Recession 2007 is the most happening buzz word in corporate world these days. Even the younger generation (Gen Y) is talking about this. Every one has a opinion about this recession, this is good sign because even a normal citizen who normally doesn't care about these situation is now getting abreast with economy. The business schools around the world are gearing up to prepare cases and this is also many research opportunity. A good number of educated opinions about recession are often different and finger pointing. According to one of India's premier organization the recession is not a big problem to Indian economy and India can come out of this much ahead of other countries in the world. How is soon is a question? More important than this would be how far away is the next recession from India?
Recession is defined as “two successive quarter of negative growth in GDP” by the economist around the world. But I think it would be more appropriate to define recession as when there supply exceeds the real demand. Based on this if we analyze we find that the American economy entered recession in August 2007. Often times we hear that this recession is far more deep and worse than the 1932 recession. Is this true? Let us explore this in detail and contrast 1932 recession and understand what this two recessions outcomes. This recession is truly unprecedented because of the breadth. Both these 1932 and 2007 an eye opener for capitalism.
In the early 20th century the countries were racing ahead to establish there political imperialism. The reason was to establish marketplace for their products. This political imperialism was the outcome of the industrial revolution. The question here is why would they want to establish markets for the products? If we go back in the history all these colonies were setup as business centers initially. After the world wars more of these colonies were became independent countries. With the days passing more and more countries became independent adopted a protectionist mentality and started establishing their own market. The western countries that had huge manufacturing were not able to consume the entire production. This caused the so called great depression on 1932. An important thing to note is this is just another recession in America, no other countries in the world were never a part of this recession. Then what is the rationale for calling this great depression? The answer is simple, after this recession the western countries realized the necessity for the imperialism, but having framed the United Nations now these countries are bound to abide by the law which they framed. Taking advantage of that recession now the countries decided to adopt an alternate path of economic imperialism (Globalization and Open market). But this time the countries were clever enough to frame a strategy that ensured them they never get thrown out of the colonized country.
Now, having spread their wings around the world through their companies the developed countries were making money through their companies and crying foul against those countries that failed to open up the markets for their companies. When we carefully observe that the globalization has always benefited the developed countries. These giant organizations from west came into India during 90's when the current Prime Minister (PM) then finance Minister opened up the Indian market. As soon as these companies entered our land it kept gobbling all our indigenous companies. Today, there is nothing in our mother India that is Indian. With the recent recession the western world are marching towards protectionism but we are left with nothing to beg them not to take that route. We don't have any brand that rivals any of the western brand. If we don't realize now then few years from now we will be left with nothing but a civil war just like Somalia and other African countries. True that we are proud of our achievement in the field of IT but that is just a modern slavery. Everybody talking about the Indian It industry as a high tech industry but in realism it is just a modern slavery. In the last 25 to 30 years of so called IT growth and boom we haven't sent out a software product that says “Its an Indian Software”. The saddest thing is that till today we don't have a software released in Indian Language. To tell the truth the Indian IT Giants are nothing but a “Human Sellers”. We should be feeling bad about this and not proud of this achievement.
Talking about this is not going to helps us anyway. We should get our house in order and start focusing on the development. What can we do to come over this shame and start building a real economy like china. Did I say china? Yes, if one poke his nose into Chinese economy we can see a real growth. They have their own brand to rival any western company and if needed adopt protectionism. First this we need to do is to avoid any product that is not Indian without uttering the word of “protectionism” and at same time develop our own brands and companies in the manufacturing that can take on these back door entrants. Another important and crucial decision we need to do is to shy away form these Indian IT giants and focus on Engineering companies. Also, we should avoid any companies even it is home grown that has more than 10% of foreign investment. The government should stop giving tax exemptions to IT companies rather give it the manufacturing companies to do research and development. Indian Government should also encourage some of the Indian Financial Institutions to go global and buy assets around the world and establish themselves as a niche player in the field. We can also impose some tax on foreign brands like Coke and Pepsi that would generate a huge cash flow to the Indian Exchequer. These measures looks communistic, but we have no alternative because of our initial mistake of opening up the market with out developing it. Let's feel proud of Our Mother India and make her might again.
Jai Ho
