“Is Recession a natural and compulsory phenomenon, or it is manmade”
Today, a lot is being written and spoken about the recession in India, more so by the opposition stooges and the Modi haters. Because, they somehow want to project that Modi and his economic policies are failing and not helping the Indian Economy. And the two sectors frequently quoted by them are the Automobile Sector and the Real Estate Sector.
But the reality is that India Indian economy has never ever been so good since independence. Virtually, everything which you and I need in our daily life, is easily available and it is available much cheaper than what it used to be, five years back. Yes, what has disappeared is the excessive buying or the tendency to indulge into hoarding, which in any case is a good sign for the economy at the gross level.
For the sustainable growth, it is always better that the demand rises in natural progression rather than through the stimulus. Because, in such a case, you are consuming tomorrow’s resources today which more often are wasteful, leading to long term problems for the economy and people as a whole.
In this context, we also need to be aware that “Recession” is not a natural and compulsory phenomena. It’s not that it has to occur after certain number of years. If you do a deep analysis, you will realise that it is completely manmade and an outcome of greed of some of the businessmen to earn even tomorrow’s profit also today. Not only of tomorrow’s, but the profits of all the times to come. So if you don’t leave anything for tomorrow, then who is responsible for this situation. This is what these people who are complaining of lack of demand, need to think and ponder over.
The current slump in automobile sector and the real estate sector is temporary and completely man made. Just, check whenever there has been a rise in demand for the cars in the past, what Maruti and the other companies would have done. They would simply increase the selling price of the Cars immediately. As much many companies in general, even failed to pass on the GST benefits to the end consumer.
Now, if these companies find, that there is no demand or it’s not enough, why don’t they decrease the selling price, the demand will rise automatically. But they have become so much used to of unreasonably high returns, that they won’t take any responsibility for it, instead expect Govt to do something to bail them out. Actually, what they must realise is, you cannot blow a balloon infinitely.
Same is the case with real estate sector as well. So the bottom-line is, be reasonable in your return expectations and you will do well.
India is a great story and phenomenal market. Today, there is absolutely no market like India in the whole world. And the degree of governance in general and at the corporate level is consistently on rise because of the efforts and direction of the national leadership. Therefore, if you fail here, it’s all because of your wrong understanding and approach towards business and nothing else.
Recessions are temporary, more often man-made. One has to be proactive to them and not opportunist. Anyone who is willing to add value and create value is whichever way possible, is bound to grow and prosper by leaps and bounds.
Management Consulting- Renewable Energy | Sustainability | Net-Zero Emission | Energy Transition at Utility Scale | Renewable Energy | Project Management | Solar PV Plants + BESS | Business Modeling | Industrial Energy
5 年The same problem (not passing on the benifits of GST) is with the automation, Industries want automation in their operations but don't want to pass on the benifits to the end users which is creating a hoax about the use of automation and AI. This greed for profit making is totally different from their vision what they have set for themselves to serve the society and improve the standard of living.
Tech Entrepreneur, Software Consultant, Turnaround Specialist, Author, Researcher, Project Manager | IIT-B
5 年Your article gives a very different perspective on recession. I an not yet convinced as this is very different from what we have been reading. I probably need to take time to let this sink in. But I am definitely going to think through it. So, if this current recession has to traced to someone's greed, then they could be the auto companies or the builders, right? But then: 1. Isn't the recession forced on to the small businesses that depend on these businesses? Surely, these small businesses are not being greedy. Right? 2. Car sales has a natural limit. The city roads will not accommodate so many cars if people just went on buying. On the other hand, there is endless demand to the real estate, as there are still many people who would like to own a house if they could afford it. How does your greed theory address these differences between these two sectors?
Functional Architect-Oracle Cloud PPM & Financials Consultant, #Accounting Hub #Project Governance Strategist #Program and Project Management Methodologist
5 年Great article sir and I think that's all about vicious circle of expecting all the time a high returns by all industrial sectors from each other.The present slow down in auto industry shows that there is not enough customer in the auto market as it use to be and it may be due to high prices but other side of the coin is that there is decrease in spending powers of the customer base and they are no longer able to buy the cars at same high prices. Now question is why consumer is struggling with comparatively lower purchasing power then their past and the answer is all about their battlefield of charging premium high return prices from their customers in their relative industries so there is cascading effect and that effect is passing into one another and I feel that will take time to get corrected.This correction will come as and when again some equilibrium is resorted to the market in terms of reduction in prices and passing the benefit to consumer which will get distributed in the society as a whole.So agree with you it is just a temporary economic correction.