Modi & Eastern India

The coming of NDA and BJP in complete majority in the current Lok Sabha election has created an euphoria in the entire nation. The media since last few days has been following Modi like a shadow and bringing its each movement on National Television.

In today's 'Sunday Times' the an article by 'Swaminathan Aiyar' nicknamed 'swaminomics' particualr caught my attention. He claims the popularity of the BJP in Uttar Pradesh and Bihar is attributed to the migrant workers who carried with them stories of the successful Gujarat model which they witnessed. It is a remarkable logic considering the fact that migrant workers from UP and Bihar form a sizeable workforce in western India and has been a target of regional parties like MNS and Shiv Sena since years now. 

Now let us come over to the eastern part of India particular the states of West Bengal, Orissa, Seemandhra and Tamilnadu which elected regional parties in their constituencies.This somewhere displays that people residing in the eastern part of India do not share the sentiments of the nation and are un-aware of the happenings in other parts of India. 

Here I would like to give an excerpt from a famous book titles 'India Unbound' written by the acclaimed author 'Gurcharan Das', it goes like "Draw a perpendicular from Kanpur to Chennai, the region on the right side of the perpendicular will take atleast 20 years to match the standards of the region on the left side"

The eastern states of Seemandhra, West Bengal & Orissa all fall under the region on the right side of the perpendicular and although North-East India can still be given a benefit for being distant, these states on the other hand form a part of mainland. 

The biggest challenge for the new government more than anything else would be to get these regions which continues to vote in favour of regional parties in the mainstream of Indian economy. Hilly States and North-East India received attention from the center but the eastern states continued to be ignored. 

Just before the election results the BJD offered support to BJP on grounds that it will award a special status to Orissa. With BJP getting clear majority in the Lok Sabha support of BJD is irrelevant however in the interest of the Nation and in the interest of people in Orissa the new government should keep its ego aside and seriously think of conferring Orissa with a special status and usher an economic revival of the status which is not just based on a few mining companies setting up shops there. This incentive will certainly play a vital role in bringing the people of Orissa in the mainstream of Indian Economy. 

Lavasa

Lastr weekend I traveled to Lavasa alongwith my family. For those who havent heard of Lavasa, its an attempt to create a town on the western ghats somewhere between Lonavala and Mahabaleshwar. Contrary to Lonavala and Mahabaleshwar which were saw organic growth as a hill station due to its proximity to Mumbai and Pune, Lavasa is being developed as a planned hill station which would have an organized town plans on the lines of the Italian town 'Portofino'

Towns and Cities in India traditionally sprung up due to trade. Be it ancient towns which fell on caravan routes or British towns which were ideally a major sea port or a major railway junction as we have seen in our earlier posts.

New Delhi was one of the earliest 20th Century settlement in India which had a planned city layout. It was then followed by Bhubaneswar, Chandigarh and Gandhinagar which were formed adjacent to business centers to serve as administrative capital of newly formed states which would suit the palette of Politicians and Babu's who found the present city too cluttered and inadequate to be state capital.

Lavasa on the other hand might have a political backup but nevertheless it is certainly not planned as an administrative center to govern a country of a state.

For scores of residents from Mumbai and Pune, Lonavala served as a hill station since the 2 cities has been linked, best visited during the monsoon season to have a feel of the western ghats when it is at its best. As its just a 2 hour drive from both Mumbai and Pune it became the port of call for couples and families alike who would instinctively decide to have an outing with no prior planning required.

More recently 'Amby Valley' was developed by the Sahara group which gave access to the High Networth Individuals of these 2 cities who found it too down market to mingle around with the bike riding crowd at the same time wanted to enjoy the easy access which Lonavala offered.

Amby valley boosted of an Air Strip which would transport you from both Mumbai and Pune airports in a matter of minutes. Houses which are available for a fortune and would be envied in the Page 3 circles of Mumbai.

Coming back to Lavasa it offers neither easy access of Lonavala nor does it have the natural charm of an hillstation like Mahabaleshwar. Not only is the entire town under construction it almost feels like a set of a studio which was been erected only to be pulled down by the next few weeks. It seemed like a un-used public urinal which has been installed by an affluent Sarpanch with his own money outside the village without taking the locals into confidence.

To build a town one needs trade. For trade to take place one needs a strategic location and incentive for traders to come and conduct commerce. With 4.5 hours drive from Mumbai its location is far from Strategic and the only people you see there conducting commerce there are those connected to the hospitality industry.

Although Lavasa might boast of recreation and water sports facility the Bird's eye view of Lavasa by a Helicopter, which was being advertised at the hotel reception had been non-functional for last 1 year. The water sports although reasonably well maintained was definitely overpriced. The virtual gaming arcade had equipment not less than 10 yr old. 'Grandmas Recepies' on waterfront served highly acidic slush and a chocolate cookie which would take 2 hands to break!

This is clearly a sign of a town failing to keep up with the expectations of visitors which came in through high expectations.

Like the tourist of this town even the service providers are temporary. With the native population completely left out of the economic activities even the manpower being brought in from outside Lavasa lacked commitment to provide good quality service.

I hope the founding fathers of Lavasa take some lessons from history and are able to establish a resident population which can connect with the city and make it their home. Only then can it be suscessful as India's 1st post-Independence Hill Station.

THE ROAD AHEAD

Marwari enterprise emerged from difficult times when a commercial enterprise was looked upon with suspicion and distrust not only by the government but also masses at the large. Post-liberalization ushered new opportunities which empowered members of different communities to take entrepreneurial ventures. As a result the role of Marwari enterprise became less relevant in present day economy wherein on floor knowledge of manufacturing operations or product knowledge are more important than just access to kinship network and access to credit.

India today is poised to be worlds 3rd largest economy by 2020. How can a community which has been credited to have given the Indian economy entrepreneurs generations after generations keep up with its values and name?

1. The suspicion for commercial enterprise in India post-independence reached its epic in 1970's when Income-Tax rates peaked upto a whooping 98%. It was natural for businesses to resort to dealings which by-passed the banking channels which resulted in entrepreneurs turning managers and manage all aspects of their business by themselves.

Today with Indian taxation laws being in par with their International counterparts it is no more required that a business evades taxes and under-value their sales. Infact it serves as a deterrent in valuation of one's company and effects ones credibility with banks.

As present day Marwari families gives good formal education to both boys and girls alike their skills are under-utilized in such an environment when all aspects of business are to be managed by the owner. In a globalized scenario when India had gained global competitiveness in various sectors being a good manager and attract talent to work in ones organization is a key to scaling up and growth.

2. Marwari enterpise has since long believed in capital valuation of their businesses by acquiring fixed assets which exist more or less in the form of NPA's in ones company. It is always healthy to have an asset which is working in favour of the company however higher capital valuation in the form of fixed assets defeats the purpose of business and shifts ones focus from one's core activity. Acquiring assets in the form of skilled manpower, brand value, better working conditions and good will is more important in scaling up a business.

3. Enterprise often rose in marwari community in form of proprietorship and partnership firms. The proprietor or the partners give a character to the company which defines it nature and culture in its workplace. In trading activity profits were driven by opportunism and speculation which depended on the risk the entrepreneur was willing to take. As heirs of these proprietor/partners came in they worked as apprentice and later formed their own firms.

In the manufacturing sector it takes years for one to build goodwill and SME's become knowledge centers which cannot be created overnight. Hence the need to re-structure the company comes in whereby the heir are able to join in the capacity of working partners and can gain benefit depending on the work they put in.