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[ FINANCIAL CRISIS ] The problem of fear “Monetary easing, fiscal benefits or cajoling customers with price-cuts will not work unless the moot problem of fear gripping the consumers is not tackled.” [ By DAkSeSh PARIkh ] It is interesting to see how the impact of the ‘made-in-America’ crisis is drawing reactions from various countries. In India, like elsewhere in the world, the immediate solution was to ease the money supplies in the system. The Reserve Bank of India acted almost immediately to ensure that the economy did not get trapped into a liquidity crisis. It eased regulations on the cash reserve ratio, eased regulations on foreign borrowings and opened windows to enable banks to borrow and have more liquid funds at their disposal to meet the credit requirements of the borrowers. When the monetary measures failed to spur growth it was left to the finance minister to play his part. Speaking at the India Economic Summit organized by the World Economic Forum and Confederation of Industry, Finance Minister, P C Chidambaram told Indian companies to reduce prices to induce demand and boost growth. “ Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments, car makers and two-wheelers must cut prices,” he extorted the industry promising to look at exploring the possibility of reducing excise duties to help speed up the pace of growth in the economy. Speaking on the day after the fifth death anniversary of Milton Freidman, the US economist and a strong proponent of laissezfaire economy, Chidambaram’s remarks expectedly drew howls of protests from Indian industrialists. Rahul Bajaj, chairman of Bajaj Auto, known for his outspokenness, rejected Chidambaram’s suggestion saying that price reduction was not possible at present, “nor is it a solution to the industry’s current woes.” Brij Mohan Lal Munjal, chairman of Hero Honda, the largest two wheeler selling company in India also questioned the suggestion saying that in face of mounting fuel prices and minimum labour charges it was not possible to bring down the prices of their products. Airlines also scoffed at the suggestion as did property developers. Kushal Pal Singh of DLF the country’s largest realtor was also unhappy about the suggestion. Other realtors also said that the government should reduce the prices of land if it wanted to make houses affordable for the middle-class. Chidambaram’s suggestions and the immediate responses from the industry may not translate into any action. However the debate which it has raised may continue for a long time in India. Can lowering prices and easy availability really stimulate spending by consumers? Currently consumers in India like elsewhere are holding on to their cash. Replacement demand of ageing vehicles have been put off, as has the spending on durable goods. All of which is getting reflected in the lower growth seen in the index of industrial production (IIP) which during the first six months of the fiscal, April-September, has halved to 4.9 per cent. The corresponding period in 2007 14 THE INTERNATIONAL INDIAN
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Page 4: [ EDITORIAL ] Is India the Last Bas
Page 8: [ LETTERS ] Indo-Pak Ties After fli
Page 11 and 12: etterlife ad.indd 1 12/10/2008 3:43
Page 14: [ INVESTMENT ] A Historic Year “M
Page 20 and 21: [ GuPtara GaraMaGaraM ] An Indian
Page 24 and 25: [ DEsH Aur DiAsporA ] Are Diaspora
Page 26 and 27: [ DEsH Aur DiAsporA ] Abraham Josep
Page 28 and 29: [ DEsH Aur DiAsporA ] bureaucracy i
Page 30 and 31: [ ROOTS ] Life lessons through toug
Page 32 and 33: [ LET’S ASK DR DOBSON ] Those dif
Page 34 and 35: [ iNtEr-CaStE MarriaGE ] Globalisat
Page 36: [ INTER-CASTE MARRIAGE ] husband on
Page 39 and 40: [ DATING IN URBAN INDIA ] about thi
Page 41 and 42: Double whammy.indd 1 12/10/2008 5:4
Page 43 and 44: [ LIFESTYLE ] in a frenzy trying to
Page 45: [ i BELiEVE ] Who can stop conversi
Page 49 and 50: [ FOREIGN AFFAIRS ] Chinese univers
Page 51 and 52: [ COVER STORY ] The Bhopal Crisis T
Page 53 and 54: [ COVER STORY ] Bangladesh,” Meht
Page 56 and 57: [ MICRO FINANCE ] The Dark Horse of
Page 58 and 59: [ MICRO FINANCE ] tenth of those ch
Page 60 and 61: [ PERSPECTIVE ] Lifestyles for the
Page 62 and 63: [ COMMUNAL MATTERS - INDIA ] Home G
Page 64 and 65: [ COMMUNAL MATTERS - INDIA ] of Mus
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[ LOVE STORY ] Arranged Marriage ma
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[ LOVE STORY] Ram and Veena’s wed
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[ SEE U AT THE TOP ] Be a team play
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Top: A typical JE stateroom - it is
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[ TRAVEL ] Rivkah and Tirzah with t
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[ TRAVEL ] having to hurry back to
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[ MONEYWISE ] The Route to Financia
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[ BUZZ WORD ] NEXUS: Maturing Insur
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[ FUTURE QUEST ] Christmas: Pricele
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