As the year 2008, the year of the frog, is drawing to a close many people are sighing with relief. It has been an eventful year, with a few positives like the gold medal at the Olympics and The Man Booker prize. However, The Global financial crisis and the most recent acts of terrorism have cast a gloomy shadow and are threatening to evolve to diabolic levels.
Global Financial Crisis
When the year 2007 was drawing to a close most of the Indian investors who had invested in India were very happy. Our Bombay’s stock index was hovering around 21000 giving more than 40% return in a span of just 6 months. This attributed to many theories like the ‘De-copulation theory’ according to which Indian markets are independent from the US market.
But then things took an ugly turn in 2008. The Global Financial Crisis which had spilled over from the previous year, started to wreak havoc in the global markets. Many prominent organizations like the Bears & Sterns, the Lehmann Brothers etc. had to shut shop because of the losses faced by them.
Closer to home, our banks did not face a huge impact because of stronger banking regulations and lesser exposure in the US and European Markets. But our industries are now facing a major slowdown as our economy is highly dependant on the Global markets especially the US and the Europe. There has been a significant decline in the industrial production numbers, our export figures and also in the profitability of many Indian Companies leading to a slower than usual growth of our GDP.
Repercussions of this global turmoil had a major impact on our stock market. The FIIs had removed nearly $12 Billion from our stock market this year to reduce their exposure. This has lead to more than 50% reduction of value on the Bombay stock index, which is now hovering around the 9000 mark.
To add on to the woes, at the start of this year the oil prices started climbing steadily to dizzy levels. At one time i.e., around mid of this year oil prices were around $ 150 per barrel. This led to an increase in the fuel pricing, pushing our inflation numbers to around 13% for sometime.
Though now the oil prices have gone below $50 a barrel and the inflation cooling down to below 8%, the short-term outlook looks very bleak. The RBI has been taking a series of steps so that recession doesn’t hit Indian shores by its monetary and fiscal policies. It has been trying to reduce various rates to stimulate domestic demand and there are reasons to believe that this will continue doing so for the next fiscal.
The year 2008 has been one of the bloodiest years in the recent times even though we have not waged a formal war. For the past 2 decades we have been battling militants waging a proxy war in many parts of our country for many reasons, be it Kashmir, northeast or naxals. According to estimates done by various organisations, more than 2500 people have been killed because of terrorist attacks, which is next only to Iraq in this region.
These militants have become very tech savvy in executing their attack using many everyday tools like the google maps, VOIP phones etc.
Despite all this, our governments have failed to act or address the fundamental problems that lead to terrorism. We can just hope that in the coming years they would take some steps to contain these before they hinder our growing economy.
2008 is drawing to an end and one hopes that this New Year brings about some kind of positive cheer and hope, though the above problems are threatening to become graver by each passing day.