https://www.youtube.com/watch?v=12eD3K5Peu8&feature=youtu.be
I came across this youtube presentation, in a forum.
I largely disagree with his views. The guy, in my opinion, actually has the audacity to ask the audience to go back in time and think small, and they too sit there, clapping!! I wonder why!! Here are some of my observations on the facts of his arguments first:
1. Unorganized part of the economy contributes 50% of GDP, but employs 90% of labour... HIGHLY INEFFICIENT. Tells you why the INR value is so low... how will it go up, without any meaningful productivity?
2. The second point of his - that a significant margin exists at the roadside idli shop, whereas in a five star hotel, the management keeps most of the margins.. is not true at all... the so called gross margin ( revenue minus cost of goods sold) gets eaten up in large establishments by the overheads... and the profit margins are still miniscule. If that is not true, then the EPS of listed hotel chains like Leela or Indian Hotels should be through the roof. Leela is currently about to hit NCLT !! The hotel business operates in a separate structure across the world, whereas in India, it is viewed as a luxury sector, attracting the maximum taxes. Add to it, the relatively high cost of realty, the sector simply is unviable in India. The same applies to airlien sector too.
3. Transformation happens in small orgs 12 times a year, whereas large ones take 5 years. Again, NOT TRUE. Let me explain below, later.
4. Disabled people are employed by unorganized sector, simply because hire and fire is easier, and they are the cheapest... not out of any other reason.
5. He argues that India is not progressing because the large companies do not let these roadside guys prosper. Really?? He is contradicting his own position, because, at the start of his discussion, he says that it is the unorganized sector that his shouldering the GDP, and in the second half says that the large companies are not letting it grow. How is the big pie being stymied by the smaller pie??
6. He says "patronize the unorganized sector". Why? Only because of the human element, not because they produce CONSISTENTLY superior goods and services. Let me explain with an example. When bus bodies are built by humans, where they bend the sheet metals, weld manually, fit manually, etc... the quality of the buses is - THE STATE TRANSPORT BUSES. Just look at how shabby the finish is. Contrast that with a Volvo bus! See the difference? So, do you want a lousy looking bus or a world class bus, even if it means getting it automated in terms of manufacture? Another example is the same ICF - as long as they encouraged only human work, the quality of Indian carriages had been consistently shabby. The same ICF has adopted modernization with a vengeance, and the result is the 180 kmph train.
Take a step back and think. These very same mom-and-pop shops that thrived on individual entrepreneurship, has existed in Europe and USA in the 17th, 18th and 19th Century, from where, they has mechanized, with a vengeance, and the results are there for everyone to see. The average OECD citizen has roti, Kapda aur Makaan, taken care of. The USA was quick to realize that they did not need 80% of the population working as farmers. They up-skilled their workforce progressively, and over time, the labour shortage was acute enough for them to justify bringing in labour from other countries ( It also suited them to upskill, because the menial jobs could be done by others, and these guys stayed on with white collar jobs). They created huge economies of scale, from farming to dairy sectors, to retailing and distribution sectors. The result - the OECS country people are largely out of poverty ( a few exceptions still exist) . Per capita GDP is the highest, and they have more millionaires than the jugaad guys that we are.
What this gentleman, in this video, says effectively is - do not work towards economies of scale; stay small, think small because, in a socialistic setup, that is the most efficient.
India is unable to think and act big simply because of the curse called Socialism that has been foisted on us by the Nehru clan. The laws are distinctly anti-big-establishment. They never allow you to think big. You cannot own more a a certain amount of land, in most states. If you are a non-agriculturist by hereditary occupation, you cannot buy agri land in most states. Most labour unions at the farm level ensure that you cannot employ machines. Which will force you to cough up exorbitant costs for employing inefficient, and often undependable, labour. As a simple case in point , Kerala has the same natural resources as Malaysia. But Malaysia allows large scale mechanization of their palm plantations and rubber plantations. Try doing that in Kerala!! You undo socialistic nonsense, and encourage the common man towards entrepreneurship in larger scales, and you will see that these very same street-smart street guys will no longer remain street guys, but could give the Ambanis a run for their money. Sorry, but the presenter's thoughts are totally lopsided.
Another point to ponder - China did NOT become a global economic power, lifting most of it's people out of poverty in 30 years flat, by thinking small. They copied, vigoursouly, and then are now beating the whites at their own game, by setting up HUGE economies of scale, and bringing down the cost per unit. In 1979, both China and India had the same % of people below poverty line. And now, look at China, with only 4.5% of its people now BPL, compared to India's 23% !!
In short, the presenter's logic on both micro economic and macro economic fronts, appear to be flawed.
While the roadside guys' street-smartness is to be thorougly appreciated - for their ability to do jugaad under trying circumstances, in order to survive and make a living - do not attempt to eulogize and make that a virtuous working model for a 21st economy !!! You need them not just to eke out a living, but in this day nd age, when technology is helping mankind like never before, to move away from man's basic needs for survival and realize their self-worth, thinking small will only take them back on the path of struggle to even survive.
Think small, and you will remain small. Think big, and you can become the world's economic power house. Our people are extremely smart. But do not ask them to run a marathon with their feet tied!!
I came across this youtube presentation, in a forum.
I largely disagree with his views. The guy, in my opinion, actually has the audacity to ask the audience to go back in time and think small, and they too sit there, clapping!! I wonder why!! Here are some of my observations on the facts of his arguments first:
1. Unorganized part of the economy contributes 50% of GDP, but employs 90% of labour... HIGHLY INEFFICIENT. Tells you why the INR value is so low... how will it go up, without any meaningful productivity?
2. The second point of his - that a significant margin exists at the roadside idli shop, whereas in a five star hotel, the management keeps most of the margins.. is not true at all... the so called gross margin ( revenue minus cost of goods sold) gets eaten up in large establishments by the overheads... and the profit margins are still miniscule. If that is not true, then the EPS of listed hotel chains like Leela or Indian Hotels should be through the roof. Leela is currently about to hit NCLT !! The hotel business operates in a separate structure across the world, whereas in India, it is viewed as a luxury sector, attracting the maximum taxes. Add to it, the relatively high cost of realty, the sector simply is unviable in India. The same applies to airlien sector too.
3. Transformation happens in small orgs 12 times a year, whereas large ones take 5 years. Again, NOT TRUE. Let me explain below, later.
4. Disabled people are employed by unorganized sector, simply because hire and fire is easier, and they are the cheapest... not out of any other reason.
5. He argues that India is not progressing because the large companies do not let these roadside guys prosper. Really?? He is contradicting his own position, because, at the start of his discussion, he says that it is the unorganized sector that his shouldering the GDP, and in the second half says that the large companies are not letting it grow. How is the big pie being stymied by the smaller pie??
6. He says "patronize the unorganized sector". Why? Only because of the human element, not because they produce CONSISTENTLY superior goods and services. Let me explain with an example. When bus bodies are built by humans, where they bend the sheet metals, weld manually, fit manually, etc... the quality of the buses is - THE STATE TRANSPORT BUSES. Just look at how shabby the finish is. Contrast that with a Volvo bus! See the difference? So, do you want a lousy looking bus or a world class bus, even if it means getting it automated in terms of manufacture? Another example is the same ICF - as long as they encouraged only human work, the quality of Indian carriages had been consistently shabby. The same ICF has adopted modernization with a vengeance, and the result is the 180 kmph train.
Take a step back and think. These very same mom-and-pop shops that thrived on individual entrepreneurship, has existed in Europe and USA in the 17th, 18th and 19th Century, from where, they has mechanized, with a vengeance, and the results are there for everyone to see. The average OECD citizen has roti, Kapda aur Makaan, taken care of. The USA was quick to realize that they did not need 80% of the population working as farmers. They up-skilled their workforce progressively, and over time, the labour shortage was acute enough for them to justify bringing in labour from other countries ( It also suited them to upskill, because the menial jobs could be done by others, and these guys stayed on with white collar jobs). They created huge economies of scale, from farming to dairy sectors, to retailing and distribution sectors. The result - the OECS country people are largely out of poverty ( a few exceptions still exist) . Per capita GDP is the highest, and they have more millionaires than the jugaad guys that we are.
What this gentleman, in this video, says effectively is - do not work towards economies of scale; stay small, think small because, in a socialistic setup, that is the most efficient.
India is unable to think and act big simply because of the curse called Socialism that has been foisted on us by the Nehru clan. The laws are distinctly anti-big-establishment. They never allow you to think big. You cannot own more a a certain amount of land, in most states. If you are a non-agriculturist by hereditary occupation, you cannot buy agri land in most states. Most labour unions at the farm level ensure that you cannot employ machines. Which will force you to cough up exorbitant costs for employing inefficient, and often undependable, labour. As a simple case in point , Kerala has the same natural resources as Malaysia. But Malaysia allows large scale mechanization of their palm plantations and rubber plantations. Try doing that in Kerala!! You undo socialistic nonsense, and encourage the common man towards entrepreneurship in larger scales, and you will see that these very same street-smart street guys will no longer remain street guys, but could give the Ambanis a run for their money. Sorry, but the presenter's thoughts are totally lopsided.
Another point to ponder - China did NOT become a global economic power, lifting most of it's people out of poverty in 30 years flat, by thinking small. They copied, vigoursouly, and then are now beating the whites at their own game, by setting up HUGE economies of scale, and bringing down the cost per unit. In 1979, both China and India had the same % of people below poverty line. And now, look at China, with only 4.5% of its people now BPL, compared to India's 23% !!
In short, the presenter's logic on both micro economic and macro economic fronts, appear to be flawed.
While the roadside guys' street-smartness is to be thorougly appreciated - for their ability to do jugaad under trying circumstances, in order to survive and make a living - do not attempt to eulogize and make that a virtuous working model for a 21st economy !!! You need them not just to eke out a living, but in this day nd age, when technology is helping mankind like never before, to move away from man's basic needs for survival and realize their self-worth, thinking small will only take them back on the path of struggle to even survive.
Think small, and you will remain small. Think big, and you can become the world's economic power house. Our people are extremely smart. But do not ask them to run a marathon with their feet tied!!
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