India must do its own homework, dont look for outside advice!
There are record food stocks, prices okay and the government is doing what is possible to ensure food security.
There is, however, room for cheer in the Indian economic scene! Yes, there is credit crunch and this is more severe in the farm sector.
There are predictions that the processed food sector won’t grow as much as hoped for and the exports from for the processed foods and also for other food grains as bad as one could expect for the rest of the Indian goods and services.
Elections apart, there is the general world conditions.
The developed countries, the G-7 are more severely impacted. The industrialised economies, the IMF notes, have been severely affected since the time of the world war 11.The US economy is the hardest hit and so too others.
As for India we come in the category of the G-20 and it is noted that for these countries, including India, the IMF notes the contraction of the world economy and output is likely to be between 0.5% and 1%.For the USA and the rest of the G-7, the contraction of the economy would be between 3.0 to 3.5 %, the IMF says.
So, the countries in the developing world are relatively better placed. This is good news, we believe.
But for the agriculture sector, it is now widely reported and editorials are written in the major business dailies. They all say there is a mix of many policies, more in the nature of the protectionist economies. There is a ban virtually on all foograins exports, rice and wheat are banned. There is also in the reverse a near zero duty import tariff for raw sugar. The sugar industry is almost up in protest and the area under sugarcane can be further reduced owing to this “free” imports of raw sugar.
But then, there is a need to keep a tight control over the domestic prices on all essential commodities of common consumption. Sugar is a critical daily item of consumption for the vast population.
So, for the present even the futures trading in agricultural commodities are controlled to avoid further speculation in these commodities and hence the changes that further rise in food prices can be controlled. This is what is happening.
So, what is good for the developed countries, stimulus packages to stimulate spending and create confidence, in countries like India there is need to maintain a stable price regime first for the food economy, so that the common man’s perception of the economic recession is kept far from one of gloom and fall in confidence in the government?
Fortunately, the elections and the parties and even the politicians, more out of narrow selfishness rather than the concern for the common man economic recession and the consequences, fall in real estate or further import of edible oils and pulses or raw sugar or any other item of common man’s needs are freely resorted to even if it means further government spending and further incurring of deficits and more delayed time in the economic recovery.
There is fear that very soon; if not already there is deflation that is further decline in consumer spending.
The time of economic recession is one when great leadership and confidence-building measures are called for.
In India we have a government and a Prime Minister who is supposed to be a great economist; we don’t find any public enlightenment.
There is, if any, total silence and no other competent leaders, either from the ruling combines or from the Opposition ranks, including from the otherwise vocal Communists, there is no bother about how the economy over all is doing or not doping.
So, what we, the public, have to perceive is the small sings, here and there and we have to feel confident from the small mercies from the private sector.
One good news is the latest introduction of the Tata small car, Nano. The timing is significant. As one leading daily reported this is the third stimulus package! Already the introduction of the small car has raised the market sentiments, there is, it is noted, some raise in the stock market track, as much as 5 % on the day of the small car induction. This sentiment has come nearly after three months as a single day’s gain.
So, there is the new stimulus. That is a big gain considering what the other developing countries are reporting.
Why even in Europe, notably, in France, where the small car had been an obsession with the Renault Logan, which had been long hailed as the best small car ever introduced in the automobile-crazy Western Europe. As the French newspapers have all demonstrated unconcealed envy and skepticism ,the Indians must be feeling somewhat elated and also encouraged by the success the Indian economy at this stage of development had demonstrated.
The other sectors that stand apart from the rest of the world is the IT sector, the key strategic sector in the world today.
The Indian IT sector, though impacted by the current recession and also the concerns over what the US tries to do, to protect the American workers, the latest deals made by the major IT industries show there is still much room for the Indians to gain a significant control over this sector.
So, whatever Obama’s initial promises to protect the American jobs, his policy has to respond to the ground realities.
The cost advantage for the American companies would drive further the trend towards off-loading many jobs to low cost destinations.
India’s great key advantages is its human resources and it is here we need some imaginative initiatives. The government must better consult the IT leaders in drawing up polices to enhance the competitive advantages of this sector. So, the current economic recession, while it causes much concern in such sectors like the export front, there is much effort is needed to manage the economy to steer it out of the present crisis.