India ... still intact?

Sanghi, Seema

The Sub Prime crises is translating into a recession scare, gradually engulfing not just the US economy but Britain's economy, Euro Zone and Japan. Oil has seen itself tumble to all time low. Panic has seemed to the order of the day, with the top corporates giving their worst performances ever. The uncertainty has led fears of a slow down in the Indian economy. Pull out of the FDI has caused free fall in the INR. Upcoming elections in India has lead to reduced money supply based on the uncertainly about the next government.

The Indian economy over the years has been major beneficiary of the globalization effect and the resulting boom seen in liquidity. The equity markets have resulted in a drop of over fifty per cent levels. The average saving rate in India was ten per cent in the 1950s, which rose to a twenty four per cent in 2001 and currently hovers around the thirty five per cent.

Various analysis reveal that the Sub Prime Crisis world over is relatively strong, than that in India. Our robust banking system underlined by stringent regulatory measures have 'saved' us. (?)

Over the years Indians have amassed huge wealth in gold, which has a wealth effect. For one, the long term fundamentals of the Indian economy remain intact. Be it the growing middle class base, favourable demographics, rising disposable income, consumption levels, growing corporate sector including services and industry, the outlook remains positive. McKinsey in its report has pegged India to emerge as the third largest economy by 2050. India remains intact, one among the only two countries (other being China) that even in these challenging times is expected to grow between 6.5per cent to 8per cent.

India is sailing through the financial Tsunami ... Time alone will say, have we! Let us be alert, Mumbai terrorist attack aftermath, massive brown cloud over Asia, we do not know which factor may effect or affect us, when and how. Lets remain intact with our old strong fundamentals.

Dr. Seema Sanghi