FY18 was feared to be a difficult year for business because of the anticipated disruption caused by GST. But as it turns out, we are closing the financial year on a relatively upbeat mood. After two years of tepid growth, the economy seems to be bouncing back. And that is what our ground reporting from 12 industrial clusters, across the country bears out. Small businessmen across several sectors are looking at FY19 with a sense of cautious optimism. This optimism stems from demand revival seen over the past quarter, while caution comes from rising input costs and other operational challenges. Rising raw material and labour costs are increasingly becoming a pressing issue for small businesses.
More importantly, the manufacturing sector is in a state of flux. In today’s age when the industry is looking to artificial intelligence and Internet of Things for answers, the inability of our institutions to keep up with skill requirements of the industry is a bane. The question is, could we leapfrog to a system where we no longer need the labour skills that were required for so long? If that, indeed, turns out to be the case, what happens to our large demography, how and where will they be employed profitably? This real and present danger already threatens India’s software services business, and there are no clear-cut answers.
For business owners, the immediate recovery is a matter of utmost concern, but the challenges for policymakers are much harder. They need to really figure out where and what India must focus on to remain relevant and competitive in a highly sophisticated, technology-driven global economy.
As for the Budget, the tax revision for companies with a turnover of up to Rs.250 crore comes as a relief, but the real kicker for the economy can only come in when the capex cycle turns. Several other announcements relating to the rural sector will probably help the social sector in the long run, but may not have an immediate effect on consumption, barring of course the intention to hike minimum support prices. Again, while that may put more money in the hands of farmers, one can’t be sure about how it will impact inflation and interest rates, especially as non-agri commodities, including crude oil are on an upswing.