Nov 26 2008
Economic Slowdown in India: What’s the Reality?
Recent global melt down has certainly affected the world wide economy and when US could not be left untouched from it there have been a lot of hues and cries for future sustainability of Indian Economy. What’s the reality, should we get panic or we should look into detail aspects before coming to a conclusion. Let’s have a look on some important basics of India Economy:
Sensex: Sensex is the sensitive index of BSE (Bombay stock exchange) and NSE (National stock exchange). BSE has 30 listed companies and NSE has 50 listed companies. Although these companies have the maximum stake and influence as far as Indian Economy is concerned, still there are more than 500 mid cap and large cap companies in India which are not listed with either BSE or NSE main index. A huge number of small caps are still there. So getting panic just because of Sensex doesn’t make complete sense of understanding our economic trend. Moreover Indian investors are mainly emotionally driven rather than being analytical and that’s why we are still living in speculative mode and not in investing mode.
Household savings: Household savings in India is close to 30% of total income which is one of the largest in world. Due to our house hold savings we survived during global crises of 1929-30. Huge black money with business men and over flowing accounts of Indians in Swiss bank (Indians have the largest share in total international deposit of Swiss bank) tells the story of never ending inflation and liquidity.
Job Cuts: We have lost jobs in IT, Airlines, etc but as compared with the entire employed population this percentage is not large enough. Still the largest employers Indian Railways, SBI, ICICI (to name a few) are hiring people and currently they have plans to continue hiring for next 5 years. Remember employment is not the problem; there has been always a war any where in the world for survival of the best.
Agriculture: Still agriculture is one of our economic indicators, which is not bad at all.
Conclusion: Indian Economy is still stable and poised to grow continuously with a rate above than 7% a year which is a huge growth rate. I agree to the problems related with inflation, petrol prices and credit norms (going to be liberalized soon). Indian economy is also influenced by the political changes and with upcoming elections the out remains a bit worrisome but as it gets stabilized and over by another 5-6 months, every thing will be on track again. We also need to be careful in our spending and cost savings to cross this temporary draught. Over all we won’t starve due to current situation…
