Economic Note - Economist Siddharth Shankar

While the figures of car sales, real estate prices and the stock market indices may all signal that things have bottomed out, I’am still not convinced that we are out of the bad phase. I expect that unemployment in India would continue to rise; coupled with this increased unemployment would be high inflation that would translate into social problems very soon. We have already seen inland security is becoming a major problem and a major cause of that is the un-employed youth, we cannot fight it by force, it can only be countered by providing employment to the youth and by way of educating them. I think the government must focus on this larger socio-economic issue rather than bothering too much about short term economic recovery.

I still do not see manufacturing or service sectors picking up in the near term. A much bigger problem will come in how to ensure that small business are able to sustain themselves in the coming one year. Government and the central bank have to look at sustaining the small businesses for overall stability of the Indian economy. The industry on its part will have to act with maturity and ensure that they do not push up the wages as it would lead to wage push inflation.

[Note: As said by Economist Siddharth Shankar on - 7-Nov-09]