Downgrade of US - An opportunity for India???

The downgrade of US Sovereign rating from AAA to AA+ with further possibilities of downgrades marks a Titanic shift of equilibrium in the Global Economy. US long a symbol of stability and aspirations for other national economies is today paying for its own misdeeds. The American politicians have spent money assuming that there is an endless supply. Most of it has been spent on fighting costly Wars which have been misadventures. Be it Vietnam, Iran or Afghanistan each war that it has fought has been long drawn with no tangible results. Whatever has been achieved due to these have been too little for the kind of resources that have been spent by the US.

True the world is a lot safer, but the wheeling dealings that go on to retain the so called sphere of American Influence has strained its relations with more than 50% of the mankind. The people of US have also long lived beyond their means. Their spending has been driven by plastic money and easy recourse to funding. The confidence to spend recklessly came from every nation queuing to park their funds in US Treasuries. So much so that China, with whom US at best shares uneasy relationship, having approximately US $1.5 trillion in US treasury holding is its largest creditor.

However the global meltdown of 2008 exposed the cracks in the US Financial Armour and the cracks have only widened. The US leaders appear clueless and they have tried to adopt the only way they know, unbridled spending.

The Global economy for the last quarter of a century has been built around US consumerism. Be it India or China, the growth has come riding the US economy and any negative effect is going to have repercussions through out.

However this also presents India with a huge chance to become a truly global leader economically. The Indian economy is still largely driven by domestic consumption unlike China which has become the manufacturing hub and therefore is hugely dependent on Exports. The exports from India today comprise largely of Services especially IT. These are bound to suffer, but if India can get its act together then this may be the chance that we were waiting for. If we can, in India, reduce corruption and increase equitable distribution of growth, carry out judicial reforms and create an atmosphere of policy stability and practice fiscal prudence, we can become the next big destination for parking of sovereign funds in the next decade or so.

Whatever the end result but one thing is sure: the end of days of US hegemony are in sight. Nobody, least of all me, would want US economy to falter, but this is only possible if there are great sacrifices from the Americans - people as well as their leaders.

In the meanwhile back in India we require only sacrifices from our Politicians, since Indians have always been sacrificing, to reclaim the ancient glory of India. We as a race are tolerant and peace loving, we have a multi cultural, multi religion society. If India were to rise to the Top, it will be beneficial to the entire world which is so fiercely divided on religious and ethnical lines.