Part 7: What India/World can do to avoid deep recession?

Continued from previous unfinished article


As mentioned economy could be experiencing low interest regime and high liquidity, even so economy could fail to pick up steam- when economy is seen as looking down the barrel of slowing growth locally & globally. These are conditions that we seem to be approaching globally.

It seems that in these times changing expectations could go a long way in complementing "real measures" such as interest rate cuts, fiscal measures etc. Expectations, often used in economic theory, could play a real role in these times. Hence all "soft " signalling devices such as confidence index-( used and read perhaps more in western countries) need to be ethically "manipulated" ( mostly indirectly and almost unconsciously) to inject " a feel good factor" in the economy since personal and perhaps more likely corporate spending decisions is likely to be affected by changing value of these indices

Some of these measures - non exhaustive in nature ( already mentioned in previous articles) could help if they are properly rolled out in business media

1. Major countries acting and seen acting in tandem of which fiscal stimulus is an important component ( such as through G 20 forum)

2. As much as possible ,messages given to & through media about economy by government and corporates must be more positive ( without being misleading) , regular and clearly setting out measures and their likely impact. This will help to change people's and business perceptions about future of economy which has been hammered down by bank failures and all round losses.

3. Corporates must not depend on government to do everything but must invest in measures that are supportive. Laying off workers has a very negative signalling impact about economy . why not consider temporary' salary and benefits cut all around( or rescheduling of certain benefits to a future date). This may have less demoralizing effect than laying off workers. Companies must have teams that brainstorms through these issues and workers becomes party to all decisions

4. Public sectors companies with surplus funds must be encouraged to take up long term investments rather than wait for worsening conditions to get a better price.

5. As a long term measure ( could be implemented) , additional taxes on share trading that could be used in conjunction with governments equity to bolster stock markets in extreme situations ( this is tricky) since stock markets can send strong signals about people's thinking but is prone to exploitation by large funds and traders to aggravate volatility and depressed conditions. long run Profits could be used for social welfare causes

....may be continued