Is India a Productive Nation ?

As the Rupee has started hovering below the Rs 40 mark, lot of export based industries, IT, garments are coming under a lot of stress. The government is trying to give some sops to boost the morale of these exporters. It is time the government and people should start asking some real tough questions and sincere introspection to explore the truth.

This was a recent Diwali greeting sent by sms by the CEO of a company, that had severe labour problems last year. His factory was under lockout for many months and when production resumed, his principle had created alternate sources for their own security. The Diwali SMS greeting goes as, ” Daily Prayer :- O GOD, Give us Strength and Capacity to pay, Income Tax, VAT, Service Tax, Excise Duty, Octroi, TDS, ESI, FBT, Property Tax, Stamp Duty, Water Tax, Professional Tax, Road Tax, Educational Cess, Congestion Levy and many more. Besides don’t forget, Gunda Hafta, Bribes, Donations, Chanda, Beggars etc. We have some time and money left after that we will do some business… Cheers to the booming Indian Economy.”

The above is the absolute truth about doing any business in India. What is not captured above, is that each department mentioned above will come for random audits and a certain amount has to be paid irrespective of whether the books are in order or not. So when the management of a company is busy fighting these issues, a lot of time is lost in governance rather than focusing of the product, customer, new markets etc. Our economy is not as sophisticated as it is perceived.

So why is Industry doing so well in India or is it ? In the export markets the arbitrage of US$1 to 45 Indian rupees helped most companies across vertical conceal their inefficiencies. In India lower interest rates and lenient consumer lending has created a flood of cheap money in the market. But these good times are coming to an end with the dollar becoming weaker and banks raising their CRR ratio.

Q. Does our Infrastructure support the cost structure and lifestyle of the economy ? Our co-passenger, while returning from our Diwali vacations in Hyderabad, dreaded her daily commute of 16 kms in the city of Pune, which can vary from 45 minutes to 1 and half hour. It is the most agonizing part of her job and life, she remarked. At the same time the government talks about introducing the 1 lakh car. I would be surprised if she made the commute in 2 hours in a couple of years. The price of oil has gone up 4X in the last 5 years, but the revenue per employee has pretty much remained the same.

Q. Do Indians aspire to be productive. ? “Prolixity is not alien to us” admit Amrtya Sen. We do like to speak. The average owner of a mobile handset spends 471 minutes and sends 39 sms messages. India adds more mobile phone users (8.3m) in a month than it adds PCs (6m) in a year. Indians do not buy much software only US$1.6 billion last year. But we are very proud that the market cap of the stock market is reaching US$ 1 trillion. It is scary that we are in the midst of such dichotomies. A CEO of an Indian manufacturing company told me that critical skills in the production line have to be backed up twice, because of bad work ethics and commitment. Indian garment manufactures have discovered an average Indian worker churns out 40% less garments than his or her counterparts in Sri Lanka, China or Vietnam.

Q. Is the Indian education System delivering trained manpower for this booming Indian economy or even better the Global super power ? The skills demanded by its Indian industries which are of the much richer countries since they are export based. So what do companies that are focussed on the Indian market do ? Most HR managers in private admit that only 10% of the available manpower is suitable for employment. It is a know fact, that most employees who struggled to perform in smaller lean and mean companies, found jobs with glorious titles and 3X salaries in the larger software companies like Infosys, Wipro etc. It is for you to decide, the amount of muck that is residing there and the amount of cleaning required in case of a down turn. An expat manager, finds hiring the biggest challenge in India because 40% of the candidates don’t even turn up for an interview. You can imagine that job sites sites like naukri.com encourage employees to find out more how much they are worth than finding a new job. This kind of spam makes finding experienced candidates very difficult.

The curses are converging. I think we have a serious issue if it is not tackled immediately. The high cost of real estate, driven high by corruption and artificial shortages of land, will ultimately make many business models irrelevant. The quality of roads, public transport, power and water shortages, will make prices of products and services uncompetitive in the global market. These were concealed because of the dollar arbitrage and now exporters are not able to cope at the rupee breaking the 40 mark.

Everybody has a vision in India, including our last President Mr Kalam with his 2020 vision. But every Vision needs an equally committed mission and missionaries who execute the mission to make the vision a reality. Does India have the systems, processes, governance and people with the required skills and character to build a nation that is great and fair place to stay and globally competitive. Not sure if I will see it in my lifetime.

If you agree or disagree would appreciate your views, please send email at shrikant.patil@gmail.com

3 thoughts on “Is India a Productive Nation ?”

  1. As someone who has worked for the last 10 years in the infamouus IT shops of India, I fully agree with the remarks on the muck that fills the cubicles of the likes of the Infys. As Mahatma Gandhi said “Actions express priorities” and in shining new India it’s unfortunately just talk and no actions.

  2. Thanks to the runaway growth, a section of society has experienced better lifestyle. Now they will fight tooth and nail to maintain the lifestyle. There will be “corrections” but there will be inventive ways people will adopt to maintain the ‘status quo’.

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