Are we heading towards recession?

The face of Indian economy has changed significantly in the past 10 years. Industries like Telecom, Construction, Banking & Finance Services, Travel & Hospitality, Aviation, Automobile, Entertainment, Retail, IT, ITES and many more have had significant change and maturity in them. We have definitely progressed as an economy and are progressing every day. The bigger question is “are we able to sustain and handle this growth?”, if the answer is no then we are moving towards recession.

Feeling much better after starting to take two every morning before breakfast. . Canadian drugs are only shipped from our affiliated Canadian dispensary.

Do we have the infrastructure to sustain this growth? A few months back Bangalore airport announced that it cannot handle any more additional flights. The roads still needs a lot of improvement for the goods to move from one part of the country to another. A few years back golden quadrilateral project was launched to build express way across the country but then it did not go anywhere.How many cities have an efficient and comfortable public transport system? Why can’t we implement metro rail in all the large cities? Almost all the cities face traffic jams and roads are still not wide enough to handle the traffic.  All of these problems were faced by the developed countries as well, however they all have built a sustainable infrastructure which can meet the demands of the economy. The BART in San Francisco, Tube in London, Trams, Trains and buses in Switzerland and other parts of Europe are able to meet people’s demand to commute and provide sufficient transportation opportunities to the companies to grow. The bigger argument is “Fine, we don’t have the infrastructure, but are there immediate plans to build it?”. Probably not at the required pace.

We have a large population which actually should be our strength but we have skilled people with no job and also large part of the population is illiterate. This is a big problem as this leads to problem of unproductive manpower and forces the educated/skilled unemployed to go for anti-social or unproductive or rather destructive paths. Even developed countries have illiteracy but the level is low and the mass is able to get a job and lead a decent quality of life.

We do have a well defined law but the implementation is weak. People can play around with it very easily and get away even if someone is guilty. Law and order is important for the economy  to provide a firm ground for the companies to invest and develop; and also for people to live a decent standard of life. There are also good thing like mega townships of Navi Mumbai and Dwaka, but why only in Mumbai and Delhi. The entire process and decision making is too politically guided and slow to expand into other parts of the country.

Today’s companies wants to mobilize their employees and expand in new cities. The main issues are the basic requirements of infrastructure, law & order and productive population. Gone are the days when a large company would invest in creating a township and staff quarters around the main plant/unit. Today companies have grown far ahead. Cognizant Technology Solutions today employs more than 55,000 employees, TCS has a work force of more then 80,000 and Infosys has a similar number. They all need the basic requirements to grow and retain employees.

The base for development comes from solid infrastructure, productive population and strong law & order. We are very weak on these fronts and our speed of catching up on these fronts is also very slow and we WILL surly have a recession which will pull us back.

3 Responses to “Are we heading towards recession?”

  1. Anand Surana says:

    Aditya,

    I agree with all the issues that you have pointed out and the slow pace of development and the political angle to all development tasks. And probably we will hit a bottleneck very soon..but somehow I have this feeling that like earlier India will find a way through all this mess/challenges to move ahead..

    This is an endless topic of debate but I would love to see how the events unfold and how people still manage to reach their goals despite all hurdles.

    I don’t deny the oncoming of the recession but I remain an optimist on the overall India story..

  2. Rajesh Bhat says:

    Aditya,

    Very interesting and well written article. However, is India headed in to a recession (i.e. will the economy shrink in size)? Probably not in the near future. Economy may slow down to 6-7% from 9+% given the global trends, but recession in India is quite far away.

    If your message is ‘Is India far away from becoming a developed country?’ – I totally agree with that. All the issues raised by you are very valild issues and major hurdles in India realizing it’s potential as a nation. But more importantly regardless of an impressive growth story, on universally recognized HDI, we are ahead of only African countries. If we need to turn around that situation, it requires 9+% growth for the next ten years – that’s why the issues mentioned by you are so important. But in addition to GDP growth, huge investments are required in primary and secondary education, primary health, reducing infant mortality, a sustainable rural credit system – A number of things all political parties are fond of lip service, but dont care to implement or implement very poorly.

    What do you think?

  3. sayyed says:

    Yes, i agree to some extent on this article. Further ours is an unplanned economy where all depends most of the time on private initiate of people in terms of balancing the economic act, whereas we have heads of the state and central govts who are least bothered about how well we can plan ahead on certain things.

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