A VERY BRIEF
ANALYSIS OF INDIAN AND GLOBAL BUSINESS ENVIRONMENT
No organization can live in a vacuum. This may hold
true for business organizations too. When businessmen and managers talk about
business environment, they usually refer to the macroeconomic environment, the
quality of human resources, and the role of law, which also means an efficient
judiciary, the state of the countries technological progress, supportive
infrastructure and the political stability and relative policy continuity. In
this essay we have used the generally accepted method to access the quality of
business environment- GLOBAL COMPETITIVE INDEX which ranks 144 countries in the
above mentioned parameters and many other indicators.
To present a clear picture of the global business
environment we have taken about 18 countries from Asia, Australia, Europe, and
the America. We have bifurcated these countries into 4 broad categories.
Categories:-
A-
Asia and Australia
B-
Africa
C-
Europe
D-
America
(Please do note that we have divided the list into 4 broad categories because
of their location and our convenience and not because they share something in
common even if they do share something in common)
COUNTRY
|
CATEGORY
|
POPULATION ( MILLION)
|
GDP in nominal terms (BILLION)
|
GDP/CAPITA Growth
in USD |
GDP Growth (IN %)
|
GCI Rank
|
AUSTRALIA
|
A
|
23.2
|
1505.3
|
64863.17
|
1.8
|
22
|
BRAZIL
|
D
|
198.3
|
2242.9
|
11310.88
|
2.5
|
57
|
CANADA
|
D
|
35.1
|
1825.1
|
5198.51
|
1.2
|
13
|
CHINA
|
A
|
1360.8
|
9181.4
|
6747.23
|
7.7
|
28
|
COLUMBIA
|
D
|
47.2
|
381.8
|
8097.84
|
4.3
|
66
|
EGYPT
|
B
|
84.2
|
271.4
|
3225.52
|
1.6
|
119
|
GERMANY
|
C
|
80.8
|
3636.0
|
44999.5
|
0.2
|
5
|
INDIA
|
A
|
1243.3
|
1870.7
|
1504.54
|
5
|
71
|
INDONESIA
|
A
|
248.0
|
870.3
|
3509.82
|
5.8
|
34
|
JAPAN
|
A
|
127.3
|
4904.5
|
38491.35
|
1.5
|
6
|
MEXICO
|
D
|
118.4
|
1258.5
|
10629.88
|
1.1
|
61
|
NIGERIA
|
B
|
169
|
286.5
|
1692.26
|
2.8
|
127
|
POLAND
|
C
|
38.5
|
516.1
|
13394.34
|
1.6
|
43
|
RUSSIA
|
C
|
142.9
|
2118.0
|
14818.64
|
1.3
|
53
|
SOUTH AFRICA
|
B
|
53
|
350.8
|
6620.72
|
1.3
|
56
|
SOUTH KOREA
|
A
|
50.2
|
1221.8
|
24328.98
|
3
|
26
|
UK
|
C
|
64.1
|
2535.8
|
39567.4
|
1.7
|
9
|
USofA
|
D
|
316.4
|
16799.7
|
53101.1
|
1.9
|
3
|
The GCI report has been based on both theoretical and
empirical research on sub-indices like starting a new business, dealing with
construction permits, getting electricity & related infrastructure,
registering property, getting credit, protecting investors, cross border trade
barriers and bankrupting dealings.
What these figures show are the economy and the
condition of business environment. If you have observed countries with higher
GCI tend to have stronger economies, richer citizens and usually belong to the
west or to the Asia-Pacific region.
Indian, South Korean and China started out in the
1950’s under similar conditions but since then, China & South Korea
gradually improved their business environment we have lagged behind and in that
process the country and its citizens have ended up poorer.
The world broadly has many things going in its favor
at this point of time.
1.)
A revival in the world’s biggest
economy- the USA.
2.)
Ascent of reasonably pro-market
figures in stagnant economies of India, Indonesia & Japan- Narendra Modi, Joko Widodo & Shizno Abe respectively.
3.)
Chinese efforts to strengthen
judicial process and reforming State Owned Enterprises through corruption crackdowns.
India has one main thing going in its favor at this
point of time- A quasi-dictator in the form of Modi.
The Quasi-dictator I was just talking about......
The adverse factors for the world are listed as followed:-
1.) The emerging threat of financial
instability in China ( referring the shadow banking crisis)
2.) Fed taper (Increase in the base
lending rates of the United States Federal Reserve i.e. the Fed) in the
mid-term.
3.) Emerging threat of a Brexit. ( A
British exit from the Euro Zone in the coming 2016 referendum)
India has many things not going in its favor at this
point of time. The biggest of these reasons is “INDIA IS INDIA- WE STILL FOLLOW
THE IST (Indian standard time)’’.
Coming again to the Indian business environment Mr. Narendra
Modi has declared his intent to attract more businesses to invest India and has
given two very attractive slogans :-
1.)
Make in India.
2.)
No red tape, only red carpet.
Even though these are very achievable and necessary
aims, they sound lofty as Mr. Modi has not shown much movement towards
achieving these aims, ex- the land accusation act of 2013 passed by the UPA
(which by the way noted columnists TN Ninan and R Jagannathan have famously
called the UPA’s worst legacy). Cumbersome demands of the new companies act and
archaic labor legislation like the Indian factories act of 1948 and Industrial
disputes act 1952 and the Boiler acts.
To achieve his stated aims he has to do a lot of the
above and much more but he has not shown any inclination to be India’s Reagan
or Thatcher If he has to give jobs to the young Indian unemployed he will have
to do many things that are un-popular in the short term. Mr. Modi being the
ultimate Indian pragmatist won’t do any of those things.
As Shankar Sharma and Devina Mitra repeatedly write in
the Business Standard newspaper, when compared to the other developing
economies, Indian economy is much less prone to macro-economic shocks due to
its low level of indebtedness among other things. But this won’t be of much use
if we continue to let the socialist shackles on our economy remain by not
improving upon our Global competitive index.
In the present geo-political scenario India is in a
unique position to be the next manufacturing power house of the globe as
traditional powerhouses like Thailand and China are suffering from political
instability and lack of independent judicial system respectively. It depends
upon our leaders to capitalize on this situation by increasing our
competitiveness and going out of the way to attract businesses to India.
Now coming to the rest of the globe-
Economies like South Korea, Japan, and even partly China suffer ageing population, thus resulting in gradual rise of wages. This
is causing a gradual loss of competitiveness when it comes to the labor
competitiveness index. Countries like Russia are suffering due to the
economic ramifications of the actions of their political leaders (refer Putin
in Ukraine). Egypt, which is a part of Middle East is suffering due to all the
above reasons AND the larger arab societal collapse due to the spread of extreme
Salafism. The only countries which are poised to perform well are Poland, Nigeria,
Canada, Mexico, and Columbia .While Mr. Modi may have or may turn out to be a
false reformer, Donald Tusk, Good Luck Jonathon, Enrique Pene Nieto and Juan
Manuel Santos (of Poland, Nigeria, Mexico and Columbia) have managed to reform their extremely static economies through
increasing their business competitiveness , rather efficiently.
Joko Widodo- The New Indonesian President.
The bigger risk to the global economy is a short term
shock out of the shadow banking crisis in China which will affect most
economies irrespective of their competitiveness. Such a Black Swan event if it
were to happen would negatively impact the slender global recovery.
To conclude in one sentence the Global and Indian
economy face many hurdles in terms of business constraints which is hurting the
global citizenry and the Indian citizenry and these constraints are slowly
being phased out as a part of the natural evolution process of the global
economy.
Bibliography :-
2) The Economist Magazine on understanding the shadow banking crisis.
By- S. Shreyas Bharadwaj, Pranav Tyagi, Sai Mourya, Naman Khandelwal, Bikramjit Singh , Ujjwal Krishna.
