Recession – the dreaded subject the world is talking about. Be it commodities getting costlier or travelling becoming expensive despite fall in oil prices, pink slips being rampant – the blame is on Recession. Is recession in India actually as bad as it has been made out to be?

Last year as recession dealt heavy blows to the global economy marking an end to an era of cheap money, developed countries slowed down on consumer spending. They also registered huge job losses and investment meltdown. This had an impact on emerging economies like India, where fall in demand led to dip in exports. Forex reserves declined by $56 billion. Rupee depreciated by 20% making exports expensive. Slowdown in foreign investments had adverse effect on liquidity and investments too. The stock indices showed BSE registering a fall of 54.5% at 9,647 from its peak of 21,206 in 2008.

However, despite this economic slowdown, India is expected to do a GDP growth of 6-7% in 2009-10. This is lower than the 9.7% in 2006 and 9% in 2007, but when compared to industrial countries and emerging markets, it is the second highest after China. According to reports by leading venture capitalists, India is holding on well as compared to other emerging countries, especially the other two BRIC nations – Brazil and Russia.

India, being a consumer driven country, has a very big advantage – the large working force. A study by Nomura Research Institute Asian Perspective shows that over 50 crore people are below the age of 30 and those between the age group of 20-59 will grow in next few years to give demographic dividend. These groups will fuel higher demands and growth leading to rise in household incomes, in turn leading to more savings and ultimately to a higher GDP. Currently, household income contributes 68% to the total savings that make up for 38.4% of GDP. This signifies that it will not be long before India recovers from this economic crisis.

A study conducted by AC Nielsen suggests that 83% believe the economy will get better in the next year. Overall, the mood is optimistic but till the time India actually gains back economic momentum, Indians will have to exhibit a certain amount of resilience.

When Barack Obama was declared the US President-elect in November, India lauded the victory and exuded confidence that Indo-US relations will scale newer heights.

Looking Back
It was the end of the Cold War that put India in the good books of the US. The relationship started gaining momentum under Bill Clinton and accelerated under George Bush. The signing of the nuclear deal last year took the bilateral relation to its apogee. However, two months after Obama took over the White Office, there are mixed reactions over the relationship.

The K word
One of the biggest concerns is the US intervention in the Kashimr issue, where Obama had hinted on employing Bill Clinton as a special envoy. While India has always maintained it is a bilateral issue and will be resolved without any outside interference, the fact that it is a 60 year old persistent problem does not help. US does not seem very confident that the two countries can amicably resolve it on their own and so will put pressure on India to agree to US intervention. How would India react to it then?

Comprehensive Test Ban Treaty (CTBT)
Obama is likely to pursue the non-proliferation treaty before US aids Indian civilian nuclear facilities. This will put India in a tight spot as the treaty would restrict India from indulging in any nuclear tests. What would India do then?

Outsourcing
India is very worried about Obama’s policies regarding outsourcing. The USD 787 billion stimulus plan which makes it very difficult for US companies to outsource work, or the recent opposition to bring in nurses from other countries to fill the gap in US are doing nothing to ease India’s worries. What is in store for India?

Free Trade
Where will US’s insistence on a free trade agreement with India, where the latter has been opposing the huge subsidies US government has been providing to agriculture, lead to?

These concerns are genuine. In a bid to revive US economy, the Obama administration will get aggressive and take decisions which they feel deem fit. India needs to watch out for every such move, cautiously oppose few if necessary and take decisions accordingly. Meanwhile, US needs to adopt a softer stand. After all, it cannot ignore India’s growth as an economic power and cordial strategic relations with India is bound to mutually benefit both the nations.