Showing posts with label BRIC. Show all posts
Showing posts with label BRIC. Show all posts

Wednesday, May 01, 2013

10 Ways to revive the Indian Economy

With faulty policies and incompetent policy makers, the Indian economy has seen its worst. IIPM Think Tank suggests ten critical policy measures that can save the Indian economy from mirroring the paralysed socioeconomic conditions of US and Europe

When the northern, eastern and north eastern power grids in India collapsed in July and left more than half the country in the dark, it was declared to be another vivid indicator of India’s incredible growth story having run its course (following S&P’s downgrade, which predicted that India would be the first fallen angel among the BRICs). What the world chooses to ignore is that structural flaws in our power sector in generation and T&D have been holding back our economy for years, including the years where they felt so overtly optimistic (and even insecure) about India’s potential on the world stage. For the record, India achieved a net capacity addition of around 4 GW per year from 1997-2007. But a McKinsey report (however much you might wish to believe it) indicates that a growing India’s needs from 2007-2017 merit a net capacity addition of 20-40 GW per year, i.e. 5-10 times that figure. And the 11th Five Year Plan added only around 53.12 GW, or a little over 10 GW per year. In fact, the last year (2011-12) was particularly a good one with installation of 20.5 GW. In other words, despite the best attempts of the ‘powers’-that-be in scuttling our growth in the past decade, the economy has somehow pulled itself together and kept up the heat.

Clearly, it appears that countries are perceived very similarly to companies today, and you are only as good as your last quarter. By that yardstick, the Indian economy is still struggling with a depressed GDP growth of 5.5% for Q1, 2012-13; which makes it 9 consecutive quarters of declining growth rates. The surprising part is the shock and awe most Indians feel with this slowdown, as if they were in the middle of a rude awakening! That’s really because even till June last year, the government was predicting 9% GDP growth for India in FY 2011-12 and the RBI was looking at an 8% figure!

However, as B&E had concluded from its statistical analysis last year (refer B&E’s issue dated August 4, 2011 titled “The Upcoming Indian Economic Slowdown”), there were really no surprises. We had predicted it based on a multifactor correlation analysis using inflationary trends in India as the base. Interestingly – and snapping back temporarily to the start of the past decade – during the year 2000, the Indian economy followed a trend in inflation similar to the US. The trend was again repeated in 2010 when the Indian economy mirrored the US economic condition of 2008 just before it (US) stumbled into a deadly recession. As per our polynomial forecasting trend line analysis, the correlation will continue till the end of 2012 with its impact lingering till the last quarter of this fiscal year. So our prognosis is that India would see a relatively depressed growth at least till FY 2012-13. But all is not lost. In fact, this trend is based on the fact that the government will continue to simply do nothing to reverse the situation. In other words, it’s quite easy to electrifyingly turnaround our prognosis.

What is it that our government spokespersons – including our Prime Minister – have done best in this economic slowdown? Blame external factors, and that’s quite a convenient thing to do at the moment! The US grew by 1.7% yoy for the quarter ending June 2012 as compared to 2% for the previous quarter. The Eurozone remained in a quandary with GDP shrinking by 0.4% yoy for the quarter and jobless rates at a record high of 11.3% in July. And that’s why the escapist reasoning by the government. But then, that is hardly an excuse for not setting our own house in order. There is no denying the fact that the Indian economy has sufficient potential of its own accord, and if given the right impetus, India can indeed get back to 8-9% and beyond sooner than expected. B&E and IIPM Think Tank present 10 critical ways in which we can bring the economy back to its high growth phase.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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Posted by at 3:44 PM
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Thursday, July 19, 2012

Have you Heard of The ‘BRIC’ Strategy?

It’s sad how a Giant like Mitsubishi has almost Fallen by The Wayside in The India Auto-Sweepstakes, with much of it being its Own Undoing. B&E does a to-date-legacy Summary on The Death of a Brand…in India.

With a presence in over 170 countries, there is no denying that Mitsubishi is one of the oldest names operating in the global automobile circuit, and has had glorious moments in its journey, which started way back in 1917 with the Model A. It stands as the 7th largest Japanese auto major today and the 17th largest globally.

It also took an important lead, when it set up its Chennai car plant in 1998, in collaboration with Hindustan Motors Ltd. However, despite having received rave reviews for its cars (particularly Lancer), the company is actually facing humbling times in the Indian market. One wonders why the company hasn’t been too interested in being a part of the success story of the second fastest growing auto market in the world – India. In fact, Brazil has found better favour as the Japanese automaker recently made it clear that it is trying to quickly lift global production to 1.5 million units by redistributing business resources and will be investing close to $241.5 million for securing a 50% share in MMC Automotores do Brasil SA (a Brazilian company responsible for production of Mitsubishi products). Going simply by the numbers, even globally the company seems to be developing a laudable vision – Mitsubishi is eying sales of over 13,70,000 units by the end of FY 2013 from the current sales of 1,000,000 units by the end of FY2010. The company is planning to build a third factory in Thailand, which will make it the second largest export hub after Japan. It is aiming to strengthen production in China and even start producing a new SUV series in Russia.

And what about India? Well, in all of Mitsubishi’s BRIC speak, the ‘I’, that is India, is strangely absent. And the more intriguing part is, one isn’t quite able to understand the reasons that Mitsubishi might be avoiding mentioning India as one of its topmost priorities. What could be called the ‘clarion call’ of 2010 for Mitsubishi was the fact that while Hindustan Motors sold close to 490 units of the decades-old Ambassador in the month of December 2010, Mitsubishi managed to deliver only 143 units, combining all the offerings that it has in its India portfolio! And the response of Mitsubishi to all this? Well, nothing to write home about.

It’s quite intriguing, the current situation for Mitsubishi in India. During the late 1990s, Lancer was the epitome of technology and style for the Indian consumer. The modern looks coupled with the superior technology offered exactly what its target segment was looking for. However, the years that followed have only taken the company only deeper into the woods. The biggest issue facing the Japanese giant is the product portfolio. Today, the situation is such that while any prospective buyer in India would be able to drivel off various car brand names of Mitsubishi’s competitors like Honda, Toyota, GM, it’s rare now to meet a buyer who would be able to recall even three brand names of Mitsubishi vehicles (the list starts at Lancer and ends at Pajero). Over the years, while competitors kept introducing new models specifically targeted at various demographic and psychographic consumer segments, Mitsubishi’s product portfolio has remained an awkward mix with a couple of sedans and SUVs minus a hatchback. Yes, Mitsubishi had recently showcased its global concept car at the Geneva Motor Show, which is scheduled to launch from its Thailand facility in 2012. The company has even confirmed this in its global mid-term business plan from 2011-2013, which it calls Jump 2013. But concept cars are, well, only concept cars.


Posted by at 12:19 PM
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