by teamrecNouriel Roubini, one of the few leading economists who correctly predicted the magnitude of the world’s recent financial troubles and said “if govts maintain large deficits, worries about excessive inflation will grow, causing bond yields and borrowing rates to rise and perhaps choking off economic growth.” He further said, “another reason to worry is that energy, food and oil prices are rising faster than fundamentals warrant, and could be driven higher by speculation or if excessive liquidity creates artificially high demand.” He said the global economy “could not withstand another contractionary shock” if speculation drives oil rapidly toward $100 per barrel.
The story of the “Great recovery”, being scripted nowadays by the Media and others, but the question is, is it really happening. People say, with this so called sign of recovery, not only consumers are back in the market buying their household goods, they have started trading in the financial market. Auto sales, Real estate, Sensex over 16K, IPO’s coming into the market, Gold prices touching an all time high, festival season round the corner, DA hike of 5%, all this is surely the sign of improving economic condition and sentiments of the country and the world market too. All this and more may not have helped the economy to revive in the short term, but it has definitely helped to arrest the downfall.
One conclusion which can be drawn is that the slide has come to a stop. The US unemployment numbers have started reducing in the last month or two. World over the “layoffs” have come to a stop and the fear has slowly ebbed. The recession has hit the “bottom” and there is only one way now and that is “UP”. The key issues now are ‘When?’ ‘How fast?’ There has been a transformation, with the “feel good factor” coming into play and lot of noise being made on the recovery world over and specially in India. There are a lot of reports mentioning at length on the positives which are happening in the economy.
However, “Reading between the lines”… it suggests something else. There are still signs of worry, issues to be addressed and policies to be framed at the govt level (sound bytes only will not help).
Axe on non-plan expenditure
The Centre’s decision to affect a 5% to 10% cut in non-plan expenditure, ostensibly due to the prevailing fiscal milieu and drought conditions — as well as the resource constraints it is labouring under as a result – may or may not meet with success. But the concern of the Indian Govt. is there to be seen. I agree the coming state elections could have been one of the reasons but the fear that all is not well is clearly written on the wall.
Though, more than half of the non-plan spending — 55% to be exact — does not allow any scope for any pruning at all, even in regard to the rest, any cut will prove to be problematic. All these attempts at achieving some semblance of expenditure control appear to be symbolic rather than substantive; the hidden message is a sign of discomfort.
Reduction in ‘X’, ‘Y’ & ‘Z’ Category Security for VIP’s
After dispensing with the commando bodyguards of most of the ‘X’ and ‘Y’ category protectees, the home ministry has now begun in right earnest the sensitive task of pruning security of ‘Z’ class VIPs. Officials pointed out that the government spends over Rs.250 cr. (Rs.2.5 billion) annually for the protection of VIPs. Another subject which reflects the austerity measures of the Govt.
Apr-Jul Indirect tax receipts down 28 pc
India’s indirect tax receipts fell 28 percent in the April -July period due to duty cuts and falling imports, but the government hopes to meet the annual target.
Pranab Mukherjee says “A matter of worry is that indirect tax receipts during 2009/10 (up to July 2009) have shown a negative growth of 28 percent as compared to the last year.”.
Government wakes up to austerity measures
Chasing a ballooning fiscal deficit; which is expected to take a further beating after the hike in prices of petroleum products, the government has announced a series of belt-tightening measures, to be implemented with immediate effect. Incidentally, the guidelines cover not only Central government departments but also extended to state governments and public sector units.
The Finance Ministry mandarins say the austerity measures are being introduced as they fear government’s fiscal deficit could cross the targeted limit of 5.1 per cent of GDP by as much as half a percentage point as government spending has been burgeoning even as revenue has been falling short of targets.
• Ban on creation of new jobs in the government sector.
• Abolition of posts lying vacant for more than a year.
• Cut existing jobs by up to 10 per cent wherever possible.
• Foreign travel allowance is being cut by 25 per cent for all officials.
• Travel on study tours and seminars are being banned.
• New rules also ban the purchases of new cars and other vehicles by the government.
• Calls upon all departments to spend 10 per cent less on-fuel bills.
• Organise fewer and less lavish conferences and seminars.
• Travel in Economy class for domestic flights.
EMBARRASSED by the excesses of his government colleagues, finance minister Pranab Mukherjee asked external affairs minister S M Krishna and his deputy Shashi Tharoor to move out of five-star hotels and into their respective state bhawans.
Low Retail participation in OIL IPO
The initial public offering (IPO) of Oil India Ltd, got a strong response from institutional investors. The issue was subscribed within minutes of opening. But retail investors were less enthusiastic. According to data provided by National Stock Exchange (NSE), the issue was subscribed 1.28 times by retail investors.
CEO & CFO of Infosys react to rising Share price of IT Sector cos
“We believe that it is too early to say the (global) economy is better. There are conflicting signals,” CEO Infosys, Kris Gopalakrishnan said.
“It’s more to do with cautiousness because we are not seeing any big improvement at the micro level even though there are some green shoots at the macro level,” Infosys CFO V. Balakrishnan told analysts.
Import falls by 37%, Exports by 28%
India’s imports fell 37% in July, outpacing a 28% drop in exports and appearing to paint a flattering picture of the trade deficit, although government officials cautioned the true situation was far from celebratory. The steep fall in July imports—both oil and non-oil—to $19.62 billion resulted in the country’s trade deficit for the month halving to $6 billion from year-earlier levels.
Merchandise exports fell for the 10th straight month in July, little changed from the 27.7% drop in the preceding month. Exports fell to $13.62 billion in July, but the exporters hope that the situation will improve by this year end amid expectations of an increase in orders ahead of Christmas and New Year.
JET says NO to ‘ACTIVE UNION’
The stance of the Jet Airways management and its agitated pilots to end the standoff is worth scrutinizing. The airline cancelled more than 200 flights, which affected nearly 15,000 passengers and the stand-off has proved costly for the airline – a loss of over Rs 200 crore ($40 million).
One wonders why an already troubled aviation industry player would go to such an extent to take a loss of over Rs. 200 cr. and slug it out with its Pilots. The Management was ready to hire fresh Pilots from the market rather than bow to their demands. Equally strange is the stance of the Pilots who were ready to be sacked than bow down to pressure.
Stimulus measures to continue: FM
Finance minister Pranab Mukherjee said the fiscal stimulus measures need to be continued as the economy is “just beginning to come out of the woods”even as he ruled out any fresh tax cuts to provide relief in the wake of drought that has impacted nearly half the country.
Recruitment Scenario
Not much seems to have happened on the Recruitment scene world wide. If one looks at the two newspapers TOI & HT on the respective days when they bring out their supplements carrying the requirements from the Job Market, one would be surprised to find the supplements reduced to 6 pages or there about. It speaks volumes about the state of the Job Market.
If we look closely, the much talked about expansion plans of corporate houses are no longer visible in the print media and no more announcements of new projects. This is a time for consolidation.
We are heading towards a very crucial part of the financial year world wide. The festival season is round the corner in India and the whole Indian economy looks forward to this period as the consumption increases drastically. By the time this season ends in India, the rest of the world along with US gears up for Christmas again a period of increased consumption. However, this season also means reduced productivity as there are a lot of holidays and the focus of individuals shift.
On the brighter side even though slowdown has impacted employment in some Western countries, there are others who are addressing long-term domestic labour shortages and looking at tapping skills from countries such as India to fuel economic growth. It’s not always a case of protectionist barriers. The ‘Blue Card’ plan by European Union countries, for instance, is part of a comprehensive migration policy and is targeted at attracting highly-skilled immigrants to take up jobs in EU in sectors suffering from skill shortages.
So, yes, this recovery song may not be true to the extent it is being sung, but it is needed to take us out of the fear psychosis. We can’t resolve the problem by avoiding it. We will have to face it, to finish it.
I reiterate “the recession has hit the “bottom” and there is only one way now and that is “UP”.”
ABOUT THE AUTHOR
Abhay has 19+ years of experience in Recruitment, Mentoring and Business Development. He is an entrepreneur and a professional with 14+ years in the industry specialising in Manpower Planning, Strategy and Recruitments. He heads Operations and Business Development at Team Recruiters a Delhi based Manpower Consulting company with clientele in both domestic and overseas market. Abhay is widely known across the industry and has a great reputation across Capital Market and Travel Trade, which has been the focus of Team Recruiter’s business interest for the last two years. He has been a hands-on person spearheading the operations for the company and has a good connect with people across the board.
He has earlier been an entrepreneur with 12+ years at the helm of Teamvision Solutions a Delhi based Manpower Consulting company with clientele in both domestic and overseas market.
In his previous roles, prior to Teamvision, he has also worked with Thapar Groups IT venture iBiLT Technologies Ltd, Excel Infotech Ltd and US based AVS Systems Inc. and was instrumental in growing the business tremendously.
