Entrepreneurial India, Utopia??

Ok. So my last post was about the changing fortunes of the Indian IT companies due to a decline in the conversion rate. My closing line was quoting a hint to the Indian government to rise to the occasion to look for means and ways to prevent the IT boom going bust. But that’s not an easy effort. There are more than 1 billion people in the country. Out of this there are about 500 million children who are currently under the age of 15 who will soon be joining the workforce. Neither the government nor any large business empire can create avenues for employment and growth for these people. It is only possible by budding entrepreneurs.

There are far too few cases to talk about when it comes to Entrepreneurship in India. But the few cases are worth talking about. V.G Siddharth setting up a chain of outlets called the Cafe coffee day is a classic example. In days when coffee was considered to be a beverage only for the elder generation, Siddharth brought in a whole new hip look for the younger generation and having a coffee mug in your hand a style statement. He wanted the youth to come in and have their own choice of coffee, munch on their favorite cake or sandwich and even check their emails. Today the Coffee day is a successful chain not only providing delight to its customers but also providing thousands of employment opportunities.

A graduate of NDA (National Defence Academy) and after serving for some years in Indian army in the aviation branch, Captain Gorur.R.Gopinath decided to take voluntary retirement and return to Bangalore. One day he heard about a story of a Vietnamese woman who returned from Paris to start a helicopter service in Vietnam to provide access to remote locations. That made sense to Gopinath. He felt that the same concept was applicable to India as well where infrastructure remains poor and many parts of the country inaccessible. Air Deccan as an idea was born then. Today it is known as company that started a revolution in the Indian Aviation industry and as a pioneer in budgeted airline service bringing in the skies closer to the common man. Needless to say this company has brought in hundreds of thousands of jobs along with it.

Entrepreneurs create jobs. Jobs provide livelihoods. Livelihoods provide a sense of confidence to provide emotional security to people who depend on us. So, encouraging entrepreneurship should be a top priority for any developing country. If India has to see herself as a world economic super power then there has to be focus on encouraging Entrepreneurs. Institutes like EDI (Entrepreneurship Development Institute) are being established with a mission to provide training and guidance to encourage and ignite young minds to take up this responsibility. It’s an ideal situation a Utopia of sorts but in the end it’s a call the Youth of this Nation has to take!

Ravenous Rupee!!!

Gone are the days to be happy that the Indian Rupee (INR) is gaining space over the U.S Dollar (USD). The initial frenzy and buzz over this remarkable achievement dampened as quickly as it sparked. The Ravenous Rupee is not only feasting on the now feeble and frail looking USD but also is eating into the Indian IT industry that has so proudly boasted of its strength and might in the recent years. Reports say that the INR has been on the downside for more than a decade rising sharply from 25 Rupees for a Dollar to about 48 Rupees for a Dollar in 2002. That’s almost about a 100% rise over the decade. When we are talking about these figures in the context of currency appreciation of a country, that’s a huge deal. This phenomenon is hurting the SMEs (Small & Medium Scaled Industries) the more than anybody else. Lion’s Share of business for SMEs is from their US clients and so they are directly impacted by this dipping conversion.

Well for that matter it’s not just the SMEs but even the bigger players like Infosys, Wipro, and Satyam all have reported dips in their profit margins. There is no question about the fact that the impact is paramount. For every 1% appreciation there will be a 40-45 basis points impact on the net margins. This is because the INR’s stellar show against the USD also had ramifications into the European market. Since the start of Fiscal year 07 the rupee has moved from 87 INR to 82 INR against the GBP and from 59 INR to 55 INR against the Euro.

If this trend continues we may soon have to loose a lot of business to countries like China, Philippines who are considered as potential outsource geographies in the West. The onus is completely in the Indian Government to tackle this issue to come up with plans to keep encouraging the IT market that has been a splendid performer contributing to its economy.

Dear ‘O’ Dear !!!

Alarm bells started ringing in within the coalition members of the UPA and the Congress party itself when the country saw a new high in the inflation rate when it rose to 6.73% for the week ended Feb 3^rd. When compared to previous high of 6.58 % seen during the week ended Jan 27^th this new high has certainly started to concern the ruling party. What is particularly disconcerting is the fact that the inflation rate with the same government a year ago was at a mere 3.98 % well under the 5-5.5% that was fixed by the RBI. The government would have to do really well to sustain the pressure for the ever rising prices. The finance minister had admitted that this was a real concern and said that the rise in prices was really affecting the common man.  The main reason is that the sudden surge in price was observed particularly in the some primary food articles and some manufactured products. This has proved that the rise in inflation when it comes to the food segment is not seasonal and the rise in prices of food commodities like milk sugar, vegetable oil was certainly making life difficult to the common man. Immediate effects were seen when the government had reduced the fuel prices, petrol and diesel by two rupees and one rupee respectively. The Prime Minister stated that this reduction in prices should have a moderating impact on bringing down the inflation as often the transportation costs will have a cascading effect on the price of the commodities. With the budget season just around the corner there is a lot of thinking for the Finance Minister to do. As far as the common man is considered its not a pleasant waiting game for him until then. !!