Recession

It is not a surprise; and it has to happen one day when the world’s largest economy is facing the crisis, it is quite normal that the countries dependent on the same will face such kind of impact on their economies too. The crisis signals are there for everybody to watch. Rather, it would have been a surprise when these two developing countries, India and China, which had shown a terrific growth for the past few years, have tried to avoid the slowdown in the growth rate of their respective economies by taking exceptional measures, which can fuel demand, and escaped the scathe of the financial crisis.

India and China are the most populous countries in this world. Together, they hold 37% of world’s population. Being a populous country, is a kind of both boon and curse to these developing economies. The curse comes in the form of feeding the enormous size of the population and provides them suitable work. The boon comes in the form of huge demand this population number can generate, which is equal to the demand of a combination of minimum 3 to 4 developed countries.

Although India have democratic and China authoritarian governments, both countries have opened doors to the foreign direct investments in the hope of garnering good projects which can bring employment, foreign currency, and technological development to their respective countries. In this process, both countries have depended on America for financial and technical investments in respective sectors. Out of these two countries, China has been highly dependent on America for its export market. India has been rather slow in opening its doors to foreign investments is not that much dependant as compared to China. At the same time, India exports to other foreign countries in its nearby regions and have good relations with its neighboring countries in terms of business, including Pakistan. (Pakistan imports Indian sugar.)

Although the political statements of both the countries have been sounding more confident that they are immune to the crisis set by America, finally, they started facing the heat when the export market of these two countries started going down, no matter, whatever support in the form of finance, policy, etc, have been announced by their respective governments. It is everybody’s knowledge that it is not possible to go unscathed from this huge American financial crisis, but there are chances that the impact can be reduced if relevant steps were taken swiftly instead of wasting time in giving bold paper-tiger statements, which does not hold much water.

Finally, when the mighty Europe declared that it has technically fallen into recession, it proved a direct blow to both of these countries’ export market. Earlier, there was a chance that if America goes down, these countries can export to Europe and can keep up their own growth rate without going down. Now, the recession has engulfed both America and Europe, and started its journey toward other regional economies.

China, sensing the danger knocking on its doors, has announced approximately a $600 billion package to revive the internal demand of its own. India has been announcing a spate of fiscal measures, since the start of recession. However, they were not enough. When Europe meekly submitted itself to recession’s claws, India, globally regarded as a sleeping giant, felt the heat and woke up from its deep slumber; it announced more radical fiscal measures in addition to the recently made ones, which can help its export growth rate buoy in recession times.

In summary, India and China, though a little bit late, finally, both are on its toes sensing the danger and the potential power of recession; they started taking measures in good sense, which can fuel their respective economies in present turbulent times.