Ladies and gentleman, we just have a “credit crunch” or call it “credit crisis” if you like. Don’t worry, it’ll blow over. That was 2007. And there was still some optimism in the world. After that came denial and gradual acceptance:
It’s not a slowdown… wait! It is a slowdown!
It’s not a recession… wait! It is a recession!
It’s not a depression… wait…
Well, wait long enough and soon you’ll be told it’s a depression. Then it’ll be called the Great Depression II (GD2) a la World War II.
The US Government is $10 trillion in debt. The $6 billion Lehmann Brothers shut down. The 100-year-old Ford Motor Company is fighting bankruptcy. The Sensex has crashed from 21,000 to below 10,000 wiping out thousands of crores of virtual money in one shot. (Thank God we recovered half of it in the euphoria of a new stable government. What happens when that euphoria wears off?) And you still think the recession will blow over in 2009. Well, keep thinking.
Denial is actually a great place to live in.
But I digress from why I am writing this. I wanted to make a few other points about the depression. And why it’s “Great”.
1. You asked for it!
Here’s what I (and probably you) keep hearing all the time:
*These ITwallahs are getting too much money, IT is really over hyped…
*These real estate wallahs charge five times the rate of a flat, they are all crooks…
*There are too many cars on the roads, there should be a cap on the auto industry…
*The stock market is more than double of its actual value, it’s all inflated…(@21K levels)
*Too many people are getting rich too fast, we’re getting to be an opulent and lazy country…
*We ape the Americans too much, dependence on America should go…
*These youngsters have too much money to spend on mobiles and pubs…
And so on and so forth…
Well guess what? God has finally answered your prayers! The answer is called GD2 (2007- ). Check all the above laments. They no longer hold true, for a couple of years at least.
2. India gets to be a superpower
OK, OK, maybe I’m getting a bit ahead of myself. But I think that at the end of GD2 India will go on the road to superpowerdom. At the end of GD1, America built the foundations for being a superpower and the post-GD2 world could just be India’s.
For one, according to some experts, depression in America was caused by the vast economic boom in the 1920s, overproduction, plunging farm incomes and ill-regulated markets. Doesn’t all this sound familiar and something that’s happening in India: post 1991 economic boom, overproduction, plunging farm incomes (for the small farmers atleast) and ill-regulated markets. While America corrected itself, here’s India’s chance to do so. With Manmohan’s stable dream team in the saddle, we could get it right eventually. Manmohan looks destined for even bigger things. Just look at his path: Oxford-Cambridge-IMF-World Bank-Finance Ministry-RBI Governor-Dy Chairman of Planning Commission-Finance Minister-Uncertain Prime Minister-Certain Prime Minister…
It was during GD1 that road making got a big boost in America. In 1938, President Franklin D. Roosevelt gave his team a hand-drawn map of the US marked with eight superhighway corridors. Sounds familiar? That’s something like what former Prime Minister Vajpayee promised when he was in power. The Golden Quadrilateral. Something a lot of people scoffed at, but the results are there for all to see. The National Highways Development Project is pretty ambitious in proposing 45,000 km of roads. Though we saw a blip for a few years, there’s every chance of it picking up speed in this term, with Kamal Nath at the helm.
After 9/11 America lost it’s aura of invincibility and faced great economic vulnerability. Its economy is shrinking and gradually the world’s dependence on American economy will go down slowly and steadily. Even the oil industry may de-link itself from the dollar in the long run.
That leaves countries like BRIC—Brazil, China, Russia and India. Russia is yet to get its act together. China is way ahead of India, but only as long as Communism lasts. When Communism finally collapses in China, all the fudged figures will come tumbling down and all the near-slave labour economy will disintegrate. While China dazzled everyone with the Beijing Olympics, in the aftermath, all the stadiums are not being put to good use and are lying idle with many whispers that it has been a colossal waste. This is in contrast to other cities where Olympic infrastructure is put to good use. That leaves India and Brazil in the running for the title of Emerging Economic Power. So we do have a good chance.
Many people think that the Great Depression of 1929 didn’t affect India. But it did hammer the economy and was also a possible catalyst for India’s Independence:
1. There was a steep fall in imports and exports hitting India’s international trade severely. Inflation levels soared and the British refused to devalue Indian currency, making matters worse.
2. People started selling their gold in large numbers to meet expenses. Lord Willingdon, the then Viceroy of India is quoted to have said: For the first time in history, owing to the economic situation, Indians are disgorging gold. We have sent to London in the past two or three months 25 million sterling and I hope that the process will continue.
3. Did the Great Depression spur on Indian Independence? Anti-British sentiment became higher. Prices and other factors also led to the Mahatma Gandhi’s Salt Satyagraha.
While the US stock market crashed on October 29, 1929, Nehru first officially talked of Poorna Swaraj at the December 31, 1929, Indian National Congress session. Coincidence? If it is, then let’s hope another one happens after GD2 and India gets another fillip.
Strictly speaking, it’s not a depression in India and not even a recession since the economy is still growing. Only certain sectors like real estate and the auto industry are in recession. But it’s an interconnected world and the depression in the West is bound to catch up with India even more in 2009-10. So as of now it could be called the Great Slowdown (GS), but GD2 will eventually get to us, for a little time at least.
And after the darkest night, comes the dawn…
© Sunil Rajguru