Faculty
Post Graduate Department of Economics
Bangalore University, Bangalore -560056
Ph: 0-9480584544, email: sr_keshava@yahoo.com
Abstract
The US economy
accounts for ¼ of the world's GDP. The
dream development of USA
was busted when the world major financial giants like Lehman Brothers, Bear
Sterns, AIG, Merill Lynch etc. saw the unprecedented collapse of financial
giants. The large Banks in US according to economists and financial experts are
like dead man walking A. sober assessment of the growing mountain of losses
from bad debts, measured in today’s market place would over whelm the value of
the banks…and they are insolvent (Stere lohr 2009).
The LPG reforms
were introduced opening the doors on Indian economy. The economic polices
pursued by India during the past 40 years prior to July ,1991, often dubbed as
“license –control raj” was described as “mistaken polices” by Dr. Man Mohan
Singh who was the finance minister in the PV Narismha Rao government and instrumental in the introduction of
reforms. Some individuals even went to the extent of hailing it as our second
independence had arrived. They were happy as they thought LPG reforms would
free India
from a rapacious and domineering state. These individuals were under the
intoxication of opium of globalization. They had forgotten the economic
history. But history repeats itself. India by the end of 2008 saw
herself in front of the world recession. All that state would do was either
wrong nor all that market would was right. The LPG not only gives you goodies
but also the economic tsunami which even the developed world is unable to
confront successfully.
Nehru was right when he once said ‘most of us seldom take the trouble to think.
It is a troublesome and fatiguing process and often leads to uncomfortable
conclusions. But crises and deadlocks when they occur have at least this
advantage that they force us to think’ (The Unity of India: Collected Writings,
1937-1940 (1942), p. 94) The major impact of recession on India will
be on IT& BPO, textiles and garments, automobiles, gems and jewelry,
transportation, construction and mining, Hotel, Tourism, handicrafts and leather segments. So Tomorrow depends
on how the developed world reacts to recession, will it hide behind protection
or go ahead with globalization.
Key Words:
Globalization, LPG, IT & BPO, Recession
Introduction
The US economy accounts
for ¼ of the world's GDP. The dream
development of USA
was busted when the world major financial giants like Lehman Brothers, Bear
Sterns, AIG, Merill Lynch etc. saw the unprecedented collapse of financial
giants. The large Banks in US according to economists and financial experts are
like dead man walking A. sober assessment of the growing mountain of losses
from bad debts, measured in today’s market place would over whelm the value of
the banks…and they are insolvent (Stere lohr 2009). Simon Johnson a former chief economist at the
IMF estimate that the US banks have a capital shortage of $ 500 billion. In a more severe recession it will take $ 1trillion or so to capitalize the
banks. It also estimated the potential
losers from and other credit Securities originated in the USA to $ 2.2 trillion. The IMF also had estimated USA and European
Banks would need at least $ 500 billion in new capital in 2009.
The Wall Street collapsed greasing the wheels
of financial tsunami. The ripples of this were witnessed on all the economies
on the globe. But the degree and magnitude of this fall differed from economy
to economy depending on their dependency on America and the fundamentals of
their respective economies. The average spending of American consumers reduced
significantly and that resulted in reduced demand for imported goods as well as
the domestic goods. Demand for the goods reduced. The produced goods remained
in godown of firms lacking any demand. Producers either reduced or stopped the
production.
The
World Trade shrinked at faster pace then production. Good number of firms lay
off several employees. A white house
forecast released by Bush administration on January 16, 2009 pointed out that US
economy would loose 235,000 jobs a month in 2009. In January 2009 alone the US
economy lost almost 600,000 lakhs jobs across all major industry. The president
of America
Mr. Obama recognized the growing unemployment ‘…….this is not an abstract
debate. It is an urgent and growing crisis that can only be full understood
through the unseen stories that lie underneath each and every one of those 600,000
jobs that were lost’. In the 600,000 jobs lost 207,000 jobs belonged to
manufacturing sector. Along with it if 734,000 discouraged workers who have
stopped looking for jobs as they are sure of not getting it is added the
magnitude of problem can be understood. Then the real unemployment rate will be
at least more than double than the official unemployment rate of 7.2%. The United Nations agency ILO estimated that
over 51 million jobs was lost world wide due to economic slow down by the end
of 2009.
IMF predicted that the
world economy is set to contract for the first time in sixty years. The IMF has
forecast a decline of 3.0- 3.5% in the GDP of developed economies in 2009
whereas the emerging and developing economies will grow at 1.5-2.5% during the same
period. The USA would shrink
by 2.6%, Japan by 5.8% and Europe by 3.2%.
In 2008-09 the exports
were down by 20% in Germany, 46% in Japan, 23.6% in USA over the previous year.
The global manufacturing sector is worst hit, hence the economies depending more
on manufacturing sector will not come out of recession soon including America . The
manufacturing sector contributes 18% to the world’s GDP. It contributes 33% of
GDP in China , 14% of India ’s GDP, 14% of USA ’s GDP. Manufacturing makes up
to about two thirds of US exports and contributed more to GDP growth over the
last twenty years than any other segment of the US economy (David Huether, National
Association of Manufacturers, Washington). The lack of demand for jet engines,
locomotives, pharmaceuticals, medical equipments, high tech product, etc
produced in USA
will hurt the American revival programmes.
What is Recession?
According
to ‘The National Bureau of Economic Research’ recession is defined as "a
significant decline in economic activity spread across the economy, lasting
more than a few months." A recession generally refers to the decline in a
country's Gross Domestic Product (GDP) growth for two or more consecutive
quarters of a financial year. A recession is also preceded by several quarters
of slowing down. Recession affects overall economic activities of the economy
including, investment, employment, profits, output etc.
The
turning point from boom condition is called recession. The exact causes of
recessions cannot be exactly pin pointed. Generally it is presumed that it
could be caused by cyclical movement of economy or by some external elements.
It may also be caused by combination of several potential dangerous factors like
high inflation, currency crises, speculation or the failure of a company or a
bank. It will burst the boom and brings the phase of recession. Businessmen
begin to realize they have over stepped their mark and their over optimism
gives place to pessimism, where Investment decreases because of which price as
well as income and profit too falls. When recession continues for a longer period
with its severe implications, it’s termed as economic depression which will
lead to the economic collapse.
Genesis of the Recession- 2009
The
genesis of this recession can be found in sub prime mortgage crisis in the USA
housing market. The word sub prime refers to borrowers who do not have a sound
track record of repayment of loans. The risks inherent in sub prime loans were
sliced into different components and packaged into a host of securities,
referred to as asset backed securities and collateralized debt obligations. To
facilitate marketability credit rating agencies also gave them the risk ranks
of ‘AAA’ or ‘BBB’. The greedy financial institutions to make more hay when sun
shines used the relative easy liquidity conditions across the world to expand
credit in the sub prime market. The
truth came to light only when interest rose, the borrowers were neither in
position to pay the interest nor principle. There was a huge default in the housing
sector. Later on it was revealed to the world that even the financial
institutions in the Europe have also committed
the similar blunder.
Impact of Recession on India
Nehru gave
the anti recession Vaccine to India
When India got her political independence,
majority of people were poor, India lacked capital and technology, Economy was
in Chaos. But the aspiration of people
was high, so were our spirited leaders. Mr. Nehru who took up the
responsibility of prime minister gave a clear indication of polices to come.
Mr. Nehru set the clear objectives through his tryst with destiny speech
delivered to Constituent Assembly of India,
on the eve of India 's Independence on August 14th,
1947
‘Long years ago we made a tryst with
destiny, and now the time comes when we shall redeem our pledge, not wholly or
in full measure, but very substantially. At the stroke of the midnight hour,
when the world sleeps, India India
Nehru had a clear vision and clarity of thoughts,
he wanted economic independence with political independence. He wanted to
eradicate poverty by more equitable distribution, better education and good
health. His speech at US house of
representatives and the Senate in Washington D.C. on October 13, 1949 makes it clear to us ‘We have
achieved political freedom but our revolution is not yet complete and is still
in progress, for political freedom without the assurance of the right to live
and to pursue happiness, which economic progress alone can bring, can never
satisfy a people. Therefore, our immediate task is to raise the living
standards of our people, to remove all that comes in the way of the economic
growth of the nation……. To remove this poverty by greater production, more
equitable distribution, better education and better health, is the paramount
need and the most pressing task before us and we are determined to accomplish
this task. We realize that self-help is the first condition of success for a
nation, no less than for an individual. We are conscious that ours must be the
primary effort and we shall seek succor from none to escape from any part of
our own responsibility. But though our economic potential is great, its
conversion into finished wealth will need much mechanical and technological
aid.
The Nehru major economic ideologies are listed
below
1. Nehru
personally believed in Socialism. But he did not allow it to override him when
the policy matter for India mattered, he
wanted a practical approach in framing the Indian economy, which would suit
best the country's needs. The industrial policy statement of 1948 and 1956
proves the point.
2. Nehru
gave India
the mixed economic system where the golden characteristics of both Capitalism
and Socialism were combined. But he stressed more on the role of State in the
economic development. Nehru emphasized that the state would control the key
areas of the Indian economy.
- He not only tried for the betterment of rural economy by trying to bring in good number of agrarian reforms and construction of multi purpose huge dams for which he called temples of modern India. The dams would not only harness energy, but would also support irrigation to a great degree. He also tried for industrial development by investing in basic and key capital industries. The second five year plan was devoted towards industrial development.
- In order to a have a long term successful growth strategy and for assured development, he introduced the Five Years Plan in 1951.
- Nehru inspired the industrialists to provide a fillip
to
- Nehru encouraged the development of small scale industries and cottage industries as they are the solutions to unemployment problem. But his cottage industry development programs were meant as a part of the community development programme.
Nehru's regime was not one of great economic growth for India. Some do
blame this on his economic policies. But
his decisions were necessitated by the needs of the times. All the developed
economies too in their earlier stages of development had the state led development
through the different means of protection.
The LPG reforms were introduced opening the doors on Indian economy. The
economic polices pursued by India during the past 40 years prior to July ,1991,
often dubbed as “license –control raj” was described as “mistaken polices” by
Dr. Man Mohan Singh who was the finance minister in the PV Narismha Rao
government and instrumental in the
introduction of reforms. Some individuals even went to the extent of hailing it
as our second independence had arrived. They were happy as they thought LPG
reforms would free India
from a rapacious and domineering state.
Gurucharan Das(2000) in his column white elephant in The Hindu on 1
January 2000 writes, India has recently emerged as a vibrant, free market
democracy after the economic reforms and it has begun to flex its muscles in
the global information economy. The old centralized, bureaucratic state, which
killed our industrial revolution over the past 50 years, has begun a subtle but
definite decline….it has tripled the size of the middle class, which is
expected to become half the Indian population within a generation. In the
Fifties, we passionately believed in Nehru's dream of a modern and just India .
But as the years went by, we discovered that Nehru's economic path was taking
us to a dead-end and the dream soured. Having set out to create socialism, we
found that we had instead created statism. We were caught in a thick jungle of
Kafkaesque bureaucratic controls. Our sense of disillusionment reached its peak
during Indira Gandhi's autocratic rule in the Seventies.
These individuals were under the intoxication
of opium of globalization. They had forgotten the economic history. But history
repeats itself. India
by the end of 2008 saw herself in front of the world recession. All that state
would do was either wrong nor all that market would was right. The LPG not only
gives you goodies but also the economic tsunami which even the developed world
is unable to confront successfully.
Nehru was right when he once said ‘most of us seldom take the trouble to think.
It is a troublesome and fatiguing process and often leads to uncomfortable
conclusions. But crises and deadlocks when they occur have at least this advantage
that they force us to think’ (The Unity of India: Collected Writings, 1937-1940
(1942), p. 94)
Despite
the major set back in few discussed sectors, India has the anti recession
vaccine given by Nehru. Call it as strong fundamentals of Indian economy laid
by Nehru or hurdles of growth factors, today India is more immuned to face the
ills of global recession.
Montek
Singh Ahluwalia in the interview to PTI (October18, 2009 has pointed out that
opined that the ongoing financial crisis has shattered the supremacy of Europe
and American financial system…. The belief that the financial markets are
somehow very efficient and that the American financial system invented all
kinds of new instruments that were bringing about tremendous efficiency gains
which deserved to be emulated…I think this view has been totally discredited,
In India the state would continue to play a strategic role ‘as envisaged by
Nehru……We did not see him (Nehru) as ideologically wedded to particular methods
or being against the private sector, though of course he viewed the government
as having a strategic role. We have
never changed that view, though the nature of the role has to change over
time…..Most importantly, we should avoid over leverage, improve, systems of
risk management and strengthen supervision……this does not mean banning all financial
innovations. Since fixed exchange rates
are a thing of the past…we have to evolve a system that can deal with FOREX
risk…..We have deliberately chosen a gradualist path for the evolution of our
financial system and that decision has been vindicated. But there is no room for complacency…everyone
is learning and we must watch carefully what new trends will evolve and also
new methods of risk mitigation…….this was a failure ,but not just a private
sector failure. It was also a failure of
the regulators,”
Indian economy opened its
doors to LPG only one and half decade back, but thanks to Indian Bureaucracy
and changing philosophy of political policy makers, India
did not globalize too much and hence the impact of recession is not seviour in India . To quote
“….Despite all the talk, we are no where even close to being globalized in
terms of any commonly used indicator of globalization. In fact, we are still
one of the least Globalized among major countries-however we look at it…” (RBI
(2000))
The
major impact of recession on India will be on IT& BPO, textiles and
garments, automobiles, gems and jewelry, transportation, construction and
mining, Hotel, Tourism, handicrafts and leather
segments.
IT AND BPO
As
per the NAASCOM report (2008) the Indian IT-BPO industry is estimated to
achieve revenues of USD 71.7 billion in the financial year 2009, with the IT
software and services industry accounting for USD 60 billion of revenues. In
2009 the direct employment is expected to reach nearly 2.23 million, an addition
of 226,000 employees, while indirect job creation is estimated to touch 8
million. The Export revenues are estimated to gross USD 47.3 billion in FY2009,
accounting for 66 per cent of the total IT-BPO industry revenues.
The optimistic
report of National Association of software and Service companies (NASSCOM) and
its estimates though has to be appreciated, but in reality the US recession will hit hard as India exports 60% of its IT and BPO services to USA and nearly 75 per cent of its revenues coming
from the US ,
the impact will be seviour. The reduction in demand from US has forced many Indian
Fortune 500 companies to slash their IT budgets.
Large
IT and BPO firms have started looking at other markets like ASEAN Nations,
Europe, and even the domestic market, to spread their risks. This can be best
seen with Infosys setting up an India
centric team. The European, ASEAN, Arab countries and the African countries may
offer viable short-term alternatives to our export-dependent sectors. But the
IT – and BPO have to slash their prices reasonably to create market in these
economies.
But
for the time being with the lay off knife hanging on his day a IT –BPO employee
has to work with reduced salaries, longer working hours, frequent performance
appraisals. Many of leading IT companies like IBM, TCS, American Express, etc
have removed many of their employees. Many of my friends in IT sector do
complain in private that they are allotted the work of two individuals or to
quit themselves. With the deadline software engineers are working, with huge
mental stress with limited or no time to their families. Satyam fraud was
another blow for the IT industry which hit the Indian IT brand image very hard
abroad.
The
demand for clothes in the USA and Europe has put India’s ready-made garment
export industry into a deep problem. The business has dropped to the tune of
50%, exports have fell by the same percent, because of which thousand of
workers are axed. A report in front line quotes a cutter cum labour contractor
statement that ‘workers are ready to work for less, but there isn’t any
work’ in the industrial hub of Manesar in Gurgaon district rightly
indicates the plight of the garment working community.
The
exporters should be given more incentives and persuaded to explore new
markets-in Asia, the Far East and Africa . They should also focus on the domestic
consumer with affordable prices.
Gems and Jewellery
India
controls the 90% of world business in diamonds and 3.5% in gems and Jewellery
business in the world trade. In 2007-08 diamonds earned the foreign exchange
earnings accounting to 13.5% of the total merchandise export. The global gems
and Jewellery business is worth more than $82billion. Of this 48% ($39 billion)
comes from USA .
About $ 17 billion business comes to India
from America .
In India 85% of
diamonds are cut, shaped, polished and exported from Surath. In the unorganized
sector Diamond industry is the biggest single employer in the casual period.
But today as the demand for the diamond from US has reduced, lakhs of workers
bellies have gone empty. No demand for diamond, no work, no food!
Automobiles Industry
The
fall in the price of crude oil from 176$ per barrel to less than 46$ per barrel
itself is the indicator of slump in the world automobile industry. India was
emerging as one of the major manufacturing base for automobiles, but now due to
decrease in demand for the automobiles hundreds have lost jobs. The prices of
cars, two-wheelers and commercial vehicles are slowly coming down. The
government is also trying to boost the industry with 5 percent duty cut. All
the major manufacturers namely Maruti, Hyundai, M&M, Tata Motors, Ford,
Skoda and TVS have passed the benefits of the reduced duty to the customers.
Increased Unemployment
Slowly
all the manufacturing industries are coming into the fold of recession. The
unemployment in India
is increasing. The study by labour
ministry reveals that five lakh jobs were lost between October and December
2008. Exporting units post a higher decline in unemployment. Metals and textile
sector lay off 2.6% and 1.29% of their work force respectively.
Tourism and hotel industry
The
tourism sector has also been greatly affected. If tourism industry declines, it affects hotel
industry, both boarding and lodging, transportation industry, retail business
around the tourist spots. Tourism has provided employment to lakhs of people
directly and indirectly. If tourists are reduced it affects their livelihoods. Hotels
have already reported 20-25 % cancellation from international tourists who were
booked to visit over the next one year. Many hotels have slashed the prices of
their services, but still tourism is yet to gain momentum
The problem of Terrorism
Prior
to the terrorist attacks in Mumbai, India Foreign Direct Investment flows was shooting
up by a whopping 124% during the first five months of 2008-09 to $14.6 billion.
Despite the global financial turmoil, it is set to surpass the FDI target of
$35 billion during 2008-09. The sectors that attracted maximum FDI inflows in
2007-08 were services, telecom, housing, construction activities, real estate,
electrical equipment, computer software and hardware. In 2007-08, India ranked fourth after China , Hong Kong and Singapore
as a major investment destination in Asia . But
this quarter has already seen the decrease in FDI inflows to India . The
recession added by terrorist menace is hurting the FDI inflow into Indian
economy
Foreign
students who were planning to come to India for their studies also will not
come to India due to the security reasons. In line with this policy, the Singapore government issued a temporary travel
ban on school children who were to travel to India ’s
Bangalore for a
leadership conclave. The Malaysian government has also cautioned its citizens
against traveling to India
for the time being. Many eurpoean countries, Australia
and even USA issues the
warnings to its citizens whenever such blasts/ terrorists attack takes place in
India .
The problem
of Corruption
The corruption in India is almost institutionalized. From
attender to village accountant, tahashildar to Deputy Commissioner Office and
from a petty politician to politician in power in the highest office one takes
bribe to get the things done. The one who does not give is always lost from the
world. Crores of tax payer’s money is diverted into the pockets of corrupt
politicians and officials. This has strained the economy, tarnished India ’s
image abroad, and sapped the investor’s confidence. India has to solve the problem of
corruption to ease itself towards real growth.
Employment dominated by
Agriculture Sector
Service
sector contributes more than fifty two percent to GDP but employs twenty six
percent of her population whereas agriculture contribute only 18.5% to GDP, but
employs 52.5% of India’s population. To be more precise India has a work force
of 484 million people of which 273 million works in rural areas (mostly in
agriculture and allied activities), 61 million in manufacturing and about 150
million in services (around 3 Million work in IT sector).
The
service sector is contributing majority to GDP, the IT-BT employs less than two
million individuals directly. But though the income derived from them will
reduce, it will not have the wider impact Only 27.82% of Indians live in urban
areas which is prone to recession, majority of those living in rural areas are
not prose to recession directly. The impact if at all there will very
negligible.
Industry dominated by Public Sector
Industries
The
Navaratna industry and Miniratna industries are booming with profit and
expanding rapidly.
Strong
Banking system
RBI
successfully used it monetary tools like CRR, SLR suiting to the changing
economic conditions and was highly successful. RBI has infused over Rs.400,000
crores In the system since October 2008 by cutting ratios and significant
interest rates. The commercial banking system in India
is dominated by public sector banks in India . There are 27 public sector
banks with 72,165 branches (RBI Annual Report, 2007) constituting 89.61% of the
total commercial branches. The share of public sector banks in the total
business is 71.06% and private banks are just 21% in India (RBI, 2008). It has 133
regional rural banks with its 14500 branches catering exclusively for rural India .
Apart from these there are more than 5.03 lakh cooperative societies with a
membership of more than 20.9 crores (1/5th of the population in India
are the members of cooperatives) and working capital of more than Rs.227111.8
crores.
But
Institutions such as ICIC Bank, City Bank are exposed to international banking
systems, had a few hiccups but recovered with timely emergency steps.
Relief for Exporters
The
government of India is
taking active steps to reduce the impact of recession on India on export units. It has
announced the relief for exporters which includes a 2% interest subvention up
to March 2009 for pre- and post-shipment export credit for all exports.
Additionally, an Rs.350-crore booster for schemes like Market Development
Assistance (MDA) and Market Assessing Scheme has been granted to help exporters
develop new markets.
Opportunities Galore
Talented technicians
It
appears Indian has got blessings in disguise. Thanks to the compulsions of
recession more than one lakh good skilled technicians are already on way back
to India ,
Indian government should provide the basic infrastructure to these technicians
and use their knowledge for the development of the economy. The private public partnership can be
undertaken by the government to utilize the skill of these technicians.
Savings of the returned
technicians
Repatriation
of foreign exchange by NRIs has become a major source of India ’s foreign exchange earnings
in recent years. But now these people
return to India
as many of them will be loosing their jobs.
Hence this source will dry up leading to the diminution of our foreign
exchange reserves. But these technicians will be bringing back all their
savings and this can be used as their initial investment to start the fresh
firms here, which can be used to boosten the economic growth of the economy.
Health and tourism industry
The
talented professionals along with the relatively cheap cost will help the
revival of tourism industry too. The
health and eco tourism could be offered in a package collaborating with the
economic hotels and quality hospitals. India
has advantage in cheap medicine US
food and Drug administration has recognized 100 generic drugs from India . When
compared to the rest of world, India
has quality medical care at cheap cost. A heart valve replacement surgery would
cost $ 9000 in India whereas
a similar surgery would cost $12,500 in Singapore ,
$ 90,000 in Britain , and $
200,000 in the USA .
Weakened
rupee to boost exports
In the last three months ending 2008, the strengthened Rupee
against the dollar also contributed for the decline in exports. Now the rupee
has weakened against the dollar and it will also contribute for strengthening
of exports to some extent.
Domestic
market
The 1100 million population in India can be used for the
major advantage to beat the recession. The 350 million middle class gives major
thrust for extending the market demand. Rural India has largely been unexplored. The
former president Dr. Abdul Kalam has suggested to go rural to beat the recession.
If the government offers the proper incentives and guidance, it will kick-start
the economy.
Crucial role of Government
As
per the finance ministry statement issued on 18 March 2009, the government has
collected Rs 2, 96,200 crores from direct taxes in this fiscal, prompting the
authorities to assert that the target of Rs 3, 45,000 crores for 2008-09 will
be met. Hence the fears that income tax will reduce to larger extent this year
has dispensed. The government can take more pro active role and can take more
public work to increase the income among masses.
27.5%
of the Indian population lives in poverty in 2004-05 as per the NSSO Data (URP
Method). The government at least now can try to spend more on poverty
alleviation programmes which adds to the purchasing power of the masses. Banks
can extend their banking facilities to all the households in the India . As 45.65
million farmer households (51.4%) do not have access credit either from
institutional or non institutional credit (NSSO survey of farmer households).
If the government can play a catalyst role
and stimulate the domestic demand, it will help thwart the recessionary
conditions in IT, manufacturing and other industry.
World Tomorrow-bleak or prosperous!
The US which championed the spread of
globalization all over the World through its World Bank IMF and WTO is now
doing everything to protect its economy from recession. In doing so it is
reversing globalization and resorting to
protection of its economy.
The US Congress is pushing for the
introduction of ‘Be American buy American’ and ‘US jobs for American workers’
in its stimulus plan that would compel the project financed by stimulus money
to use American made steel, construction materials men and machinery Bailed out
banks in Europe is now lending money only to their domestic customers
restriction of HIB visa.
If all the countries retaliate with
similar law, the World trade will also decrease and some economist fear will
lead to another great depression (Alok Ray, 2009).
The great depression
in 1930 deepened in USA
by the passing of infamous Smoot Hawley tariff in 1930 which allowed
protection. The Smoot Hawley tariff during 1929-34 contributed for the
reduction of world trade by 60%. The USA is also
trying to increase its subsidy for its agriculture from its present $ 8 billion
to $ 15 billion in WTO. Hence tomorrow depends on how the developed world
reacts to recession, will it hide behind protection or go ahead with
globalization. India
should continue with her cautious approach and mixed economy, where the state
will have a say in important economic decisions.
Conclusion
Though the impact of
recession in India is minimal, even that minimal negative impact can be
converted into opportunity. The government of India has to play very crucial role
to convert the recession threat into a great opportunity. IMF has suggested to
stabilize the financial condition as well as sustained strong policy support to
bolster demand.
------------
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University
Bangalore-560056.
e-mail:sr_keshava@yahoo.com
contact No.+91-080-23474929, +91-0-9480 584 544
