LESSON FOR ALL

 

 

 

 

 

TWO major developments on the economic front have set the cat among the pigeons. With Japan and the United Kingdom entering into recession, fears are being raised about an impending global recession. The contraction of the Japanese economy in the last two quarters officially confirmed recession in the Asian nation while for the United Kingdom the road ahead has become all the more bumpy due to falling gross domestic product (GDP). The two countries among the Group of Seven have shown the vulnerability of major economies amid volatile geopolitical situations and the possibility of its effect on other countries still struggling to fight global headwinds that refuse to calm down. The current situation has myriad lessons for other countries, especially growing economies like India, on systematic ironing out of minor irritants which can easily turn into major roadblocks in economic revival. It is also a signal for the policy-makers to prioritise sectors of critical importance that should withstand volatility in the world due to growing confrontations. The examples of Japan and the UK have also pricked the memories of the 2008 recession which accounted for some financial behemoths across the world.

 

The impact of that phase is still ringing in many countries as the latest contraction of big economies has aptly proven. In the case of Japan, often termed as an economic miracle after rising from the ruins of World War II to become the second largest economy after the United States, the biggest factor behind the fall to the fourth-largest economy is the decline in its population, lagging in productivity and no edge in competitiveness. The big difference between the working population and senior citizens has cast its effect on the Japanese economy for the past three decades. The economy has been growing at a moderate rate and further disruptions like the coronavirus pandemic dealt a hammer-blow to the Land of the Rising Sun as its economy nose-dived into the sunset of recession. The United Kingdom, too, is more or less in the same boat after the mishandling of divorce from the European Union. While Brexit caused political upheavals in Britain, there seems to be too many differences in the ranks to trigger an economic revival. Recession now adds another challenge for Prime Minister Mr. Rishi Sunak who had assumed office on the plank of growing the economy. The plans are still caught in political grudges and it is unlikely that the UK finds a way out of the current financial downturn.

 

Both the examples form perfect case-study for India to chart its further course matching its growing stature on the global stage. India’s ambition of becoming a top international power needs solid backing of a robust economy. To be fair to the current dispensation under Prime Minister Mr. Narendra Modi, India has done remarkably well to continue its march as a fast-growing economy. It was made possible due to timely intervention and stringent checks on the situation arising out of the aftermath of the pandemic and other global disturbances. Now, India must draw its lessons from Japan and UK and insulate its economy from similar factors that gnawed at their finances over decades. The Japan lesson must prod India to leverage its demographic dividend in the right earnest to keep the wheels moving. India has an abundant labour force to help achieve the domestic growth goals. It can be done only by upskilling the labour and bringing more women into the workforce to realise the dream of becoming a manufacturing hub. Helping the young through skill programmes and the right financial atmosphere for start-ups will be crucial for India to beat the slow poison of lethargic growth.