"When people ask for
time, it's always for time to say no. Yes has one more letter in it, but it
doesn't take half as long to say."
—Edith Wharton (American,
1862-1937)
Word for the day
Fenestrated (adj)
Having windows; windowed;
characterized by windows
Malice towards none
Has RaGa learned from his
past mistakes and become modest, or he is just faking it?
First random thought this morning
Cricket is one thing in which India has consistently improved its performance
over last decade or so. IPL has certainly played an important role in this.
While many have criticized it to be a symbol of the European burgeon culture;
the fact is that it has allowed lot of lower middle and poor class people to
aspire high and fulfill those aspirations. The constitution of various current
Indian cricket teams would stand witness to the egalitarian effect of this
phenomenon.
Another thing that need to be noticed is that how veteran
Bollywood actor Amir Khan has cracked the Chinese code. His recent films PK,
Dangal and Secret Superstar have done exceptionally well in China, beating many
leading Hollywood releases.
The government may want to take some lessons from these two
success stories.
For investors, it is important to take a note of the red flags
that are too conspicuous and could have serious repercussions on the
sustainability of the economic recovery and hence corporate earnings.
The Economic Survey for 2017-18 presented by the government
earlier this week holds many of these red flags but stops short of raising
them.
It would be pertinent to notice these red flags and review
investment strategy in that light.
Red Flags
It is widely accepted that Indian economy is recovering, albeit
slowly, from the disruptions created by demonetization (November 2016) and
implementation of GST (July 2017). The GDP growth is forecast to recover from
below 6% in FY17 to more than 7% in FY19. At this rate, India will be the
fastest growing economy amongst all major global economies.
The positives are all well known and appreciated by markets and
global agencies, as the entire government machinery is busy marketing these.
Nonetheless, for investors, it is important to take a note of the
red flags that are too conspicuous and could have serious repercussions on the
sustainability of the economic recovery and hence corporate earnings.
The Economic Survey for 2017-18 presented by the government
earlier this week holds many of these red flags but stops short of raising
them.
It would be pertinent to notice these red flags and review
investment strategy in that light.
Some areas of concern could be highlighted as follows:
(1) There is a sizable risk
that the Indian economy's effort to converge with developed economy may stall,
as the de-globalization take center stage.
(2) The fall in domestic
savings, when seen in light of changes in consumption pattern, changes in
credit profile, investment holdings, employment opportunities etc., is
worrisome. This is a structural change in Indian business ethos, that advices
against excessive borrowing.
(3) High real rates.
(4) Agriculture challenges.
(5) Rising ratio of
personal loans and loans to smaller textile and other micro enterprises in
overall formal credit.
(6) Lower potential growth.
(7) Scope for macro
deterioration.
(8) Rising emphasis on
markets, ignoring sustainability and social concerns.
(9) Demographic challenges.
(10) Political challenges.
From next week, I shall discuss all these red flags individually
in subsequent daily posts.
In the meantime, as you take a comfortable seat in front of your
TV set and get ready to hear Shri Arun Jaitley, the Union Finance Minister, I
pray all your wishes from the Union Budget for FY19 are fulfilled. Amen!
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