India's Economic Mood Turns Optimistic

A worker adjusts goods inside the newly inaugurated first Wal-Mart store in Amritsar, India, 30 May 2009As India's economy begins to recover from the impact of the globalfinancial crisis, companies have again started recruiting staff andhanding out pay raises. The mood is in sharp contrast to a year ago,when the global economic downturn put an abrupt end to a five-yeareconomic boom in the country.  

Twenty-five-year-old TrishnaMukherjee is a post-graduate business management student at one ofIndia's premier business schools in New Delhi. When she began hercourse work this year, she was worried that it might be tough to land ajob when she graduates.

She had reason to be concerned. Nearlyhalf the class of 2009 did not find suitable jobs when they graduatedin April. That was not surprising. Just as in many other countries,Indian companies had stopped recruiting staff as they coped with theglobal economic downturn.  

But Mukherjee says the mood on college campus is now much more upbeat.  

"Whenwe went there, a lot of our alums had not gotten placed. Sowe would still see them constantly coming to campus, still taking theirinterviews. And, obviously, somewhere we were a little worried as towhat would happen when we get to that point. Now, it's much better. We already have people coming to campus. There is already a buzzaround. And, now we see things are getting better. So people are muchmore relaxed," said Mukherjee.

As India emerges from the globaldownturn faster than many countries, companies here have announcedplans to start hiring again. And, as people gear up to celebrate thecountry's main festival, Diwali, next week, employers are handing outpay hikes and bonuses to staff.     

Although India was lessaffected by the downturn, compared to Western countries, many hardhit-sectors downsized in the past year. Almost all companies had putsalary raises and bonuses on hold, as profits declined.  

But, now, sectors such as finance, insurance, services, information technology and retail are back to hiring.

NareshMalhan, who heads the job consultancy firm Manpower India, says arecent global survey shows that India's job market is more buoyant thanthat of other countries.

"India is on top. The maximum number ofemployers who had positive intent to hire is highest in India, incomparison to any other country. In order of sequence, India isleading, then would be Brazil, then will be Colombia, then will bePeru, and then will be China, Australia, and then Singapore," saidMalhan.        

The government says the economy is back ontrack and is eyeing growth of more than six percent, this fiscal year.In the last year, it has passed three stimulus packages and cutinterest rates and taxes to boost spending. These measures have helpedbring consumers back to markets and industrial activity has picked up.

Aneconomist at the Federation of Indian Chambers of Commerce andIndustry, Anjan Roy, says business confidence is higher than it hasbeen in the past year.

"Indian industry has turned around andthe slowdown is wearing out. These are the early days, when theexpansion growth triggers are once again operating and we expect thisshould go on, provided there is no reversal of these basic policyparameters," said Roy.

Concerns remain. Businesses are worriedthat the government could raise interest rates to check risinginflation and food prices. A drought in much of the country andflooding in other parts has hit agricultural growth and will dampen therural economy. And, there are fears that any reversal in the tentativeeconomic recovery being seen in several Western countries could stallmomentum in India.  

Economists also warn that the economy maybe improving, but it is unlikely to reach the levels of over eightpercent growth witnessed for four years prior to the global financialcrunch. At that time, Indian industries were turning in huge profitsand rising salaries had brought new affluence to the middle class.

Businessmanagement student Mukherjee says the expectations of her class aremore modest than those of students who graduated during the economicboom India witnessed between 2004 and 2008.    

"Definitely oursalaries and our remuneration will not be as good as it was three yearsback or two years back, but I think we should be okay this year," saidMukherjee.

India is Asia's third-largest economy.International institutions, such as the World Bank and InternationalMonetary Fund, have said that countries like India and China will helppull the global economy out of the worst recession seen in recentdecades.