27. Tracking the State of Health of the Economy

For any economy, it is vital that we track the right metrics to assess its state of health. It is also important that we are able to visualise the data captured in this context, with the right research and analysis approach, in a manner that leads to better planning and better outcomes.

As the economic engine chugs away, under the aegis of an institute like, a national statistical institute, data collection should happen rigorously at various levels (a trade block level, country level, local level and hyper-local level etc.,)

Consider the Deming cycle – PLAN-DO-CHECK-ACT to track the economics.

1.      PLAN PHASE:

The involvement of planning commission, budgeting, the strategies involving micro-activity networking and block level integrations, propping up the systematically important businesses (SIB) at a trade block level, country level, local level and hyper-local level etc., fall under this phase. Please note that the nature/size/attributes of SIBs tracked will change for different levels of tracking (trade block/country/county/cities/towns/villages). For leveraging economy of scales in SIBs, at the lower ends, we can consider strategies like co-operative development (for example, in an agricultural centre, co-operative development can span the whole chain of production, storage, distribution and consumption). For leveraging efficiency and effectiveness, we can consider forming consortiums at the higher ends of the SIBs.

2.      DO PHASE:

This is where the rubber meets the roads. The four major sectors (Services/Manufacturing/Agriculture/Harnessing Natural Resources) of the economy take shapes as various economic activities. Business, community and political leaders at various levels of the authority should come together and after the thorough analysis of the strengths and weaknesses of the area under purview, should plan/guide the activities of the economic engines. Activity networking of SIBs in the region and the expected eco-system of economic activities that will spawn out should be carefully assessed. For SIBs, support to maintain the minimum threshold of economic activities on a no-loss/no-profit basis for sustaining it should be guaranteed. This is akin to hard wiring in the network. The eco-system of activities that naturally spawns around a SIB and the ingenuity of local entrepreneurs is akin to the free-Wi-Fi available in the network. Hierarchical integration to higher levels and lower levels (Block level integrations), should be seamless. Another set of block level integrations can the lateral integrations.

Now that the network is set-up at the various levels mentioned above by various parties, and properly integrated, it is time to see what flows through the network and how the overall health of state of economy can be assessed from this flow.

3.      TRACK PHASE:

It is easy if we convert the business activities spanning all the four sectors of the economy into a single common denominator - money. This will help in visualizing the economic activities as a complicated network of flows of monies.

The nodes can be the SIBs in the context and the pipes can be the in-flow/out-flow of monies.

At any level, (say city or township), assuming that, the relevant authorities would have created the activity networking and block integration grids for tracking, the nodes can be expected to track the Net Profit, Tax (to show government income), Assets and Liabilities converted into money. The expenses and incomes can be shown as outgoing and incoming pipes respectively, connecting to other SIBs, Financial institutions, local governments, above mentioned ‘Wi-Fi’ zones, some virtual nodes (some concrete/abstract services, investments, losses) etc.,

Any blocks in the flow be it in the local or in the national context will show up in this visual chart. The problems can be endemic to a local context or to a higher context. This will help the deployment of right resources at the right level with maximum efficiency and effectiveness. Thus, situations like, a large forest fire can be addressed in a national context and situations like a shed fire can be addressed in a local context. With the right data at hand and the clarity obtained with respect to the scope of the problem at hand, we can always aim to maximize the economic outcomes.

4.      ACT PHASE:

Based on the data and problem context mentioned above, surgical manoeuvres can be planned and corrections applied to sustain the health of the economy. Besides, as part of the lessons learned, the information from this CHECK and ACT phase can be pumped back into the PLAN phase as part of continual improvement efforts.