10 April 2009

Can India live through the recession?

“What is the truth behind the fitful hints which reach us intimating that there exists in India an old wisdom that promises the most extraordinary development of mental powers to those who practise it.”
– Paul Brunton, spiritual seeker, in his book A Search In Secret India (Chapter 1)

With job cuts in certain sectors, a drop in demand and in production, no doubt the global recession has hit India. Interest rates have fallen, the stock market is idling, and the government is reconsidering its estimate for the country’s growth in GDP. Most likely it’s going to be far below last year’s projection of 9%. Indeed, the figure will be half as attractive as that. Still, in all probability, India will be one of the very few countries around the globe to end the year with a positive growth in her GDP.

Current market reports indicate that FMCG, retail, automotive and pharma sectors will do well... not just in the usual urban areas, perhaps less so, but by exploring markets in smaller towns and in rural India. For instance, the FMCG industry, estimated at $40 billion, is expected to have huge wins in rural markets with large populations from India’s over-600,000 villages asking for and buying branded consumer goods. Most other industries are likely to follow suit in order to grow their businesses or sustain them.

Of course, there will be some set-backs. Industries dependent on foreign markets for their customers and foreign investments will suffer. But, thanks to local demand from a large population (over a billion people with varied needs), a conservative banking system (no toxic debts to worry about), adequate resources of her own to channelise towards growth (only 20% of India’s GDP is dependent on external trade), management prowess of her industry leaders (competing with the world’s best), and an educated and skilled workforce, India is likely to live through the global recession without a great scare.

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