Surojit Mahalanobis |  2013-09-08 20:32:55.0  |  New Delhi


The current account deficit (CAD) in India is the result of failing exports and withdrawal of foreign investments. The effect has further tilted the balance of trade (BoT) against India. Almost all major exporting economies – such as China, Japan, USA, UK, Australia, South Korea, Malaysia, Indonesia – today enjoy favourable BoT advantage against India’s economic interests.

 If we take a close look at issues, we may surmise that the world today is divided between two economic blocs of quality. One by the US-led European countries and the other by China, and to some extent Japan.

 The first group of countries is exporting most of the arms and ammunition. They have developed strong fundamentals from production and sale of all round mercenary deals of tools for warfare.

It is a high-technology domain, in which Quality concept and education have become a culture developed over a very long period of time. Their emphasis on Quality is big, with inputs of product-and-process, target timeframe and reduced cost at production and deliveries. All this has been further boosted by effective exports of high-tech equipment, know-how, and money (investment). The environment indeed has become the main determinant for investments, for it involves quality of management in a nation that receives the investment.

 The fleshy stories in newspapers about long-under-construction flyovers, roads developing potholes soon after rain, inordinate delays in clearance of project proposals, vox populi over development activities like forming of special economic zones (SEZs), agitation against setting up of thermal and hydro power plants, factories – only dampen the investor institutions or organisations. So they took away their investments and went to resurgent Europe where the economies are being stabilised more and more.

 The second group of countries, mainly China, has also developed its product manufacturing culture over a very long period of time. It is their national culture, so intensely fortified that even anti-China countries of the Cold War era buy Chinese products, almost as compulsion.
 Over a period of time, consistently, China created an environment suitable for foreign investments, even from countries towards which it had been historically antagonistic (e.g. the USA, the UK, European Union nations, Japan, Korea). China also assiduously maintains the Big Q in its SMEs, power generation, strategic weapons development and aggressive exports, both goods and ideas.

 Today’s China is different from that during the Kuomintang’s or Mao Zedong’s times. Chinese students go all round the world, learn the latest technologies, languages, cultures, and apply them in China as they come back home. This showcases the classic example of patriotism.
 Once back home, they emerge as valuable experts in their respective domains eager to contribute to the nation’s development. They echo what management guru Joseph Juran had said: ‘My job of contributing to the welfare of my fellowman is the great unfinished business.’ Majority of Indian expatriates lack in this mindset.

 The Chinese entrepreneurs have effectively developed long-term quality planning, consistent quality products and processes required to meet customer’s needs. China has recorded huge growth in manufacturing and governance sectors. According to a stat, about 90 per cent of products at Wal-Mart are Chinese, avidly consumed by peoples wherever Wal-Mart stores exist.

 Ironically, if Chinese firms decide to export sub-standard products, they are also successful at that in India, because Indian managers do not have enough consciousness about Quality. A case in point is the Chinese firms’ successful export of under-performing equipment in Indian power sector. The issue cropped in BHEL’s results for a recent example.

The damage has gone so deep that the Planning Commission had to ask Central Electricity Authority (CEA) to file an analytical report on functional standards of Chinese equipment used in India. In India we don’t prevent, we only spend huge after damages, which in most cases are avoidable expenditures.
 Indian managers don’t remember what Professor Juran once said: ‘Quality planning consists of developing the products and processes required to meet customer’s needs.’
 Indian entrepreneurs at governance hardly believe ‘quality does not happen by accident, it must be planned’. No doubt, China’s dominance in world economy today is based on their long-drawn planning for developing products and processes to meet customers’ needs.
 If products are not manufactured through quality-controlled processes, what would be left for India to export? It is IT and manpower (that is cheap labour).

 IT emerged as the trendsetter since late 1990s, and a revenue generator. But IT is not as fundamentally strong as a product, as are the manufactured goods which sustain for longer time and build up an economy. Indian SMEs till recently (2000) have been good forex earners. Sadly now, the Indian SME markets have yielded space to the Chinese.

 An IIT and IIM pass out today craves for MNC employment, preferably abroad, for monthly salaries in lakhs. What do they contribute to their homeland? It’s only ideation and not working skills. The skills they acquire only after undergoing on-the-job ASQ training through individual trials and errors at work places, and thus acquire ASQ Certificates to stay in the market.

Many engineering pass-outs in Indian private and regional colleges today do not get this advantage. They are either unemployed or underemployed.
 Topping the spoil is the working environment in the country. Indian contractors would seldom complete assigned works within the stipulated time. This practice halts infrastructure development prospect. They use sub-standard materials in construction, resulting in breakdowns and repeat contracts. Thus funds are wasted.

 Why would they use sub-standard raw materials? The reasons are two: One, they say they have to pay bribes or kickbacks first for assignment of contracts and then for clearance of bills. So they compensate their profits by using sub-standard materials at construction. Two, they lack the adequate expertise.

 In most cases of infrastructure development, the input costs go spiralling due to ill-management of time, false or inflated non-plan area expenses, and yielding to populist political decisions at top levels. All this tells that Indian governance system is bereft of Big Q aspects that attribute to products, consistency in environment, and knowledge.

To stop rupee downslide, India needs to draw investments and boost exports immediately. It must stop politics against infrastructure development. Political consensus has to be acquired through all-party meets. Create environment for FDIs. In today’s post-Cold War world no nation can afford to live alone, unconnected from others.

 All this is national necessity. It must eliminate national wastages by systematic adoption of best practices of modern Big Quality aspects, embedded in ASQ's Body of Knowledge. It is an ideal step to adopt the best practices in systems revolution. India missed this opportunity of systemic revolution, after agricultural and IT resurged in the recent past, yet it can be readdressed.

 A step has been taken to institute world-class systems in governance at Lal Bahadur Shashtri National Academy of Administration, IIT Delhi, in top PSUs like NTPC, and private conglomerates. It’s a nascent step forward with ASQ Body of Knowledge. More such steps are required.

 For boosting exports, the entrepreneurs must apply quality raw materials to develop manufactured product attributes, meet targeted timeframes, save enough for consistent quality inputs and product lines. Topping all they must reduce cost of production to reach consumers.

 India today has come to a stage of economic crisis, perhaps enough to invoke Presidential Ordinance. The government is duty-bound to institute corruption-free governance with accountability strictly fixed.

It must without fear or favour institute surveillance against the corrupt and push for accountability when performance
gets wanting.

Surojit Mahalanobis

Surojit Mahalanobis

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