2008 is over… finally. One of the worst years in terms of the economy, terrorism and environmental pollution.
What shall we look forward to in 2009?
The pessimist will say 2008 Reloaded.
But I feel 2009 will be a the year which will decide the fate of the economy for the next decade.
The key is the U.S. Economy and how it plays out. 2008 has shown that what happens in U.S. now affects the world in much more severity than previously thought simply because of the dependency of both manufacturing and services export led nations like EU, China, Japan and India to the consumption hungry Americans. Add Brazil, South Korea and energy exporters, and the American drama looks worse.
Americans have too much debt to “borrow” their way out of this mess. What they need is:
Another economic boom led by some industry sector. (Silicon Valley tech boom in the 90s followed 80s recession, and then the real-estate boom followed dotcom crash.) This time it must be more of an tech-energy revolution, an engineering- tech innovation leading to drastically low dollar spending on imported middle-eastern oil and keeping those dollars in U.S. which can create consumption (and more exports and so on). U.S. will gain at the cost of terrorsim sponsoring middle-eastern oil havens which is good news for the whole world especially India, currently the no. 1 victim of terrorism.
Some more things to look forward in 2009 is the release of Windows 7. Have great expectations from it and might kick-start a new cycle in I.T. spending.
What should India do?
Start a Wireless broadband revolution. Use tax payer money. Heck broadband will pay for itself more than building a dam does! We can live with a bad road, but cannot live with a bad net connection. Not anymore. Internet can fuel its own economy around it in India as the domain expertise is there amongst Indians and the cost savings for this country are massive. Where wires are defeated (landline phones), wireless ahs won (mobiles). Same logic for internet. Wireless broadband can lead to online innovation in servcies from banking, finance to even education.
Another “must do” for India is simple Tax Reform. Make Income tax FLAT 10% for ALL income groups, salaried, corporate, business. Whatever your salary, 10% is tax on it. Remove all excise duties, octroi, import duties and instead levy a flat 2% Sales Tax on all goods & services. Thats it. This will lead to a boom in consumer spending and unlock loads of money from the black markets to the open economy. After all, the effort to hide that 10% tax is more than simply paying that tax. This makes tax planning easy and the Govt. collects more in taxes this way.
A third “must do” is opening up the Education sector. Allow foreign universities to freely start in India. No need for “government recognition” as industry recognition of recognized US, UK, Australian and European educational institutions is enough.
Is asking for 3 measly reforms too much? I think not. Lets see what 2009 brings in.