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Economic recession a challenge for India

A calm and serene exterior always holds within itself the potency of a tempestuous interior.

The US, soaked in assurance till the second quarter of 2007, was suddenly faced with

convulsions of panic as a monster brewing under the pressure of the foundations of its

skyscrapers, suddenly raised its head. We call it the recession now. Millions of faces who for

the last, almost two decades would open the stock market indices on their net in the

anticipation of a pleasant predecessor to a confident smile, were now doing the same with

apprehension , fear and with a heart that fluttered in its discomfort. Outside the window, the

monster razed various buildings to the ground. Furious, fierce and indomitable, it threatened

to engulf everything in its unfortunate path.

Good morning, judges of honor, distinguished guests and my dear friends. Today am here tospeak on economic recession a challenge for India.

The fact is, tentacles of US economy exist in all other developed and major developing

countries of the globe, the effect of the so called and the erstwhile process of globalization.

From our shores, i.e. the Indian shores, we can see the monsters head, but luckily, it seems

more fascinated by the destructive possibilities of more liberal and open economies.

The western world has landed itself in this unprecedented situation primarily due to cheap

home mortgagees, the prosperity of the consumer, the economy and the government to live

beyond its means. This was the triumph of the neo-conservative Chicago school of economics

since the 1970s that had mesmerized policy makers in the western world.

One should owe the narrow Indian escape to the loyalty of Indian governance to orthodox

conservative policies and the Indian common man's habit of saving for the rainy day. As the

world struggles to maintain balance in the face of a turbulent tsunami of perils, the Indians

stood their ground in a minor ripple. This ripple was mainly because of US based Indian

MNCs, the handful of Indian banks doing business with Western counterparts and the large

number of Indian software and IT based companies who do business with American financial

companies.

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There were indeed socio-economic repurcursions. One could say, a lot of people were laid-off

as such. The common man on the streets felt the effect of this recession due to some

companies handing over the pink slip to a large number of the employees, the banks

drastically hiking the interest rates on home loans and cutting down the interest rate on

savings. The real estate sector has faced the major brunt ofthe recession in India due to the

hike of interest rates on home loans and the common man shying away from investing in real

estate. As an aftermath a large number of industries like the cement, furniture, iron,

transport etc that were flourishing due to the real estate boom went into a slump.

But international trade accounts for only 24% of India's GDP and therefore the impact on

India's growth is only minimal. Also, the government observed the weight was too heavy for

the already much-burdened shoulders of the common man to bear, and thus, it decided to

help shed the load. It ordered all the public banks to cut down their interest rate on loans andraise the interest rates on investments.. It opened vacancies for the citizens who had got their

pink slips from the multinationals and in return consumed the talented human resource. As a

result, when many countries of the developed world was declared to be in a state of

depression, India was not. And now with India having a stable government, the policy makers

are implementing various measures to pull out the country from the state of near recession

to one of economic growth. With the finance ministers declaration that India will work

towards an economic growth of 6.25%-7.75% in the present financial year. Even this slight

drop in GDP growth has been good for the Indian economy, as due to a larger reduction in

imports than exports, India's trade deficit is finally turning positive. India can look forward toa much brighter economy in the very near future while most of the rest of the world will

languish and then take time to recover under the unexpected blow of the economic

recession.