I was amused to read Singapore Minister Mentor Lee Kuan Yew sharing his thoughts on the Indian economy yesterday as Singapore became the first – or one of the first – Asian economies to slip into recession, according to AFP, the Telegraph and the Guardian.
MM Lee was right, of course. India has to urbanise to make greater progress.
But the Indian farmers who refuse to give up their land – and thwarted plans to build the world’s cheapest car in West Bengal — know one thing. As long as they have their land, their fate depends on the weather and the harvest. Once they leave their land, they face even greater uncertainties — from the job market to the world economy. Just like Singaporeans today.
Despite being the best educated workforce in Asia and living in the fifth most competitive economy in the world, Singaporeans are the first to suffer recession. And the recession will get worse next year, says the local Straits Times newspaper, echoing a Morgan Stanley report.
Singaporeans are as helpless as Indian farmers in a drought year. More helpless, in fact. Indian farmers can expect government writeoffs of bank loans. But if a bank fails in Singapore, the government is not obliged to help depositors. Bank deposits are insured for 20,000 Singapore dollars (about $13,7000) – less than in any country in the European Union – and the insurance money comes from the banks, not from the government. Meanwhile, America is considering fully insuring bank deposits following the example of Germany, Ireland, Greece, Spain and Denmark, reports the Wall Street Journal.
The fact is, governments are guided by the big picture. The Monetary Authority of Singapore yesterday abandoned the strong Singapore dollar policy. Even though inflation has been running at a 27-year high and is expected to be between 6 and 7 percent this year. The new “zero percent appreciation” Singapore dollar policy is to help exporters, who need all the help they can get in an export-driven economy like Singapore. Even if that hurts the wallets of the common people.
That is another thing Indian farmers resisting urbanisation know. It will help the Indian economy grow but hurt them.
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