Although predicted by Jim Kramer as early as June 2007 in a vociferous interview to CNBC asking Bernanke to "wake-up!", the US credit crunch continues to harbor uncertainty and dismay. But the fear and the hype are seemingly non existent in India - where the consequences for world food prices can be drastic for the 75% of its 1.15 billion and growing population when 1 billion across the globe were pushed below poverty line by the crisis. Why?
The multifold argument stems from one simple core difference in Indians: mindset. Culturally, Indians are less inclined to spend on credit, forget taking housing loans with as little downpayment as 10% (as was prevalent before the crisis in US). So when the then Indian Governor Mr. Y. V. Reddy stuck to the conservative high regulation attitude and emphasized corporate disclosures, it was a blessing in disguise for Indian banks which are less exposed directly to problem assets. Secondly, even when exports and the stock market faced gloom, India's FDI's inflows were surprisingly as sturdy as ever. How was this possible with the US financials and auto-industry collapsing like a house of cards? Well, the same industries continued their investments in India realizing that with a forecasted 6% growth rate, India was still far better than the recessionary American or European markets. The billion dollar US bailout of GM would go a long way in helping it continue with the proposed billion dolar worth plant proposed in Gurgaon.
Although it is debatable if India has received its due recognition in the world, the crisis will surely open up the country to hoards of new investors looking to tap in to its consumer base and the country ganing new recognition in the G-7 meta-process when the combined GDP of BRIC countries could overtake the combined economic might of G7 as an aftermath of the financial tumble.
Furthermore the most important for India are its 75% of the population living below USD 2.5per day. When inflation fell from the 12.91% in August to 5.2% of January, the poor pocket became half as strained as it would have been without the monetary expansion to counter the crisis. Real India isn't the stock market or the exporters worth billions which experienced shocks, it is the low and medium income families who actually provide the services and manufacturing products to which the elites act as in intermediary in selling it off to the developed world. Thus overall, the crisis has come across as a boon in disguise to the Indian poor, to its banks, and its future recognition as a force to reckon with in the new world order after a financial restructuring.
The multifold argument stems from one simple core difference in Indians: mindset. Culturally, Indians are less inclined to spend on credit, forget taking housing loans with as little downpayment as 10% (as was prevalent before the crisis in US). So when the then Indian Governor Mr. Y. V. Reddy stuck to the conservative high regulation attitude and emphasized corporate disclosures, it was a blessing in disguise for Indian banks which are less exposed directly to problem assets. Secondly, even when exports and the stock market faced gloom, India's FDI's inflows were surprisingly as sturdy as ever. How was this possible with the US financials and auto-industry collapsing like a house of cards? Well, the same industries continued their investments in India realizing that with a forecasted 6% growth rate, India was still far better than the recessionary American or European markets. The billion dollar US bailout of GM would go a long way in helping it continue with the proposed billion dolar worth plant proposed in Gurgaon.
Although it is debatable if India has received its due recognition in the world, the crisis will surely open up the country to hoards of new investors looking to tap in to its consumer base and the country ganing new recognition in the G-7 meta-process when the combined GDP of BRIC countries could overtake the combined economic might of G7 as an aftermath of the financial tumble.
Furthermore the most important for India are its 75% of the population living below USD 2.5per day. When inflation fell from the 12.91% in August to 5.2% of January, the poor pocket became half as strained as it would have been without the monetary expansion to counter the crisis. Real India isn't the stock market or the exporters worth billions which experienced shocks, it is the low and medium income families who actually provide the services and manufacturing products to which the elites act as in intermediary in selling it off to the developed world. Thus overall, the crisis has come across as a boon in disguise to the Indian poor, to its banks, and its future recognition as a force to reckon with in the new world order after a financial restructuring.
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