Re-cess-ion

There were times when vast farm lands were converted to residential zones. Builders borrowed money from everywhere and constructed umpteen apartments, complexes and business parks in stretch of few miles in most big cities of India. Investment in realty sector was considered safest to other sectors. Sensex touched 21k and people were made to believe in impossible. Laws of economy were forgotten by many of us and we kept dreaming. On fine day, Lehman Brothers, a 150 years old US establishment crashed, soon followed by AIG and the party was over.

Analysts all over the world were shocked at this sudden demise of 2 giants. AIG was bailed out immediately by US government. There were huge debates on the future of other US firms. US housing market almost landslided. These were toxic assets displaying huge billboards for sale. People could not believe their luck with jobs market taking a big hit in the subsequent weeks. Dow and NYSE nosedived to bits. There was chaos and fears in lot of intellectual minds of biggest capital economy of the world. The crash spread like a fire in all its geographical dimensions. Other developed economies like UK, Japan and France soon came in the grip of this downturn. Every day this monster damaged lot of people's livelihood all over the world. India and China soon found themselves entangled with global exposure. Foreign investments started receding very fast. Bull markets all over the world bombarded. Economies started seeing their growth in red.

The effect of this slowdown is felt in almost every company existing on earth. Several boards announced large scale cutback measures. Several business plans saw early terminations and several revisions. IT companies in India soon started feeling the pinch. Cost cutting became the order of the day. Satyam, a fourth largest Indian IT giant has something else in store for everybody. In the first week of 2009, Mr Ramalinga Raju sent a shocker to worsen the economic situation. Sensex crashed to 8k. Indians started doubting credibility of Indian firms and accounting practices. Trust almost evaporated in business arena. VC's literally held their funds. There were large layoffs announced in most of the Indian companies. There was severe liquidity crunch in the market. Property market in India rock bottomed. House budgets shrinked to a fraction. Demands dried up in almost every sector of the economy. Exporters had a terrible time in dealing with the situation. There was a huge question mark on India's growth story. Indian techie saw its worse days in his life. Creditors resorted to extortion in many cases.

There was onus on Indian government to handle the crisis. RBI responded well with slew of measures. General Election followed in India which provided stable government at the center. This was a much needed shift in mindsets of many Indians. Satyam case was handled well by Corporate affairs ministry. Bottoming up of global oil prices helped the initial recovery. This was reflected in rising of Sensex and Nifty. This boosted the confidence in the market. Several cost cutting measures by private companies payed rich dividends. There were also some positive global cues which added to the positive atmosphere in the Indian economy. Kudos to Finance ministry in providing much needed fuel to the economy! 'Green Shoots' as they call it started appearing in various parts of the economy. The lost hopes saw some light in the distance. Indian IT companies tweaked their strategies fast enough to catch the pace with the economic situation. Better regulation in the banking and insurance sector proved to be a saviour. Deals started hitting Indian markets.

There are enough signals to confirm this economic recovery. India and China has emerged all the more powerful in this crisis times. Chinese banks have gone ahead and bailed out some US firms. Several captive centers in India are helping out various companies all over the globe in these times. Interest rates in India have stabilized to a great extent and there has been enough liquidity in the market. Sensex has seen several good rallies past few weeks. South block has been instrumental in this early recovery. This recession proved to be a pit stop to Indian growth story.