After a steady trot at 7 percent, India’s GDP growth has hit a speed-breaker during the year 2019. There is still a lot of debate on the nature of the slowdown. The media has been crying hoarse about the decline in sales in the auto sector; and the decline in sales offtake reported by the auto majors is indeed alarming. What was a surprise to this author is the slowdown even in the offtake of two-wheelers. Fortunately, not all sectors are affected to the same degree. Packaged consumer goods are continuing to grow, albeit in modest single digits. Healthcare and pharma are doing fine. Consumer durables are slowing down, but to a lesser extent than automobiles. Real estate is also in the dumps.
What is the slowdown due to?
There are many theories doing the rounds to explain the present (2019) slowdown. Before I address some remedial measures, I thought I should outline my understanding of the various reasons attributed to the slowdown. One big reason, at least with respect to real estate and auto sector, is the tightening of lending rules for NBFCs and banks. The other reason often cited is the stress caused by demonetisation and the implementation of GST (I am not sure how valid these issues are, now that both events are behind us by more than 24 months). Yet another reason is the rural stress and the tempering of agriproduce prices. Add to these reasons the global concerns of a slowdown triggered by the trade war between China and the US. As you can see, most of the above issues are beyond the control of a CEO of a mid-sized Indian company. So, what are they to do when their business is facing a slowdown?
What is the ‘colour’ of the slowdown?
Before we can look at the playbook to fight a slowdown, it is important to understand the colour of the slowdown. What do I mean by ‘colour’?
Denne historien er fra November 2019-utgaven av Indian Management.
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Denne historien er fra November 2019-utgaven av Indian Management.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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