A historic day that can change our future - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster
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A historic day that can change our future 

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In this issue:
» 50% of low cost houses being siphoned off
» Is the revere of Padma Bhushan getting diluted?
» World's biggest census starts today
» Indian most popular car leaves the showroom
» ...and more!!


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00:00
 
India's potential workforce of 100 m set to join in the next decade can be the biggest reason for the economy's dominance over the US and China. The workforce is expected to be as technologically sound as the minds in the West. Equipped with much better English language skills than their Chinese counterparts. This is something even President Obama has warned the US citizens about. With 50% of her population under the age of 25, India's workforce is expected to account for 25% of the global workforce in 2020. Thus, India has a chance of becoming one of the world's most prolific talent providers.

However, the ground reality is in stark contradiction. Only one out of every eight school going children in India manage to get a college degree. Compare this with the ratio of five out of eight in the US. As per the Education Ministry, of the roughly 509 m workers currently employed in India, only 12% are skilled. Such is the paucity of skill development in our nation that all arguments of economic potential fall flat.

NASSCOM reported that a whopping 75% of the fresh engineering graduates in India are unemployable. The WEF's 2009 Global Competitiveness Index ranked India at an abysmal 101 (out of the 133 countries evaluated) for its primary education. However, a lot of this is set to change. Hopefully for the better.

From this day, April 1 2010, the Right to Education Act (RTE) is expected to ensure basic elementary education to every child in India. This can take the nation atleast closer to ensuring adequate employment to its youth. Ajit Dayal, our founder, who recently spoke at the Equitymaster Investment Summit 2010, pegs the requirement of daily job creation at 27,700 per day for the next 10 years! The task is certainly not easy. Reportedly, 1.2 m teachers are needed to implement the RTE Act to its core. Leave alone the other infrastructure. We earnestly hope that the government sticks to its promises on this one. If not, the fate of our future generation and our long term investments may be sealed.

01:12  Chart of the day
Deals like Tata -Corus, Hindalco-Novelis and the recent Bharti - Zain may seem to be taking Indian companies places. However, the underlying facts prove otherwise. Although these large deals have taken India Inc to the global map of foreign investments, the cumulative FDI of Indian companies are dwarfed by their foreign counterparts. As today's chart shows, Indian companies had invested US$ 77 bn in the form of FDI until December 2009. This was a third of the FDI by Chinese companies. And a paltry 2% of the FDI by American companies.

Data source: CIA

01:48
 
Have you ever wondered what has denied the destitute in India with a home despite various efforts by the government including the Indira Awaas Yojana (IAY) scheme? You may be already having the answer. As per a business daily, about half of the houses built for the impoverished section of the society have been siphoned off by others with the help of local politicians.

In order to put an end to this practice, the rural development ministry has been directed to release funds to states only after creating a list of intended beneficiaries (people living below poverty line). But even the list is full of flaws and with outdated statistics. Although there are suggestions to make the IAY scheme more transparent, we wonder if the government will come clean to taxpayers on this one.

02:20
 
Padma Bhushan Awards, India's highest civilian awards were given away recently. Outstanding achievements were deservedly rewarded in all fields save one. We did not quite understand the rationale behind awards given in the field of business. There did not seem to be a uniform pattern. Take the case of Mr K.P. Singh, the head of DLF, India's largest real estate company. Mr. Singh being given Padma Bhushan, the second highest civilian award, has come as a little surprise to us. Of course, he has been credited with a lot of landmark projects. But he has had his fair share of controversies as well. Secondly, his contribution to the society cannot be called completely self less. He must have put a roof on the heads of lakhs of people. But his wealth has also gone from strength to strength at the same time. Furthermore, he is yet to make even his minority shareholders rich ever since DLF went public.

Based on the evidence that we have at hand, Mr. Singh does not seem to have covered himself in quite the same glory as other people from other fields who got the awards have. Let us know what do you think of this.

03:05
 
Ms. Pratibha Patil, the President of India, will fill out the first census form today. A census which is being pegged as the world's biggest. And this will kick-off census 2010-11, which is being conducted this time around with the ambitious goal of building a 'National Population Register'. This register will seek to not only tally India's vast urban and rural population like the pervious censuses did, but will also create an identity database for India's 1.2 bn people. It will include photographs and fingerprints of all residents above the age of 15. Among other things, the census will have details of the use of cell phones, internet, reach of computers, banking facilities and drinking water usage of all its denizens.

The exercise will eventually culminate in each citizen being given an I-card with a unique number. This Unique ID will help bring an end to many weak spots in the system like the rampant duplicity of documentation. Incredibly, this will be the largest exercise of this type in the history of mankind. While the results will be out only in March 2011, it will serve as a great way of getting to know our vast country a little better. Infact, make it lot better! And in that spirit, also perhaps help corporate India in understanding its untapped customer base a little better over the next decade or so.

03:50
 
There was a time when Indians waited for three years before they got the keys for their Maruti 800. However, India's most popular small car (before the Nano) will no longer be seen at showrooms. The reason? The Bharat Stage (BS) IV norms will be implemented from today in 13 cities across the country including metros. And Maruti 800 will not be the only car that will be dealt this fate. Others that will be on their way out are Fiat's Palio, Tata's Indica, Ford's Ikon and Mitsubishi's Lancer Cedia. Interestingly, while 13 cities will be BS IV compliant starting today, the rest of India is only BS II compliant. Infact, cars plying the rest of the country will comply with BS II for another 6 months atleast before they are upgraded. The key here will be how the pricing policy of fuel pans out given that it is a politically sensitive issue.

04:25
 
After an enthusing start, the Indian stock market went on to add to the strength in the benchmark indices and the BSE Sensex was trading nearly 158 points higher at the time of writing. Stocks from the IT and commodity sectors led the pack of gainers. Smallcap stocks, in particular, seemed to be finding favour as the BSE Smallcap index topped the sectoral indices with gains of 2.3%. Other Asian markets closed largely in the positive with Indonesia leading the gainers in Asia. European markets have also opened on a positive note.

04:45  Today's investing mantra
"The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer." - Warren Buffett
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97 Responses to "A historic day that can change our future"

Radhakrishna Rao

Apr 6, 2010

Recently all civil Awards value are devalued including the Nobel Award given to President Obama. Now the Second highest Civilian Award of India is bagged by Big Money Bag. It is fit case to refer to Right to Information Act for finding the minimum requirement for such Award.

RK

Like 

HIMA

Apr 6, 2010

IN INDIA ANYTHING CAN BE BOUGHT INCLUDING THE HIGHEST CIVILIAN AWARDS Bharat Ratna too if you have enough money and contact with UNSCRUPULOUS MONEY MONGER POLITICIANS WHO ARE SHAMELESS

ONE CAN OBSERVE
SAI ALI KHAN Eligibility HE IS A MUSLIM WITH A NUMBER OF MARRIAGES OF WHICH MANY ARE BROKEN AND SOME GIRLS WERE CHEATED ALSO GOING TO LURE A HINDU ACTRESS OF RAJKAPUR KHANDAAN BELONGS TO ELITE RICH FILM INDUSTRY WITH INFLUENTIAL PARENTS.

KP SINGH ROTTEN WITH EASY QUICK MONEY OF REAL ESTATE BUSINESS MUST BE HAVING HIGH LEVEL CONTACTS. NO NEED TO DO CHARITY. HE MUST BE FRIEND OF A ITALIAN BASED IN EITHER INDIA OR ABROAD.

Like 

manoj kanani

Apr 5, 2010

D=do
L=let me
F=fool u

Like 

krishnamurthi

Apr 5, 2010

Yes you are right. Mr. Singh does not deserve this title. He has neither done anything worthy for the poor or downtrodden nor for the upliftment of economic status of his minority shareholders.

Like 

subash

Apr 5, 2010

As long as politicians and their cronies have a say with the awards committee these things are going to happen on a regular basis. It is high time that the awards committee have people of remarkable constitution and personal ethics as the key decision makers and be provided discretionary powers.

Like 

Raghvinder Joshi

Apr 4, 2010

Questioning the award being given to Mr. KP Singh by Mrs Pratibha Patil, the President of India.....Whose credibility are we discussing here? We are in fact questioning the cedibility of the electorate of India, (that is you, me and every Indian voter)and not so perfect Constitution of India.

Let us not take these awards very seriously. You are doing a good job. We, the investors trust you and it is your credibility that matters to us in safeguarding our investments. Raghvinder

Like 

V GAJJAR

Apr 4, 2010

THE AWARDS COMMITEE MEMBERS ARE SPINELESS AND ARE PUPPETS WHOSE STRINGS ARE OPERATED BY CORRUPT HIGLY PLACED GOVT/PRIVATE OFFICIALS AND POLITICIANS.
SUCH AN INSTITUTION SHOULD BE INTERFEARANCE FREE AND PATRIOTIC.MOREOVER NOMINATED MEMBERS SHOULD HAVE COURAGE TO SAY THAT THEY COULD NOT FIND ABLE PERSON TO NOMINATE AND LET THIS AWARD BE NOT GIVEN THIS TIME/YEAR.
MORE OVER TRUE DEMOCRATIC APPROACH BE FOLLOWED WHERE IN BROAD SPECTRUM OF PERSONALITIES BE INCLUDED WHO HAS A SERIOUS/SINCEAR INTENT TO DO THIS SERVICE TO THE NATION.
AS A TRIAL LET NO MEMBER BE PAID DIRECTLY OR INDIRECTLY AND STILL LET THEM DO THERE JOB.WHO SO EVER IS PREPAIRED ,INCLUDE THEM.RESULT WILL BE NEAR TO THE TRUTH.

Like 

Prabha

Apr 3, 2010

Another very surprising Padma awardee this year was Saif Ali Khan. What are his credentials? A divorcee ,romancing Kareina,Son of a father convicted under wild life act,a chequered acting career or just being son of a celebrity couple.

Like 

KAVIRAJ PATIL

Apr 3, 2010

By giving awards to these undeserving fatcats, the government is devaluing the awards.

Like 

Amrit

Apr 3, 2010

Now a dasy the government is doing whatever they like!I do not understand what criteria was used to honour Mr.Singh with such one of the highest award!

Like 
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