Monday, October 27, 2008

Many Fear losing jobs / Salary cuts in India Inc


With the US economy slowing down it is tough times ahead for India Inc.

A recent survey depicts that many Many Fear losing jobs / Salary cuts in India Inc

Do you also share these feelings ? What are your views ??

Founder HRinIndia
Indias Biggest HR Network
HR Guru & Strategist
Bangalore, India

The finding of an exclusive CNN-IBN poll on the economy reveals that one out of two Indians is scared of losing the job. The poll, conducted across seven metros, also shows that Mumbaikars are one of the most worried about their job prospects. Close to 50 per cent respondents are worried about losing their jobs. The fear of a possible job loss is the highest in Mumbai followed by Ahmedabad and Hyderabad.

Eight out of 10 Indians feel that due to the current financial crisis, the Indian economy has slowed down. The feeling of an economic slowdown was strongest in Delhi and Mumbai with upto 81 per cent women feeling the pressure on the Indian economy.

Nearly half the respondents also claim to have been affected by the stock market crash. Interestingly 50 per cent of the women claimed to be affected by the stock market crash as against 45 per cent men.

Fifty-four per cent feel that nationalised banks are more reliable with more and more willing to open an account or shift to a public sector bank. And only four out of 10 claims to have cut down on spending with women and middle aged respondents being the most cautious.

Majority of the respondents in Mumbai have put their plans to buy a house on hold and one out of three will cut down on purchase of durables and reduce the frequency of eating out. People's confidence in private banks, too, has taken a beating.

Fifty-four per cent feel that nationalised banks are more reliable with more and more willing to open an account or shift to a public sector bank. Now bank deposits and real estate are the most preferred investment options. One out of three are satisfied with Union Finance Minister P Chidambaram. The findings have not come as a surprise to the economy experts.

"I am not surprised at all with the findings that you are providing. There are two or three things coming out. One is everyone believes that the crisis in the world economy is hitting home. India cannot be insulated from the rest. I think people are a little panicky about job losses. May be in India there won't be the kind of job losses that the USA will see but people are indeed worried about the economic conditions. When your economy has grown by nine percent for four years and then suddenly one year the growth rate drops even though the government is still talking about 7.5-8 per cent, people would consider themselves fortunate enough if Indian economy grew at seven per cent in the current financial year. That slowdown is certain to hurt the underprivileged sections than the relatively well-off," Paranjoy Guha Thakurta, economist, says.

"Second point is even though a very small proportion of our population has put money in stocks and shares, and this section has seen its wealth come down by more than half between January and now. The last point is that after the whole collapse in the financial system the world over, people are far more sanguine in keeping their money in a public sector bank or in a nationalised bank. Recently ICICI banks shares collapsed and the same day State Bank of India shares went up, Punjab National Bank's shares went up," says Thakurta.

Thakurta agrees that the polls reflect the mood of urban India.

Even though the Union Government and the Reserve Bank of India have been assuring that the global financial crisis will not affect India and the fundamentals of economy remain strong, Thakurta says the government cannot do much in the present situation.

"I am not at all sure that the government could do very much at this juncture. What the government can at best do and what the government has tried to do is cushion the fall a bit. Therefore last week on Monday and Tuesday the markets actually picked up and this was thanks to all the infusion of money by the Reserve Bank of India. But on Friday people were expecting further infusion of funds and when that didn't happen, markets collapsed. So what the government can at best do is cushion the fall and not prevent it all together," Thakurta says.

"If markets the world over are collapsing and the up downs of our stock markets have been completely determined by the net inflows of Foreign Institutional Investors. There are nearly 2000 FIIs and many of them are based in the USA. In 2007 these the FIIs pumped $18 billion into the Indian stock markets. We had a problem of plenty. We had so much money; we didn't knew what to do with it. But the same FIIs when the recession in the US hit them, started withdrawing. So in this year between January and October the same FIIs have withdrawn 3/4th of the amount of money that they pumped in last year. This is the main reason why you find that the dollar has become so strong, which might be paradoxical to some because the US economy is getting weaker and the International Monetary Fund says it is not going to grown in 2009, yet the dollar has become so strong. In June 2007 one US dollar could be bought for Rs 39. Today it is Rs 50 for the same dollar and that's because the FIIs when they withdraw money want it in dollars so the surge in demand for the dollar explains the exchange rate having gone so much weak," he says.

"It is bound to affect the sales all goods. I think the sectors likely to be affected more would be consumer durables sector. People would postpone purchases that they can. People won't stop purchasing food as that's something they need. Purchase of a flat, a car, a television set, a fridge etc could be postponed," he adds.

The poll took the opinion of 1,431 men and women spread across different age groups and sections of the society.

Source :

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