World Staring at Recession?

The first 10 years of the new millennium—from 2000-2010—were terrifying from the economic perspective, so much so that they got even former US President Barack Obama to admit it was a “crisis unlike any we have seen in our lifetimes”. Let’s now fast-forward 14 years. Ironically, when President Obama passed this statement in 2009, India has withered the global financial storm better than most others. The Government of the day stepped in with resolve to stave off economically-invasive and -divisive forces and created a national and international cocoon that saw India continue to unravel silk and gorge on Butter Chicken. With these two mainstays being protected, we marched along the road to greater financial well-being.

For a bit, let’s rewind to the 1920s, the ‘Roaring Twenties’ of the US. This nation was living in the lap of near-lasciviousness and obscene luxury, with the financial sector thriving beyond belief. Loans and fund extensions were given to anyone who deigned to ask, and since there was no real Federal Bank or financial monitoring in place, banks began getting stretched thin; the feral drought just wasn’t stemmed or monitored. It got to a stage where the discretionary powers of a few families were used to extend loans even to other countries.

Suddenly, though, those countries began running dry, so desiccate they could not repay. And close to their borders was a marauder—Germany’s Adolf Hitler—who seized the opportunity and ran things into the ground. The Great Depression of 1929 hit the Americas. Hitler grabbed all that was cherished by the West to make his point—that Aryans shall rule. He eventually perished in a bunker with Frau Eva Braun, but Hitler did manage to get a once-winging world and economy to its knees. Today, many new Adolfs are lurking at many international borders.

Economic Cross-Winds Buffeting Us Again

Quite simply, we are at an economic crossroads again and the symptoms are anything but good. Today’s debt numbers are worrisome, to say the least. The money Indians owe banks is at new highs, as people are forced to live on savings and borrowings. Banks are being tuned to raise lending rates and resultantly, the burden on people is only increasing. The World Bank and the International Monetary Fund have both warned nations worldwide, especially the so-called ‘Developed World’, to watch their economic footing and moves, for dire times are coming.

The number of ‘confirmed employees’ who have lost their jobs since 2019 is a whopping 7 per cent. The manufacturing sector is headed for deeper trouble, as the ‘Developed World’ reduces imports, given their own sagging and flaccid economies. The growth rate in Europe in hovering around the 0-per cent mark, while global superpower America is boasting a slightly better growth forecast of 0.5 per cent. Globally, the growth is an (un)enviable 1.5 per cent. This reminds us of the 1970s, when the world economy had to face two reversals in the space of a decade. The world is staring recession in the face.

Exodus of Indians: Relinquishing Citizenship

The number of Indians relinquishing citizenship and moving abroad is up 2 per cent over the last decade. Government data itself shows that 183,741 people renounced their Indian citizenship in the first 10 months of 2022, with 604 people leaving the country every single day (in 2014, an average of 354 people were leaving the country each day). Some research reports even claim that of the people who left the country, around 7,000 had an annual income of over Rs 8 crore.

The reasons seem to be India’s falling stature on many global rating parameters, including those related to hunger, gender gap and freedom of the press, and India is now being cited as having the maximum number of poor people in the world. Add to this rising unemployment and cost of living and a double-whammy has been unleashed.

What has led to such a fall in India’s ratings and the people’s experience of working and living in the country? The jury is still out on this one, but some claim that a feeble global economic scenario, the implementation of a graded GST regime and demonetization of larger-denomination currency notes at short notice led to financial and business tumult, especially amongst smaller and medium enterprises. As authorities attempted to bring back economic sensibility, the COVID-19 pandemic made its snarling appearance and took India and the world back many years on every front—economic, social, cultural and medical.

Five-pronged Approach to Bring Back Traction

Well, the time to act (even harshly, if needed) is now. In the Indian context, experts have propounded a five-pronged approach to bring back economic traction and forward-movement. These include tax reforms (our own expenditure far exceeds revenues); subsidy overhaul (way too much is being spent on welfare, perhaps due to populist needs); banking sector reform (bad loans and NPAs have to be reigned in or we will be staring at financial mayhem); job creation (which will instil personal pride and improve the quality of life); and improving infrastructure (many sectors such as manufacturing can see a boom if we impose clear timelines, rationalise documentation and implement single-window clearances all-around).

All of the above, and more, needs to be done to get the juggernaut rolling again in the right direction. And it needs to be done fast. For if this doesn’t happen and Governments worldwide do not pull back from the economic precipice through concerted actions, people will eventually have to do it on their own, as the trend of exodus alone shows. If nations don’t act to empower and cherish people, the people will do it on their own.

— The writer is a veteran journalist and communications specialist.