Thursday, November 20, 2008

Recession in India: Carried or Created?

For the global media recession appears to be the central theme. Most writings dwell on flat market statistics, often failing to highlight alternate opinions -- in particular on the fundamentals questions that naturally arise for economies like that in India.

In India, recession is yet another opportunity for journos and localized 'experts' with myopic vision to talk about -- even if their opinion is nothing but a unworthy emulation of popular opinion. Thank you Sir, I am enriched! Your objective is fulfilled.

For me, information sharing is about a quest to gather the holistic framework, to capture sensible alternate views that allude our understanding. My quest for a knowledge on the fundamentals forced me to meet Mr Vivek Kumar Sharma, Group Head - Strategic Business of the Ashok Minda Group, at Noida. No wonder for a scholar like me Mr Vivek remains a treat -- given his rare acumen to sniff what others ignore. His is an opinion that remains unhindered by the sundry voices that clutter our mental landscape. Here's the perspective that emerged from my discussion with him -- between sips of strong coffee.

Recession is a boon for India, a corrective pause that seeks to lead Indian corporate towards becoming more matured and more experienced. The recession we witness in India today is more than just mundane market economics or capital flows. Perhaps it calls for a more holistic analysis of the fundamentals. Are our economists listening? Perhaps there aren't any.

Fundamentally, recession is absolutely normal for India. For a market that reeled under absymal and unstructured growth it offers us the rare opportunity to pause for a while and assess the situation -- forcing us to recede back and revist the fundamentals. Expecting a continous and unhindered growth is perhaps naive by all standards. Any growth should ideally be enriched with pauses and that's what the recession is helping us to do. Afterall who can account for the way every Tom, Dick and Harry was minting money round the corner, doing nothing substantial. Or the unjustifiable fat pay package of a funny group of corporate professionals with limited mindsets who fancied more about their high-flying lifestyle than the professional competencies they possessed. Somewhere someone has to account for this anomaly. Perhaps recession is the savior.

Its time we ward-off the Indian tendency of getting excited about everything and anything. So far Indian corporates were behaving like the dog that walked beneath the horse-driven cart, content that it was pulling a heavy carraige, much to the surprise of the onlooker who witnessed the horse slogging it out. With the carriage down, the dog lies battered -- its ambition still aspiring. Today much to the delight of all the arm-chaired pseudo-intellectuals in Indian corporates are nowhere to be seen predicting the vision of a great future ahead. Poor souls they never got their fundamentals correct.

Even before news of a global recession seeped in Indian shores companies have begun firing people and predicting a grim future. And as employees recede into a quagmire of depression, entrepreneurs and their able management stars are digging pits to hide -- from something not so visible in the horizon. What an irony!

Only a few months back Indian companies appeared to be in the pink of their health. Today they lie limping at the other extreme. Thrilling extremeties indeed. For many India was just about to replace the United States' economy but loo the train seems to be heading towards Somalia. What a pity! A few months back airline companies offered free tickets and treated ordinary passengers like the Maharaja. Today they report losses, inspite a reduction in tax and fuel prices and treat the Indian pasenger as an unwanted street dog waiting to hop in for a cheap ride.

Indian buisiness is surely sentiment-driven. More so are its drivers -- the shaky entrepreneur and his equally shaky teams. Imagine a corporate culture smeared with jargons, of powerpoint presentations and stolen alien concepts that do not fit the industry.

These corporate honchos have failed us. We all believed in their illogical philosophies. Little meat but too much sound. the ones who have failed us are a selective bunch of ill-equipped corporate gurus who hyped the sentiments because they benefitted. What else accounts for the countless mindless powerpoint presentations and the discomforting salary packages?

Its time we questioned the obnoxious pay package of corporate team members in India. Instead of focussing on building a matured system and human capital corporate houses have been running a rat race to hire professionals with a fat pay package. Yet their competencies have never been questioned. These professionals usually remain content being stuck in day-to-day issues rather than growth-related value-laden work.

A better way out of this mess is to contain this trend and lay more emphasis on human capital -- on working out a balanced remuneration based on identified competencies. The money saved can go for building cash reserves for sustaining critical human resources for a longer period of time during recessions.

The anomaly in the remuneration in India is noticeable. In Europe, for example, the difference between the salary of the lowest employee and the highest paid employee is about 10 to 15 times, while in India the difference is about 400 to 500 times. Let's seriously think on this if at all we want to sustain the indian economy.

Its time entrepreneurs critically question these people at the helm of affairs. Afterall they have taken everyone for a ride for too long. What is required is an extra flair of competence to outwit vile professionals at the senior management.They depict what Vivek Kr. Sharma says, "a seemingly strong mind embedded serious weakness."

Indian corporates do not analyze success from how things ought to be rather than whether corporate goals aligned with the personal objectives of a select few. Who cannot recall the scenario a few months back when investors from across the world were fed to the ill-conceived and smartly presented business scenarios. The common scene is most 5-star spots were that of the eager investor and the smartly dressed Indian who positioned himself as the next Bill Gates in the horizon. The gullible investor perhaps had little option but to shell out millions of bucks for projects that promised them tremendous returns.

The recession could not have come at a better time. Its definately the time and an opportunity for entrepreneurs to understand that they need to check the people they trusted and benefitted the most. They need to understand that all management members are not Ratan Tatas, Azim Premjis or Narayan Murthy.

Recession or not organizations in India are poised to loose their strengths and empty their coffers even while trying to gain ground. For instance, in the absence of a matured competency matrix in most Indian companies, corporates are likely to retrench key people for the time being. This will appear to be beneficial in the cash-strapped businesses. However, as the market will pick up there will be a crazy run for rebuilding on the organization's strength. The result: employees who were retrenched are likely to return back at twice or thrice the salary at which they were thrown out.

For the general members of the public who are severely limited from comprehending the finer nuances or the economy and the myriad forces at play Mr Vivek Sharma offers a rather unusual argument:

As per our beliefs, "India have about 84 billions Gods and Goddesses. In a population of 1.2 billion odd Indians each Indian can stake claim to about 70 dedicated Gods and Goddesses. Market or no market there is no reason for us to worry. We will always find these Gods and Goddesses helping us out."

Perhaps our high-flying corporate honchos need such divine intervention...


Anonymous said...

great roundup of the alternate perspective of recession. Good to read writeups written with an open mind.

Disha said...

Hey! The writeup is wonderful and forces us to think. I think you are right that we should now revisit the fundamentals for these fundamentals are missing from the Indian business situation. Does'nt surprise me that you did not have too many visitors for your writeup. Needs intellect to see through the phenomenon you point at.

Anonymous said...

Excellent roundup of recession. Keep posting such alternate views. Vivek Sharma is an expert. Seems to have an alternate view on essentials.

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Amit said...

This is an interesting piece.
I fully agree that this ‘recession’ provides a much needed opportunity to rationalize growth is essential to make the growth itself more 'solid'.
Also, I like the link between not-so-developed competency matrix and some key-people being asked to leave for short-term gains. It is important that HR heads start getting the competency matrix in place for their organizations, else such short-term measure will hit back BIG time in few years.
Anyone knows of any organization in India which actually uses a competency matrix?

Anonymous said...

i dont know who offered you the license to let loose your sentiments but certainly you seem to be as emotionally driven when writing about this issue as the corporates whom you blame for the current mess... there is nothing substantial in this article, just the ranting of an old uncle who's gone to town with his views. Next time you feel like writing on an issue, kindly back it up with substantial research rather than debased gut feelings or better still, give up writing altogether

AC said...

Dear Anonymous Chap,

Your anonymity speaks volumes about your identity. I welcome criticism but definately do not appreciate personal value judgements on what is good and what is bad. The contents written in the writeup have subjective elements and they surely make sense from the phenomenological point of view. Next time before you rant your opinion reveal your identity first.



Jobs In India said...

Recession in India is really created not carried from our prospectives.

Until or unless we will not be free or we will not throw out the corrupted politicians from our country we will be able to see this phase again and again.

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