In my discussions with the various market participants in last
one year, I have realized that "drivers" and "domestic
workers" are perhaps the most influential reference points in their
analysis and forecasts of the economy.
I have heard many of them proudly alluding to stories how the
life in villages has improved in recent years. All the villages have connected
to highways through all weather roads. Everyone is getting free money to build
pucca houses. Houses in remote villages have got electricity and LPG
connections. Children are going to English medium schools. Everyone has a smart
phone and internet access. All have a basic bank account. Farmers are selling
their crops through nationwide electronic trading platforms. Millions have
people got their Ayushman (Health Insurance) cards and can avail free medical
treatment in empanelled hospitals, etc.
Many popular analysts, investment advisors and fund managers,
have famously narrated on social media, and also during public presentations,
how some of their most successful investment ideas and investment strategies
have been inspired by the discussions they had with their Uber driver on their
way to or from airport.
I fully respect the idea of having a frank conversation with the
"driver" or "domestic worker". However, the thought of any
such conversation resulting in investment strategy sounds mostly frivolous to
me.
I have also heard stories of development in the hinterlands from
the immigrants. However, I am unable to correlate their stories to their living
conditions in the cities, resistance to the idea of going back to the developed
and connected homes, and the conditions I witness during my visits to the so
claimed fast developing communities. The stories of drivers and domestic
workers sound distinctly similar to the stories narrated by Indian immigrants
living in foreign lands. Whenever they return to foreign lands after visiting
India for few days, they proudly narrate to their friends how the things have
changed back in India - the airports, the malls, drone photography in
marriages, broad highways, luxury cars, etc. But while narrating this they are
hardly imagining themselves returning back to India.
From the investment strategy viewpoint, I find a stark
disconnect between the concepts of economic development and economic growth.
The immigrants are mostly talking about infrastructure
development from a very low base. For them, no electricity in 50km radius to an
electric connection 7kms away is a huge development. Also, from having to walk
10kms to catch a bus to the nearest town to a bus coming to village once in a
day is massive development.
Whereas the analysts and investors are concerned about the
growth rate from tomorrow onward because whatever has happened till today, is
already there in the price.
My latest visit to some villages and tribal areas in central
India highlighted the following to me:
(a) Education and medical
amenities continue to remain very poor.
(b) Economic exploitation
continues to remain elevated. The "agent" is charging Rs50-70 for
every transfer of money from city to village. No one gets minimum wages paid.
(c) The roads are better
but these are far from being good. Electricity condition has improved but
remains far from acceptable level. Water availability remains critically poor.
(e) The house made even
from bricks are mostly Kutchha. These add noting to cement and steel demand.
(f) Mobile phones are both
boon and curse for the communities at large.
(g) The financial security
of an average farmer is no better than it was 10years ago.
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