India, the second fastest growing economy in the world, has demonstrated, with great assurance, a creditable growth rate in the last decade. It appeared , at least until the end of last year, maintaining a growth rate higher than 9% was never in doubt. Large number of economists and investors, both local and global, believed in the India Story. Further, many even believed that Indian economy is largely insulated from global trends, and such insulation stemmed primarily from a strong domestic demand.

The first of the blows, weakening the credibility of the India story, was the sub-prime crisis in the US. In the wake of economies world-over tumbling down, Indian markets too seemed to be drawn into a vicious downward spiral. The second blow came in the form of a runaway rise in global crude oil prices which have gone up by 62.5% in the past year; though there are signs of global crude prices softening, the impact on the economy is distinct, loud and definite. The third blow, whether it is consequent to the galloping crude prices, or a force of its own, is the runaway rise in prices of food, steel and other commodity prices. The prices of raw materials such as steel and cement have increased almost by 40% over the last year. In the week ending August 15, inflation in the country hit a 13 year high of 12.63%. The fourth blow is the depreciation of the rupee; albeit to some sectors such as the IT, such depreciation is indeed a windfall gain. Governments, both central and state, have swung into action in many ways. Price controls, import and export controls have been set in place. To sponge off liquidity, the RBI hiked the CRR and repo-rates by 8%, resulting in a situation of great liquidity crunch.

The challenges to firms in the current times are by no means easy; in some sectors it appears indeed daunting. Firms, across sectors, face a multitude of top-line and bottom-line challenges. With depleted spending power of consumers, sales seem to be dwindling. Worrisome to some firms is the consumers’ sagacity to hunt for maintaining value with decreased outlay. With increasing costs of inputs, in terms of raw material, labor and interest rates, the bottom-line is under tremendous pressure. Capital investments and developmental plans have been put on hold or even cancelled.

Firms appear to tackle the situation in a variety of ways. While some firms have resorted to cautious price hikes, some are wary and are perhaps presumptuously absorbing costs. Advertising outlay has been slashed; product mix is being rationalized; existing projects are being hastened to the finish-lines so that the gains from efficiency neutralize the loss from cost increases. Firms are pruning workforce; reach and location of service are being curtailed.

Is India in a quandary? Do our industry captains have the right solutions?

INSIGHT ’08 - “Management in Challenging Times” converts these depressing socio-economic signals of the recent times into an opportunity to discuss and evolve solutions.