IIM Ahmedabad Celebrates Confluence 2009

IIM Ahmedabad Celebrates Confluence 2009

Confluence 2009, IIMA's annual B-school summit was inaugurated by lighting the ceremonial lamp by Mr. Rajat Nag, MD of Asian Development Bank (ADB) and Dr. Samir Barua, Director of IIMA. The guests were introduced to the audience by Prof. Atanu Ghosh.

Dr. Barua set the conference in motion by giving a brief illustration of the relationship between the real economy and the financial markets. He said that if a growing economy is a fast spinning top, its axis is the financial markets. He explained that their co-existence and synchrony is essential for the healthy and sustained growth of the economy. Consumer demand is a critical aspect that contributes to growth of the economy and this is what is being spurred by governments globally to combat the crisis. The approaches used by the governments broadly fall into three categories, viz. infusion of capital, boosting government expenditure and putting more money in people's pocket through tax subsidies and loans. For example, India's NREGA spurs rural demand by making more money available in the hands of the rural population.

Taking off from there, Mr. Rajat Nag said that while India should work towards becoming affluent, it is equally important to be fair and inclusive. From the point of view of the crisis, the US economy suffered from multiple problems like the housing bubble, a weak financial system etc. the Asian economies are very robust on these aspects. Moreover, considering the aggressive steps taken by the governments to boost consumption, the ADB foresees an increase in the growths rates of India and China. On a cautionary note, he also suggested that while the expansionary policies must continue, stimulus exit strategies must be carefully planned so that the growth isn't adversely impacted. He also said that the five major challenges facing India are its deep structural inequalities like urban-rural rich-poor divide, lack of efficient governance, poor infrastructure, environmental issues and its relationship with its neighbors. He felt that a higher level of cooperation among the neighboring countries will lead to increased trade and hence progress of all nations.

Mr. C. B. Bhave, Chairman of SEBI, presented an alternate view to look at the crisis and held that an improper distribution of leverage across sectors had resulted in imbalance in the economy leading to meltdown we all know very well. He blamed the culture of excessive risk taking that had mushroomed while the times were good as another factor that led to the depression. According to him pre-crisis the bankers of the world believed that," In the world of risk-taking, the less you bet, the more you lose if you win."

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Contributed by -
M. Arun,
Coordinator,
Media Relations,
Confluence 2009,
Indian Institute of Management, Ahmedabad.

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