Recession: The Trickle Down Effect

About a year ago the word recession was vaguely known. It perhaps best resembled a rising talent who had once been on the way up but got lost somewhere. Bringing recession into the discussion at any gathering would have at best elicited a quizzical look with the word Great Depression of 1929 being bounced back at you with no little pride. Unfortunately we no longer live in those times and our life does not go backward as in the case of the charming Mr. Benjamin Button.


Recession is now a cruel twenty-first century global reality. While countries in the west grapple with unimagined levels of unemployment and a bleak future, we in South Asia seem to be wavering between cautious enthusiasm and despair. India, in particular, started out with the stance that its domestic demand would cushion it from the ill effects, went on to accept that despite all the ‘decoupling’ theories, it was not completely immune, revised its estimates and is now accepting and trying to deal with one of the biggest challenges of all times. I call this the biggest challenge because the economics of this recession will also play havoc with the politics of our country and affect the social structure.


A quick look at any of the newspaper or business magazines will inform you that a lot of economic indicators are falling – estimated GDP growth (reaching a double-digit growth has now become a far-fetched dream), employment numbers, inflation, real estate prices. This list goes on and as the pundits predict, this is just the beginning. Consumer sentiments have started to wane. Job cuts have just begun and pink slips are expected to make their presence known in larger numbers this year. While the country was still watching the domino effect in the banking system, sectors such as textiles have been hard hit and are verging on collapse. Hired and yet hanging in the air, youngsters are realising that the dream run may not begin this year. The government has started to slowly inject liquidity in the system through rate cuts.


For an average Indian this is dampening news. Having long before become used to rising disposable incomes, a ready and heady job market, an incredible array of goods, it may take some time to get used to the reduced pay checks and increased insecurity. Reams have been covered about the corporate challenges and dulled business sentiments. What remains unspoken and perhaps is still not a sentiment in the minds of many is what this recession means not just for the India that was, if I may borrow a term, shining, but for the India that was and is marginalised and suppressed. This is the India that lives on the fringes of survival, fighting perhaps an already lost battle to starvation and disease. They may not understand the fancy vocabulary of the recession but they already know that jobs are scarcer and their lives harder.


For them recession could mean a variety of things. Fewer jobs for starters, as the lower-skilled people get pushed out of the market by higher-skilled workers who have been laid off. As small and medium enterprises struggle and larger corporations completely shut down their factories, large numbers of people will be left unemployed. This in a country, where there is no system, apart from the traditional family structure, to support them. Malnutrition and ill health will rise as the public healthcare system shows inadequacies in being able to reach out to these masses of people.


Recession also hurts their chances of acquiring education and the skills they need to move up. This means that not only are they marginalised now, when this recession gives way to the growth part of the cycle, these people are still going to be at the lowest rung.


Conventional sources of help – aid and funding – may also dry up. A company that does not have any profits in its books is unlikely to have social responsibility in its mind. As the trickle-down theory brought resources to the lower rungs of society, it will also make the effects of shrinking funds felt. The politically created educational, healthcare and disaster management structure has been ably supported by business enterprises and individuals. The recession could make this support optional.


It is not hard to imagine how the recession can affect the marginalised. Think about as an average Indian – as companies cut costs they lay off optional maintenance and administrative staff, as you face a salary cut, you may let your second driver go. It is a vicious circle – an unavoidable effect of a recessionary phase. As the malls lie deserted, shops shut down; more and more young salespeople find themselves jobless, implying that more and more people are pushed to battling daily survival.


While it may be hard to prevent shutdowns and job losses, we are not completely powerless. As the government aims to maintain the infrastructure spending so as to be ready and running when the economy gets back on its feet, it is also helping create several thousands of jobs. But to lay the complete responsibility at the government’s door is tantamount to washing our hands off the job.


As individuals we have the ability to help. As consumers we are already being spoken to. But as a part of the social fabric we can all reach out the marginalised sections of the society and help. I would refrain from using the word charity here – the idea is to support the social structure and empower people. To understand that this cannot be left just to the better and boom times.


There is a lot that can be done – helping people form Self Help Groups is just one of the ideas that comes to mind. Soup kitchens for the starving and schools for the illiterate are just some of the ways we can keep people from being mislead by people and parties with vested political interests. A hungry person has no religion except the stomach and unscrupulous political parties will capitalise on this sentiment and promise free rice, blankets, televisions and much more. As voters we are always ready to crib and criticise; now is our time for action. So far we have been focused on building our homes and lives – the time now perhaps is to build our social fabric to ensure that as India makes its way out of the recession, its demographically favourable population is well-equipped for success.


Shruti Saxena

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