My apologies if this begins a bit gloomily but I promise it will get better as you read along. Almost anyone you spoke to during the last few weeks of 2007 felt that year's outstanding performance by India Inc. and the Indian economy was unlikely to be repeated in 2008. GDP growth, which clocked 9 plus per cent for the second successive year, will almost certainly be lower next year. The stock market, which recorded a never-seen-before 38.99 per cent spurt in 2007, may enter a more sober phase next year. And, as rising interest rates, a strengthening rupee and an overall slowdown of the global economy begin to affect businesses, India Inc.'s heady growth during 2007 may not be replicated during 2008: the 30 per cent or more growth in profits that you saw in the last couple of years? Well, we'll probably have to learn to live with much smaller numbers next year.
Yet, there are trends that are unlikely to get reversed. Like Indian companies finally winning their place in the sun. Few trends stand out as much as the major global acquisitions that Indian companies made in 2007. True, the really big-ticket deals were by large Indian conglomerates-like the Tatas and the Birlas-but probably not as headline-grabbing were the global takeovers that smaller companies in auto ancillaries, information technology and even consumer products pulled off. This trend is here to stay. As this 16th anniversary issue of Business Today went to press, the odds were in favour of the Tatas' bid to take over the iconic Jaguar and Land Rover brands and an announcement was expected soon. In 2008, expect to see more such moves by Indian firms.
And while the stock market could sober up and corporate profits may slow down, we're not talking about winding back anything. Corporate profit could still grow 18-20 per cent; and many analysts are predicting that the Sensex will touch at least 25,000 by the end of the year with the Indian stock market remaining the magnet it has been for foreign institutional investors. Not bad, eh? Remember, I told you things will get better as you go along?
Still, we could do things to make 2008 a fruitful year. Let's begin with a few fundamentals. Like infrastructure. While a good beginning has been made by flagging off the airport modernisation projects and work that is apace on road building across the country, there is much more to be done. In power, by 2009-2010, India is expected to face a "peaking shortage" of 8.10 per cent. In 2007, two mega projects were kicked off for private enterprise-the Mundra power project to Tata Power and Sasan to Reliance Energy-but that is nowhere close to the estimated 100 gigaWatt hours that China added last year alone.
Healthcare and education are the two other fundamental factors that need all-out efforts. Large swathes of the population have no access to either of these. And no economy can ever harbour dreams of becoming a global economic powerhouse if the lot of its people does not improve. The spread of education is all that more important in a country where half the population is under 25 and every year millions are added to the potential workforce. Yet, ironically, organised businesses complain of talent shortage-precisely because of the lack of suitably educated manpower.
Finally, what about economic reforms in 2008? Expect little to happen on that front in a year that, politically at least, is just a run-up to parliamentary elections. So, if your wishlist includes a radical Budget in 2008 or announcement of a raft of sweeping probusiness reforms, you could forget about it. Instead, count on the spirit of enterprise, amply demonstrated by India Inc. in 2007, and 2008 will probably not disappoint you. Have a good year ahead!