The paper was presented by Prof. Poonam Kumar at the 11th International Conference on Corporate Governance & 2nd Global Conference on Sustainability on “Sustainability: Opportunities and Challenges” in London on October 12-14, 2011.

In her paper Prof. Poonam Kumar addressed the challenges faced by the global economy as it sought to rebound from the 2008-09 recession. She pointed out that, even though the World Economic Outlook recently published by the International Monetary Fund (IMF) had predicted a global growth averaging about 4 percent in 2011 & 2012 down from 5.1 percent achieved in 2010, the figures indicated that growth was not evenly distributed across countries. Today, the world economy faces a major challenge in seeking to bring about equitable and long-term sustainability in growth. Can the challenges being faced by the world economy today be seen as opportunities for entrepreneurs to find sustainable solutions? In her paper Prof. Kumar points out that, as long as development challenges exist in the economy – issues of demand and supply, conflicts on climate change, limited supply of oil and energy – there will be opportunities for entrepreneurs to find sustainable solutions to meet these challenges. However, she emphasises that we need to remember that the collapse of some of large corporate entities where hundreds of thousands were employed raises the questions on the standards of Corporate Governance that exist the world over. This makes it imperative that we return to supporting bankable, sustainable projects and nurture corporations and business with strong foundation that are well versed to be managing their risks. It is not all about regulations but some basic ethics of conducting business focusing on the sustainable value that businesses will generate for their stakeholders and for the society at large.

You can access the paper on the GSE Research website link http://bit.ly/I1XIYn. Alternatively you can copy past the following link of your browser http://www.gseresearch.com/content/paper/10-5848-iod-2012-00016. Your comments and feedback are welcome.

Since the 1950s India, being rich in Thorium, had envisaged a three stage programme of nuclear power development, which was thwarted by the slow progress in the First stage for reasons already mentioned. With the lifting of nuclear trade ban on India since 2008, plans have been drawn up to accelerate expansion of nuclear power generation capacity in India, with a view to eventually exploit Thorium based technology. Thus, in the second stage of development the critical elements are; (1) Indigenous development of fast breeder reactors (2) Increase in the number of light water based nuclear power plants with foreign collaboration (3) Development of Advanced Heavy Water Reactors indigenously.

New projects tentatively identified for the Twelfth Plan so far envisage a further capacity expansion by 18.1 GWe (See Table – 3). Of these, 10.3 GWe capacity expansion is to come from international co-operation. There is no certainty about new centres mentioned in Table - 3 as many other potential centres have also been identified and talked of.

Thus, the investment initiatives taken during the Twelfth Plan would eventually lead to the gross power generation capacity to be augmented to 25.4 GWe. We say ‘eventually’ because not all projects would be completed by the end of the Plan period (March 2017). Besides, the implementation of projects could slow down on account of a number of impeding factors. While some of factors are traditional like adequate supply of fuel (insufficient tie-ups for stable supplies of Uranium) / technology (for example development of fast breeder and advanced heavy water reactors), there are also factors of recent origin.

New Factors Inhibiting Growth in the Nuclear Power Sector

A number of new factors have emerged in the past couple of years that could slowdown India’s nuclear power expansion programme.

An important factor that could hamper expansion dependent on international co-operation is the passage of “The Civil Liability of Nuclear Damage Act, 2010”, which enables the nuclear plant operator to seek compensation from nuclear plant suppliers in the event of an accident. This has inhibited particularly US based companies, who have sought seek amendments to law and / or greater specificity with regard to the rules relating to liability. This may slowdown implementation of international projects.

A collateral impact of this Act is likely to be on the balance sheet of the main nuclear operator in the country – the NPCIL- as it would have to provide for possible future liabilities out of its profits and reserves. Thus, funds available for investment would be constricted. At some point of time in the near future government would certainly have to permit infusion of private equity into NPCIL to enable / facilitate investment.

Another institutional change in the offing is greater regulatory independence sought via “The Nuclear Safety Regulatory Authority Bill, 2011”, which when enacted would lead to the dissolution of the Department of Atomic Energy controlled Atomic Energy Regulatory Board (AERB). Greater independence of the regulator could delay approvals, though many experts feel that the new regulatory body would not be completely free of executive control due to certain debilitating clauses.

The matter of greatest concern, particularly in the aftermath of the Fukushima accident, is the concern of citizens, residing in the neighbourhood of proposed nuclear power stations, that this exposes them to greater risk and will impair the environment / result in scarcity of water that could have an adverse impact on their economic well being. This has led to agitations as in the case of Jaitapur in Maharashtra where Areva is to set up Light Water reactors. An additional grievance is the compensation offered by the government and resistance to the acquiring of agricultural land.

While usually barren land is acquired for such purposes, in some areas agitators have claimed that government is acquiring irrigated / triple cropped land. For instance, in Gorakhpur village in the State of Haryana, where NPCIL is planning to set up two power plants, agitators have made these claims.

With the national elections round the corner, in 2014, such agitations might gain increasing momentum over time.

Conclusion

In the prevailing political economy environment of political brinksmanship finding suitable land would be a major stumbling block in India’s quest for nuclear power expansion. It appears that if the government is serious about this sector it would have to identify isolated areas of government owned land to build new atomic power plants. It would also have to adequately / more generously compensate citizens living in the vicinity and who could be adversely affected.

Generosity of pre-project compensation cannot, however, be the sole means for expanding India’s Nuclear Power generation capacity. In the wake of Fukushima, safety of the environment and human lives is of paramount importance. Therefore, creating institutional mechanisms to ensure the highest possible safety is of paramount importance. It might be convenient to make the operator both run the plants and look after safety, but the wiser, though difficult, course would be to create a Regulator free from fear of coercion from the executive – perhaps, only answerable to the people’s representatives in Parliament.

In mid 2009 Mega Ace had conducted a detailed research study on the future of Nuclear power sector in India. Those were the euphoric days after the Nuclear Suppliers Group had eased restrictions on nuclear trade imposed on India since 1974, foreign governments were signing agreements with the Government of India on nuclear sector co-operation and NPCIL, the sole nuclear operator in the country, was besieged by foreign companies seeking a share in India’s nuclear power generation programme. In that atmosphere it seemed fairly credible that there would be accelerated growth in the nuclear power sector.

Based on the existing generating capacity (2009) of 4120 MWe spanning 17 units and the ongoing projects we had estimated that by the end of the Eleventh Plan (March 2012) the nuclear power generation capacity would be augmented to 7280 MWe spread over 23 units. However, there has been an inexplicable slowdown in capacity expansion and nuclear power generation in the Eleventh Plan will be no more than 4780 MWe from 20 units. Thus, 3 projects under construction with gross generation capacity of 2500 MWe have spilled over into the Twelfth Plan period.

The Investment in new projects during the Twelfth Plan period (April 2012 to March 2017) has not yet crystallised. However, based on information published from time to time, by the DAE and NPCIL we may make some guesses.  Should investment in these projects be commenced during the ensuing Plan period, it is fairly certain that India might be able to attain its vision of 20 GWe or more of power generation capacity by the end of the Thirteenth Plan.

The growth of the Nuclear power sector in India during the next two Plans, may, however, face obstacles that may slowdown project implementation.

Nuclear Power Generati

Food processing and economic development go hand in hand. Alongside economic development, as urbanisation and incomes grow and as the pace of life changes, lifestyles alter generating a demand for a variety of Processed Foods. In India, with the recent burgeoning of relatively prosperous urban middle classes the demand for processed foods is bound to grow. Taking into account this factor the government of India is trying to encourage investments in the food processing industry, both domestically and from foreign sources.

In this write up, however, we look at the food processing industry from the perspective of exports and outline some of the problems and policy issues that affect this sector. Perhaps, this sector lacks the sophistication and range of goods that this industry serves in advanced economies.

Currently, the food processing industry contributes roughly in the range of one fourth to one third of the overall food market in India and displays volatility in output. This volatility may be understood in the context of India have a large population and variability in agricultural output from year to year. This variability naturally affects Indian exports.

Major segments of Processed Foods exported from India

The major segments of exports as classified by the Ministry of Food Processing of the government of India cover 14 broad categories – comprising of Dried and Preserved Vegetables, Mango Pulp, Other Processed, Fruits and Vegetables, Pulses, Groundnuts, Jaggery and Confectionery, Guar Gum (cluster Bean), Cocoa Products, Cereal Preparations, Alcoholic Beverages, Milled Products and Miscellaneous Preparations.

Destination of processed Food Exports

Processed foods from India find their way to countries across all continents.  However, a lot of processed foods are exported to countries in the immediate neighbourhood like Bangladesh, Nepal, Pakistan and Sri Lanka. Other important importers are Russia, USA, UK, Germany, Netherlands, Indonesia, Saudi Arabia, UAE and many Asian and African countries.

Export Trend

India’s exports of processed foods have shown great variability both in terms of volume and value. This is due to price as well as output fluctuations, which may not always occur simultaneously. The table below provides the recent trend in India’s export of processed food alongside the top importing country in the particular broad group.

Exports		(In US $ Million)
Processed Food	2008-09	2009-10	2010-11	Top Importer
Jaggery & Confectionery	435.87	49.17	766.95	Bangla desh
Guar Gum	291.14	239.07	616.92	USA
Groundnuts	269.40	300.79	459.40	Indonesia
Other Processed Fruits / Vegs	298.22	302.85	288.74	USA
Cereal Preparations	239.32	213.80	269.15	USA
Miscellaneous Preparations	128.62	146.62	191.77	USA
Pulses	117.91	86.14	187.17	Pakistan
Mango Pulp	163.69	157.09	178.55	Saudi Arabia
Alcoholic Beverages	117.95	124.35	173.35	UAE
Dried & Preserved Vegetables	107.93	112.25	113.40	Russia
Milled Products	17.68	27.84	35.40	USA
Cocoa Products	18.27	20.42	28.85	Netherlands
Total	2206.00	1780.39	3309.65

Scope / Problems / Solutions

There is tremendous scope for this industry in India. The major problem with food processing in India is the low productivity in the agricultural sector and fluctuations in output from year to year. Therefore, anyone focused on exports has to ensure a steady supply of inputs. One method adopted is contract farming where the producer provides inputs for stable output. Since India has large domestic demand, exports often have to suffer.

Overall the food processing in India only has a future if the policy focus of government is to improve productivity in the agricultural sector, getting remunerative prices for farmers and improving the storage infrastructure across the country.

Read the latest issue of the Update on Indian Economy February 2012

For India Inc, the past decade has been one of fast – paced development with increasing top line growth and revenue inflow. If the nation can sustain an annual growth rate of 8-10 percent in the coming years, India will be rightfully acknowledged as a major economic superpower. However, to sustain the growth momentum by increasing productivity and to enable competitive growth, the industry is facing a challenging task – the lack of skilled manpower. Compared to countries like Germany & Japan, where more than 75% of the total workforce is skilled, and South East Asia with a skilled workforce of 85%, only 5% of Indian workforce is skilled.

Labour in India: Dividend or Deficit?

Between 2001 – 2026 India’s population is projected to increase by 371 million; about 83% of this increase will be in the 15-59 age group. In the next 15 years, as a vast population enters the working age group, it is expected that they would be setting up their own households and consumption unit. A relatively young population also implies declining dependency ratios and higher saving rate. Together it can have a positive correlation on per capita GDP growth as witnessed in countries like Japan (1950’s) and China in (1980’s). With India’s workforce growing annually at around 2.4 % the requirement is far greater.

Employment elasticity in India is very low, at around 0.15 according to the Planning Commission. This means that every 1 % growth in GDP results in only 0.15 % growth in jobs. So even if we grow at 10 % in the next 15 years, we would still be creating at least 100 million less jobs than the addition to the workforce by 2026.

Next is the quality of jobs created. In India, the quality of majority of the jobs created is extremely poor. This is born out of the fact that roughly 92 % of the workforce is employed in the unorganised sector. They remain outside the purview of labour legislation. Thus bereft of Social Security benefit, credit access, training etc. As a result, they perhaps earn enough to make sustenance, but not enough to pull their families out of poverty levels.

National Sample Survey Organisation (NSSO) data shows that over 233 million Indians will still not have access to formal education or would not have crossed primary school level in 2020 while only 164 million will complete higher secondary education or more of which barely 88 million will be graduated. The education sector is characterised by poor infrastructure, low quality teaching, irrelevant content, missing courses and a host of other malaise.

The National Skill Development Council (NSDC) has been set up to promote skills development by providing gap funding and equity investment to build scalable, for-profit vocational training initiatives. As projected by the Human Resources and Skill Requirement in Education and Skills Development Sectors in 2022 Report by NSDC, the existing skills gap is slated to increase the demand for vocationally skilled people. NSDC has mapped skill gaps in 20 high-growth sectors and the unorganized sector till the year 2022 which will add to the demand for skilled people anywhere between 25 % and 85 % depending on the nature of the industry. The report further states that about 12 to 15 million people are expected to join the workforce every year. Given India’s existing skill development capacity of about 3.4 million, the urgent need to enhance skilling and technical education capacity is evident.

While the private players in the skilling industry see this opportunity and are working towards increasing skilling capacity, they have a natural inclination to zone in on the proverbial low hanging fruit. The numbers to be achieved are huge and the current capacity or extent of work done in the area so far does not still look promising enough for the industry to reach the 500 million mark by 2022. The reality is that collectively India was able to skill only around 25-30,000 people last year which poses a question on whether the current momentum and scale can meet the skilling target of 50 million per annum for the 75 year old India of 2022. There are a number of policy issues that will need serious consideration if the skilling eco-system should to be able to be able to reach that kind of scale.

Genesis of the Skilling Challenge

The genesis of the sheer audacity of numbers in this industry first stemmed from Dr. C.K. Prahlad’s prediction in 2007 that double-digit growth in India will see light only if the country is able to make available 200 million graduates and 500 million skilled people by 2022. As various stakeholders – mainly Government and industry - have come to share the same view, this has created an undoubted necessity to scale up vocational education to cater to India’s demand for higher economic growth, demographic changes, and the obvious demand-supply mismatch in available skills in many sectors.

This skilling challenge is further magnified by the fact that 70 % of this population falls in rural and tribal India. The numbers being huge, solving the same is impossible unless there is integration of skill development and the formal education system. Moreover, it demands a collective effort by varied government initiatives like MES (Modular Employable Skills), PPP (Public Private Partnership), National Vocational Qualification Framework and large and small scale private players. The scale and speed at which action must be taken in this regard makes this one of the larger entrepreneurial opportunities.

NRI Award Presentation Video

At a time with the Indian government is seeking to assure the international supermarket giants that its retail reforms are well on course, it would be interesting to analyse the various arguments that have been placed as to why India should open up its retail sector to foreign players.

Growth and Infrastructure: India’s GDP has been growing at a favourable rate of 7-8% since the last 4-5 years and it is seen as one of the world’s fastest growing economy. According to Technopak the Indian Retail economy is bound to grow to US$ 94.4 billion by FY12 and India has all the potential needed to support this growth. The growth has percolated down to Indian consumers in both rural and urban areas who are consuming more than ever before.  Furthermore, the Indian government has been providing a major boost to Indian infrastructure making investments in roads, power, and metro. These facilities will help retailers attract Indian consumers and provide them the incentive to “stock-up” on a periodic basis.

Untapped Retail Sector Potential: According to a PWC study the retail sector is expected to record healthy sales in 2010-11 and grow by 10.2% in 2011-12. The sector’s PAT (profit after tax) margin is expected to expand over the next three years on account of a faster rise in income vis-a-vis expense.” Further the study claims that India is ranked as one of the world’s most exciting retail destinations. The study says that India’s retail sector is worth an estimated US$350 billion and is growing between 30% and 40% per annum.

Demographic dividend: India’s consumers largely belong to the middle and lower economic strata of society, and both these segments would prefer shopping at multi-brand retail stores which provide them a wide array of price points and options in each product category. A majority of retail companies, 33.6%, cater to the customers falling in Rs 100,000 to Rs 500,000 income bracket, followed by 26.2% companies catering Rs 500,000 to Rs 1,000, 000 income brackets, both of which are growing segments in India.

Expansion of Malls and Shopping Centres: Malls have sprung up in every major city in the nation and many people visit malls to shop, eat, watch movies, and “hang out”. Organised retail, or large chains, make up only 6% of the market but is expanding at 20% a year. This is driven by the emergence of shopping centres and malls. While rental costs have remained a major concern for retailers, rentals now being negotiated on a revenue-sharing basis which has reduced the fixed up front costs for retailers.

Need for Geographical Diversification: Foreign players have deeper pockets and have the ability as well as the need to make continued investments to expand. Many retailers face increasing margin pressures in Western regions and the Chinese and Japanese markets are slowly reaching towards saturation point. In this context, it makes sense to invest to invest in an economy such as India which is growing at a fast pace, has increasing urbanization and has a favourable consumer base.

Scope for Margin Improvement: The Indian markets see a series of middle-men in the retail chain. By entering the Indian market, these retailers can apply best practices in supply chain management, keeping intermediaries to a minimum and enjoy higher margins while competing with the kirana stores

Exports: Research has shown that expansion of retail sector has led to a spurt in exports growth in those economies. Chinese retail exports surged by 60 billion USD annually after opening up the retail sector, Indian exports hover at around 1 billion USD. Retailers see India as a huge base to export and meet requirements elsewhere.

Cheap Labour: This may be both an advantage as well as challenge. While there is availability of cheap labour in India, the lack of skilled labour may pose a challenge, and there may be need for training and development of labour to manage advanced retail chains

The political compulsion against opening of retail FDI, especially in the current inflation stricken economy has been a careful bet for the government as it fears to hurt the sentiments of the large number of middlemen, farmers and the indigenous community of mom-and-pop stores or the kirana stores.

However, the big question that remains – would foreign players be actually serious about expanding in India on a large scale. So far India has seen some foreign players enter the market as single brand retailing through the JV route. Many of these foreign players are basically into the apparel and accessories segment for that is where Indian urban consumers see the need to pay a premium for a foreign brand. But with changing trends in the Indian urban and rural society, which this changing patterns impact the need for expansion of retail in Indian market.

Participants from Shailesh. J. Mehta School of Management, IIT Bombay

Organised by Rotary Club of Bombay, the Annual Rolling Trophy Competition is sponsored and managed by Mega Ace Consultancy a leading strategic advisory services firm. Titled “Next Generation Business Leaders” the Competition has been an occasion that lets management students put on their thinking caps and argue their case before an esteemed panel of jury members. Conceptualised and organised though the efforts of Prof. Poonam Kumar, Founder Chairperson of Mega Ace Consultancy who is also the Chairperson of the Management Education Committee of the Rotary Club of Bombay; the competition seeks to encourage the spirit of strategic and insightful thinking among management students. Since 2008, the Competition has seen an overwhelmed participation from the various B-Schools from Mumbai and Pune region.

Symbiosos Institute of Management Studies, Pune

Through the 30 minutes of presentation, the participating teams are objectively scrutinised on marking parameters which include grasp of the subject, conceptual approach, and conviction to take a position apart from presentation skills.

Welingkar Institute of Management Development & Research, Mumbai

K.J.Somaiya Institute of Management Studies & Research

Narsee Monjee Institute of Management Studies

Among the other finalist teams were Shailesh J. Mehta School of Management, IIT Bombay; National Institute of Industrial Engineering, Mumbai and Narsee Monjee Institute of Management Studies, Mumbai. The case study topics presented by the participants included:

• FDI in Retail- Will it kill Local Business
• Skill Development in India: Meeting the Demographic Challenge
• Healthcare Development: Reaching the Poor

Sydenham Institute of Management Studies Research & Entrepreneurship Education

In her concluding remarks, Prof. Poonam Kumar stated that, “the world economy is going through a very challenging phase”. She urged students to continue thinking out of the box. “New problems and crisis demand new solutions” she pointed out. “As the world economy goes through the present challenging phase; a new breed of innovations will bloom and a new generation of business leaders will emerge” she told the participating students. An observation shared by the other eminent Jury members who included Rtn. Mr. Shailesh Haribhakti, Rtn. Ms. Tarjani Vakil and Rtn. Ms. Roda Billimoria. The Jury called upon the students to ensure that fresh ideas are also backed with good execution skills. “India has attracted global attention creating new opportunities that demand good and creative leadership skills”, they observed.

The prizes which include a rolling trophy, certificates and cash awards were handed over to the winners at the weekly meeting of the Rotary Club of Bombay on Tuesday, January 24, 2012.

Judges- Rtn. Mr. Shailesh Haribhakti, Rtn. Ms. Tarjani Valki, Rtn. Prof. Poonam Kumar, Rtn. Ms. Roda Billimoria

Participants of the Fourth Annual Rotary Club of Bombay and Mega Ace Consultancy Rolling Trophy Competition for Management Studies, was held in Mumbai on December 19, 2011 along with the Judges and Trophies

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