World Economy is facing problems & many are getting affected. Some lost jobs, some got pay packets reduced, some sectors closed altogether so on and so forth. Where do India stand? It is a known fact that all the IT, BPO, KPO stuff were bringing valuable foreign currency apart from work & life style to many Indians. This will get definitely affected. For states like Kerala, where wealth comes from Gulf & Europe thanks to the 'Pravasi'. With economic slow down, many are expected to return. That's an interesting situation. On one hand the money inflow gets badly affected & on the other hand, number of mouths to be fed becomes higher. For some months, the Gulf Returnee might live on the savings. However this can't be eternal. Many of the fields especially in construction, Kerala was facing acute shortage of manpower. The wages of labour (Skilled or otherwise) have skyrocketed so much that it has become very difficult for the middle class people to construct a home.
Hopefully returning migrant people might consider working again & if that happens, the bloated wages as well as construction costs can come down. This gives me good hope to construct something for myself!
As they say in management jargon, one must consider setbacks like slow down as a challenge and take it as an opportunity. In these difficult days, the onus of keeping the economy safe and sound should be the highest priority for the government. With a transition in place, hopefully Government will rise above petty political differences and rise up to the occasion. India has a very good opportunity to build infrastructure using this time interval. Since many of the good companies (L&T, Gammon, IVRCL, HCC, Bhageeratha etc etc) will find their order book shrinking, they will be willing to execute works at lesser cost to keep their machinery moving. India needs a lot of infrastructure facilities. Many financial institutions like world bank, IMF will be in a position to give loans to Government of India. Wonderful opportunity for India - Good competitive financing options, Competent companies & Fine work force.
Hope governance gets delinked from politics and all concerned raises above myopic visions.
Have a nice time !
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3 comments:
Hey Binose,
Nice article. India is relatively less affected by the Global Recession. India's weak point always was that the large forex balances that the RBI was managing were sourced from the "hot money"/"portfolio" capital etc. Basically, FIIs pumped the money in to invest in the stock market. A better form of sourcing forex would be to get companies to start a manufacturing plant (FDI). A good chunk of the chinese forex is through FDI. Because of this, the challenges faced by the Chinese economy is different from the challenges faced by the Indian economy. In the Indian case, the rupee is getting hurt as the forex flows out of the country due to the recession. In the chinese context, millions of jobs are lost as the country reduces the total amount of export.
Is high construction costs due to higher wages? If you exclude nobody-in-the-world-can-understand costs such as "nokku-kooli", I think Kerala is the only place in India where manual labour is rightly compensated. Even then the total cost of labour in constructing a house will be less than 5% of the total cost. If the recession can bring the cost of land and materials down it will be more helpful. Hopefully you will be able to build a non-RCC home - something I dream and very well be a dream for ever.
Thanx Mathew & Sudhir for comments. I am not sure about right payment in kerala. considering the living standards & requirements are higher, the wages is also higher. However i have ample doubt as to whether workers there are doing the job 'rightly'. The cost reduction for projects is not primarily because of the labour component. If economy is booming, there will be many big infrastructure projects being executed in private sector (SEZ, Power, Toll roads etc.) There are only a few competant contracting agencies with sophisticated machinery. Naturally contractors will want max profits. In case of recession, in order to keep the machinery running & keep workers occupied, these same contractors will try to get the job with minimum profit margin. I hope i have cleared my logic.
Mathew rightly pointed out about China-India difference. Hope India remains just affected by recession with some minor damages.
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