When the sub-prime mortgage crisis raised its head some months back; nobody realized its gravity and week after week, nobody had imagined its scale and rapidity with which it expanded. Even the US Treasury Secretary could not anticipate its size and its ramifications. Every time, the crisis claimed one victim after another, it was creating a sense of disbelief and yet none including Treasury Secretary could fathom its undercurrents, which was fast enveloping the US economy.


We, in India, failed to even a larger extent; and felt that Indian economy is strong, as its basic fundamentals are sound and that; to start with, even Finance Minister said that the "slowdown" in the US would not affect India. As there was an increasingly realization that no country would remain immune from the US crisis, we started talking about its "ripple" effect.


Very slow and yet increasing realization on the part of our economist Prime Minister (from a "ripple effect" to a far away tsunami), however, led to setting up of a high-powered committee to handle the economic crisis in the country, which has initiated a discussion on various measures to bail out industries, especially exporters that have been hit by the slowdown in Western markets. The industries that have been hit the hardest are those, whose major export destinations were the United States, the European Union and Japan and which have been hit by recession the hardest. And the industries, which are labour-intensive and account for a major chunk of employment in India are the ones that face threats of depletion in strength. The garment export industry fulfills both the parameters.


To my mind, the shadow of recession is deeper, darker and surer than what is understood by the powers that be, even today. I am appalled by sheer lack of appreciation that recession is knocking at our door and our Harvard educated Finance Minister says that there is no recession. There are unmistakable signs of serious slowdown, even meltdown, in India and our Prime Minister still swears by 9% growth; though his own Finance Minister now puts the figure at 7-8%. Both of them know that their statements are not right. This I say because when the international financial institutions like International Monetary Fund have revised India's growth downwards from 9% to 6.3% and international credit agencies have also quoted a similar figure. This is despite the marked slowdown in industrial production, serious erosion in our export performance, and evident slowdown in domestic demand; each and all of which point towards lower growth prospects. This clearly dents the credibility of our economist Prime Minister, as corroborated by the quick and sharp decline in our Sensex figures after he has made the announcement of his projection of Indian growth.






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