If you observe the pattern of recession in dotcom time and current one. There are lots of similarity.
How much the pattern match.
Last time it was more centric to IT and partly with manufacturing which had affected the economy back-bone. This time the problem start on the back-bone itself --- The Banking sector, spreading to credit crunch across most of the sectors. Most Impacted industries are real-estate, again manufacturing, Semiconductors, FMCG (excluding the food), auto, travel etc. etc.
What does that mean? Impact on global economy will be too much. You heard that it is in US and spreading in Europe. Why not at other place yet?
Let us go back to the basic. Though India, Russia, and China are emerging fast as economic power but if you check US still contribute 30% of the GDP of the world and if some thing happens there, it impact the global economy. China contribution in world wide GDP is still in single digit. India still may be struggling to reach 0.5% of the global GDP.
No.. No.. Don’t get depressed. Fast developing countries like China, India, Brazil, Vietnam etc. are growing at tremendous rate and ultimately going to take away some part of US or European GDPs pies.
What are the positive part of slow down for India?
Look at the situation for Vietnam, Brazil and India… Medium and small scale Industries in these countries are yet matured. Excluded China in this list but still 70% of the medium and small scale industries are immature indications are on quality side. Hold on, ground reality is that China has the scale but not focusing on quality -- Maturity matters here really.
This timing of slowdown or recession can be utilized as learning part by Indian. Looks like world will take at least 2 years to settle down from the current economy slumps. And in these two years Indian needs to ramp up quickly.
Where we can do far better?
We should complement to Chinese manufacturing instead of competing. How can I make such comment?
OK… See, China is doing pretty good in apparel sector and if one can start now, it is going to take much longer time to be there where China stands now, but look at the automobile manufacturing we can take the big leap here. Next 18 months to 20 months are crucial to create the differentiation in automobile industries by Indians. Knowledge based industries we have the edge, take advantage. After the recession most of the investment will happen in India and Vietnam so that west can get some return of investment. The product life cycle needs to be managed near to the customer in India and China and not in America or Europe. There are lots and lots of opportunity coming for us. How we take these opportunities are going to shape the country.
One thing needs to be controlled in next three to five years. Inflation needs to manage within 5%. Why 5% why not below 3%? Hey !!! Let us talk in reality.
This will automatically control the salaries, purchasing power, Return of Investment, good environment for investment etc.etc.
1 comment:
Thanks for writing this.
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