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You and I can beat recession August 18, 2011

Posted by aglakadam in International Issues, National Issues.
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Mrs. Geeta Khurana, an architect, used to work for a leading construction company. Her husband was a practicing Chartered Accountant.  Both had an exceptionally peaceful family life full of love and understanding. It was daily chore for them to have breakfast and dinner together at home along with their children. One particular day Mr. Pravin Khurana did not reach home at the time he generally used to report back every day. Natural reaction was to contact him on his cell, which eventually was not responding.

After three hours when the CA reached home he saw a lot of mayhem inside. The house was full of people, the police, the neighbor’s and a few media people. While he was shocked to see the audience at home, all others were relieved to see him safe. Since Pravin did not reach home and also since he was not responding on cell, Mrs. Khurana got panicked and called up the police station to inform that her husband was missing.  What actually happened is this – on his way back from office Pravin witnessed one accident and rushed to help the injured. He had to go to the nearby hospital and as such he got delayed. In the process someone stole his cell phone and he could not update his status at home.

Friends you and I are no different. Think about it – what comes first to our thoughts when a near & dear one does not reach home at the expected hour? Would one think that the person might have hit a jack pot on the way and would be counting the amount! Nope. Invariably one would worry of some accident on the way. It’s very natural for human brain to readily accept the possibility of a negative consequence. That’s the treatment it gets right from its birth. It requires conscious efforts for an individual to anticipate and accept a positive outcome out of uncertain situations.

Something similar happened to the world last week when credit rating firm Standard & Poor’s stunned the whole world by downgrading the U.S. government’s debt rating to AA+ from AAA. This was the first time in history that America lost its top-rung rating.  Although this downgraded of US by S&P was not the end of the world, it gave birth to a tsunami of panic driven speculations across the world. The newspapers started talking of the second consecutive recession. The world became a theater of sentiments where the drama of downfall was being staged. 

A national TV channel interviewed me the same day and wanted to have my views on the likely job market scenario if there was a double-dip recession. Though I am not an economist I refuted the possibilities of job losses and bad times. They were not convinced and started interrogating me in a manner in which police would question a suspect. I stood strong on my stand and tried to convince them. S&P’s US downgrade did not mean companies in India will start throwing out their manpower from the window. It was just one indicator. Even billionaire Warren Buffett has expressed that US economy will avoid its likely recession in three years.

Every recession has a distinct point of ignition. 1995 recession was different, 2008 was due to the fallout of subprime lending. Even the who’s who in India were caught unaware in the last recession.  On the eve of Lehman debacle, Tata’s had signed up the takeover of Corus steel in a multibillion dollar deal. As such the impact of recession was also unexpectedly harsh. But today India is not unaware; inventory and manpower levels are well within manageable limits in the core segment. There would however be certain sectors which may face the heat. Even if economy gets into a continuous phase of de-growth I thing we can be sure of is that there won’t be episodes of mass unemployment this time.  

Actually the scars of 2008 recession are still live and it does not allow our naïve brain to stop extrapolating the negative. Relax: It is most unlikely that the world would plunge into a ‘once more’ recession. While the news of likely recession was on fire, there were some positives which happened simultaneously but did not get the public sentiments. There are signs of modest improvement which should quiet the slowdown worries. Here is a list of these encouraging news sentiments: Reputed rating agencies (other than S&P) like Moody’s and Fitch have not downgraded US. In July’2011 US added 117000 jobs, better than the previous two months. Hiring picked up and the unemployment rate dipped to 9.1 percent. Goldman Sachs on Monday upgraded India to ‘market weight’ from ‘underweight’. With the macro cycle oil prices were likely to roll down and a newspaper report said petrol could come down by Rs. 10/- a liter!

Life differs in each ones perspective. A deaf child says : “For all of you I am deaf, but for me all of you are dumb.” I am sure the US downgrade doesn’t warrant too much of panic like it did in 2008. Need of the hour is to refrain from being a negative thinker. Since we may not know the details of the macro economic developments across the globe let’s not succumb to a recessionary thought process. Worries of negative expectations lead to ignorant negative speculations on a mass scale. Businesses across the nation would adopt the ‘wait and watch’ strategy and this may subsequently trigger recession. Hence it is better to be wishfully optimistic than to be hopelessly pessimistic.  Positive thoughts will encourage & help build up sentiments leading to overall growth. Let’s together cultivate an optimistic belief about the future and spread the positive word around. 

LESSONS FOR EXCELLENCE :

  1. 1.       Let’s train our thoughts to dwell more on “hope for the best” and less on “be prepared for the worst”.
  2. 2.       No poison can kill a positive thinker and no medicine can heal a negative mind! Be it life or business; teach yourself to be positive in the world of expectations.
  3. 3.       “Words are under your control until you speak them, but you come under their control once you have spoken them!”
  4. 4.       Tongue is the biggest tool of mass destruction as well as mass construction. Let’s use it constructively.
  5. 5.       Collectively all of us can defeat recession by endorsing the right sentiments.

 

Ajit Varwandkar

Email : info@fsindia.in

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