It has been a long time that I put my thoughts into writing or rather typing. So why not I get my thoughts into something which remains a most talked, most discussed, most written topic recently and it’s ‘The Recession’. Though many haven’t yet been affected by it, at least not every country has experienced it but it still remains the biggest challenge to all.
Before I put something on this word document, before I even think to think about the Recession and the Global Slowdown I would like to confess that I might have little or no knowledge on the economics or the even the remote part of economics, as basically I am from a technology background and after my schooling I haven’t read anything worthwhile on it. But, in recent times I have gone through various articles and that is what making me write the present one with whatever little understanding I have. I might be right I might be wrong and if I am wrong I will certainly be happy if I be corrected.
So let’s begin…………. I have come across few of them including some of my good friends trying to tell me eagerly that India is in recession and I should also take that into account before I decide on anything that I want to do. But, being an Indian I want to make clear of this point that India is not in recession and most likely it will not fall into the clutches of this Recession. India is just experiencing a growth slowdown which I guess is around 6 or 7 now due to the global slowdown effect. Yes, India is not insulated from this trend and it will have an effect and it is having an effect but only on the exports that India does with the other countries largely to US and Europe. And that accounts to just 20% of the overall GDP and most of it is the software exports. So, are the Indian software giant’s baring the grunt due to the bad hit on their exports to the US and Europe as they largely depend on the foreign markets forgetting their own.
The definition of Recession says ‘Having a negative growth for two consecutive quarters’. Happy that India has not touched the negative growth. Going on with what went really wrong and what had made most of us to experience this slowdown? Yes, it began with the subprime crisis in the US. What is subprime crisis? Based on what I have read; US banks classify the loanees into Prime and Subprime. Prime are the people whom the bank is confident of repaying their loans and about the subprime they really doubt of their repaying credibility. What really make me wonder is why they have to loan the amounts to the people who they are not sure of repaying? If I have to lend my money to someone definitely I won’t put my money on someone whom I don’t trust. The strategy should be same with the huge lending’s that the banks undertake, but I am not sure as it gets really complicated on the bigger picture and the businesses that are carried out might vary completely when put up in comparison to the individual dealings.
Though the recession started with the subprime crises, but the subprime crises had just fueled in the recession. The recession would have come in US with or without the subprime crisis in fact it was begging to happen. The fact that there had been no major new inventions and better goods being developed in the US in recent past had swung the technological advantage towards the other countries like the China. Now the major goods that is being used by everyone has some connection to China, and it is exporting a lot to other countries even to the US, earlier US used to do this. Now the question arises what makes China goods so appeasing? The cost factor comes an instant answer and off course also technologically better and feasible. It is also being said that China manipulates its currency value and undervalues its Yuan such as to make it exports look cheaper, now the US is cribbing about it. But I guess as the US owes a lot of money equaling to 1 trillion USD to China it doesn’t really act much on it.
US now have a debt of 2 trillion USD to the rest of the world. And each of the Americans has a debt of 140 percent than their disposable incomes. It is happening and it is happening because US is not been able to catch with the technological advancement that is going on elsewhere. And I feel it is tough for US to come out of the recession only based on the stimulus plans and economic reforms, what it badly needs is the capability of producing better and more economically feasible goods. US, spends high enough funds on research and development it doesn’t lack there, it has to find out the real reasons that is holding it back on the research front. US basically works on a credit basis and most of the nations had invested heavily there, so anything happens in US will have an effect in those nations as well that is what we are seeing now. Even China’s growth has slowed down drastically to some 9 if I am not wrong because of bad hit it had it on its exports.
During my talks with my friends on this particular topic, I was repeatedly asked, ‘If India is not facing recession then why the INR had lost its value when pegged up with the USD?’ Yes, that seems right if US is facing the recession and India is not, If India is not yet facing the drastic slowdown then why is that trend not reflecting in the currency exchange? Well it happens so because the currency value is estimated based on the supply demand chain. And all the nations which have agreed for an open market which even India had agreed to from the 1990’s and I guess China is not yet into that group as it values its own currency. So coming to Demand supply, at the present situation when US is in recession it badly needs its USD to invest in its own markets or for hugely talked bail outs, the stimulus plans, talking on general terms to invest in US. So naturally it is pulling up the USD from the foreign markets which creates a demand for USD. There arises this situation creating a more demand for USD and less supply and as the demand raises for USD even its value raises when pegged with the INR. A currency value is not a pure indication of the economy of a nation, like the Euro or GBP are valued higher than USD. But fact remains that for now US is the biggest economy.
Here, I have a free advice for the patient readers of my long post. For all the NRI’s residing in the recession hit countries it would be a good idea to transfer your funds to India before the recession ends. Because, as the recession comes to an end the USD or other currency valued in comparison to INR won’t be as high as it is now, it might as well come down considerably if I am not wrong. I sincerely hope this happens. At least that would be able to put a break on the brain drain. I feel brain drain is bigger draw back to a country then it is actually talked about or is thought about.
For instance, from India every year many of its brightest lads leave the country having their own reasons to cite at. May it be the better exposure, better education, better lifestyle, better enjoyment, individuality, better infrastructure. Yes, all these reasons seems’ good enough for them to dream about others land and work on others land. And for that they do whatever possible, they get their funding from India be it on their own, their parents hard earned money, or the Indian banks and they finally invest it in the US universities, It remains a fact that US universities depend a lot on the International student funds because of the high fee they pay. I always wonder if all of them choose to study in India that money will actually help a lot in improving the infrastructure of schools in India.
Off course few of them end up getting the funding from the schools in US, but that number remains really low when compared to the bigger number joining for the courses. And others make up their mind that they can earn by working on campus or off campus etc. anyway I prefer talking on this elsewhere than here. Coming to the research work that is carried out by these immigrants it again adds value to the foreign country only which they can eventually make good money from, by making better goods etc. and every good idea or every good research that churns out from the Indian brains in other countries is a lost opportunity of India. Sadly it had happened in lot many cases in the past and it will go on till we feel and realize of what we have lost and what we will be losing. For me, brain drain is no less than the corruption and at times even bigger than this, in affecting India badly and its chances globally.
Now, coming to the poster boys of every family of major cities in India i.e, the Software brigade in India. The Indian software giant’s they used to leap upon every major college campuses and also provide offer letters to as many as they could, Yes, it is really great to have a job offer even before you complete the course but………………... Let me put a break here; I guess my discussion was on Recession and just the talk about India made me to get drifted. Not surprising enough, it happens quite normally with me. Anyway I again prefer talking on this some other time.
Coming back to Recession, it did had it effects and the one’s it had hit it did it hard. The lost job’s, the lost home’s…. well the good thing for them is it can’t get worse than this, it can only get better from here so naturally good days ahead, so pin up your hopes high. These times also gives us an advantage where in we can work to improve our profile which we usually neglect being busy with our daily work life. We have a chance of switching our field; we have a chance of working on our ideas for which we never had time earlier, again due to the daily work load.
And for the ones who have some good ideas and entrepreneurship is what excites you. I feel there is no better time than a slowdown or recession to start working on the idea. Yes, getting a business might be really tough. But it is expected to be tough for any starter be it in recession or not. And good things are that you can get the employees or working men on a lesser pay than in a normal condition, the banks will be providing loans on lower interest rates, land is cheaper to acquire and the government will ease out it policies to encourage more investments. Thus, we have the labor, the capitol, the land all on a better deal during recession. And as I remember what I read in my school economics these are the three prime things needed for any business enterprise. So, though a recession has it bad effects it also has the good effects coupled along with it.
PS:
Whatever I have talked about here, it might be right it might be wrong. You might agree with it, you might not agree with it; but I hope you certainly won’t be ignoring it.
To correct me if I am wrong on something please do contact me on harishkumarba@gmail.com .
Before I put something on this word document, before I even think to think about the Recession and the Global Slowdown I would like to confess that I might have little or no knowledge on the economics or the even the remote part of economics, as basically I am from a technology background and after my schooling I haven’t read anything worthwhile on it. But, in recent times I have gone through various articles and that is what making me write the present one with whatever little understanding I have. I might be right I might be wrong and if I am wrong I will certainly be happy if I be corrected.
So let’s begin…………. I have come across few of them including some of my good friends trying to tell me eagerly that India is in recession and I should also take that into account before I decide on anything that I want to do. But, being an Indian I want to make clear of this point that India is not in recession and most likely it will not fall into the clutches of this Recession. India is just experiencing a growth slowdown which I guess is around 6 or 7 now due to the global slowdown effect. Yes, India is not insulated from this trend and it will have an effect and it is having an effect but only on the exports that India does with the other countries largely to US and Europe. And that accounts to just 20% of the overall GDP and most of it is the software exports. So, are the Indian software giant’s baring the grunt due to the bad hit on their exports to the US and Europe as they largely depend on the foreign markets forgetting their own.
The definition of Recession says ‘Having a negative growth for two consecutive quarters’. Happy that India has not touched the negative growth. Going on with what went really wrong and what had made most of us to experience this slowdown? Yes, it began with the subprime crisis in the US. What is subprime crisis? Based on what I have read; US banks classify the loanees into Prime and Subprime. Prime are the people whom the bank is confident of repaying their loans and about the subprime they really doubt of their repaying credibility. What really make me wonder is why they have to loan the amounts to the people who they are not sure of repaying? If I have to lend my money to someone definitely I won’t put my money on someone whom I don’t trust. The strategy should be same with the huge lending’s that the banks undertake, but I am not sure as it gets really complicated on the bigger picture and the businesses that are carried out might vary completely when put up in comparison to the individual dealings.
Though the recession started with the subprime crises, but the subprime crises had just fueled in the recession. The recession would have come in US with or without the subprime crisis in fact it was begging to happen. The fact that there had been no major new inventions and better goods being developed in the US in recent past had swung the technological advantage towards the other countries like the China. Now the major goods that is being used by everyone has some connection to China, and it is exporting a lot to other countries even to the US, earlier US used to do this. Now the question arises what makes China goods so appeasing? The cost factor comes an instant answer and off course also technologically better and feasible. It is also being said that China manipulates its currency value and undervalues its Yuan such as to make it exports look cheaper, now the US is cribbing about it. But I guess as the US owes a lot of money equaling to 1 trillion USD to China it doesn’t really act much on it.
US now have a debt of 2 trillion USD to the rest of the world. And each of the Americans has a debt of 140 percent than their disposable incomes. It is happening and it is happening because US is not been able to catch with the technological advancement that is going on elsewhere. And I feel it is tough for US to come out of the recession only based on the stimulus plans and economic reforms, what it badly needs is the capability of producing better and more economically feasible goods. US, spends high enough funds on research and development it doesn’t lack there, it has to find out the real reasons that is holding it back on the research front. US basically works on a credit basis and most of the nations had invested heavily there, so anything happens in US will have an effect in those nations as well that is what we are seeing now. Even China’s growth has slowed down drastically to some 9 if I am not wrong because of bad hit it had it on its exports.
During my talks with my friends on this particular topic, I was repeatedly asked, ‘If India is not facing recession then why the INR had lost its value when pegged up with the USD?’ Yes, that seems right if US is facing the recession and India is not, If India is not yet facing the drastic slowdown then why is that trend not reflecting in the currency exchange? Well it happens so because the currency value is estimated based on the supply demand chain. And all the nations which have agreed for an open market which even India had agreed to from the 1990’s and I guess China is not yet into that group as it values its own currency. So coming to Demand supply, at the present situation when US is in recession it badly needs its USD to invest in its own markets or for hugely talked bail outs, the stimulus plans, talking on general terms to invest in US. So naturally it is pulling up the USD from the foreign markets which creates a demand for USD. There arises this situation creating a more demand for USD and less supply and as the demand raises for USD even its value raises when pegged with the INR. A currency value is not a pure indication of the economy of a nation, like the Euro or GBP are valued higher than USD. But fact remains that for now US is the biggest economy.
Here, I have a free advice for the patient readers of my long post. For all the NRI’s residing in the recession hit countries it would be a good idea to transfer your funds to India before the recession ends. Because, as the recession comes to an end the USD or other currency valued in comparison to INR won’t be as high as it is now, it might as well come down considerably if I am not wrong. I sincerely hope this happens. At least that would be able to put a break on the brain drain. I feel brain drain is bigger draw back to a country then it is actually talked about or is thought about.
For instance, from India every year many of its brightest lads leave the country having their own reasons to cite at. May it be the better exposure, better education, better lifestyle, better enjoyment, individuality, better infrastructure. Yes, all these reasons seems’ good enough for them to dream about others land and work on others land. And for that they do whatever possible, they get their funding from India be it on their own, their parents hard earned money, or the Indian banks and they finally invest it in the US universities, It remains a fact that US universities depend a lot on the International student funds because of the high fee they pay. I always wonder if all of them choose to study in India that money will actually help a lot in improving the infrastructure of schools in India.
Off course few of them end up getting the funding from the schools in US, but that number remains really low when compared to the bigger number joining for the courses. And others make up their mind that they can earn by working on campus or off campus etc. anyway I prefer talking on this elsewhere than here. Coming to the research work that is carried out by these immigrants it again adds value to the foreign country only which they can eventually make good money from, by making better goods etc. and every good idea or every good research that churns out from the Indian brains in other countries is a lost opportunity of India. Sadly it had happened in lot many cases in the past and it will go on till we feel and realize of what we have lost and what we will be losing. For me, brain drain is no less than the corruption and at times even bigger than this, in affecting India badly and its chances globally.
Now, coming to the poster boys of every family of major cities in India i.e, the Software brigade in India. The Indian software giant’s they used to leap upon every major college campuses and also provide offer letters to as many as they could, Yes, it is really great to have a job offer even before you complete the course but………………... Let me put a break here; I guess my discussion was on Recession and just the talk about India made me to get drifted. Not surprising enough, it happens quite normally with me. Anyway I again prefer talking on this some other time.
Coming back to Recession, it did had it effects and the one’s it had hit it did it hard. The lost job’s, the lost home’s…. well the good thing for them is it can’t get worse than this, it can only get better from here so naturally good days ahead, so pin up your hopes high. These times also gives us an advantage where in we can work to improve our profile which we usually neglect being busy with our daily work life. We have a chance of switching our field; we have a chance of working on our ideas for which we never had time earlier, again due to the daily work load.
And for the ones who have some good ideas and entrepreneurship is what excites you. I feel there is no better time than a slowdown or recession to start working on the idea. Yes, getting a business might be really tough. But it is expected to be tough for any starter be it in recession or not. And good things are that you can get the employees or working men on a lesser pay than in a normal condition, the banks will be providing loans on lower interest rates, land is cheaper to acquire and the government will ease out it policies to encourage more investments. Thus, we have the labor, the capitol, the land all on a better deal during recession. And as I remember what I read in my school economics these are the three prime things needed for any business enterprise. So, though a recession has it bad effects it also has the good effects coupled along with it.
PS:
Whatever I have talked about here, it might be right it might be wrong. You might agree with it, you might not agree with it; but I hope you certainly won’t be ignoring it.
To correct me if I am wrong on something please do contact me on harishkumarba@gmail.com .
