Why cherry picking is no longer seasonal in India

Much of what I am reading in headlines these days – on India and, indeed, the global economy –  reminds me of the opening lines of ‘A Tale of Two Cities’ – “It was the best of times, it was the worst of times…”. Why do I say this?

1)  The Indian Stock Market – Often considered a bellwether of the economy, I came across two different articles (thankfully, in different publications) on the same day this week.  One referred to a leading fund manager’s prognosis that the benchmark Bombay Stock Exchange Sensex will cross the 30,000-point level (currently hovering around 18,000) in the next 3-5 years.  The other publication informed me that one out of every six Sensex stocks is at its lifetime high.   Furthermore, the Sensex is about 3,000 points, or close to 14%, shy of its historical peak.  It went on to predict that a correction in Indian stock markets is imminent.

2) Telecom – Gartner, the technology research agency, says that mobile connections in India will grow by 27.3 percent in 2010.  Yet, India’s largest private telecom companies – Bharti Airtel and Reliance Communications – have gone on record to aver that ‘virtual’ consolidation is underway in the country’s crowded telecoms market. According to them, new entrants are scaling down their rollout plans and shying away from reducing tariffs further. 

3)  Automotive – The Wall Street Journal tells me that the Indian automotive boom is getting ‘bubbly’ with approximately 33% of respondents in a recent KPMG survey of auto executives predicting that India would be struggling with overcapacity in the auto sector within the next five years.  At the same time, auto executives and analysts agree that if the prices and products are right, India will have no trouble boosting passenger car and commercial vehicle sales. The KPMG survey also revealed that 40% of respondents expect sales to climb to more than four million by 2014, compared to 2.5 million at the end of March 2010.

4)  Retail – For the 4th time in five years, India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney in its 8th annual Global Retail Development Index (GRDI) 2009.  India's retail market is expected to be worth about US$410 billion in 2010, with 5 per cent of sales through organised retail. Retail should continue to grow rapidly—up to US$ 535 billion in 2013, with 10 per cent coming from organised retail. Yet, according to another study earlier this year, over 6.57 million sq ft of mall space is lying vacant across eight major cities in India.

Is one analysis right and the other wrong?  Not necessarily. 

While headlines are clearly becoming heady, what is obvious is that growth is no longer ubiquitous in India.  According to the wisdom of the crowds embodied in IBM’s 2010 Global CEO study, corporate leaders believe that a rapid escalation of complexity is the biggest challenge confronting them.   They expect it to continue and, in fact, accelerate in the coming years.  As Goethe, the German thinker, eloquently expounded 200 years ago: ’Everything is simpler than you think and yet more complex  than you imagine’.

10 reasons why India is heading for a second ICT revolution

One of my recent blogposts generated a significant number of comments on an EIU discussion forum.  A few of the commentators alluded to some of the speed breakers littering India’s highway to growth.   These included issues of governance, public debt, the need for ensuring trickle-down growth and development, agricultural reforms, efficient allocation of resources and greater financial inclusion.  While there is no one magic wand that can address these issues satisfactorily, certain notable developments in the information and communication technology (ICT) and ICT-enabled space, taken together, have the potential to come close.   

1.   Recent auctions of wireless broadband licenses and 3G spectrum. Acknowledged as among the biggest such auctions globally in recent years, revenue from the two auctions totalled `1.06 trillion (approximately US$ 23 billion), about three times the Indian Government’s initial estimates. As per recent reports, over 250,000 villages would be connected to wireless broadband and 3G mobile services by 2012 enabling them to access the slew of value-added services including e-commerce, tele-medicine and social networking.

The auction was also a welcome windfall for the deficit-strapped government, with some analysts saying the spectrum bonanza could cut the country's deficit to 4.5 percent of its gross domestic product (GDP) from a projected 5.5 percent for the 2010/2011 fiscal year.

2.   The Unique Identification (UID) project.  Launched in June 2009, the UID is an ambitious project designed to link a resident Indian’s multiple IDs (passport, driving license, PAN card, bank accounts, address, voter ID etc) to a common database. It is believed that unique national IDs will help address the rigging in state elections, widespread embezzlement that affects subsidies, poverty alleviation programmes, etc.  Addressing illegal immigration into India and terrorist threats is another goal of the programme.

3.   Mobile banking. According to a recent report by TowerGroup Research, mobile banking in India will grow from 10 million active users in 2009 to over 53 million active users by 2013.  Signalling the potential of this channel, the Reserve Bank of India (RBI) has relaxed mobile banking policies and increased the mobile payment limit to `50,000/- from `5,000/-.  At a recent conference on m-Governance organised by the Internet and Mobile Association of India (IAMAI), one of the speakers highlighted that, due to digital payments, cash circulation had gone up by 7%, against the usual 2%, quoting an RBI report.

4.   Agrarian transformation through models such as e-Choupal.  e-Choupal, an initiative of ITC Limited, involves the installation of computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information for procurement of agricultural and aquaculture products. It was conceived to tackle the challenges posed by fragmented farms, weak infrastructure and the involvement of numerous intermediaries.

5.   The Spoken Web – Developed by IBM’s India Research Lab, this is a voice-enabled web-browser.  It is currently undergoing a second pilot in Gujarat, after one in Andhra Pradesh.  The opportunities for connecting the disenfranchised 35% of India’s population which is illiterate are mind-boggling.

6.   E-Governance. While deployment has been slow, some significant initiatives have been made, especially in states such as Andhra Pradesh. At national level, customs and excise and passport services have seen considerable use. For a status report, click here.

7.   E-learning. With more than 500 million people required to be educated/skilled over the next 12 years, the Government  of India is putting significant thrust to this mode of delivery.

8.   E-healthcare :  With a shortage of 600,000 doctors and 1,000,000 nurses, e-healthcare solutions are gradually being seen as significant drops in a very large ocean.

9.   Smart Grids – In May this year, India’s Ministry of Power launched the India Smart Grid Task Force and the India Smart Grid Forum with a view to turbo-charge the strategic deployment of smart grids in the country.

10. Adoption of smartphones.  According to Frost and Sullivan, smartphones will account for 54% of the Asia-Pacific mobile market in five years, up sharply from five percent in 2009.  In a market where the mobile handset is often considered a reflection of social standing, the smartphone is driving ARPU (average revenue per user) in India.  Introduction of low-cost, sub-US$110 smartphones is fuelling this growth.

The catapult that the mobile revolution created for the Indian economy in the late 1990s is well documented and widely acknowledged.  All of this makes me wonder whether ICT will now stand for India’s Cohesive Transformation?