In
spite of the GDP growth of 4.9%, most Indian industries are unhappy
including the printing and publishing industry. The
reason is that GDP growth below 5% is easily absorbed by our existing
capacities. Since the majority of our industry grows at twice the GDP
rate, even 10% growth in print and packaging is easily absorbed since
the installation of even one new automated multicolor press adds
capacity exponentially. Even where two new presses replace three old
presses, new capabilities and efficiencies are created that can
generate far more value than the depreciated equipment. So if you
grow at all, your capacity grows exponentially, it is very difficult
to moderate and balance expansion unless you build and populate a
completely new plant. And new plants, even if an old one is shut
down, also mean large increases in capacity.
Another dimension
of new capacity creation is that it tends to be at the high end. Very
few printers are able to resist the temptations of new technology for
automation, coaters, UV curing and other features if they are buying
a new press since the whole purpose of the purchase is to
differentiate yourself from the market. Demand for high value
commercial printing with add ons such as special UV coatings,
foiling, embossing, diecutting and personalization does not keep up
with demand in the middle part of the market such as book printing.
Many medium and
large commercial printers have tried to rationalize their growth by
adding digital printing, book printing in addition to the marketing
and promotional collateral work that they traditionally printed. Each
of the big printers has built up expertise in several niche areas and
some have done this in exports. However, there is no question that
barring some unforeseen boom in the industry, there is every
likelihood of more presses in the metros closing down just as new
print businesses in Tier 2 and 3 cities continue to grow.
Elections and print
In the earlier
days of our democracy, let’s say much before the economic
liberalization of 1991, one could point to a multicolor machine in
the pressroom and say that it represented the by-product or profits
from the political posters of such an election. In those days,
respectable printers generally added one big used machine for every
election they worked for.
In
the 21st century, elections
are associated with high spending on the media – print, television
and outdoor and more recently on public relations and social media.
Some estimates claim that the Rs. 10,000 to 15,000 crore media spend
of the 2009 general election will likely grow to Rs. 30,000 crore
(including parties, candidates and government expenditures) in the
current general election. There are various estimates on how much of
this will be spent on print versus television advertising. Although
it is clear that the major political parties have spent considerably
on print advertising (as much as a 10% boost to ad expenditures) this
spending has not really lead to major plant expansion by newspaper
publishers. To print more color pages, some color towers have been
purchased and added to old machines, but not as many as the
manufacturers had hoped and few new presses have been added just for
the elections.
As
far as whether the elections have boosted the economy, there are
divergent views. There are reports of money being spent on air
charters, automobiles including SUV’s and even on liquor, all of
which act as a kind of economic stimulus since the money is said to
pass through efficiently without sticking too much on the way.
“Election spending provides a very sizeable boost to the economy.
Traditionally we have seen it adds 0.2-0.3% to growth,” Pronob Sen,
chairman of the National Statistical Commission reportedly told the
Economic Times in
mid-March.
Other
reports insist that elections actually slow down the economy. An
analysis of key variables in Mint
convincingly shows economic activity slows down ahead of an election.
The study that looks at as many as seven election years in the past
two decades shows that economic activity loses pace every time there
is an election in spite of the increase in government spending in the
average pre-election year. It points out that steel consumption in
these years falls by 6.45% in comparison to other years in the past
two decades. The front page report asserts that government spending
ahead of the polls in such years is largely wasteful and
inflationary. The report states that the year preceding the current
general election has been worse than that of the other six or seven
pre-election years analyzed over the two decades.
Where there is complexity, there is
generally value to be added.
Naresh Khanna from the edit-blog page of April 2014 issue Indian Printer and Publisher
