No economic crisis for India?

After years of tremendous growth, India’s economy is facing a slowdown. Despite that, it is still growing at the second fastest rate in the world, after China.

In India, it looks like the financial crisis is not truly global. The buck never stopped here. No banks collapsed, and there is no cash shortage – largely thanks to a banking culture that looks down on reckless lending.

“There is no crisis whatsoever in the Indian context. Indian banks are well capitalized,” said Tamal Bandyopadhyay, Deputy Managing Editor of the Mint company. “There is no problem of capital, there is no problem with the quality of assets and there is no problem of growth as well [sic].”

Multinationals like HSBC and Citigroup may have hemorrhaged money in the West, but it is not stopping them fiercely courting India. Swiss giant UBS is launching a retail bank, while playing to its strengths in investment.

”It’s one of the few economies which is growing,” said CEO of USB India, Manisha Girotra. “The Indian domestic entrepreneurs are very aggressive. They are very keen to grow, expand not just locally but globally. And that’s a unique opportunity for international banks to help them.”

However, it is not all good news. Plummeting Western demand has forced Indian exports to drop nearly a third in a year, throwing half a million out of work. Information Technology is particularly vulnerable, with the boom years of the past decade well behind it.

“Our outsourcing is dependent on global markets, and our customers have been deeply impacted,” said Som Mittal, president of Nasscom. “Anything that happens in that part of the world does impact us – and our growth rates have come down to 16 per cent last year, and this year it will be 4-7 percent.”

On top of this, there is one problem that can not be solved by bankers and business – India’s worsening drought.

The specter of crop failures in the world’s second- biggest producer of rice, wheat and sugar cannot be ignored. It’s playing a big part in slowing India’s growth to a predicted 6.2% next year.

But even that is a figure well beyond the reach of most Western economies.