FMS Delhi | Outlook for the Global Economy and Prospects for India

FMS (Management of Services) Delhi organises talk on "Outlook for the Global Economy and Prospects for India"

Green Shoots or Scorched Earth?

This was the question with which Mr.Manoj Vohra started his lecture. Mr.Vohra, who is the Director of Research and Senior Editor, The Economist Intelligence Unit, at the Economist, visited the Faculty of Management Studies, South Campus, to give a talk on the topic, 'Outlook for the Global Economy and Prospects for India' to the students of the MBA (MS) course.

Mr Vohra spoke at length about the problems facing the world economy today, especially in light of recent news of a few countries being said to have recovered from recession. He emphasized that the governments are still asking the wrong question to their institutions. They are asking, 'do you have more capital than losses?' instead of asking 'can you stand on your own?'

He raised and answered pertinent questions on the current state of the global credit crunch, recession and recovery from it, the way forward to move out of recession, and whether India as a nation can be decoupled from the world in these crisis times. Backed with strong analysis, Mr. Vohra opined that the recession is not over as many analysts are claiming, based on the appearance of green shoots in several economies.In fact, he went on to say that for some developed economies the recovery is going to be a W-shaped instead of a V- or U- shaped one, implying that a major factor for the current positive growth figures is the government stimuli, whose effects will be short-term.

Mr.Manoj, Director of Research and Senior Editor, The Economist Intelligence Unit, delivering a talk at FMS Delhi

Commenting on the current recession being a financial crisis originated one, Mr. Vohra said that it's the worst form of recession as it spreads both horizontally (from sub-prime to mid-prime and so on), as well as vertically (moving from financial sector to other sectors like aviation and hospitality) and claimed that the banks need at least another 12-18 months to rebuild their balance sheets. This is especially true considering the mid-prime sector in the US, which is many times larger than sub-prime sector, and is seeing worrying levels of defaults.

The good news though, according to him, is that the free fall is over. From here on, there will be growth in the positive direction, and the extent and pace of recovery will differ from one country to another.

Regarding the India perspective, much like the journal he represents, Mr.Vohra was crisp in his arguments about what could be expected of the Indian economy, what kind of reforms could take place and what would be their impact. He was slightly critical of certain policies followed by India, especially about subsidies. He also remarked on the lack of proper, well-directed investments being made in the rural economy, with long-term perspectives in mind. Though, in spite of being clearly unhappy with the economic fundamentals of India, labelling it as 'choosing the prettiest among the ugly', Mr Vohra was still bullish on India.

On the future of India, Mr Vohra forecasted that it would see an interest rate hike by the first quarter of 2010 and also a double-digit inflation. He also went on to say that irrespective of the crisis, India would have seen a fall of GDP growth rate to around 7-7.5%, as the economy was already overheating.

The highly interactive session saw arguments and counter-arguments flying between Mr.Vohra and the keen FMS students, with discussions ranging from policy decisions to the long- and short-term measures being taken in India and Worldwide.

In all, an informative and invigorating session allowed the students to develop and build on their knowledge and perspectives on the global financial crisis and India's role in it.

Concluded.

Contributed by -
Media & PR Committee,
FMS, Delhi.

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