The path to export success; What's broken in government contracting; NPS; Resilience in a demand surge
The path to export success
For firms: India got a nice phase of export growth, during the pandemic. This was grounded in macro policy in advanced economies. That phase has come to an end. My column in the Business Standard today, Firm internationalisation holds the key, focuses on the reconfiguration of global production that desires diversification away from China. This is a unique and limited window of opportunity for Indian firms. It is different from filling orders in response to the demand surge of 2020 and 2021; it is the complex problem of becoming trusted vendors in global value chains. This requires a bigger role for strategy.
For policy makers: Should the government subsidise exporters? Should the government pick winners — the industries or firms which are likely to succeed? Should the government put up barriers against foreigners who compete with national champions? On 14 July, Prashanth Perumal hosted an episode of the podcast, Parley by The Hindu, with Biswajit Dhar and me, on these questions.
What’s broken in government contracting
In the `contract life cycle approach', government contracting is a pipeline that runs through four phases: I - Contract design, II - Contract award, III - Contract management and IV - Contract closure. We must measure the defect rate across the four phases, so as to prioritise resourcing, in the field of policy research, and in the activity of government contracting.
The most important contracting entity in the Indian state is NHAI. On 13 July, on The Leap Blog, Charmi Mehta and Susan Thomas have an article, Identifying roadblocks in highway contracting: lessons from NHAI litigation. They construct a dataset about NHAI-related litigation. Each court case is viewed as a manifestation of a defect in the government contracting process, and each case is attributed to a phase in the contract life cycle. They find that the hot spot is Phase III, contract management.
NPS
Workers tend to think that a state-backed defined benefits (DB) pension is attractive. Writing in The Print on 6 July, Renuka Sane reminds us of many governments in world history who reneged on their pension promises. There is greater certainty, in old age, of commanding an individual account that contains wealth that is derisked from public finance.
The policy process from 1999 to 2005 looked at the then-prevalent demographic projections, and made the decisions that gave us the NPS. Writing in the Business Standard on 18 July, K. P. Krishnan observes that the demographic outlook has changed greatly — in favour of the NPS reform.
Writing in The Print on 23 July, Pranay Kotasthane looks at the faulty foundations of decision making, which have hampered improvements in the defence HR process.
Resilience in a demand surge
At the heart of economics is the price system, and the price system is sometimes put to a stress test. Extreme surges of demand are observed across diverse domains — from ammo to medical oxygen to electricity. The price system is good at dealing with these. It does its magic, high prices rouse firms into action to produce more.
It is interesting to look deeper. What are the conditions under which an economy is able to mobilise a bigger supply response? How could defence planners create the private ecosystem that would better cope with surges in production of ammunition? I wrote More ammo: Improving resilience against extreme surges in demand, on The Leap Blog, on 13 July on these questions. For readers of ISOTR, this article fits right after “Going with the grain of the price system”.