Best IT Development Solutions Kolkata

MACROECONOMIC ANALYSIS OF INDIA INC. AND WHAT’S IN IT FOR THE SMALL BUSINESSES

Yesterday, we had published some important rankings measuring some of India’s economic parameters against the rest of the world. I’ll reproduce them here for recollection:

1. Ease of doing business: 100th (total countries)

2. Indian Passport travel freedom: 81st (total countries)

3. Women entrepreneurship participation: 49th among 54 countries

4. Startups per capita: 3rd (total countries)

5. Innovation Index: 60th among 130 countries

6. Public Debt: 82nd (total countries)

7. Economic freedom: 143th (total countries)

8. Population: 2nd (total countries)

While this is in no way an exhaustive list, it makes for an interesting comparative analysis of India Inc. with the rest of the world while throwing special light on the plight of Indian Businesses which falls under direct effect.

The daily newspaper is an efficient way of assimilating information. Information — coming up daily in huge numbers from around the world. The problem is, most of the news is hardly relevant or essentially just noise. Thus, it becomes absolutely imperative that the chaff gets separated from the hay, the clutter from the gold. It is only wise to look at the bigger picture while forming any rational opinion.

Let us jump right into the facts and scrutinize them while establishing cause and effect relationships and their validity:

1. EASE OF DOING BUSINESS IN INDIA

This is something which has plagued India since Independence. Being 100th on a list of 190 countries is nothing to be impressed of.

The government has been particularly slow in easing the structure around business regulation in India. Too much distrust and the huge parallel economy have contributed to the same while honest Indian entrepreneurs have faced the brunt. Some parameters that are considered while evaluating ease of businesses are:

· Days to get a construction permit

· Days to enforce contract

· Days to get electricity

· Hours to file taxes each year

· Days to start a business

· Days to register property

Historically speaking, the regulatory norms has been one the major reasons why this ranking has primitively been so low. The export crisis of 1991 had opened up India’s economy to the rest of the world and since then positive change has been recorded.

Only recently did India jump 30 places to be ranked 100th. Optimism makes for a valid sentiment among the observers.

2. INDIAN PASSPORT TRAVEL FREEDOM

This parameter is more important than you think. The more India opens up to the economy and gives businessmen the ease of travel of themselves and their resources, the more will the ecosystem flourish.

Indians can currently travel to 58 countries without visa (or visa on arrival) where on the other hand the U.S has access to 147 countries without visa. This is interesting because the more countries you can travel with ease, the more internationally reputed you are. India has huge number of immigrants settled in almost all parts of the world. It’s not surprising when Hollywood portrays all taxi drivers in U.S as Indians. Quite embarrassing but happens more often that you may know.

India’s population is so huge that, in most countries, even if 0.1 of Indians relocate, they will form a sizable minority and this is the reason why Indians require a visa in most countries whereas Americans don’t.

3. WOMEN ENTREPRENEURSHIP PARTICIPATION

If you could pick up probably the most painful spot in India’s economic body, it will be women economic participation and women welfare in general. Indian population is huge, so is its women resources. But the sad fact is that most Indian women resign themselves to being housewives and end up contributing nothing to the economy.

Endless household chores and too much children poses a burden to women where they are figuratively forced to take care of their house. And Indian’s in general have very low level of trust towards maids or professional nanny/housekeepers as compared the western world.

The population is like a double edged sword for India. If we have a large number of unproductive people relying on the smaller group of working people, it calls for trouble. We cannot move forward without employing enough women into economic activity especially in rural areas where traditionalism is bread and butter.

4. STARTUPS PER CAPITA

India ranks 3rd among all countries. There you go, I just said it! The number of startups cropping up in India is really something to impressed of, huge part of credit goes to the youth demographic of India.

India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan. This is a huge advantage for India as it will embark on its growth story and also the part reason why India is today the second fastest growing nation of the world.

The growth of startups in India is a positive sign but if you delve deep, there is a caveat! Moving on to the next point….

5. THE INNOVATION INDEX

I had to maintain a pessimistic tone throughout this post given the dismal rankings of India but the last point about the number of startups in India brought back quite a smiles. Here comes the caveat:

90% startups fail. Yes. The effect of number of startups slowly glides down if there are so many failures around and entrepreneurs distressed over their failed startups. Part reason is the fact that Innovation in India is still nascent as compared to the rest of the world.

Small pockets of the country occasionally produce brilliant work but as a whole we have failed to match up to the global innovation standards.

India’s obsolete, stringent and job-oriented education culture grows managers and employees while neglecting the need of the hour — entrepreneurship. None of the major schools in India promote entrepreneurship skills as much they promote integral calculus as part of their curriculum. We have only us to blame.

If you are a startup and struggling to make it to the next level, look no further.

6. PUBLIC DEBT

Interest rates in India have been fairly stable and high during the years and we have little to worry here. Bankers at RBI are pretty cautious when it comes to implementing monetary plans and are thus safe on this front.

India’s public debt, as a percentage of GDP stands at 50.1% which is manageable because of fiscal prudence shown by our leaders over time. There is ample room for interest rate cut coupled with enough liquidity which gives India a fair chance to grow in the coming years.

7. ECONOMIC FREEDOM

India ranked a dismal 143rd in an annual index of economic freedom by a top American thinktank, behind its several South Asian neighbors including Pakistan, as progress on market-oriented reforms has been “uneven”.

Among South Asian countries, only Afghanistan (163) and Maldives (157) were ranked below India. Nepal (125), Sri Lanka (112), Pakistan (141), Bhutan (107), and Bangladesh (128) surpassed India in economic freedom.

India has technology and manufacturing sectors as advanced as any in the world as well as traditional sectors characteristic of a lesser developed economy. Extreme wealth and poverty coexist as the nation both modernizes rapidly and struggles to find paths to inclusive development for its large and diverse population.

India is a significant force in world trade but corruption, underdeveloped infrastructure, and poor management of public finance undermine overall development.

It will be a daunting task for India to come out of its poverty labyrinth and population menace, before which no realistic person can expect improvement in these scores.

8. POPULATION

Having mentioned population several times in the post, it makes sense to discuss it in isolation. As I said earlier, population is a double edged sword. If large part of the population (elder people, children) are unproductive and relies on the rest, we will continue to suffer from abject poverty and unemployment.

Poverty and unemployment will then leas to high rates of crime around the country which makes matters only worse. This problem can never be eradicated, yet if governance can be eliminated of corruption, hope is that such parameters can be improved. But it is a colossal, humongous task which probably won’t be witnessed in this lifetime.


If you happen to read this while sitting on your comfortable couch and wondering how come India is still lagging behind after so many tall buildings and interesting developments taking place — you are just seeing one side of the coin.

The other side is not a pretty sight. It is filled with poverty, unemployment disparity and hunger; and it is prevalent in a major part of the population.

Analysts all around the world forecast steep growth points to India just because of its massive youth population present NOW, and if the government does not promote ease of doing business at this stage — it will lose a golden opportunity!

Thanks for reading.