Saturday, May 9, 2009

The rural sector would steer the economic recovery

It is now apparent that India’s economic recovery would come through the villages. Unless the villages of the country are developed it would be impossible for the country to usher in a new era of Growth. This fact was ignored till recently. With the better statistical analysis and with the strengthening of studies of welfare economics it become apparent that not only the soul of India rest in villages but the secret wealth of the nation is buried under the dust of villages.

The job loss is a matter of great concern no doubt in recent downturn. More than five lakh educated employees had lost jobs. More than million had to undergo pay cuts. Now it is the turn of new graduates to feel frustrated since companies have not really absorbed employees even after the on campus interviews held twelve months back . A few boys have been stopped from joining the service even after issuing the appointment letters. The traditional markets have shrunken. The companies have started research work to find out where the new markets for their products do exit. From this research work it was found that in India the savior could be the rural sector. This area was hitherto ignored.

The companies are employing fewer persons now a day. The most of employees are sent through rigorous on the job training before any official works are assigned. These training schedules are tough. The most of the employees fails to pass these tests and get sacked. Some of the employees undergoing training get so scared that some time a few commit suicides as they fail to stand up to the rigor of the training. With more and more competition for the lesser numbers of jobs the nervousness amongst younger recruits does create hell . Now companies have started counseling as to how to withstand the training pressure by the newly employed executives. Fortunately the down turn has affected minimal in India. This is due to the excellent management of monetary system by the Reserve Bank of India.
A seminar held recently in Columbia Business School noted that although developing countries, especially India and China, are doing much better than the rest of the world, including the US, Prof Stiglitz said one should not believe the effect of the US economic downturn would not affect emerging economies worldwide. The Nobel Prize winning Economist however conceded that RBI has managed the financial affairs of the country much better than most of developed nations including USA. India would be the vanguard in bringing back economic growth to the world economy, along with China, Russia, and Brazil.
He said that about a year ago people used to talk about de-coupling, meaning that emerging economies, especially that of India, are not linked to the global economy and so any downturn would not spread to countries like India and China. But later on it was found that now a day’s economy of the world is greatly interlinked and pressure on dominating economies would bring in ripple effect on the entire world.
"I always thought that that was a myth, and today it seems that the downturn in the world's largest economy has to have global implications and that is what is happening today. We are tied by a whole set of connections -- capital markets, export markets, labour, all that. . .," Prof .Stiglitz said, adding that India's economy is likely to continue growing but at a slower rate than before the crisis.

Prof Stiglitz’s concern found echo in the study of the Associated Chambers of Commerce and Industry of India. It found the rural market is becoming increasingly attractive for FMCG, automobiles and organised retail businesses. Rural India accounts for more than 40 per cent consumption in major FMCG categories such as personal care, fabric care, and hot beverages.
None can afford to ignore two third of the consumer population pie. No wonder, the growing power of the rural consumer (accounting for 64 per cent of country's total consumer base) is forcing Indian blue chips and MNCs to flock to rural markets. Not only FMCG companies but even banks, auto, telecom and retail companies are finding it difficult to keep themselves away from the lure. Young boys must have patience. India is bound to improve soon . The unemployment would surely ease out by 2010.


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