We are truly living out the old Chinese curse “May you live in interesting times”. As Ministers, top bureaucrats and senior members of Parliament spoke at keynotes and panels in the annual conference of CII, organized specifically to discuss the path to a return of economic growth, one fact became abundantly clear – every intelligent person in any position of influence in the country knows that we have hit a growth roadblock. Do we have a collective method of recognizing, accepting and removing these road blocks is the question that is always met with prevarication or silence!
It’s not that all is bad with the current state of the economy. Surely we can derive some satisfaction from the fact that the Gross Enrolment Ration in colleges is going up and the Right to Education bill has been passed, a National Manufacturing Policy has finally been formulated, the life expectancy in our country has almost doubled since Independence, some of the mission mode National eGovernment programs are being rolled out and over 200 million Indians will be covered by Nandan’s Adhaar scheme by end of the year. However the “policy paralysis” accusation that has been hurled often enough is now sticking, the land acquisition and labour reforms rationalization are yet to see the light of day and the delays in DRTC and GST implementation are likely to cost the country dearly. As one speaker rightly said, the roadblocks that were there in 1989 persist to this day and unless a way is found to eliminate friction in clearance and implementation processes, a quick return to a 8 to 9 percent GDP growth may well be a pipe dream.
For all of us in IT, the tax and duty issues for software products vendors, the lack of clarity on MAT for SEZs for the services folks and the weak budget for private equity and domestic venture capitalists does not augur well for a robust industry growth in this financial year at least. A compounding factor is the clouds that are hovering on the global economic horizon that have cause some concerns among the analyst community, particularly over the Financial Services vertical and large firms relying on hundred million dollar deals to keep their growth momentum intact. In an interesting report by a leading brokerage house on one of the large firms under the title “Rime of the ancient IT vendor” , three key shareholder concerns are articulated – how will companies who have been the darlings of the sector in India correct the loss of revenue and earnings to global peers, how will they restore predictability to their business and manage industry-leading operating parameters and finally when will they articulate a clear cash usage policy to avoid perceptions of shareholder value dilution.
In an industry which has been used to a CAGR of twenty percent, these questions have very rarely surfaced in the past but managements have to have strong answers ready if a period of lesser growth lies ahead!
------------------------------------------------------------------------------------------------------------
This Article was published in the April Edition of The DataQuest
0 comments:
Post a Comment