‘Open the roads, that’s enough for India to grow’
At a time when the world is in the grip of a financial slowdown and companies are struggling to hold on to their business models, Eliyahu M Goldratt, a business management guru and author of the bestseller The Goal and the recently-published The Choice spoke to Sandeep Singh on the options before business leaders, and how to address the issues. Excerpts:business Updated: Feb 22, 2009 20:32 IST
What is your view on the current recessionary fears?
There is a financial meltdown but no recession. There is a temporary scare.
What, then, is the problem?
I think the companies are holding back their investments at a time when they should do more of it. That will cause the real damage. It will hamper the growth going forward. I think that they will hold it till such time when they realise that things have certainly improved.
How do you think it is going to play out in the medium term?
The real damage will come two years from now, as there will be more bottlenecks. When you will need more you will see the production to be low and that will hurt.
Why do you think the companies are falling apart? Were they not equipped to handle such a situation?
That is because nobody is thinking cause and effect, and they are all just extrapolating. Everyone is in panic and that is why they are laying off people.
So what do you think should be done?
I think things will improve in two months when the inventory gets over and demand comes back. When that happens and companies go back to their laid off employees to hire them, I just hope that those workers choose another company.
Do you think the companies are taking the situation as an opportunity to lay off people?
There are only few of them doing so; the majority is (laying off staff) because of genuine fear.
What do you think India should do to grow fast?
Open the roads and also open the custom barriers on the roads. When you drive a truck in India, it feels like you are moving from one country to the other.
A lot of time gets wasted because of the roads.
How will this help?
What you don’t realise is that the longer is the replenishment time for retail, the higher is the inventory in the retail market and thus higher is the cost and lower the profit. The roads cost you half the economy. Open the roads and that is enough.