August 9, 2011 by Parthajeet
Panic seems to have gripped the world with the downgrading of the US economy and already lean stock markets has fallen quickly across the world. The Indian stock market has taken a beating as well; as an immediate effect. However, I wouldn’t worry too much if we look at the long term picture.
CONSUMERISM VS SAVINGS
It is quite obvious that the Americans are today paying for an era of over-consumerism. Living on debt had been taken to the level of a virtue and the fallout is being seen today. On the other hand, China seems to have realized that it is over producing goods that it finds hard to sell at home. With its culture supporting savings, China is today realigning its thought process to find out ways and means of increasing domestic consumption. India has had a record of delivering outsourced services to the west that Indians could ill afford. However, the domestic market in India is so large with such unique market potentials that the time has come to now focus on this segment than look at global markets alone.
Recently my mother took ill and had to undergo a major surgical procedure. This was a learning for me about healthcare facilities in India. Whilst a few of us living in cities have access to healthcare, a large majority of Indians across the country have zero access to sick-care, leave alone healthcare. Many of them may even be willing to or able to pay for such services, but have no access to it. Usually it is too late by the time one gets access to healthcare services.
The scenario is very similar for good quality education. Everyone wants to study in India. However leaving affordability aside, what is pertinent to note is that capacity creation is the big challenge. Most schools in India do not have the required number of teachers and other necessary staff.
The housing shortage in urban and semi urban India has a similar story. The Government puts the shortage at thirty million units. To cover such a gap, one would have to create job opportunities for thousands of young Indians.
In all the opportunities above, capacity creation is the challenge and the opportunity. Education, Healthcare and Housing; all of these industries have the potential and need to uplift the economy from the grassroots level. Besides fulfilling the needs of so many Indians, it will create unprecedented domestic consumption, create millions of job opportunities and ensure zero dependency on a ‘trickle down’ economy. It is but obvious that the trickle down economy has not worked. To understand this, one may ask businessmen and traders in smaller cities like Guwahati and Bhopal, what effect the downgrading of the US economy means to them. It has been seen in previous recessions that such markets have remained largely unaffected by a stock market crash. It only goes to show that the real India lives a life free from the bulls and the bears.