ಲಂಡನ್ ರೆಸ್ತುರನ್ತ್ಸ್

London: Recession-hit restaurants in Britain have started offering free food and major discounts to entice customers, many of whom have stopped eating out frequently following job losses and salary cuts.

Offering free food was one of the ways of beating recession in the 1980s, and restaurant owners hope it will again do the trick now. The innovative offers come amidst reports that hundreds of Indian and other restaurants have closed shop in recent months.

The offer of free food is premised on the belief that customers would be too embarrassed not to leave behind money after dinner. Restaurants owners believe that except students, most customers would not leave without leaving money behind.

The menu card at The Little Bay in Farringdon in London does not mention prices for dishes. Customers pay only for the drinks.

Restaurant owner Peter Ilic said, "You can leave 50 pounds or nothing; it doesn't matter, I will treat you the same," he said, and claimed that it was not a desperate measure to beat the steep fall in business.

According to the latest PricewaterhouseCoopers report on Hospitality and Leisure, 141 restaurants closed down in the final quarter of 2008. In total, 363 restaurants suffered insolvency in 2008 a 32 per cent rise on the year before.

Faced with supermarkets offering cheaper ready meals, Indian restaurants too have taken to innovative measures to revive business. These include reducing prices and packages offering 'eat as much as you can' prices.

TOP ARTICLE | How To Beat Recession 12 Nov 2008, Pradip Shah What started as a purely US investment bank problem has slowly spread to the entire financial sector across the world. And now it is engulfing entire economies. There is a consensus that the world is rushing headlong into a prolonged recession. Columnists remind us of the Great Depression, when US real economic output fell by a third between 1929 and 1933, unemployment rose from 3 to 25 per cent and stock markets took 25 years to regain their peak. There is a danger of governments tightening public spending or raising tariff barriers, thereby risking a deep recession. The 27 European countries that have free movement of capital, labour and products, are ringing with dissonance, and there may be some breakaways from the 15 that share a common currency. But the concerted response of leading countries suggests that they will not indulge in ruinous policies. Nevertheless, a global recession seems inevitable. Keynesian pump-priming through fiscal programmes is already being planned. Barack Obama is talking of rebuilding roads and bridges and giving tax rebates of $3,000 for every job created. China, which is expecting annual growth to slow down has proposed a fiscal stimulus package, including export rebates on 3,000 items. China is much more dependent on exports than India. But India is globally entangled much more now than it ever was. We have liberalised financial flows in and out of the country, reduced tariff barriers and a quarter of our economy is dependent on trade. Our exports at 13.5 per cent of gross domestic product are 50 per cent higher than in 1991. India is no longer a closed economy and cannot insulate itself from a global recession. The policy responses suggest that our government is leading the economy by looking at the rear-view mirror. Economic figures of the recent past are certainly better than those of countries already in pain. But the government seems to believe that our financial sector is delinked from our real economy and that our economy is decoupled from the rest of the world. It doesn't seem to notice what businesses in India already see - signs of a creeping slowdown. Because of recent inflation, tight money, high interest rates and now the wealth effect of lower stock prices and property values, demand is falling. Monetary initiatives have been tardy and timid so far. More aggressive monetary policies are inevitable, but by themselves will not avoid a painful slowdown. What we need now is a coordinated fiscal stimulus. But investment-led expenditure takes a long time to plan properly, implement effectively and operate efficiently. At a time of a looming global recession we need something that will immediately help rejuvenate the economy, create employment for our idle resources and protect us from global economic illness. For this, the government must fall back on our one billion consumers, constituting in numbers the second largest market in the world. A consumption-led stimulus through a measure simple to implement and quick in result is the need of the hour. The government must immediately bring down incidence of excise duties - for all products except for the biggest contributors such as oil and tobacco - by about 20 per cent. For instance, the 24 per cent slab going down to 20 per cent and so on. This move can be done by a simple executive action and implemented quickly. It is non-partisan, will have the support of the left and bring electoral benefits for the incumbents. Such a move would benefit the one billion consumers, over 90 per cent of whom have not just unsatisfied wants but also unfulfilled needs. Sufficient idle production capacity and competition exist in the economy to ensure that the excise reductions will in large measure be passed on to the consumer. Proven price-elasticity of demand will encourage consumption and re-energise demand. The move will reduce the pipeline inventories, get factories to hum again and lead to rehiring and employment creation. As the experience of the automobile industry shows, volumes will increase as happened after the excise reductions in the 2008 budget. It will improve corporate financial performance and therefore income tax collection while reducing the incidence of the regressive excise tax which, when coupled with the states' sales taxes and other local taxes, imposes an unaffordable burden on the poorest consumers. It will also improve the capital markets and facilitate fund raising from the market for investment proposals. What is the risk in this strategy? The budgeted revenues from excise and service taxes are about Rs 200,000 crore for 2008-09. A 20 per cent reduction on all products, excluding oil and tobacco products, would mean a revenue loss of just about Rs 30,000 crore for a year, offset by revenues on volume gains, a fraction of the shameful subsidies on petroleum products. One wishes that a chief minister took the lead and got all the states to reduce VAT similarly and in a coordinated manner. It is possible that pipeline inventories may not immediately be marked down in price. While this will improve corporate tax collection, more likely, the pressure of competition and new production will result in the consumer getting the benefit of the lower prices far quicker than revenue officials may imagine. If this doesn't work, the new government could increase excise duties in the next budget. Our stable agricultural sector, sound banking system and consumers are great assets. A fiscal stimulus through a significant and widespread reduction in excise duties and service taxes can be just the right combination of good economics and good politics to decouple us from the global recession.