The private sector should become an active lobby for reform and use globalisation and export competitiveness as the basis for increasing the domestic consumers welfare, Suman Bery, director general, NCAER said.
Talking at the 28th National Management Convention organised by All India Management Association (AIMA) in Chennai, he said, "The private sector should support redirection of state activity toward modern regulation and social development instead of seeking protection against competition from government."
Though the concept of competitiveness is unobservable, he urged the sector to focus on productivity, innovation and consumer welfare for surviving in a globalised environment.
Bery observed that by increasing the productivity of factors of production (both capital and labour) towards international best practice, the private sector through firm-level management could offset macro-level structural problems. "According to a study conducted by NCAER, it suggested little increase in total factor productivity in Indian manufacturing in 1990's. Also, industrial has growth slowed down since 1996-97."
Talking about regional perspectives, Bhanoji Rao, university of Singapore and an expert on development policy, said, "By analysing growth rates of 125 economies over three decades (1960-90), it has been observed that only nine economies -- five in Asia alone -- have exhibited growth rates in excess of 3.5 per cent per annum. These high growth rates were possible only because of openness to ideas, investment and trade."
He said openness to trade and investment coupled with human capability enhancement was the real reasons for success of these five Asian economies- Honk Kong, Korea, Singapore, Taiwan and Thailand. "The policy makers in these countries adopted a simple strategy, they kept talking to the CEOs and top officials of MNCs and ask them why they are not present in their country. This, helped the key policy makers to frame right polices," Bhanoji said.
To illustrate the efficiency of these markets, he said that in the technology index (measure of the capacity to innovate or receive via technology transfers) in Singapore and USA were similar. Thus, reflecting the efficiency of Singapore in transfer of technology.
Explaining further, Rao said that more than one-third of the growth of these Asian economies such as Japan and Korea were directly attributable to innovation, adding that only through constant innovation of technology and manufacturing processes, private sector could achieve sustainable competitiveness.
Meanwhile, Mukesh Ambani, vice chairman and managing director of Reliance Industries, in the inaugural address, called for 'tripartite' focus on three factors- physical competitiveness, intellectual competitiveness and systemic competitiveness- to achieve global competitiveness.
On the intellectual competitiveness, he said that India should develop a sound professional resource base, as the developed world is likely to experience shortage of talent, adding that in US alone there would be a shortage of 15 million over the next 10 to 15 years. "Let us train just one million people every year on marketable skills in diverse sectors. If they work for 2000 hours per year earning $20 an hour, which is about half the average salary, it means a sustainable income of $40 billion per year. This can catalyse an output of at least $120 billion and provide employment in several million in other sectors," he illustrated.
Earlier, K V Kamath, managing director and chief executive officer of ICICI, identified restructuring of the manufacturing sector, building infrastructure capabilities, increasing the opportunities in services sector, bringing rural and agriculture into the mainstream and financing all the development needs, as five major challenges that an organisation would face at an macro-level.
For the manufacturing sector, he said that they should undertake financial re-structuring by reducing the debt-equity ratio to build a vibrant manufacturing sector at a right leverage. "Since, it is not possible for them to raise resources from the capital market, the only way is to organically generate cash to repay debt."
