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Voice of Electricity Workers The mighty economies of the world United States and Japan which together accounts for 46% of the world’s output has plunged into recession while the European countries are showing a sharp slowdown. Its impact is spreading all over the world – south and Southeast Asian countries, Latin America etc. The stock markets everywhere were tumbling over the last one year. Nearly 10 trillion dollars have been wiped off of Global share values. The NASDAQ too faced serious crash (information technology shares). The world economic growth is slowing down. According to the latest available data the US Economic growth averaged 5% last year. But in the fourth quarter it fell down to 1%. The first quarter this year too the growth was only 1% and the trend further aggravated in the second quarter and came down close to zero (The Economist 23rd June). Industrial Production is showing a down turn besides the equity prices fell sharply – particularly technology stocks - If the NASDAQ having declined yearly by 60 % and Internet stocks about say 70% from their peaks. The US productivity, which was 5% per annum, came down to 1% in the first quarter of this year. “ New Orders for Electronics fell at an annualized rate of almost 20% in the first quarter signaling that bigger cuts are in the pipeline” (The Economist May12, 2001). This brings the new economy brings to its “death knell”. Besides, many firms have become bankrupt and many others especially in the Technology sector are facing the same risk. Job losses are on the increase during the last year. 18 Lakh workers were laid off and for the last five months more than 6 lakhs were put out of jobs of which 2,68,000 were from the High Tech Sector. About 40,000 Indians high tech employees have been out of their jobs from Silicon Valley. Average lay off per month 1,30,500 according to labour department the unemployment rate is 4.5% which is the highest in recent years .The high tech sector slowing down spread quickly to other countries which led to serious down turn in capital spending, which had adverse impact in industrial development. JAPAN The Industrial output in Japan has fallen dramatically mainly due to the drop in exports to United States and its economy is facing serious crisis. For the last five months the GDP was contracting by 0.2% each month. The first quarter of this year the growth was down to 0.9 % from 1.2% last year and it is said for the second quarter it has come down to below zero. The weakening economy of United States, the collapsing market for technology shares have hurt Japan badly since Japan’s export to America adds upto 3% of their GDP. The share value dive in Japan had its repercussions on US economy too. The Bank of Japan pushed back its interest rates to zero level, which also could not reverse the sliding down of share market and recession in the economy. The attempt of the Japanese Prime Minister to revive the economy by cleansing banking sector that has mountains of bad debt. This will push many retail industries and many companies to bankruptcy resulting in millions of job losses. At present the unemployment level all time high. The mutually reinforcing economic recession in US and Japan, the two mighty economies have its global impact. Europe In the 12 countries of Europe the GDP growth has come down to 1.3% from the estimated 2.1% last year and it is now showing a sharp slow down. Besides the consumer price index has risen to 3.4%, which is creating serious trouble for the economy. The Us and Japanese economic slow down has its repercussions in European economy, due to the adverse impact on their exports. South and southeast Asia. The Economic recession in Japan and United States has serious repercussions in other Asian countries since 37% of their exports were to America and Japan, which is almost now broken down. Those countries that were affected in 1997-98 crises, though improved their economic growth are again put to serious slow down due to export crunch. According to GDP estimates published on July 10th the Singapore economy has shrunk by an annualized rate of 10.1% in the second quarter of this year. It was only 0.8% in the last year. The Singapore ministry had to revise their economic growth estimates to 0.5 - 1.5% for the year from the earlier forecast of 3.5 – 5.5%. The Singapore’s Industrial production fell by 11% in this year upto May and in South Korea and HongKong their industrial production came down to 2 - 3% this year from 9 - 10% last year 2000. That too is in the case of Taiwan and Thailand. This situation has been created because of the serious slow down in US and Japanese Economies since they were depending on their high-tech exports to these countries. The exception is China. Its growth is expected to be more than 8% this year since their exports were only 23 % of their GDP and they were less dependent on IT. Without going to the details of other areas like Latin America, Africa suffices to say that the effect of the global slow down is affecting all of them including India. The small description given about the world economy brings to light the serious crisis in the developed countries. They are forced to restrict imports to their countries, while aggressively being pushed exports to the third world countries. The WTO, IMF, World Bank etc and all the powers at their disposal would be used to push their exports aggressively. In this process many contradictions may develop among them. Thus however, the so called theory of building a crisis free economy especially the high-tech economy is proved to be a pipe dream. Therefore a new situation is developing – “globalisation itself into reverse and encourage countries once again to retreat behind protectionist barriers”(The Economist 24 March 2001) . In other words the catch words “export and flourish” is now become invalid and the new situation being faced by the third world countries is that “import and perish”. Unwindfully without carefully studying his background the Government of India is pushing forward their so called second generation of reforms of course under US pressure. The Indian Economy The GDP growth during 200-2001 has slumped to 5.2 per cent against 6.4 per cent in the previous year. According to CSO, the GDP growth which was above 6 percent in the first two quarters of 2000-01, declined to 5.0 per cent in the third quarter and further fell to 3.8 per cent in the last quarter due to a sharp fall in the growth rates in agriculture, manufacturing, mining construction and some major services sectors etc, etc. The growth in per capita income also fell to 3.5 per cent against the previous year’s estimates of 4.8 per cent. The relative weakening of economic growth for the last five years also attributable to industrial slow down. The average growth during 1997-2001 was 5.2%. This was a period of sluggish growth. The industrial production for the month of April this year was only 2.7 %, which was 6.5 % in the last April. The unemployment growth dwindled from 1993-94 to 1999-2000 to 1.3 % in the urban area and 0.6 % in the rural area. More than 6 lakh small-scale industries are closed down and many industries are facing crisis besides the crisis in the agricultural sector due to unrestricted imports. |
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