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Friday, October 26, 2012

Preventing Economic and Societal Meltdown in India

India is at risk of experiencing serious instability and chaos. Its national job-based hopelessness has nearly tripled since 2007.

The two states of mind that are most deadly for societies in a world of hopeless unemployment and chronic workplace disengagement are: One, you’re out of work and believe you’ll never find a job. Two, you have a job, but you’re miserable. Combine these conditions with corruption and cronyism, and you get societal suffering that breeds chaos.

Most alarming for India, though, isn’t the current state of its society, but where things are headed. Gallup’s quarterly tracking numbers show:

  • Thirty-three percent of working Indians are actively disengaged. Of these actively disengaged employees, 35% rate their lives poorly enough to be considered “suffering.”
  • The percentage of Indians who believe the government is corrupt has jumped from 73% to 84%. And the number who believe businesses are corrupt has jumped from 67% to 81%.
  • Forty-two percent of the total adult population feels their community is a “bad place to start a business.” And 64% think the government makes it hard to start a business in India -- up from 46% last quarter.
  • Indians are losing confidence that working hard can make them successful -- down from 77% last quarter to 63% this quarter.
  • Indians are increasingly dissatisfied with the level of personal freedom they have to choose what they do with their lives; a record-high 39% are dissatisfied with their personal freedom.
  • Most troubling of all: Over the past five years, the percentage of Indians rating their lives poorly enough to be classified as “suffering” has risen from 7% to 19%.
Just 10 years ago, Western executives would come back from trips to India and China and say, “I think the one to watch is India, not China.” They couldn’t have been more wrong. Over the past decade, China has routed India. The primary reason is that Indian leaders are not transforming their business culture to one driven by meritocracy and one where people feel fulfilled.

My recommendation: Indian leaders should change all of their metrics. Stop placing emphasis on GDP, interest rates, and inaccurate unemployment data. Move everything to the new metrics of behavioral economics -- to state-of-mind versus simple transaction data. These metrics are:
  1. percentage of good jobs
  2. percentage of engaged and actively disengaged workers
  3. perceptions of government and business corruption
  4. belief that working hard will get you ahead
  5. perceptions that “India is a good place to start to a business”
  6. percentage saying they’re dissatisfied with their personal freedom
  7. percentage who rate their lives so poorly that they are considered suffering
Gallup will continue to collect and report on these demands -- so India should use them as markers of progress. In fact, Indian government, business, and NGO leaders should keep these demands on their desks and in every conference room. Ask at every meeting and about every decision, “What does this have to do with driving these demands?” Aim all strategies at these markers.

Do this, and India will prevent its own economic and societal meltdown.

A version of this post originally appeared in Business Today, India.

10 comments:

A Ramesh said...
October 29, 2012 at 9:09 AM  

If we wont bother on GDP,Interest rates and Govt will make decisions regarding to FDI,FII, and inflation and I think in addition to this we can add some of your points,not all like "Percentage of good jobs"-How can yo can say what is good job and Bad job.For suppose Graduates of IIM also passion about teaching,If somebody we are earning more 25000 per month they wont be happy with what they are earning and if govt try to pt some cap to this figure there is no wonder it will done some thing like people who are earning more than 25 rupees are not poor

Bharat K said...
October 30, 2012 at 2:14 PM  

Jim put the facts nicely in a nutshell.
The reasons behind India's lack of progress when compared to China are below:

a) Lack of strong leadership at Center (Coalition politics have led to slow decision making and in some instances put road blocks in the reforms process).

b) Stagnant Manufacturing : India has'nt used its vast human resource on a scale by which China has excelled. The internal manufacturing and FDI's are getting delayed or becoming a non starter due to policy paralysis at the center.

c) Corruption : It evoked negative investment mood in the country and the citizens thereby became disengaged due to lack of opportunities to excel.

d) Reservation : Deprives equal employment opportunity in the public sector.

However Indian youth are well educated and with an ever improving education infrastructure, they is more hope than despair :-)

Krishnakumar K said...
November 8, 2012 at 11:54 AM  

If India has to achieve the metrics mentioned then it has to concentrate on:
1. Electing visionary leaders who know what is required for India to succeed in 21st century and thus will take bold steps towards it without getting derailed by coalition politics.
2. Root out corruption with stringent punishments to the corrupt so at to boost the confidence of all.Today corruption has become a way of life in India (some even consider it equivalent to smart living).
3. Concentrate on Infrastructure development across country be it roads, power, water etc etc.
4.Politicians on the opposition should challenge and force the government on development and growth targets instead of on unproductive issues like petty political nitpicking, caste / religion based politics, purposefully opposing even good measures just because they want to oppose and thus derailing the decision making process.

Arun Anna said...
November 8, 2012 at 2:30 PM  

Collectively writing about India will never be accurate.
Hear me out- following are my views:

1. India's population 65% are poor they are either farmers, ordinary "mom&pop" shops or simply govt employee at lower levels(not upper mgmt).

2. Jobs satisfaction applies only to high level such as IT sector and Sales, it does not even apply to Manufacturing or Retail. The high level sectors only make less than 25 percent (or even less) of the population

3. India is considered as democratic country to its highest level, so each state is different even the language they speak and within each state people are different at city level, its not like USA where one policy affects all. Maybe at high level such as tax, ration and train fares, but even that does not play significant role.

There are some exceptions - for example
1. Look at the explosion of cell phone market that happened in India, it affected the entire country

2. Currency valuation that affects IT and export/import of entire country.


So making gross prediction on overall Indian economy by any guru is a joke, atleast in my opinion.

Vick Singh said...
November 8, 2012 at 4:45 PM  

I think that the Indian workforce has abandoned their traditional vedanta values. The government is corrupt because the people are weak. People who are employed and think that they are suffering are doing so because they are chasing western ideas and material gains. Your net worth an an individual should not me measured only my the amount of material wealth you have accumulated but by you primary purpose in life, that is to live a life of spiritual bliss irrespective of your economic situation. Being gainfully employed is important and you should be thankful that you have a job. I have traveled extensively throughout the United States and have witnessed suffering on a scale never imagined - I saw people picking out food out of trash can,I saw a mother walking the streets picking up empty soda cans so that she can sell the metal to feed her children. I have seen "white" citizens of America living in the woods because they have lost their homes and their jobs. Lets never let poverty make us lose our dignity. And there is dignity in hard work no matter what you do. If you goal is to wear a Gucci watch or drive a Mercedes Benz, and if you do not achieve it in this life you may achieve it in the next, if this is so important to you. Please India go back to basics and read your Bhagavad-Gita. Mahatma Gandhi once said: "When doubts haunt me, when disappointments stare me in the face, and I see not a ray of hope on the horizon, I turn to Bhagavad-Gita and find a verse to comfort me; and I immediately begin to smile in the midst of overwhelming sorrow. Those who meditate on the Gita will derive fresh joy and new meanings from it every day". Need I say more?, Jai Hind. God bless India.

Prem said...
November 9, 2012 at 12:49 AM  

The root cause is that the politician in power are primarily serving their interest. It is high time people demand ELECTION REFORMS. Suggested reforms are :

#1-Each MP/MLA have to publish their annul Report Card and their Action Plan for remainder of the term on a website of Election Commission. The Report Card should be discussed and debated. After which the MP/MLAs need to seek a trust vote from their electorate. If successful, he/she will continue, else fresh election with new candidates.
#2-Retirement age of 70 years for all MP/MLA and for all offices by nomination.

Gabriel said...
November 9, 2012 at 3:49 AM  

Guys, I think is much more simple to start, empower your people and trust them more. Get read of the mentality that the leaders/managers are always right, let the people be heard and make their opinion count.

And there is only one place to start doing that, in the private sector.

Anonymous said...
November 9, 2012 at 4:44 PM  

For much of that article I think you could replace India with USA.

vatsal said...
November 9, 2012 at 11:56 PM  

A very interesting and an apt article.I strongly believe that apart from the attributes considered in highlighting the current state of affairs in India, one should also consider the following aspect in the gallop poll to be undertaken in future :
what is the percentage level of perceptible satisfaction derived by Indians in India on the three pillars of democracy - namely freedom, equality and justice.
Moreover, there is not just the risk on economic and societal meltdown in India, the probability is increasing day by day mainly because, the present MPs and MLA's ( who are supposed to be public servants) are in no mood to change the existing circumstances which are extremely beneficial to them (have becomes kings). Will anyone, like to to change and kill the goose that lays golden egg? Only the chaos, instability and revolution (may be bloodless or otherwise) will change the future scenario in India. That time will coincide with the rising number of dissatisfied, frustrated Indians.God save India.

S.Sankaran said...
November 10, 2012 at 2:15 AM  

Excellently Summarized. India of today looks like the country before Arab and Islamic invasion 1100 years ago with fragmented kingdoms mutually destructive internecine wars between them (now read states fighting over everything), lack of common thread and goals, conflicts of interests, general people apathy, frequent whipping by those ruling of linguistic emotions when convenient, convenient antipathy against a common uniting language i.e. English with their own children studying English, omnipresent corruption and looting of state. Frankly, the older generation yearn for the foreign rule which was much better. Very unfortunate

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