It is quite clear by now that the Indian economy is headed southward. My premonition of an imminent slowdown (See Trouble in Paradise: India Inc., 23rd March 2012) indeed came true. India registered a mere 5.3% GDP growth for the quarter ending March 2012, the slowest in 9 years. So what lies ahead for the economy? Is all love lost for domestic industries? What is going to help us get back on our feet and revert to high growth levels?
For too long now, our policy makers have found safety in denial and have been blaming everything from the Euro crisis to Oil prices for the slowdown, but it is undeniable that the government needs to wake up to some of its own wrongdoings that have led us to the situation we are finding ourselves in today. True, global consumption is wobbly; Europe, one of our biggest trade partners is in crisis with no clear visibility of a clear resolution. Investor sentiments are weighing heavily on global currency flow; investors have found safe havens in $ denominated investments, leading to strong movement of portfolio investments away from the Rupee thus hurting it badly. Recent drop in crude oil prices haven’t had the favorable effect that we anticipated, largely due to the declining rupee, which has wiped out any potential gains. One more tell tale sign of crisis is that leading rating agencies such as S&P and Fitch have downgraded India’s credit rating reflecting sagging global sentiments about the country thus threatening to make India the only country among the BRICS to fall below investment grade. The union budget 2012-13 didn’t do much to revive sentiments either; some of the draconian policies such as retrospective taxation have only further scared investors away.
So what can be done to improve the situation. It is clear that UPA II has completely lost its way and there is no sign of policy reversals until 2014 general elections, by when, I fear we would’ve lost too much time. In order for businesses to survive, it is going to take a lot of innovation and some Lean thinking. While falling of rupee is making imports dearer, it is also making exports more lucrative. It is a golden opportunities for exporters now to make windfall profits. What will likely come in the way, of course, is quality and ability to fulfill demand in a timely and qualitative manner. One of the constraints that have prevented exporters from filling orders quickly and expanding their reach has been their inability to eliminate bottleneck in their manufacturing and supply chain leading to back orders and lost opportunities. Too, India is blessed with large domestic consumption, which is a vital ingredient to keep the economy ticking. Sectors ranging from automotive to telecom are witnessing enviable domestic growth. But time and again what has come in the way for them to cash in on the opportunity to grow has been their inability to consistently maintain quality standards and customer commitments. This is where Lean manufacturing and Six Sigma can come in extremely handy. Lean can help overcome supply hurdles and extract more out of existing resources without the burden of capacity expansion. This will in turn help companies cash in on market demand through better productivity and resource utilization. Six Sigma on the other hand is a potent tool that can be effectively leveraged to achieve benchmark quality levels through a relentless quest for defect elimination.
In summary, economy upturns and downturns are imminent. At both ends of the curve there are opportunities abound, it is only a matter of perspective how a company views these opportunities, and more importantly, gears up to cash-in on them. Quality and agility will always remain the cornerstones and key differentiating factors. Only those companies with a genuine eye for customer value creation will remain viable and grow in the long run. Lean helps in agility whereas Six Sigma helps in meeting and surpassing quality standards. In my opinion these are powerful tools available for Indian industries to differentiate themselves and grow and prosper despite uncertain economic conditions.
On a lighter note...
On a lighter note...
