India should focus on Micro, small and medium enterprises now

Meeting the employment needs of crores of young people is one of the major responsibility of the government now. As discussed in my previous post http://thekalyan.com/2014/05/24/jobs-are-growing-but-not-in-all-sectors/ major set of workforce are in need of employment is in manufacturing, construction, tourism sectors etc. Micro, small and medium enterprises (MSMEs) have a great potential to meet this requirement. Next to agriculture, this sector, contributes to 8% of the overall GDP. Most of the people in this sector are entrepreneurs

Kalyan: (image taken from rediff) for the article

While the government is helping this sector through financial, technological and marketing assistance, assistance in conducting tool rooms, there are still some bottlenecks. Key problems are related to labour laws, taxation, market uncertainty and majorly the skill level of the workforce.

• For instance, MSMEs have multiple, stringent labour laws to follow. This means they have to employ additional staff with financial and legal expertise to comply with the laws that adds to their costs.
• MSME’s face tough competition. As they don’t have any assured information on regular supply of raw materials for production. So they will be vulnerable to price fluctuations.
• Inadequately trained staff also has an impact on the MSME’s – with the limitation pertaining to infrastructure from government training institutes.

 

What needs to be done?

• Provide a careful analysis of markets and projections keeping global trends in mind. Like that in agriculture sector, dedicated radio and TV programs like Krishi Darshan can be broadcasted for MSMEs.
• More Subsidies, tax concessions.
• Service MSME’s require less finance than that of manufacturing, but can generate quick jobs. So concentrating more on it.

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Jobs are growing, but not in all sectors

Few days back it was reported that a sample of elite manufacturing companies has seen a growth in workforce of 3% every year over the past decade. Not going into the details of what companies were considered, how many were considered in the sample, the 3 % growth is a significant one, experts say.

 

image taken from: quickbase

But there is fundamental question – what type of jobs were created that saw an increase in % in workforce? Evidence shows that most of these jobs are white-collar’ed jobs.  Information technology techies, CA’s and MBA’s are contributing to the increase in this workforce %. While this is a very good sign, majority of people out in the nation, seeking for jobs does not have these qualifications. They are more likely to fit in the blue-collar, shop-floor jobs. With the automations and re-engineering emerging, the blue collar jobs are shrinking. – The question resurfaces. Is the employment situation in nation is improving?

Manufacturing, textile, construction, tourism are some industries that require more blue collars jobs. It is time to have polices, that boost more growth in these sectors. Also with reference to my previous blog http://thekalyan.com/2014/05/20/why-rupee-should-not-appreciate-against-dollar/ it is vital that we export more that have more scope in manufacturing, textile industries.

Why rupee should NOT appreciate against dollar?

With the current trend of Sensex going up and anticipations that it would touch 30K point, there will be sufficient inflow of money in the market. This would help rupee to appreciate even to 50 per US dollar from current 60 value.

Image Courtesy: topnews

But there is a reason that central government as well as RBI may not encourage this appreciation.

• The government will be uncomfortable in allowing appreciation as will it have impact on export sector. Government is looking at an angle where India needs jobs and that too in short term. Jobs are driven by commodities like textiles, construction and of course on export oriented industries. If rupee appreciates, our exports become costly which will impact our export industry

• As far as RBI is concerned it should accumulate good amount of dollars, which is not possible if Rupee appreciates and results in less inflow of dollars for a given value of services.

• The Current Account Deficit (The amount India is in debt to other countries) can also be repaired only by having more exports compared to imports.

The steep increase of Sensex is because of tremendous election result and as it will give country a good stability for the next five years. The cycle should go on – more investments, and there by good results from corporates – then they feed back into investments – there by good economic growth.

In conclusion, it is better to have rupee at the current value of 55-60 for some time to have a good economic growth.

 

India’s inclination towards Russian power !!

Impact of recent events in Ukraine

The recent events in Ukraine widened the gap between US and Russia. There are good number of nations from EU that are supporting Russia’s standpoint with respect to Ukraine. Russia will host International Economic Forum (SPIEF) in next two weeks. This forum discusses the emerging and growth markets across the world. This year, most participants will be the leaders of Russian, Baltic and European nations; however, US may not join because of Putin’s Ukraine policy.

 

image courtesy: thehindu

All these events, has paved a way for India is to gain access to an alternative economic zone rich in natural resources and wide-ranging market opportunities – Eurasia – mainly in the countries Russia, EU, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. SPIEF is seeing our interest and participation. Over the last few years, there is growing energy partnership between India and Russia. Europe has not yet recovered from its economic crisis. And emerging markets in Eurasia, led by Russia, gives an opportunity to India as a possible alternative to the EU. This region has huge reserves of oil and natural gas, as well as metals and other minerals. Last year, India and Russia decided to cooperate in sectors such as oil and gas, pharmaceuticals, infrastructure, mining, automobiles, fertilizers and aviation.

 

India could not come to a trade deal with EU, but it could with Russia

In spite of the conflict in the Ukraine, India has backed Russia. India also started pushing for membership in Eurasia Union (Russia, Belarus, Kazakhstan) that provides free movement of goods, services and people in the region.

Meanwhile, there is delay in expansion of trade, even though EU is India’s largest trading partner. Reasons: India wants EU to provide greater market access in services and pharmaceutical sectors, data security for its IT sector and relaxed visa norms for its professionals. The EU, in turn, wants India for reforms in banking and insurance, wines and spirits, intellectual property etc.

While deal with EU is not going well, India should grab the opportunity in Eurasia. It can become a big economic player in the region where Europe and Asia overlap!!

Employee performance review : How far a Bell Curve is good?

 

There is this debate of whether the bell curve is a right fit for performance ratings and salary hikes in the current dynamic world of corporates. Bell curve which forces a small set of high performers and a small set of bad performers to each side of the curve is pioneered by GE.

 

image courtesy: fistfuloftalent

Though it is virtually followed by many large organizations, many of the companies debate that it is not the right way of reviewing the employees’ performance.

Microsoft and Adobe decided last year, to not to use bell-curve as employee assessment tool any more. Indian IT major Infosys too is rethinking whether to use this statistical model as a tool to rate its 150,000-plus employees. It is understood that performance rating is evolving with respect to the current trend. One should consider individual contribution rather than just relative performance. The bell curve creates a conflict as it limits the number of high performers. In fact Infosys replaced the bell curve with the performance curve, where it assumes that most employees are high performers, some are average and very few perform poorly.
There are other players – Internet companies Google, Twitter and LinkedIn that do not use the bell curve.
To conclude, the performance evaluation methods followed by big organizations are slowly changing from traditional bell curve to more employee favored methods.

Tablets and Phablets

It seems the global market for tablets are slowing down because of the large screened smartphone also called as “Phablets”.

While tablets are great for watching films and browsing the internet, large-screened phones are capable of doing pretty much the same, with perhaps more features packed into their smaller shells. For instance, you might be able to Facetime or iMessage your mates with an iPad, for example, but can you send a good old fashioned text message. Or make a call?.

But again when it comes to price, the tablets are cheaper as compared to the similar featured same company phablet…

When it comes to sales, Tablets sales was growing at a rate of 50% last year, but it is slowly going down. Resources says that Apple’s ipad is the largest tablet vendor in the first quarter of 2014, but its market share too is slowly fading away. Samsungs and Amazons kindle’s tablet sales are also seeing a noticeable decline. At the same time, Apple and Samsung are capturing the market with their phablets. Apple planning to launch iPhone Air/6 and Samsung already in the game with Galaxy note. Though it’s hard the cannibalization of these products are going good.

Another reason of slow sales is the replacement cycles. For example the Apple’s iPad: Apple hasn’t really come with a significant value for the new iPads every year, – this makes harder to convince consumers  shown a penchant for offering only modest upgrades to its slates to buy the latest model. There’s no need to buy a new tablet every year, as these devices offer a good experience for 18 to 24 months