Has India lost its magic?
In this issue:
» India's crude production has gone up in FY11
» Will petrol cars see a de-growth in India?
» Should BRICs trade in their own currencies?
» Euro troubles not over. Spain could reignite the crisis
» ..and more!
---------------------------- Raise your voice before this turns into yet another scam! ----------------------------
When millions don't even have food to eat, our government is thinking about bailing out multi-millionaire CEOs!
Is this government really made up of our representatives or is it on the payroll of those corporate giants?
We at Equitymaster feel strongly about this cause, and thus have started an Urgent Poll where you can read all about this and cast your vote to make your voice be heard!
We strongly recommend every Indian, who wants to make a change, to take a look at this.
Click Here to read more and cast your Vote... Before it's too late!
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But the fear at the back of the mind of every investor was how long will this continue? Come 2011, the magic seems to have fizzled out. Growth is back at sub 7%. The country is fraught with problems related to corrupt politics, reform paralysis, high interest rates, fiery inflation, etc. And all this has combined to hurt the economic growth. Not to mention that the government's indecisive policy actions have sent investors scurrying to the bushes. Bowing to coalition demands the government has rolled back more than one policy that was to the benefit of the manufacturing sector.
It is not just policy inaction that has hurt India. The government's concentration on populist reforms can best be described in one word- overkill. As a result important issues like public services, road transport, power are being completely overlooked. Let us not forget that these together form the backbone of any economy. To say that these are underdeveloped in India is still saying too much.
But the point here is that hasn't this always been the case in India? Were politicians ever honest? Were they ever looking at anything beyond vote banks? The answer to this is no. But even then India has managed to grow at a decent pace. This was largely due to the after effects of the huge reforms undertaken in early 90s. However, like all good things the effect of that has slowed down. What India needs now is the right kind of leadership to lead it in the next phase of growth. A leadership that is proactive and committed to the country's long term growth.
The thing is that India still has a lot of 'magic' left in it. The country has a healthy middle class that is driving consumption growth. It has a huge 'demographic dividend' which is willing to work and add to the growth of the economy. With the right leadership it can get back on track.
Do you think India has lost its magic? Share comments with us or you can also comment on Facebook page / Google+ page.
01:35 | Chart of the day | |
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Data source: The Financial Express |
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Thus, in an environment where demand for cars in general has waned, that for diesel cars has seen an increase. Further, there was uncertainly prevailing in the industry with concerns that the government would impose an additional tax on diesel cars. No such move was announced by the Finance Minister in his latest Budget speech. And so, auto companies are now gearing up to ramp capacities for diesel vehicles. Given that oil prices are still firm, a further hike in petrol prices cannot be entirely ruled out. This makes the case for diesel that much stronger. Hence, auto companies such as Maruti Suzuki expect growth in passenger cars to be driven by diesel variants. This means that petrol cars could see de-growth in the medium term.
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Well, the idea is indeed a sound one. But how about going one step further and having a common currency? If problems in the Euro zone are any indication, a unified currency concept should not be touched even with a six-foot pole. A unified monetary policy is impossible with member nations having diverse political as well as fiscal policies. However, moving away from the dollar and Euro and trading in each other's currencies does indeed look like an option worth exploring we believe.
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Not only investors but other European economies, especially Italy are also concerned. Italy has been trying hard to come out of its bad economic phase. Any fallout from Spain would push back the whole region to the crisis situation. And it would hurt the corrective measures taken by the Italian government as well. But will Spain go Greece way? Only time can answer.
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So, is the gold's bull-run coming to an end? Not according to Barclays Capital who sees this most recent sell off as an opportunity to buy the precious metal. They believe gold will head towards USD $1,850 per ounce due to inflation concerns and currency debasement. They also believe that lower Russian exports will lead to supply deficit in the market, thus pushing the prices of gold further north. Also, there is a possibility of further quantitative easing (QE3) by Federal Reserve which could also provide boost to gold prices.
Amongst the other world markets, Singapore was down by 0.7% while Japan was down 1.2% during the week. France was the biggest loser registering losses of 3.3% during the week.
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04:55 | Today's investment mantra |
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6 Responses to "Has India lost its magic?"
Shreedhar
Apr 2, 2012Whatever the reasons are told hear for india loosing its magic, are all 100% correct. first we the people have to change which automatically changes the system which eventually changes the leadership, for example when there is no corruption in the masses [which is a huge population] it can easily control the class people
who are few compared to them in turn they can control the leaders
Nerkuppai Thumbi
Mar 28, 2012One important stake-holder in the scheme of things - bureacarcy - was left out of reforms. The bureacrat is capable of ensuring/restoring status-quo. The villain of the piece is the bureacrat, which the media and the common man on the street either do not realise or takes lightly: unless reforms in the batch promotion of IAS is replaced with more rational performance-linked promotion, there can be no long-lasting changes.
shirish patwa
Mar 26, 2012I fully agree with the views expressed in the article.What surprises me(pains me)is that unlike European countries and U.S. the economic slow down is not the result of depression.It is because of the lack luster performance of the Government ,the corrupt politicians and lack of vision in the Government have nailed the growth engine of our economy.The problem is totally man-made.Whatever growth India manages is not because of the Government policies but despite them.And this is in spite of an Economist heading the Government.If he has an iota of self respect and sense of well being of the country at his heart he should quit at once.The country is great to throw capable alternative.
Govindaswamy Dhayalamurthy
Mar 26, 2012Though India has all potential to keep its growth, the lack of Leaders who are committed to the growth of India and with vision not centered on their own growth India will loose not only the magic but also the real GROWTH
Deva
Mar 26, 2012This country is always a place full of opportunities. Even after scams with mind boggling numbers and one after the other, the economy has not gone to dogs. Still people are able to go about and doing things they usually are doing. One question is as Indians we do not enjoy much from Government as part of the Government's social responsibility. Definitely right leaders will take us a long way but that again will be a pipe dream with regional parties coming in the forefront and the national parties squabbling within them for prime posts.
kcguptarewa
Apr 12, 2012India has not lost yet but will certainly loose the magic with the type of leaders and the mentality of the public that is prevalent in India.The public has to change first,the leaders will be bound to change.The bureaucratic mindset has to be forced to change otherwise all will be a futile exercise.The present leadership has virtually failed.