How can India prepare for the Global Recession

Sun, 16 Nov 2008 17:34:48 +0000

The world is presently going through an economic crisis. The problem began with
US banks who gave high-risk loans to people with poor credit histories. These loans were then bundled into portfolios, high yield securities and sold to investors globally. As the news of US banks collapse tricked in, every country initially thought they were not affected by it. But soon the whole world realized that the global economy is very interdependent. Growth has slowed down considerably, world is in recession and already few countries have been declared bankrupt.

India has also been affected by the global slowdown. There has been a huge outflow of funds. Stock market has collapsed, exports are down and there is news of job cuts & layoffs across several sectors. The Indian government goading over 10% growth has suddenly been caught unawares. However there is a ray of hope also. We are still not completely integrated with the global economy – especially the badly hit banking, finance and insurance sectors. Some of the steps that we can implement in order to insulate our self from the global recession:

• Implement cost savings across all sectors and reduce unnecessary spending
• Invest in long term projects like roads and infrastructure
• Reduce Imports and discourage corporate and private capital outflows
• All securities, savings and extra cash be deposited in PSU Banks
• Monitor fund inflows and outflows on a regular basis to discourage currency fluctuations

For the Indian economy managers, there are several lessons to be learned from the global economic crises. Like – Focusing on building a strong domestic economy based on local consumption. Strengthening regulating agencies such as SEBI. And most important – not depending entirely on international consultant’s, agencies and regulators.

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How can India prepare for the Global Recession