Good Times Are Here Again
Hindustan Times, Jaipur Live, May 24, 2009
By Pradeep S Mehta
When will the economic situation improve is a question often posed to me.
In an opinion poll published by a national magazine, about 58 percent people expected it to remain the same, while 27 percent believed it will improve, in the next six months. I belong to that minority. Why?
Let us look at some indicators: the sensex crossed the 12,000 mark after having taken a hit in the past, and the same phenomenon was witnessed in the western markets too.
On the other hand, oil prices rose to nearly US$58 a barrel, while the core multipliers: steel and cement production and prices went up. Nano racked up booking deposits of over Rs 25000mn in just 18 days.
This is a reflection of people being willing to spend more.
I am an optimist, and believe that the economic hardships of the last couple of years might soon become a thing of the past as the global economy shows encouraging signs of recovery.
The rate of job loss, a major consequence of the recent economic downturn, seems to be slowing down.
This is true of the United States economy, which still continues to be the centre of the global economy. And it is due to reduction in our exports that our own economy is decelerating.
The improvement in economic health of the United States, therefore, is sure to have a favourable impact on India and the global economic climate.
In India, the economy never stopped growing. It is only the tempo of growth which had slowed down.
But there are definite signs that the rate of growth has now begun its journey back to the high levels seen in the middle of the decade.
The decline in manufacturing output, a phenomenon viewed with alarm in 2008, has now almost stopped.
With agriculture having performed well in the recent past and the services sector still expanding, it will not be surprising if the growth rate of national income for 2009-10 is markedly higher than that in 2008-09.
There are distinct signs that the economy is regaining its lost momentum.
In bad times, people cling on to whatever money they have and reduce spending.
As one man’s spending is another man’s income, this actually worsens the situation. Therefore, if I put off spending this hurts the incomes of a large number of persons through direct and indirect channels.
We, therefore, need to un-zip our purses and spend more liberally. Good times are near at hand. A little positive thinking from us will ensure that these become a reality.