India’s economic reforms have freed it from an era of punitive taxation and stifling regulation. The challenge now is to establish an inclusive social contract that cuts across divisions. Sunil Khilnani in Mint-Lounge:
A peculiar outcome of what many have called the “crisis of capitalism” over the past two years is that it has left capitalism remarkably unscathed. Indeed if anything, the recent shocks to this, our least-bad economic system, have worked to reinforce many of its less good aspects.
Here in India, much has been made of the fact that the economy has gracefully survived the recession. Both the Indian government and our corporate managements responded nimbly, and the companies are now well placed to take advantage of new opportunities. That is all to the good.
Yet the language of crisis can also be a means of manipulation. Over the last two years, it’s been used to eliminate competition and consolidate sectors of the economy in the form of a few, massive players. After the global shake-out among investment banks, airlines and the automobile industry, the surviving players are not just big. They’re secure in the knowledge that they’re far too big to fail. Meanwhile they’ve parlayed the uncertainty about the financial climate into a trumping argument against worker concerns. They’ve pared costs, shed labour, reduced employment security. And now the citizen as consumer has less choice, the citizen as worker has more uncertainty, and a paradox has been laid bare. More:
Emily Wax from Kochi in the Washington Post:
When his overnight flight landed, Abdul Wahib walked out of Kochi’s palm-fringed airport and hugged his family. After 24 years of working in the United Arab Emirates, he was home. He carried a suitcase and a layoff notice: His well-paid job as a forklift operator at Dubai’s once-bustling port was terminated.
Wahib’s airplane was filled with Indian laborers, some fired by text messages, dozens owed months of back pay.
“My flight was full of shocked men, sad men. I could think only of my wife and two children back in India,” said Wahib, 48, who had saved enough to buy a three-bedroom house in a sleepy hamlet of coconut groves and banana trees in the southern state of Kerala. “I didn’t want to disappoint them. India has become a strong nation. But it’s migrants’ money that has pumped through our banks and villages. I hoped I could find good work at home.” More:
Impact of recession on Indians with H1-B visas in the US. From the Wall Street Journal
Since nearly 40 percent of all H-1B visa holders are from India , the mounting layoffs are hitting Indian professionals particularly hard.
An estimated 16,000 to 20,000 Indian nationals have returned home, says Arvind Panagariya, an economics professor at Columbia University and a senior fellow at the Brookings Institution.
H-1B visa holders say they feel they are in a state of limbo, ready to pick up and move wherever the economy or work takes them. Lives have been disrupted, and some said they were under tremendous stress to pay back mortgage loans for buying houses and cars. Many had children born on U.S. soil and wonder how their children will adjust to Indian schools and a different way of life.
It is one of the major vulnerabilities for professionals on the H-1B visa. “The moment you don’t work, you’re out of status, you have no grace period,” said immigration attorney Tahmina Watson. Workers can either leave the country within a matter of days, or convert to a B1/B2 tourist visa, which doesn’t allow them to work, but buys them a few months to sell their homes and cars, make travel arrangements or find a new school for their children. More:
Jayati Ghosh, professor of Economics at Jawaharlal Nehru university, New Delhi, in the Guardian:
The geographical distribution of the award both creates and reflects power hierarchies in the discipline. The economics prize has been awarded 40 times to 62 recipients, 42 of whom have been from the US, while more than 50 were working in the US at the time of the award. The University of Chicago has 11 laureates, leading to the joke about “the Stockholm-Chicago Express”. This does not reflect the actual state of economic knowledge so much as the biases and blindness of the jury. Only two people from developing countries have received it (Arthur Lewis and Amartya Sen) and both worked in the US and Britain. Only three with an interest in the economics of developing countries – which is the economic reality for around three quarters of the world’s population – have received the award.
In recent years the prize has been focused on financial market behaviour. In 1997, the award went to two economists – Robert Merton and Myron Scholes – who were supposed to have discovered a method of valuing derivatives that could reduce or eliminate risk in financial investment. When the hedge fund they ran (Long Term Capital Management) went bust within the year and had to be rescued by the US federal reserve, there was some embarrassment. Perhaps to right this wrong, a few years later the prize was given to economists George Akerlof and Joseph Stiglitz, who had pointed to the imperfect functioning of financial markets. The award last year to Paul Krugman may also have indicated some bowing to changing times. More:
Neeta Lal at Asia Sentinel:
Kishore Hali, 22, a diamond polisher at an industrial unit in Saurashtra, in India’s western state of Gujarat, was the sole breadwinner of his eight-member family. When his unit shut its doors last month, the youth struggled with a $400-debt before jumping into a well to kill himself.
Nor is Hali alone. At least 70 diamond industry workers in Gujarat, one of India’s poorest states, have committed suicide over the past few months as the state’s storied diamond industry has sunk into depression. Nearly 60 percent of Gujarat’s diamond industry has closed. Gujurat accounts for 72 percent of the world’s processed diamonds and 80 percent of India’s diamond exports. About 92 percent of the world’s diamonds cut in 2003 were in Surat.
The Surat diamond industry alone is worth Rs8 billion – or was – and accounted for more than half of India’s diamond exports, an industry that employs more than 700,000 workers across the country. Overall, about 2.5 million are associated indirectly with the diamond trade in India. But with the export market in a recession, layoffs and suicides have cast an ominous shadow over the state’s 10,000-odd diamond units.
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India is feeling the cutbacks in America and elsewhere, as high-tech companies and outsourcing firms tighten their belts by freezing salaries and laying off workers. Jeremy Kahn in the New York Times:
Bangalore – After years of being blamed for job losses in America and elsewhere, India’s high-tech companies and outsourcing firms are going through a downturn of their own. The global slowdown is forcing them to reduce hiring, freeze salaries, postpone new investments and lay off thousands of software programmers and call center operators.
While some industry insiders insist the global crisis will actually benefit companies here, as Western businesses seek to cut costs by moving jobs overseas, right now the sector is suddenly gripped by an unfamiliar sense of uncertainty.
“It’s certainly not irrational exuberance,” said Nandan Nilekani, co-chairman of Infosys, one of India’s best-known technology outsourcing firms. “There is a lot of introspection about what does this mean and when does it end.”
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From AFP [via The Smart Set]:
Bollywood is tightening its belt in the face of the global economic downturn, as Indian cinema-goers prefer to hold onto their cash and corporate backers look for guaranteed returns for their money.
Producers and analysts say that although the Indian economy has been spared the worst effects of the banking collapse, negative sentiment and fear of contagion have still affected the 2.1-billion-dollar film industry.
That means more financial scrutiny, particularly after two recent big movies — sci-fi fantasy “Drona” (Saviour) and the thriller “Kidnap” — bombed at the box office.
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The Economist on how an American recession might hit Asia
INVESTORS in Asian stockmarkets were until recently big fans of the “decoupling” theory: the notion that Asian economies can shrug off an American recession. This week’s plunge in shares, taking the MSCI Emerging Asia Index down by 25% at one point from its October high, suggests they have changed their minds. But the fact that Asian markets have not decoupled does not necessarily mean that their economies will follow America’s over a cliff.
Decoupling was always a misnomer, seeming to imply that an American recession would have no impact on Asia. In fact exports and hence profits would certainly be reduced. The pertinent argument is that they would be hurt by much less than in previous American downturns.
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