This has rocked the rich world. It's not high debt!
In this issue:
» India's July industrial production slows down
» Farmers take no pride in high agricultural output
» IMF to impose new checks and balances for debt
» Retailers drive demand for real estate space
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It can be argued that the young always have their parents to fall back on, they can stay in education longer. They have no families to support and have no urgent need for medical insurance which the unemployed aged population require. But that perception is misleading. More and more young people remaining unemployed means lost income tax revenues to the government, increased benefit payments and the most worrying of all, wasted capacity.
Because of their relative inexperience, young people are always the first ones to be shown the door. Although once the recovery sets in, their chances of finding jobs are easier. But therein lies the problem. Given the scale of the crisis, recovery seems a long way off and the youth is finding itself without jobs for longer periods. Longer stretches of unemployment makes it that much harder for securing jobs down the years. Employers typically always prefer fresh graduates. This means that the unemployed are forced to undersell themselves. Over a period of time, this translates into lower salaries and experience compared to what would have been the case had they not been unemployed. There are also undesirable psychological and emotional consequences of long stretches of unemployment among the young. What is more, the link between youth unemployment and crime cannot be completely ruled out either. That is why, the rich world has a serious problem on its hands if it is not able to improve the job prospects for its people.
For India, the idea of youth unemployment assumes greater proportions. A lot has been said of how India's young demographic profile will be one of the key drivers of growth in the future. But here again, the Indian government will have to ensure that there are sufficient employment opportunities. This means more focus on quality education which will equip people with the required skills for any job. Without that India's demographic profile could end up being a double edged sword.
Do you think that unemployment among the youth will create more problems for countries in the future? Share with us with us or post your views on our our Facebook page.
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Furthermore, even exports seem out of bounds as Government chooses to clamp down on it following the food inflation in recent months. However, the price bane for farmers could turn out to be a boon for consumers what with prices of food articles finally expected to come down. This tug of war between the two i.e. a farmer's profit expectation and a consumer's price expectation is likely to persist even in the future provided rain gods continue to smile upon us. There is a sustainable solution though. The farmer will have to aim for higher productivity and thus make up from volumes what it could lose from lower profit margins. And the good news is that there are signs this is already happening. Certainly a good sign for the long term well being of the economy.
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One reason for this has been the increasing cost of operations that have led to thin margins. But another and a bigger reason for this is the large percentage of inactive subscribers. As per the data released by the telecom regulator (TRAI), the active subscriber base for new operators like Videocon, Etisalat, etc is just 30 to 60% of total subscriber base. This when compared to an active base of over 90% for incumbents makes one realize as to why new operators have not been able to break even. Acquiring new subscribers becomes irrelevant if they do not contribute anything towards the revenues.
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While the current expansion is happening in metro cities where demand for branded accessories is high we advise a word of caution. It may be noted that in the past builders have already paid the price for being too optimistic. Further, with most deals now having the revenue share component if the demand scenario does not pan out as envisaged the income calculations could go for a toss. We believe that the real turnaround would happen once the demand for retail space shows signs of improvement/increases in the tier 2-3 cities. That would bring in stability as concentration amongst few cities will get diluted.
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7 Responses to "This has rocked the rich world. It's not high debt!"
S.K.Damani
Sep 13, 2011Very true, unemployment is going is a much bigger problem than debt etc. One has to also consider that when the govt. gives out unemployment benefits, is it actually beneficial. Agreed with the small amount recd by the unemployed, he may not indulge in crime and wrong doings, But the other side of the coin is that then the said unemployed is not ready to work for lesser pay also. Since he is getting some monies to tide over the month, unless he gets what he thinks he should get, he is not ready to take up the job.
A strong case in point is the unavailability of Farm workers. (I stay in rural area) Since NREGA funds are available,farm labourers are demanding Rs.150/- per hour for the 8 hours of work, or else they are ready to sit at home. Agreed it is a tough job working in the fields, but the actual output of these workers is worth less than 4 hrs., This I am speaking from actual conditions seen.
For solving all this problems you require a very visionary leadership, which at present is terribly lacking, at least in India. Ministers and elected representatives, very well supported by the adm. machinery is totally busy in self enrichment, BY EVERY CONCEIVABLE MEANS, mainly rampant corruption.
Words and ideas fail how this problem is going to be solved, particularly as the present govt. is going to continue for another 2 yrs. And in this all political parties are included.
MAybe, the youths themselves will create a new leadership, revolt and find a solution. (No, Rahul Gandhi is not the answer ; He is already a seasoned politicians, playing the political game to the hilt.)
MAy God help the country.
Thanks
Damani.
K.Swaminathan
Sep 13, 2011
All of us talk Warren Buffet because he made huge money in stock trading. Ok could u compare one in India from the ordinary. None - take the list of loosers 99.9% of Indian public lost money on equities. Conduct an online survey of your own cutomers - truth will be out -Fund managers fail inspite of indepth study of stock market could u agree in fact certain fund houses performed better than Quantum.
Mandar
Sep 13, 2011You are absolutely right on this one. Middle Eastern and African countries undergoing political crisis have should youth unemployment of 25% - 30%. If young people remain unemployed for extended time, without a doubt, crime rate will go up! This is second effect in addition to loss of capacity what you have mentioned.
ashim
Sep 13, 2011The increasing advent and continuing development of labour-saving devices is initially welcome as it boosts the profit of the device maker, but then, it also, in the long-run CUTS down on employment. This is one of the major reasons for the growing unemployment of youth in ALL sectors - industrial, agricultural, services etc.
Suresh Kumar
Sep 13, 2011Corruption in our education system is taking a toll on the employability of youth, particularly in the technical education. AICTE is unable to enforce the standards. As a result, the salary level for youth from poor institutes is much lower. Those from better institutes normally prolong their education, while waiting for a job. While India will have under-employment of youth, West will have to face social unrest, the kind we saw during London riots. And, maybe some of these people may decide to move to BRICS countries for employment particularly with MNCs. That may change employment demographics over the next decade.
VINOD K HURIA
Sep 13, 2011The world financial crisis has shown the weaknesses of a globally integrated economy. It has also indicated that some nations have higher resilience to overcome their financial problems. India is one economy which has demonstrated to the world what it can achieve in a short span of time. The fact is that India has a very high savings rate, as compared to other countries. These savings help to overcome financial crisis. The US economy thrives on borrowings, and not savings, and that is why it is impacted highly when markets crash. Everything is hypothecated or mortgaged to financial institutions, with very little ownership.
Indian brains are far superior to brains in the western countries, if used for constructive activities. That is why the average Indian performs better in the western context, and is helping to drive their IT systems. What if all the Indians decide to work for their own nation? What cannot be achieved?
What if the Indian savings are invested properly in equity. Any amount of FII that is withdrawn from the markets can easily be replenished by Indian resources. A billion, trillion or quadrillion dollars can easily be ploughed back by Indians to see their markets grow and yield returns.
k.s.jayanth kumar
Sep 14, 2011For India, instead of reaping the demographic dividend we may have to face the Domocles sword of Social unrest because of our Govt.'s policy paralysis,incompetence and corruption leading to inability to give employable education and create jobs in the manufacturing sector. May be we should outsource " Manufacturing Governance" to China !!