A Giant Belly

Adel, a Mumbai based hair stylist got a rude shock when she billed her stunning pink Tresmode stilettos from a suburban franchisee of the Italian brand. Glossy lipped lady at the billing counter gently asked her to pay the mammoth bill by some other card or cash as her debit card had insufficient balance. Frowning at the trained counter lady, she threw her Credit card and walked away with envious Italian footwear. She convinced herself that the credit card bill is a matter of just fifteen haircuts. Fifteen haircuts?? Last year when Economic Tsunami struck Western, Japanese & Middle East Economies, the ripples spread every corner of the Globe and spared none. Adel’s Lokhandwala Salon was no exception. Bathed in Cosmetics and Branded apparels, Adel never got or rather never gave time to news with the exception of Bombay Times. But in the year of economic turbulence, Adel would not have dared to buy Stilettos on credit card as she observed the drop in the number of people visiting her saloon. This year she was sure she would make a lot of money.
The World has not recovered fully, but our entire nation seems to be shopping. Companies are hiring, economists are forecasting better GDP growth figures, High optimism amongst businessmen, Sensex closing its boom time high, real estate prices scaling new peaks. Like Adel, entire nation is fearless and confident of a better tomorrow. Indians are known for saving a lot of money unlike western counterparts. We end up stocking a lot of money in our Banks who offer attractive returns. With jobs knocking all across the nation, coupled with previous savings stockpile, the purchasing power is all set to give our nation a huge belly to consume as much as it can. (Till the belly doesn’t explode)

The Giant Belly – Consume as much as possible. Consume Food & Beverages, cosmetics, automobiles, white goods, apparels, endless list of services – telecom, hospitality, tourism, airline to name a few. But who will feed the giant belly? Current infrastructure is just not sufficient. Current supply of many products and services will fall short soon. Leading to excess demand but low supply, giving rise to high inflation. Most economists warn of our rapidly growing economy to overheat soon due to high inflation. So, satisfying the hunger of this huge belly is a challenge. Easiest way would be to allow growth and sales starved Western countries to dump their outputs to us. Allow GE to set up as hundreds of power plants all across the country. Anyways, GE can’t set up more power plants in the USA. But this would hamper domestic business growth and create a much larger global economic bubble, where western part of the World is producing and Eastern part is consuming. Once consumption saturates in the Eastern part, the West will face an economic crisis of far greater magnitude which will engulf entire globe. Another way ahead could be, to strengthen domestic supply. This would require setting up more industries, building infrastructure quickly, encouraging entrepreneurship, simpler procedures to gain licenses. But this will require huge capital expenditure. Who will lend us? The World Bank? The IMF? Western countries? Sure, easy to gather large sum of loans from mentioned foxes, but they come with clauses and conditions which invariably favors them. Third way could be to decentralize production. But this may lower the quality of products. And certainly Adel would never comprise on quality and brands.

Just as huge belly in man brings plethora of medical problems, a Giant belly in nation also comes with a bag full of problems. Well while we ponder over this economic situation, Adel is busy checking out FCUK dresses and MAC eyeliners.