Shares have tumbled down over the last few days, following S&P’s downgrade. Quite rightly, people fear another recession, similar to that which engulfed the world after the U.S Subprime lending crisis in 2008.
However, stock markets do not always react logically, and many a times, the reactions are sentimental. India has its own set of advantages. The country has the demographic advantage of younger population and has a large domestic market. Unlike other countries, India’s growth in the recent years has been primarily driven by the service economy, wherein cities have played a vital role. The future success story of India depends to a large extent on the growth of small towns and cities, which have limitless potential for investment.
So, we at India do not need to worry. But prudence lies in caution.