Up, down, up. Where is the Economy Going?

Over the last few months everything in the Indian economy has been up, down, up with no end in sight. After the recent downfall in the stock markets, experts have made different opinions about future of our economy. Many of them say, with stock markets nose-driving, sky-driving fuel prices and prices of basic commodities going high, the fear of an economic recession worldwide is looming large. This fear can well affect India’s strong run in terms of becoming economic superpower.

Well, I feel there is nothing extra-ordinary about the impending recession and believe somehow the global economy has been prone to go through cyclical boom and bust. In fact, failing home loans and municipal bonds are the key factors behind the recent sub-prime crisis in the United States. Moreover, the monopoly situation of the countries like US, UK and other European countries has gone now and process of globalisation has provided a semblance of independence for some of the developing countries. Therefore, I am confident that the US recession might dampen the pace of growth in India, but can not affect in the long term. A recent speech delivered by Indian Finance Minister, Mr. P. Chidambaram highlights some key statistics which suggests how India fast India is growing. Here are some of the extracts from that speech.

• GDP at market prices has increased from US$ 20 billion in 1950-51 to US$ 920 billion in 2007-08 and is expected to cross a trillion dollars in the current year
  

• During 1999-2000 to 2007-08, India added to its workforce about 15 million people each year and the rate of growth of employment was 3.9 percent per year
  

• The proportion of people living below the poverty line in India has declined from 51.3 per cent in 1977-78 to about 20 per cent in 2007-08
  

Keeping in mind the above data, I feel that possible recession in the western countries brings an opportunity for India, especially in the IT/ITES industries. Indian domestic IT companies are most cost-effective in the world and as the result more business from these countries can be expected. Infosys chief mentor, N R Narayana Murthy says “"The fact that there may be a slowdown in the US means people will become much more concerned over better value for money...we could look at it as an opportunity," I also feel the focus on better value of money will generate a lot of business in India. With strong consumer base and high economy growth rate, India is capable of surviving the negative impact of global recession, if any.