by Priti Sehgal
– India –
The United States was once a dreamland for many of us Indians. The US label – whether American-brand apparel, a pleasure trip to the US, a higher education degree from anywhere in America, a short training program, a job or the ultimate dream of a family member settling down there – used to be enough to elevate one’s social status in India. Given the current financial crunch in the US, the American dream is dying for many Indians.
Not long ago, the Hindustan Times carried a front-page report about an Indian murder-suicide in Los Angeles. “Indian in LA kills family, self,” screamed the headline. This was followed by the sub-headline: “Unemployed victim of US financial crisis shoots wife, three children, mother-in-law.”
The report was a poignant tale of 45 year-old Karthik Rajaram, described as “an Indian unemployed for several months.” Quoting from the Los Angeles Times, the report recalled how Rajaram, who held an MBA degree from the University of California at Los Angeles, worked for a major accounting firm and was at least part owner of a financial holding company. Just a few years ago he had made more than $1.2 million in a London-based venture fund. Unfortunately, all of his finances were wiped out by the stock market collapse, leaving him in utter despair. Rajaram is believed to have written in his suicide letter that he felt he had two options – to kill himself or to kill himself and his family. He decided that the second option was more honorable.
For my friend Nikhila too, the great American dream is dying. “Goodbye Wall Street” begins her latest email to a close friend. Therein she describes resorting to cost cutting as her husband continues job hunting. His salary expectations decrease with each passing day.
Writes Sumukha, another Indian living in America, “Yes, times are hard in the US. I am a banker’s wife and we are in the thick of the meltdown. I am told by experts that this is just the beginning…there are more hardships ahead.”
Although Sumukha plans to stay put (she has a special needs child and feels that the American school system is best equipped to deal with it), she writes that many of her friends are scaling down their lifestyles and ambitions; some are considering returning to their homeland.
My friend Shweta, presently based in North Carolina, confides that given the bankruptcies and job cuts, enquiries about “how things are going” aggravate already raw nerves that many would rather keep private.
As the recession in the US economy spills over into global finance – the situation further aggravated by the historic collapse of iconic banks and financial firms – stock markets worldwide have gone into a free fall. In September, an article in The Hindu declared, “the US crisis has dealt a serious blow to the Asian initial public offering market, with India’s proceeds plummeting by 34% through September this year. Overall, the Asian IPO market has posted the worst performance in 10 years. The gloom is now spilling over into the corporate sector, with companies deferring plans to raise fresh capital across developed markets.” Entrepreneurs are not interested in making commitments during this prevailing time of uncertainty, so expansion plans are also being postponed.
The Bombay Stock Exchange Sensitive Index is recording all-time low figures and regularly making headlines not only in the business pages but in the main newspaper as well. “Collapse, Black Friday, Global Gloom, Stocks Crash” are some of the expressions used. Report after report focuses on the stock market quakes (investments of billions having slumped to millions in many cases) and how investors are getting jittery as more financial firms report trouble. Many have now even sworn not to enter the stock market ever again. Portfolios of high networking individuals have gone down by 50 to 100 percent.
The ripples are also reaching the Indian Institutes of Management. For some, investment bankers such as the Lehman Brothers and Merrill Lynch used to be among the biggest recruiters, offering some of the most lucrative salaries. But placements in the aftermath of the global meltdown are losing their appeal. According to a report published in The Hindu, “Merrill Lynch, which was bought by Bank of America, had picked up 18 students from IIM-Calcutta in a batch of 290 last year for postings in New York, London, Hong Kong and India. Lehman had trained nine interns last November as part of its summer training program.” However, sources say there has been no fresh official intimation from investment bankers yet.
With Lehman Brothers bankrupt, AIG gone, and Merrill Lynch sold, the rumor mills have begun churning in India. Not too long ago, panicky ICICI Bank officials sent SMSs and emails to their customers to assure them that their bank was “safe.” From the Prime Minister to the Union Finance Minister to economic experts, all are being grilled about the impact of the global meltdown on the Indian economy and are busy delivering assurances that the country is well insulated from the US crisis.
However, there is no denying that the calamity is slowly coming closer to home. Economists and analysts say that the financial tsunami in the US will slow India’s economic growth. “It is not just financial markets, there is now a process of adjustment in the real economy as well,” says Partha Mukhopadhyay, an economist at the Delhi-based think tank Centre for Policy Research, speaking with the Indo-Asian News Service. “Economic growth is likely to be in the region of 5-7 percent. Certainly, six percent growth is not the same thing as nine percent growth.” (The government had been consistently saying India’s growth would stabilize at 8-9 percent by the year’s end.) However, the impact on India will be less than that on more open or smaller economies, he adds. “The real impact is, therefore, an empirical question and we can know about it only after a few months, but a recession in the US market is certainly not good news.” His comments came just hours after Prime Minister Manmohan Singh was quoted by French daily Le Figaro as saying that the global financial crisis would impact India. “If the financial crisis causes a recession, this will compromise our exports.”
The meltdown is now reportedly trickling down to the bottom of the pyramid, and the heart of rural India and small businesses are feeling the global chill directly. According to reports from various sources, thousands of skilled workers in small towns have been waylaid as orders from their global markets, mostly in the US and Europe, dry up. Recently, I met a local from Moradabad, known for its exquisite brassware, who said that skilled artisans are working as cycle rickshaw pullers or fruit sellers. The Business Standard recently described how “three diamond workers of Surat committed suicide in separate incidents after losing their jobs in the Rs 75,000-crore diamond industry.” Surat in is often referred to as the Diamond City since it polishes almost eight out of ten precious stones exported from India.
Property rates have also been hit hard. According to Ilesh, a property dealer based in Mumbai, commercial rental rates in the tinsel town are receding, slowing by over 30 percent in the last few months. Property brokers and consultants in Mumbai opine that things will only get worse in the coming months.
The Indian media, of course, is religiously on the job. Analyses, expert comments and endless studio discussions keep the general public informed on the global meltdown and its resultant financial turmoil. Such is the bombardment that I overheard the local milkman explaining to one of his customers that prices are rising because there is something wrong with the US economy.
The more educated are discussing the reasons for the financial crisis in the US. Says a friend working in a reputed American bank, “Financial markets embrace capitalism in good times. They tend to re-discover socialism only during the bad times. So, do not be surprised if socialism prevails on Wall Street in the near future.”
In a letter to a news daily, Mr. M. Krishna Prasad from Chennai says that India should learn a lesson or two from the economic crisis in the US. “We should halt our reckless pursuit of liberalization and privatization in the name of reforms. The collapse of behemoths like Lehman Brothers should serve as an eye-opener. India, originally a socialist state, is now at a crossroads. It should adopt the right mix of capitalism and socialism to prevent any serious crisis,” he opines.
Fortunately, a recent HT-CNN-IBN survey reveals that although times are tough, India is faring much better than most expected. Thus, alongside reports of doom and despair are hope-laden statements that bad times are not here to stay. And that’s what’s important for everyone – whether in India, the US or Europe – looking for light at the end of the dark tunnel.
About the Author
Priti Sehgal is a journalist presently based in New Delhi, India. After an exciting stint as a freelance writer for reputed Indian dailies and magazines, Priti’s passion for writing led her to a full-time career in journalism. She joined the reputed English daily The Times of India as a staff correspondent and has over 500 bylines to her credit.
After receiving an offer from the Eenadu Group, Priti switched to television and joined ETV as a senior correspondent in the politically important state of Uttar Pradesh. She covered the careers of three Chief Ministers from three different political parties – Rajnath Singh, Mayawati and Mulayam Singh Yadav – as well as some of the country’s riots, Legislative Assembly elections and state visits by the Indian President and Prime Minister. Priti has also been published in the second edition of People Building Peace, a project of the European Centre for Conflict Prevention, and she is the ambassador of the US-based Companion Flag project in India.
Priti is currently taking a short hiatus to be a full-time mom to her toddler.
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