Swati CA

Swati_CA column in The Hindu Business Line

Wednesday, November 07, 2007

Is greed the issue, or the associated consumerism?








Sorry for disappearing without a notice.



Your world can change in just 180 days. The way you see people, the way you thought things worked, the way you thought life would change…everything can transform and that is what I discovered in my sabbatical.


But when I look back at the days that I spent before attending the diploma in developmental economics, I think I lacked realism.


Models, you can make for just anything; but, for any model to work coherently, we need real situations and see whether they can stand the test of realism. “Economics with a human face,” I understand the meaning now...




7 Comments:

  • At 9:22 AM, Blogger Who Is Your Model? said…

    Dear Swati,
    Happy to see your column again and get connected with the reality of ""displacement".To me, it appears more as an issue of "rehabilitation and resettlement"and less of öppourtunity cost".Given our pathetic farm productivity levels - both in terms of land and labour - and the need to activate the manufacturing sector, the oppourtunity cost of pressing these lands into non-farm sector can not be faulted with, on the grounds of pure economic oppourtunity cost. The challenge today is to "produce more with less" again both with less labour and land. After all, agriculture accounts for less than 20% of our GDP but employs more than 55% of our labour force. Diversion of substantial segment of labour and a certain amount of land into non farm activities is not only unaviodable but an absolute necessity. India being late in this has one more constraint (or oppourtunity?). That is it has to do that without resorting to too much of chemical fertilisers.This doesn't however mean that there is no oppourtunity cost incurred. It is more in pshologial terms. The poor farmers are attached to their little piece of lands for their livlihood.THerefore apart from providing alternative livelihood oppourtunity, they need to be taken into the fold with proper sensitisation and education. Last but not the least is the over 100% increase in the scrips of oil and gas companies. This can't be looked in isolation. With incresing concern for global warming on the one hand and increasing prices of petroleum, a switch towards bio fuel is becoming strong. So the competition for farm goods is not just restricted at the land level. It started happening at the produce level now. And any planning and policy formulation exercises should factor this reality as well.
    Thanks.
    S.Gnanaharan.

     
  • At 9:47 AM, Blogger Swati CA said…

    Letter...


    Indian economy has not changed in the last 6 months for sure. Index is not a barometer of economy any more. Authorities at helm change the configuration of index in line with the market trend and piped approach. Index stocks does not represent the bulk of consumers, I mean the bulk investors. Media and broker cum speculators advice people only on the currency of situation. Viz: short term money making(?) techs. All are interested in making more business sense ( media gets advt, brokers gets brokerage) including FMO (which gets a continuous stream of inflows like service tax,STT etc)


    Like any sensational news (betting was done even on “the small child Prince who fell into a well in north India, whether would survive or not”) people are attracted to the currency of situation.


    The bulk FII money, …..Whether it is going to stay long and participate in India’s growth for the next 10 yrs or not…….. alone will determine the small investor’s investment down the years.


    In software euphoria investors lost 70 tot 90% between 1999 to 2001, even WIPRO”S market cap today is considerably less than the peak market cap in 2000 feb.
    In the last 18 months, who had invested in the “then much talked about sugar stocks”, an average of 75% is lost as of now……18 months back the talk of the market and town was about sugar story only..


    Stories will come and go, whether we will survive or not matters the most…


    History teaches us many lessons…….are there any listeners now?...also beg to acknowledge that our memory is short

    Krishnamoorthy.S
    Sr.Manager-Operation, MRPL, Mangalore.
    EN-8, MRPL Colony,
    Bala post,
    Mangalore. 575 030.

    0824-2279812

     
  • At 9:47 AM, Blogger Swati CA said…

    Letter...

    Dear SwathiCA,
    I am a long term investor in the primary as well as secondary equity market since 10 years. What I have observed is that in the last 7-8 years, the upper class and the middle class in India have discovered new ways of creating wealth through two routes ; STOCK MARKETS AND REAL ESTATE with a clear knowledge that both are riskier options compared to investments in Bank deposits and postal securities.Also the upper middle class segment has been experiencing rising income levels thanks to the LPG wave blowing across the country and are left with significant amount of investible surplus finding it's way into property and stocks. The returns from both these asset classes has been phenomenal in the past. It is not only because of fundamentals and liquidity but also because of increasing faith of the new breed of investors. As opinionated by our PM recently , the investment as an act of faith shaped by perceptions, expectations and past performance indicators if any.

    According to me Greed is a relative term of expression. Do we have anything called good greed or bad greed ? it varies from person to person and is contextual.

    However what I feel sad about is that the under privileged and the down trodden segment of people of India are not sharing the benefits of growing Indian economy. How long should they wait to experience the benefits or will they be permanently left out of this ?

    Lastly, stock markets are booming not only because of key fundamentals but also because of a strong belief that the new India will shine brightly in the next two decades shared by indians as well as by overseas investors.

    My response to your concluding remark would be : Greed fuels the investment decisions and noble intentions always take a back seat in the commercial world of money making !!!!!!!!!!!!!!!

    Regards,

    subramanya chandrashekar

     
  • At 9:48 AM, Blogger Swati CA said…

    Letter...

    2Good is the word for your article in the Business Line of 5th november. Three cheers for it. :-)
    good
    keep it up
    :-)
    Lt Ankur

     
  • At 9:49 AM, Blogger Swati CA said…

    Letter...

    Dear Swati,
    Happy Diwali. A great surprise to receive your column.Your topics trigger our thinking process.The nation is made greedy by the unregulated funds dumped by the FIIs in our country.Inspite of the SEBI ruling on participatory notes and the caution by the finance minister,the upsurge by the stocks defies reasoning.The investors are confused and the 100 percent return in six months makes them greedy.The economy of the country is definitely growing and the growth is not commensurate with the growth of the Sensex.It is upto the financial regulator and the government to take corrective measures sothat the small investors do not burn their hard earned savings.Let us not be greedy and wise counsel prevail.
    Rtn.R.Thesinghrajan,
    Sr.Development Officer,
    LIC of India,
    Ooty.

     
  • At 9:49 AM, Blogger Swati CA said…

    Letter...

    Dear Swati,
    Happy Diwali. A great surprise to receive your column.Your topics trigger our thinking process.The nation is made greedy by the unregulated funds dumped by the FIIs in our country.Inspite of the SEBI ruling on participatory notes and the caution by the finance minister,the upsurge by the stocks defies reasoning.The investors are confused and the 100 percent return in six months makes them greedy.The economy of the country is definitely growing and the growth is not commensurate with the growth of the Sensex.It is upto the financial regulator and the government to take corrective measures sothat the small investors do not burn their hard earned savings.Let us not be greedy and wise counsel prevail.
    Rtn.R.Thesinghrajan,
    Sr.Development Officer,
    LIC of India,
    Ooty.

     
  • At 9:49 AM, Blogger Swati CA said…

    Letter...

    Dear Swati,



    I have gone through your recent article in Business Line. It was amazing. You have touched the areas of concern.

    I don't agree with you on some points, especially on sen sex story.

    You have mentioned that it's the greed which is fueling the new highs on bourses and questioned the change in fundamentals within last 6 months.



    Few facts are as follows:

    1. The growth story fuels new highs on Sensex not the greed. (The earnings of the 2nd quarter proves it)

    2. The P/E ratio of Indian market is just 23 in comparison to that of China's P/E (40).

    So Indian market are not expensive and don't expect a downturn from here until and unless a global recession is on the cards.

    3. Due to globalization, all the countries are so interdependent to each other that a recession in one affects other. But, the growth story of India, despite the sub prime crisis proves that India can sustain a major setback.

    4. Till October, India is able to attract more FII investment than China. So, this will definitely help to attain new heights.



    From all these statements, it can be easily concluded that despite a bit recession world wide, India is one of the least affected and continue it's march to attain 9% GDP for this financial year(Acc. to forecast). Till now, other markets were more attractive. So, India was not the choice for FIIs.

    Reasons are:-

    Government policies
    Political instability
    Local upsurge (for SEZs, etc…)


    Now India will overtake world economies with in a decade and you might see the sensex on moon (Cheers)

    I will appreciate if you can share your views on this.



    Regards

    Rahul Dev Jain

     

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