In an exclusive chat with TOI, Goldratt says the Indian economy, particularly manufacturing, is already showing sign of an upturn.

“In the next couple of months, barring a few sectors like real estate and automobiles which are dependent on retail financing, it will be back on the growth path,’’ he adds.
What’s more, says the 60-year-old Israeli business thinker, corporates which are resorting to downsizing as a response to fall in sales will find themselves at a disadvantage a few months from now. “Companies that lay people off now will most likely be slow to respond to sales picking up shortly hereafter’’, he said. Goldratt, scientist whose celebrated ‘theory of constraints’ helps manufacturers remove broken links from their value chains and improve performance, said the present gloom is just “an outcome of over publicity in the media of the failure of banks in US, which gripped the entire globe’’.

He, in fact, feels 2009 will be better than the previous year for manufacturing. “The negative growth in the industrial production in India in December was because of fear of demand falling in the future and not because of a lack of demand,’’ says the author of books like The Goal, It’s Not Luck and Critical Chain, which typically use fiction to propound new business ideas. Goldratt is in India on a lecture tour. Elaborating on the ‘fear factor’, Goldratt gives the example of a Japanese electronic component manufacturer, which came to him for an advice after a 50% fall in production in December. Research showed the company had faced 50% reduction in demand despite a growth in demand at the retail level of around 14% in Japan. As the company was a big exporter, Goldratt assessed the market condition globally. Surprisingly, his research found no evidence of a big economic crisis. Even in markets like the US, where the meltdown began, the fall in retail sales was in single-digit percentage points. “To find the cause of the steep fall in demand, we looked at the demand and supply of companies in the value chain. What we found was that the fear of a slowdown had led retailers to reduce inventories.