Monday, June 8, 2015

Demographic dividend or EMI


-          Leo Tolstoy (Russian, 1828-1910)
Word for the day
Gainsay (v)
To deny, dispute, or contradict.
(Source: Dictionary.com)
Malice towards none
Will the government stop at Maggi?
Or should it?

Demographic dividend or EMI

Millions of reams have been used to write and publish about the demographic characteristics of India. Many stories, themes and strategies have been built around the young demographic profile of 1.25bn Indians.
Almost all these stories and strategies recognize the young Indian as a great opportunity - "Demographic dividend" for the Indian economy. Of course few of them have words of caution also. Failure to channelize this vast reservoir of energy into productive streams may not only dissipate the demographic dividend but also prove to be counterproductive in terms of widespread civil unrest and violent disruptions.
I have however not come across any presentation that classifies this demographic profile as the solemn accountability and responsibility of India to the world.
The global community has always valued the resource rich nations and expected them to behave in a responsible manner to preserve the global order.
The capital rich western world has been expected to help the poor and starved of the world. The world looked forward to them to fund technological advancement, preservation of cultural heritage, assisting global growth and development. Even after taking full cognizance of the allegations of imperialism and suppression, I believe that financially rich communities have worked for the betterment of human life by funding technological innovation, life science research & development, productivity enhancement, and development assistance to the economically lagging world.
Similarly, nations rich in natural resources like minerals etc. have been expected to prospect and exploit these resources in optimum manner to assist the sustenance and growth of the global economy.
My point is that now since India possesses the largest pool of prospective workers for the world, should it not be responsibility of Indian government to prospect, grow, and develop this resource for the larger benefit of the global community.
This is even more pertinent in the context of the current global financial crisis. In places like Europe and Japan the root cause of the crisis could be traced to the aging demographic profile. China is also like to join the club in a decade or so. Under the circumstances it is the responsibility of India to provide educated, skilled and trained workforce to the global economy.
A number of research papers and surveys have shown that (a) Child and mother nutrition level in India is sub-standard consequently child mortality rates are poor; (b) higher and professional education standards are extremely poor consequently a large number of Indian graduates are unemployable even in routine jobs; (c) There is acute shortage of competent scientists to scale up research and development (R&T) activities to make Indian businesses competitive at global stage.
"Skill India" and "Make in India" are noble ideas for human resource development. But we need to make sure that these do not end up prospecting and developing only blue collar low skilled workers. In that case India will not only fail in its responsibility to global community but also slither back into the lower orbit of economic development like in 1950-80.
Bears still hibernating
Since Sensex recorded its all time high closing level of 29593 on 3rd March 2015, it has corrected little under 10%. However, Midcap and Small cap indices are down about 5% during this period.
Midcap and smallcap indices has peaked almost one month later on 13 April 2015. Even if we count from their respective tops, these indices have still outperformed the benchmark.
This suggests we may not have yet entered a bear market as greed continues to top the fear of investors.
In the bear phase, historically we have witnessed material outperformance of benchmark over broader indices.
Extreme caution in mid and small cap stocks especially those having higher momentum and beta is in order. In coming weeks, this segment of the market may witness virtual crash and illiquidity.

 
 

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