Importance of Private Players in the Country's Economy

Today, I read two articles THE DEVIL IS NOT REALLY IN RETAIL by Kishore Biyani & PRIVATE SECTOR NEEDS TO BE MORE AGILE by Prakash Nedungadi in ECONOMIC TIMES. Both the articles talk about the importance of the private players/private consumption in terms of domestic demand boosting which forms the major part of our GDP.

Although most of college mates might read ET, I am posting some highlights of the both the articles for the benefit of my other readers (not from IBA & non readers of papers). Interested people can browse through through the paper for full articles.
So here we go...

THE DEVIL IS NOT REALLY IN RETAIL by Kishore Biyani

Here Kishore Biyani talks about how Chinese package is different from any other country's package, how they are overcoming the global slowdown by boosting the domestic demand. Here are his some thoughts.

China & Taiwan, on the other hand, decided to give back some money to its citizens to spend by themselves, thereby creating demand for products in local markets, which in turn could boost economic activity and job creation.

Under a new policy announced in December 2008, the island’s 23 million people regardless of age or wealth were given 3,600 Taiwan dollars or around $165 as shopping vouchers. “The programme is aimed at boosting the economy and is expected to contribute to a 0.64% increase in 2009 GDP,” explained Premier Liu Chao-shiuan.

The core belief behind this programme was government spending is not effective due to leakages and delay in execution, whereas private spending is far more efficient in boosting economic activity, creating demand for goods and services and raising employment levels. The idea of the voucher and stimulating growth through private consumption has been powerful enough for even the governments of Japan and Germany to consider such a move.

In India, private consumption demand has been the key driver of economic growth, with private final consumption expenditure contributing over half of India’s growth in the past decade. In fact, almost 68% of India’s GDP is accounted by private consumption, as against 39% in China, making the case for stimulating the Indian economy by growing private consumption far stronger than anywhere else in the world.

PRIVATE SECTOR NEEDS TO BE MORE AGILE by Prakash Nedungadi

Here he talks about how the private players not doing their moral responsibility of job. How the problems are getting bigger due to irresponsibility by these players. I am not posting those reasons for problems but I am posting the solutions he has mentioned in his articles as we want to be part of solution rather being part of problem!!!

First of all, organisations should hold on to people...retrain, redeploy, re-wage, but do not lay-off! Secondly, reduce prices substantially and immediately wherever possible. A 20-25% drop in prices would initially appear to contract the economy. In fact, it will result in a boost in real spending, start fuelling investment and spur sustainable growth.

Thirdly, let competitors, consumers, suppliers and other stakeholders know what you are doing transparently and, understanding the bigger picture, collaborate much more strongly.

Fourthly, innovate — fast! This is the secret of all step-change in demand growth and wealth-creation. Finding a different way, a better way is more important than ever, not cutting down innovation spends as many seem to be doing.