It's time to get back on track
The past year is perhaps a forgettable one for India Inc. The rate of industrial growth in November 2011 fell to a mere 1.9%, with GDP growth revised down to 7.5%. With the Reserve Bank of India repeatedly increasing interest rates to curb sky-high inflation, investment has been hit, along with investor confidence, writes Abhijit Patnaik.india Updated: Dec 31, 2011 23:27 IST
The past year is perhaps a forgettable one for India Inc. The rate of industrial growth in November 2011 fell to a mere 1.9%, with GDP growth revised down to 7.5%. With the Reserve Bank of India repeatedly increasing interest rates to curb sky-high inflation, investment has been hit, along with investor confidence.
Through a survey of over 80 CEOs and other top executives, we have analysed the strengths, weaknesses, opportunities and threats (SWOT) faced by Indian industry today. The results reveal a general sense of unease at the pace at which reform is happening. Top executives have showered praise and poured scorn in equal measure over their own performance as well as highlighted the challenges facing them in the coming months.
For example, 60% of those surveyed believe that the government does not support industry actively in India. Sixty-one% are of the opinion that India has not produced a world-class product yet. Sixty-five% believe that the availability and requirement of skills in the working population are mismatched. So much for our demographic dividend.
Of course, not all is doom and gloom. We are growing at 7.5%. That’s five times the expected growth rate in the United States in 2011.
The United Kingdom is expected to grow at less than 1% over the same period. We have our fair share of problems, but compared to some European nations, things here are decidedly peachy. Demand in India continues to grow at a healthy rate, and over three-quarters of respondents think that this is what still attracts foreign investors.
The challenges are many. Transforming the manufacturing sector by allowing large-scale factories to produce exportable goods has been a crying need. Investment in skill and education infrastructure, to make sure that the incoming labour force is literate, has been ignored long enough.
India is becoming a haven for the middle-class. By 2025, 37% of the population will be in this category, according to the National Council of Applied Economic Research. From consumer goods to the need for commercial and residential space, the growth in the next two decades is going to be immense. Companies need to be ready to take advantage of the tailwinds of a growing population and an enlarging domestic market. We have the leadership, we have the ideas, we have the talent. It’s time to unleash it all.
Happy New Year!