Saturday, June 25, 2022
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Look at the Economy gone by


By Harneet Khurana |


Christmas is here. Children humming carols, the markets dotted with red and green colours, oversized people dressed as Santa Claus giving away children chocolates, gifts and yes who can forget the dazzling stars and the lighted bulbs hanging from the Christmas trees.

Well, the above was not the case for the past 5 years, well at least not in the Europe and to an extent in the US too. PIIGS (Portugal, Ireland, Italy, Greece & Spain) did not celebrate Christmas with the same zeal and enthusiasm which they were used to. The Economic Turmoil and the financial crisis that followed the year of 2009 will remain etched in the minds of the people for a long time.

India was also not immune as the GDP fell from an average of 9% during 2004-07 period to 6.8 % during 2008-09.

Persistent high inflation rate followed, fiscal deficit came to a level not experienced for the past 10 years, and exports fell.

What started as sub-prime crisis eventually turned to the biggest crisis since the great depression of 1929. China also felt the pinch as it being an export driven country, the orders became smaller. The export surplus amount fell, but as we all know the dragon did not fall instead it expended huge funds on building roads and dams in the remotest of towns.

In fact, it was said that in the year 2009 around 80% of the world’s cranes were in China. Chinese labourers who did not get jobs in manufacturing IPhones and IPads, got jobs in constructing Infrastructure, making china the fastest growing economy in the world.

India also responded but the twin sword of inflation and growth hit it below the belt. The RBI was concerned more about the Inflation than on growth. Adding salt to the wound, were the various scams like 2G, Coalgate, common wealth games and who can forget the Satyam episode. These scams rocked the Indian economy, sent ministers to jail, well at least for a short stay, Investors sentiment hit rock bottom and the fizz of Indian economy had almost popped out.

The only silver lining was and till date is the service sector, which somewhat steered the Indian economy through its ups and downs.

The stock market lost its sheen and gold was the in thing. Gold biscuits and ornaments started flying off the shelves as hot cakes.

In his 2nd term as the Prime Minister, Dr. Manmohan Singh went from being the father of Indian economy to a puppet.

In 2013, the darling of Indian Bourses and long considered industry bellwether Infosys which was going through a rough phase led to the bringing back of Mr India of Infosys N. Narayan Murthy.

The growth of BRIC has seen a small decline but is expected to be back next year. MISSAT (Mexico, Indonesia, Singapore, South Africa and Turkey) continues to grow.

In the last month of the year, two central banks influenced the equity market. The RBI which left policy rates unchanged and the Federal Reserve which began withdrawal of its monetary stimulus.

In the short term, the single most important factor that is the cynosure of all eyes are the 2014 general elections as a strong government with decisive mandate would be the Ideal outcome. Well as said by the Prime Minister Manmohan Singh that India is the tortoise and China is the hare. Well, we all hope that turns out to be true.

Well for now, let’s gorge upon the plum cakes and wait for the Santa to bring the much awaited gifts.



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