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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a year of hope....

well its been over 70 days since my last post and i would like to apologize to my readers (a handful to be honest but clearly the feedback from them is highly appreciated) for the long hiatus. Apparently business tours and the administration tasks associated with with can make your world go round (:0) for a considerable amount of time - creating expense sheets, deleting them, re-creating them, time sheets etc etc - you name it, i got it.

Anyway a lot of changes on the personal front too had been keeping me away from one of my favourite activities - "voicing my opinions" and this platform

has honestly opened up new avenues in my persona that even i was nto aware of.

So continuing on that note and wishing my dear reader a belated but prosperous new year - i hope that i can continue doing what i had started last year.

Let this year 2009 be a year of HOPE for all the people of this world - amidst the political and social gloom let 2009 herald in a new chapter of socio-economic reforms and human uplift-ment.

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inflation_on the other side......

“Inflation”……………..”Mahangai”!!!

…………….the words that so marked the 80s are back in business, worldwide and how. In India, while basic food inflation has reached a back-breaking 10%, for many items, it has reached 100,000% as in Zimbabwe (remember a article where yours truly Virender Sehwag during the T20 world cup in South Africa, Zimbabwe was highly amused with the price of a bowl of noodles reaching about a million in their local currency).

A case in point is the popcorn available at multiplexes, so expensive that De Beers is thinking of entering the popcorn business with a tagline “Popcorns are forever”. Then again 300 ml of soda drinks are available at Indian airports for upwards of Rs 30 (sweetened water that too this expensive) - I wonder what supply chain they use. Taking the cue, the IIMs have trebled their fees since they rightly believe that they are the worst affected by rising sugar, edible oil and food grain prices.

In India, escalating prices haven’t responded to strong currency, high interest rates or the slowing economy. While many blame it on the global situation, export curbs on Indian produce are unlikely to cause much difference for many key products such as wheat where prices of local produce is already higher than world prices. The much promised supply chain efficiencies with the coming of retail chains have also turned out to be a hoax. Well prices in big bazaar or the likes are actually more than the local mandi 9at least this is what I found in Pune)

As such, there is a need for drastic measures to curb inflation even if they sound hilarious to some. One can learn from Philippines where legislators have suggested making it compulsory for the top 100 companies in the country to produce rice & foodgrains – move over to India; think of tata rice, (experience certainty in taste) reliance moong dal (le lo khana muththi mein or mere paas MA brand dal hain) & infosys wheat (eat in the f-L-at world) !!!!

One way could be for the government to vigorously promote the religious practice of Upvaas or fasting to ease demand. Public TV stations need to telecast messages like “Zaraa sa upvaas, fir inflation bakwaas” in lines with that messianic family planning PR effort of “Zaraa si savdhaani, zindaagi bhar asaani”.

Alternately we should invest in R&D by people like Baba Ramdev so that he can develop new breathing techniques to control craving for food.

Serious and long term measures such as making another push for land reforms are unlikely to be taken up in India’s democracy, accustomed to creating easy loopholes in all land reform related initiatives. This, despite strong evidence that self-cultivation of small farms ensures far higher productivity than cultivation by tenants or hired labor of large farms and the so obvious benefits of land reform for India where only 9.6% of landowners own 56.2% of land. (Source: D Bandyopadhay, EPW)

All the same, there is one quick fix which can immediately solve the inflation problem and that is to make it compulsory for tele-shopping companies to sell food grains, edible oils, sugar etc. Given their practice of offering seemingly huge discounts on everything and selling many things for the price of one, these tele-shopping networks will help solve food related inflation in a jiffy. Indeed, a combo of 15 kilo of basmati, a free shree-yantra, and a jogging simulator thrown in, all for the price of one, will go a long way in solving our inflation owes.

PS: And Mr. President - average daily calorie intake for an average Indian is about 2000 calories only.

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