Global financial crisis: A new world order needed

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India has been able to withstand the shock better because of the mixed economy and well regulated financial system. The fundamentals of the Indian economy are also good and this saved the country from going broke

CJ: PRAMOD THOMAS

Mon, Nov 17, 2008 18:31:18 IST

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India News Today :

AFTER ALL, what is recession? It is a mix of all the worse situations, one can expect to come together and hit the economic and financial world from all sides. It is characterised by shortage of money and food and increase in unemployment rate. When one looks around, negative news can be seen and observed everywhere during such times.

Presently, lot of such news is coming from the West, but now India being a part of the globalised economy is also facing similar problems. Information technology and real estate sectors are the ones, which are worst hit by the recent financial crisis. Indian equity market also plunged after foreign institutional investors started getting out of the stock markets, thus making the shock harder.

Recently, finance minister P Chidambaram said that the crisis will be over within nine months. But recent reports, say that fifteen European countries have also been hit hard by the crisis and this recession could be a long affair. Germany, a giant economy announced that they are also undergoing recession.

Reports said that tourism, real-estate and IT will be the major losers and the financial services sector will also be affected badly. As a curative measure governments have taken, a number of steps including bank rate cuts. But the effect of these steps lasted for few days. These measures helped the stock market in India to cross the 10,000 mark, but soon it went down and now it is at 9000.

G20 Summit and its aftermaths

The G20 summit, which took place in Washington was a big step forward in easing the current financial crisis. Leaders of developed countries as well as developing countries participated in the summit and discussed the present situation and said that they will take necessary steps to eliminate the crisis.

There were reports that there was a difference of opinion between the US and the European union. Actually the world order headed by the US and European union takes the big decisions and others have to support them.

The rich countries benefit at the cost of the third world and poor countries in Asia and Africa. India, however, has been able to withstands the shocks better because of the mixed economy and well regulated system, which saved the Indian financial system from going kaput.

The fundamentals of the Indian economy are also good and this saved the country from going broke.

PM Manmohan Singh recently said that India will grow at a rate of 7.5 per cent, which is a good sign in the current market situation.

Emergence of a new world order

The present world order is in the favour of rich (arguably). After the second world war, America became the super power and the powerful European nations came down a peg or two.

However, the time has come for a change and it is time both India and China occupy their natural space in the world arena. To save the world from economic debacle, he world should give China and India more powers and roles to perform.

The world financial and economic system needs to be revamped and national regulators should redefine the job they have to perform. The need is that every individual’s investments should be protected. Every country should be able to assure their people that their investments are safe.

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