Economic conditions directly impact HR as they provide a background to determine the recruitment, development & retention policy for the organization to meet it’s customer needs. Thane HR professionals got an excellent opportunity to receive an overview of the country’s changing demography & it’s impact on the third largest economy. On 18th March, 2016, Thane HR Group invited Mr. Prashant Jain, Executive Director & Chief Investment Officer, HDFC Asset Management Co Ltd (Popularly known as HDFC Mutual Fund) to share his take on the current Indian economic outlook.
Indian GDP Outlook:
Real GDP growth rate for India was around 7.5% in 2015 and Nominal growth rate was around 12%-13%. A nominal GDP will often appear higher than the real GDP, as real values are adjusted for inflation, while nominal values are not.
Referring to the image above, you will notice that Indian economy is growing at a static rate i.e. from 15% (1991-2000) to 14% (2001-10) to 15% (2011-15).
Why is Indian Economy Growing?
Every year, India’s population is increasing by 2% leading to a steady increase in the rate of consumption.
Large number of joint families are breaking down to form nuclear families. About 1% increase in consumption rate is experienced annually due to this reason.
Penetration Levels of Consumer Durables
Mobile phones which are just 15 years old in the country, have penetrated the 80% – 90% of Indian market. On the contrary, motorcycles & cars have been able to cover 40% & 8% respectively. This shows the growth potential that Indian markets still possess.
Due to more consumer product offerings, new items are frequently bought.
Outlook into Indian Equities:
Volatility in the Short Run
Markets give volatile returns in the first few years. However, as the holding period increases, the volatility come down to providing returns which fall mostly between 11% – 19%. This is because Indian GDP growth is around 15% every year.
Correlation Between Sensex & Equity
If profits grow by 20%, the value of company also increases by the same percentage. The value of the company is in correlation to the profits of the company. At the same time, we understand that Indian GDP growth & the growth in Sensex go hand-in-hand. This is because Sensex has the tendency to correct itself to be higher or lower based on the GDP growth.
Insights by Mr. Sharad Gangal, Executive Vice President HR , Admin, IR, Thermax
With one million new entrants joining the labour force every month for the next 20 years, Skill India has gained a corner stone importance. While, India’s biggest contribution comes from Service Sector, there is a need to leverage the Manufacturing industry that has the capability to provide employment to the increasing population. HR needs to be awakened and aligned to deal with the emerging Employee Relations in the country. He emphasized the below mentioned pointers:-
Awareness on ER is missing. it is rare to find a skilled ER/IR manager as compared to an OD or Comp&Ben expert.
Apart from Dunlop’s Systems Theory, we do not have a strong theoretical model in the IR field. There is a need to encourage research and more thinking in this field.
Contract Laborers are our responsibility. Organizations need to take proactive steps to further regulate the conditions of Contract workforce. One has to be judicious for the disparity between the different working units in the organization.
Today, workers lookout for income security as compared to job security. This is a critical reason for the employees not to join unions. Once direct communication between workers & management flourishes, unmerited union demands are tapered off automatically.
While a lot of tittle-tattle occurs on where to invest and when to invest, Mr. Prashant Jain suggested to enter in the mutual fund market especially when the bull does not seem that strong. Eventually, the head-strong bull will equate itself to the growing GDP. Moreover, if you are confused between the different funds, bet on anyone that has given consistent returns more than the market rate, over a long period of time!
About Thane HR Group
Thane HR Group was founded in the year 1996 with an objective of getting the HR Professionals staying or working in Thane District on a common HR platform. Over a period of 18 years, Thane HR Group had many HR experience sharing meeting. Thane HR has successfully arranged for more than 150 such programs, absolutely free of cost!
You can connect to Thane HR Group through the following website –