the economy and the escapist Indian

well….we all have heard the word “recession” looming large over the global market for the last 2-3 quarters and it seems that the baby is here to stay – well at least for the next 2-3 quarters that’s what pundits say. So realistically what does it mean for the average India – let’s put it into perspective.

- inflation dipped to jan 2008 figures at around 5%

- home loans at lower 7.50-8% monthly reducing

- property prices slashed by 10-15% at most places

- shops offering discounts galore in a last ditch attempt to move merchandise

Well all seems hunky dory then – Indian markets seem to be on an upswing trajectory, or is it? Around half a million workers in India have lost jobs between October and December 2008, according to sources in the labor ministry. It is estimated that by end of March the total job losses in India's export oriented units may mount to over 1.5 million. In contrast the picture does not seem as rosy a before.

The problem is that the market sentiment has touched rock bottom - India being mainly a services economy seems to have been affected some what by the US economy downswing. But somehow data seems to show that Indians and Asians as a bunch seem to be doing comparatively well. Yes the attrition rates are lower, raises are almost non-existent but India offers a beacon of hope.

According to the latest Nielsen Global Consumer Confidence Study. The survey is the largest bi-annual study of its kind, covering more than 26,000 internet users in 52 countries. Savings save Indians – it seems.

Sixteen per cent of those polled in the country think it is an excellent time for jobs, while 59% feel it’s a good time. Consequently, the respondents’ perception of personal finances is just as glowing, as India topped the list as the most optimistic with 77%; 9%of Indians think it’s an excellent time while 68% opine it’s a good time.

In keeping with the negative global sentiment, 38 out of 52 countries are pessimistic about the economic situation in their country in the second half of 2008 with 63% of the respondents saying that they believe they are in recession. Only three countries think they will be out of the economic recession in the next 12 months: China, India and Vietnam.

Absolute numbers have come down in India. Six months ago, 26% thought it was an excellent time for jobs while 60% said it was a good time. On the personal finance front, things are down by two percentage points. A report released by jobs portal Naukri.com states the overall job index in October 2008 was 781 as against 1,000 in July 2008. That’s a decline of a whopping 21.9%. It is not as bad as the United States, but the numbers are down with many sectors retrenching or holding hiring.

The most palpable of all fears is the one that has stricken business schools. Many firms are not going to B-schools this year. The spokesperson for Indian School of Business agrees that the coming placements season will be challenging.

While the rest of the world may be living from pay cheque to pay cheque, 58% of Indian respondents said they were in the saving mode. Indians have gone a step further and slashed spending on holidays and vacations by 10 points. Spending on new clothes and out-of-home entertainment has dropped two and eight points, respectively. But not much has changed with regard to paying off debts, credit cards and loans.

Saving continues to be a high priority in these times of uncertainties. In India savings remains the biggest priority, with 58% consumers preferring to save their spare cash, almost the same as six months ago.

Net net amidst the global lull though the only thing Indians have down is to cut down on the shopping and entertainment front – so we see lesser footfalls in malls and even lesser outright purchases. And yes thoughts of the luxury car and the second home have been put on hold - at least for short while. While that is bad news for the retail industry and other associated industries that grew along with the sentiments of those times. As Indians want their money’s worth now even more so than before - we might be looking at companies coming out with innovative products and price points to set the market going. One way or the other the escapist Indian is the winner.

All hail the escapist Indian.

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