Impart 'change management' to realise competitiveness - Kamath

By Our Special Correspondent

CHENNAI, SEPT. 6. Two optimistic scenarios for the Indian economy - one on the performance of the real sector and another on India's potential to achieve global leadership in competitiveness - presented, respectively, by heads of the ICICI and Reliance Industries, set the tone today for the country's management fraternity to discuss issues of competitiveness.

``Crucial segments of the manufacturing sector such as textile, steel and chemicals, are already over the hump, having crossed the stage of plant closures and seen the emergence of new capacities on a global scale. They are likely to emerge competitive in a couple of quarters'', said Mr. K. V. Kamath, Managing Director and CEO of ICICI, delivering the keynote address at the inaugural session of the three-day 28th National Management Convention organised by the All India Management Association devoted to the theme ``Building Sustainable Competitive Strength''.

The other sectors which were yet to reach the stage were expected to do so in a few more quarters. Similarly, Mr. Kamath said, the picture was bright in the services sector, which would be the ``growth engine of the future", and the infrastructure sector, where substantial investments were taking place. There was good progress in power despite some hiccups, roads (with its quadrangular link project) and telecommunications, besides ports, all of which would help Indian industry cut costs.

However, one area which would pose a problem was the high cost of financial intermediation despite the large availability of funds with banks. Indian industry should learn to reduce its debt- equity ratio. With the service sector contributing to 5 per cent growth of the gross domestic product (GDP) and the manufacturing and agriculture sectors contributing each a little more than one per cent, the economy should be able to achieve eight per cent growth in the not distant future, Mr. Kamath said.

His advise to professionals and industrialists was to impart ``change management'' as the most crucial element for achieving competitiveness.

Mr. Mukesh Ambani, Vice-Chairman and Managing Director, Reliance Industries, in a presentation that bore the Reliance stamp of ambitious and confident big picture and big numbers with reference to the Indian economy's - rather Indian people's - potential, however, warned that the economy would not be able to achieve competitiveness unless the country gave up the outdated approach of self-reliance and the colonial legacy of looking to the government for solutions and emphasis on ``administration'' rather than on management and leadership.

He warned against attempts to create demand or purchasing power through government schemes that could only benefit bureaucrats and politicians. Instead, priority should be given to public investment in education, including primary and higher education, and the private sector given a bigger role in higher technical education. Total deregulation in place of ``first stage'' and ``second stage'' reforms and thrust on efficiency and productivity alone would help reduce costs. ``You reform or deform, there cannot be stages in reform'', Mr. Ambani said.

Saying that foreign direct investment (FDI) had only led to mergers and takeovers, while greenfield projects, like those of Reliance, had contributed to economic growth and employment, he said the economy's potential could be realised only by a thrust on ``integration'' - of the agricultural and rural economy with the industrial economy, of the small industries with large industries, and of manufacturing with the services sector.

He said the power sector should be fully deregulated and there should be no government subsidy or prop for inefficient production.

Mr. A. C. Muthiah, Convention Chairman, said the lesson that Indian industry could draw from the country's IT industry was that competitive strength could be achieved by anticipation strategies, fine tuning and a commitment to stakeholders.

Mr. T. T. Thomas, President, AIMA, called for government intervention to identify and support core competitive businesses for at least ten years. Mr. S. K. Swamy, President, Madras Management Association (MMA), said the AIMA had entered into arrangements with the Annamalai University and the Aligarh Muslim University for doctoral programmes for working professionals.

The Governor, Dr. C. Rangarajan, in his message, said efficient planning and effective management were needed to cope with the challenges of the 21st century.

Send this article to Friends by E-Mail

Section  : Business
Previous : SEBI makes startling revelations on
           brokers-FII-OCB nexus
Next     : Nervousness grips BSE, Sensex down 26 points