G20 Summit And Impact of Financial Turmoil on India
First thing first!
Congratulations Mr. Barack Obama for the history making thumping victory and become the first colored President of the United States of America. My best wishes for your successful Presidency
. May you make historical judgments in this difficult situation and shape a brighter future not only of America but also the whole world. No wonder the most challenging task by the new US Administration will be to bail out the US economy which is in tatters. It is another matter altogether that Nobel Laurette Dr. Amartya Sen thinks Obama is little bit of a protectionist for comfort!
Amidst this global financial turmoil and looming recession, countries around the world are trying to make the impact as less painful as they can. In a recent G20 (a group of developed and emerging economies that represent almost 90 percent of the world economy) meeting finance ministers, advisers and central bank governors of the member countries gathered and tried to find a solution in the Brazilian city of Sao Paolo. The US is again mulling a proposal of $700 billion bailout bill which was not approved by the congress initially. China has already announced a plan worth to the tune of $600 billion to stimulate the economy by supporting domestic demand. The European Union is not far behind. More is expected to come out a the following G20 summit in Washington in a couple of days time from today
So what has been the impact here in India and what is it doing?
Well, due to the nature of Indian economy which has been a closed one till few years back and only recently opening to the world slowly but surely, there was little immediate impact in the financial and banking sector. But it has taken its tool on stock trading and export figures. The benchmark indicator, the Bomaby Stock Exchange Sensex has crashed to bellow 10000 mark from a high of 21000 plus in January. The government has already trimmed the expected GDP growth to seven percent while leading consultancy firm Goldman Sachs put the figure at 6.7 percent. These figures are still very good compared to other countries which are already experiencing contraction in their growth rate. The Indian government has also taken measured and responsible steps to thwart the impact of the turmoil. It has already released huge funds in the financial market by way of bringing down interest rates in order to induce demand and thus stimulate and maintain current rate of growth. So, one can hope that India could escape with fewer scars in the immediate future.
On the other hand Indian Inc. is nervous about the long-term impact of the current phenomenon. Ratan Tata, Chairman of the $62 billion Tata Group of Companies has already asked his CEOs to put off new acquisition plans unless it is highly strategic in nature. Software companies like Wipro Ltd. has already made plans to emphasize on the domestic market rather than depend on exports to the US and the EU.
One industry that has taken most of the pinch is the BPO industry. As global financial giants like fall, their outsourcing and call centers which cater to jobs such as credit card processing and factoring loans are in danger of closure. Already, there are media reports that workers in those centers are spending sleepless nights and suffering from depression.
One can only hope that leaders at the G20 summit, where Indian Prime Minister Dr. Manmohan Singh is also attending, find a suitable solution to the crisis.