BW BUSINESSWORLD 30 JULY 2022

www.businessworld.in VIKRAM SUBSCRIBER’S COPY NOT FOR RESALE I RNI NO. 39847/81 I 30 JULY 2022
GUPTA
SUDHIR RITU
SETHI VERMA

BREAKING
THE INVISIBLE NIKHIL
VORA
ANUP BARRIER
JAIN Rs 150

KRIS GOPALAKRISHNAN Domestic investors are increasing their
presence in the Indian startup growth story
as they look to pave the way for the billion-

dollar domestic funds

SANJAY KARTHIK
NATH REDDY

MAHENDRA
SWARUP

6th

www.businessworld.in RNI NO. 39847/81 I 30 JULY 2022

TCM SUDHIR SETHI,
SUNDARAM, FOUNDER & CHAIRMAN,
CHIRATAE VENTURES
FOUNDER
& VICE

CHAIRMAN,
CHIRATAE
VENTURES

BEEN THERE,
DONE THAT

Having seeded many of India’s first unicorns,
Chiratae Ventures mirrors the success of the

Indian startup story

Photograph by Jagadeesh NV



www.businessworld.in RNI NO. 39847/81 I 30 JULY 2022

BETTING BIG
ON AGRITECH

RITU VERMA, Co-founder, Ankur Capital
on the art of creating products & bringing

early-stage tech innovations to India



www.businessworld.in RNI NO. 39847/81 I 30 JULY 2022

REDEFINING
STARTUP FUNDING

KARTHIK REDDY, SANJAY NATH,

Chairperson, Indian Founder, Blume Ventures

Private Equity & Venture “Indian ecosystem
is creating digital
Capital Association tailwinds”

“A level playing
field is needed for
domestic investors”

#IndiasBestFlexSpaces

FLEX SP CESPresents AUGUST 2022

CON C LAVE & AWA R DS NOMINATE NOW

Celebrating India’s Top Innovators & Disruptors in Flex Spaces Last Date to Nominate
AUGUST 5, 2022
in association with

Top Initiatives and Innovations that make Flex Spaces
Future Ready in the Next Normal

JURY CHAIR

JURY MEMBERS

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EDITOR-IN-CHIEF’S NOTE

HOME-GROWN CAPITAL

ANNURAG BATRA “It’s hard to beat a person who never gives up.” — George Herman Ruth

 [email protected] CAPITAL CHASES assets and a strengthening dollar has its own
ramifications on the flow and flight of capital. Even a few years ago global
investors, sovereign funds, pension funds, along with private equity (PE)
and venture capital (VC) funds formed the pipeline sustaining Indian
businesses, especially new ventures. Amidst the uncertainties that haunt
economies today, companies have even turned chary of the initial public
offering route of raising capital. Into this sticky terrain have entered an
entirely new breed of domestic investors, themed funds and strategic
investors, offering growth capital and exit routes to the initial investors.

Successful integration of the UPI-led payments framework, low-
cost data access and the Aadhar ecosystem, have all enabled a pro-
entrepreneurship environment. Coupled with these initiatives, could this
new clutch of domestic investors, particularly high net worth individuals
(HNIs) and family offices, prove the salvation that Indian businesses need?
In this issue we pick the minds of home-grown investors, like Chiratae
Ventures, a leading technology-focused venture capital firm, which is a
growth-stage investor in the Indian market. Of its $1 billion assets under
management (AUM), it has raised 40 per cent from within India.

IvyCap Ventures, a people-first, early-stage VC firm, nurtures
entrepreneurs and their ideas into sustainable businesses, leveraging its
global alumni ecosystem. Ankur Capital is another example of a similar
fund. It is an early-stage venture capital fund investing in startups with
transformative technologies for the next billion Indians. Meanwhile, the
Indian Alternative Investment Funds (AIF) industry has virtually doubled
in size to $72 billion in terms of AUM till September 2021 from $ 36 billion
in 2016. No doubt, the Indian private equity investing space is showing
signs of maturity. The market indicates that new investments account for
half & the VC transactions. The VC-to-PE pipeline has also been robust and
consistent across the last five years. The pages ahead offer you an insight
into this fascinating transition in the funds market.

We also have an in-depth feature on the growing logistics sector with
a special focus on Mahindra Logistics. In the EV space, home-grown
Okinawa Autotech, which recently emerged as the top seller of EV two-
wheelers, is investing and expanding its manufacturing capacity. The
97-year-old Raymond brand, no doubt a household name in suitings, is
foraging into green pastures like education and realty. In an exclusive
interview, Raymond Group Chairman and Managing Director, Gautam
Hari Singhania, talks about this transition and some more.

Of course, we also bring to you all the regular columns and features that
you look forward to. Happy reading.

We hope you enjoy reading this issue.

10 | BW BUSINESSWORLD | 30 July 2022

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CELEBRATING TOP 40 UNDER 40
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OCTOBER, 2022

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Kotak Mahindra Bank Schneider Electric CSC India GE Healthcare Piramal Enterprises Make My Trip

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12 | BW BUSINESSWORLD | 30 July 2022

Interview:BasavarajSomappaBommai,ChiefMinister,Karnataka MAILBOX

www.businessworld.in SUBSCRIBER’S COPY NOT FOR RESALE I RNI NO. 39847/81 I 16 JULY 2022 YOUR COMMENTS

DR RAMESH LEADING MULTI-SPECIALITY HOSPITALS
KANCHARLA, PAEDIINADTIRAI’CS
Chairman & Managing This refers to the editorial (“ The Focus On
Director, Rainbow CARE Children Always Get’s Left Behind”, BW, July
Children’s Hospital 16). We get a glimpse into the journey of Rainbow
Rainbow Children’s Hospital, which is the largest chain of
Rs 150 Children’s multi-speciality hospitals for children and perinatal
Hospital: Taking services in India. Built over 20 years ago, Rainbow is
childcare to now a hospital chain with over 1,600 beds and 640
doctors. It is good to know that the hospital chain
greater envisages to integrate perinatal services within the
heights children’s hospitals to make them comprehensive
multi-speciality hospitals for children with
INSIDE: perinatal divisions to be able to address all their
India’s Great medical needs, beginning with the unborn child
to adolescents. Also, the hospital chain is keen to
Mid-size strengthen training programmes for paediatric
Workplaces surgery, paediatric anaesthesia, paediatric
neurology and other paediatric specialities.
2022
RUCHI SHARMA, EMAIL
TALKBACK BLIPP
THIS PAGE DIGITAL PUBLIC INFRASTRUCTURE
Submissions to BW |Businessworld TO GIVE US
should include the writer’s name and YOUR FEEDBACK This refers to the editorial (“We Are Moving
address and be sent by email to the INSTANTLY Towards Facial Authentication ”, BW, July 16).
editor at [email protected] It is heartening to know that India has proved to the
or by mail to 74-75, Scindia House, world that it is second to none in adopting technology
Connaught Place, New Delhi-110001 and innovating around it. The pandemic highlighted
the need for a robust digital public infrastructure.
And India has, driven by the CoWIN platform,
been able to dispense over 197 crore doses of Covid
vaccines as on June 28, 2022. The CoWIN platform
is a testament to India’s much admired digital push,
and work in the digital public infrastructure space.
Judging by reports, and the assessment of experts,
the digital economy could create value in excess of $1
trillion by 2025.

PURVA KULKARNI, EMAIL

13 | BW BUSINESSWORLD | 30 July 2022

Chhattisgarh Is Fast
Emerging As India’s Top
Investment Destination

Chhattisgarh offers locational advantages to be leveraged both in terms of a regional lo-
gistics hub as well as from the standpoint of accessibility to vast consumer markets in the

neighbourhood. In the recent Ease of Doing Business Ranking 2021, Chhattisgarh state
has been declared as Aspiring Leaders in its category.

The heartland of India is witnessing massive growth. advantages to be leveraged both in terms of a regional logistics
One of the states driving this growth is Chhattisgarh. hub as well as from the standpoint of accessibility to vast
Over the years it has emerged amongst the fastest consumer markets in the neighbourhood.
growing states of India, which offers immense
opportunities for business and development. Chhattisgarh is located in the seismically safest zone of
There are many factors that are driving this growth. The big the Indian subcontinent and significantly far from any hostile
ones include: good governance, essential infrastructure coupled international border. It has easy access to a potential market of a
with a surplus of power, a stable labour environment, talent pool, cumulative population of about 500 million (about 40% of India’s
abundant mineral resources, and a diverse forest produce — all population) across seven bordering states, which contributes
make Chhattisgarh a leading business destination. 38% to India’s GDP. The state has potential to become a logistics
hub for central India with exports to Asian markets (Singapore,
Chhattisgarh also has the distinction of ranking amongst China, Korea and Japan) being targeted through the Vizag port,
the richest Indian states in terms of mineral wealth. It is well approximately 500 km from Raipur.
acknowledged for 28 varieties of major minerals, including
diamonds, spread across 205 mines. Chhattisgarh ranked fifth BIG PUSH
in terms of value of major mineral production in India. The state The state promises a world class investment environment.
also accounts for 36% of India’s tin ore reserves, it's the only
State producing tin concentrates in Chhattisgarh has introduced a Single Window System for
India. The State accounts for 4% and
36.5% of the Country’s diamond and investors. Empowering the investors,
dolomite reserves respectively.
Single Window System enables faster
POWER SURPLUS STATE
B2G information flow, real time
As we know, a healthy business culture
requires ample energy supply and B2G interactions and simplifies the
Chhattisgarh is acknowledged as a
power surplus State. It is self-sufficient application process for clearances &
in power and ensures an uninterrupted
24x7 power supply across the State. incentives.
Korba district in Chhattisgarh is
known as the Power Capital of India. Investors can enjoy following

Chhattisgarh’s large coal reserves benefits of Single Window System
present a huge opportunity for
electricity generation. Being a power which include: obtaining information
surplus State, Chhattisgarh is an ideal
destination for high power consuming about the NOCs, licenses, clearances/
industries like cement, aluminium,
iron. With an uninterrupted quality permissions and registration, register
power supply, the State offers an
attractive power tariff slab to many proposed unit/ established unit online
focus sectors like IT/ITeS, Electronics,
and other manufacturing focussed and apply online for the requisite
sectors.
licenses, clearances and registrations.
LOCATIONAL ADVANTAGE
Businesses can also make electronic
Centrally located in the country,
Chhattisgarh offers locational payments towards statutory

(processing) fees, track status of

application online etc.

Elaborating over the ease of doing

business created in the state, Bhupesh

Bagel, Chief Minister of Chhattisgarh

said, “Chhattisgarh has a favourable

environment for industry, trade and

commerce. Investors from across the

country and the world should visit

Chhattisgarh, and see how the vision

of 'Nava Chhattisgarh' is being realized

in this state full of possibilities, with

its industry-friendly, business-friendly,

trade-friendly, consumer-friendly, pro-

tourism and pro-employment policies.” introduced a new industrial policy to Investment
The Chief Minister also added provide a special incentive package for Opportunities in
investment in ultra-mega projects of the
that the State Government has always sponge iron and steel sector. Chhattisgarh
encouraged the works which promote
economic activities that create better As per an official statement, the Projects 489
employment opportunities. region-wise subsidy limit has been
increased from 60 per cent to 150 per Opportunity $35.14 bn
“As a result of our decisions and cent for industries of the sponge iron
initiatives, the rural economy is and steel sector and investment incentive time now.
strengthening and flourishing in the of maximum Rs 500 crore (Rs 1,000 Not only MSME, the state can boast
state while the industry and commerce crore for Bastar) will be valid under this
sector is also getting benefitted. We have initiative. The proposed units will have to of mega-scale industrial greenfield
announced the industrial policy 2019- start production by October 31, 2024, to projects which are on the anvil. The state
2024, in which food, ethanol, electronic, avail this. today has an expansive infrastructural
defence, medicine and solar energy base for manufacturing activities which
based new industries have been given Likewise, financial investment includes a slew of industrial parks which
preference. We aim to promote the service incentive will be provided to those new are both generic as well as aligned with
sector and tourism sector in Chhattisgarh units, which have started commercial specific sectors like metals, engineering,
as well. Provision has been made to production after investing Rs 100 crore in food processing, plastics and aluminium.
provide industrial investment incentive the permanent capital investment fund.
for the 16 services, under MSME Service ENVIRONMENT FRIENDLY POLICY
Category, including electronic vehicle Investgarh Chhattisgarh is the new
charging station, Service center, BPO, slogan ringing. It’s the new anthem Under the Chhattisgarh State Electric
3D printing, seed grading and others”, he of Chief Minister Bhupesh Baghel’s Vehicle Policy-2022, government will
further added. government to attract more investment establish a vast network of charging
into the state. The state government’s stations and swappable battery stations
SPECIAL INCENTIVE PACKAGES drive to finetune its policies and create in government and private buildings.
the right environment for business and
The Chhattisgarh government has investment has been its focus for some The Chhattisgarh government has
approved Chhattisgarh Electric Vehicle
Industrialization with environment conservation (EV) Policy 2022 with an aim to make the
state an EV manufacturing hub, provide
employment opportunities and protect
the environment.

The government aims for rapid
adoption of Battery Electric Vehicles
(BEVs) so that BEVs account for 15%
of all new vehicle registrations by 2027
and bring about a material improvement
in the environment of Chhattisgarh by
reducing emissions from the transport
sector.

The Chhattisgarh will create
platforms and programs for industry
participation and explore possibilities
of entering into MoU with Lithium Cell
Manufactures/ EV auto components to
start EV components and assembly in the
State. 

CONTENTS

VOLUME 41, ISSUE 20 30 JULY 2022

Photograph by Jagadeesh NV

18 Jottings 38 Digital Marketing 64

Oil’s not well for India’s trade deficit; EV Prasad Shejale, Founder & CEO, Logicserve The Homegrown
launch on Metaverse; Healthcare industry Digital on how digital marketing has become Startup Funding
underpays women; A wine-maker goes a crucial part of new-age marketing Ecosystem
public, and more strategies and is here to stay
How the rise of the
20 Columns 46 Scooting Ahead domestic VC and PE firms
is fuelling the growth of
Minhaz Merchant (p. 20); Vikas Singh The story of electric two-wheeler maker India’s startup ecosystem
(p. 22); Amit Kapoor (p. 24); Ashutosh Okinawa Autotech and how it is gearing up to and reducing dependence
Garg (p. 26); Kiran Karnik (p. 28); Ajai become the leading player in the segment on overseas investors
Dayal (p. 30); Prakash Iyer (p. 32); Noor
Warsia (p. 34); Srinath Sridharan (p. 58) 48 In Conversation Cover design by DINESH S. BANDUNI
Cover photograh by JAGADEESH NV
36 M&A Standpoint Anil Agrawal, Additional Secretary, DPIIT on
the government’s vision for the retail sector,
Richa Singh, MD India, Natural Diamond ecommerce taxation and the changing
Council on how the notions of luxury that industrial landscape of India
were once characterised by cost, crafts-
manship and exclusively shared symbols of 68 Midas Touch
wealth and accomplishment are now more
dynamic and far harder to pin down After seeding many of India’s first unicorns,
how Chiratae Ventures is looking to replicate
its success in ecommerce 2.0 now

16 | BW BUSINESSWORLD | 30 July 2022

42 Growth Logistics

How Mahindra Logistics has
chalked out a three-pronged
strategy to more than double its
revenue to Rs 10,000 crore in
the next four financial years

74 In Conversation 92 The D2C Surge 106 Car Review

Sudhir Sethi of Chiratae Ventures on How ecommerce as a framework has spawned Saurabh Vatsa, Brand Head of
the current Indian investment scenario, a plethora of new brands and new players in Citroen India talks about the
the impact of rupee capital for the market challenging the legacy companies company’s latest offering as well its
homegrown startups, and more future plans
98 Betting on Agritech
78 Interview 112 AI in Telemedicine
Ritu Verma of Ankur Capital on the art of
Infosys’ co-founder Kris Gopalakrish- creating products, bringing early-stage Vikram Thaploo, CEO, Apollo
nan on domestic capital’s ability to technology innovations to market and more TeleHealth on healthcare providers
trigger a cycle that creates sustainable are moving towards more digital care
and long-term growth 102 In Conversation options to enhance treatment and
patient experience
80 Purple Patch FADA President Vinkesh Gulati on key
initiatives and decisions impacting automo- 114 Bookmark
Sanjay Nath of Blume Ventures on why bile dealers
there is no let-up in VC funding activity A review of Equal, Yet Different —
despite the correction in the markets 122 Career Catalysts for the Professional
Women by Anita Bhogle
84 300 unicorns by 2030 Last Word
116 Gadgets & Gizmos
Vikram Gupta of IvyCap Ventures on Gautam Hari
fund deployment strategies, the tech Singhania, A review of five cool and trendy
ecosystem and why India is poised to Chairman & MD, gizmos for your home
build 300 unicorns by 2030 The Raymond
Group on his TOTAL NO. OF PAGES
86 Lack of Support education and INCLUDING COVER 124
real estate
Mahendra Swarup, Founder, Venture ventures and the
Gurukool &Ankurit Capital on why of the legacy of the
over 100 unicorns in India today none Raymond brand
are funded by Indian VCs

88 Resilient Ecosystem

Anup Jain of Orios Venture Partnerson
Indian startups’ potential to go aglobal,
surge in VC and PE investments
post-pandemic, and more

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17 | BW BUSINESSWORLD | 30 July 2022

JOTTINGS

FIST BUMPING
BUT NO OIL
PUMPING

T HE GLOBAL CRUDE OIL
market turns bullish again. The
International Energy Agency
(IEA) and the Organization of

Petroleum Exporting Countries

(OPEC) have in separate reports warned

of a further squeeze in energy supplies.

Addressing a global energy forum in Photograph by Gints Ivuskans State Department Photograph by Ron Przysucha

Sydney, IEA Executive Director Fatih Birol

has said, “The world has never witnessed such a major capping measures by G7 nations, sending prices shooting up

energy crisis in terms of its depth and complexity. We might as high as $380 a barrel.

not have seen the worst of it yet ...” A weakening rupee and the unprecedented rise in oil

The OPEC’s first oil-market outlook for 2023 has prices sees India’s crude oil and petroleum products import

suggested no relief from the current supply turmoil. The bill at $21.30 billion in June 2022 from $10.67 billion in the

OPEC expects the growth in global oil demand to exceed same month in 2021. The masive jump in the oil import bill is

supplies by a million barrels a day next year. United States notwithstanding the discounted Russian crude supplies. The

President Joe Biden’s much photographed fist bump turbulence in the oil market spells bad news for India’s trade

with Saudi Arabia’s Crown Prince has failed to secure any and current account deficits.

pumping commitments from the kingdom, either. The 3 August OPEC Plus meet on September production

Meanwhile, J. P. Morgan has warned that Russia could quotas assumes great significance under the circumstances.

make oversized cuts in crude exports in retaliation to price — Arjun Yadav

METAVERSE’S
FIRST
ELECTRIC SUV

SWEDISH LUXURY carmaker, Volvo Cars, is all set to Hoskote plant near Bengaluru. It will deliver a claimed range
launch its first all-electric four-wheeler XC40 Recharge in of 418 km on a single charge.
India. The interesting bit here is that this electric SUV will be
officially launched on Metaverse on 26 July, 2022. And of course, as we said at the start, it will be the first car
in the Indian auto industry to be launched on Metaverse.
This will be the first time that the sunrise technology of
Metaverse is used to launch a car in India. The company says — Utkarsh Agarwal
that the Metaverse launch of the XC40 Recharge will usher in
a new era of digital connectivity, offering a 3D experience.

Metaverse is said to be the future of internet and most
automotive companies are trying to adapt to this new
technology. The Volvo XC40 Recharge will be the first luxury
electric vehicle to be locally assembled at the company’s

18 | BW BUSINESSWORLD | 30 July 2022

24 PER CENT Photograph by Indiapicturebudget
LESS CARE
FOR WOMEN counterparts. While this awning gap remains unexplained, the
UN agencies say that perhaps, the gap could be attributed to
WHO DO CARE the prevailing discrimination against women.

TWO UNITED NATIONS (UN) organisations bring to The report also discloses that salaries in the healthcare
light a glaring dichotomy within the healthcare industry sector are lower compared to other sectors, which confirms
in times that salute healthcare workers, who have bravely the finding that pay is often less in fields where women are
coped with the ravages of a pandemic at the cost of their predominant.
own lives and safety.
The report highlights the fact that these gaps are not
A report developed by two UN agencies, the inevitable and that the divide can be bridged by building more
International Labour Organization (ILO) and the World efforts into dialogue and policy action in the sector. So, where
Health Organization (WHO), shows that the pay gap in do we begin?
the healthcare sector among genders is quite wide and
that women were at the receiving end of it. — Shivam Tyagi

Women who make up 67 per cent of the healthcare
workforce, it says, earn 24 per cent less than their male

A TOAST FROM SULA WINES

DESPITE THE UPHEAVAL seen in the Indian stock markets

lately, liquor companies are keen to say ‘cheers’! After Allied

Blenders & Distillers (makers of Officer’s Choice whiskey)

filed its DRHP (draft red herring prospectus) in June, Sula

Vineyards, India’s largest wine maker, is following suit. Sula

has filed its DRHP with SEBI for its initial public offering

(IPO). The proposed issue will be a complete Offer for Sale

(OFS) aggregating 25,546,186 equity shares. The OFS is a

mechanism that allows promoters to reduce their holdings

in companies transparently, whereby the promoters or

investors offload their shares directly via an IPO.

Sula is backed by Belgian-based Verlinvest, a family-

owned investment holding company. Verlinvest, along with

Verlinvest France, will be offloading their shares through

the proposed Sula IPO. What may work for Sula? In addition

to producing and selling wines, Sula derives revenue from

its two wine resorts. Sula services close to 8,000 hotels,

restaurants and caterers, and has tie-ups with distributors

across multiple states and retail touch-points. It will be

interesting to see if investors raise their glasses to the liquor

companies’ listing endeavours. —Ashish Sinha

19 | BW BUSINESSWORLD | 30 July 2022

COLUMN

Minhaz Merchant

A $30 Trillion
Economy?

MINHAZ MERCHANT D URINGASPEECHinCoimbatoreon26June,2022,Commerceand
IS THE BIOGRAPHER Industry Minister Piyush Goyal declared that India was on track to
be a $30 trillion economy by 2052. That’s nearly ten times India’s
OF RAJIV GANDHI AND current economy of $3.2 trillion.
ADITYA BIRLA AND Goyal’s assertion drew criticism from certain quarters. A column-
ist in Mint who specialises in negative reportage on the Indian
AUTHOR OF THE NEW economy sneered that, of course, India would one day be a $30
CLASH OF trillion economy – but by 2065, not Goyal’s target date of 2052.
Who’s right? Neither. As it turns out, India will probably be a
CIVILIZATIONS (RUPA, $30 trillion economy well before 2052 and obviously long before
2014). HE IS FOUNDER 2065.
Assume real GDP growth in 2022-23 at seven per cent. Given the trade disruptions
OF STERLING caused by the war in Europe, that’s a reasonable assumption. India’s GDP pie com-
NEWSPAPERS, WHICH prises services (58 per cent), industry (27 per cent) and agriculture (15 per cent). The
estimated growth break-up of these three sectors in 2022-23 is broadly 10 per cent
WAS ACQUIRED BY (services), four per cent (industry) and three per cent (agriculture). That translates
THE INDIAN EXPRESS into overall GDP growth of just over seven per cent.
Caveat number one: this is real GDP growth. Now factor in inflation to get nominal
GROUP GDP growth which is what the World Bank and the International Monetary Fund
(IMF) use in their global data rankings.
Inflation in 2022-23 is likely to stay around six per cent. So nominal GDP growth
this fiscal is set to be 13 per cent (seven per cent real plus six per cent inflation). India’s
GDP in local currency as per the government was Rs 240 lakh crore on 31 March, 2022.
Add 13 per cent and GDP on 31 March, 2023 would rise to 272 lakh crore.
Caveat number two: factor in the rupee-dollar rate to convert India’s GDP of Rs 272
lakh crore into US dollars. Assuming a rate of 80 rupees to the dollar, India’s GDP on
31 March, 2023 would be around $3.45 trillion.
The mistake analysts like the morose Mint columnist make is to assume the inflation
differential between the US dollar and the Indian rupee will always be around three per
cent. That differential is what has caused the rupee to depreciate historically against
the dollar by around two to three per cent a year.
That assumption no longer holds good. The US is headed towards a higher inflation
rate – and not only because of the Russia-Ukraine conflict. The US is a heavily indebted
country. It has escaped the ravages of inflation since the end of the Second World War
by simply printing dollars, the world’s reserve currency. It has financed wars in Viet-
nam, Iraq, Syria, Yemen, Afghanistan, the Balkans and now Ukraine because global
investors in times of crisis flee to the dollar, the world’s safe haven currency.
The rupee may have depreciated against the dollar for precisely this reason from 75
to 79 over the past four months. But it has appreciated against the British pound from
100 to 95 during the same period and held steady against most other international
currencies. Thus if India’s GDP was designated in a basket of currencies and not just
the dollar, it would likely be closer to $4 trillion on 31 March, 2023.
The era of the US dollar’s reserve currency status will not last forever. In 1931, the

20 | BW BUSINESSWORLD | 30 July 2022

British pound, then the world’s leading The GDP growth GDP growth, the economy will double every seven years.
global currency, went off the gold stand- will moderate If the rupee-dollar rate stabilises – as the yuan-dollar
ard. After the Second World War, Brit- rate has stabilised over the past 20 years – India’s GDP
ain was bankrupt. Germany was saddled
with war reparations. The US dollar’s to 6 % a year, in 2039 would be around Rs 22 lakh crore. At 90 rupees
ascent began.
inflation to 4 % to a dollar, that translates into a GDP of over $24 tril-
That supremacy is being challenged by a year. Even at lion. Even at 100 rupees to a dollar, GDP would be $22
the Chinese yuan and the euro. Even the trillion in 2039.
Russian rouble, hammered in the early
days of the Ukraine war, has climbed to 10 % nominal From there, $30 trillion is a three-year sprint. So
a 20-year high against the dollar.
GDP growth, the Piyush Goyal’s $30 trillion target for 2052 will likely
Global trade is increasingly being set- economy will be met by 2042, a mere 20 years from today. And the
tled in yuan, roubles, rupees and euros, morose Mint columnist’s 2065 date will remain wish-
bypassing the dollar. For India, the re-
lentless pressure to toe the Western line double every ful thinking.
on Russia has been accompanied with seven years. If Knowledgeable foreigners are more upbeat about
subtle threats. None have worked. The the rupee-dollar
realisation has finally dawned on West- India’s economic prospects than India’s perennial
ern leaders that India will not abandon doomsayers. In its 2020 report, McKinsey wrote:
its strategic autonomy to appease Wash-
ington, London and Brussels. rate stabilises, “India is at a decisive point in its journey toward pros-
in 2039 India’s perity. India has a successful track record to draw on:
But back to our math. With GDP of over the past three decades, the country has been one of
Rs 272 lakh crore by the end of this fis-
cal, and an average nominal growth rate GDP would be Rs just 18 outperforming emerging economies to achieve
of 13 per cent a year for the next decade,
India’s GDP would double roughly every 22 lakh crore robust and consistent high growth. Pro-growth reforms
five years to around Rs 11 lakh crore in lifted productivity and helped the country weather
2032.
shocks and cycles. Real GDP growth has averaged 6.8
From here on, assumptions must
change. The GDP growth will moderate per cent annually since 1992, and it has been inclusive;
to six per cent a year, inflation to four per
cent a year. Even at 10 per cent nominal economic prosperity has brought significant improvement in living standards.

“India needs to leapfrog ahead to achieve the employment and productivity growth

needed. Fortunately, it has many opportunities to do so. Global trends such as digitisa-

tion and automation, shifting supply chains, urbanisation, rising incomes and demo-

graphic shifts, and a greater focus on sustainability, health, and safety are accelerating

or assuming a new significance.”

India, however, needs to engage in deep economic reforms to achieve its growth

target that will have several collateral consequences: lowering poverty, improving lives

and keeping the country’s tryst with destiny.

Photograph by Amlan Mathur 21 | BW BUSINESSWORLD | 30 July 2022

COLUMN By Vikas Singh

MSMEs age.
Don’t Grow.
Need Holistic
Support

THE MICRO, SMALL AND MEDIUM enterprises (MSMEs) employ over 80 intervene, and demolish growth barriers.
per cent of India’s workforce, contribute to a third of India’s GDP and ac- Support must be tailored. Ideas must be
count for about 40 per cent of India’s exports. actionable and ‘packages’ implementa-
However, the good news turns bad, even ugly from here. Less than ble, for stimuli to yield better outcomes.
two per cent grow at a pace that is higher than the inflation rate and even The government must nourish and en-
fewer outpace the GDP growth rate. Over 99.5 per cent of India’s seven crore MSMEs able. And let go.
start micro and remain micro. Less than 5,000, i.e., about 0.007 per cent ‘graduate’ to
medium – literally, ‘lakho mein ek’! The reclassification of MSMEs on the
basis of turnover and investment is a step
Most small firms never grow to medium. Most medium firms don’t grow big. They in the right direction. It will encourage
treble every three decades and double the payroll number. Similar firms in other devel- and also reward growth. It will reboot,
oped economies grow 12 times, employ eight times more. Decades later most end up even revive the sector. However bereft of
with less than 50 employees if they survive. They not only remain small (but inevitably) holistic effort it will be one of the many
inefficient, adding to their frailty. revivals, and unsustainable. Reclassifi-
cation metrics need some fixing, several
Those unaware of the ecosystem would be forgiven for concluding that every effort nuts tightened.
is taken to keep them small.
Similarly, the PIL scheme in its pre-
A Crux study across 18 economically ‘progressive’ states, 6,000 SMEs, 500 policy- sent form will widen the chasm between
makers and influencers, articulates that the economic ecosystem has largely focused the larger firms and the MSMEs. Sev-
on the ‘creation and registration’ of the businesses. And the ecosystem has equally ‘re- eral constituents of schemes need to be
stricted’ their growth, even ‘punished’ scale. Amongst the manufacturing ‘medium’ (50- rationalised, many others need align-
250 people), productivity is about twice that of the ‘small’, and half that of the larger ments. Schemes must be modified and
firms. The long-term impact of productivity gap between the small and larger firms is ‘tailored’.
less understood; and may amount to enhancing the GDP growth rate by 10 per cent.
Policymakers often ignore the real is-
Regulatory, compliance framework sues. The focus must be on market fa-
They are unfair, too elaborate, equally costly and value depreciating. Similarly, the cilitation, promoting ease of doing busi-
poorly designed laws, unimplementable regulations, ‘torturous’ taxation regime, and ness.
energy sapping ‘inspections’ strengthen the blockades, deplete their will. Over 90 per
cent of SMEs are incapacitated. The prevailing ecosystem perpetuated by the state The government has more impactful
machinery is detrimental to their growth. Over 95 per cent of the ‘small’ amongst the options. It must ‘collect’ GST on receipt of
segment, would ‘want to be somewhere else’, the study concludes. payments, not when ‘invoiced’. Liquidity
is key to capitalising on market opportu-
The Crux study of the ecosystem offers some ideas. The government must look ho- nities. The MSMEs are the last to be paid
listically. Reforms must focus on enhancing the overall business environment, actively by the clients, compelling them to scurry

22 | BW BUSINESSWORLD | 30 July 2022

The MSMEs, in their present
form, can neither be the
backbone, nor the engine for
the $5 trillion GDP ambition.
Size adds muscle, scale
enhances productivity to
move up the value chain and
capitalise on the
opportunities. They need to
double their contribution to
the GDP to pierce the
inflection point

to borrow at a higher cost. Lack of equity capital slows growth momentum, impedes scale 10,000 to midsize.
investment in technology and restricts scale. The government must impose a frame-
work, direct its institutions to prioritise MSME’s payments. The Crux study highlights Unlocking growth
that about 3.5 lakh crores are ‘stuck and meandering’ in files. This alone will increase There are good examples. The Scale-
the much-needed liquidity. It will importantly send the right signal. up programme in Singapore, has cre-
ated productive leaders amongst their
Formalisation and the growth of the small and medium enterprises has the potential small entities. Similarly, the Malaysian
to catalyse the growth of the larger corporations, enhance competitiveness. Mid-Tier Companies Development
Programme (MTCDP) created export
Some economy-facing institutions lack capacity. Most are indifferent champions from their midsize firms.
Policymakers are so taken in by the idea of the MSMEs that ‘employ 11 crores’. The China’s model of industrial growth that
real issues get swept under the carpet. Other economic actors romanticise about the launched ‘town and village enterprises’
misplaced idea of MSMEs as job ‘creators’. Other institutions don’t help. They see the (TVEs) transformed the rural hinterland
MSMEs as a ‘bridge’ to employment and overlook the several ‘fallouts’, namely, that into industrialised areas. India needs to
employees are denied benefits, suffer job security and misery. Most accept ‘minimum’ modify and model this growth story.
wages.
A Crux decadal ‘scenario’ planning
Corporate India has a missing ‘middle’. It diminishes productivity and competitive- articulates that net employment would
ness, reduces value and hurts the economy. India must move beyond the ‘registration’ of need to grow by 1.7 per cent per year for
MSMEs, focus on providing the necessary and customised impetus for optimal scale. the next ten years. Productivity growth
Stimulus is generic, not customised; lumping dissimilar enterprises, clubbing unre- needs to enhance to seven per cent. Pro-
lated industries, and geographies diminish impact. Larger and the top decile capture ductivity and jobs are closely co-related;
80 per cent of the benefits of the stimulus. The smaller ones are left with crumbs. not contradictory. These numbers have
been achieved; but not simultaneously.
The MSMEs, in their present form, can neither be the backbone, nor the engine for India needs both at tandem.
the $5 trillion GDP ambition. Size adds muscle, scale enhances productivity to move
up the value chain and capitalise on the opportunities. They need to double their Economic growth creates jobs. Pros-
contribution to the GDP to pierce the inflection point. Merely creating low-end jobs perity brings significant improvement in
will not drive growth. inclusivity, living standards and upward
mobility. We do not want another ‘lost’
The government has a bigger role. It must incentivise investment, also co-invest decade.
in innovation, technology upgradation, capability-building, and fund networking
opportunities to help high-potential entities grow. States lack financial resources and The author is an economist and columnist
must select only the right potential firms through a robust, stringent methodology. The The views expressed are personal and do not
stimulus and support must be tailored to enable 2,000 mid-size firms to capitalise on
growth and productivity-improvement opportunities. And emerge as ‘big’. Similarly, reflect those of BW Businessworld

Photograph by Stock Image Factory 23 | BW BUSINESSWORLD | 30 July 2022

ARTHSASTRA by Bibek Debroy, Amit Kapoor & Aditya Sinha

THE CURIOUS
CASE OF CENSUS

TOWNS

Photograph by Himanshu Kumar

Top: Bibek Debroy
Facing page (left) : Amit Kapoor
Facing page (right): Aditya Sinha

L ITERATURE on service delivery suggests that a state is incapable of deliver- Similarly, the Ministry of Road Trans-
ing critical services to the agents if it operates vertically, i.e., in a top-down port & Highways used to earlier publish
manner. In a sense, India has been an exception. As far as creating a safety Basic Road Statistics of India. The latest
net is concerned, the vertical model has performed exceptionally well report available in the public domain is
with the introduction of the Jan Dhan, Aadhaar & Mobile (JAM) trinity. from 2017-18. It had a clear distinction
between rural and urban roads.
There is a sharp decline in both inclusion and exclusion errors. Be it any
Urban roads comprise Municipal
subsidy or even an instalment of PM Kisan; the direct benefit transfer has ensured that Roads under Urban Development De-
partments of States and UTs, roads in
beneficiaries are not bereft of what is rightfully theirs. But service delivery is not just Railway Zones, MES roads constructed
by Military Engineering Services (MES)
about direct benefit transfers. and Major and Minor Port Roads.
Whereas rural roads consist of roads built
It is also about (a) basic infrastruc- other facilities. Access to the bare ne- by Panchayati Raj Institutions, (Zilla
Parishad, Panchayat Samiti, Gram Pan-
ture, (b) robust governance structure cessities has improved tremendously chayat), Pradhan Mantri Gram Sadak
Yojana (PMGSY) and state public works
and administrative capacity to deliver as compared to 2012. However, access department.

services. In newly urbanising towns, to bare necessities is lowest in Odisha, Glaringly, the share of urban roads in
the total road network in the country is
both (a) and (b) fail to cope with the Jharkhand, West Bengal and Tripura. merely 8.6 per cent. This doesn’t include
the roads in areas not categorised as ur-
necessities of the growing population. Kerala, Punjab, Haryana and Gujarat ban. Altogether 70.9 per cent of the total
road network in the country comprises
As far as access to basic infrastructure are the states where access to the bare rural roads. The Panchayati Raj Institu-
tions construct 57 per cent of the total
and necessities is concerned, there ex- necessities is easiest. Most schemes that rural roads. These roads are primarily

ists a glaring spatial disparity across have ensured access to bare necessities

the country when it comes to basic (be it Swacch Bharat Abhiyaan or Jal

infrastructure. The Economic Survey Jeevan Mission) are largely funded by

2020-21 formulated a Bare Necessities the Union government. However, the

Index (BNI), which had 26 indicators implementation of the scheme lies with

on five dimensions, viz., water, sanita- the states, which in turn leads to the

tion, housing, micro-environment, and inter-state disparity.

Photograph by Indiapicturebudget 24 | BW BUSINESSWORLD | 30 July 2022

for funding developmental projects.
The funding of both rural local bodies
and urban local bodies come primarily
from the recommendations of the State
Finance Commissions (SFC). In most
cases, the recommendations of SFCs are
rarely accepted in toto.

Compared to statutory urban towns
that are governed by urban local bodies
such as municipalities and municipal
corporations, the quality of infrastructure
in CTs is significantly inferior. Thus, while
India is becoming urban, the mushroom-
ing towns are not being classified as ur-
ban. Further, a 2018 study by Shamindra
Nath Roy and Kanhu Charan Pradhan of
the Centre for Policy Research projects
that India is set to add 2,231 new census
towns. According to the UN’s The World
Population Prospects 2022, India is set

The Case for Integrated Development of Rural and Urban Areas:
Compared to statutory urban towns that are governed by urban local
bodies such as municipalities and municipal corporations, the quality of

infrastructure in Census Towns is significantly inferior

meant for light traffic. infrastructure. Panchayati Raj institu- to surpass China’s population by 2023,
This brings us to a peculiar case of cen- tions primarily have the responsibility thus becoming the most populous coun-
of building roads in CTs. Do they have try. This will also be accompanied by an
sus towns (CTs). In our last column, we the administrative capacity to deliver increase in the level of ‘informal’ urbani-
delved into the issue of the definition of these services in CTs? Probably not. sation in CTs.
urban in India. Census Towns are towns
that are not statutory towns, i.e., they The 11th and 12th Schedules of the But is the problem just confined to
have not been notified as urban areas Constitution have a list of responsibilities the definition of urban? The 73rd and
by the state government. However, the of rural local bodies (RLBs) and urban 74th amendments to the Constitution
population of these geographical areas is local bodies (ULBs), respectively. Urban are the reasons for the delineation of
more than 5,000, more than 75 per cent areas have a provision for expenditure governance structures in rural and ur-
of the male working population is em- on urban amenities and facilities such as ban areas. This means that there are
ployed in non-agricultural activities and parks, gardens, and playgrounds. Urban separate ministries and departments at
they have a population density of 400 local bodies are also required to provide both the Union and state levels. Often,
persons per km2. sewage systems, solid waste manage- these departments work in silos, just as
ment and construct arterial roads. They RLBs and ULBs do. Maybe the country
According to the 2011 census, there are also responsible for providing fire ser- has to move beyond rural and urban de-
are a total of 3,894 CTs in the country. vices. Rural local bodies do not have any velopment silos to a model of integrated
Ideally, these towns should be classified such responsibilities. The 11th Schedule economic development.
as urban areas. However, till the state also doesn’t envisage the propping of
government notifies them as one, they slums. That is the reason why it figures Bibek Debroy is Chairman, Economic Advisory
remain technically rural. It means the in the 12th Schedule but not in the 11th Council to the Prime Minister
governance structure in the CTs is also schedule.
rural. Thus, access to bare necessities is Amit Kapoor is Chair, Institute for
provided by the rural local bodies. So is Rural local bodies have either limited Competitiveness, India; visiting scholar and
the case with the development of basic or no avenues for generating finances
lecturer, Stanford University
Aditya Sinha is a consultant, EAC

25 | BW BUSINESSWORLD | 30 July 2022

COLUMN Ashutosh Garg

E VERY STARTUP ENTREPRENEUR needs a coach. a sounding board in a non-threatening
A majority of startups all over the world are founded by young men manner with someone who has no agen-
and women in their twenties and possibly in their early thirties. While da with the individual or the business.
their ideas are excellent and their energy levels are great, most startups Given the significant work pressures
starttofalterwithinacoupleofyearsbecauseofpooror inadequatesys- Startup Entrepreneurs face, they need
tems, over aggressive scaling up, weak financial planning, insufficient someone to discuss their issues with and
focus on people management, weak governance or poor execution of allow them to vent.
their revolutionary ideas.
At the same time, thousands of managers are retiring from the corporate world at They will not say what the startup en-
the “young” age of between 60 years and 65 years after spending almost four decades trepreneur wants to hear and after a long
in specialised or general management positions in major and smaller corporations. At work innings, hopefully, they would have
this stage of their lives they clearly have at least another decade of work inside them. learned how to manage their personal
Retirement of senior managers is happening in all parts of the world and is a conse- egos in front of the young team that they
quence of the superannuation policies of the employer rather than the competence or wish to be a part of.

In addition to watching the back of the

Should Startup
Entrepreneurs
Have a Coach?

the age of the individual. These people on the need of the individuals. startup entrepreneur and guiding them
know what it is like to run businesses and Not every superannuated individual when the ship invariably hits troubled
tackle the challenges of building busi- waters, a coach will also bring in strong
nesses. They have functional expertise in has the energy or the risk taking capabil- subject matter knowledge from the do-
finance and accounts, budgeting, packag- ity to start a business enterprise on their mains they would have spent decades
ing, branding, sales, human resources, own. At the same time, the older manag- working in.
governance, legal matters and general ers, in the twilight of their careers, are not
management. yet ready to hang up their gloves. Most of Most startups face issues in the fol-
these older individuals would be reason- lowing areas and an experienced profes-
With a little bit of training, most of ably financially secure. They are looking sional can provide invaluable inputs for
them can become excellent coaches. to give back their life’s learnings while the startup team. Some of these areas are
staying occupied and earning some. Such outlined below:
Therefore, logically, there is a huge op- individuals will be much more stable for j PeopleStrategies–Mostentrepre-
portunity to bring together the vision of a startup. They will not resign and walk neurs struggle with their people strate-
the Startup Entrepreneur and the experi- away in a hurry and leave the entrepre- gies. The people who started off with
ence of the older manager in an unobtru- neur stranded. the entrepreneur may not be the best to
sive and non-threatening manner for the take the business to the second and third
entrepreneur. Older individuals can con- For the entrepreneur, it is a very lonely level. Even the entrepreneur needs to
nect with the entrepreneur as coaches (or job and there are very few people he can stay ahead of the curve to manage a fast
in some cases as employees), depending trust. Most young entrepreneurs need

26 | BW BUSINESSWORLD | 30 July 2022

growing business. A coach can evaluate For the entrepreneur, it programme with the print and visual
the people and help in identifying new media.
resources at each stage of the growth. is a very lonely job and o Legal Processes – In addition to
hiring legal help during formation and
kBusiness Planning and Review – there are very few fund raising, most businesses are faced
Startups are famous for making plans with a lot of legal challenges. Once again,
and then not meeting them! A good people he can trust. an older and more experienced coach will
coach can work closely with the entre- bring wisdom in handling such matters.
preneur and the top management team Most young Which cases to pursue and which ones to
to develop an achievable business plan drop is a critical decision to save valuable
and more importantly, hold quarterly entrepreneurs need a managerial time, resources and of course,
reviews. This will ensure that the en- money.
trepreneur and leadership team is held sounding board in a pPlaybook / Standard Operating
accountable for what they commit in Procedures – In the hurry to get started,
each quarter. non-threatening very often standard operating procedures
l Good Governance Practices – All get lost in the detail. These need to be put
Startups should normally be started with manner in place very early in the game so that mis-
theobjectiveof buildingastrongandsta- takes are not repeated. An experienced
ble business which can mature into an a large opportunity for raising funds from manager tasked with this will be able to
institution. A coach will ensure that the banks though debt and working capital put in place such a manual / playbook that
entrepreneur will build good governance financing. A coach with a strong finance would serve the company well into the
and transparent practices in the organi- senior background will bring in much long term.
sation. needed contacts and experience to reach
out to the banking system. Having mentored several startup en-
Even something as mundane as en- n External Relations – Most busi- trepreneurs, I have seen the value a coach
suring board meetings are held on time nesses, irrespective of the sector they are who has “been there done that” can pro-
and minutes are properly recorded is an addressing, need a strong connect with vide to a startup entrepreneur.
area where startups have been known the external world. These connections
to slip up. could be with bureaucrats, politicians, I have often said that the combination
m Fund Raising – While most startups environmental activists or the local coun- of young energetic legs with grey hair
are looking for funding from Angel Inves- cilor. An experienced coach will have the would be a win-win combination for all
tors and Private Equity Investors, there is patience to handle these external chal- startups. To draw a parallel from hockey
lenges. This could also include devel- or football, the entrepreneur is the cen-
oping a strong public relations contact tre forward rushing to shoot goals and
win while the older manager is the goal
keeper who will protect the companies
turf and ensure that self-goals are not
scored!

What is important for both the parties
is to mutually select the right set of indi-
viduals. What is important is to develop
mutual trust and confidence between the
two individuals to build a win-win combi-
nation for the success of the business.

In other words, every Startup Entre-
preneur needs a coach.

Experience Never Gets Old!

The author is a business and executive coach and
an angel investor. He hosts the highly successful
podcast titled The Brand Called You. He is also the
Founder Chairman of Guardian Pharmacies and
author of eight best-selling books. He writes for

several online newspapers

Illustration by Granz Creative 27 | BW BUSINESSWORLD | 30 July 2022

KIRAN’S KONTRARIAN KORNER

By Kiran Karnik

RURAL
ROMANCE, CITY
CHAOS

M ANY URBAN DWELLERS look improvement in traffic speed probably being an incentive for greater
at cities as centres of conges- use, thus quickly nullifying the gain. My suggestion to rename (a fa-
tion, chaos and crime. Air pol- voured activity today) important urban arteries (for example, Western
lution, power outages and and Eastern Expressways in Mumbai, or Delhi-Gurgaon in NCR) as
water shortages are consid- “Parkways” or “Parkingways” instead of Expressways has not found
ered an inevitable component acceptance, despite the more factual nomenclature.
of city life. Monsoon flooding, crowded
public transport, traffic jams, and health Expensive new metro systems, which provide fast and comfortable
contagions are routine hazards. mass transportation, are quickly getting crowded, without any reduc-
tion in road-borne traffic. Bicycle tracks and pedestrian pathways
On the other hand, thanks in consid- are always in a state of shoddy disrepair, and new, dedicated ones are
erable measure to Bollywood films, rural quickly encroached upon. Bus services have run down, and procure-
India is often conceived as idyllic, with ment of new buses (laudably, often electric ones) is slow. More motor-
fields of waving wheat or sunflowers ised transport than ever before is on the roads, making for congestion,
swaying in the wind. The romance of jams and adding to air pollution.
rural is heightened with the hero and
heroine in a tractor-trailer, singing a The transition of all public transport to CNG in Delhi did improve
merry melody. Clean air, friendly peo- the air quality – but all too briefly. Now, it is worse than earlier. One
ple, peace and quiet stand in sharp con- can only hope that the transition to electric vehicles will improve air
trast to urban areas. pollution in the next few years, though what discarded batteries will
do to land and water (and possibly air too) is yet to be seen.
URBAN CHAOS
Most people are wary of the rapidly- All this and a host of other problems – including serious social ones
growing urbanisation of India. Over the like crime, violence, drugs, and personal safety – have made the cities
next few decades, the urban population less liveable. Most of these are seen as stemming from overcrowding:
is projected to grow by leaps and bounds, too little infrastructure for too many people. Fears abound about how
adding considerable stress to the already cities can cope with further growth. This is largely due to the grow-
strained and creaking urban infrastruc- ing influx from rural areas, leading policy-makers to look for ways of
ture. Today, roads are unable to cope with stemming the tide.
the need-driven and prosperity-induced
increase in vehicular traffic. Flyovers and Creating jobs beyond cities seems to be the solution, and many ef-
by-passes have hardly helped, with any forts are being made to see how work and jobs can be shifted to rural
areas. The new mantra of work-where-you-live sounds like an attrac-
tive proposition: expenses are lower, as is the cost of living; there is no
commuting, nor a separation from the family; and one can continue

28 | BW BUSINESSWORLD | 30 July 2022

centres in hundreds of rural
locations and employing
lakhs, are yet to be realised.
May be this will be a reality
one day.

REVERSE MIGRATION

Meanwhile, people point to

the reverse migration (city

to small town/village) trig-

gered by the pandemic and

facilitated by work-from-

home. Independent contrac-

tors and many employees are

This viewpoint, of jobs moving to rural areas and of city-dwellers happy to escape the rigours
and problems of the city and

migratingtovillages,mayappearcontrarian.Yet,itcouldbeareality may permanently relocate.
Such reverse migration,
in the years to come, with the negative “push” factor from unliveable though, is probably limited
cities being supplemented by the “pull” of rural areas with urban- to a few thousand at most

class facilities. There is though, a strong reverse “push” for today’s (as compared to the millions

rural population. Mostly, this is due to the lack of jobs, but it also stems who traverse the opposite
from the discrimination, caste and class oppression, patriarchy and path). As schools re-open
regressive moral codes of rural society and the need for social inter-
action and entertainment

(restaurants, theatres, malls)

returns, even the limited

to live in the same socio-cultural milieu. back-flow may end. Yet, if small towns and states ensure the neces-

sary social infrastructure, this trickle could become a flood in future.

RURAL ROMANCE This viewpoint, of jobs moving to rural areas and of city-dwellers

Easier logistics, thanks to a growing net- migrating to villages, may appear contrarian. Yet, it could be a reality

work of roads, and a more skilled and edu- in the years to come, with the negative “push” factor from unliveable

cated population, does make it possible cities being supplemented by the “pull” of rural areas with urban-class

to think of moving some manufacturing facilities.

activities to small towns or villages. At the

same time, better digital connectivity and THE PUSH TO THE CITIES

the lower cost of data transmission could There is though, a strong reverse “push” for today’s rural population.

facilitate the shifting of some services to Mostly, this is due to the lack of jobs, but it also stems from the dis-

rural areas. crimination, caste and class oppression, patriarchy and regressive

Some – including this writer – have ar- moral codes of rural society. Many, especially youngsters, find this sti-

gued that new technologies make possible fling, and migration provides an escape. Cosmopolitan cities provide

the decentralisation of both manufactur- an antidote, and anonymity has its advantages. The romance-of-rural

ing and services, with economies of scale movie is a hit only in cities.

being substituted by economies of scope. Thus, it is not just economics but also sociology that one has to study

In addition, lower wages and far less staff to understand the attraction of a big city. Stemming the coming tidal

attrition are additional advantages. The wave of village-to-city migration may require not only job-creation in

government too is encouraging rural work rural areas, but also radical social change. Progressive change could

centres through various incentives. reduce migration, relieving pressure on the cities; importantly, it will

A few pilot projects have proven suc- also contribute to social justice and nation-building. Here is a chal-

cessful. However, most companies are yet lenge worth taking up.

at the stage of exploring small (tier-3) cit-

ies rather than rural areas. Scenarios of IT The writer loves to think in tongue-in-cheek ways, with no maliciousness or offence
and business process management (BPM) intended. At other times, he is a public policy analyst and author. His latest book is
Decisive Decade: India 2030 Gazelle or Hippo (Rupa, 2021).

Photograph by Gajendra Bhati 29 | BW BUSINESSWORLD | 30 July 2022

COLUMN Brick and
Mortar Must
Ajai Kumar Dayal Fight Back

The writer has over 30 years’ experience A FTER PLAYING A DEFENSIVE game against the onslaught of ecom-
managing brands and retail and ecommerce merce there are now signs of brick-and- mortar waking up. Witness
businesses internationally. He also comments the amazing response Ikea received at the opening of their new
stores in Bengaluru and Hyderabad. In Bengaluru, the crowds
and consults in these areas were unmanageable on the first weekend, forcing them to tweet to
customers that the waiting time was two to three hours.

Of course, Ikea is a huge international brand which had an over-

sized image even before it’s new openings. They were also cleverly

seeding the market on portals like Amazon, introducing their products to customers

unfamiliar with their range.

On top of all this, they had a unique, well-funded launch. The drone ballet was prob-

ably one of the most reshared posts in recent days and the huge queues at the opening

were no surprise. Even surrounding businesses were not complaining, reporting a 50

per cent increase in sales, especially at eateries and the closest metro station had a big

spurt in traffic.

But this cannot be a one-off event. After all, with the ending of months and years

of restrictions, people are beginning to rediscover the pleasure of shopping as fun,

entertainment and even therapy.

In the last few years, it was almost as if high street and mall stores had given up the

fight against a rampaging ecommerce which notched up unprecedented growth rates.

Online shopping filtered down even to small towns where customers began enjoying

its range and convenience. But even diehard ecommerce supporters know that this

growth was situation driven and cannot continue at the same rate going forward. In the

melee, however, brick-and-mortar stores seem to have lost sight of their own inherent

advantages which online stores still cannot counter.

l Immediatedeliveryofpurchase – Despite their service and logistics clout, online

customers still have to wait. On the other hand, a customer entering a store can walk

out with her purchase in a bag.

l Productknowledgeandinformation – Only the larger portals are able to provide

what they call A grade product information, which of course, they get from suppliers.

Smaller sites struggle to display even a proper list of specifications. In contrast, the sales

assistant in even the smallest store, can provide all the knowledge and information the

customer needs and more, to make an informed decision.

lShopping is coming back into vogue after a break of two years and customers are no

longer hesitant to enter shops.

A lot of retailers have, however, frittered away these advantages – they don’t keep

stocks on hand and depend on suppliers’ stocks to make deliveries. This was perhaps

expected while people were spooked with physical shopping, but now it becomes a

major deterrent. Furthermore, sales staff are simply not trained to provide the level

of service that is really required to outdo ecommerce shops. In the case of depart-

30 | BW BUSINESSWORLD | 30 July 2022

mental stores, the situation is often worse Shopping is coming back into vogue after a
as most staff on the shop floor are more break of two years and customers are no longer
shelf stuffers than actual sales advisors hesitant to enter shops. A lot of retailers have,
equipped with skills to assist in making however, frittered away these advantages
informed choices. As a result, shopping
becomes a frustrating chore instead of to start thinking as a group with a common interest, rather than only as individual
the pleasure that people really want. stores with their own limited objectives.
l Offers and sales in a particular area or mall should be coordinated for specific peri-
In the matter of pricing, brick-and- ods. This happens to some extent for example around festivals like Diwali. But could
mortar stores find it difficult to match be synchronised for other times in the year as well. This means, that there would be
the clout of large ecommerce shops with non-promotion periods when customers don’t get any offers, providing a respite from
their large volumes and their successful offer overdose and increasing the credibility of offers when they do happen.
use of loss leaders or limited models to l Sales and offers should be genuine. Larger chains probably have kosher pricing
create the illusion of always low prices. In policies, but the practice of first increasing tag prices and then putting up big ‘percent-
the case of electronics and white goods, age off ’ signs is unfortunately not unknown. This is actually self-defeating as the real
suppliers are so volume driven that their competition today is not with other physical shops, but rather with ecommerce portals
best prices go to only their largest cus- and for this, confidence and trust are big factors. Ecommerce is very clear that any sale
tomers which makes competition with happening in brick-and-mortar is a sale that they have lost and they do their utmost
large suppliers to ecommerce difficult. to protect this. Brick-and-mortar retailers should be thinking similarly with regard
This is a tough nut to crack but it calls to online sales, working together instead of trying to upstage each other. The mantra
for a rethink of pricing strategies for the should be that brick-and-mortar wins when any physical store makes a sale.
manufacturers, wholesalers as well as l When customers know that they will only get the best offers in specific periods,
the retailers. their purchases will be planned around these milestones.

Creating and hyping mall wide events All this calls for some kind of coordination and control of physical stores. It also
such as a Black Friday also works. But means that first and foremost, service levels need to be upped. In a porous market
change is needed in the way stores oper- where staff keep leaking away this is no small challenge, but strategies are needed to
ate. ensure that trained and knowledgeable staff are retained. Retail sales should be seen
l Most retailers decide their offers as a desirable career option attracting better talent and greater commitment. Physi-
based on the stocks that they are hold- cal retail still has a lot of potential and when it is done right, it is highly successful.
ing and their sales targets for that month
or period. So, in every location or area It’s time for brick-and-mortar to fight back.
you could end up with some Sale or Offer
practically round the year. Retailers need

Photograph by Zatletic 31 | BW BUSINESSWORLD | 30 July 2022

PI TALKIES

When You
Don’t Know!

PrakashIyer isaspeakerandleadership R EMEMBER THAT TRICKwithinvisibleinkfromyourschooldays?If
coach and former MD of Kimberly Clark Lever you wrote a message with lime juice on a piece of paper, and let it dry,
it would be invisible. And then if you held a candle up to it, the heat
would reveal the secret message. Remember that?
Well, it was a trick that fascinated kids and grown-ups around the
world. Including a man called McArthur Wheeler. A man you’ve
probably never heard of. But there’s a lesson he can teach us all. About ourselves.

McArthur had an idea. Since lime juice had the property of making things
invisible, he reckoned he could put it to good use. He decided to rob a bank. And
to make sure he would remain invisible, he smeared a lot of lime juice on his face,
so the security cameras would not be able to capture his face. Emboldened by his
genius idea, he stepped out one fine morning in Pittsburgh and robbed not one
but two banks. Of course, he was fully prepared. Gun in one hand. And lots of lime
juice on his face.

As the police looked at the bank’s CCTV footage, they could clearly see the face of
the robber. He even seemed to be smiling into the camera. The cops put the footage
out on the evening news on television, asking for leads if anyone could recognise
the robber. And soon enough the cops were led to McArthur’s home.

When they told him he was being arrested for the bank robberies, he could
hardly believe it. “But I wore the juice!” is what he apparently told the police.
Medical tests confirmed he was not on drugs. He wasn’t delusional. He was just
super-confident he had a fail-safe plan.

Ignorant, yet confident. Sounds like someone you know? Maybe there’s a bit of
McArthur in all of us. The less we know about something, the more confident we
are. You see it in the workplace. And on social media too.

When David Dunning – a professor of Psychology at Cornell University and
Justin Kruger (then a PhD student at Cornell) heard McArthur’s story, it led them
to an underlying human trait. What’s now known as the Dunning–Kruger effect.
It’s a cognitive bias wherein people of low ability or knowledge in a particular area
tend to over-estimate their skill and ability in that area. When you don’t know, you
tend to not know that you don’t know. Read that again.

Ah, the Dunning-Kruger effect. If you are looking for examples, think of bad
drivers, who all think they are very good. Or that poor performer at work who is
convinced he is a star – but it’s just that the boss doesn’t like him. And that leader
who made stupid decisions, confident he had a can’t-go-wrong plan.

A good way to avoid the effect is to have a learning mindset. Keep learning. Get
comfortable with saying, “I don’t know”. Be willing to acknowledge you may be
wrong. Being open to feedback can help too. Ask for feedback.

We can all think of people we know who behave like McArthur Wheeler did. But
here’s what Dunning and Kruger have to say: if you are looking for examples of the
Dunning-Kruger effect, the first place you must look at is a mirror.

Take a look. Today.

32 | BW BUSINESSWORLD | 30 July 2022

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