Expanded and inclusive approach in Planning & Strategy
Many see the new approach in Planning Commission as old wine in a new bigger bottle! It is obvious that role and responsibility will be the same, the differentiator should be in the deliverables (with well-dedined KPI/KRAs) and accountability for ensuring execution of set vision targets. The erstwhile Planning Commission was seen to be advisory in nature focusing on (ideal) vision statements without being in sync with (delivery and) execution capabilities; hence the strategic shift from top-down to bottom-up approach!
The focus will obviously be on macroeconomic fundamentals - growth, inflation, current account deficit and fiscal prudence. All these are impacted from economic demand-supply and financial cost-benefit dynamics. There is need to build robust infrastructure across monetary, financial, legal, labour etc to make the economic, financial and business environment easy for doing business for investors and consumers. All these combined will lead to creation of opportunities seen good to acquire by domestic and foreign investors. Needless to say, public sector should lead from the front in the initial stage for private sector to follow!
It is indeed a different approach and it is early to make judgement on the performance and efficacy. It is important to build linkages between this strategic unit and tactical & execution units to ensure that what is planned is translated to ground-level impact and economic benefits. Indian system is stuck in steep upward slopping pyramid shape; be it economic efficiency or private wealth, with heavy base with inefficient business entities and individual poverty. The need is to crush the pyramid from the top to build formation (and shape) of large belly with upward/downward slopping triangle, so that majority of the population (enterprise or individual) stay at the belly to ensure long-term sustainability in consumption and investment.
PSU banks transformation, key to success!
PSU banks (and few large private sector banks) own (and control) more than 90% of market share in the Financial Services sector. In this group, the few large private sector banks are strong in terms of overall productivity and efficiency (measured from Return on Assets and equity) and command huge investor acceptance (measured from Book Value to Market Cap and Market Price to EPS multiples). The agenda is why not replicate what the few large private sector banks have done to establish investor confidence since their inception in 1994?
It is not rocket-science but the clean-up (and transformation) has to begin from the top - promoters and strategic executive leadership. The Return on Assets is derived (at the numerator) from aggregate of Net Interest Income, Other Income, Cost of operations and credit loss, while (the denominator) the Risk Weighted Assets is managed with good mix of assets linked to capital usage versus the yield/return. The management of these key parameters differentiate the laggards (PSU banks) from the leaders (new private sector banks). It is irony that those who command size are inefficient and those who are systemic irrelevant are highly efficient! The exercise begins with "gyaan" session, but the success depends on ruthless execution, taking cues from well-run private sector banks.
It is good that key issues concerning the Indian economy - Planning & Strategy and Financial Services sector (the facilitator) are being addressed simultaneously. At this point, I could only wish good luck (and God speed) to Narendra Modi & his team! It is indeed a great beginning into 2015 and stake-holders are in wait-and-watch mode to see transformation of the efforts into tangible beneficial impact!
Moses Harding
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