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Mixed signals - Indian Economy

Last few days have been Godsend for the economists who love to play the mind games. We have had amazing mixed signals, though the net effect is more sentimental than real.

-ves

- Satyam fraud
- banning of many IT firms by World Bank (more on that in the next post)
- strikes by transporters and oil industry officers

+ves

- better IIP numbers
- lower inflation
- higher credit offtake
- announcement on infrastructure spending by government

What is future holding for us is anybody's guess!

I still maintain that India will be one of the quickest off the block from this downturn. I see a major positive outcome of the Satyam fraud as most organisations will clean up their balance sheets, if there are inaccuracies, and then going forward good news will be a real one.

The euphoria being over, consolidation in various industries will bring in efficiencies. Shedding flab due to the circumstances will mean healthier businesses. A control on spending will ensure that investments will be put in more productive assets/ventures. Government's firm handling of the strikes is another indicator of sanity making a big comeback.

The biggest issue I see on the horizon is the social impact of the downturn. And, if not managed well, can be very damaging.

The other day, in a conversation with some of the top brains on marketing and economy, one of the highlight was about the psychological impact events will have on professionals. A whole new generation will have to pass before this experience is forgotten (and estimates are between 5-10 years) and sentiments are built up.

The bigegst impact is seen on the consultancies who surely are looking at Government/Public Sector to make money for sustainence.

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