India Says “No” to Recession – How?

Post independence, the founding fathers of India, like Pundit Nehru founded a Mixed Economy pattern for the growth of this country, distinctly away from the policies of capitalistic or communistic economy. One can only wonder at their vision in the presence context of the so called GLOBAL RECESSION where both the hither to capitalistic economies like US, Europe and the communist economy barring China are bearing the brunt of the slow down within their countries. China became an exception because they have adopted a new type of economy similar to that of India.

While the US economy reel under severe recession causing failure of their banking companies and their systems, drastic reduction in the manufacturing activities particularly in the automobile sector resulting in unprecedented unemployment problems, in India the traces of the spillover of the recession is fast receding already. The Indian economy is resilient mainly because

1. More than 90% of banking and insurance companies are in public sector controlled by the government. With little scope for failure of any of the public sector banks or Insurance companies.
2. Being still predominantly and agriculture based economy production in the agricultural sector has not reduced rather there is buffer stock of food grains all the time.
3. The industrial sector is dominated by small and medium, enterprises capable of changing directions and managing capacities, upgrading technologies without reduction in employment to beat the slow down effect, if any.
4. Foreign Exchange deficit due to reduction in export of goods is compensated by export of services.
5. The ever-growing competent and skilled human resources are an added advantage.
6. Majority of each of the manufacturing sectors produces is consumed locally and there is absolutely no wide supply demand mismatch.
7.  India unlike US or other western countries continue to remain a saving economy rather than a spending economy.
8. The social and family fabric in India is so string that inward remittances continue unabated taking care of the possible balance of payment problems.
9. Exploration of natural resources like oil and natural gas has yielded significant results reducing the burden of imports.
10. Education and health care will continue to be affordable for the majority in spite of the changes in governments as they are constitutionally protected.