In our view India has a potential grow 6-6.5% on
sustainable basis over next decade. This rate of growth is excellent provided
we make it inclusive and sustainable.
Hopes of getting back to 8%+ growth trajectory on
sustainable basis would only fuel frustration and motivate inaction.
In prelude to general election no government would want to admit
a serious economic collapse, but the fact is that after growing over 8%
(seasonally adjusted 5yr CAGR) during FY08 to FY12, the Indian economy has
slowed down to more sustainable 6- 6.5%.
The optimists would want to believe that low growth is a
temporary phase and we would soon get back to 8%+ trajectory. However, there is
small section that accepts that 8% growth in current context is not only
unsustainable but undesirable also. We are in the second school.
In our view, Indian economy and people are not yet prepared for
higher growth, for the simple reasons:
(a)
The current status of basic infrastructure, both
social and physical, cannot sustain more than 6-6.5% growth. A forced higher
trajectory would only lead to (i) crumbling of even this grossly inadequate
physical infrastructure; and (ii) heightened social strife as the system will
not be able to complement the burgeoning aspirations.
(b)
The brief incidence of higher growth has only
led to larger income disparities. With 5% people earning, saving, consuming,
investing – we can reasonably expect to grow only 5%-6%. For 8-9% growth we
would need 25-30% participation, which seems a distance dream as yet.
(c)
6% growth is not bad per se, provided it generates employment. This could happen only if
additional productive employment is generated in rural economy and industry. 8%
growth with little additional employment is completely unsustainable.
(d)
On more philosophical note, we need a different
mindset to sustain higher growth. Corporates not willing to comply with law and
governance standards and blatantly refusing to share wealth with other
stakeholders; total civic disobedience on citizens part; and badly fragmented
society and hence political establishment – certainly do not constitute a
conducive background for sustainable higher growth.
Also read:
Thought for the day
“Cynical realism is the intelligent man's best excuse for doing nothing in an intolerable situation.”
- Aldous Huxley (1894-1963)
Word of the day
Spelunk (v):
To explore caves, especially as a hobby.
(Source: Dictionary.com)
Shri Nārada Uvāca
Infosys has explicitly admitted to poor management, by effecting multiple senior level changes.
The more important question would be how fast the “new management” would be able to regain the ground lost to competition like Congnizant etc., that is if at all they could do it.
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