|»5 Minute Wrap Up by Equitymaster|
On This Day - 3 DECEMBER 2010
India growth story miles away from here
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But even worse than this is the economic divide that is plaguing the country. While some people are filling up their pockets with the fruits of these scams, others are starving for even a meal a day. We are referring to the huge population of the country that is still residing in the slums. As per the government's own estimates, the number of people living in the slums is likely to cross 93 m by 2011. This is a whopping increase of 23% since 2001.
The main reason that has been cited behind this 'spectacular growth' is the large influx of people in cities without commensurate job opportunities as well as the lack of housing and basic amenities. The cities are fraught with higher cost of living as well as higher cost of housing, transport and education. Add to this lack of adequate housing land and also infrastructure and one knows why there is a spike in the slum population of the country.
The government now plans to work with the state governments to provide adequate housing facilities to slum dwellers. But we ask, why were these provisions not made earlier? Was it really more necessary to sell land for luxury homes at exorbitant prices? It must be remembered that these land sales are what led to the birth of so many of the current scams.
It is a matter of pride for us when we are counted amongst the top growing nations in the world. But it would do the government good to remember that the country would grow only if its people do. And the people include even the poor, not just a handful of the elite few.
Do you think the government has done enough for the poor segment of the society? Share your views.
Fortunately for investors, the IPO pipeline for the Government of India is choc a bloc this fiscal. And many more issues are lined up. But do all of them come equipped with the same quality as say Coal India or MOIL? We have our fair share of doubts. Take for e.g. the impending FPOs of ONGC and IOC. There is no doubt that both these companies are also titans in their respective fields. But it is the Government's repeated interference in their business affairs that makes predicting their future a difficult task. Thus, these issues are a pointer to the fact that investing in Government IPOs is not a one way ticket to riches. Picking and choosing would indeed yield better results than investing just blindly in the so called Public Sector Undertakings.
We beg to differ. More stimulus will only lead to more printing of paper money and hence, a fall in the value of currencies. The UN believes that the key to recovery is an international agreement for a coordinated stimulus. But because there has been a lack of the same, the organization has been compelled to lower projections for US and global growth in 2011. The world economy is expected to grow by 3.6% this year and slow to 3.1% in 2011, according to the UN. Similarly, US projections for 2010 and 2011 were revised downward to 2.6% this year and 2.2% for 2011. Europe is also in a precarious state as debt issues have loomed large. Indeed, it will be a while before any full fledged recovery emanates either from the US or Europe.
The rise in Chinese demand could further inflate gold prices. Bullion hit a nominal all-time high of $1,424.10 a troy ounce last month. But adjusted for inflation, prices are still far off from the 1980 peak price. Chinese total gold demand rose last year to nearly 450 tonnes, up from about 200 tonnes a decade ago. Analysts anticipate a further leap this year, putting the country within striking distance of India's total gold demand of 612 tonnes in 2009.
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