Does recession still have grip on economy or Is Economy in grip of recession
Does recession still have grip on economy or Is Economy in grip of recession
The fear of recession looms all over the world. Weakening of the American economy is bad news, not just for India, but for the rest of the world too.
India has grown substantially over the past few years with major outsourcing deals from US , UK and Australia. Indian exports too saw major success in the past .
According to experts the long term prospects for India are stable. Chances of more foreign currency coming India is more due to weak dollar. Inflation might be brought down with the oil price coming down.
Service industry which includes KPO, BPO , IT and ITES etc is supposed to be the worst affected in India as 52% of India's GDP growth. However, due to the cheap labor and quality performance, these industries are not facing severe job losses.There is no threat to the skilled people. According to NASSCOM India will have a shortage of about 5 million skilled people in IT/ITeS. So there are lots of opportunities.
In addition to this India's growth in travel, tourism and power industry will improve and we don't have to actually depend on the US for our growth.
Innovations and exploration of new opportunities can be done meantime, in order to ensure that India does not remain dependent on US economy.
The interdependencies between the US economy and emerging economies like India and China has reduced considerably over the last two decades. Thus, the effect may not be as drastic as would have been the case in the 1980s.
No sector has a dominant influence on earnings growth and risks to our estimate are limited. Corporate India is also learning to master the art of efficient capital management, reduction in costs and delivery of value-added services to sustain profit margins. Further, interest rates are expected to be stable primarily due to control over inflation and proactive measures undertaken by the RBI.
As 75% or more of their revenues related to the IT Enabled Services comes from Unites States and if Fortune 500 companies slash their IT budgets, Indian firms could be adversely affected. However instead of looking at this situation as a threat, the sector would do well to focus on product innovation. If this is done there is no doubt that India can emerge as a major player in the IT products as well.
Over the past couple of months, fears of a slowdown in the United States of America have increased. The impact of the sub prime crisis along with a slowdown in mortgages has led to a significant lowering of growth estimates. Since the United States dominates the global economy, any slowdown there would have an impact on most of the global economic variables.
For India, it could mean a further appreciation in the rupee vis--vis the US dollar and a darkening of business outlook for sectors dependent on US companies. The overall impact of a US slowdown on India would, however, be minimal as the factors driving growth here are more local in nature. Unlike the rest of Asia, India is a strong domestic demand story, so any slowing in the US is likely to have a more muted impact on India. Strong growth in domestic consumption and significant spending on infrastructure are the two pillars of India's growth story. No sector has a dominant influence on earnings growth and risks to our estimate are limited. Corporate India is also learning to master the art of efficient capital management, reduction in costs and delivery of value-added services to sustain profit margins. Further, interest rates are expected to be stable primarily due to control over inflation and proactive measures undertaken by the RBI.
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Does recession still have grip on economy or Is Economy in grip of recession Copenhagen