Open Forum

New Delhi, 17 June 2020

Ingrained Inefficiency

CHANGE IN OUTLOOK VITAL

By Dhurjati Mukherjee

Prospects of foreign companies changing locations from China to other countries such as India, Malaysia, Vietnam, Thailand etc are said to being contemplated. While many believe India could be a big beneficiary, it suffers a drawback as experts opine that most foreign companies have little interest to relocate here given factors such as inefficiency, corruption and lack of infrastructure.  

Inefficiency is unfortunately ingrained in our system. Some of this may be attributed to manual functions, instead of automation while others may be due to lack of clear-cut methodology and planning. Be it in power transmission or completion of infrastructure projects, inefficiency results in delays and add to project costs. Even in vital areas like water usage or fruit preservation there is 30 to 40% wastage and the lack of warehousing has led to farmers throwing their produce on the streets.  

The recent rhetoric of ‘atmanirbhar Bharat’ (self-reliance), has little basis for a country importing basic products. India has become an assembly hub for mobile phones, lighting and consumer electronics and its domestic value addition is under 30%.  In Thailand, Indonesia, Malaysia, Taiwan, the Philippines, South Korea and China, while manufacturing has contributed 30-50% of the GDP, the Indian manufacturing sector’s contribution has moved from just 16% to 18.32% in the past 10 years.

Though huge amount of resources being utilised to improve efficiency of processes and institutions may have had some positive indicators in recent years, the system has a long way to go. While automation and digitisation have helped in gearing up some efficiency in industrial processes, foreign made scientific machines are largely preferred to indigenous ones. Equipments manufactured in China, and even South Korea, have been flooding the global market, including India’s. However, it’s difficult to understand why developed nations, which have high labour costs, are successful in selling these at competitive prices in our country. Perhaps, their technology and expertise is of a higher order.

Nevertheless, there are business houses which have shown high degrees of efficiency such as Reliance group, the Tata group, Mahindra & Mahindra, Bharati Airtel etc. At the same time, monopolies are created due to disadvantages which include technology, performance standardisation etc.

Insofar as infrastructure is concerned, while the British need to be given credit for building the Railways, bridges, tunnels etc, the maintenance over the years has been poor and we have had to consult foreign firms for reconstruction or for that matter take Japanese technological aid to build the metro railways. In the financial sector there are umpteen examples of inefficiency. If we look at public sector banks, their performance and functioning leaves much to be desired. The rise in NPAs and poor levels of profitability compared to private sector reveals sheer mismanagement and lop-sided policies. And there is lack of transparency and autonomy in our institutions.

An example may well be of a recent report regarding the waters of the holy Ganga river at Rishikesh and Haridwar. These have now been classified as ‘fit for drinking after chlorination’, as there has been a 54% reduction in faecal coliform (human excreta) and 20% reduction in biochemical oxygen demand – a parameter to assess the quality of effluent or wastewater. It appears the government has been wasting crores of rupees on projects when effective action of controlling hydropower plants, mining activities and industrial waste has not been taken for years due to sheer negligence and inefficiency. Either industrial units continue to dump waste in the river by bribing officials or the State government has taken a lackadaisical approach and wasted the huge Ganga Action Plan money.

Over efficiency, feel some experts may have a side effect-- reduce number of jobs and create unemployment. But it hasn’t really been the case. Modernisation along with diversification and value addition does help in increasing employment and this has been demonstrated, not just by China but other countries including South Korea, Vietnam.  

Gearing up of indigenous manufacturing is intrinsically linked to efficiency and standardisation. If India has to become globally competitive in the manufacturing sector, there needs to be skill upgradation along with use of long lasting right materials. Also prices need to be competitive to allure nations to buy Indian products. 

In the case of agriculture, which engages over 50% of workforce but contributes only 14% to GDP 14%, efficiency and raise in income of farmers would only be achieved through increase in productivity, diversification of crops and government initiatives. Small farm owners could come together and share technology for better and viable produce. Another aspect is lack of warehousing to stock foodgrains. This has allowed traders to manipulate prices with the farmers, whose staple crops, vegetables and fruits would rot without stocking facility. In the backdrop of starvation deaths in the country, this is ironical.

India’s quest to become an emerging power cannot become a reality unless the whole system comes out of the bania mentality and becomes truly westernised as regards governance and efficiency is concerned. Unless there is good governance situation may not improve in this country.

However, for this we need to raise the efficiency bar as well as ensure autonomy in government institutions. The political leaders and bureaucrats will need to change outlook and overhaul the entire spectrum of governance. High levels of efficiency and skill in all sectors of the economy that China has been successful in implementing has to become a reality. This is manifest from the fact how efficiency and promptness has enabled the UK to begin human trials for Covid-19 vaccine. As pointed out, a modern system has to be decentralised, both political and economic, and greater importance given to grass-root organisations to ensure vibrancy and better health.  

To become a major power, transformation is much desired –efficient, forward looking and more so when growth is predicted to be negative in the current fiscal. Without innovation and efficiency the self-reliance or manufacturing boost cannot become a reality. Also the level of corruption needs to be checked at all levels but mostly at the top. Better performance, resource saving, dedication and sincerity is what the nation needs. ---INFA

                                            (Copyright, India News & Feature Alliance)