Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
And miles to go... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jan 16, 2004

    And miles to go...

    Amidst all hue and cries over India achieving a 7%-8% plus growth rate in FY04, one generally tends to miss the point that this level of growth, and that too on a sustainable basis is not any option but a compulsion for the country. With the population increasing at a constant rate and, more importantly, there being a greater addition to the middle-aged working population, the need to create adequate jobs presses the need for the country to raise its economic growth bar and move beyond the 'Hindu' rate of growth.

    * India's rate as projected by the government;
    Developing Asia's rate as per the IMF.

    A look at the graph above indicates that post the beginning of liberalisation process in India, there were only a couple of years (1998 and 1999) when the domestic real GDP growth surpassed that achieved by nations in the developing Asia region (inclusive of India). This might be attributable to the fact that, during those years, the entire group of East Asian countries was under the throes of a severe economic crisis. Therefore, India grew relatively faster as it managed to hive off the effects of the crisis. This was mainly due to a combination of factors that characterised the Indian economy of those times - small size of capital inflows, the relatively lower convertibility of the Indian Rupee and, most importantly, the inherent strength of the Indian financial system in comparison to those of the 'Asian miracles' (Indonesia, Malaysia, Korea, the Philippines and Thailand).

    However, as the East Asian countries recouped from severe pressure of the crisis, their growth rates picked up and outperformed the Indian economy. Apart from this, during these times, India witnessed a phase of political (rapid changes in central government) and economic (sanctions due to the nuclear blasts) changes, and the economy had to bear the burden. Now, when things are looking up, and that the 'world is flocking' towards the Indian shores, there is a need for introspection and deep understanding of what we have achieved and what needs to be done to make our growth strong and sustainable.

    To sustain higher growth in the Indian economy and, more importantly, to provide the fruits of this growth towards the development of an average Indian citizen, the government has to play a very proactive role. We face dangers in forms of geopolitical uncertainties, increase in world oil prices, terrorism and the potential return of the SARS virus. Then there are internal concerns like red tapism and divide in the populace on communal lines. But this should not affect the government's policy-making initiatives to take India on a higher growth platter. While we are moving in the right direction in reforming our security markets (to attract greater Foreign Institutional Investors (FIIs) FII money), we ought not forget the equally (or more) important structural reform measures that would be of great help in inviting more of FDI inflows (that are of utmost importance for long-term growth).

    Now, the efforts on the structural reforms front would not only require considerable amount of patience, but also continued efforts. Be it institutional build-up, or infrastructure development, or sound monetary policies, the time seems to have come for India to pull up its socks and not give into laxity that the rapid growth of 2003 might bring (much like India's one day loss to Australia, post the solid test match performance). Creation of more jobs, thus resulting into acceleration of demand growth would bring in sustainability that we have been talking all around. And when that happens, India and investors in its growth story would benefit tremendously. But that would take a long time to happen. Patience pays!



    Equitymaster requests your view! Post a comment on "And miles to go...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    This Company Beat the Business World's 'Three Killer Cs' (The 5 Minute Wrapup)

    Aug 16, 2017

    And what it has in common with beating the stock market too.

    5 Steps To Become Financially Independent (Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Let's Hope This Correction Continues (The 5 Minute Wrapup)

    Aug 14, 2017

    Last week's correction is making a number of Super Investor stocks look a lot more attractive...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. 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

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 17, 2017 11:48 AM