New Delhi, Dec 3 (UNI) Leaders of Indian and global industry warned of an impending recession of the United States economy and its impact on the Indian economy, but said India has a unique opportunity to take advantage of its niche areas and conquer the global mart.
They said the US economy was likely to go in to a recessionary mode next fiscal, hitting economies which were largely export driven and heavily dependent on the large American market.
The industry leaders were participating yesterday in a session ''The Shifting Power Equation: Implications for India'' at the India Economic Summit 2007, jointly organised by the World Economic Forum and CII.
Those who participated in the event included Reliance Industries Chairman Mukesh Ambani, Mahindra and Mahindra Vice-Chairman Anand Mahindra, Morgan Stanley Asia Chairman Stephen S Roach,Republican Senator from Utah, USA, Robert F Bennett and Advanced Micro Devices Chairman and CEO Hector de J Ruiz.
They said that the rising rupee and the falling dollar were beneficial to India and provided an opportunity to Indian companies to invest abroad.
Infact, Finance Minister P Chidambaram in his address at another session went as far as to say that this fiscal FDI outflows will be larger then the inflows of FDI.
The speakers said economic activity follows a business cycle and added that the US economy was no exception. There was thus the threat of an impending recession, which will impact upon the global economy profoundly.
They said there was over optimism regarding the US stock markets and over exuberance in the Asian stock markets. In short, the real economy is out of tune with the financial economy.
Mr Mahindra said he reposed faith in the '3D' advantages of India-Democracy, Demography and Durability.
Democracy is a prerequisite to a healthy society, polity and economy. India's demographic advantage is that it has the highest number of people in the working age group and this is going to continue for some time.
Durability stems from the fact that India is a peaceful and stable nation despite many internal disturbances. He said that India has the second largest Muslim population in the world peacefully coexisting with the Hindu majority. The challenge of Islamic fundamentalism is effectively dealt with in India.
Mr Ambani said the new century has seen a shift from geo-politics to geo-economics. He said that two advantages which India has are its developmental model and democratic political system.
The developmental models can potentially eliminate poverty in India in the next ten years. The democratic environment has helped India to have a peaceful and stable economic environment.
He emphasised that both the factors were interlinked and make India an attractive destination for business. India was willing to engage in partnership with the rest of the world and work to lift the lives of people everywhere in the world. The private sector has a very important role to play in this developmental process.
Mr Roach said that he is bullish about Asia in the context of the shifting power equations. He said the world economy was still dependent on the US because its consumers were open to buying foreign products.
Asia, therefore, cannot decouple itself from the US economy. He, however, felt that the backlash against the globalisation was due to the American middle class workers perceiving that their jobs were going to the emerging market economies, like India and China.
Mr Bennett said there were many Republicans who supported Free Trade Agreements (FTA). He was hopeful that Ms Hillary Clinton, who is a contender for the Presidency of the USA, if elected would carry on the free trade policy.
Mr Ruiz said the consumer would rule the world. He felt that the shift of power will be towards the consumers,who would demand higher technology driven products at affordable prices and which are reliable as well.