Modiji, Are You Listening to Our Mann Ki Baat?

Jun 27, 2016

In this issue:
» Brexit or Sensex 40,000? Channel Your Greed and Fear Right
» Bank lending slows down
» Steel production in China
» .....and more!
Ankit Shah, Research analyst

What a rainy weekend it was in Mumbai! It poured almost incessantly. I chose to stay indoors and to enjoy the sight and sound of rains. I spent some time clearing and organising my drawers. I found lots of bills... restaurant bills... movie tickets... electricity bills... grocery bills... mobile bills... online shopping invoices... travel vouchers...

I couldn't help but notice the amount of taxes I paid on every single bill.

And it got me thinking...

The government first takes a big bite off my salary. And then, like an uninvited guest, it joins me at every dinner...on every every movie...every transaction! If you add it all up, it's a large sum of money that the government takes away from us.

Now don't get me wrong. As a law-abiding citizen, I understand that the government needs money to run the country. And I am happy to make my contribution.

To be honest, I didn't care much about what happened to my tax money until I started reading Vivek Kaul's Diary and realised there was a huge money-sucking black hole in the system that no one was talking least not the mainstream news media.

For those who don't know him, Vivek is a financial historian who has dabbled in management and economics for over 20 years. He has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. He is the author of Easy Money - a trilogy on the history of money and the financial crisis.

Vivek has a rare ability to demystify the complex world of money and politics in a way that the common man can understand and relate to. He writes fearlessly...calling a spade a spade...raising questions that others are too timid to ask...and seeking accountability from every public office bearer, including Prime Minister Narendra Modi.

In his latest special report, The Crony Socialism of Narendra Modi, Vivek exposes the biggest black hole that's sucking your tax money - HUGE public sector losses. According to him, the public sector is burning money at probably the fastest pace it ever has. And we, the taxpayers, have to foot the bill for this growing black hole.

Now, let me tell you a secret. Politicians hate discussions on accountability. They fear being exposed. And hence, much of the political discourse in the country revolves around sentimental issues of religion and caste, or political mud-slinging. This is an old, proven technique to divert public attention away from real, critical issues.

We want to change that. We want to bring pressing economic and political issues to the forefront. So, instead of crying foul about the taxes we pay, let's start demanding accountability.

We hope PM Modi is listening to our Mann Ki Baat.

Do you think the government is making the most productive use of your tax money? Let us know your comments or share your views in the Equitymaster Club.

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Brexit. Britain's decision to leave the European Union has come as a big shock. And this has sent global financial markets into chaos. On 24 June 2016, global stock markets witnessed their biggest fall in nearly five years...the British Pound plummeted over 10%...the Euro crashed the most since it was launched in 1999...Oil dropped to US$ 48 per barrel...the Indian Sensex reacted by shedding more than 1,000 points within hours of opening!

Even today, the Asian stock markets were weak. The British Pound declined further by over 2%. In short, there's panic and uncertainty in the markets.

You would be surprised to hear this, but these are precisely the kind of situations we await. For long-term value stock pickers like us, such panic corrections are the perfect opportunity to pick up some solid stocks at a discount. The only thing required is to ensure that you pick out businesses which could not just withstand the storm but come out as winners on the other side.

Is it time to be greedy when others are fearful?


So yes, Brexit is indeed good news for you!

The only question is...Are you ready to profit from this rare opportunity?

If yes, then just download our special report - Sensex 40,000: 4 Stocks to Profit from the Coming Stock Market Wave to make the most of this rare opportunity.


The Indian economy grew at 7.6% in FY16. This was the fastest growth for India in five years. But not much to cheer about in terms of bank credit growth. As per the data in Mint, Credit growth slowed to 8.7% for the fortnight ended 10 June from 9.8% in the year-ago period. This is the lowest credit growth in last 20 years.

Sluggish Credit Growth

It is important to dig deeper and look at the overall bank lending. If we look at the bank lending numbers in a little more detail, the retail/personal loan which includes home loans, vehicle loans, education loans, credit card outstanding etc. have grown by 19.7% in April 2016 (April 15 to April 16) compared to 15.7% in April 2015 (April 14 to April 15). Hence this means, the retail loan growth has clearly picked up over the last one year. Credit to agriculture and allied activities increased by 15.3% in April 2016 as compared with the increase of 14.1% a year ago.

So where's the slowdown? As per the RBI data, lending to industry increased by just 0.1% in April 2016 as compared with the increase of 5.9% in April 2015. Credit growth declined for several sub-sectors, notably in food processing and infrastructure. Clearly, the banks are not in the mood to increase their lending to industry.

This is mainly because banks are sitting on a huge amount of bad loans on money that they have lent to industry. The banks are currently focusing on cleaning up their balance sheets.

The overall bank lending will revive once the lending to industry revives. And that will only happen once the bad loans are cleared up.


Talking about the industry, steel is vital for any economy. In a lot of ways, steel consumption in an economy reflects the economy's health. However, currently, the steel industry is under pressure due to increase in supply, especially from China and the sluggish global environment.

The dynamics of the metal and steel industry are intensely complex and insane. This is an industry where producers are producing more and more metal despite tepid demand... This is an industry where the government subsidizes steel plants by providing incentives to steel producers.

As per the latest data from World steel association, China's crude steel output growth has inched up in May 2016 compared with April 2016, with the steel production rising by 1.6% month on month basis and 1.8% on YoY basis. Whereas, overall global production in May declined by 0.1%. In March 2016, China produced record steel production of 70.2 million tonnes, an increase of 2.9% compared to March 2015. Similarly, in April 2016, China produced 69.4 million tonnes, overshadowing 65.5 million tonnes produced by all other nations.

While the world is cutting output, which supports steel prices, China's steel mills are doing the opposite.

China's inability to curb steel production remains the main concern for global steel makers. A solution to this would be to address the structural problems such as high debt, excess capacity. But that's not easy.


The Indian stock markets were trading listless today with the BSE Sensex showing a marginal decline of 18 points at the time of writing. Oil and Gas and banking stocks led the list of gainers while stocks from the IT and Auto sectors were at the receiving end.

04:55 Today's investment mantra

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble" -Warren Buffett

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15 Responses to "Modiji, Are You Listening to Our Mann Ki Baat?"

Amit Abrol

Jun 30, 2016

Increased salaries for govt employees with the cream going to the politicians (do they deserve the right to award themselves huge hikes???); farmers (okay in part); armed forces (well deserved); roads (we still deal with potholed roads worse off while it rains); and the list goes on!! Is the middle class only to pay taxes, while the corrupt politicians reap benefits of our labour bleeding us dry?

Humongous taxes in Karnataka but no ear for growing garbage piles, pathetic roads (despite highest road tax in the country); highest petrol prices in the country; no pride in our law n order to write home about????? This space is too minuscule to list all the woes but gets one to think if the common man is even a point of concern? Ridiculous taxes aside, their expectations brushed aside with the Govt least bothered!

You decide what we eat, how late we stay out, what we save & where to invest but is that it? Nothing in return?? STOP & think HARD again as the rising discontentment will hit you in the face, sooner & more severe than you think!


Keshava rao

Jun 29, 2016

Dear Ankit Shah,
What you said is absolutely correct.
we the common public meet all the taxes from our pocket, at the same time we cannot getting back its benefits.
who will bell the tigers ?,
no proper civic amenities provided, no proper roads, no proper idea of development, governments cannot plan for feature, there is lot more to say but no use, common pupils fed up with life where ever they leave whether in city or in rural
at last there is a need of revolution.


chandrashekhar kabra

Jun 29, 2016

the Maan ki Baat of general public is out and out pessimistic- the hhigher middle class is only ggung-ho with daily announcements of BJP government about far reahing polcy which fizzle out in few days. The public sector spendi g and huge salaries and lifelong perks without any accountability and eevaluation of pperformance put huge burden on others. The 7th pY ccommission hiking salaries to the tune of 23% will take its toll on other working class who in no way is inferior to overall increase in productivity. See in PF gov will give 8,7 while in PPF it is 8,10 only. sp tax incentive fo employees u/s80cc D2 up to rs 150000 which is not aavailable to others and iinnumerable lifelong social perks


Satyendra Sinha

Jun 29, 2016

Ankit, from Equitymaster I expected positive ideas related to stocks and markets. Not this kind of complaining about the Govt in your every writing. You appear like a politically biased writer rather than a independent analyst. A politically biased person loses his/her weightage and not taken seriously in future.



Jun 28, 2016

Would love to know where my tax rupee is being spent? Wouldnt it be wonderful if each of the ministers present an Annual Accountability Report highlighting the accomplishments as well as the failures--- in fact if the reasons for slow or tardy implementation of projects/ reforms are made public, things would surely be different ! But then agin this is only wishful thinking, right? Can we expect accountability in this great democracy of ours? Regds



Jun 28, 2016

Looking at the article opinion, I almost feel like we all were living in a tax free nation till about 2 years ago :) Good going Equity Master and the young journos...



Jun 28, 2016

Ankit, I think you have choose the most relevant and important topic of the decade when Indian Government and system is tracing so much on Black money, India as a country is putting its continuous effort to project itself as the fastest growing economy, and moreover we have so called PSB where most of our hard earned money is going as fuel, I some time think if as a commoner I can say that these companies are run by very irresponsible and incapable management who perhaps hardly understand how a corporate should be run, so when our big politicians and finance ministry keep coming and donating money from the RBI to these sick PSBs it really doesn't shows that its effectively using of taxpayer's money very prudently and wise manner. we still has very poor infrastructure in rural areas, we still have our education system very poor, we has far way to go to for getting better medical system, and last but not the least improve employment condition to use our huge youth, skill India is probably one good initiative toward that. But still long way to go, and getting professional like Dr Rajan to get our top PSBs will definitely an important steps towards that. probably Mr Modi needs to realize his own statement which he gave just after he came to the power " Lets forget our dirty politics and think for our country"...



Jun 27, 2016

Mann ki bat very true.Modiji has to act now


Dr. K. S. Ananda Kumar

Jun 27, 2016

Our Modiji is listening to Mann ki Baat. But, his time is inadequate. Like all his,predecessors,he is surrounded by 'yes boss' loyalists. Somebody should make him understand what is going on around him, and where he needs to change the situation. Find out somebody who can confide with Modiji to keep such loyalists at a distance, and make him understand not to believe in the earnings of the Public Undertakings, about which he may not be knowing full truth.The only alternative is put up bunch of petitions through etc. The only other known method is to take a legal recourse to find out why our pm is silent on certain specific issues. I am not aware of any other alternatives. One should only find out through others.


Ravi Damodaran

Jun 27, 2016

Of course they are not. I understand that in US Law makers are bound heed how their constituents want the public expenditure to be allocated and spent.

About taxes, Imam now holidaying in Sweden where income tax is a massive 33 % across the board fro basic minimum salary up to 47,000 Crowns. BUT after first job a nd 6 months of work they qualify for a unemployment payout that is so high that their salary would have been only 70% of their allowance. That is whybtheybfear immigrants who come and don't work and enjoy State money. On the other hand, they too pay VAT, but no one is grumbling, because home loans are charged 1 or 2 percent interest, they are covered bu medical insurance and it is cheaper to own a house than rent one. Real Estate can come with an equivalent of 30 months salary, versus 30 years for some Indians

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