Why India is Not So Affected by the Global Economic Crisis
Imagine an economy growing at over seven percent, even at a time when the world is facing a massive crisis. Imagine a service sector, that is growing by leaping and bounds, bound, as it is, by tradition and religious values. Imagine an economy that is producing MBAs in several lakhs, and not thousands.
This is the story of the Indian economy. Of a country called India, which has an economy that cannot and will not just go down under, though it is not insulated from the global economic crisis.
India is a land of several languages. India is a land of several cutures. India is one country that has had a glorious past in terms of a cultural heritage. Indians have always withstood any difficulty — be it floods, or droughts, or earthquakes or even recession. Every time a big calamity has stuck India, the country has emerged stronger than ever before. Even the November 2008 blasts has made the country bounce back with greater vigour.
Now, what is going on?
Yes, there has been some impact of the global economic crisis. However, the impact is still not so huge as it is in other parts of the world.
How is this possible? This is very much possible, because of the size of the Indian middle-class that is approximately about 230 million. A middle-class that is made up of Government servants, the managerial class in the private sector, the bankers, the insurance employees, the hundreds of thousands of teachers in schools and colleges, and a very huge entrepreneurial class that keeps growing the service sector, much faster than any other country in the world.
There are any number of opportunities for the educated middle-class. To give just one example, thousands of engineers who were in trouble when the economy started slowing down, are now employed as teachers in the hundreds of engineeing colleges. Their salaries are around 70% of what they were getting in their previous salaries. So, life goes on.
Next, the way the middle-class spends on marriages, has to be seen to be believed. Even a middle-level executive in the private sector, with an engineering degree to his credit and a monthly salary of aound twenty thousand rupees ($ 400), would get gifts for atleast $4000 from the bridegroom’s parents. This is not all. Atleast three thousand people would be having a sumptous lunch and another equal number a very sumptous dinner. The cost for food alone would be around $2000, at the bare minimum. Even $2000 is a huge amount in Indian currency.
The kinds of cash flow that this sort of economic and religious activity (yes, marriages are considered to be very sacred activities in India) generates would keep at least twenty thousand Indian families very happy and they would still be making enough money to buy certain electronic goods, on what is called “instalment” basis. This is a very shrewd marketing strategy adopted by the marketing expets.Yes, the dealers and the manufacturers would not get their regular cash flow, but the finished goods inventory is far less, since the goods are still sold. This keeps the economic engine growing.
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