Viewing from the ringside seat, IE has been reporting on the cataclysmic changes. How momentous these have been! Hundreds of flourishing British companies changed hands and several of these, like the Binnys, Best & Co, Crompton Engineering Co., A&F Harvey Mills and Martin Burn that existed and flourished for over a century, folded up. Dozens of plantation companies changed hands. Even purely Indian companies that flourished under a protective environment like the Premier Automobiles, Standard Motors Products of India and South India Viscose could not survive in the capital- intensive, open market, competitive milieu.

The focus of the earlier decades was on indigenisation and self-sufficiency. The severe constraints of foreign exchange goaded the policy-makers and the corporates to strive hard to find swadeshi solutions. The ingenuity of the entrepreneur was drawn to the best in developing technology and finding the solutions to cross the barriers of technology imports and exchange shortage. We had stellar performance by companies like Hero Cycles that succeeded in evolving technology and management practices that helped them emerge as large corporates building their own brands and winning handsome market share. We remember the just-in-time concept so effectively practised by Hero Cycles with sack loads of bicycle components like hubs and cones, saddles… delivered in cycle rickshaws by the hour. The Munjal Brothers, Brij Mohan and Omprakash, sitting in a modest office in Ludhiana, engineered such a spectacular growth! In just about a decade, Hero Cycles rendered the established giants – Birla's Hind Cycles and Sen & Pandit – sick and get nationalised; even the better-managed TI Cycles of India down south was forced to close down for over ten months, phase out many of the in-house production facilities and resort to procurement of components cheap from Punjab and Haryana for survival and growth. In quick time Hero Cycles evolved the largest producer of bicycles in the world, a position it maintains to this day.

Towns that evolved as innovative centres of initiative and enterprise

We reported on Birla's Harihar Polyfibres set up to produce viscose staple fibre making use of a temporary relaxation in licensing (engineered by them?)! The Birlas obtained the licence and set up this unit under a brilliant technocrat Goel, in just twelve months. Most of the equipment was fabricated at site and the unit became a money spinner in quick time. Coimbatore, Ludhiana, Rajkot and Faridabad are among several of the towns that evolved as innovative centres of initiative and enterprise.

Shortage of capital and the socialistic orientation of the Central government resulted in a long regime of permit, licence and quotas. These put severe curbs on the evolution of large-sized enterprises and too much of the effort and ingenuity had to be focused on the acquisition of licences. Capital formation was poor and a few like Dhirubhai Ambani had the audacity and vision to tap the capital market. Alert states like Maharashtra, Gujarat and Tamil Nadu led by visionaries like R. Venkataraman, procured licences by the dozen, spotted new generation entrepreneurs and persuaded them to enter business. The discovery of oil and gas off the coast of Gujarat and Maharashtra also triggered development of dozens of industrial units in the petroleum, petrochemicals and energy sectors.

1991 provided the most notable watershed for Indian economy led by P V Narasimha Rao and Dr ManMohan Singh. Economic policy witnessed a 1980 degree change. The regime of permit, licence and quotas ended and the country was set on a course of liberalisation, market-orientation and globalisation. Changes in the global economy like the setting up of the World Trade Organization and a spectacular expansion of the global economy and trade helped in the flow of capital, technology and modern management practices into the country. In the following years India witnessed spectacular growth in several directions.

When the job market shrinks…

During the current decade economic growth accelerated and it averaged over 9 per cent in the last three years. Government revenues have been buoyant. The government could step up development outlays massively and there was the move towards fuller employment. Organised sector alone was providing employment for over a million every year with corresponding flourish of employment in the unorganised/self-employed segment that accounts for over 92 per cent of the job market.

The global melt down triggered by the crisis in the USA is impacting severely the Indian economy as well. Economic growth is decelerating. Policy-makers try to take comfort that the smaller growth rate of around 5 to 6 per cent in the current year was still sizeable on global terms. But most of these growth is contributed by the services sector that accounts for around 54 per cent of the nation's GDP; the contribution to economic growth by the agriculture sector on which the majority of the population still depended, has been poor - at less than 0.4 per cent. The more distressing aspect is the negative growth of the manufacturing sector witnessed in recent months which impacts severely on jobs and incomes of sizeable sections of the population.

Paralysis in administration…

With elections around, there has been a paralysis in decision-making. With the rapidly shrinking base of the two national parties – the Congress and the BJP – the nation witnesses increasing clout of regional parties; most of these do not have strong economic platforms or visions of national development. Like the DMK in Tamil Nadu, there has been an over-emphasis on distribution than on growth, conditioned by the exigencies of vote bank politics. The enormous demands of resources for contesting elections, helped by the existing system of lethargic judicial remedies, have only resulted in the institutionalisation of corruption and the neglect of governance issues. We provide two instances:

• The paralysis of the judicial system in Tamil Nadu caused by the strike and boycott of courts by lawyers since end-January. There are over 5 lakh cases pending in the Madras High Court alone with the numbers many times this waiting for decision in the subordinate courts. The rate of disposal in recent years has been just around 90 per cent of the addition through fresh cases. Of around 18 cases listed for hearing by a judge, around 16 get adjourned as a matter of routine with little time for judges to go through in detail even the two taken up for arguments. In the first 82 days of the current year, the High Court had functioned for less than 10 days!
• The increasing focus on freebies like supply of rice at a rupee a kg for all, provision of free colour television sets, gas stoves and LPG connections for poor, free electricity for the farm sector and subsidised power tariff for the domestic consumers had resulted in poor attention to the addition of generation capacity through the last five year plans. Significantly, after 1996 the state-owned power stations have not added any capacity resulting in a power shortage of severe magnitude. TNEB has resorted to a system of fixing quotas limiting consumption to 80 per cent of the earlier monthly average and levying penal rates that works out to over Rs.17 per unit. And this for small businesses!

Constraints of coalition governments

The national parties are today not able to muster on their own even 30 per cent of the total number of seats in the Lok Sabha. They are thus forced to go for alliances with a kitchdi of parties with no common ideology or programme. The very process of stitching together a coalition involves compromises and corruption of serious proportions. The Congress and the UPA had to run the government with the support of the leftists who stalled reforms and put severe brakes on several development efforts. Both the Congress and the BJP have lost support of sizeable numbers of their earlier partners. All these forebode a more difficult process of stitching a stable, cohesive government. Already there has been a paralysis of administration at the Centre and the state. One can only hope and pray for the elections to end this. And this is needed most in the present phase of severe economic melt down.

News magazines hit hard

The newspaper industry, particularly the small specialised periodicals, are passing through a crisis of severe magnitude. In any period of slow down, advertising suffers the first massive cut. Understandably, specialised magazines with modest reach, suffer the most. Despite the professed priority for the small sector, government policy is heavily weighted in favour of the large newspapers. Remember the flourish of advertisements through the government's Directorate of Advertising and Visual Publicity through February when department after department placed large advertisements in the large newspapers? Such advertise-ments accounted for close to 25 per cent of the total size of the edition The Hindu for a few days. And look at the small papers kept totally outside this bonanza! At the state level the discrimination is even worse with the large share of such advertisements going for party-oriented papers with no policy or priority for small publications touted as the beautiful priority sector!

Especially in this light, we record our appreciation to the sustained and handsome advertising extended by several business houses and corporations that alone have helped us to focus on research and analysis of several vital economic issues. To these and to our readers we record our sincere gratitude as we enter our 42nd year of publication .