Will there be a recession ?

How the future could possibly be ?

wrt US , INDIA , CHINA ...

There are talks of recession going around... there is speculation of what wonders will India and china achieve … the American universities are sending their groups to conduct studies on India… the British prime is visiting India to improve ties with it, the Chinese premier breaks protocol to display warmth to Dr.Manmohan Singh during his china visit…. The rising rupee is hurting the IT firms and the small exporters alike…the stock market is volatile and people are wary about putting their life’s earnings into it…

Among all this hoopla.. I think there will be a drastic changes in the world economies in the coming few years :

The recession and the sub-prime crisis will hit the American badly and the dollar will freewheel downwards leading to the countries pulling out their dollar reserves to buy other stable currencies like the euro… which will further wreck havoc with dollar’s exchange rate. The Americans will take huge debts from china and Japan to plug their deficits in the budget. Still The US will remain one of he strongest economies and few correct policies by the federal bank and the new president in office might stop the free fall.. as a strong dollar benefits not only the US but also the world on the whole.

The Chinese will continue to grow at the present amazing pace.. so will India for the present at least.. the world will see the rise of euro as the stable currency ..

How will this affect the Indian economy … to take a bird’s eye view … the IT companies which have their business modeled on the cost cutting and off shoring will take a major hit …due to the rising rupee and the falling dollar. But still it would be cheaper to get stuff done in India… so the overall worth might decrease.. Yet India will still get business till South America and china come up as competition.

On the other front the world will see the rise and consolidation of the Indian companies on the international arena . after Corus and Novelis and a spate of other acquisitions by Indian companies .., the Jaguar and land rover are being eyed by the Tata's themselves..the international competition will force the Indian industries to become better and enhance their quality.The Indian pharma and automobile companies will get stronger both in India and also abroad.

Even other areas like the exporters will take a hit in their business due to the changed scenario…the falling dollar will hurt the economy for few years till the situation is stabilized again … it will not be entirely fun to watch it happening but the end result might be !

The writing is on the wall: Indian companies will have to become better to face the competition, India has to move up on the value chain rather than jt providing the most cost effective solutions like in IT and BPO’s and other arena’s….we have to make a few sacrifices and build up the infrastructure else it will be difficult to sustain the rate of current growth.

___________________ INDIA and the development indices ____________________

India will still feature at the bottom of the most of the human development indices : the reason being the denominator is still HUGE .. i.e our population … how much ever we might increase our GDP and net output … the per capita will still languish … we must come up with a parameter which will be a better indicator of the scenario.. like we could build an index which shows our current situation as compared to 20 year back or 40 years back .. whether we have made progress on few fronts or have we stayed put.

Another index might be based on the rate of ‘rate of growth ‘ .. that is are we growing at same pace or faster or have we any hurdles…and one other parameter could be exploitation of potential… are we utilizing our resources well.. or is there any scope of improvement further … or that how scenario will change if we have better infrastructure compared to the one we have now …

we need able administrators.. we need infrastructure..we need better education for the young .. we need reforms ...we need SEZ's ... we need to ease the setting of business and we need a stronger foreign policy.. we need to shed the fear of international competition.. and ...we need to just keep the faith .. and keep running !

We sure do have a long way to go before we accomplish the dream of APJ !

A promise is a Promise ... TATA NANO!

The Tata’s deliver .. yet again .

some are saying that the whole idea is as innovative as the Ford’s T-line itself.
Ratan Tata unveiled the Nano! With these memorable words “The production costs have spiraled up ,in past few years , but a promise is a promise “ !
That’s what I call leadership.Despite the opposition he is said to have received from all quarters .. the tata’s have pushed on and have kept their promise. Many people have said that producing a lakh rupee car ..( 2500 $ !! ) is impossible and they are the ones who are queing up to congratulate now. Ratan Tata traveled into the realms where the angels feared to tread.


Though its revolutionary , we should wait for the initial euphoria to die down and see how the markets accept the car and how the automobile dynamics are altered by this.
I expect it to be an instant hit among the developing nations esp the south asian tiger economies and of course BRIC countries. Since the design is cute and the emissions conform to the world standards it could garner strength among the developed countries too .. including the eastern Europe … This could start a clamor among the automobile companies to deliver a competitively priced car. This can also alter radically the dynamics of the second hand car segment .. as a similar priced car is available now.

Yet, there are few problems with the car as it obviously lacks the power (623 CC engine ) ….hence it might not be a hit with the young crowds .. and the leg room problem and also the lack of AC and push back seats and other things put together will obviously dissuade the upper middle class from buying it … hence it might not draw away the customers from the small car segment too… rather it will create a new segment all together of people who would not have bought a car otherwise. Yet it can derive its profits from the sales volumes.. which can be radically higher .. not only in India but other countries too.

And I think they should target the rural segments too instead of only urban segments .. an aggressive marketing in the rural areas could notch up the sales in India .


Another problem I had was that of the incessant traffic on the Indian roads.. already the roads of the Indian metropolis are choking with jams round the clock. The addition of such cars will make the condition only worse as it opened the flood gates to the people who would otherwise use the public transport. Of exactly how the markets would behave towards this recent development – only time will tell!

Nevertheless its worth a thundering applause!!