The global meltdown is having a telling effect even on the relatively insulated Indian economy. A slowdown in the growth rate, a drop in industrial activity, some job-losses, production slowdowns, freeze on new hiring plans, purse-tightening on new capex plans. . . all these point to India Inc bracing for the impact of the global financial tsunami.
Rediff.com spoke to captains of the industry to find out what the government and the Indian business could do to best meet the challenge of this crises. Mudit Jain is president of DCW, a Rs 1,000-crore (Rs 10 billion) company. He has a management degree from the Wharton School.
Here's what he has to say about the meltdown:
"The first step is to accept that times are bad. There is no point resisting it. As long as you resist something it will keep on lingering. If you accept the bad time, you will be free from its hold over you.
"Companies should drastically cut down costs and defer expansion plans unless they are able to arrange funds for this. Uncertainty is the bane of business and in uncertain times corporates should adopt a very cautious approach in their expenditure. Hence, corporates should drastically cut down costs wherever possible and also postpone / halt any expansion plans.
"The government should extend liquidity in the capital markets by cutting the statutory requirements of government securities that banks have to keep with the Reserve Bank of India. Also, RBI should reduce interest rates to zero to enable banks to lower interest rates on borrowings to corporates. These measures by the government should encourage banks to lend liberally to corporates for carrying out their working capital and expansion plans.
"Hence, the government should increase liquidity to banks, who in turn should extend loans to corporates at low rates.
"In addition the government should keep the rupee strong against the dollar as the rupee has depreciated by over 30 per cent in the last one year. The Indian currency needs to become stronger as our imports are far in excess of our exports and a strong rupee will reduce the balance of payments deficit.
"Hence, measures should be taken by the government to strengthen the rupee by allowing liberal foreign investments norms and foreign inflow into the capital markets by totally revamping the rules and regulations governing foreign investments into India."