Recession and Great Indian Middle Class

We are already interpolating another recession fears, when we have not been completely out of the previous yet.
We dont know whether it will happen again or not, there is a fractured opinion in the international community of economists. But we have the chance to look back and see what happened.

It is well evident that India as a nation came out of the recession in flying colors. Well, atleast thats what the world says. Following are some Real GDP growth rates for India.
2007 - 9.37
2008 - 7.35
2009 - 5.36

Now the second quarter GDP 2010 is 8.8. It has not been that bad.
So the point of the discussion is that, who let us out of this phase, RBI or the great Indian Middle Class.

First Point: Being over leveraged was the biggest problem Western World had. But did they have any choice. No..
India was not over leveraged, not by chance but by choice. We are still developing and at this stature economies cant afford to be over leveraged. The Middle Class of India still believe in savings and can afford to be over invested. Whereas western world is of the other choice. Its not their mistake but they have no choice.

Why? Because lets take a example. If you earn $20, of which you invest $10 (50% of your earning)and make $2 out of it. This makes a 20% of profit.
The next year you would have $22 and you have to grow to you would have a pressure to make more than 20% profit. We would have the pessure to invest $10(our capital) and $2(our profit) means $12, which is slightly more than 50% of our total capital i.e. $22. This is how as you keep growing you start increasing the percentage of income being invested.

Second Point: Having a big middle class population has come to our rescue not only as a work force but also as the consumer base. Our domestic consumption was high enough to handle recessionary pressures for a longer time.

Third point: The untapped, unnoticed black money. Due to sectors like automobile, reality etc. the huge amount of black money came into circulation to save from the drought of liquidity.

Fourth Point: On the back of the large Middle Class, the state owned organizations like LIC, EPFO etc. are so cash rich that they have the capability to take the country out from small hiccups. Even they bailed out the government from recent low subscribed IPOs like NMDC, NTPC.

Fifth point: The love for gold for this class. No matter how much the price of gold goes up, we tend to buy more due to the customs we have. And as we know, as of now till dollar is the pegging currency around the world, the more it weakens more the price of gold goes up. So atleast in recent times gold prices are supposed to go up till the world economy stabilizes and dollar holds up its value.

So in the end my credit goes to the Great Indian Middle Class. Hats off to them. But this cannot happen everytime. We have also started getting into the vicious loop of long term loans in reality, I dont understand why there is so much of rush as if in five years there would be no place to live on earth. We should learn and not follow West. As Chanakya famously said "You do not have time to commit all the mistakes in single life".