Mahant!

Electricity consumption peaked in 2007 and was crossed only in 2012. % growth in electricity consumption peaked in 2007, and has still not recovered to its highs.   (click on images to enlarge) Savings rates drop across the board as inflation spikes up. It peaked in 2007. Since the investment cycles has not picked up dramatically over past 4-5 years, it can be assumed the loss in savings are directly the erosion in value due to spike in inflation. This assumption is validated in the second chart, as savings dip even though the GDP growth recovers. The employment creation (private sector + public sector) is just tagging along, though showing a upward trend, it is growing at far slower rate than needed. Private sector is growing very fast but public sector is still the largest employer but declining jobs numbers. Do we interpret this as India emerging out of socialist era into the capitalistic era? Another stunning data which reveals how poor India really is. Only 30% of Indian hous...

Browsing through many forums I am stunned and shocked to read many people advocate gold curbs and like. It shocking and it’s clear these people do not understand the intricacies of economics. They have just taken the Chidambaram-MainstreamMedia story hook, line and sinker about gold being the evil of everything bad happening right now. It’s an easy ploy for government to blame gold for the huge current account deficit but do these supporters really understand the repercussions of such a curb? Or a more pertinent question is do they really understand the repercussions of the curb on the common people of India? Looks like Chidambaram and government has effectively brainwashed large numbers of people to see gold as an evil perpetrator even to the extent to look into tapping the temple gold, jewellery and assets. People who know monetary economics know how futile it is to acutally curb a supply of a quasi-currency in order to boost the value of another currency. A small explanation (for t...

Yes this is NOT 1991. India is not in the same position as 1991! Why don’t people get this!! It’s just shocking! India, today, is in a much worse position than it was in 1991. Obviously to analyze this any better we have to start comparing the situations of 91 and present. 1991. After decades of Nehruvian policies and Indira Gandhi’s emergency and nationalizations and those infamous gangsterous licence-rajs’; there wasn’t much of an economy left in 91. Add to it the turmoil surrounding the Russia, Berlin-wall, Bush Senior’s Iraq war and the bust of HM bubble; there wasn’t much left. India was a closed economy, the bamboo economy! There were no foreign investors and those who came were frowned up on and/ or fleeced and sent away. Probably, the only foreign investments were the round-tripping of the money. The only foreign flows that came were probably from the World Bank-IMF aid funds or Japan / US donor funds. What do you get when you are in this type of an economic situation? India go...

Rupee fall has gripped the imagination of everybody now. People who were least bothered about FX are now asking for opinions or in some cases giving opinions. It’s good that the effects of the policy-paralysis of the government are finally being felt and are out in the open for everybody to see. For long time government has fiddled and pretended everything was fine. Thankfully, that mask has fallen off. There are two objectives of this post: 1. To state my opinion on RBI's action 2. To give my opinion on the Rupee depreciation RBI If you have been reading here, you well know where my bias lies. IMO, RBI is doing a good job. It is letting the market take its course, which should have happened a long time back. What however is a bother is a speed and quantum of depreciation is such a short time. 20% depreciation within a month is a bad management. To be fair, RBI was never in a position to handle these kinds of outflows. And it was clear to everybody, and RBI themselves have stated ...

I just sent out this mail to my clients and friends, thought it might be useful to many people here. Here are the relevant excerpts.:       But this last mail in this series is not about Nifty or Rupee, its about Gold. The question is, do we bet on gold now? I think, and saying this with proper disclaimers, its not good to bet on it for sometime - unless you are a trader. If you are looking to buy into the jewellery etc, you may want to hold on for there are possible chances that this may dip further, however entirely dependent on how Rupee behaves. But assuming Rupee stabilises after some more fall, the fall in gold prices, plus any lowering of taxes will bring the prices back to reasonable levels, say, under 30,000. Fundamentally, gold has added lots of Geo-political risk premium over past few days (Syrian situation) but apart from that there is nothing to help it. The Fed taper for instance is Gold-negative. But if the war-costs explode into further QEs,...

I have been quiet for a long time now (on the blog, that is) and that is not because we did not have any issues to talk about. There are plenty and plenty more. Everything that has words "Modi" seems to be an issue these days. Or cutting up states for few votes has become a norm, or the "rates" have to be negotiated and bargained. Lots of barbarianism and stupidity has passed through the stream in the days I was last active here. And hopefully I will take up some issues and be active, whenever I can find some time for it. *** So here goes the second of the many posts, first was an apology to Mr. Subba Rao .  One of the issue that I hotly debated here was the FDI in retail.  a) I was against it because of the way in which it was brought up.  b) I had also predicted, if that is the word, that they ventures will fail and there is not enough space to succeed as it exists (i.e. when they are confined to specific cities.) c) I had also alleged that typical of this governm...

I write this with a single purpose in mind - to apologize to Subba Rao, present RBI Governor. Though I do not 'take back' or anything I wrote but my perception of his working was clearly wrong, and has been wrong for at least past few quarters. This post in that sense is an acknowledgement of my views offline, into the same pages that I used to disparage him in past. The long story short, I was very critical of Subba Rao's policy early on especially when I thought he was unnecessarily and unfairly keeping the rates too high. I felt, the growth coming off the 2009-2010 were and will be squandered if the rates were too high. In this, I think I am vindicated in the position however with the somewhat managed inflation (which was runaway in most months) Subba Rao too has reasons to be vindicated. My diatribe came from the fact I could see the growth slowing across the fields I was working. With no policy actions coming from the government (on which I had given up back then!) I h...