Monthly Archives: October 2013

Where has the money gone? Here it is…

India’s Gold reserves with RBI are approximately Rs.1.25 lakh crores.

But, India is spending almost double this amount every year, on mobile services and handsets. And that is about 2.06% of India’s GDP…

Telecom and Mobile handset industry is where the money from average consumer’s pocket is going. No wonder most of the markets are reeling under slowdown. India spends less on goods and a lot of time and money on talking…

Check some interesting numbers to get a better perspective :

India’s GDP in 2012-13 : Approx Rs 114 lakh crores (Reference :Wikipedia)

India’s Telecom Services sector revenues in 2012-13 : Approx : Rs. 2 lakh crores based on Q4-2012-13 report of TRAI (Reference : TRAI Report for Jan-March 2013 Quarter)

Mobile handset sale of last 2 years : (Reference : Economic Times article here.)

a) 2011-12 = Rs. 31,330 Crores

b) 2012-13 = Rs. 35,946 Crores

That means, EVERY YEAR, approx Rs. 2.35 lakh crores are being spent in India on Mobile services and handsets. That is approx 2.06% of India’s GDP. Considering approximately, 120 Cr population of the country, this works out to about Rs.2000 average PER HEAD PER YEAR….!!!

This means that out of about Rs.90,000 per capita GDP, EVERY Indian is spending average Rs.2000 per year on mobile phones…! Now that is a significant number…! A lot of Indian money is turning into hot air.  This has a very serious possible repercussions on the Indian economy.

1) Notwithstanding the immense communication advantage of mobile and Value Added Services and their contribution to the economy at large, the actual productive usage of these facilities is comparatively lower. Most of the mobiles are used for non-productive purposes (Chatting, Social Media, Group messaging,  Playing games,Listening to music, as a Camera etc.). Along with money, this is wasting a lot of productive time of the country’s populace. The general population, newly exposed to this technological solutions, is behaving like a small child who has suddenly entered a room full of toys. The instincts ‘to be there among the crowd’ is costing the economy a very huge amount of productivity. Unfortunately, this will be realized later than sooner.

2) A lot of this money is going out of the country, as most of the telecom hardware, mobile handsets and accessories are imported. This puts a lot of pressure on the Indian rupee.

3) With many of the family members now having their individual mobile phones, the monthly budget of the average household is very strangely skewed due to mobile hardware and services claiming a significant amount. A lot of essential goods and services are becoming predictably unaffordable due to this imbalance in the household income and expenses. This is one reason why all other markets are reeling under reduced demand.

4) The social impact of ‘the mobile revolution’ is generating a lot of lonely souls, destroying the fabric of relationships. This also gives rise to a lot of psychological disorders. Small children exposed to mobiles early on are reducing time on physical activities and spending a lot of time on mobiles, limiting their wholesome physical growth. All this finally impacts the general physical and mental health of the country and then to the economy.

It will be good if the child gets wiser after playing with the new-found toys for a while and getting back to its normal life.

Otherwise, these toys will prove to be very expensive for the economy in the end.

Here is what stops India’s industrial growth.

India is shining…! Or, that is what the government wants us to believe. The emptiness of this claim is visible in the decelerating economic growth since last few years. The reasons for this disappointing performance are not difficult to find.

It is very difficult to be an entrepreneur in India. Even though the country needs a lot of entrepreneurs, it is hostile to entrepreneurship. The Indian government and its bureaucracy has always treated Business and Industry as a milking cow. Officially, businesses are imposed various types of taxes and levies. The impossible maze of rules and regulations encourage another unofficial extraction of money from the businesses in the form of palm-greasing amount for various permissions, licenses, certificates etc.

This all has lead to a step-motherly treatment to industry and entrepreneurs. Instead of building sound infrastructure and facilitative rules and regulations, the government and politicians don’t leave a single opportunity to strangle the business and industry. I saw a live example of the negligence, exploitation and apathy of the government towards industry during visits to Silvassa and Daman, the union territories on the border of Gujarat.

1) Even though thousands of SME units are located in this region, the infrastructure in Daman and Silvassa is at its worst. As soon as we enter Kachigam from Vapi, the miserable quality of road welcomes you. The one kilometer stretch passing through one of the industrial area, takes at least 10 minutes, with not even 5 meters of flat road to be found anywhere. Driving this through this road is a hellish experience. Theoretically, every year some money is sanctioned for improving this road, but the condition is simply unchanged. The pathetic condition of this road has remained the same since many years.

2) The poor infrastructure has grave impact on the industries here. A lot of international companies fail the units here in their internal evaluation audit only because the infrastructure in the vicinity is not conductive for the business. This puts the industries here at a huge disadvantage.

3) The Daman-Silvassa has an independent Member of Parliament to represent this region. But, instead of helping the industries in this region through proper infrastructure and facilities, the politicians here seem to be busy ‘developing’ their own future. Instead of helping the industry which brings jobs and prosperity to the region, their lieutenants are known to harass the industrialists by running a parallel government in the industrial belt milking the entrepreneurs for ‘maintaining’ the region. Every now and then, these pseudo ‘governors’ drop in for various favors, including seeking financial contributions from the owners of the units in the area. These people, ‘blessed’ by the reigning politician, ensure that all types of contracts go to them only and their own people are employed in these companies, regardless their qualification or suitability for the post.

4) It seems the poor central government does not have funds to maintain roads and other infrastructure in Daman-Silvassa and hence the volunteers from the ruling MP’s cadre have to work hard to go and collect the ‘contribution’ themselves from the industry owners, to build the roads and maintain the infrastructure. In spite of the ‘hard work’ of these volunteers in the form of collecting repeated contributions, the roads are not in place. May be the pit is too deep to be filled.

India will have to wait to grow its industry till all such deep pits are filled.  Till then, the industry will continue to struggle for growth and the country will have to continue to live “in the pit…”

Even a strong brand can’t survive employees inefficiency

MTNL and BSNL are some of the strongest Indian telecom brands, due to their inherent advantage, existing huge customer base and the brand equity.

But, in spite of having a headstart in the country’s telecom revolution, these best brands are losing out big time. The companies are not making profit.  Here is why. I read here that for MTNL, employee cost as a percentage of revenue stands at 103 per cent. That is, its salary bill is higher than its turnover…!

Today also, when the world-class telecom companies are beating MTNL/BSNL on their home turf with their efficient service and quality and still making money and building formidable brands,  these government behemoths are bleeding since many years.

Why?

MTNL/BSNL have a huge redundant and unproductive employee base which is eating them out. Here are some examples of the wastage of manpower at these companies.

If you complain to MTNL (Mumbai) one of the following things are likely to happen :

1) The number for registering the complaint will keep ringing. In this time of being attentive to customers 24×7, the ‘official timings’ of MTNL Customer Selfcare department as displayed on MTNL Website are 10 to 17.30 (7.5 hours), when the world-average is at least 8 hours per day. In spite of the official 7.5 hours of duty timings,  MTNL babus are still living in the age of 11 to 5, which includes at least 1 hour lunch break in between… Such an archaic working practices can kill the organization and they are doing it…

2) If you are lucky, after some follow-ups if your complaint is attended, you will see at least 2 or 3 persons from MTNL coming to your place for attending the same. There are always 2-3 hangers-on for every customer visit. And most of the time, the problem is not resolved even after the procession visiting the site.

If India has to progress, inefficiency of its government and its PSUs has to be worked upon. Till then, India will have to struggle to grow ‘in spite of’ the government, not ‘because of’