Today I happened to attend a seminar at which Mr. Prakash Gupta, Partner, Mckinsey & Co delivered a speech on Implications of Global Crisis on India. I thought I will reproduce the highlights of the speech in this post for the readers. I have subdivided the topic into different areas and have focused on bullet points rather than paragraphs.
Possible Outcomes of the Crisis
1) Quick Recovery: Improved psychology, Effective government spending, End of credit crunch.
2) Battered but Resilient: Innovation, Regulation
3) Stalled Globalization: Nationalistic Sentiments, Over-safe lending rate
4) Over-freeze: Ineffective policies, Prolonged pessimistic sentiments
How vulnerable is India?
1) Vulnerability of IT: Underestimated contribution of IT to the growth story
2) One-third of GDP is constituted by red-flag sectors
3) 25% of GDP by sectors –demand intact but capital problem
4) 34% of GDP by sectors-good demanded & well funded
Factors which can affect course of the crisis in India
1) Realty sector
2) Foreign Capital
3) Domestic Savings
4) Government Measures
Opportunities/Advantages for India
1) Capacity to attract capital (Relatively higher economic growth even in slowdown)
2) Government has headroom
3) Commendable financial regulation-RBI-conservative
What recession means for companies?
1) Overhaul of structure
2) New entrants getting bigger market share
3) Survivors extremely value creating for investors
4) Risk diagnosis & Scenario painting-Future Orientation
5) Cash Optimization replaces profit optimization
6) Acquisition or getting acquired
7) Opportunity to drive changes-‘Blame Recession’
