|» INVESTING IN INDIA|
Prime Minister Narendra Modi should watch the film, Sophie's Choice.
Your money in my pocket!
The problem is that India's inglorious industrial families are generally not seen to be creators of wealth. They are beneficiaries of a re-distribution of existing wealth.
They view India's resources as a way to maximize their net worth, not that of society.
You need "proof" of this allegation against the chest-thumping, TV profiled wealthy Indian industrialist?
Here is a quiz.
Indian probably has over 100 individuals with a net worth of USD 1 billion or more.
Name me 10 people who have created USD 1 billion without any perceived or actual help or favours from the government?
Still scratching your head after 3 days of thinking? Give up?
Therefore, wealth creation in India is not about how smart you are but, rather, it is about how smartly you can access what belongs to the People of India and can be converted into your personal wealth!
Even the stock market seems to think so!
On January 7, 2009 the then Chairman and founder of Satyam, Ramalinga Raju, sent a fax to the stock exchanges that he had manipulated the accounts of Satyam to the tune of
USD 1.5 billion. He was, he wrote, getting off "the back of the tiger".
Satyam's share price slid by -72% on that one day and the stock market indices fell by over -6%.
The stock market was not waiting for any CBI inquiry into what happened. They gave their own verdict on the dangers of investing in potential tigers (Table 1) based on fears that there was such a massive accounting fraud and worried that:
Fast forward to May 16, 2014: the election-day victory of Prime Minister Modi, who single-handedly brought the BJP to power.
And see what the market is telling you in terms of what kinds of companies and managements are likely to do well in this new political environment.
Choose your choice.
Of course, what happens on the day when there is a "news break" may not pan out as the years roll on.
But does the knee-jerk reaction of the market on May 16, 2014 have a potential message?
Is Bad, the New Good?
And, given that India is not the best place in the world where entrepreneurship is born and wealth created out of thin air but a country where wealth is transferred from the People to the Few, Prime
Minister Modi has a choice.
Like Sophie, Narendra Modi is holding 2 children.
But there are 2 gates in front of him: one of Heaven and one of Hell.
He reached this crossroad funded by the hands of India's robber barons, many of whom have thrived ever since the regime of Indira Gandhi legitimised corporate corruption.
He has also reached where he is because of the faith -and votes - of 250 million hopeful Indians.
As the budget unfolds and as the long term economic policy is cast, it will be clear whether Prime Minister Modi is giving India a Heaven or the
Hell. We know where the Congress - and other political parties - were taking India.
Maybe Prime Minister Modi will make a better choice.
A choice that Sophie never had.
Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)