Monday, July 6, 2009

As a responsible citizen of India how will I take my country through this financial slowdown?

Hi people. There is an essay competition here in Chennai and this is my entry for it. Results are not out yet. So please cross your fingers for me. ;)
Also today was the day the budget was released so I think it is apt that I post this essay of mine here for all of you.

As a responsible citizen of India how will I take my country through this financial slowdown?

The sub-prime mortgage crisis that originated in the US, soon consumed every country of the world, and has now become a Global Crisis of epic proportions that is second only to the Great Depression of 1929.

Most of the major economies in the world are in recession and this is taking its toll on people everywhere in the world. With reduced demand leading to reduced productivity, this in turn forces more and more people out of jobs as companies try to cut-down costs and maintain bottom lines.

India has escaped the brunt of the crisis thanks to its strong domestic economy and good financial regulations. We have managed to register 5-6% growth in the last year. This is down from 9% in the previous few years, but is still impressive considering the global crisis we are in.

However, certain sectors of our economy that are export-driven have suffered with reduced demand from abroad. This has resulted in job-losses for millions. Most of the people who have lost their jobs are daily wage-earners and usually the sole bread winners in their families. So the problem scales up when we take in to account all the dependents.

The stock market also lost nearly half its value. Many investors lost all their life’s savings in a matter of months.

Many analysts and experts say the worst of the crisis is over and things can only go up from here. But there are others that say that the world will take a long time to recover from the excesses that led to the crisis.

It is important that we focus on recovery and maintain strong economic growth rates to realize the dream of a poverty-free India. President Kalam once said that if India were able to maintain a growth rate of 10%, then by 2020, we could eradicate the scourge of poverty from this country. It is therefore imperative that we all take steps to re-energize the economy.

So, as a responsible citizen of India, how will I take my country through this financial slowdown?

Many analysts and experts believe that a recession/slow-down is a good time to restructure the economy and give it a better direction. I’m a believer of this school of thought and would like to look at this tough situation in a positive way.

It is widely accepted that one of the ways for an economy to handle recessions/slow-downs is to invest heavily in infrastructure. The deflationary effects of the slow-down means prices come down and therefore more work can be done for the same price.

India needs to develop its roads and transportation network. We need better schools and colleges. We need better power supply, better telecommunications, better ports and airports. Thus there is a tremendous opportunity to develop our infrastructure and bring it to world-class levels. This large-scale investment in the economy will drive up demand and will bring dividends over the long- term. Now as an individual I’m not really in a position to invest on my own in projects of the scale mentioned above. However, in a democracy, I am enabled to vote for the candidate that promises to do as mentioned above. I did exercise this power in the recently concluded general elections and I will continue to do so in all elections in the future. I also plan to be more involved and write to my local MLA, MP and Councilor demanding the implementation of the election promises and also try and give my own ideas and initiatives when I can.

I would also like to develop a savings habit for myself and encourage others to also do the same. Like the old saying goes- One must save for a rainy day. India has the highest savings-rate in the world. But being born in a generation with easy access to credit in the form of credit cards and personal loans, I feel those good old-fashioned money values are being lost. This easy accessibility to credit was the reason for the crisis in the US and I believe it is the duty of every responsible citizen to try and avoid it so that we don’t suffer a similar crisis here.

I also plan to become a prudent investor. I won’t be dealing in the stock market until I have understood the market dynamic. I want to have a complete knowledge base and I don’t want to be playing the market on speculations and gossip. People should return to their books and become thorough before they enter and play the markets. Market speculation and hype was another big reason that drove the real-estate bubble in the US. We must try and avoid the same here.

I have a long-term goal of becoming an entrepreneur. Entrepreneurship is the key to harnessing innovation and creating jobs. Job creation will hopefully be a positive off-shoot of my entrepreneurial venture. I will also encourage others around me to get in to business and try out new ideas and processes. In this way we can all play our part in developing Brand India and in harnessing this country’s tremendous potential.

These are the steps I intend taking to help my country through this financial crisis. I know that I am only an individual and there is very little that I can do to influence society and policy from where I am today. I also know that there is very little one can do when a crisis of a global scale is on us. I might be only one drop in the ocean, but each drop makes the ocean. People should learn and understand that, individually and collectively, we all have our roles to play in our society, economy and country. I’m sure if we all work on it we can pull through this crisis and make the India of our dreams a reality.

16 comments:

Venky said...

hmmmm i echo your thoughts totally but fro this one

"I would also like to develop a savings habit for myself and encourage others to also do the same"

actually this can aggravates it. The more u spend there is more money flow, savings to a certain small level is ok. So i believe we should spend a lot to stop this and save less.

A New Beginning said...

and the winner is the writer of the most thought provoking, well written and practical writeup...Mr. Ajai!Really well written, the point on saving is very imp and its good that you pointed it out in ur essay. All the very best to you Ajai..more than winning or losing whats imp is the fact that we can point out the real problem which you've done here.You won when u decided to take part...which many didnt!Cheers!

Rakesh Vanamali said...

Couldn't agree more with your take especially on the credit cards and the personal loans front which while seemingly provide easy access to money to a large populace, also come with the rider of a very huge price associated with either!

What is called for is strict discipline that needs to be observed at all times, good and bad!

Also, investments in infrastructure and basic amenities will see widespread benefits, especially in the wake of a shrinking global financial scenario!

issam said...

brillianto bro!!
But like Venky said the credit thingy can backfire...especially at this moment... People should be encouraged to spend. But yes, with a certain good sense...
Our FM seems to have big on this... But excessive deficit is only going to hurt us more... The huge borrowing will again put enormous strain on the exchequer.. And Oil prices would remain a prob.
I would say the focus should be on agriculture... The need to increase our productivity is enormous...
You rightly pointed out the power of entrepreneurship... It's like a trickle effect. With the market liberalization it was that power that Mr Singh tapped. I feel further impetus should be given to this area. Colleges should be encouraged to have Entrepreneurship Development cells and it needs to be given apt attention and focus. A lot of it is to do with the perspective. For a long time we Indians have been accustomed to working for someone. Thus all our precious manpower gets lost elsewhere.
And I also believe our education model needs to change. The economic impact serves right for all those colleges who were advertising for all the I.T companies. Colleges should be the brain behind ideas and from them should stem the roots of business which should branch out to serve the masses...
Anyways, I hope you get the prize bro!!

AJai said...

@Venky & @Issam
You guys brought out the same point so I'm replying for both.
A high savings rate means there is some sort of stability in the system as it can avoid/handle big shocks. It also means there is more liquidity in the system and gives the Govt more room to play. This is one of the big reasons why India and China's economic models are so sound. I'm sure you guys already know this.
I admit that too much savings can have an averse effect on the economy. I'm k in releasing credit for building value- like in funding education and homes and businesses etc. But releasing credit so you can buy that new mobile or laptop is not what I am for. With the instability in the market you could be out of a job tomorrow, then what happens to all the payments that you default on? Precisely what's happened in the US. And that's why I brought out that point.
Thanks so much guys for reading through and commenting. And I thoroughly enjoy discussing/debating these things here. :)

@Sana
Now only if you were in the panel that decides the prizes. ;)

@RV
Glad to see that we think alike Raks. :)

@Issam
You will be finance minister someday bro. I can see it. :)

Ayesha Parveen said...

A detailed, well-written essay.

All the best of luck to you, Ajai.

Cheers :)

AJai said...

@Ayesha
Thank you so much. :)

rimz said...

1st of all a very best of luck for u for the competetion..

The piece is very well written with nice vocab n consequences properly delineate our present socio-economic condition. As u said we all shud act resp[onsible on our own parts , as thers another bon-mot 'charity begins at home'...little good things will sum up to mend the big hole...n in near future we will b out of dis meltdown. Its we d youth who are supposed to take the reign of d country in ol ways possible...
liked ur pisece...quiet inspiring as it brings the true facets of today's life.

issam said...

Just thought of adding to your comment.
I am with you for the savings part. All i meant was that people shouldn't have that excess cash kept inside their bunkers. In the name of savings, our folks kill the economy and we have a parallel market running.
I am sorry I am kinda deviating.
Anyways, suffice to say that I am for no unnecessary credit extension. It only creates a virtual demand which will only come back to haunt us. :)

AJai said...

@rimz
Hey thank you for your points. And welcome here. :)

@issam
perfecto mundo. What's with the sexy new pic? ;)

Anand said...

Hmm.. 'To save' has been a mantra fr decades. It's flawless. Always works. DOnt see why it cant now. :-)

Hope u win bro.

AJai said...

@Anand
Well Anand, saving is good. But it might not be a good idea to lock all the money away in the bank. Money is like water, it remains fresh if it flows, otherwise it gets stale. So money needs to be running through the system if any development or progress needs to be made. For eg: A business man might need to raise capital to expand, but if everyone saves and no1 is willing to invest with him then he either stagnates or loses business completely. So too much of savings can be a bad thing. But a little bit is necessary and that was the point i raised in my essay. Glad that you dropped by. I hope you continue reading my blog. :)

Mad Blogger said...

Great post man... These days everywhere you look around, you find gloom and doom.. Everything points to some sort of a dooms day for some strange reason.. But if we have a pause and have a look at the woes that we get to see, its so resemblant to our lives - ups and downs.. There is a serious lack of optimism around. I believe in one thing - when you are in the midst of a cold winter, be rest assured that the spring is fast approaching!!! In all this gloom that people perceive around, I am sure that there is a boom on our way.. SO stay focussed and do things that we are supposed to do.. Once again.. congrats..

AJEYA RAO said...

Informative...Did you write to Mr Pranab Mukharji befor ethe budget. :-)

AJai said...

@MB
Thanks bro.

@AR
Ya I did. You think he could come up with all that himself??? ;)

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