Viewing the economic crisis as just a “trailer to the real movie”, NRI industrialist S P Hinduja has said the billions in bailouts by governments were more like a stop-gap oxygen therapy, whereas the situation requires investments in emerging economies.“Giving large sums of money to the very people who caused the problems in the first place seems very unwise, to put it mildly,” said Srichand P Hinduja, Chairman of the diversified Hinduja Group.
In a commentary written for US business publication Forbes ahead of next week’s G-20 leaders meeting in London, he said: “What we are witnessing is the trailer to the real movie.“The recession could last anywhere between 3 and 5 years, possibly even longer. The worst pain is, I fear, yet to come.”“What governments are offering by bailout of financial institutions and industrial manufacturers is temporary oxygen in an attempt to stave off the worst effects of the deepening recession. As nature seeks to correct the imbalance, we have to recognise that both socialism and capitalism have failed,” Hinduja wrote in the article.
"The main message is that the developed and developing worlds have to work together in the present crisis. Only in this way can the increasing wealth gap between rich and poor nations, with its fateful consequences of conflict and terrorism, be avoided,“ Hinduja said listing out the proposals that the world leaders should consider at G-20 summit.Hinduja Group is present across a number of countries in sectors ranging from financial services, automobiles and IT to infrastructure.
“Such an approach would reduce present political conflicts, create better understanding between nations and bring about global political and economic stability,” he said.Governments in the US and many other developed countries have taken steps to bailout companies from financial and industrial sectors to avoid bankruptcies and stave off job losses, Hinduja noted.“However, bailing them out by pouring in billions of taxpayers’ money into the system is not the answer for an immediate revival of the global economy.
{{/usCountry}}“Such an approach would reduce present political conflicts, create better understanding between nations and bring about global political and economic stability,” he said.Governments in the US and many other developed countries have taken steps to bailout companies from financial and industrial sectors to avoid bankruptcies and stave off job losses, Hinduja noted.“However, bailing them out by pouring in billions of taxpayers’ money into the system is not the answer for an immediate revival of the global economy.
{{/usCountry}}“At a purely pragmatic level, what guarantee is there that the money will not be misused again, particularly when greed and fear continue to determine human actions? What is there to ensure that some of the money does not disappear again through corporate mis-judgement or through undeserved incentives and bonuses?” he opined."Nothing quite like the current economic crisis has happened before, with financial systems the world over all failing in tandem, the regulatory bodies, auditors and rating companies in fact, the whole system failed,“ Hinduja wrote.
“Chairmen and members of the board of directors failed too; so have the management and compliance officers. Add to that the failure of many ‘rank and file´ employees.”
Agreeing that certain banking and other institutions should be rescued to avoid bankruptcy and job losses, Hinduja said it has to be ensured that the right teams are in place and they do not fail just as their predecessors.Hinduja also called for the revision of the statutes of the International Monetary Fund and the World Bank on a top- priority basis to ensure deployment of greater resources from them to meet the needs of developing nations, which in turn would fuel US technology exports to advance their economics.