The Sovereign Society's  Instablog

Despite fears plaguing the dollar and a questionable financial system in Western countries, the Indian subcontinent isn’t just soldiering on; it’s already thriving.

And we’re seeing this growth story play out in all the right places. This progress has gone further than the pre-crisis levels of September 2008 when it comes to Industrial Production.

Let me show you what I mean…

As you can see above, we’ve seen increase in both Industrial production and the consumer sector during the early parts of summer. This is an essential part of the growth story of India, and a key factor as to why India – and not China – will meet with the greatest emerging market success in the years to come.

You see, as I’ve discussed recently in my blog, one of the most formidably problems plaguing China has been low internal consumption.

This low consumption has forced China to become overly reliant on exports. As a result their fate is closely tied to that of the United States through currency pegs and a host of convoluted agreements and practices. India, meanwhile, has been far more self reliant except for its need for oil. And the internal consumption story continues to be robust in India.

In the latest release of data, Industrial Production relating to Capital Equipment is now on a tear.

In turn, that means Capital Goods – the biggest hurdle for growth of Industrial Production in any society – are now joining in and moving along at a speedy clip. This is an especially healthy sign, since it clearly indicates that Industries are confident of continuing growth in the economy and are spending on long-term capital equipment.

Within the industrial classification, manufacturing, mining and electric components each have shown double-digit growth rates of 10.2%, 12.9% and 10.6% on a year over year basis.

And this is not the only impressive headline coming out of the Indian economy. There are expansionary signs all over the economy:

• The August Infrastructure Index shows a robust growth rate of 7.1% YoY.
• The Purchasing Managers Index (PMI) printed at 55 for September (remember a print over 50 indicates expansion).
• Motor Vehicle Sales have continued to remain very strong, growing at 22% YoY.

In my opinion, these factors will mitigate any slowdown that the Indian economy would be facing due to a poor monsoon there this year.

Further, I continue to believe that the Indian Growth for 2011 will come in around 7.8% after a robust growth of around 6% for 2010. And that’s only the beginning…

Stay long Indian Rupees and Indian Economy!

Sincerely,

Ashish Advani
Editor of Dalal Street Insider