The Congress’ austerity drive was not unfounded. After all austerity is what global leaders are insisting on in the G-20 summit. US President Barack Obama and his counterparts from the G-20 nations have cited a clear warning that the global recovery is still too weak to start reversing stimulus packages. This is despite the fact that these nations are to pay off the US$ 9 trillion debt that they have accumulated for rescuing their economies from the deepest financial slump in seven decades.
The Organization for Economic Cooperation and Development (OECD) predicts the world economy’s potential growth rate will fall to 1.1% in 2010, compared to an average 2.4% in the decade before the financial crisis. The International Monetary Fund (IMF) has further predicted that the debt level for the G-20 nations will reach 82% of the combined GDP in 2010, almost 20% higher than that in 2008 and the equivalent of about US$ 37 trillion. Austerity in government spending is seen the only way out.
While several European nations have cut down their borrowing plans others seem committed to do so. The Indian Finance Minster has himself been very keen to check the country’s burgeoning fiscal deficit that is being largely funded through borrowings. He believes that the government cannot allow the subsidies for an extended period.
In fact austerity is not just desired in government spending but also in terms of foodgrain and water utilization. As per the United Nations’ Food and Agriculture Organisation (FAO), the world will have to produce 70% more food by 2050 to feed a projected extra 2.3 bn people. The FAO believes that global demand for cereals and animal feed is expected to rise to 3 bn tonnes by 2050 and more demand may come from the biofuels industry. The agency has also said that the annual cereal output would have to grow by almost 1 bn tonnes from about 2.1 bn tonnes at present to meet the projected food and feed demand by 2050. The same would mean massive investments to bring in more arable land and improved food storage infrastructure.
Global fresh water resources also need to be used with caution and distributed evenly with water scarcity reaching alarming levels in an increasing number of areas, particularly in North Africa and South Asia. As per FAO, water used for irrigated agriculture is projected to grow at a slower pace due to reduced demand and improved water use efficiency, but will rise by about 11% by 2050.
India Inc. finds its place under the sun
Although Chinese firms have maintained their dominance on the Asia Pacific business scene, India seems to be trailing close. Chinese firms accounted for a third of a Forbes list of 50 large and profitable firms in Asia this year. The 2009 list included companies that have revenue and market capitalisation of at least US$ 3 bn and a 5-year track record of operating profitability and return on equity. While 16 companies from China featured in the list this year, up from 13 in 2008, only 5 had made it to the maiden list compiled by Forbes in 2005.
The good news is that India has followed closely behind China this year with 13 entries on the list, up from 9 last year. Four Indian firms made it to the list for the first time, including Adani Enterprises, Axis Bank, Jindal Steel & Power and Tata Consultancy Services.
Taiwan’s five firms put the island in third, with Japan and Australia tied at the fourth place with four firms each. The economic crisis has dealt a heavy blow on the performance of Japanese companies which have lost their rankings over the years.