Friday, March 26, 2021

Recession is written on Wall.

Recession written on Wall.

"Purchase power of the customers" is a big word in booming or dooming the economy. The Ports of the world are witnessing the great recession of the present world after 1930. All Ports are waiting for the ships to come and occupy their jetties and berths. The warehouses are emptied and truck load on roads is declining.

I recollect my experience of participating in a Handicrafts and Home appliances Trade fare in LA, US in 2009. The US customers were hardly buying products above $20. In fact, I came to know first time that US though look rich from the distance, but has large population that has average income of $15000/annum. It is a country that follow popular development agenda of food vouchers and health vouchers. If dollar become rupee (why Saddam Hussein was killed?), the immigrants start returning to their native country. However, US is a country of great infrastructure. If reverse migration takes place, many of its cities become Detroits! The local production of oil by US has put the Black Gold countries and Russia on back foot, as the prices of crude is continuously going down. India is losing its opportunity of accelerating the economy by transferring the benefits of crude savings to the consumers.

Urban China was shining with its sky scrapper buildings and dumping of goods in international markets. Till the market demand of Chinese goods was there, it was importing raw materials, producing and exporting to the world. The youths were employed. The investors were chasing 'Dragon Statistics' of China and investing more and more to fetch profit. But if the purchase power of the world has gone down, the wheel of Chinese production has to stop.

India is an economy mostly dependent on its internal market. Therefore, export based industries and suppliers of goods and raw materials abroad will be the major sufferers of the present recession. However, manufacturing sectors except pharmaceutical and chemicals are on decline trend at present.

After the 2008 recession in US, the value of their real estates have come down to 1/3 or 1/4. Indian real estate market is holding the price of the pick but the standstill can't be maintained without crashing the bubble to its demand value, so that the industry come back on the growth track. For that, Bankers have to lose huge money. The artificial price rise in real estate was 10-30 times in last decade. It has to come down to the half way to find new buyers.

Entrepreneurs in India are in silence. News papers are coming without advertisements of public issues. After Adani's venture in Australia held up by locking up of capital of approximately Rs. 20,000 Cr, the Indian entrepreneurs eying on world market are on hold. Governments may try to vibrate them through summits, but unless great advantages of land and taxes are offered, they will not put a step forward. Their announcements will be like announcements of politicians.

Where are the common men? Dal (food) and Dava (health) are their main concern. Without employment opportunities, their quality of life may suffer. Urbanisation is on brake, and rural farmers are unable to cash from the yield due to high production cost and low return.

It's time for stimulating Indian Economy with all round efforts. Recession is written on the wall.

Punamchand
13 January 2016

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