India's public enemy No. 1 - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster
PRINTER FRIENDLY | ARCHIVES

India's public enemy No. 1 

A  A  A
In this issue:
» Rising middle class key to rebalancing global economy
» India and China's fight for supremacy
» Changing consumption heralds changes in the oil industry
» Indian job market expected to double in 5 years
» ...and more!!!


---------------------------- Exclusively for Serious Investors... ----------------------------
We are so certain you will find huge value in our latest long-term wealth creating opportunity that we're offering you something for the first time ever -
A 365 Day 100% Money Back Guarantee. *
So, what is this service all about? Click here for full details...
* No terms and conditions apply.

--------------------------------------------------------------------------------------

00:00
 
Indians are an ambitious lot. And so is India. It is rather ironical then that our ambitions to move forward and progress at a fast pace have time and again been stifled by one indomitable monster - corruption.

It is a monster that has made a habit out of rearing its ugly head time and again. And it seems to especially make an appearance when we as a nation set any substantial target for ourselves.

Just two recent examples are enough drive home the point.

At the outset, Prime Minister Manmohan Singh said that India hosting the Commonwealth Games (CWG) would "signal to the world that India is rapidly marching ahead with confidence." When the organizers of the CWG recently called a press meet to talk about how prepared New Delhi was, it ended up instead fielding questions about how much they paid for toilet paper. The only signals the CWG have ended up sending out are that of mass corruption and mismanagement.

A while back, transport minister Kamal Nath set the ambitious target of building 20 km of highways in the country everyday. That intended pace has now come to a screeching halt. Why? No prizes for guessing. The CBI unearthed a scam in highway tendering in May. Since then, the authority has managed to award merely 2 projects spanning just 164 km. This roughly works out to a pace of just 2 to 3 kms per day. Dismal by any count.

Till when will the monster of corruption keep playing havoc with our dreams? And just why is corruption so very deep-seated in our country?

What do you think is the solution to the pervasive scams and corruption in India which are severely slowing down India's progress? Share with us your views or post your comments on our Facebook page.

01:12  Chart of the day
 
They say that age equals experience. And that with age comes wisdom. Today's Chart of the Day exhibits the age of some popular Indian large-cap companies. In a way, the longer the history of a company, the more the information an investor has to work with. He can see practical illustration of the company's business model in action, and the results it has been able to achieve therein. Afterall, seeing how a business has performed during past upturns and downturns in the economy does say a lot about the quality of a company's business.

Source: CMIE Prowess
Age calculated from the year of incorporation

01:38
 
China's latest claim to the second largest economic size in the world after the US is a historical landmark. The nation which is now competing with the US, held the same position after India centuries ago. But today China is not just an economic super power. It is also world's most-populous country, the biggest exporter, the biggest car market. In addition to being the biggest carbon-emitter and the biggest consumer of energy. An article in Economist that captures India and China's fight for supremacy caught our attention.

What was most interesting was the fact that China despite its economic prowess is an insecure nation. Its growing aged population and anti-Communist sentiments are seen as a major threat. India's democracy and young populace, in particular, scare the dragon nation. But we could not agree more with the conclusion of the article. That both India and China would be better off channelizing their resources together rather than competing with each other.

02:20
 
The Asian Development Bank (ADB) has released a report on the emerging middle class in Asia. It sees the region's rapidly rising middle class, led by India and China, to be the key to rebalance the global economy. A growing middle class, ADB thinks, will make these regions (especially China) more consumption-driven rather than relying heavily on external demand.

As far as the Indian middle class is concerned, ADB believes that it remains vulnerable to global economic shocks. This is given that over 75% of the country's middle class remains in the US$ 2-4 daily consumption bracket. As such, this segment is at risk of falling back into poverty in case a major economic crisis strikes.

We see India's rising middle class as both an opportunity and a risk. Opportunity in light of the huge consumption boom it promises. And risk in terms of the big unemployment challenge it can throw up.

02:58
 
Seasonal patterns of global crude oil use are changing with growing demand coming from China, India, Saudi Arabia, Brazil and Indonesia. The traditional peak season used to be the winter of northern hemisphere during January-March. But no longer. As per FT, this year the peak has already arrived due to consumption from the emerging nations. The new peak will bring about changes in the oil industry. Low demand periods allowed refineries to undergo maintenance. They helped to build inventories to meet peak consumption later. But now the industry will have to adjust the new refining and logistical challenges. The message is loud and clear. The world economic order has changed. Be it the sharp contrast in economic growth between the developed and the emerging nations. Or be it the use of basic commodities like crude oil.

03:35
 
Who would be the biggest beneficiary of India's growth? The answer is the people. More growth would obviously translate to more jobs. As per a leading recruitment agency, the Indian job recruitment market is expected to double in the next 5 years. India's job recruitment market currently stands at Rs 10 bn. As per the agency, this is expected to grow at 20% each year and double to Rs 20 bn in the next 5 years. This growth would be fuelled by increasing intensity of economic activity in India's smaller towns and cities.

04:00
 
Chinese businessmen have been long harbouring the impression that their Indian peers are not equal to them. This has compelled India Inc. to send out a stern message to the Chinese to change their mindset particularly if they want to enhance their growth prospects in India. Chinese companies have been told not to proceed with a 'perception of imbalance' and a feeling that Indian firms were less competitive than those in other countries. Moreover, the Indian industry associations are also prompting China to make its market more accessible to Indian companies in certain sectors. Take the case of pharmaceuticals for instance, which are highly competitive. These do not even figure in the list of India's significant exports to China. Same is the case with Indian IT. It has not yet met much success in the Chinese market. Will China bow down to this message delivered by India? Only time will tell.

04:37
 
After opening in the red, markets continued to stay in negative territory on profit booking. The BSE-Sensex was trading 31 points lower at the time of writing this. Stocks from the healthcare and consumer goods space witnessed some buying interest while IT and banking stocks saw some declines. Sentiments were negative in the rest of Asia, with all major markets in the red. China and Japan were top losers, down 1.7% and 2% respectively.

04:55  Today's investing mantra
"I have owned one stock since 1969, two since 1988 and one I started buying in 1986 or so. That's my portfolio. Six stocks. I once owned 17, but that was way too much." - Philip Fisher
The 5 Minute WrapUp Premium is now Live!
A brand new initiative of Equitymaster, this is the Premium version of our daily e-newsletter The 5 Minute WrapUp.

Join us in this journey to uncover the sensible way of managing money and identifying investment opportunities across various asset classes including Stocks, Gold, Fixed Deposits... that over time can help you realize your life's goals...

Latest EditionGet Access
Recent Articles:
Why Hasn't Warren Buffett Rung the Bell Yet?
August 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
How Unique Are the Companies You Invest In?
August 21, 2017
One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.
You've Heard of Timeless Books... Ever Heard of Timeless Stocks?
August 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Why NOW Is the WORST Time for Index Investing
August 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.

Equitymaster requests your view! Post a comment on "India's public enemy No. 1". Click here!

89 Responses to "India's public enemy No. 1"

C.P.Ayappa

Sep 1, 2010

Democracy is the umbrella that shelters the corrupt. May be because we (the people) started of as nation so full of "have nots", there is an inherent aspiration for wealth. Corruption is the direct result of such aspiration but without values. A very large section of population practice corruption...broadly categorized they include those with vested interests who want to corrupt the authority, the corrupt authority, their families who enjoy the benefits of ill gotten wealth and the hapless common man who will, when before an authority, be forced into corrupting the authority. And then there are the "touts" who are always looking for opportunities to network the above categories. Every anti-corruption agency works with its hands tied up. On many an ocassion, the corrupt police the corrupt. For example : the Department of Mines & Geology in Karnataka will have special squads to monitor illegal mining!! Why would there be illegal miniing if this department was straight in its dealings. We are staring at the results of what the ruling class (executive, judiciary, business houses) has created for its unsuspecting citizens over the last 50 odd years. Can we reverse the tide?? I think not - certainly not as a democratic republic. This might sound radical, but, a "revolution" of sorts is what would seem absolutely necessary. If not, 25 years from now we will still be exchanging notes on the subject.

Like 

Ravi Shankar R

Aug 31, 2010

It is not that Corruption raises its ugly head,"time and again" - Corruption has become a WAY OF LIFE, IN ALL WALKS OF LIFE....Be it in the Tax Depts (covers direct and indirect), Registration offices, Beurucrat's offices, Electricity & Water Depts, Municipalities, Telecom offices, you name it.... One needs to have sincere, honest, committed Officers manning the Govt Depts, Govenrments and Public Offices - in the absence of honest personnel, our Country's problems are only going to multiply manifold... As it is the extent of unaccounted money in circulation is said to be 100% of our GDP - not many countries in the World hv a GDP in excess of USD 2 Trillion Plus and India wud have been in that league, but for our corrupt politicians, who are served in their interests by the Officers in Public service...No patriotic person would like to see the likes of Kalmadi, Gill, Raja, Alagiri, Maya, Laloo, Reddy's and Khoda's still getting away scot free from the law of the land, for all the sins they have committed.

Like 

A.K.Varma

Aug 31, 2010

Recently the CVC had suggested a line of action to reduce Corruption- it was a lot of talk with no possible action.
All our laws are designed to encourage corruption.
There are only 2 ways to reduce corruption.
1- Judicial system must ensure speedy justice0 even if a few innocents are to suffer.
2 Any person found to have more assets than his declared income - the liability of proof should rest on him. In the mean time all his assets should be frozen and confiscated . If he cannot prove rhat the assets belong to him he must be jailed. SO far not a single individual has been jailed- and if this is not done no amount of laws will suffice.
Regards
A K VArma

Like 

Rajesh mahajan

Aug 30, 2010

Corruption is multi-dimentional and deep rooted world-wide driven by human greed and ambitions. There is need to make and maintain good regulatory mechanisms to monitor it. we also need to re-shape our human values as individuals. More importantly, enforcement of law by way of fast proceedings in court cases and strict punishment would definitely act as a detteren but the same is lacking.

Like 

loknath sahu

Aug 29, 2010

As my point of view, the role of young generation plays important role in the growth of ecomony and country. In India, the role played by Indian youngsters is a few. Behind this tale, there is the lack our education system, which not providing fundamental knoweldge that can help to bring prosperity.As a report, a person who has passed graduaton or higer study. they don't like to go on field like agriculture. Here most politician belong to the age of more than 55 years. To join any political party, you should have political background then your road will be clear. this is reason that youth are far away from politics. there are only used by politician for their purposes like strikes, campaign. This is one of reason that the corruption is palpable in India and sucking the growth of india.Further education is also reponsible for lack of growth played by women. Still there are many restrictions like sexual harrasement, men dominated family etc. But there are many example also which inspire indian women to break glass ceiling.To bring transparency and prosperity through stopping corruption is possible by adopting new technologies and establishing regulatory bodies. I would focus here that there are many regulatory bodies who controlling economy and adding growth history. for example RBI, SEBI, DCA and DEA. In this way , there should be regulatory system who can put eyes upon develpoment activities. If it would be possible,CWG corruption could be stopped.The acceptance of new technologies brings transparecny in the system. there are example like CCTV, Electronic Voting machine. After use of EVM, somhow we are able to count voting properly. The last but not least, if we improve, my country will improve. So first of all we need to stop ourselves from supporting corrpution as we are ground level from where corruption starts. Thank you.

Like 

stg

Aug 28, 2010

Whats the root of corruption? Government. Big government means big corruption. The only way is complete privatization barring the regulatory stuff. Ailine, railways, telcom, all the sundry industries and hopcoms should be privatized. There will be no corruption and even if its there it will be dealt with sternly. The government should get out of production and be only a regulator. And we don't need the ICS as well.

Like 

K.S.SRINIVASAN

Aug 28, 2010

Have you heard any politician or minister or a bureaucrat sent to jail or gallows for corruption. Our laws are too lenient to instil fear among our politicians and bureaucrats. Unless we have stringent laws, nothing will improve.

Like 

Vijay Nair

Aug 27, 2010

While most people respond with angry and sometimes helpless outbursts the only person who has touched on a relevant topic is Vikas. He has rightly pointed out education and Law as the bane of our problems. However, someone has to implement it effectively. Implementing something that is of national importance can be done only by a great leader - which we have not seen, sadly, since independence! If independence was the goal, then Mahatma Gandhi got that done. I have seen Margret Thatcher achieving and implementing the impossible in the 1970's in UK. The UK was a messy democracy where the sun set 5 times a day then, but the resolve of one great leader changed it all. Corruption is of grave importance but removal of that will only happen when our leaders, both high and low, are held accountable and institutions that can function without political interference are in place. The simple answer is we need a white knight, a leader great enough to mobilise opinion, support and implement what most of us know is required. We have some of well qualified (IIT,MIT, Cambridge,Carnegie Melon Scholars)leaders today some of whom, are not corrupt and know what is required to be done. But excellent qualifications alone does not translate into excellent execution and implementation of policy. Gandhi was for all practical purposes a failed lawyer but matured into a nightmare for the Britain. Leaders like that are not groomed in classrooms but emerge from the woodwork when society is ready. Columns like yours asking people to respond will probably stir some such soul to enter the center stage and set things right.

Like 

Prakash Madnani

Aug 26, 2010

The root cause of corruption is the menace of black money and until and unless Government comes out with a practical amnesty scheme and tax laws which can eliminate black money from the roots all efforts are useless. In the eyes of law and by current laws i do not think there is one single person who is honest to the core. Let the Govt. first raise the exemption level to 10 to 12 lacs ( so that the majority of citizens can live with the thought of being honest citizens )and tax all other incomes including agriculture and other exempted categories. For 2 to 3 years let Govt. slash the income tax rate to maximum 20% giving a window to people to wash away their ill gotten money and once this money is converted into white money let it be taxed reasonably so that there is no need for people to think of black money

Like 

Jatin

Aug 25, 2010

Corruption is no different than extortion!
Your honest efforts will have no results unless supplemented by corruption. It starts from morning with milkman and ends with you paying 20 to 30% extra to auto rickshaw driver with manipulated meters.
Everybody should insist for transparency in government activities.

Like 
Equitymaster requests your view! Post a comment on "India's public enemy No. 1". Click here!

MOST POPULAR | ARCHIVES | TELL YOUR FRIENDS ABOUT THE 5 MINUTE WRAPUP | WRITE TO US

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.

Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement

Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.

This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.

This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, the same may be ignored.

This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.

As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407