Pinkerton Blog May 15, India has a rich history of economic and societal diversity. However, over the last few years, the threat landscape has evolved in India; a number of risks have emerged.
This report is based on a global perception survey covering various age groups, countries and sectors such as business, academia, civil society and government.
This report highlights risks of highest concern for doing business. A quick analysis of the risks for doing business shows that while the top global risks have largely remained stable there have been some significant changes in the context of India.
Catching up with global risk perception Results of the perception survey for India are more aligned with the global perception unlike previous year.
Three risks — profound social instability, failure of national governance and unemployment or underemployment have seen the most significant change.
Profound social instability is associated with prominent social movements or protests that disrupt political or social stability, negatively impacting populations and economic activity. In this risk did not even make it to the top 25 in the India survey.
It has come a long way to rank 2nd in Its global rank has remained unchanged at 5. Failure of national governance is a risk associated with the inability to govern a nation of geopolitical importance as a result of weak rule of law, corruption or political deadlock.
This has jumped to the 6th position from 24th in Its global rank has remained unchanged at 4.
Unemployment and underemployment is associated with sustained high level of unemployment or underutilization of the productive capacity of the employed population.
This was at rank 18 in and has moved to rank 2nd tying with profound social instability. It continues to remain the top most global risk for business.
Two risks which are now perceived to be much lower in the Indian context are in striking contrast with global perception. While globally this continues to stay at 8th position in India it has dropped from 6th place to 20th.
While globally it is stable at 3rd position it has dropped from 2nd to 16th position in India. RBI Governor recently made a public statement urging the government for better managing this risk. I am yet to find a very strong evidence in support of this drastic change in perception.
Trends to watch out for The report maps each risk with a set of trends that are inter-connected to it.
Looking at the trends interconnected with the top India level risks the following common trends stand out. Rising income and wealth disparity — This trend is connected most prominently to social instability and unemployment risks.
The fact that the top 2 perceived risks for Indian businesses are prominently linked to the alarming levels of inequality in India this is the most critical trend for Indian businesses to watch out for. Two most prominent risks interconnected with this trend are — failure of urban planning and unemployment.
This poses a real threat in a scenario where fewer organised sector jobs are being created to come to speed with the growing demand from growing educated middle-class working age population.
Increasing national sentiment — This is a trend linked prominently with the risk of profound social instability and unemployment or underemployment among others. India is experiencing a surge in the nationalistic sentiment among its people.
While the political merits and demerits of a nationalistic surge have been debated to death its impact on business risks is new. Rising urbanisation — This trend is interconnected with the risks of failure of urban planning, profound social instability, unemployment or underemployment, failure of critical infrastructure and water crises.
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