The most rewarding career path in India - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster
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The most rewarding career path in India 

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In this issue:
» The rags to riches story of politicians
» China, India to power global recovery
» Food prices surge 15% YoY
» Gold demand halves in the latest quarter
» ...and more!


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00:00
 
It is one of India's most mineral rich areas. It is also one of India's poorest regions. But that has not stopped some of its citizens from charting amazing career paths. We are talking about the state of Jharkhand and its governing class. As reported in a leading national daily, a rickshaw puller who entered politics now has two bungalows and a small time contractor who did the same now commands a fleet of cars. Of course, the cake is taken by a daily wage earner who eventually became the Chief Minister - Madhu Koda.

While one should not jump to conclusions while the investigation into the alleged Rs 40 bn scam is on, there are some startling numbers already in public domain. Mr. Koda declared a personal networth of Rs 2.4 m in 2005 which swelled to Rs 11.7 m in 2009. That's nearly 5 times the money in 4 years. Two of his erstwhile colleagues Enos Ekka and Harinarayan Rai have personal networths of Rs 14 m and Rs 32 m respectively as per latest declarations. These very politicians were in charge of development projects, which of course was the last thing on their minds. So, no slum development, no security measures and no roads in rural areas.

The sad part in all of this is that this is hardly an isolated case. Nor is it likely to be the last such instance. Politics certainly seems to be the most rewarding career path in India.

01:04  Chart of the day

Source: OECD Economic outlook, Nov 2009

Most observers now feel that the developed economies are well on their way to recovery. Also, no one seems to doubt that the emerging nations will lead the march forward. The latest confirmation comes from the economic outlook of the Organisation for Economic Cooperation and Development (OECD) which broadly underlines these themes. As the chart of the day shows, while the US will post positive GDP growth rates, it is China and India who are poised to accelerate due to strong stimulus measures. As for India, it feels that the economy has weathered the global downturn relatively well. It has also indicated that inflation poses a key challenge to Indian policymakers in deciding when to withdraw the stimulus and pay attention towards the burgeoning fiscal deficit.

01:33
 
Speaking of inflation, it is showing no signs of receding, much to the agony of the incumbent government. The magnified impact on food prices is making matters worse. This is because it is food prices that impact the common man the most. As per reports, food prices have surged nearly 15% YoY on the back of spike in cost of pulses. Fruit and vegetable prices have rendered them unaffordable for the common man. For instance, the price of potato has doubled while onions are dearer by 40% over last year. Sugarcane prices have also been at the centre of government and media attention for some time. Meanwhile, the opposition is leaving no stone unturned to draw mileage from the government's misery. We wish there was someone genuinely concerned about the common man!

02:14
 
The global economic slowdown while having an impact on Indian stockmarkets has also hit the real estate market in the country very hard. This has not only hampered the performance of real estate players but has also saddled their books with considerable debt. Take the case of DLF. As reported in a leading business daily, the company, which is the largest realtor by market capitalization, has embarked on a land selling spree. The company recently sold 500 plots of 200-400 yards in Madhya Pradesh, which earned it around Rs 1.1 bn at an average of Rs 800 per square feet. Not just that, more such sales are on the anvil. The reason for this move is obvious. The company has amassed debt to the tune of Rs 121 bn, which it is looking to retire through these sales. The outlook for the real estate market still remains choppy as buyers are still not willing to pay the price that is being quoted by real estate companies.

02:55
 
The wedding season has started in full earnest in India. And if you are the one who has bought a slightly lesser quantity of gold to gift to your near and dear ones, you've definitely played a part in pulling down the demand for gold by nearly half in the quarter gone by. Yes, that's right. As per a leading business daily, India's gold demand has fallen by 49% for the quarter ended September 2009 with the jewelry demand, which plunged by 42%, emerging as the key contributor to the fall. What's more, the near term demand trend in India is likely to be poor as high prices and poor monsoons and floods continue to play spoilsport. From an investment perspective however, the outlook is likely to remain positive as economic uncertainty and inflation concerns will continue to make gold the preferred asset choice for diversification.

03:31
 
Forbes' annual rich list for India is out. And as usual, it throws up some mind boggling figures of personal wealth. Topping the list is Mukesh Ambani with a lofty US$ 32 bn in his personal kitty. Close on his heels is Lakshmi Mittal with US$ 30 bn. The younger Ambani brother, Anil Ambani, is third with US$ 17.5 bn of wealth. The one seeing a striking drop in his position was Bharti's Sunil Mittal. This is on the back of his company Bharti Airtel seeing its stock price crash in the recent few weeks. But the most striking and real fact is this: as per Forbes magazine, the combined fortune of India's 100 richest is a whopping US$ 276 bn, almost one-fourth of the India's GDP! What to make out of this? You decide.

04:06
 
As per the latest projections of the United Nations Population Fund, India is going to be the world's most populous country in the next 40 years. Currently, China has the largest population with 1.3 bn people with India a close second with 1.2 bn. India has a higher fertility rate of 2.4%, as against 1.8% for the dragon nation. This rate is influenced by factors like literacy, awareness about family planning and reproductive health. These factors are within our influence. Hence, in our opinion, we must work on them on a war footing. Otherwise, all our other economic programmes will hardly amount to anything.

04:34
 
Meanwhile, after trading in the red for most of the early session today, strong buying activity led the Indian markets to surge above the dotted line. At the time of writing, the BSE-Sensex was trading higher by about 180 points or 1%. Buying activity was being witnessed in stocks across sectors led by those from the oil & gas, banking and FMCG spaces. As for global markets, Asia was trading mixed, while Europe began the day on a positive note.

04:54  Today's investing mantra
"Bad news is an investor's best friend. It lets you buy a slice of the future at a marked-down price." - Warren Buffett
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12 Responses to "The most rewarding career path in India"

V.S.Prabhu

Nov 23, 2009

From Rags to Riches: You have written only the sad part of the story. The sadest part is with all these crimes, these politicians go scot-free. As long as the immunity cover of the parliament remains, their numbers will swell in geomatrical progression and we common man will remain only a side spectator. Because, we vote on religious, communal and hero/heroin worship basis and not on the merit of the candidate. We should blame ourselves and not the politicians.

Like 

sudhanshu yardi

Nov 21, 2009

AS youth of a developing nation,we feel a lot bogged down by reading about such politicians .Mechanisms must be built in a way which shows more transparancy about assets on a regular basis and check their activities before hand and not after the scam as always.

Like 

Pradnya Ranshinge

Nov 21, 2009

"the combined fortune of India's 100 richest is a whopping US$ 276 bn, almost one-fourth of the India's GDP! What to make out of this? You decide. "
What an irony!! just 100 people - own 25% of the multibillion india.

Like 

Haresh prasad

Nov 21, 2009

It is really a very nice explanation on the economic and day to day problems arising in india
how so ever its over all nice statement

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Mahesh Soni

Nov 21, 2009

It is a beautiful, crisp, to the point commentary. No no-sense. Why others can not emulate it.

Like 

MDZIAUDDIN

Nov 20, 2009

PLS GIVE ME SUGGESTION ON GOLD IN COMMODITY MARKET

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sheo kumar lal

Nov 20, 2009

The politicians of Jharkhand are most attracted people towards money in the whole country. We see people of backward community in politics are more corrupt or they are picked by the agencies very much easily. because they have no akas to protect.

Like 

ramesh shetty

Nov 20, 2009

A 13 trillion $ economy growing @ 3% is still higher than a 1.2 trillion economy growing @ 8%?

Like 

Manoj Barve

Nov 20, 2009

The rags to riches story of politicians

It’s an extremely sad story. We are a nation of hypocrites. Most of our politicians are corrupt. A large majority of Government. babus are corrupt. And nobody knows how to handle the problem. Corruption is in our genes. We are always willing to pay for a “privilege” and break the rules, make a shortcut, jump the queues. Instead of accepting the level of our children we bribe teachers to get them admission in better schools than they deserve. We do not plan our trips in advance and take efforts to reserve tickets ahead of time, and bribe the ticket collectors to get a sit. We do not follow traffic rules - speed, jump red signal, park in no-parking zone and pay police to ignore the offence. We even bribe temple officials in order to improve our “darshan”-time to queue-time ratio at “powerful” temples. The crop of politicians like Koda grows fast in such a “fertile” soil. None else but we ourselves try to justify the acts of such criminals saying that – everybody does that!
Change cannot take place overnight. To start with, we should feel ashamed of our corruption. Then there should be debate over it. We should demand from media that they continue to report on such cases until the issue is resolved and the criminal politicians land in jail. How vigorously does media follow such a story? Another terrorist attack, another Swayamwar, another IPL and the media’s fickle focus gets diverted from serious issues.
In my opinion only a Presidential system with proper checks and balances, and speedy justice can reduce the corruption in the country to some extent.

Like 

P.V.Ranganathan

Nov 20, 2009

Dear Sirs,
The most rewarding career path in India is undoubtedly politics. You have made an entry about the politicians amassing wealth illegally in Jharkand. But here in down South, it has been converted from a Science into an art and politicians have amassed enough wealth "legally" which will be adequate for ten generations of their kith and kin. It used to be said we have 64 Arts but now we have 65, including the Art of Corruption. Art is a thing to be cultivated and encouraged, so can you eliminate it? And that money comes in handy because you can buy anything from jobs to votes! Votes will perpetuate the corrupt politicians, so they will continue to practice and propagate the 'Art'. So much so, every politician can call himself an Artiste and so no one will get caught, much less punished. God save India, if He can!

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