Sick and tired of the rot that I'm surrounded with I have little option but to at least express myself in terms of the rot I see around.
This blog represents my true accounts of where I feel this nation fails at the most basic level. These are also supported by facts in the references section to the important points made about market and companies. The basic prmise of tis bLog is that the fundamentals are weak. The fundamentals stem from:
- Tight control over liberalization; and regression in 2012 Budget on the same
- An inefficient government expenditure machinery fueled by corruption; contributing to the Fiscal deficit
- An insecure population that is till date pushing every young aspirant into an Engineer or a Doctor without the promise of producing quality innovators or social contributors
(Am in the process of updating the Refere3nces section and implying direct connection between the references and the test I am providing)
1. Kill the entrepreneur : No matter how much economic growth this country has achieved, as an aspiring entrepreneur your entry barrier to do business in this country is extremely high. Having a good idea, business basics and plan is simply not good enough. You need to understand the twisted paper work, the red tape and the hoops you must go through to set yourself up. You still need to grease the palms of a few monkeys, hire people for nonsensical things that waste your time and you would rather have someone else do etc. etc. The government has provisioned for SEZ (Special Economic Zones) but these again cannot cater to the demand and have very special and stringent requirements so that they are not abused. However, the combination of lack of sufficiency and stringent requirements again implies the small guy has a small chance.
2. Unlimited Paper : The countries appetite is tremendous. You fill many forms, submit them and them you fill them again. As an example: You open a Bank account, you open a DMAT account for trading. You submit paper as if you were buying a house. Then, a year a later the government comes out with some KYC - Know Your Customer scheme where they demand the same papers again. As if this countries system suffers from amnesia. Where have all the photo copies that I submitted to so many institutions gone?
3. Keep paper for 6 years : If it is true, one is to maintain PAPER of transactions for 6 years before they can be disposed.
4. The Cheats anyway get Away : I suppose the reason to have so much Red Tape is to keep the cheats in check. While, this has never helped and rather it forces a system that relies on a "Quick & Easy" way rather than follow the system. Simply put, the System in its pure state never works here and one has to rely on other means, contacts etc. to get through. You have to know "how to beat the system". its perhaps, with such ferocity that youngsters learn early that people have little faith in any system and take matters in their hands any which way. The honest man is left struggling with all their insecurities while the manipulators get away in spite of all the bureaucracy that was probably intended to keep them in check.
5. Lack of innovation : For a country that prides itself on the number of engineers and doctors it produces, does very little to innovate in comparison to the developed nations. There is some innovation but not at a scale that can be recognized globally. I feel the problem here is the cultural urge to make people engineers and doctors than self driven goals of being innovators. Even entrepreneurs are not innovators as most Indian entrepreneurs are interested in some .COM idea that is easy to fund and become rich. Yes they are solving problems but we will address this later.
6. Market focus on commodatized services than R&D : This actually contributes to the previous point. I can speak for the Indian Software and IT industry. Having attended some conferences it was clear that Angel investment in this country is still Risk averse, and they see investing in .COMs as lucrative. On the other hand, the new crop of Indian entrepreneurs also is obliging the same sentiment. We are seeing a surge in the number of E-Commerce sites. Every dick, tom and harry has an idea and wants to be a .COM millionaire using comodatized open source software like say "Magento" or some CMS. There would be something different about the idea given,... but if you look at the market trend, the number of E-Commerce sites is totally on the rise.
I had done a detailed study on the .COM bust around 2003 in the US. We are following a similar trend in 2012, and I can say this absolute assertion that we are doing it worse than any better.
7. Heading always towards lowest Entry Barrier : Am noticing a dangerous trend in the Indian entrepreneur community and the investment circuit. The emphasis of funding seems to be more .COMs. I won't explain why this is dangerous but will simply state it for the record.
8. Government Taxation Laws : From a 10% Service tax the Government of India thought it necessary to increase it to 12% (approx). There is speculation that this will go upto 16% or 17% in coming years. While service tax is justified for an economy that provides a lot of services to its businesses to reduce their operating cost, this is certainly not true even today in India. The cost of business is on the rise. You can evaluate this in terms of Commercial Rent, Commercial Power etc etc. If I'm paying higher for every aspect of doing business why am I paying increased service tax without any service return from the Government? The reason for the Government to increase service tax is very clear. For a democracy where majority is still struggling you cannot impose higher import taxes, you also have a corrupt and inefficient machinery that loses money ... so the only way out is to juice the corporate sector. While this is perhaps sustainable for the bigger players, it is not for the startups. And a country without *real* start-ups is pretty much axing its foot in terms of the fundamentals of Economic growth.
9. 1990's - Boom if IT sector, 2010's - Boom of the .COMs : Following the positions of the current IT big players like TCS, Infosys, Satyam (Poof!), Cognizant,... you will realize that they are surviving on pure volume. They have some products that are domain specific and B2B in nature but nothing that cannot be overpowered by a smaller and more agile player in the coming years. Infosys knows this, and has put a lot of emphasis on R&D and product development to counter it @ the coming years, even if it means hitting its current market value (which has fallen pretty low right now). In this regard, I actually respect Infosys position and feel they may bounce back. Given the size and focus they are thinking long term and I have some sense of optimism for them. However companies like TCS are just massive sweat shops. They may have some small areas of sophistication but I'm very pessimistic about them.
References
No comments:
Post a Comment