Some food for thought
"You can never really go wrong if you take nature as an
example."
—Christian Dior (French Designer, 1905-1957)
Word for the day
Creed (n)
Any system or codification of belief or of opinion.
Any system, doctrine, or formula of religious belief, as of a
denomination.
First thought this morning
From media projections of Congress party leaders, it appears
that they have chosen alleged corruption in Rafael deal as their primary plank for
forthcoming general elections. Through this issue they are seeking to raise
many other issues like cronyism, unemployment, failure of public policy,
authoritarianism of BJP leadership, etc.
However, my discussion with number of people across eight states
of Uttar Pradesh (UP), Rajasthan Haryana, Delhi, Punjab, Uttrakhand, Himachal
Pradesh (HP) and Madhya Pradesh (MP), indicates that Congress Party has mostly
failed in convincing people about any wrong doing in the Rafael deal. At best,
it has (a) given few talking points to the local leaderships of Congress party;
and (b) made few neutral voters turn suspicious about non-fallibility of PM
Modi.
But this is not good news for BJP either. I found an
overwhelming number of people who believe that BJP has deliberately allowed (or
even manipulated Congress) to make this a primary election issue, so that BJP
is saved from answering uncomfortable questions on various important
socio-economic issues, where government's performance is being perceived to be
significantly lacking.
This is prompting many voters, who traditionally voted for
regional parties or Congress but supported BJP since 2014, to either return
back to their original fort or to the stronger regional party at the moment.
Despite recent victories in state elections, Congress leadership
is doing most thing wrong.
Chart of the day
Mistress must only serve the master
"Statistics is the mistress whose only job is to serve her
master."
(I am sorry for my limited knowledge of Her Majesty's
language and near illiteracy of modern liberal jargon. Nonetheless, I do hereby
solemnly confirm that I am not a misogynist and may not be condemned as such
for making the above statement.)
Now days, one is being overwhelmed by a myriad of statistics by
governments (center and states) and politicians. The data that is thrown on
unsuspecting people every morning invariably tries to project how much better
or worse condition of people has become during the regime of the respective
incumbent government. Everyone is presenting and interpreting the data to suit
his/her convenience and political affiliation.
In my recent travel to the hinterlands, I checked with many
people what they think about the data being presented by their respective state
government and the central government. Not surprisingly, most people rejected
this as mere propaganda.
Some people who parroted the data were invariably the booth
level workers of various political parties. Naturally, none of them could tell
anything beyond what the WhatsApp message forwarded to them by their masters
had stated.
The group supporting BJP thumped "the fastest growing
economy in the world with 7.2% GDP growth"; whereas the opposition people
highlighted Bangladesh 7.3%; Afghanistan 7.2%; Ghana 7.4%; Rwanda 7.7%; and
Vietnam 7.3%, etc. being ahead of India in growth rate. None of the people
could however explain what does GDP growth actually mean.
Some local leaders of BJP in Bhopal were instinctively very
agitated, when I tried to quell their claim of "bigger economy than
UK" by highlighting that we have 20x population of UK and make same amount
of GDP. It is like comparing two member family living in self owned bungalow in
posh South Delhi locality, earning the same money as a forty member family living
in a rented accommodation in a suburban village. This is indubitably bizarre
comparison. There is nothing to celebrate in this.
I specifically asked 62 people in Bhopal, Agra, Alwar, Rewari
and Gurgaon, "if given a chance would you want to immigrate to Greece,
South Africa, or Thailand? All of them answered in positive, firmly and
quickly, mostly without any second thought. Pertinent to note, on various macro
economic statistics, these places do not look any better than India.
If India was growing this fast and offered so much better
prospect, this should not have been the response! Amongst the respondents were
two booth leaders (Panna Pramukh) of BJP!
One of my dear friends, highlighted the following data points to
me last week—
India government spends 25% of its revenue on interest payments.
USA Govt spends only 8%.
India is a big outlier among BBB countries with DEBT/GDP ratio
of 68%. It has stayed between 65 to 69% for last 4years. The Government's claim
to reduce it to 60% (40% Center + 20% states) by 2023 sound impractical, as
currently states are over 25%.
Centre’s net tax collection after state devolution etc grew only
4% in 9MFY19, well below target of 19% growth set for FY19. Despite all accounting
jugglery and farcical disinvestment through book entries, the fiscal conditions
are not likely to improve.
The short point
I am trying to make is that investors must use statistics to their advantage
and not as a restraining factor. Take a view on an investment idea purely on
"business considerations" and then use select macro and micro
statistics to strengthen your conviction; and vice versa should never be the
case.
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