted for as much as 72 per cent of the sales of
all 1,000 companies - and 83.5 per cent of net profit. To any observer,
that would seem like enormous concentration of financial muscle.
It
wasn't always like this. Similar numbers for the 1,000 largest companies
10 years earlier (1994-95, which is when the big public sector companies
got listed) show that the 100 companies at the top of the pack accounted
for no more than 59 per cent of sales and 64 per cent of profits.
What
this tells us is that the last decade of reform has been unusually good
for the biggest companies in the country - who have increased their
share of the cake, any way you look at it.
In
most sizeable economies, and India's is the 10th largest in the world,
any company with less than $100 million of sales (Rs 450 crore) slips
into the medium-scale category. By that yardstick, India has all of 324
large companies, with the last one to make the grade being West Coast
Paper. In other words, while India has more firms listed on the stock
market than any other country, barring perhaps the United States, this
is a mirage”*
The
consumption of goods and services by average Indian citizen per capita
is 1/3rd to 1/20th of their counterparts in
advanced countries and yet our companies and manufacturing units go
in loss.
However,
it is important point to ponder if it would be advisable at all to let
per capita consumption of goods and services like cars, mopeds, petrol,
paper, plastic and pharmaceutical products, increase and match with
those of USA and other economies as far as per capita consumption is
concerned.
USA
having just around 35% of India’s population has 5 times bigger
geographical area.
USA
also holds 80% of world market for engineering goods that can be called
value addition products that fetch much higher profits than commodities
and low end products and services that India produces.
Would
Indians be in a position to find ways and means and enough area to dump
industrial garbage, domestic refuge, pollutants and the disposal of so
called conspicuous consumption products and fast obsolescence products
like computers, cars and TV sets? Will India be left with any potable
water enough to feed drinking requirements of population and industry?
Will
the projected sales of 1 million cars in India every year be viable with
no room to run them on Indian roads, specially the Metro and A class
cities?
Is
India wise enough to spare its scarce and diminishing land under
cultivation for growing the items having high Domestic Resource Cost and
consumption of irrigation quality water, fertilizers and human input?
Has
India been able to plan and control its population growth and balanced
development of 3-tier urban and 2-tier semi urban structure through out
its geographical territory?
Why
Indian Government and various consulting organizations like CMIE, IIMs,
NCAER and DGCIS etc not conducting consumer satisfaction surveys and
Citizens’ satisfaction surveys for various sectors, utilities, product
groups, State provided services like health, policing, judiciary and
sanitation and publishing them?
When
talking of sustainable growth are We as a nation comprising of
economic planners, social organizations, corporate sector members and
academician able to carve out and address the issues related to Ethics
in public administration and Business, transparency, low cost of public
delivery of State delivered services, Distribution and logistics of
essential commodities and basic services, and increasing Metro-centric
development of country like Delhi NCR, Mumbai, Hyderabad, Bangalore and
Chennai?
The
Planners in India including the so called and hyped Institutions have
miserably failed to address issues of mass rapid transport, well
developed national grid of roads and public distribution system and
delivery of education and health services thereby loosing opportunity to
empower common citizens in India in terms of purchasing power, income
and growth.
With
virtually negligible infrastructure for R &D in the country both in
Public and Private sector barring a limited few areas it would be
difficult for India to maintain share of global market in global economy
in long term. The growth of R & D in recent years is not in Indian
domain but sponsored by MNCs from abroad who find terrific cost and
productivity advantage in utilizing Indian talent pool and
Infrastructure. The best option therefore, is for Indian corporate
specially those in top 500 list to go out for acquisitions and utilizing
of Technical know-how of organizations located in other developed
countries like Tatas, Infosys have done and Ranbaxy is following the
suit.
There
is need for rapid reforms in Indian public administration systems,
judicial system and Financial markets with thrust on investing heavily
in basic and higher education, privatization of universities,
dismantling of license Raj and focus on First class delivery network for
goods and services through the country including world class ports.
The
labor productivity, customer service and innovation and entrepreneurship
have to be rapidly developed.
What
we need is right combination of ethics, spirituality, low cost
distribution network, and honest and efficient bureaucratic set up to
facilitate rather than regulate the economic activities in the country.
Instead of risking survival of socio economic system by encouraging
consumerism and materialism, India should focus on selective-sectoral
expertise at world class level utilizing traditional Indian knowledge
domains and ensure out reach of Indian and MNC corporate to nook and
corner of Country with right kind of products for Indian purchasing
power, cultural ethos and markets.
Some
of the sectors for growth in India for export markets are drugs and
formulations, biotechnology, textiles and clothing, higher education,
health care (Tertiary),
spiritual products, herbs and ancient therapy products like Ayurveda and
Yoga, packages software, knowledge products outsourcing center like
architecture, legal and medical research
and entertainment products.
India
can hardly afford to waste millions of sq. meters of prime and costly
space in Metro and big cities for malls and retailing marts, which are
unlikely to generate enough employment and profitability.
Another
foolishly neglected sector is mass housing for LIG & MIG population
in various Metro satellites and A and B Class cities thereby escalation
of property and real estate prices having no relationship to per capita
income of Indian citizens.
Why Indian companies are facing
profitability and marketing problems in a vast country like India is due
to following factors; readers and experts can expand the list:
1. Low purchasing power of
Indian consumers at large
2. Wrongly designed and
costly products and services
3. High cost of various
factors of production regulated by state-like electric power
4. Very high cost of taxes,
documentation and clearance of formalities
5. Poor delivery and
distribution mechanism, and
6. Very high rate of corruption in Public purchases and
administration, resulting in drainage of almost 40 to 50%
of India’s actual GDP into black money.
7. Poor productivity of
Indian workers and low quality of goods.
8. Lack of technical
know-how and innovation.
The abnormally high prices of real estate
in India will make most of enterprises failure. A good part of this is
being driven by black money, profiteering, corruption and mafia
operations and bears no logical relationship with per capita income and
capital formation in the country. Urban planning is virtual failure in
India by whatever criterion one can choose.
We must decide whether we want a few
large conglomerates like Reliance in Indian markets or entrust them the
task of developing global markets while developing a fairly large number
of smaller but world class SMEs to ensure fair competition, market
outreach and affordability of goods by average Indian consumer.
Acknowledgement:
Some of the data and statements have been
taken from Rediffmail.com business articles and EXIM Bank of India
literature.
Prof R K
Gupta, Director AIMT Ambala City
and Director Sobhagya Marketing & Consultancy services-india |
