Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
RSS

News

Need to create essential competitive advantages to better standards of living in India

Author: IANS/Tuesday, April 3, 2018/Categories: Economy

Need to create essential competitive advantages to better standards of living in India

By Amit Kapoor 

Our chief economic advisor very succinctly put it recently that India is both a story of revival and risks. It was further noted that although the level is still below potential, the economy seems to be picking up resiliently in terms of direction.

Now, echoing on similar lines, India has again become the world's fastest-growing large economy as the latest trends from the CSO data have reported a GDP growth of 7.2% in Q3 of the current fiscal year. No less than an opportunity, this has patently presented all of us with a sense of euphoria while taking our economy to reclaim the "fastest-growing" mantle from China. However, sadly it cannot be for long that one can hold up to all the zest surrounding the Indian economy: Our performance in the global prosperity order is the case in question here.

India has made a ripping progress over the last few decades, with its presence now also being felt at the world level, but when we look at the per capita real GDP figures, the country stands far lower on the economic spectrum compared to the rest of the world: $1,861.5 at 2010 prices for 2016 (World Bank data).

Keeping its economic peers in mind in going by this measure of prosperity, a quintessential question that besets us is why is India where it is today in terms of standard of living for its citizens? Is there a "magic sword" that some countries swing in their favour and maintain decent levels of living standards? Well, differences in GDP per capita across countries have abstracted much of growth and development economics amongst economists which continues even today. However, no less than a magical sword or a master key, the answer lies in looking at the competitiveness of India's national economy.

Conventional definitions of competitiveness would normally involve discussions about the availability of cheap abundant labour and natural resources, interest rates, exchange rates, the state policies in action and the management practices adopted. But an idea which is single-handedly much more eloquent to the theme of competitiveness is productivity. In its simplest form, productivity is the value of output per unit of input used. National competitiveness, then, is defined as the productivity of the factors of production (labour, land and capital) employed during production processes.

This explanation of productivity being the most meaningful concept of competitiveness is sufficient by itself to demonstrate that there tends to be more broad and complex forces at work than ones that have been traditionally talked about.

Since it is an overriding goal for a nation to produce a high and rising standard of living for its citizens, its ability to be able to deliver on this front depends entirely on the productivity of some of the principal factors of production. Depending on the quality as well as the features of the product, productivity is concerned with the efficiency with which this product is produced.

Being the root cause of national per capita income, productivity, however, must not be mistaken with higher participation of the labour force although it is productivity which determines the rate of return that a factor can earn for itself. This is because it is possible for the overall output to rise even though the per worker per hour productivity goes down. Hence, sustained standards of living and productivity growth require that an economy continually upgrade itself.

An economy that is made up of companies and a set of industry segments must incessantly work towards improving productivity by boosting production efficiency through added quality and features. In the process that is unleashed, capabilities must be developed to compete in more advanced segments as well in entirely newer sections. Because no nation can be productive in everything it does, the ideal is to position the limited pool of resources into uses that are the most productive ones. The search then is for the unwavering quality of a country that can allow its industries and companies to create sustained competitive advantage in selected fields, not only locally but also globally.

Therefore, policymakers seeking to unravel higher levels of living standards must first fully understand the determinants of productivity and its growth. It is incontestably about how and why that underpins the process of achieving and upgrading a nation's productivity. To find answers to some of the basic caveats, the economy then must not be studied as a whole but in terms of specific defining industries and segments where companies in the modern international competition set-up compete with global strategies involving both trade and foreign investment. This approach has the capability to provide for an understanding why a nation like India can build up a home base for its companies that compete on a global level.

The home base here which is to be built over time is nothing but the nation itself where essential competitive advantages are created and hence sustained.

Print Rate this article:
No rating

Number of views (103)/Comments (0)

rajyashree guha

IANS

Other posts by IANS
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free