Indo-US Business Confidence Index

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President's Message

Now the question being asked across the world among policy makers, corporate honchos and common men is when the melt down is going to bottom out. Discussions on intensity of the melt down, how it is affecting various economies, sectors which are mostly hit etc, are put in the backburner. Barring a few countries, meltdown has ridden rough shod over them and every one is looking forward to the deliverance. Significantly, there is a marked perceptional cleavage among economists, policy makers etc about the timing of the recovery. There is an overwhelmingly pessimistic school of thought, which feels that recovery process will be longer than what it is expected. They feel that it might take little more for the US economy to pick up. According to them deliverance from the present turmoil is directly linked with the upswing of the US economy, particularly that of the Europe, China and Japan, which have very strong trade links with the US (US accounting for major share of their exports).

The other view is that the recovery is round the corner. They cite the example of recent results of some of the American and European corporations, which have bucked the trend and shown profit last year. Citibank is one such example. According to them many corporations across the world are in a fast track to recovery, which will be unveiled in the coming months. Protagonists of this view also point out the perceived buoyancy in the Indian market as a trailblazer to the global recovery. According to them, the positive movements in the Indian stock market, has started attracting investments from abroad, particularly from FIIs from US and Europe. Very soon they are going to be net investors in the Indian market. The growth process in India will gather momentum with a stable government in place at the centre. A massive growth program will be triggered for ushering in inclusive growth. Some of the reform process, which had to be put under tight leash on account of the political expediency and stiff opposition from the coalition partners will be taken to the logical end. These include much awaited reforms in insurance sector, banking sector, educational, judicial and administrative reforms and the like.

What that will portend for the global economy? Undoubtedly, that will open up many areas of investment for the global companies, particularly in the field of infrastructure, such as power both in the conventional and non conventional sectors like solar energy, wind mill and bio-mass. A rough estimate by the governmental agencies put the requirement for the infrastructure investment in India in the next five years or so is worked out to over US$ 500 billion. This massive figure include sourcing of equipment such as plant and machinery, FDI and a host of consultancy services and technical know-how, countries like the US are keen to participate.

The bail out plans of India is not an isolated happening. Almost all countries, the US, Europe, Japan and China have come out with such rejuvenation plans to boost their sagging economies. Some of the plans unveiled by the US for repairing roads and bridges, strengthening urban facilities and housing have already showing encouraging results. In the months to come, these development activities will gain momentum pushing up the beleaguered economies.

There is also another dimension to the development process. That is the fund infusions that can be expected from the multi-lateral organizations like World Bank, IMF etc. These funds may flow mainly to developing world, which can catalyze the demand for imports of capital goods and technologies world-wide. It is expected that in a few months time from now, these funds would be released in phases, which can help signaling growth processes world-wide.

But the recovery process and the resultant economic landscape will be essentially different from the one existed below. We have learned the lessons the hard way. Investment banks and hedge funds have to transform themselves from greedy outfits to responsible institutions. There will be greater degree of controls and regulations on them to ensure their orderly growth. Inclusive growth should be the buzz word in the post recovery period and all administrations should gear themselves for this challenging task.

Significantly, during the recovery and post recovery period three countries will have cut out roles. They are the US, India and China. Their combined efforts should be not only coordinated but also should seek greater synergies. The thinking that prevailed during the bad days of the melt down that the US, sooner or later will be decimated as a super economic power. But that thinking seems to be thinking without any sound rationale. The US will continue to play a powerful role in the emerging economic and financial architecture. Possibly, its pre-eminence will to a large extent dependent on the type of support and synergy it can strike with the Indian and Chinese economies, the two fastest growing economies in the world.

As a partner in progress, IACC has been cementing the relationship between the oldest and largest economies of the world. Three important events that have taken place in our continuing effort to take the economic engagement to a higher orbit of growth need are mentioned below.

A delegation comprising of 34 delegates from the Indian media and entertainment industry and officials from the Ministry of Information and Broadcasting Smt. Sushma Singh, Secretary alongwith Mr. Amitabh Kumar, IRS Director (films) participated in the world famous National Association of Broadcasters Show 2009 held in Las Vegas, USA from April 18-23, 2009. IACC also organized a India Pavilion and Info Session on “India : Transitioning to a digital future on April 22, 2009 which was chaired by Mr. Farokh Balsara, Partner & Director, Advisory Services – Technology, Communications & Entertainment.

The second is the interface we had with the Indian Commerce Secretary G K Pillai. We could impress on him some of the policy changes that are required to boost the exports to US. We also had an interface with the Indian Ambassador Peter Burleigh, Charge d’Affaires, Embassy of USA, New Delhi where we discussed the need for taking the Indo-US civil nuclear energy agreement to the logical end. An interactive meeting with members of IACC in New Delhi held on 16 April ‘09, Ms. Meera Shankar, India's Ambassador designate to the US, underlined the need to take appropriate steps to further enrich the economic engagement. She specifically referred to the decline in the share of the US in the overall foreign direct investment (FDI) India received last year. Ms Meera Shankar, has underscored the need for greater business involvement of the small and medium enterprises (SMEs) of India and the US to strengthen bilateral economic relations. Shortly, we are going to meet the Revenue Secretary for a detailed discussion on Budget and a pre-Budget memorandum will be submitted to him.

S.K. Jain | View President S.K. Jain's Profile

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