A lot has
been talked about the Indian economy. The sliding growth rate has concerned
many, so deep that, even a 6th standard boy is discussing this.
Every week, a new data point is sabotaged to prove the theory of India
declining. Economists on either side are jumping on the conclusion with their
wits and formulas.
As they
say, it's the sentiment that prevails over fundamentals.
This
article will shy the fundamentals for the sentiments of a common man. Let's
decode the market sentiment or a larger Indian sentiment –
Price
Delusion
Price is a
seller's assumption of value in the buyer's mind. The general sentiment is for
a price correction in real estate. Last few years witnessed a little
appreciation in real estate prices. The sentiments for price cut was looming
from quite a long, which led to fewer transactions and larger inventory. Price correction didn't happen and inventory halted the further circulation of money.
This decade
our inflation rate swung from around 12% to 2%. Many of the economists may
attribute this to poor income growth. However, with regards to common
sentiments, the following theory prevails –
-
The
buyer doesn't see that much value in the price offered by the seller.
-
This
generalized, buyer seeing the rooftop level of prices and not much returns on
further resale.
-
Inventories
are piling up, for example, during this decade, our food production growth rate
was almost double than our population growth rate.
Sliding
Growth rate
India's GDP
has grown by 5% in the last quarter. This headline was shared as if the
doomsday is near, unnoticing the few facts –
-
World
GDP growth rate is 3-3.3% while ours is 5%. So, our growth rate is 34% more
than the world average.
-
At
a constant price in 2011, we added $87 Bn to our GDP while in 2018 we added
$186 Bn.
*The GDP
growth rate of advanced economies put together is 1.8%.
Looking
for safe investments
India's
bank deposits have reached an all-time high in June 2019 it touched $1822.708
Bn, while in Dec 1998 it was only $153.672 Bn. Indians are finding bank interest
rates as a safe investment at the current stage. Should there be a better
opportunity, these savings may turn in a huge capital base.
Demonetization
and GST
Demonetization
and GST might not have yielded to their genesis. But post that, we saw a sharp
increase in the number of taxpayers. It slowed the transactions and income
generation from the shadow economy. As a
result, the march of price rise has halted a bit.
Let's
ponder a few questions on the current state of the Indian economy-
Is it a
price correction? The Indian economy is inching more towards a developed
economy? Will we remain to be market for the world or can we be the creators?
Falling income levels, perhaps no? Are we finding new ways of consumption,
perhaps yes? On what fundamentals, we are losing the growth rate?
Given the
strong savings base, Indian economy will always have an edge. As they say- Buy
when everyone is selling and sell when everyone is buying. This principle can
be handy at the current state. The price correction is defiantly there. Find
opportunities and stay ahead of the rest.
Disclaimer:
Most of us are drowned with the opinion of our favorite media house. My
objective is not to deter your opinionated world hence am not concluding on the
fate of the Indian economy. You are the better judge to call it as an
opportunity or a threat 😊.
Yours,
a
PS: I will
keep blaming mobile revolution for my grammatical errors, kindly excuse them 😊.
For further
digging on data sources, kindly refer the below web links :
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