where is the economy heading?

the IIP nos came in yesterday--- and the market recovery stopped and it closed at the lowest point of the day. The entire industry is now talking about a recession in the country. Surprisingly the PM Mr Manmohan singh had only in the earlier part of the day said that the gdp will grow by 8% this fiscal..

whats my theory? My hypothesis is that the beginning of the domestic consumption boom started out with the IT industry and the sudden huge disposable incomes people got. This started a virtuous cycle which then spread to the other areas of the economy- and the opening up of the economy helped fuel the fire of the "domestic consumption story".

but lets look at what our country habits are- high savings rate- and in most places in the country- people have worked in an era of low consumptions. Thus when the needle does move to the recession theory- i bet that the domestic consumption story will not hold water--- unless it is driven by infrastructure development works by the government.

in short- if there is a recession in the developed markets- india will not be spared and will take a huge hit... we are not decoupled- but extremely Coupled...

watch this space for more..