Recession in India is more psychological than real...

Saturday, 21 February 2009
Recession in India is more psychological than real…

Recession is the product of irrational consumer-expectations and the manipulation of markets by the financial sharks. Before we fight it, we can really avoid it through the combined efforts of the government and the corporates, said Prof. B B Bhattacharya , Vice Chancellor, JNU. He was addressing a gathering of industry leaders, faculty and students at the Faridabad Institute of Technology, MR International University( MRIU). The herd mentality, he observed, of the consumers and investors is also a factor leading to such crises world wide. The consumption not matched by income of the neo-rich has also contributed to the slow down in India in particular.

Glaring questions
Welcoming the eminent experts, the MRIU Executive Director Col. (R) V K Gaur raised the questions that need to be addressed for better future of the world. These include: how far the trade protectionism in different countries will help restore the normalcy? Will Bharat bail out India from the current situation? How will a highly decentralized polity remedy the problem plaguing quite a centralized economy that is India?

Recovery in the third quarter
Recession in India is more psychological than real and what we see today is just a slowdown, said T K Arun, Editor, The Economic Times.. Sensex being not the real indicator of economic growth in India, he added, stock market-generated recession will give way to recovery in the third quarter of the current fiscal itself. The growth in telecom sector as registered in January this year, about 15 million connections, is a testimony to it.

Greed the culprit
Echoing the same perception, ARPL India’s MD Vijay Sardana said that the greedy managers trained at the best B-schools have punctured the optimism and the buying powers of the urban buyers in India. Reality sector is an example of this.

Recession or opportunity?
On the other hand the SMC Global president Rajesh Jain wanted the industry leaders and strategists to look at the current hyped slowdown as an opportunity and encash on the cost-cutting drive of the developed economies by way of cheap labour and strong knowledge base. This slowdown is just a cycle like any other and it will leave us more efficient and cost-effective at the end of the day.

Retaining the old customers and employees
The challenge today is not how best to sustain growth in the short run, opined UIMS Executive Director Neeran Gautam, rather the real challenge is retaining the old customers and employees who carry with themselves loyalty and the twin-jewels of experience and initiative. He was surprised at the media hype about recession in India that is only next to China with the capacity to bail out the world economy from the current crisis.

Good things are round the corner
Good business practices, innovative products and creative marketing tools are about to overwhelm us , thanks to the recession in the West and the fear of recession in the East, said Venkatesh Mahadevan, Director, Information Technology ( Asia), Motorola. We need to revisit our plans and connect to the customers.
MRIU Vice Presidents Prashant Bhalla and Dr. Amit Bhalla received the guests on behalf of the Chancellor, MRIU, Dr. O P Bhalla and Brig. ( R) S N Setia, Vice Principal, FIT, proposed the vote of thanks to the dignitaries.

Global Recession: Questions Begging Answers

The big, bad and the weak

With the US, Europe, and Japan officially in recession, the global financial and economic crisis keeps getting worse. No less distressing has been the speed at which the cumulating financial crisis has throttled real economic activity worldwide since summer 2008.

IMF: Changing forecasts now and then

Also, the rapid onset of recession in advanced countries has overwhelmed the forecasting abilities of many institutions, including the IMF. There is overwhelming uncertainty about the depth and duration of the current global recession. But the majority of expert opinion now concedes that this will be the worst recession since the Great Depression of the 1930s.

India: sectors likely to be hit

What about India? What are the sectors likely to be worst affected and which are the ones with the capacity to withstand or even benefit from it? Will the adverse impact on India be in commensurate with its limited integration into the world economy? Will the IT and ITES along with exports and the financial sectors will be hit the hardest and the agriculture the least? Will the health tourism, education and the like be reaping benefits of the current gloom?

The industry-wide indications after September 2008 are uniformly gloomy. There are reports of significant declines in output of automobiles, commercial vehicles, steel, textiles, petrochemicals, construction, real estate, finance, retail activity and many other sectors. Exports fell by 12 percent in dollar terms in October and advance information points to a similar decline in November. The latest IMF estimates put the GDP at 5.1 for 2009-10. The equivalent figures for China and USA are 6.7 and -1.6 respectively.

Policy options

What about economic policy options to insulate our growth momentum from the global economy almost 60 percent of which has slipped into recession? Don’t we share the same planet as the USA, Europe, Japan and China?

Bharat to bail out India?

Or, can the Bharat with its over 250 million below-the –poverty-line consumers save the India of the rich and the affluent from the global recession that took its birth in the womb of America? Also, how to look at recession—as cause or effect?

Can private capital, purely for legitimate profit, penetrate this 'market' more efficiently than state capital can in the form of siphoned-off handouts? Could, for instance, Tatas' Lakhtakia Car inspire another industrialist to come out with a Rs 900 'people's bicycle'? Could Usha produce low-cost sewing machines for aspiring rural men and women? Could someone make and market a 400-rupee computer for village schools? If rural telephony and banking can be can be runaway successes, why can’t other services and products? Will all this not require the economies of both Bharat & India joining hands as it has happened in China?

Heading for non-dollar economies

Furthermore, shouldn’t India search for markets in non-dollar economies such as the African, East, South-east and West Asian?

Political decentralization vs economic centralization

India has seen significant political decentralization during the last few decades. Has the economic decentralization kept apace? Or has it really even on the agenda of the decision-making elite? Could a decentralized Indian economy have been better-positioned to deal with this or future such recessions?

Caste system providing security ?

How do different communities deal with the adverse impacts of recession on their own? Even in the current scenario, how does the traditional social security provided by the caste system empower its members to fight the onslaught of recession, if any?

In the Indian scenario, we can be face-to-face with the following questions:


• Global Recession & the Indian Economy: Emerging Prescriptions
• IT & the IT Enabled Services: The Search for New Markets & Practices
• Fighting Recession with Decentralizing Polity and Centralizing Economy
• Global Recession & the Response of the Caste System to it