Byapaar.com -The Indian Business Blog

This post was written before Dewali Festival which was celebrated on 28^th October.

True to the title, there is a huge turbulence in the Indian airline industry what with Jet Airways laying-off 1900 workers although it had to re-instate 800 of them after huge pressure was applied by none other than Mumbai politician Raj Thackerey. Serving termination notice to many workers at a time is not very common in India – but Jet Airways had to do the unthinkable to save itself by reducing operational cost soon after it tied-up with another private play Kingfisher Airlines. Most of those workers are probationers and include flight attendants, pilots and ground staffs. Jet announced that due to the rising fuel cost and dwindling passengers, the amount of loss was ever increasing. So they had to lay off the surplus staff hired for expansion plan they undertook in the past. This is not only the case of Jet Airways. Other airlines too are facing similar problems. The government though is not sitting idle and made an announcement that would definitely help private players. According to a recent move by the government, airlines could pay the bulging fuel bill (that stands around Rs. 160 billion) in phased manner so that they get some breathing space.

On the other hand the Prime Minister of India Mr. Manmohan Singh had to address the parliament to re-assure the growing public worries caused by liquidity crisis in the financial sector worldwide. The PM assured the nation that Indian banking and insurance sector will not face similar turmoil like others as they are on more sound footing and not dependant on international market. He assured the people that all their deposits are safe and will remain safe. He also warned the industry about the imminent slowdown of the economy during this financial year but assured that Indian economy will still grow at more than 7 percent and remains one of the fastest growing economies in the world. The over-all foundations of the economy remain sound despite stock market crash and slowing industrial output. Economic experts have welcomed this honest move by the PM and predict the slowdown is temporary and growth will again pick-up by net year. Read the rest of this entry »

It has been quite long that I posted and I am sorry for that. Actually, it has been quite hectic few weeks not only in my personal life, but also the world financial market where the ever so known face of the Wall Street as giant investment banks collapsed like pack of cards thus triggering a world financial crisis.

But first thing first - it is festival season in my place and we got 2 weeks holidays for it. This is the time when many Hindu Goddesses get worshiped with much fun and flair. Although I am not Hindu by religion, still I grew up in close proximity with them and know most things. Mythologically, the Hindus have hundreds of Gods but out of them only few are worshiped in big way. And also the enormity of festivals depend from region to region. For example, Durga Puja is the biggest festival for Bengali community whereas it is Ganesha Puja in Mumbai. As I live in an area dominated by Durga Puja worshipers, our school has been closed since 3rd October and will open only on 17th. I do not like the crowd - and so took refuge in my village house for 9 days. All those days were spent without accessing the NET.

Today is the Laxmi Puja or festival of the Goddess of wealth. Hence, my best wishes to all those managers of mutual funds, investment banking who have been going through stress since the crisis started. Most analyst say that it is a result of the sub-prime crisis that engulfed the US market few months back. It is being seen as the greatest economic crisis since the great depression days of 30’s.

Europe has already felt the effect and now Asia too is feeling it with Pakistani financial market on the verge of collapse. India is getting very nervous which has been proved by the government constituting a crisis committee headed by finance secretary Mr. Arun Ramanathan to tackle any crisis that may start in India. The committee is working overtime and leaving no stone unturned to toss options including revising the Cash Reserve Ration (CRR) by 150 point basis which will make more funds available to financial institutions.

However, governments in Europe are not sitting idle as they got together to fund a multi-billion dollars bail-out plan for banking and financial sectors. Britain has already called for a new Bretton Wodds agreement to give a new direction and shape to the world financial system. This has lifted the spirit of the stock markets which went tumbling over last couple of weeks.

But one thing is sure - the crisis has shaken up the world financial system! Though it might not affect immediate cash flow in developing country looking for foreign direct investments (FII), it will slowly dry up funds from the markets thus causing somewhat of deflation.

Anyway, lets just hope with our fingers crossed and let our planner