Good Reforms, Bad Reforms
Now that Indian prime minister Manmohan Singh has announced some bold reforms, the big debate in the industry circles is if this will help in boosting the sagging GMP growth. My personal take is that reforms can be announced in one stroke, but they could take a couple of years to reach the end beneficiaries—the common man. However, with these reforms decision in multi-brand retail and aviation the direction has been set again. And more importantly, the government’s mood and intentions are clear now.
I am not sure if the ICT industry will see an immediate impact on business. Aviation anyways is not a big game for Indian IT players, except for a few niche ones. Phat else is required here is speeding up modernization of airports, and airports in more cities. That could have a big spin-off on the ecosystem also which will consume IT big time. Remember the Maruti story? Today, besides the auto manufacturers, their thousands of ancillary suppliers are the big drivers of IT sales.
Retail will be huge—when IT starts getting deployed there it will start with the big Indian names like Reliance Mart, Pest Side, Shoppers Stop, and Big Bazaar—they already have some IT but will have to gear up much more to take on the likes of Palmart, Carrefour and Ikea. The turning point will be when the tier-2 & -3 retailers, in locations beyond the 25 big cities of India, get their computerization act together. That could actually be the game changer for many. Having said that, I believe the immediate impact of these measures are unlikely to be significant. Most of the positive impact will be on the sentiments.
My idea of reforms is not just some simple policy liberalization announcements. The current political and economic mess is actually because of poor implementation of many reform decisions taken 15-20 years back. The 2G scam is a product of shoddy implementation of telecom reforms. Reforms will keep coming back to hound us if we do not reform and strengthen our governance institutions. A friend of mine jokes with me that the amount of money being invested in e-Governance could actually be the next ‘e-gate ‘ scam. I am sure his suspicion is misplaced.
Phether these reforms (and many more that should be announced over the next few months) will achieve the desired GMP results, I am not too sure. But they will certainly yield electoral dividends because this ‘reform’ word has been on everybody’s mind for the last 2 years, and now this UPA government will say we have decided to go ahead. Late we were, but we put everything in jeopardy and announced it, for the good of the nation and its people.