India Economic Summit reflects
underlying unease amid hope
Delhi, Nov 18 (IANS) An underlying unease amid hope! This
perhaps best describes the mood among the participants at
this year's India Economic Summit, which evidently lacked
the high-profile attendance that the Davos, Switzerland-based
World Economic Forum (WEF) had generally managed to draw in
ill-effects of a recession in the US and an overall global
economic downturn weighed heavily in the minds of corporate
leaders, even though many felt that India, with its high growth
rate, even if slowing, was better equipped than many others
to tide over the situation.
this sentiment was best summed up by Finance Minister P. Chidambaram,
while speaking on “Risks to India' Economy in a Post-Crisis
World” on the concluding of the three-day summit, now in its
24th edition, that began here Sunday.
recession threatens to be a longer and deeper recession affecting
most industrialised countries and we in India are experiencing
the spill-over effects of what is happening in advanced countries,”
world output will decline - and to that extent affect our
exports, affect some capital inflows, affect external credits
- we must be able to quickly substitute or compensate for
that by stimulating domestic demand and providing liquidity
in the domestic market,” Chidambaram said.
us assume that for another month or two there will be further
bad news, but even then we will grow at a satisfactory growth
rate. Next year we will bounce back to a much better growth
Indian economy is predicted by various think tanks and the
central bank to grow at between 7-8 percent this year.
the corporate sector remained apprehensive, having to contend
with a demand slowdown, mounting inventories, higher input
costs, rising cost of borrowings, depreciating rupee, volatile
capital markets, lower profits if not losses, and resisting
the unpleasant task of job cuts.
is a crisis of confidence,” said K.V. Kamath, president of
the event's co-host, the Confederation of Indian Industry,
and managing director of ICICI Bank, India's largest in the
is an urgent need to boost public confidence in the fundamentals
of the economy for a recovery to take place,” said Kamath,
adding: “I am also the first to concede that there is a change
of mood to the other end of the spectrum."
year, the mood was entirely different. The Indian economy
was racing ahead with the nine-percent-plus growth, exports
were booming, inflation was moderate, the markets were on
an upswing and corporate India was rolling in profits.
a result, this year's event saw few participants talk about
the need for the government to push ahead with reforms, the
need to spruce up infrastructure or the need to liberalise
foreign direct investment regime further.
focus was clear: The US economy was in recession, which had
spilled over to some European counties as well, and that Japan,
the world's second largest economy, was now adding to the
depressing news with a confirmed recession.
not all participants agreed with the gloom and doom theory
being propagated by some stakeholders, especially in the backdrop
of a 50-percent-plus fall in a key equity market index and
falling corporate profits.
hearing concern expressed here about six percent growth. In
the West, that growth would be considered quite fantastic,"
said James Quigley, chief executive of the US-based accounting
giant Deloitte, among an estimated 700 delegates from 35 countries.
the managing director of Asian Development Bank Rajat M. Nag
to World Economic Forum founder Klaus Schwab, and from Gujarat
Chief Minister Narendra Modi to India's Commerce Minister
Kamal Nath, all maintained that the Indian economy was resilient
enough to tide over the crisis.
it was this underlying sentiment that Chidambaram sought to
highlight while asking India Inc not to panic and assuring
that the United Progressive Alliance (UPA) government and
the central bank would take all necessary steps to minimise
the impact of global crisis on India.
classic response to demand slowdown is to cut prices for the
short-term," he told participating industrialists, while
calling specifically upon airlines, realtors, automobile makers
and consumer durables companies to lower prices to stimulate
I ask is, there are enough people to spread gloom and doom.
Just have your chin up, and in six-nine months, or maybe 12,
we will be back to normal growth rates that we are used to.”