Economy

Mohammad Anas Wahaj | 28 jul 2018

India has to give special emphasis to agriculture to ensure food security for its large population. Recent report, 'Agricultural Policies in India' (Authors: Ashoka Gulati, Infosys chair professor for agriculture at ICRIER; Carmen Cahill, Deputy Director for trade and agriculture at OECD), jointly developed by Organisation for Economic Co-operation and Development (OECD) and Indian Council for Research on International Economic Relations (ICRIER), provides outcomes of the research conducted for over two years to map and measure the nature of agricultural policies in India and how they have impacted producers and consumers. The report includes key policy indicators like the producer support estimates (PSEs) and consumer support estimates (CSEs). According to the authors of the report, 'The methodology adopted is a standard one that OECD has applied to measure PSEs and CSEs for 51 countries over the last 30 years. In the case of PSEs, it basically captures the impact of various policies on two components: (a) the output prices that producers receive, benchmarked against global prices of comparable products; and (b) the various input subsidies that farmers receive through budgetary allocations by the Centre and states. The two are combined to see if farmers receive positive support (PSE), or negative, as a percentage of gross farm receipts. A positive PSE (%) means that policies have helped producers receive higher revenues than would have been the case otherwise, and a negative PSE (%) implies lower revenues for farmers (a sort of implicit tax) due to the set of policies adopted.' The report found India's PSE, on average, during 2014-15 to 2016-17 was -6% of farm receipts. Contrary to this most other countries have positive PSEs. Overall, PSE (%) was negative to the tune of 14%, on average, over the entire period from 2000-01 to 2016-17, indicating that, despite positive input subsidies, farmers in India received 14% less revenue due to restrictive trade and marketing policies. To incentivise farmers to raise productivity, build an efficient and sustainable agriculture that augments farmers' incomes and foster rural growth and jobs all along the value chain, authors suggest - (1) Change policies to 'get the markets right' by reforming domestic marketing regulations (ECA and APMC), promoting a competitive national market and upgrading marketing infrastructure. Also review restrictive export policies for agri-products. (2) The report recongnizes concerns of the policymakers to protect consumers from price rise. But, it argues for switching to an income policy approach through a direct benefit transfer (DBT) targeted to the vulnerable sections of the population. (3) Indian agriculture and farmers would be much better off if input subsidies are contained and gradually reduced, and the equivalent savings are channelled simultaneously towards higher investments in agri-R&D, extension, building rural infrastructure for better markets and agri-value chains, as also on better water management to deal with climate change. (4) A greater degree of coordination is required between the Centre and the States, and also across various ministries, for a more holistic approach towards reforming agriculture. Read on...

Financial Express: From plate to plough: India must get its agri-markets right
Authors: Ashoka Gulati, Carmel Cahill

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Mohammad Anas Wahaj | 22 jun 2018

According to Korn Ferry's 'The Salary Surge' report, India would be the only economy that will not face an upward revision of wages by 2030, as it has a talent surplus, bucking the global trend of a talent crunch. For organizations around the world lack of highly skilled talent supply will drive up salaries for the most in-demand workers and is expected to add more than US$ 2.5 trillion in annual labour costs by 2030. The Global Talent Crunch analysed global demand for labour at three key milestones, 2020, 2025 and 2030, in 20 markets, including in India, across three sectors, financial and business services, technology, media and telecommunications (TMT) and manufacturing. Wage premiums by 2030 - US (US$ 531 billion); Germany (US$ 176 billion); Japan (US$ 468 billion); China (US$ 342 billion) Asia Pacific (US$ 1 trillion); Singapore and Hong Kong (10% of 2017 GDP). Wage premium per worker per year by 2030 - Asia Pacific (Average US$ 14710); Hong Kong (US$ 40539); Singapore (US$ 29065); Australia (US$ 28625). Dhritiman Chakrabarti, Head of rewards and benefits for the APAC region at Korn Ferry, says, 'The new era of work is one of scarcity in abundance, there are plenty of people, but not enough with the skills their organisations will need to survive. While overall wage increases are just keeping pace with inflation, salaries for in-demand workers will skyrocket if companies choose to compete for the best and brightest on salary alone.' Manufacturing, one of the sector that is a critical driver of growth for emerging economies, may be stalled by the huge impact of the salary surge. Read on...

The Economic Times: India to be lone economy facing suppressed wages by 2030: Study
Author: NA

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Mohammad Anas Wahaj | 31 may 2018

According to British Council's 2016 report, 'The State of Social Enterprise in Bangladesh, Ghana, India and Pakistan', there are more than two million social enterprises in India with 24% of them led by women. India is one of the fastest growing economy and it needs more social entrepreneurs to tackle socio-economic problems. Women have to enhance their participation. But, existing stereotypes alongwith lack of investor confidence are major hurdles in the way. According to the World Bank, labour force participation rate for women in India has fallen from 37% in 2004-05 to 27.2% in 2017, which is quite low in comparison to developed nations. Increasing participation of women in workforce is vital for balanced growth of the country. Archana Raj, Team Leader at Save The Children, says 'Despite these low indicators, it is worth mentioning that there are new generation women who have broken the barriers of societal norms and regressive mindsets to pave way to the new world of entrepreneurship. Over the past few years, it has been observed that more women are choosing this as a career over other options, making a mark in the start-up ecosystem. Nonetheless, the aim must be to reach higher, which can help the rest of the women of our country to rise beyond the barriers and choose for themselves.' Jamie Cid, a social entrepreneur and founder of MobiHires, says, 'I think that there is a great opportunity for women social entrepreneurs in India, especially mothers returning to the workplace, who develop products and services based on their experience and solve problems in their community. With platforms like Sheroes, Reboot, SheThePeople and Lean In India initiatives that support and invest in women social entrepreneurs, this is the right time to be one.' In one of the blog posts of World Bank, Monique Villa, CEO of Thomson Reuters Foundation and founder of TrustLaw and Trust Women, gives the example of Ajaita Shah who works in rural regions of India. Shah's organisation, Frontier Markets, sells and distributes products to rural households. The organisation calls itself a 'for-profit business with a social mission'. According to the Thomson Reuters Foundation, India ranks 35th among countries that are the best for women social entrepreneurs, with the US, Canada and the UK occupying the top three positions. Manju Yagnik, vice chairperson of Nahar Group and member of Indian Merchant Chamber, says, 'I personally do not believe in male-female classifications. I do not think capabilities and talent can be differentiated as per gender. Today's women do not seek sympathy. They want equal opportunities when it comes to decision-making in financial capabilities, which is still male-dominant. Thankfully, with the modern society promoting and striving for gender equality, the position of women is improving year after year. Women entrepreneurs in India are bringing revolution and growth in the public and private sectors. With the help of government initiatives, they will grow further.' Manisha Gupta, founder and director of Start Up!, says, 'Regardless of whether a woman is a social or business entrepreneur, she has to negotiate through an ecosystem that has been structured for men to succeed. Not only do we need more women social entrepreneurs but also an ecosystem where there are more women leaders at every level. We need them as coaches, investors, in finance, as leading incubators, etc to break the template.' Citing challenges women face, Ms. Raj comments, 'Pressures of social norms and societal biases force women to give up the job while tough competitive market further make their work challenging.' Ms. Yagnik feels the need for more women entrepreneurs in India. She says, 'Social entrepreneurship might be a great opportunity for Indian women professionals to break through the glass ceiling that typically exists in traditional corporate life.' Ms. Cid suggests social entrepreneurs to stay positive and focus on the bigger purpose and stay passionate about their goal. Explaining capabilities of women entrepreneurs, Ms. Gupta says, 'I always say that women social entrepreneurs use the 3Rs - resilience, relationship and resistance – to build and grow their ventures. They are masters of resilience, I have seen many women without any resources, standing on their own and building a business in rural regions. They also demonstrate strong capabilities of building connections and meaningful relationships with stakeholders which takes them far.' Read on...

SME Futures: Nascent social entrepreneurship sector in India is beginning to look at women leaders for growth
Author: Anushruti Singh

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Mohammad Anas Wahaj | 29 apr 2018

According to the report by Indian Council for Research on International Economic Relations (ICRIER), 'Anatomy of an Internet Blackout: Measuring the Economic Impact of Internet Shutdowns in India', 12615 hours of mobile Internet shutdowns in India cost the economy approximately US$ 2.37 billion and 3700 hours of mobile and fixed line Internet shutdowns in India resulted in a loss of approximately US$ 678.4 million during the period 2012 to 2017. Most affected by the shutdowns were e-commerce businesses and online freelancers operating from small towns. Tourism is another sector affected. Rajat Kathuria, Director & CEO of ICRIER, says, 'The objective of the study is not to pronounce on the efficacy of a state decision on an Internet blackout, rather to estimate the economic costs associated with the event. However, policy makers would be well advised to consider these costs in the final decision on a shutdown. If digital use were to proliferate as envisaged under the Digital India programme, the magnitude of loss could increase in the future.' Read on...

Firstpost: Indian economy suffered a loss of estimated $3 billion due to internet shutdown during 2012-17 - Study
Author: NA

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Mohammad Anas Wahaj | 22 apr 2018

According to a report by The Times of India, engineers in India are now showing more interest in the automobile industry as compared to the usual IT industry, signalling a boom time for the more traditional manufacturing sector. Tightening of US visa rules, streamlining of staff by big IT companies and increasing importance of big data and artificial intelligence in automobile industry are some factors promoting this shift. NASSCOM says that IT sector will see single-digit growth for the third-consecutive year and jobless growth for the second year. Gopal Mahadevan, CFO of Ashok Leyland, says, 'Earlier mechanical engineers were going to the IT industry but now they're coming back. There appears a reverse brain drain happening and suddenly we're getting lots of applications from this segment, much more than in the last 3 years.' According to the Naukri Jobspeak data for March 2018, there has been significant hiring growth for the auto industry. The sector has witnessed a 33% growth in March 2018 compared to March 2017. Rajan Wadhera, President of Automotive Division at Mahindra & Mahindra, says, 'The IT allure is beginning to wear off as that segment has almost reached a saturation point. The pay growth is also not as good as it once was. So the attraction to join the auto industry is back.' Thammaiah B. N., MD of Kelly Services, says, 'Product specialists are in demand and their experience levels are in the tune of 8 to 10 years or higher. The auto industry itself has stepped up its hiring by 30% and IT has been a major contributor.' Read on...

The Economic Times: Automobile industry is the new IT for India's engineers
Author: NA

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Mohammad Anas Wahaj | 11 jan 2018

India's growth trajectory can slow down if firms are not able to grow and banks are not able to lend. Restructuring can be an immediate policy solution for the twin balance-sheet problem. But, for the long-term growth and job creation, the causes of financial misallocation have to be deeply considered and mitigated. Growth needs more efficient firms to produce more output and use more factors of production, which includes ease of access to bank loans. Contrary to this in India, a case of financial misallocation is a common phenonmenon, where less efficient firms get more bank loans reducing the ability of more efficient firms to grow and scale up. The cause for India's financial misallocation is distortion in the land market, as less efficient firms can access more land consequently enhancing their ability to get loans. Land provides strong collateral to access bank loans. Financial misallocation is a bigger problem in the manufacturing sector, that is more land intensive, as compared to services industry. World Bank lead economist, Ejaz Ghani, alongwith Gilles Duranton, Arti Goswami Grover and William Robert Kerr, examined plant-level data on millions of formal and informal enterprises, in both the manufacturing and services sectors, in more than 600 districts in India and provided important insights into the geographic and industry distributions of financial and land misallocation in their World Bank research report, 'Effects Of Land Misallocation On Capital Allocations In India'. According to Mr. Ghani, 'Most bank loans in the manufacturing sector are taken up by large firms in the organized sector. The small firms in the unorganized sector, which account for nearly 80% of jobs, and about half of the value of land and buildings held in the manufacturing sector, pull in a very small share of bank loans. The value of financial loans reported in the informal sector is barely 2-6% of the value of total bank loans reported in the manufacturing sector.' Mr. Ghani explains, 'We computed an index of misallocation in manufacturing and services, and the organized and unorganized sectors, in the districts. The indices of misallocation for output, value added, and factors of production were computed individually for financial loans, land and labour. India is one of the most land-scarce countries in the world. Land and financial misallocation trumps labour misallocation. The former appears to be at the root of much of the misallocation of output in the manufacturing sector...poorly functioning land and financial markets explain why India has so few start-ups; entrants are constrained by financial misallocation, and incumbents don't grow in the manufacturing sector.' Mr. Ghani recommends, 'Policy makers need to pay more attention to addressing the underlying causes of financial misallocation. This would involve removing land market distortions, better land-use regulations, and more efficient taxation of properties. Faster growth requires marching ahead with even stronger policy reforms to promote competition and innovation, and enabling more efficient firms to grow faster.' Read on...

Livemint: Reducing financial misallocation in India
Author: Ejaz Ghani

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Mohammad Anas Wahaj | 19 dec 2017

Family businesses are a substantial part of India's economic landscape with two-thirds of the listed corporates (with market cap above US$ 50 million) and contributing 79% to GDP. Presently, survival rate of family businesses from first to second generation is 30%, falling sharply to 12% and then just 3% after that. Family businesses have their own set of challenges and have to continuously evolve and stay competitive. According to Vishesh C. Chandiok of Grant Thornton India, 'Typically, family businesses go through three stages over the first three generations - entrepreneurship, sibling partnership and cousins confederation. Complexity of issues at each stage changes exponentially...Technology is disrupting old family business as also giving an opportunity to the family to rapidly build or own new-age business. It's more of an opportunity than a threat for Indian family business, if they can have a well organised family office that is separate from the main business.' Pranav Sayta of Ernst & Young says, 'Often, emotional ties come in the way of mature decision-making when handing over reins, and that impacts transition after the first generation is no more.' But it is not always the case as many owners have successfully diversified their businesses and others have brought in professional management to take them to further growth and progress. Nitin Atroley of KPMG says, 'A big challenge is maintaining the same momentum and scale.' Nikhil Prasad Ojha of Bain & Company says, 'It's important to imbibe the learnings of the founders' mentality to thrive.' While the nature of businesses is changing with more technology use, it's important for GeNext to know their 'roles and goals', says Mr. Chandiok. Mr. Atroley points out, 'This era calls for a higher risk-taking ability to deal with continuous disruption that industries are going through.' Mr. Ojha comments, 'The central challenge for the next generation is to become 'scale insurgent' in their industry. They must simultaneously capture the benefits of size and retain a strong sense of founders' mentality (that is, insurgency, frontline obsession and owner mindset).' Mr. Sayta believes family businesses have a much longer term vision compared to professionally-run businesses, which are under tremendous pressure to perform and deliver in the short term. He adds, 'There will definitely be room for family businesses, provided they adapt to changing times.' Read on...

The Economic Times: How family-run businesses are evolving amid innovation and the startup invasion
Author: Shelley Singh

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Mohammad Anas Wahaj | 12 nov 2017

Thriving entrepreneurial ecosystem drives business growth and economic development. India is steadily transforming itself into a major hub of tech entrepreneurship. According to Raman Roy, Chairman of NASSCOM and CEO of Quatro, 'About 1000 tech start-ups were registered this year (2017), taking their total to 5200 and making India the world's third largest start-up ecosystem.' The report 'Indian Start-up Ecosystem - Traversing the maturity cycle', compiled jointly by NASSCOM and Zinnov, was recently released. Major trends include - India is witnessing a rapid rise in the B2B tech start-up landscape, focused on verticals like healthtech, fintech, and ecommerce/aggregators; Bengaluru, Delhi/NCR and Mumbai retained their position as the key start-up hubs, with 20% of the start-ups emerging from tier-2 and tier-3 cities across the country. Some highlights of the report - 40% of the start-ups are in the B2B segment. Its share in tech start-up funding is 30%; Fin-tech start-up base is about 360, indicating 31% annual growth, with US$ 200 million funding in the first half of this year, recording a 135% annual growth; Health-based technology start-ups are 320, with 28% annual growth and attracted US$ 160 million funding in the April-September period, which is an increase of 129% in the same period of 2016. Mr. Roy says, 'With 60% start-ups, the B2C segment is focused on creating innovative business models and taking the vertical approach, securing about 70% funding in the year's first half.' R. Chandrashekhar, NASSCOM president and former Telecom Secretary, observing that the ecosystem is driven by young, diverse and inclusive entrepreneurs, says that the landscape is leading to focused domain solutions in verticals like healthcare, agriculture and education. He comments, 'We will continue its drive towards catalysing tech start-ups, build category leaders and support start-ups to create for India.' Read on...

FirstPost: India added 1,000 technology start-ups in 2017; maintains the third spot as the largest hub for entrepreneurship
Author: NA

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Mohammad Anas Wahaj | 28 aug 2017

Industry experts are bullish on India's agriculture and suggest that it has potential to double farmer's income and grow exports to US$ 100 billion by 2022. Rajju Shroff, President of Crop Care Federation of India (CCFI) and MD of United Phosphorus Ltd, says, 'Globally, exports in agricultural products is over US$ 1500 billion annually as per the latest data from WTO and India's share is less than US$ 35 billion at present.' According to the latest report by Centre for Environment and Agriculture (Centegro) and Tata Strategic Management Group, released by Union Minister Nitin Gadkari, 'Agriculture's contribution to India's economy extends beyond the rural economy and encompasses many activities in manufacturing and services sector. Export surplus from the country's agricultural trade is higher than the corresponding figure achieved by the manufacturing sector.' Report urges the government to launch 'Grow In India' campaign to achieve gains in agri-exports with a single authority to monitor India's international agricultural trade. Report suggests that organic farming is not sustainable because of low yield and need for huge amount of unavailable manure. Mr. Shroff explains the dynamics of India's agricultural growth, 'This is all due to small and marginal farmers who deploy family labour and engage in intensive multi cropping all year round. They also manage livestock & poultry efficiently using agriculture waste as animal feed and to produce manure.' Read on...

The Economic Times: Agriculture exports may grow to $100 billion by 2022 - Experts
Author: NA

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Mohammad Anas Wahaj | 26 aug 2017

Agriculture is a critical component of the economy and farmers are the nation's backbone. India's 2017 food-grains production is around 273.83 million metric tonne. World Bank predicts Indian food-grain production to reach 280.6 million metric tonne by the year 2020-21. Following are key areas that India's agriculture should pursue for growth and development - (1) Demand Strength: Large population is key driver of agrarian demand growth; Rise in urban and rural income; Increase export demand particularly from Middle-East and Central Asia. (2) Attractive Opportunities: Hybrid seeds; Chemical Fertilizers; Organic Fertilizers. (3) Competitive Advantages: High proportion of over 157 million hectares of agrarian land; Leads in production of jute, pulses, milk, buffalo meat export; Second largest producer of wheat and paddy. (4) Government Policies: Paramparagat Krishi Vikas Yojana has led to development of various organic clusters with very low chemical dependency; Pradhan Mantri Gram Sinchai Yojana has also played a major role to irrigate the agrarian lands; Step towards unified agriculture market; 100% FDI under automatic route for development of seeds; Reduction in wheat import duty from 10% to almost zero and capping import limits to two lakh tonnes by importers in pulses. (5) Development Of Rabi And Kharif Seasons: Kharif season (Summer - April to September) mainly for paddy and Rabi season (Winter - October to March) for wheat production, have registered good growth. In March 2017, almost 64.5 million hectares of agricultural land were sown, out of which over 19 million hectares land was insured during Rabi season. More than 16.4 million farmers were benefitted by the Pradhan Mantri Fasal Bima Yojna. Read on...

Businessworld: Key Focus Areas For Indian Agriculture Sector
Author: Prabodh Krishna

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