Reasons for optimisim
By Dhaval Valia
 There is a lot of apprehension and pessimism in the channel about the present and the future and rightly so. But, to me the future isn’t as negative as what many believe it would be.
In fact, I am optimistic about the future. In my estimate, by early February, we could see revival of demand, of course nothing comparable to what we’ve been accustomed to, but enough to sustain business.
Till September, despite what was going on in the US and Europe, Indian businesses were fairly optimistic about the future and aiming at a GDP growth of 7.5 percent. Even now, the most conservative analysts are predicting the Indian economy to grow by 5 percent in 2009, faster than any other country in the world.
The acute liquidity and credit crunch in the market today has been the result of Indian financial systems’ knee-jerk reaction to the meltdown in the US financial systems. Indian banks and financial institutes have enough funds and liquidity to sustain the forecast GDP growth. For now, the financial institutions are taking a very cautious view, but by January, with a little pressure from government, we would see lending from banks to resume.
The role of government in reviving business and consumer confidence will be critical. And I believe the government will not disappoint. With general elections in May, the government will try its level best to spruce up the economy. It has already announced an economy stimulus package, which, analysts say, would boost the GDP by 0.5 percent. More such boosters are expected leading to the elections.
IT distributors expect the credit payment and inventory situation to ease out by January. Currently, everyone’s focus is on payment collection and inventory disposal. Once that happens, the channel can focus on charting out strategies for demand generation. Industry growth targets will surely need to be recalibrated and new marketing techniques will have to be used to identify latent demand and to convert that into business.
This is not to say that every thing will sort out easily and positively. The journey over the next six months will be painful as the channel will witness defaults and losses arising out of inventory clearance. Few may even go out of business, but that’s the cost the industry must pay to get the house back in order.
What’s your outlook? |