Saket Mundra

Indian Economy: The Road Ahead Looks Tougher than Expected

Dear Art,

I would suggest all to please read Reserve Bank of India's Quarterly and Yearly survey released in April. I hope following points answer your questions

1) I am talking about next year or so and you are talking about Long term (10 Years or so).

2) I am talking about current economic numbers, and you are suggesting about Demographics and anticipated growth.

3) ROE and ROC are a function of number of parameters including Leverage. I hope you have taken into account high leverages of some of the Indian companies.

4) Regarding Public Private Partnership - I suggest you please update your figures for construction of Roads and other Infrastructure in the last five years. Planning and allocating money is very different from execution on ground.

In the end, I would like to understand, why has the Indian Government and RBI lowering its GDP and other economic (Exports, FDI) estimates every 3 months over the last year?

Regards

Saket Mundra

On May 02 07:56 PM ART DAVE wrote:

> I THINK THE AUTHOR OF THESE ARTICLE ALONG WITH MOST OF EXPERTS HAVE
> TOTALLY FAULTY ANALYSIS.
> INDIAN ECONOMY IS A TRULY AN UNIQUE SITUATION IN INVESTMENT WORLD.
> WHENVER, THIS GOLBAL BUBBLE THAT STARTED WITH HIGHLY SUBSIDIZED
> (THROUGH TAX BREAK FOR 50 YEARS FOLLOWED BY FNMA GURANTEES BY US
> GOVT ON FINANCING) WITH US HOUSING WILL BUST ALONG WITH BUBBLE RECKLESS
> SPENDING OF US CONSUMER, THERE WILL BE A NEW WORLD LEADER THAT WILL
> EMERGE. MUCH THE SAME WAY USA EMERGED AS A LEADER AFTER WORLD WAR
> 2. PARRLALLEL WITH USA POST WORLD WAR 2 AND INDIA TODAY IS DRAMATIC.
> POST WORLD WAR 2, BRITAN AND WESTERN EUROPE WAS IN A HUGE DEBT MUCH
> THE SAME WAY US AND WESTERN EUROPE IS TODAY. USA AT THE TIME WAS
> THE LOW COST PRODUCER WITH ROE AND ROC (RETURN ON EQUITY AND RETURN
> OF CAPITAL) WAS THE HIGHEST IN EVERY INDUSTRY MUCH THE SAME WAY INDIA
> IS TODAY. USA POST WW2 HAD LOWEST DEBT COMPARE TO PEARS. BELIEVE
> IT OR NOT, INDIA HAS MUCH LOWER DEBT COMPARE TO USA AND WEST EUROPE.
> AND MOST OF THE DEBT IS INTERNAL AS OPPOSE TO CURRENT USA IS EXTERNA.
> SAME SCENERIO EXISITED IN FAVOR OF USA POST WW2. USA POST WW2 HAD
> THE MOST EDUCATED WORK FORCE (SPECIALLY ALL GERMAN AND RUSSIAN SCIENTIST
> MOVED TO USA). THE SAME EXISIT FOR INDIA.
> CHINA ON THE HAND LOT OF US DOLLARS AS RESERVE. THEY WILL SOON FIND
> OUT THAT IF THEY SELL OR USE LOT OF THESE DOLLARS, DOLLARS WILL DECLINE
> SUBSTANTIALLY. SO, EXACTLY AFTER THIS DECLINE WE ALL BE SURPRISED
> HOW MANY DOLLARS THEY HAVE. AND OFFCORSE, FLOW OF CAPITAL WHICH
> THIS AUTHORS TALKS ABOUT, THAT THERE WILL NOT BE QUESITONS WHEN CAPITAL
> WHEN ALLOWED TO FLOW FREELY, WILL ALWAYS FLOW TO MOST EFFICIENT ECONOMY-I.E.
> THE ECONOMY WITH HIGHEST ROE AND ROC. WHICH INDIAN COMPANIES HAVE
> ONE OF THE HIGHEST ROE AND ROC.
> USA HAS ALWAY MAINTAINED HIGHEST LIVING STARNDARDS BECAUSE CAPITAL
> WAS EFFICIENTLY DEPLOYED AND IT WAS EVIDANT WITH ROE/ROC. NOW INDIA
> HAS THAT ADVANTAGE. EVERY MAJOR INDUSTRY, INDIAN COMPANY IS LEADER
> IN ROE/ROC. OIL, REFINING OR E&P, METALS, MINING, ALTERNATE
> ENERGY WIND GENRATION, AIRLINES, AUTO, AUTO PARTS AND EVEN SUCH AS
> AUTOANCIALRY, IT; YOU WILL FIND ARE THE LOWEST COST PRODUCERS AND
> GIVING BETTER ROE/ROC.
>

Indian Economy: The Road Ahead Looks Tougher than Expected

Hello,

I have been long Nifty since March, when we hit the lows. I have been booking profits all this while, and carrying my positions with Trailing Stop Loss. I hope we all would agree, that stock market movements don't strictly follow economic activity.

Also, I wish to respond to CaptainJohann's comments. Though there has been demand in the rural segment and discounts offered on a large variety of products, the CPI (Consumer Price Index) has still not come down. Might be a good idea to visit our nearest super market or grocery store and ask about prices of vegetables, food articles. What I want to bring to your notice here is that the speculative price rise was nothing to cheer about, but it has very less to do with a common man's monthly expenditure and budget.

Demand for NANO must be seen in context with overall Auto demand. For the last three months the numbers reported by the sector have been quite overwhelming, given the environment.

But I still agree that price moderation shall really help and its a good sign. Nevertheless price moderation at the cost of jobs and growth is something I am seriously doubtful and cautious of.