Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
The Importance of Trust in Building Successful Companies and Great Nations Recently the former Prime Minister of India, Dr. Manmohan Singh, made an impassioned plea for building trust among the economic agents and between the citizenry as that would have a salutary effect on the country’s economy. In a hard hitting article, Dr. Singh, decried […]
The latest trend in all industries has been to outsource inventory management functions to Third Party Service providers. Companies outsource both Raw Material Inventory as well as Finished Goods to the Service Provider. In case of finished goods inventory, depending upon the supply chain design, there may be multiple stocking points at national, regional and […]
Credit rating industries are part of a closely held industry. For years, this has worked in favor of these agencies since they have to face less competition. However, these agencies are also the first ones to get blamed after every financial crisis. It is a known fact that no one can really predict a market […]
When organizations have “flat” structures and consist of coalitions of people coming together with multiple loyalties, intersection of the organization with its environment being characterized by shifting boundaries; the informal nature of the work processes makes use of “open” systems approach towards organizations. The point to note here is that external environments both shape and […]
When organizations were first formed they were largely people driven. Before we delve any further, it would be useful to first understand what being people driven really means. An organization basically required four types of inputs to function successfully viz – Land Labor Capital Enterprise A people driven organization is dependant on specific people for […]
For a long time from Independence to the mid 1980s, the Indian Economy used to grow at 3-4% or at the most, 5% a year. Indeed, in the decades following Independence, economists were fond of saying that India is not culturally or structurally suitable to grow faster than that and hence, they dubbed the low growth decades as the times of the Hindu Rate of Growth.
This term was chosen mainly because it carried social and cultural connotations to the Indian way of life and hence, even the Western media used to refer to India as having been stuck in such a muddle while the Asian Tigers and China raced ahead.
The reason why we must now ponder whether we are returning to those decades is because the Indian Economy is in the Doldrums for some months or even a year or two now, and hence, some experts are now speculating whether we are back to the Hindu Rate of Growth.
What they fear is that the gains made by the Reforms starting in the 1990s are being squandered and with no further Big Bang reforms in sight, the Indian Economy might be entering a prolonged slowdown.
Before we get into the structural issues that are holding back the Indian Economy, we must first consider the reasons for the present situation in the economy.
To start with, the high growth rates experienced in the last decade had their flip side in the form of huge debts incurred by Indian corporates and which went sour after the Bust with the banks now being saddled by high levels of NPAs or Non Performing Assets.
Indeed, in hindsight, it appears that the dazzling levels of growth since the 1990s have led to a situation where the “highs” have given way to hangovers and consequently, the feeling of the Good Times Being Over.
However, it is also the case that any capitalist free market economy goes through these highs and lows and hence, the present situation is a result of the nature of systemic slowdowns rather than anything else.
Thus, one can be reasonably confident that growth would return soon and the next Boom is around the corner after the Bust that we are now in.
This is the line that is being taken by the government wherein it insists that the slowdown is temporary and cyclical, rather than structural.
Having said that, there is a minority of experts who believe that the present slowdown is structural and unless the government addresses the actual reasons for the same, India is likely to remain in the Hindu Rate of Growth.
What these experts feel is that the reforms undertaken since the 1990s were not radical enough to result in structural changes and moreover, successive governments were content to let the market do its work.
Of course, this is not to say that there were no interventions as each Finance Minister since the 1990s has actively nudged and even pushed the RBI (Reserve Bank of India) and the India Inc. to do their bit to help political as well as economic causes.
In other words, it is not like the relevant stakeholders did not try and did not act. Rather, what some experts believe is that despite the rounds of reforms, India is vulnerable to structural slowdowns and hence, the inescapable conclusion is that more needs to be done for the Indian Economy to recover.
Indeed, there is a growing consensus that India is headed for stagnation unless drastic action is taken.
On the other hand, even radical measures such as Demonetization have failed to achieve their objectives and hence, some experts are now pondering whether anything if at all can be done to revive growth. Welcoming foreign capital is one step and unleashing the Animal Spirits of the Economy through Big Bang Reforms is another step.
Moreover, land and labour laws can be reformed to unlock the hidden capital and to release the latent energies.
In addition, a Debt Jubilee can be announced that would ensure that India Inc. starts with a Clean Slate.
While some of these decisions can be very unpopular, given the mandate that the present government has, it is very much the case that they can be done.
Indeed, with steps like the Abrogation of Article 370, it is likely that the present dispensation does what it deems to be right and hence, some of the bolder measures outlined here would appear to be in the realm of potential actions that can be taken.
Apart from that, there is a need to address the structural issues as well and it is the case that unless radical reforms are undertaken, we might yet return to the Decades of the Hindu Rat of Growth.
Last, there is also a need to bring in more transparency into the entire policymaking setup as the people need to be taken into confidence and hence, the present stonewalling cannot continue.
In addition, there is also a need to be upfront about statistics that present more accurate snapshots of the economy.
Moreover, there is also a need to do away with Jugaad ways of working especially when the top echelons are concerned.
To conclude, the Indian Economy is in the midst of a Perfect Storm of Worsening Climate and it remains to be seen as to how the Captain and the Crew navigate it through the turbulent waters.
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