Covid – Contending with the Waves of Uncertainty!

If at all there has been one thing which is consistent with Covid, it is its remarkable inconsistency.  From the time Covid entered our collective lexicon in February last year, every theory or conclusion related to its behaviour has been found to be inconsistent or invalid very soon after.  Like India was never affected by Bird flu or SARS virus, so we will not be affected by Corona virus (See the situation today). India is a hot country and in peak summers, Virus cannot survive (It did hit us through the last summer). India will be spared as we have better immunity for many diseases (Of course India was not spared).  During monsoons in places like Mumbai, Covid is going to create a havoc (There was no specific spike during monsoons).  Masks are required only if you have symptoms but hand washing and sanitising are most important to prevent the spread (Today, it seems it is the other way – Masks are most important and hand washing is not that important).  Once vaccines are found, that will be the end game for Covid (Vaccines were indeed found but the end game is still not in sight).  Once you take the two doses, you are safe (Now the latest theory is, we may have to take vaccines every year!). This was just to list a few theories on Covid which have got negated along the way.

We must keep this in perspective when we make our judgement on the way the municipal administration or State governments or the Central government or the Prime Minister have handled what is now called as the 2nd wave in India. Let us all be honest. Since the dawn of this New Year, all of us have in some way or other started moving towards leading a normal, pre-Covid life. We started – travelling out of our cities, taking vacation breaks, working from Office, wining and dining out, going to places of worship, having social get togethers, planning for house functions and getting domestic helps back in our houses, to mention a few normal/pre-Covid activities.

All of us were keen to put Covid behind us and lead a normal life. We all understand that it is important for economy to get back to normal which can only happen if consumption in all spheres get back to normal. We were all happy when GST figures reached pre-Covid levels and were delighted when it started exceeding pre-Covid numbers. All this when we also got the news that vaccines were available and we could see some light at the end of the Covid tunnel. We all celebrated and rejoiced about how India came out unscathed on Covid.

What we did at individual levels, companies did at their level as well with respect to businesses. And similarly the administration and Government did at their levels. In this period, we must not forget that farmer protests which in normal Covid times could be super spreader events were going on in most parts of North India. Yet, we didn’t see any spike in Punjab or Delhi or other states where farmers in large numbers were protesting taking limited or no Covid precautions. A full test match was held in Chennai with spectators watching it and there was no spike after that. Looking at these I guess, the Election Commission went ahead with the conduct of the polls in the five states in March and April. Ditto for the Uttarakhand government for the Khumb festival.  We all lowered our guard. Not just the government.

Today, however in India, we have been savaged by a Covid Tsunami. So, what we see all around are depressing news about deaths, sufferings and other collateral issues, all related to Covid. We have been hit by a lethal second wave which none of us saw it coming. This is where the first failure of the epidemiologists, experts and relevant authorities in the administration come into picture. All the while in the 1st Quarter of this year, I only saw experts explaining how India has flattened the curve and how we were moving towards herd immunity.  So, when other countries like the UK, USA and a few European countries were hit by a second wave, why was there no alert from the experts of a potential second wave in India?

In the mid of March, we could see suddenly numbers rising in states like Maharashtra and Kerala without any specific trigger like a super spreader event. When at that time, a few were enquiring with me on what’s happening in Mumbai, I mentioned that it is only a question of time the numbers start going up in other cities/states. And that’s what happened. So, when a person like me without looking at any regression models or analysis could predict that we are up to an imminent spike in numbers, how come the state governments and Central government did not realise that we are walking into a sudden burst if precautions are not put in place immediately.

Even in the 3rd week of March, if the Election Commission had announced strict regulations on campaigning or Khumb was made symbolic as it was done eventually, things would have been different. Or if all states including Maharashtra started what it is doing today in terms of restricting movements, we could have avoided the crisis. This is the second issue.

As some wise man said, “Before, you are wise. After, you are wise. In between, you are otherwise!” In hindsight everyone is God. Anyway, today lock downs have been put in place and I am sure, the numbers will start coming down in the next 4 weeks. Already the numbers in Mumbai are showing a declining trend day by day. But, once we reach a trough, again it will be time for “Unlock 2.0”. When that happens, we may once again at some point of time witness a third wave, unless by that time we have vaccinated a reasonable mass of people.

It is clear therefore that the key to prevent further waves, is vaccination. Or so we hope at this point in time, unless even this theory gets demolished. It is now apparent that the vaccination roll out has been patchy.  Just six weeks into opening up of the vaccination program to public, we have a shortage of both the vaccines.  And I am not joining the chorus of why India exported vaccines when we should have used it for Indians first. The external affairs minister has articulated recently that if we do not support other countries, we cannot expect support from other countries for supply of raw materials. This could be the official line. But the main reason why the government also decided on exports initially was the shelf life, in my opinion. The government cannot give this reason out for obvious reasons.

The shelf life of Covishield is six months from the date of production. As per Serum institute, by the end of December, it had already produced about 50 million doses of the vaccine. I must add here that it had started producing and piling up inventory even before the official approvals. Since the vaccination roll out in India was planned to be in phases starting first with the health and frontline workers for obvious reasons, the stock would not have been consumed before the expiry. Hence, exports meant to serve triple purposes as per me. Consumption before expiry, generation of good will with Vax diplomacy and fulfilment of commercial and licence related contracts for Serum.

A committee under Niti Aayog has been entrusted with the roll out of the vaccination program and it appears that the whole plan was based on “let’s cross the bridge when we get there”. How else can we explain the fact that the Central government had not secured supplies for the vaccine from the two approved sources at least to cover 60% of the adult population right at the beginning? Why is it that the companies were not committed working capital support right at the contract signing stage? If there was a clear plan of sharing of responsibility between Centre and states, it was never made transparent. And today we see that the whole vaccination has been opened up but without ensuring supply. From vaccine hesitancy, it is now a rush for vaccine. It is going to take at least till June for stabilisation of supplies. To me, more than not anticipating the second wave or being lax on taking actions after witnessing the second wave, the ill preparedness of the government on the vaccination roll out is the main issue.

While it is now clear that we as a country have landed our foot into a second wave land mine, the last thing we should see is politicking over this and the never ending blame game between the Centre and states. It is high time that the Centre and states work together in diffusing the crisis rather than pointing fingers on who is wrong at this stage. This is a collective failure of all of us, the society, the administration, the domain experts, the State and the Central government.  As common public we must now learn to be cautious throughout even if we have taken the vaccine, control our instincts to get back to normal lives soon and learn to deal with what could be waves of uncertainty in the coming months.

Having said that, in terms of accountability, the buck of course stops at the top, which is the Prime Minister. He must now quickly move towards establishing a separate ministry for Covid and have a competent minister and set of bureaucrats to man the same.  This ministry should be tasked with all activities related to Covid as an umbrella entity. Being pro-active should be the core mantra for this entity.  It should be acting on a WAAR footing – Watch – Anticipate – Act – Repeat.

As we have seen, unless we get out of Covid quickly, lives and livelihoods will be under jeopardy – caught in the ensuing waves of uncertainty.

Pic Courtesy: India Today

Budget -21, Reform push and Time to Market!

There have been budgets in the past which have sort of quickly moved away from the headlines. And there have been budgets which remained in the headlines but for all wrong reasons. This year’s budget, incidentally the 8th one from the Modi Sarkar presented by Nirmala Sitharaman has managed to hog the limelight for all the “right” reasons. The pun here is well intended.

Talking of the reaction to this government’s previous budgets, it’s always been muted and for obvious reasons. Ever since Narendra Modi became the Prime Minister way back in 2014 that too with a clear majority, the expectation has been that he will bite the bullet on many of the much needed, long pending reforms. Honestly, the previous budgets of the Modi Sarkar were mostly incremental budgets with some increased allocations here, some improved programs there and so on. “What’s the Big Idea”? ‘Where are the Big bang reforms?” were some questions hurled by the commentariat post every budget. It has been my observation that under Modi, the budgets have just become an annual statement of allocations and outlays while Big Ideas whether it was the Swachh Bharat Abhiyan or the Ujjwala Yojana et al were launched outside of the budget. But in this year’s budget, there has been a welcome change to announcing some “Big Ideas”.

The positive vibes around this year’s budget can be attributed to the announcement of few big ideas which have been reformist in nature, while keeping the budget free of any “bad news”. One is the announcement of the setting up of an Asset Reconstruction Company (ARC) which is a euphemism for a “Bad Bank”. Second, is the statement of intent on “privatisation” of two Public Sector Undertaking Banks and one General Insurance company. So far, governments have been taking umbrage under the term – Disinvestment without putting out the word “Privatisation” so openly.

Not just the budget, but the announcement has been followed up by speeches in the parliament and other forums by those who matter in the government, on the seriousness of the intent. In fact, as per news reports, Niti Aayog has recommended to cut the number of state owned Public Sector Undertakings (PSUs) to just 24 from over 300 that exist today. If this programme takes off, it will make Modi a reformist of “Thatcherian” proportions. If you recall, Margaret Thatcher way back in 1979, on assuming power systematically embarked on a reform program to revive the British economy. She deregulated markets, cut tax rates, removed exchange controls and consigned militant trade unions to oblivion. But, it is the privatisation of State owned corporations like British Steel, British Petroleum, British Telecom and British Airways that stays as her enduring legacy till today. So, what Thatcher achieved in the early 80’s in the United Kingdom is what Modi is embarking to do in India after forty years. That brings to the next point of this post which is the important piece of “Time to Market”.

In business, Time to Market is nothing but the time taken by a company to launch a product or a service from the date of firming up on an idea.  For companies, this is an important issue in new product introductions.  In businesses that are highly competitive or for that matter any business, you cannot afford to have a long Time to Market.  That would run the risk of your competitor getting ahead or consumer preferences changing that makes the idea less relevant or even redundant.  I believe that even in the matter of reforms for a government, a short Time to Market is critical. And as a country, our track record on that front is unenviable so far.

In the context of reform push, I believe there are three stages namely – Idea, Intent and Implementation. First, the idea is just floated in a budget speech or on important occasion/forum. Then the Intent is demonstrated when the idea is given a proper shape, laws are formulated if there is a need and resources are allocated.  Implementation is when finally the reform becomes a reality and is rolled out. So, in India if you see the history of Time to Market on important reforms, it doesn’t pose a pretty picture.

For example, take the case of a reform like Aadhaar. The idea and need for a unique citizens identity card was floated way back in 2001 by an Empanelled Group Of Ministers (EGOM) chaired by the then Home Minister L.K. Advani during the Vajpayee led NDA regime. It was only in 2009, when the intent was demonstrated by the UPA government led by Manmohan Singh with the announcement in the budget and then following it up with the set up if UIDAI (Unique Identification Authority of India) under the leadership of Nandan Nilekani. And finally, the first Aadhaar card was issued to a citizen in September 2010. So, from the idea to the launch it took a good 9 years. In the case of GST, from the time of the floating of the idea way back in 2000 to showing the intent in the budget in year 2005 to finally launching GST in India in 2017, it took seventeen years.

In the case of the policy of allowing 100% Foreign Direct Investment in retail however, from the stage of the Idea to Intent to Implementation, the landscape of retail has changed. India doesn’t still allow 100% FDI in multi brand retail. This was seen as an important reform in attracting FDI and employment generation a decade ago. But now with the advent of E-Commerce where 100% FDI is allowed in the marketplace model, 100% FDI in Multi-brand retail is no longer seen as a constraint. In other developing countries like Thailand foreign direct investment in retail gave a huge boost to the economy. But India missed that boom because of the dogma around FDI in multi brand retail which stretched the Time to Market on that reform.

Ergo my point is, if the reforms which have been announced in this budget have to make an impact, short Time to Market is critical. Having floated the Idea of a Bad Bank, it is important to follow up quickly with the formation of the ARC and eventually roll it out within this year itself so that the PSU banks can be freed of the stressed loans and they can get back to lending with more ease. Similarly, in the case of privatisation of PSU Banks, the idea has been floating for a while now. But this is the first time, the government has expressed its formal intent via the budget speech. The road to privatisation is not going to be easy at all with trade unions already gearing to pick up the gauntlet with the government. I though believe just as the mass VRS issue in PSUs like MTNL and BSNL etc. went through in spite of stiff resistance from trade unions, this time, the government may be able to pull it off with a few hiccups. Or so I hope.  Also, while the stock markets are on a high this year, the government can manage to get better valuations.

In the run up to the 2014 Lok Sabha elections, Modi repeatedly talked of “Less Government, More Governance” and “Government has no business to be in business” – thoughts which signalled a clear Rightward tilt on the economic philosophy front. However, till this budget speech, we didn’t see much of action towards withdrawing the government from running many businesses. This budget from that sense is critical in signalling the government’s intent towards moving away from running inconsequential businesses, which is a good sign. And, if the intent is translated into action in a reasonably short Time to Market, then it will be Narendra Modi’s lasting legacy in changing the economic course of this country.

Post Script: If Aandolanjivis are those who make a living out of protests, what about taxing them? And what would be the Time to Market for this idea? 😁

Nothing Private about this!

Ever since, WhatsApp informed all its users of its new update on the privacy terms with an option to accept or “else”, debates and discussions have been happening on whether to move out of WhatsApp or just agree and continue. Irony lost its privacy when all these discussions have been happening predominantly over WhatsApp itself!

In the meantime, rival platforms like Telegram and Signal have seen a huge traction in terms of new users. WhatsApp has been trying to put out the fire through full page ads in mainline newspapers insisting that the new changes are not of any material consequence. And finally, it took a call to put off the effective date for the new policy till at least May which was earlier the 8th of Feb. Hopefully the chatter on this issue will reduce in the coming days. For the rival platforms and media companies though, in these tough times, this has become a bountiful New Year present from the Facebook Corporation.

I personally have been trying to wrap my head around what’s the brouhaha about and what should I do. Privacy is indeed a major issue. But the moot question remains as to where do we draw the line on it. With the advent of technology first in the form of computers, internet, Networks, the Mobile phone and now Apps for anything and everything under the Sun, it is clear that life has become more convenient. At the same time, it is also clear that all these invade a lot into our privacy.

The last time when the issue of privacy entered the drawing room discussions in India was when the Government of India was pushing Aadhaar linking to bank accounts, mobile phones, IT returns and so on. The move was challenged in Supreme Court and post the verdict which sent mixed signals, we don’t see so much push on the Aadhaar front these days in terms of linking with anything and everything. Aadhaar has now been relegated to just being one of the requirements for identity proof.  This is unfortunate because, when Aadhaar was envisioned by Nandan Nilekani and his team, the scope was to use Aadhaar for delivery of many of the Government services. There was also a talk of a virtual Aadhaar Bank. All those big ideas lost their way now due to the battle which a few launched on the privacy front against Aadhaar.

I was then of the opinion that all those who use mobile phones, who are active on social media, who use tools like Google search and maps and so on should never complain about privacy. As part of their functioning, they anyway track the users. So the question of privacy doesn’t arise. The only way to protect one’s privacy is not to use them at all. Even the congressional questioning which took place in the US against Facebook, Google etc.… did not lead anywhere because, at the end of the day, as users we choose to use the tools and accept the conditions that define the usage of these tools. We all have the choice not to use them at the expense of convenience in life.

My position around the new changes in WhatsApp and the next steps, veers around the same points.  If you are a user of Google search, Maps, Mail and the works, anyway a lot of your activity is tracked and shared across platforms. And today, I came to know that our off Facebook activity say in other Apps are being shared with Facebook by the Apps for which we have signed up and accepted the terms of usage! It’s ironical that many who complain about the new update in WhatsApp continue to post “Check in” and “Check Out” status on Facebook!

I also realised that more than the issue of actual privacy, the inhibition towards WhatsApp’s new policy has come from “Big Corporate phobia”. I remember reading in Philip Kotler’s Bible on Marketing that large corporates and market leaders are always prone to becoming victims of negative public reactions frequently and so the Marketing team in such large companies should be equipped to pro-actively sense this and strategize accordingly. Had this privacy update notice come from a smaller player, the response would have been muted. But because it was from WhatsApp which is this humungous communication monster today that too owned by another monster called Facebook, the noise became louder.  And looks like the marketing team there hasn’t read Kotler!

I feel a bit lazy and hassled to ditch WhatsApp now and start using another messaging App say like Signal knowing very well that Signal could be acquired by Google or Facebook tomorrow. And what stops the rival Apps from changing their privacy policy tomorrow? And also even after moving to another App for some group activities, if I have to continue with WhatsApp for other groups, it is a pain to dabble in multiple platforms, not to mention of the erosion in the available memory space on the poor mobile phone.

WhatsApp has turned out to be one of the most convenient mode of instant communication today and has become ubiquitous. So ubiquitous that WhatsApp has become a verb. You don’t send a picture over WhatsApp but you just WhatsApp it! It is indeed convenient and it has been free all along. It has broken all kinds of class barriers. It will take a while to completely sign out of this presently. Not that it is not probable. (Remember Orkut?)

Back in 2014, when Facebook acquired WhatsApp for a staggering US$19bn, the first question that came up in our minds was, what all will Facebook do to monetise WhatsApp? What’s been happening of late with WhatsApp is part of the answer to that question. The launch of WhatsApp business accounts, WhatsApp Pay and probably a virtual WhatsApp Bank are all steps to add revenue streams to the company.

It appears that there are two options now. One, if I am so concerned about my privacy, I have to ditch my smart phone, become smart myself, stay away from social media and stop using all the convenient Apps. It’s like going back in time to another era altogether.

The second option is not to get so concerned about the privacy threats and continue to use technology but be conscious of what we do and what we share on Apps and platforms and hope and pray that all’s well that ends well. For now, I have chosen the 2nd option. What about you?

If you like this post, do share among your WhatsApp groups or any other platform you have taken to of late. Thank you.

Pic Courtesy: NBC News

Tanishq Ekatvam – Anatomy of the Campaign!

When you read this, I am sure you will be familiar with the latest product of the “Outrage factory” in India. Tanishq, Tata’s crowning jewel other than TCS provided the raw material this time. The outrage was around an ad which was put out to kick off its new Ekatvam campaign. The company soon pulled down the ad bowing down to the social media outrage but not before it went viral and divided popular opinion.

As a standalone ad, (see here) I personally liked it. The story is consistent with the purported theme of the campaign, where “the beauty of oneness” was being promoted. Oneness in this case was conveyed through the coming together of Hindu and Muslim faiths after a marriage between a Hindu woman and a Muslim man in this case.

There was predictable outrage following the ad where many questions like “Will they show a marriage of a Muslim girl and a Hindu boy?” and “Why are they showing as if the Muslim parents were doing a favour by following the girl’s traditions” and so on. I am certain that if the ad was shown as above, there would have been exactly opposite questions. Newton’s third law – “For every action is there is an equal and opposite reaction” and Whataboutery are the cornerstones of today’s outrage factory.

My take on the ad itself is that it was a well thought out plan. The campaign was launched during IPL just ahead of the festivals which is peak season for brands like Tanishq. And during this period and particularly during IPL, it is important to cut the clutter. One way of doing it is to make a nice commercial but with a contrarian story line. It helps the ad to stand out and also ensures it goes viral. That’s what happened with the Tanishq ad. Today for most marketers, the starting point of a campaign is to make it “Go viral” and if it does, it is the ultimate take away for the bucks spent.  So, kicking off a controversy through the ad is one established method of making it go viral. Many companies in the past have done that and Tanishq is no exception. I had written about this in one of my earlier posts “Stir up to sell” and if you haven’t read that, please do read here.

It is unfortunate that the company decided to pull down the ad. At the same time, it is easy to criticize the Tatas for succumbing to social media pressure in taking that decision. But I believe that it was a pragmatic choice. Already the business is reeling under the after effects of Covid with showrooms just being opened up. And the peak season is just ahead of the company. At this time, it makes no sense to do grandstanding risking the safety of its retail staff and properties.

At the same time, due to the heat the ad cranked up, the ad went viral and more people have seen than probably originally envisaged. The ad and the brand have become talking points for weeks over and even this blog would not have been written if the ad showed a plain vanilla oneness story!

This post though is not about the journey of that particular ad. I wanted to use the window the ad provided to look at the strategy behind the campaign itself.

As I mentioned earlier, the campaign titled Ekatvam has been kicked off by Tanishq just ahead of its biggest season. In North India, the festive season around Navaratri and in particular Diwali/Danteras are peak seasons for buying gold jewellery. And any serious brand would not like to miss out on this high stakes season.

At the outset, Ekatvam seems to be a brand building exercise to build on its core values of “Trust” etc. So far so good. After having seen the ad that sparked the controversy, I went to Tanishq’s website which also showcases the Ekatvam campaign. And here’s the thing! It says “Tanishq presents Ekatvam – the beauty of Oneness!” It says the “thought” being, “Beautiful things happen when people come together. But today, we’re asked to stay apart, keep a distance and be safe. While we continue to do this, through compassion, empathy, hope and care, we’ve come together when it was needed the most.” And goes on further. “The beauty of oneness. One as humanity. One as a nation. Ekatvam. A confluence of India’s finest craft forms, intricately knitted into one stunning collection, bought alive by our skilled Karigars, where similarities and differences all become one!”

Beautiful thought and an excellent copy. However, if this is the Ekatvam (confluence of India’s craft etc.) Tanishq wanted to promote, where does this aspect come out in that ad? It is common marketing wisdom that when a company launches a campaign, it is showcased consistently across media platforms may it be Print, TV, Web site, Digital etc. I don’t see that being followed here. While the website talks of the campaign being a noble effort to bring together different craft forms and craftsmen, the TV commercial tries to convey oneness by bringing faiths together.  If you look at the print ads, the one in North India (see below left) is consistent with the theme in the web site. However, the print ad in South (see below right) doesn’t explain anything about Ekatvam beyond the tag line of “the beauty of Oneness” and looks more like a “Sales promotion” ad.

 

 

 

 

 

 

So, this brings back to my original hypothesis that the controversial ad was part of a game plan to “Stir up to sell”. The brief it seems was to deliberately bring in the Hindu – Muslim angle and showcase the oneness. And probably the company sort of expected the backlash. In any case, backlash or not, the ultimate objective was to make it go viral and maximise the bang for the buck. The outrage factory in my opinion completely missed this point and effectively contributed in making the ad and the brand top of the mind for few weeks.

What the controversial ad would do to sales would be an interesting thing to watch in the coming weeks. While some commentators feel that it may affect the retail sales a bit, I reckon it may not do much damage.

In final summary, just as you shrug off a lean business period after lock down and get into a peak season phase, why would you launch a CSR kind of corporate campaign of Ekatvam?

Post script: Another innocent question to the makers of the ad. When you wanted to showcase Hindu-Muslim confluence, why would you choose a Kerala family as a backdrop when the ad is in Hindi and aimed at festival season (Diwali) in North of India?

“JUST” learning to live during the pandemic!

Vijay Yadav* is a small time vegetable and fruit vendor who has been carrying out his business in Mumbai since 2 decades now.  Ever since the lock down, in our apartment complex, he is one of the suppliers of fresh vegetables and fruits. Twice a week, we place order over WhatsApp to him and he delivers the same at the parking lot of our building. He informs us the due amount on WhatsApp and we pay the amount due to him through Google Pay.

22nd Aug, 2020 was Ganesh Chaturthi. Due to the current pandemic situation, we couldn’t go to the local market for Pooja related shopping (different types of Flowers, Garland…) on the eve of the festival. When we were wondering what to do, Meena*, our regular flower seller informed us to our pleasant surprise that she will home deliver whatever flowers and items we need and asked my wife to send the list over WhatsApp. On the 21st evening, the list was delivered at our ground floor. She informed us the amount and we made the payment to her through PayTM.

On 22nd Aug was also our Avani Avittam (Janeu changing ceremony) for which our regular Cheenu vaadhyar (bhatji) sent us the YouTube link to join him. From home, we completed the rituals and promptly sent the Acharya sambavana thro Google Pay.

In between we had to consult for a routine ailment with our Homeopath doctor.  We did the same over phone. He said he will send the medicines to our house within 1 hour. He has a tie up with Swiggy and the medicines were delivered at our doorstep. The doctor gave his UPI id for transferring his fees, which we did.

What is common in all these? It is that we and the other parties involved were able to carry on with life even during the lock down period without stepping out of our place, fairly smoothly. And if you look at it closely, this was made possible through a combination of Smart phones, Bank accounts (to which we could transfer the money) and more importantly the UPI platform through which we could transfer money real time into bank accounts of beneficiaries.

It was Dr. Arvind Subramanian, Ex-Chief Economic Advisor to the Government of India who in his 1st Economic Survey document coined the term – “The JAM Trinity” and said that the potential of Jan Dhan Yojana, Aadhaar and Mobile phone could be harnessed to plug subsidy leaks and ensure a more targeted delivery to those needy.  This was the beginning of Modi’s 1st term during which, the government gave a huge push to opening Bank accounts for the poor through the Jan Dhan Yojana and also advocated the use of Aadhaar for identifying the needy.  However, in the aftermath of Covid-19, I would tweak the JAM Trinity and say that it is the “Quad of JUST” which is helping to keep the bottom of the pyramid afloat during the pandemic.

If you look at the examples I have provided at the beginning, you would realise that even with the unexpected strike of the pandemic, what has been sustaining at least some fraction of the economic activity is a combination of

J (Jan Dhan Accounts) – through which we could transfer money to beneficiaries who are not so privileged like Domestic helps, small time vendors and so on.

U (UPI Platform) – without which money transfer to bank accounts through mobile wallets like Google Pay or PayTM for example, couldn’t be so easy and swift.

S (Spectrum) – as in the advent of 4G which has made data usage cheap and ubiquitous in India

T (Technology) – Without which all these would not have been possible at all.

In this four, I would like to focus on the UPI bit. United Payment Interface (UPI) developed by National Payments Corporation of India was launched in India in April 2016. But it was post the Demonetisation that UPI as a tool got its fillip in terms of adoption and usage. Just look at the numbers. From just 21 banks who were part of UPI in 2016 when it was launched, today it is more than 140. The transaction volumes have grown exponentially from 2.06 mn. in Dec 2016 to 1.49 bn. in July 2020. And in terms of revenue, it has gone up from Rs. 13.17 crore to Rs. 29.05 Lac crore in the same period!!

It’s been so much of a runaway success that Google (which is part of the UPI through its GPay product) has written to US Federal Reserve Board urging it to build a similar faster payment service platform in the US citing the case study of UPI.

As documented very well by Shankkar Aiyar in his book, The Accidental India, in post Independent India, almost all of the successful economic transformations happened as an answer to a crisis. Similarly, the success of UPI in India also, could be pointed towards the cash payment crisis situation that resulted due to Demonetisation in November 2016. While Demonetisation might not have yielded the originally intended objective of the government namely to suck out the black money from the system, I feel that it has delivered or still delivering other positive outcomes.

Among the top is the formalisation of the economy which is a Work in Progress. The huge success of UPI has made conducting business smoother and easier even during lock down times even for the micro business community. At the same time, the added benefit is the expansion of the formal economy where less and less transactions happen through cash.

The last few months ever since the pandemic struck, have been testing times for any country and its economy.  It’s my feeling that after the initial complete lock down phase of two months, Indians have accepted the reality and have started looking at ways and means of getting on with their lives even without any dole from the government in the form of cash support. Purely from the stand point of micro businesses, they have all tried to adapt their business models to at least survive and stay afloat. Accepting orders through WhatsApp, doing home delivery and equipping themselves with online payment options are some of these adaptations. And these may very well stay even after the pandemic is over. In that sense, while the media commentary (when not busy with Sushant Singh’s death that is) could be around doom and gloom due to Covid in India, the common man has learnt to live during the pandemic with the “Quad of JUST” and will to survive.

Postscript: Way back in November 2016, in the aftermath of Demonetisation I had written a post titled Cash Mukt Bharat (Read here) where I had fantasised of an India where cash transactions have reduced completely by 2025. We are in 2020. Looks like many things mentioned in that post have already become a reality.  Amen.

*All names changed.

Pic courtesy: Yourstory.com

Taming the Dragon!

This is intended to be a sequel to my last week’s blog– Return of the Dragon. If you haven’t read it, please read here.

The military standoff between India and China at the border is slowly turning into a diplomatic one with both sides waiting for other side to blink first. Marathon disengagement talks are going in parallel with coercive military build-up on both sides. And in India, we have set in motion a slew of things in an effort to “tame the Dragon”.  But what real options do we have to tame the Dragon?

I remember vividly that whenever we used to have these military tensions with Pakistan triggered by some terrorist attack, though we are a militarily and economically stronger nation, experts would say that a full blown war with Pakistan is not an option between two nuclear powered countries. At the same time, we were told that we must raise the cost for Pakistan to carry out terrorist activities, whatever that means. Since there is little economic activity going on between India and Pakistan, it doesn’t really make any difference to Pakistan even if we sever all economic ties.

Between India and China too, a full blown war is out of question considering the fact that we are both nuclear powers. The issue of longstanding boundary dispute can be resolved through talks and diplomatic efforts. But, since both countries cannot give up even a square inch of land, a solution to the boundary dispute is not coming any soon. Under these circumstances, the best option which is face saving for both is achieving Status Quo Ante!

At the same time, while pursuing diplomatic engagement to get the troops back to where we were before this round of escalation, it is necessary for India to raise the costs for China to deter it from indulging in border escalations.  This, I believe can happen only on the trade front.  On the trade front, I believe that China has more to lose than India if relations are spoilt.  And this is opposite to what the commentariat in the India media feel. That being the case, what are some of the options?

  • China is an exporting economy. For the past few years (coincidentally since Xi took over in 2012), the Chinese economy has been floundering, after years of high growth. Under the circumstances, it cannot shut business with a country like India which is poised to be the most populous country in the world soon. In 2019, we imported US$75 billion worth of goods from China. Those who say that this is miniscule compared to the total exports of US$2.5 Trillion China does, are missing the larger point. As globalisation weakens and Nationalism grows and in particular when large economies like the US, Japan and Germany are talking of de-risking from China in the wake of Covid-19, spoiling trade relations with India and denting the prospects for trade growth is the last thing China can afford. So, leverage on this aspect.
  • A quick look at the last quarter’s import data shows that Electronic Components, Telecom Instruments, Industrial Machinery, Computer Hardware and Peripherals are the top 5 categories of imports from China and take up almost 33% of total imports. As a country, we must roll out a solid, strategic plan for developing the domestic Electronic Hardware manufacturing industry. This cannot happen overnight. But can happen with a vision and a roll out plan in the next ten years. Considering the fact that the role of electronics, is on the continuous rise in every aspect of our life and every aspect of engineering, the scope for just catering to the domestic market and then emerge as a competitive, key part of global supply chains is huge. There has been talks in the past to build a globally competitive electronic manufacturing industry in India but this is the right time to translate those talks into actions on the ground.
  • Ever since, we lost lives of our soldiers in the border standoff, the cries of “Boycott China goods” have become louder and more visible. A total and real boycott of these is not neither feasible nor advisable under the current circumstances. Chinese components are a key cog in the Indian manufacturing wheel today.  Instead, whatever government does needs to be only “covert” and not overt. In short, kick off “Salaami slicing” in aspects of trade and commerce.
    • For example, for all government purchases, government cannot openly declare that it will not buy “Made in China” products. However, it can signal a preference to “Made in India” products.
    • Just last week, government made it mandatory for sellers to indicate the “Country of Origin” for their products offered on the GEM (Government E Marketplace) portal. While this was touted as a move to promote the Prime Minister’s Atma Nirbhar Bharat vision, that it was a move to identify products coming from China was not lost on trade observers. Government can do more covert actions like this.
    • For big infrastructure projects, go slow on Chinese companies. (There are many ways of doing this)

  • In the private consumption space, there is a groundswell of opinion among the common public against Chinese products. Usually this sentiment is very temporary. But now, as the government cannot take part directly in festering any Anti-China emotion, it can use the party, its loyal trade bodies and Non-profit bodies to do the job in keeping the sentiment alive for a long time. Though in terms of dollar terms, the reduction in imports in the consumer goods space may not be significant for China as a country, any reduction in demand and orders particularly with the weakening demand due to Covid-19, will affect the Chinese sellers. For example, for the upcoming festival season in India, even if the orders are reduced by half than usual for the many consumer items including domestic appliances, garments, plastics, gift items, decorative items etc. it will be significant blow.  And if that demand turns into orders for Indian manufacturers, it will also aid the economy here.
  • Creating stumbling blocks for Chinese origin businesses like more scrutiny of compliance matters is another way of covert signalling. For example, just last week, without citing any reason, India customs officials said that there could be delays in clearance of goods imported from China. Moves like these will raise the costs for those importing Chinese goods in India and indirectly act as a deterrent for promoting those products in India in the long run. Here, I would like to add that these moves cannot be sustainable in the long run. But, in the short term helps in messaging. And the Indian government doing this now is a smart thing to do. Manufacturing activity and demand in India is any way weak and tepid at this point in time. So, any delay of a few days here and there is not going the move the dial significantly. I am sure that this will be a short term prick rather than a long term change in process.

Now, there is a distinct possibility that China does retaliatory moves (we hear, it is already acting on delaying customs clearance of goods from India). But as I mentioned, today, India imports 5 times more than it exports. So, as of today, it hurts China more than it hurts India. Of course the imported goods are a part of the Indian economic activity and hence any delay or disruption affects those who are in that sector. It is a small cost to pay compared to the cost our defence forces pay with their lives at the border securing our sovereignty.

In conclusion, to tame the Dragon, we must first believe we can, punch above our weight and play to our strengths as a large consuming and growing economy. “Challenge is a dragon with a gift in its mouth. Tame the dragon and the gift is yours” goes a saying. Time to replace the word Challenge with China?

Covid-19 in the world and Comvid-20 in India!

Since the advent of Social media, “Going Viral” is considered the ultimate thing! As we speak, the world in general and India in particular are reeling from something that literally went viral. The Corona virus pandemic which is now being called by WHO as Covid-19 which started from the Wuhan region in China, has now been spreading rapidly across the globe.

In China where it all started, we understand that things are getting under control. The new cases are reportedly fewer which is a key indication of the virus not spreading further. The Chinese government has been swift in taking tough decisions including shutting down towns and cities in a bid to arrest the spread very early.

As one can expect in a globalised world as it is today, while the situation is getting better in the origin (China), there are other countries where Covid-19 is taking a huge toll. First Italy, then Iran and now Korea have been under the onslaught of the Corona virus in the last couple of weeks. And those who have visited the affected places like Italy and those who came as tourists from these countries into other cities have become silent carriers of the virus. So, countries like America and India have also come under the affected list. Though the numbers are low at this point in time relatively, considering the population in these counties and the viral nature of the contagion, the risks associated cannot be dismissed away.

The approach of the countries to the pandemic is also a reflection of these societies. In highly disciplined and if I may add, regimented countries like China, Korea and Japan for example, the governments moved fast, enacted tough strictures and the public fell in line. The results are there to see. On the other hand, in flexible and If I may say, slack societies like Italy, the government has been slow in action and reaction. It’s only today that we read of Italy taking a call to shut down parts of the country which have been affected. The damage is already done.

From the perspective of economy, it’s already been well documented as to how the global supply chains with its epicenter in China and in particular Wuhan have been disrupted globally. It is believed that Covid-19 will impact global GDP by over 2% negatively in 2020 and this is huge.  As the Corona virus signalled the first decline in demand of oil, Saudi and Russia decided to pump more oil in a battle of market share! Result – Price crash to the extent not seen in 25 years! The chain of events have led to the carnage in the stock markets worldwide. After a long while, we saw the circuit breaker being triggered at NYSE yesterday!

Apart from manufacturing industries affected by Covid-19, the other worst industries are those that deal with people. Travel, Hospitality, Tourism and Events sectors will see an impact worse than the Lehman crisis time! It would be sad if the next summer Olympics being planned in Tokyo in July 2020 is called off due to the Corona virus. As can be only expected, Japan has been super ready for the event for a  few months now and will be a pity if all those efforts go down the Corona drain!

After the Lehman shock of 2008, Covid-19 is the next best example of a globalised world rising and perishing together in ironic harmony. There are very few countries which are immune to this today. The synchronised interest rate cuts by the Central banks a few days ago, I am not sure will help. Because what we are seeing is a supply side disruption and constraints arresting human movement. This is a not a demand problem or a capacity building issue where capital infusion could do the immediate trick. Of course any softening of interest rates is welcome! While the world struggles to get into terms with the aftershocks, I do believe that China from where it all started, may recover faster than expected. Already people have started going to offices after a long break since Chinese New Year and factories have started brimming with activity from last week. Again, at the risk of being repetitive, being a disciplined and a regimented society which China is, we should not be surprised if China gets back to normal by June while other affected countries still continue to struggle to get back to their feet!

Coming to India, along with Corona virus, we had another thing which has been going viral in the past many weeks – the “communal” virus” or Comvid-20! Ever since the Citizenship Amendment Bill got passed and became an Act followed by the government’s “chronological” intent to take up NRC (National Register for Citizens) all over India, the country has been on the edge.

The CAA protests also took almost the same route as a virus spread.  What started off as peaceful protests in different parts of the country essentially college campuses, soon spilled over to the streets. A hitherto unknown entity to those outside Delhi – Shaheen Bagh, entered the daily vocabulary and a subject of Prime time loud debates. And finally culminated with full blown communal riots in Delhi in the 1st week of March.

For Modi Sarkar which prided itself of not facing a communal riot in the country for 6 years since 2014, the Delhi riots have come as a huge blot on its image. That the riots happened in the first place, that too in Delhi which is the capital of India with its heavy security apparatus and when a big diplomatic event that of the US President Donald Trump’s visit was in progress, is an embarrassment. The coverage of the Trump visit therefore turned “split screen” globally with beaming faces of leaders and burning streets of Delhi, side by side!

That today, Social media has a huge role to play in spreading this communal virus is unmistakable!  Images and counter images, Videos and counter videos were just going viral in what I call as a battle of narratives! In sum, even today, we are yet to get a final answer as to who lit the spark first. And in spite of all the media and social media explosion, we may never get it, in our lives! Everything that went viral finally did their bit to mobilise mobs, fuel frenzy and finally celebrate madness.

Covid-19, with the world putting its might behind it may soon get a vaccine and a cure! However, Comvid-20 with its epicenter in India and to do with the majority community Vs minority community wrangle ingrained in our minds for decades, may not get a vaccine soon. Unless, we become a truly secular society where religion is personal and ceases to be a vote bank. Welcome to Utopia!

Time to bid good bye to the Budget!

Just yesterday, Finance Minister of India, Nirmala Sitharaman presented the Union Budget for the upcoming fiscal year 2020-21 in what was a very long speech. The length notwithstanding, it was short on material required to  lift the sagging mood in the country with respect to the economy. The markets tanked big time by the end of the day. If one goes by the commentaries in the media and expert opinions in social media, it seems that the budget has disappointed one and all.  As one expert on TV put it, the reaction was about what could have been done rather than what has been done.

The reaction to the last budget by the same minister in July 2019 was almost similar. Right after the big victory and into a second consecutive term, everyone expected a bolder budget with a road map for tough reforms from the Modi Sarkar. That didn’t happen.

If you go back further to the last few budgets, the story is similar.  In the pre-budget season the air is thick with expectations of all kind. Expectations of big bang reforms, of new big ideas, of a vision for the country and of course of income tax rate cuts! And post the budget speech, the reactions have been similar. “What is the one big idea in the budget?” “Where are the big bang reforms?” “There is no vision in the budget!” and so on.

The last time the media hailed the budget generously was P. Chidambaram’s way back in 1997. It was termed as the “Dream Budget” when it presented a road map for economic reforms in India and included lowering income tax rates, removal of the surcharge on corporate taxes and reduced corporate tax rates. But ever since the budget presentation became a media spectacle post the explosion of 24*7 News media, I don’t recall any budget (of any government) being hailed as a visionary budget or a great budget. Most of the times, the budgets have only disappointed people.

Today, there is a big disconnect between the expectations from the budget speech and what it can deliver. And increasingly, the scope of what the budget speech can deliver is reducing day by day thanks to reforms and change in governance models.

I am of the view that it’s high time we do away with this annual over hyped British era relic of a budget speech which focuses on outlays for the following reasons:

  • Leaving aside the Aam admi who doesn’t follow or understand the language of the budget, increasingly everyone expects the budget speech to actually lay out the “Governance vision and strategy” rather than increase or decrease of allocations. Essentially people are expecting the government to talk the corporate language. Of Vision, Mission and Strategy for the coming year/years.
  • For the budget speech, the FM takes inputs from other ministries on their key initiatives for the coming year and then announces outlays for the same. In a sense the FM is talking on behalf of her/his colleagues. There is little review of outcomes of the past outlays and the focus is more on the future outlays.
  • In the past, one of the areas of interest for the common man from the budget is to know what gets costlier and what gets cheaper. The finance ministry adjusted the tax and excise rates to balance revenue collections for the budget. In the present GST regime, the GST rates are decided by the GST council. The GST council meets as per their charter and decides the change in rates when required. Ergo, the budget speech doesn’t have details of prices going up and down. The exception being any reduction or increase in basic customs duty for imported goods. As we have seen in the recent past, the finance ministry has taken to these announcements whenever they want.
  • Coming back to yesterday’s budget speech, the common feeling was that there was no big announcement that would assuage the struggling economy. If one remembers, the same Finance Minister Sitharaman, had announced an unexpected corporate tax rate cut in September 2019. One must remember that this was not done in the budget speech of July 2019.  This was announced out of the blue, in an out of turn announcement as a counter measure to prop up the economy, then. So my point is, measures that are required to be taken can be and should be taken and announced when needed. One doesn’t have to wait for the budget speech to actually make such announcements.
  • Again if one closely analysed the budget speech, many of the initiatives announced by the Finance Minister can reach its logical conclusion only with last mile delivery by the states. In the sense, these are more like nudges to the state to perform better to get more outlays.
  • Till 2016, there was another media spectacle called the Railway budget. The Modi government took a wise call to do away with this ritual and merged with the Union budget. Except for the reason that it was a British era custom that was followed, it seemed there was no reason for just one of the many departments of the Government of India to have a separate budget presentation day! We don’t have any empirical evidence of any deterioration in the ministry’s performance since then.
  • As I see, there are just a handful of countries in the world who still follow this Annual budget presentation ritual!

Considering all of the above, my submission is, it’s time to bid Good Bye to this all-encompassing Annual Budget Speech by the Finance Minister. Instead, this should be replaced by an address by the Prime Minister in the lines of the State of the Union Address (SOTU) in the US. In this address, the PM should take stock of the situation in the country, the issues on hand and present a vision, road map and the priorities for the coming year. This should be followed by debates in the parliament to understand the views of the other parties and opposition. In the same session, key ministries must present the outcomes of the previous year against the outlays and the plan, initiatives for the coming year in line with the vision, priorities outlined in the PM’s speech. By this, along with the Prime Minister the entire cabinet will be made responsible for their achievements and misses in their ministries, every year.

Narendra Modi, who has a penchant for leaving a legacy has a golden opportunity here. By replacing the budget speech ritual with PM’s Annual Vision Address!

Pic Courtesy: Bloomberg

A New Decade Resolution for India – Moving on from being WIP!

When you are neither here nor there, you are Work In Progress (WIP). As a country, India has been that. A Work in Progress. Now for a long while!

Since Independence, we probably had the tag of an “Under developed” country till the 80’s. From then on, we moved on to be called as a “Developing” country. Since then, it is now 5 decades but, we still continue to be a developing country. An emerging market. A Work in Progress.

Personally for me, from the time I started my career in 1991, India has been a developing country. Even today it continues to be. After close to 30 years.

Just look around and you can notice that almost everything around us is Work In Progress.

Our public transportation in all cities is still evolving.

Roads and highways are perennially under construction.

Health care is floundering but getting better day by day slowly and is Work in Progress.

To just cite a few areas.

In all these years, one thing constant has been that we hold promise. Promise of future potential.

We have had goal posts by way of Vision 2020 etc. in the beginning of this century. In the many versions of those vision documents, by 2020, India was supposed to be an economic Super power.  Supposed to be the 3rd largest economy ahead of Japan or some such thing. As we speak we are still the 7th.

For India in the last few decades, it’s been a case of missed opportunities. We never miss to miss an opportunity. Once missed, it’s a question of living in futuristic hope. If one thing that has kept this country going in the last many years, it is hope. Hope others have on us. More than what we have on ourselves.

In the past, whenever we seemed to have caught the economic growth train, we have quickly derailed it ourselves.

Beginning of every decade is touted to be India’s decade. And we have belied that systematically.

As we step into another new decade, can we actually turn it into being India’s?

What is stopping us from realising our potential? Is it “We the people”? Is it the Government? Is it the politics? Is it the bureaucracy? Is it our attitude? Is it our capability? Is it the population? Is it our chosen path of democracy? Probably it is a combination of all these. And so the answer is complex.

I think the first and foremost need is to put “Economic growth” at the centre of our National discourse and put everything else in the back burner for the next ten years.  For the government, for the media and for the citizenry. There could be and probably there are other unfinished businesses. But it is time to prioritise. And prioritising Economic growth over everything else has obvious beneficial effects on peoples’ quality of life. Has a direct effect on many social issues. It also promises a placebo effect on issues.

It’s not that governments have not been focussing on economy in the past decades. They have, but only intermittently. The question is – was it or is it a single minded focus? As people, did we make Economic growth the single issue while voting?  Politics is driven by electoral results. If parties get the message that if they don’t deliver on economic growth, they cannot win, there will be difference. Today, this is not the case.

A new year is always a time for personal resolutions. This is not just a new year. A new decade beckons. Hope on India is still high. At least as of now. So time for a new decade resolution for India as a country. A resolve to put the Economy first.  Not just first. Just that. For the next ten years.

And move on from being a Work In Progress, come 2030!

On that note, here’s wishing you a busy and exciting decade. Working to Progress.

Image courtesy: Yourstory.com

 

 

Turning the GDP (Gross Disappointing Product) tide!

Many years ago on my visit to China, I found most of the newspapers there giving a lot of attention in their front pages to decline in GDP, tapering of FDI into China and other such economic issues. In a blog post that visit, I rued that in India, our media doesn’t still focus on economic Roti, Rozgaar issues but spend disproportionate amount of columns on mundane political news and views. For the past few months, it has been good to see in India too, the media at last waking up to the slow down blues in the economy.  For more than a year or so, the entire country was pre-occupied with the Modi re-election issue and everything else did not matter.

Since the re-election of Narendra Modi and his government that too with a majority better than last time, the euphoria and the resultant expectations have been very high.  However, the party has been cut short by the bad news coming in on the economic front, day in and day out. There was a great opportunity for this Government with a new face as the Finance minister to have seized the opportunity when she presented the Union budget on the 5th of July and fire the economy. The budget was a decent one but one that was devoid of Out of box, bold ideas which would set the economy on fire. In doing away with the brown brief case and opting for the bahi kaatha, Nirmala Sitharaman’s budget was a ritual breaker but, was not a path breaker! Hence, ever since the budget, there has been quite a few negative reactions as manifested in the tanking of the markets, depreciation of the rupee and a massive FPI pull out!

The initial reaction of the Government to these reactions were in expected lines that our economy was still resilient, one of the fastest growing and hence no need to panic. However soon enough, with bad news emerging on the Automotive sector first and then even on FMCG, the Government was forced into action and from then on we have been seeing a slew of measures, cabinet decisions and sops to revive the economy. Q1 GDP at 5% turned out to be the last straw.  Coinciding with the Q1 GDP results, the Government announced the merger of PSU Banks as a way forward in banking reforms. Economy was finally on top of the news cycle and the Government’s attention, Kashmir notwithstanding!

It was widely expected and hoped that some of the important initiatives of the Modi Sarkar in the 1st term like the thrust on Highways construction, massive investments in improving Railways infrastructure, improving air connectivity to the smaller towns, making electricity available to the last village and so on would start yielding results in terms of improving economic activity and fuel growth in the country. Added to this, Modi Sarkar has been constantly increasing outlays on MGNREGA in every budget. Why these measures have not started yielding results on the ground both in terms of economic growth and job creation is mysterious. It may be a good idea for the Chief Economic Advisor to come out with a White paper on the outcomes achieved for the massive outlays in Modi Sarkar 1.0.

In the back of all these, the question becomes, are the measures so far announced by the Government enough to resuscitate the economy? The reversal of some of the proposals in the budget are certainly welcome moves but those just contain the damage.  And the other measures like opening up of FDI and so on are necessary but not sufficient to get us back to where we were last year (8%) and then hit our dream goal of 10% GDP growth which increasingly is becoming a pipedream.

During Modi Sarkar 1.0, the Government leveraged well on the windfall it had from the crude prices and not passing on the entire benefit to the consumer to “manage” the economy with heavy public investments. The hope was that gradually the private investments will pick up once the sentiments change. But unfortunately, due to the NPA and the overall banking crises, it did not fire up the economy so much but, just kept the wheels of the economy going. Now, under the current circumstances however, continuing of public expenditure alone may not be sufficient. The recent red herring on the increasing debt of NHAI may in fact become a dampener here. For India as a country, the next few months are supposed to be very high on economic activity with the impending festival season. And the fact that the monsoons have been bountiful for most parts of the country notwithstanding the floods in some parts, there is still hope even for this year.

So, in order for the economy to fire up, ways and means have to be found for increasing private investments and individual spending/consumption. I am no economist but here are some thoughts:

To get private corporate investments going:

  • Modi Sarkar should bite the bullet and announce 100% FDI in Multi Brand Retail. Though India as a country missed the retail bus 10 years ago, it is still not late. Some of the global retail majors may not be as bullish today as they were a decade ago on India due to our policy flip flops and the current industry shift to E-Commerce. But still considering the country’s size and the potential it offers, India is still an exciting market for say specialised vertical retail stores. In announcing this, we should do away with the myriad sourcing conditions and allow the retail water to find its own level. Retail gives fillip to low end jobs, manufacturing industries as well as commercial real estate.
  • Copy the STPI (Software Technology Parks of India) strategy that helped in boosting the software industry in India in the 90s and come up with a similar framework for boosting Electronic hardware manufacturing in India. This will help India in becoming a preferred country for those who are looking at alternatives to China. Again we are late in this game and today Vietnam has emerged as an alternative to China for low cost manufacturing. But still considering the long term view, I believe we still have opportunities here.
  • Every Government recognises the potential of Tourism as an industry to provide jobs and improve economic growth. However, to unleash and unlock the true potential of India, we need massive capacity building in hotels, recreation facilities, connectivity and infrastructure. Government should provide time bound tax cuts for investments to private sector in this area to targeted locations in India which need infrastructural boost. The tax cuts must be linked to time bound completion of projects.
  • As a purely short term stimulus, any capacity building in manufacturing industry by way of new factories, expansion of plants,.. should be provided with tax relief.

To improve consumption and spending:

  • Holiday season is upon us. Provide relief on Income tax to individuals for money spent on holiday travel and stay in select locations in India which require boost on tourism (Uttaranchal, North East, Leh for example) with a cap of say Rs. 1 Lac. This will motivate public to take vacations and boost tourism in certain locations which have potential, decent infrastructure and connectivity but are untapped. Usually this has a spiral effect. When more people throng these places, automatically investments start pouring in for development.  For every 3 years, the locations can be changed in order to make it widely spread.
  • On the real estate front, today the supply is high and the demand low. This is mainly because the property rates are artificially pegged high and the home loans still high. This jinx needs to be broken. Though I have seen the Government announcing a slew of measures in the past few years, the housing market has not taken off. Considering the fact that the private real estate lobby is not going to cut prices ever, there is a need for the Government to intervene and disrupt the market. Like in countries like Singapore, Malaysia,.. Government must float either own companies or joint ventures to construct affordable housing in a massive scale and allot to citizens who do not own a single house in a transparent manner. The Government can offload its equity and then exit after say 20 years from these companies once the overarching objectives are reached. This will also disrupt the existing real estate industry and make it fall in line in terms of pricing and best practices, both of which are found wanting in the current scheme of things.

To revive the “animal spirits” in the Indian economy. Animal spirits are related to the points mentioned above i.e. both consumer and business confidence. I have put this separately as there are some low hanging fruits here which can be taken:

  • Sell Air India as of day before yesterday!
  • Get going on “Actual” disinvestment of Public Sector units already identified as non-strategic. Identify another Arun Shourie to make this happen in this term!
  • It is not enough to merge PSU Banks but to offload equity, get professional management and turn them to “HDFC Banks”!
  • Today many of the Government’s grand projects are stuck or going slow due to land acquisition issues. Identify the issues and fix them by bringing about the necessary changes in the Land bill!
  • Use the current crisis of job loss to build consensus around Labour reforms. Adopt the “GST council” approach for labour reforms. Today all state governments will eagerly come on board considering the pressure all states have on generating jobs.

As I write this blog, I am seeing that the Finance Minister is addressing a press conference. This is her 3rd one in the last 2 weeks. Glad to see the Government demonstrating the needed sensitivity to the economic situation and willingness to take steps. Our only urge is that instead of incremental small steps, we need big leaps.

Only that will ensure we turn the tide over Gross Disappointing Product and achieve real Gross Domestic Product rates quickly!