Singapore-based Business Times has just carried an interview with Arun Shourie. It has a good quote. The question was about decoupling and India’s insulation from global financial crises.  Shourie said, “Suppose the water is just one centimetre below my nose, but it is six inches below your nose.  I might be relatively less affected than you, but if the water around me rises by one centimetre, I will drown.” Business Times probably got one centimetre and six inches mixed up: reversed, the quote makes better sense. Everyone agrees India hasn’t been as hard hit as other countries. A columnist (Daniel Gross) has written a partly tongue-in-cheek piece, correlating exposure to financial crisis with concentration of Starbucks outlets. The correlation works well, both inter-country and between American states. To state the obvious, Starbucks is absent in India.  The company withdrew its application from FIPB (Foreign Investment Promotion Board) and registration of trademarks or selling products through PVR multiplexes doesn’t count. Nor does Barista. 

I possess a colour-coded country risk map prepared early in 2008.  This grades countries from AA to D.  AA merits dark green, D merits red.  This isn’t about economic risk alone.  With a rating of B, India is light pink, floating around in a sea of dark pink and red.  The dark greens of the world are Australia, Japan, Singapore, West Europe and North America. Iceland is light green.  The 2009 map should be easy.  Leaving swathes of the world intact, one can reverse colours for North and South America and similarly reverse them for West Europe and chunks of Asia.  Saying India is relatively insulated is one thing, saying it is completely insulated is another.  No one believes the second proposition any more.  With 7.6 per cent GDP growth in first half of 2008-09, a consensus has emerged that growth this year will be between 6.5 and 7 per cent.  The difference between 6.5 and 7 per cent is explained by how bad one believes Q3 and Q4 to be.  We won’t officially know until CSO releases Q3 figures towards the end of February. Similarly, consensus has also emerged Q1 and Q2 of 2009-10 will be the worst, with growth recovering in Q3 of next financial year for India, though not necessarily for the world. 

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