Tuesday, November 6, 2012

US Elections and what it means to me

I am not an American citizen, and I don't see myself becoming one in the near future.

So, to a casual observer, who gets elected as president hardly matters.

But to me, it does. There are things that it holds in store which can have rather far reaching consequences.

For instance, before Mr. Obama came into power in 2008, the IT scene in India was quite good, and Infosys stocks, an Indian IT bellwether, were at $57 a piece at the NASDAQ. As soon as he came into power, the stocks plummeted to $23. That is an almost 60% drop in share value.

Needless to say all companies followed suit. And it spawned what we now recall as the recession of 2009. Which co-incided with the Lehmann Brothers declaring itself bankrupt. The ripple effects are something which we still face today. It brought to light several crucial aspects of the global and especially American economy that would not only affect the USA but also India.

Lets rewind the clock to 2004, before Mr. Obama, Mr. Bush was re-elected to power. Let me go by the Infosys stock prices in the NASDAQ. The stock prices were low, at $21 per unit, but as soon as Mr. Bush got re-elected to power, the stock prices climbed steadily and reached $35 by 2005 which is a 66% increase. What followed was a period of prosperity for the global economy.

What I am basically trying to say here is, that the Indian economy though has strong fundamentals, and is capable of surviving a global crisis is sentiment driven. And, contrary to what people might think, is affected by who is in power in the US.

How does that affect me? Well, it's quite simple. It determines inflation, the cost of fuel, the cost of electricity, the chances of me going to the US for a visit among other things.

Now, the point of the blog, how does the future look?

We perhaps as an economy should focus on self sustenance and core sectors. The inflow of FDI in retail does come in with its own share of ups and downs. By encouraging FDI we are bringing in more money into the economy, but are also making ourselves more vulnerable to external variables, such as the American stock markets, and presidential polls, and American policies.

India needs to start perhaps with agriculture and infrastructure. If a nation is eating right, and eating well, more than half our troubles are solved.

If India has good roads, good transportation systems, and good connectivity, India can mobilize resources more efficiently and quickly.

How do we start with all this? Or how do we better the approaches taken so far?

Its quite simple. For all this we need to invest in education. Why you might ask and I would say, awareness.

The first step towards self sustenance is awareness. Aware of ones flaws, strengths, opportunities and threats, one would be able to assess the situation much better and plan a much better tomorrow.

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