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