Today there was snow in the morning, followed by some afternoon rain and a bitter cold breeze afterwards. It was too daunting to venture out, and besides I did not intend to go out to the mall because I did not have anything to buy. I have noticed, indeed, such days when I am out and about without the need to buy something, I end up buying things which are completely unnecessary. So, I stayed home to keep myself away from such wastefulness.
My mood isn't all too sunny, so this caution was well-timed. I have this feeling which is midway between despondent and totally desperate, and I guess it is not getting any better. The news channels are full of gloomy news, and everyone you talk to is down too. British economy seemed to have taken the hit - and it seems, will continue to take hits in the coming days - from this recession. As expected, the United States look far more resilient than Britain, though I am sure it is not exactly at the best of its economic health right now.
Compared on that scale, India looks much better. I did notice that the property prices in Mumbai are wobbly, and there are job losses in the tech sector. I, in fact, know people who have lost their jobs recently, for no fault of theirs. The corporate training market has noticeably slowed down too. But, despite all of that, one can feel the real demand in the market - for things of all sorts, even property - and while this adjustment has to play out in India, I do think the fundamentals are solid here and we shall return to years of growth and expansion shortly.
I may be naive, but my confidence come from the enormity of demand in India. The property prices in many cities have barely budged. I think Mumbai was a bit overpriced, but I do think markets will quickly adjust there too. I am told that the prices will continue to go down, but was advised that the best time to buy will be in four to six months from now. Which, in turn, tells me the bottom - and if that's so, that will still be a shallow recession. True, the stock markets have come down from 20,000 index points to 8,500 index points in a few short months, but I actually met a few happy traders who felt that they can afford blue-chip stocks now that the FII speculators have all left. And, if this is the bottom - Rupee has moved up to 50 a dollar but stayed there after RBI intervened and spent $5 billion to stabilize it - this is still going to be bearable. Compared against Russia's loss of $112 billion in a comparable exercise, India will then escape relatively unscathed, and will not possibly need an external bail-out. Besides, the reduced crude oil prices will help us, and so will any investment from the NRIs, who snap up cut-price properties and stocks at this time.
I am also optimistic about India's job market. The demand is low at this time, but usually economic downturns help offshoring activities more. The current situation will also help soften the wages a bit, as well as make people stay in their jobs longer. That will actually help the industry - attrition has been the wrecker-in-chief so far. Besides, such adjustments will push some employees down the value chain - from Captives to third-party entities, from third-party entities to SME BPOs - which will actually be good for the employees concerned, as they will be forced to spend some time and up-skill themselves. This forced sorting out will help restore the balance between wages and productivity, something that was forgotten in the rush years. This will be painful when considered at an individual level, but will be good overall for the industry and will even pay-off for the individuals over a longer term.
The problem is, of course, it will not be as smooth as I make it sound. While the economic and practical logic will demand, and force, going down the value chain, people will not be able to adjust to this practicality easily. Those who will, will survive and do well. But there are far too many people in India who are sewed to the status and privilege of their jobs, and will find it extremely distressing to lose those privileges. I have already heard people say - I can't take a lower position now after all these years - and know that this has all the making of an individual tragedy. At times like this, the trick is to be flexible, and adjust. Failure to adjust and living in denial are the worst sins one can commit at this time. It is all about having confidence in oneself and embracing things as they come - always looking out for an opportunity - rather than staying put, something that middle level executives in India are not very adept in doing.
Besides, there are social aspects too, which will come into play. I have noticed that Indians in general have very little understanding of a recession. While disasters, floods and famines, have been a regular phenomena in India [floods continue to be so], the urban Babu-s have not seen a full-blown recession ever. This makes us, as a nation, remarkably insensitive about failure. Our families and communities have no understanding what a failure means, and provide little support to individuals to emerge from one. I have heard Indian employers comment that they never hire staff who had an experience in a failed business; it is considered inauspicious. Consequently, the fear of failure runs deep in the Indian psyche. The current market adjustments, hopefully, will challenge this thinking and make failure common, and over time, acceptable.
I do think this will be the greatest gift that this current recession will give us: our acceptance of failure as a part of life. Urban Indians have been so fearful of failure that they have invariably opted for sub-optimum careers, in government, railways, PSUs, BPOs etc. They lived a content and safe life, but often did not realize their potential or chased their dreams. This recession will force a rethinking, and let the cat out of the bag - so don't be surprised if this leads to an entrepreneurial revolution in India in the days to come.
So, overall, I feel positive, despite the bad news all over the TV channels. I know India needs this hard knock, but it will emerge stronger than before. I don't necessarily see the end of US dominance here - that economy is far more resilient, innovative and dynamic for being written off in one global crisis - but I am hopeful about India. This is the first time the Creative Destruction of capitalism has been unleashed in India. Without doubt, this will raise efficiencies, expand capacities and inspire enterprise, as it always does when it begins.
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