Economic depression: More to chase
The Asian markets started tumbling. The economic crisis appeared to be a big threat to the global growth. The economic depression is not a new phenomenon but this time its impact has been quite elusive since the 1971 turmoil
THE ECONOMIC depression is not a new phenomenon but this time its impact has been quite elusive since the 1971 turmoil. The Wall Street collapse has created a huge void in the world economy. Its repercussions have adversely affected the economies of all developing and developed economies. The Asian markets started tumbling as the financial fears deepened. The economic crisis appeared to be a big threat to the global growth as the head of IMF Dominque Strauss Khan said that the turmoil will affect the global growth at least by 4 per cent. The liquidity problem is of prime concern as the market meltdown has left people’s face blanch. The stock market has collapsed like a house of cards. The IMF too has been able to provide only little assistance as the stock markets have sunk further.
The problem of international liquidity implies that the resources or the reserves at the disposal of the various countries of the world for setting trade and other imbalances in the international sphere are inadequate and disapproving. All the leading sectors have started their reformation work by axing jobs and limiting their other expenses. However, we need a cheap money policy to tackle this situation of job cuts and other effects of the liquidity problem.
India is also feeling the heat as the Sensex tumbled below the 10000 mark. The IT, outsourcing and financial sectors are the worst hit by this economic recession. Though the PM and FM have given several assurance of a strong banking system that we possess but the ground reality is far behind these assurances. There is lack of capital in India as the foreign investment is in a liquidity trap. This is more evident from the fact that our GDP growth is below 7 per cent, which was supposed to be 10-11 per cent by this time.
It will definitely take a year for the revival of capital in India and the world over. What we need is to ensure creation of credit trough the banking system and efficient planning as tough times are ahead. Job cuts and minimisation of expenses will only lessen the losses but they, in no way, will guarantee any form of profitability. All the leading firms are planning to cut jobs slowly which may touch the 1 million mark, that sounds quite fearing but one must realise that this crisis cannot be overcome in a night’s time.
India is also feeling the heat as the Sensex tumbled below the 10000 mark. The IT, outsourcing and financial sectors are the worst hit by this economic recession. Though the PM and FM have given several assurance of a strong banking system that we possess but the ground reality is far behind these assurances. There is lack of capital in India as the foreign investment is in a liquidity trap. This is more evident from the fact that our GDP growth is below 7 per cent, which was supposed to be 10-11 per cent by this time.
It will definitely take a year for the revival of capital in India and the world over. What we need is to ensure creation of credit trough the banking system and efficient planning as tough times are ahead. Job cuts and minimisation of expenses will only lessen the losses but they, in no way, will guarantee any form of profitability. All the leading firms are planning to cut jobs slowly which may touch the 1 million mark, that sounds quite fearing but one must realise that this crisis cannot be overcome in a night’s time.
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