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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
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Tough decision making is crucial now 
(Wed, 28 Sep Pre-Open) 
 
The global economy seems to be facing really tough times as it has been hit by the US budget crisis, downgrade of US sovereign debt and the Euro debt crisis. This just points to the failing leadership in these so called developed economies. As if the reality is not hard and harsh enough, the doom predictions by world leaders are further adding fuel to the fire, thus jeopardizing whatever little chances of recovery exist.

So what's the solution to the current crisis? The first thing will be to take a leaf from the history book and learn our lessons. A similar situation in 2008 was countered by Quantitative easing, i.e., printing more money. It was aimed at generating more demand and output. But the results were far from it. The approach instead led to inflation and financial instability. A similar crisis now stands gaping in our face. It's time the global leaders realise that the developed world cannot be the engine of global growth anymore. It would be prudent to acknowledge emerging markets as the key growth drivers.

The second step would be to aim for a more realistic growth rate and work towards structural reforms in the economy, the key to which lies in high levels of employment. The recovery agenda needs to incorporate sensible regulations for business and reasonable tax structures that promote growth.

Last but not the least; the central banks need to learn that QE is no panacea for ailing economies. It can only make things worse by leading to more inflation. It's time they learn to adjust to the post crisis reality and take some tough decisions. There can be no quick fix solution to years of bad decision making. It all may seem tough now, but any more dilly dallying will only make it tougher.

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