Macro level management issues in Indian Economic Planning
and Marketing-A short appraisal


Prof. R.K. Gupta
Professor & Director
S.A. Jain Institute of Management & Techology (AIMT)
Ambala City-134 003

Indian Economy has strange complexion. The country having population of 1.05 Billion people of which almost 30% are younger than 25 years age (A big market in absolute terms for youth and children products) is full of debate on survival of Companies in India, post-liberalization and the ensuing opening up of Economy to foreign goods and services.

The country that has more than 100 Institutes including Central and state Government, private and NGO sector, University system and some of companies for entrepreneurial development and training, hardly throws out 10 new entrepreneurs in a year worth noting.

Although exports from India is increasing at a good pace as claimed by Union Government and other data of world economic fora, in many sectors hyped about, the share of India in world trade into these sectors is peanuts and even lesser than countries like Pakistan-for example yarn and textiles*.

India boasts of largest pool of talent in terms of technically and managerially qualified graduates and diploma holders, but the employability and quality of this talent is far from satisfactory even in eyes of domestic corporate sector, forget about Global employment arena. The University system in India barring a handful is virtual failure in terms of standards, quality and relevance and is more focused on quantity and numbers. It is badly throttled by Bureaucrats and politicians and worthless teaching staff.

"Some simple analysis of last year's results for the 1,000 largest companies, done by the Business Standard Research Bureau, shows that the 100 largest companies accounted for as much as 72 per cent of the sales of all 1,000 companies - and 83.5 per cent of net profit. To any observer, that would seem like enormous concentration of financial muscle.

It wasn't always like this. Similar numbers for the 1,000 largest companies 10 years earlier (1994-95, which is when the big public sector companies got listed) show that the 100 companies at the top of the pack accounted for no more than 59 per cent of sales and 64 per cent of profits.

What this tells us is that the last decade of reform has been unusually good for the biggest companies in the country - who have increased their share of the cake, any way you look at it.

In most sizeable economies, and India's is the 10th largest in the world, any company with less than $100 million of sales (Rs 450 crore) slips into the medium-scale category. By that yardstick, India has all of 324 large companies, with the last one to make the grade being West Coast Paper. In other words, while India has more firms listed on the stock market than any other country, barring perhaps the United States, this is a mirage"*

The consumption of goods and services by average Indian citizen per capita is 1/3 rd to 1/20th of their counterparts in advanced countries and yet our companies and manufacturing units go in loss.

However, it is important point to ponder if it would be advisable at all to let per capita consumption of goods and services like cars, mopeds, petrol, paper, plastic and pharmaceutical products, increase and match with those of USA and other economies as far as per capita consumption is concerned.

USA having just around 35% of India's population has 5 times bigger geographical area.

USA also holds 80% of world market for engineering goods that can be called value addition products that fetch much higher profits than commodities and low end products and services that India produces.

 Would Indians be in a position to find ways and means and enough area to dump industrial garbage, domestic refuge, pollutants and the disposal of so called conspicuous consumption products and fast obsolescence products like computers, cars and TV sets? Will India be left with any potable water enough to feed drinking requirements of population and industry?

Will the projected sales of 1 million cars in India every year be viable with no room to run them on Indian roads, specially the Metro and A class cities?

Is India wise enough to spare its scarce and diminishing land under cultivation for growing the items having high Domestic Resource Cost and consumption of irrigation quality water, fertilizers and human input?

Has India been able to plan and control its population growth and balanced development of 3-tier urban and 2-tier semi urban structure through out its geographical territory?

Why Indian Government and various consulting organizations like CMIE, IIMs, NCAER and DGCIS etc not conducting consumer satisfaction surveys and Citizens' satisfaction surveys for various sectors, utilities, product groups, State provided services like health, policing, judiciary and sanitation and publishing them?

When talking of sustainable growth are We as a nation comprising of economic planners, social organizations, corporate sector members and academician able to carve out and address the issues related to Ethics in public administration and Business, transparency, low cost of public delivery of State delivered services, Distribution and logistics of essential commodities and basic services, and increasing Metro-centric development of country like Delhi NCR, Mumbai, Hyderabad, Bangalore and Chennai?

The Planners in India including the so called and hyped Institutions have miserably failed to address issues of mass rapid transport, well developed national grid of roads and public distribution system and delivery of education and health services thereby loosing opportunity to empower common citizens in India in terms of purchasing power, income and growth.

With virtually negligible infrastructure for R &D in the country both in Public and Private sector barring a limited few areas it would be difficult for India to maintain share of global market in global economy in long term. The growth of R & D in recent years is not in Indian domain but sponsored by MNCs from abroad who find terrific cost and productivity advantage in utilizing Indian talent pool and Infrastructure. The best option therefore, is for Indian corporate specially those in top 500 list to go out for acquisitions and utilizing of Technical know-how of organizations located in other developed countries like Tatas, Infosys have done and Ranbaxy is following the suit.

There is need for rapid reforms in Indian public administration systems, judicial system and Financial markets with thrust on investing heavily in basic and higher education, privatization of universities, dismantling of license Raj and focus on First class delivery network for goods and services through out the country including world class ports.

The labor productivity, customer service and innovation and entrepreneurship have to be rapidly developed.

What we need is right combination of ethics, spirituality, low cost distribution network, and honest and efficient bureaucratic set up to facilitate rather than regulate the economic activities in the country. Instead of risking survival of socio-economic system by encouraging consumerism and materialism, India should focus on selective-sectoral expertise at world-class level utilizing traditional Indian knowledge domains and ensure outreach of Indian and MNC corporate to nook and corner of Country with right kind of products for Indian purchasing power, cultural ethos and markets**.

Some of the sectors for growth in India for export markets are drugs and formulations, biotechnology, textiles and clothing, higher education, health care   (Tertiary), spiritual products, herbs and ancient therapy products like Ayurveda and Yoga, packaged software, knowledge products outsourcing center like architecture, legal and medical research, and entertainment products.

India can hardly afford to waste millions of sq. meters of prime and costly space in Metro and big cities for malls and retailing marts, which are unlikely to generate enough employment and profitability.

Another foolishly neglected sector is mass housing for LIG & MIG population in various Metro satellites and A and B Class cities thereby escalation of property and real estate prices having no relationship to per capita income of Indian citizens.  

Why Indian companies are facing profitability and marketing problems in a vast country like India is due to following factors; readers and experts can expand the list:

1.Low purchasing power of Indian consumers at large
2.Wrongly designed and costly products and services
3.High cost of various factors of production regulated by State-like electric power
4. Very high cost of taxes, documentation and clearance of formalities
5.Poor delivery and distribution mechanism, and
6 Very high rate of corruption in Public purchases and administration, resulting in drainage of almost 40 to 50% of India's actual GDP into black money.
7.Poor productivity of Indian workers and low quality of goods.
8. Lack of technical know-how and innovation.

The abnormally high prices of real estate in India will make most of enterprises failure. A good part of this is being driven by black money, profiteering, corruption and mafia operations and bears no logical relationship with per capita income and capital formation in the country. Urban planning is virtual failure in India by whatever criterion one can choose.

We must decide whether we want a few large conglomerates like Reliance in Indian markets or entrust them the task of developing global markets while developing a fairly large number of smaller but world class SMEs to ensure fair competition, market outreach and affordability of goods by average Indian consumer.


*Some of the data and statements have been taken from business articles and EXIM Bank of India literature.

** The "Concept of Marketing Harmony" by the Author published elsewhere.

Prof. R.K. Gupta
Professor & Director
S.A. Jain Institute of Management & Techology (AIMT)
Ambala City-134 003

Source: E-mail January 22, 2006


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