NEW HOPES

[Dr. Sanjiv Agarwal]

While 2009 posed a severe  test  for Indian economy and India escaping slipping  into recession, 2010 is likely to be driven by improvised GDP (from present 6.5- 7 % to 7.5 -8% in next year) and earnings growth and strong and timely supportive government action in the form of economic and tax reforms, besides fiscal stimulus. We should not forget that despite the global recession, India's GDP has remained resilient and is expected over 7 percent in current fiscal. The way India contained the economic crises itself attests to the strong fundamentals developed during the two decades of economic reforms with Indian companies depicting the high degree of market orientation and the ability to adjust to difficult situations.

The ongoing reforms including economic and tax laws reforms, aggressive PSU divestment and accountable governance would hold the key to India of future. We have proved to the world that India is economically mature, both in vision as well as at the ground. At macro level, recession could not deter India, much as other countries were affected (no failure of a single enterprise or bank in India). At micro level, India could not only address the governance issues but also saw that Satyam continuation with all its employees on board and showed proactive solution to worst ever governance issues thrown open as a major challenge. Satyam was saved from becoming Enron.

The year 2010 and beyond is going to witness higher returns on investments. It is hoped that with domestic political stability and global economic stability, India inc should perform better, be more efficient and fundamentally strong. The immediate future, ie, 2010 may be a positive year for Indian equity market and corporate world owing to healthy fundamentals, strong earnings growth and present valuation near historical averages. This is also because we are in a advantage over other countries due to our positioning, higher structural growth, huge foreign exchange reserves and high saving rate.

Capital markets may see a spurt of growth in both, primary and secondary market. While companies would come to tap over rupees three lakh crores from primary market, a lot of disinvestment is in store for us. Also mergers, acquisitions, venture funding and private equity will also find space. There will be plenty of investment opportunities in all sectors (more particularly in knowledge and research ones). With technology ruling our lifes now, we will soon see stock updates and advisory on twitter and use of mobile telephony. Technology would infact give a push to economic spur- be it capital market, be it banking or be it any other profession or business. Technology will be the main driver of growth, employment, knowledge and education and of course, employment

On the flip side, let me assure you, population is not a problem today for government or for country or society as a whole. For the first time since independence, we are proud of our population. There are going to be plenty of jobs in millions. 2010 will also see enhanced operational efficiency. Thanks to the just ended recession and emerging out of an environ full of cost cutting and cost management, lay offs, scouting for new markets, product innovation and new strategies in management. A better understanding of staying together between employers and employees in past few months of recession would also help leverage this relationship in enhanced quality and productivity. Re- skilling  of work force will also add to value.

But we need to worry on inflation, rising prices and a bit slow growth on infrastructure. In fact, we need to double our infrastructure investment from 5 percent of GDP and spend on roads, ports, power, telecom. Soft infrastructure is also a priority in areas such as health care, education and affordable housing.

A combination of inclusive growth, pack of economic and social reforms and expected global economic recovery will see India's growth up and on a sustained basis, much better and stable than many developed nations.  India will surprise the world, once again.