Better logistics for improving economy and employment
BUSINESS ECONOMICS|August 16-31, 2019

“The line between order and disorder lies in logistics” – is how Sun Tzu, the Chinese military strategist and philosopher defined the place of logistics in a nation’s growth drive.

Tushar K. Mahanti

Sun Tsu’s basic proposition probably related to military strategy but since the logistic industry involves the management of the movement of goods from the place of origin to the place of consumption, its efficiency is crucial to economic growth.

Basic of logistics

Logistics is generally the detailed organisation and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies as well as food and other consumable items. The industry does a complex networking including integration of material handling, warehousing, packaging, transportation, shipping security, inventory management, supply chain management, procurement, and customs service.

The development in technology and the advent of new industry verticals have created high demands for logistics and delivery of products and services at precise time and location. The new set of requirements has risen from the sections with busy lifestyles and has also added to the increase in logistics demand.

The high economic growth during post-liberalisation era resulted in a significant rise in the volume of freight traffic movements in India. The large volume of traffic provided for growth opportunities in all facets of logistics including transportation, warehousing, freight forwarding, express cargo delivery, container services and shipping services. The growth path also suggests that increase demand is being placed on the sector to provide the solutions required for supporting future growth. Strength of the logistic sector is likely to be one of the key determinants of the pace of the future growth of the Indian economy.

Backed by higher economic growth, India’s logistics sector is growing fast. According to the domestic rating agency ICRA, Indian logistics sector is expected to grow at a rate 8-10% over the medium term. This is an improvement over the compound annual growth rate (CAGR) of 7.8% at which the industry grew during the last five years. The logistics industry of India is currently estimated to be around $ 160 billion. With implementation of the GST, the sector is expected to benefit and touch $ 215 billion-mark over the next two years, as per the Economic Survey 2017-18.

Government plans to organise the sector

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