India in 2008 -- Outlook and Challenges

 

This article is by B V Krishnamurthy Who is the Director and Executive Vice-President of Alliance Business Academy in Bangalore, India.

The Indian economy is likely to grow at 9% in 2008. The challenge is to aspire for and achieve a 12-to-14% growth that alone can take the country to an economic power status by 2020. Some of the imperatives for 2008 are:
1. Agriculture, on which a major section of the population is dependent, continues to be an area of concern. The spectacular success that has been achieved in milk through the co-operative movement can be replicated in agriculture. Farmers committing suicide is a blot on the nation. Technology needs to be harnessed in ways that will improve agricultural productivity while reducing the dependence on the monsoon. In this, as well as in infrastructure, connectivity, and tourism (a highly neglected area), public-private partnership is an imperative -- the government can act as a facilitator while reaping the efficiency of private enterprise.

2. With a phenomenal 250 – 300 million “middle-class” consumers, there is a huge market for a wide range of goods and services. We need to exploit the benefits of scale economies and the experience effect if we wish to become a global player in products and not just services. The challenge is to be a manufacturing counter-hub to China. A strong local demand can be leveraged to drive down costs and become globally competitive. For all the technical skills available, productivity leaves much to be desired. Organizations would do well to adopt best practices in quality and reliability. After-sales service is conspicuous by its absence. We need to be more sensitive to the expectations of customers.

3. The cost advantage that has driven the IT-enabled services sector may soon diminish to a point that industry cannot bear due to the appreciation of the Indian currency in relation to the US Dollar. A leading banker has projected the exchange rate to touch 35 Rupees to a Dollar by end-2008. It is time to re-think our monetary policy and link the currency to a basket of global currencies. One also hopes that 2008 will see the Indian currency becoming fully convertible.

4. With a huge talent base, innovation requires an impetus. The IT sector should now focus on developing products to compete with the best in the world instead of merely providing services.

5. Now that the Bali round of talks on climate change is over, pragmatism must get the better of rhetoric. We need not repeat the errors of the developed countries. Sustainable development is critical to our future.

6. The Bombay Stock Exchange index is predicted to touch 23000 by December 2008. Organizations need to look beyond share-price movements and focus on value creation. Transparency and accountability need to be the epicenter of discussion in boardrooms. The alternative is financial scandals that an emerging economy can do without.
Perhaps the biggest challenge for India as another year comes to a close is to develop a broad consensus on major development issues. Opposition for its sake is counter-productive. If only we can make more of our people to be a part of the growth process, we can achieve all that we want to -- and without too much pain.

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