Saturday, August 24, 2013


 The economic situation of India is at the end of an era of mistakes which one has made during the growth phase from 2004 to 2008.  Corporate India took up the 8% GDP growth of India as an constant number violating the rules of economic cycles and investment cycles.  Indian economy has been on a skeptical mood from the inflation number right from 2010 end onward. They failed to control the inflation despite of making 13th straight interest rates hike but were very much able to accelerate the declining phase of the GDP standing today 24th August 2013.(For Rupee new level of trading read at the end).

They hiked interest rates which compelled the Indian corporate to borrow from overseas markets where interest rates were running below or equivalent to zero levels. Today around 60% of the corporate India’s borrowing are based on foreign capital. Well the other name of the this form of capital is cheap money which was placed as an bet over the Indian corporate taking the 8% GDP growth mirror image in front. When the mirror became past history was never accounted. In between the current-account deficit soared to almost 7% of GDP at the end of 2012. Well how it will come down is not a task of us since we are common man and common man cannot rule the economic and capitalist game plans.

The risk of corporate failures and re rating of India is very much in the lines since external borrowing has not risen by much relative to GDP—the ratio stands at 21% today—but debt has become more short-term, and therefore riskier. Plummeting IIP numbers, deprecating to Rs 65 has all spooked up the failure risk of corporate India. I find a negative rating to soon hit Indian companies and GDP growth which would create the trouble more for all of us. Common man will suffer the pains of job cuts and  layoff which we might be tasting at our ends. I find that the whole system is being designed in such an way that UPA government gets a clear win position since whoever comes in 2014 would find it next to difficult to control the economic conditions of India.  Moreover I find that in the coming months once the elction dates are announced the Indian economy would be dead for couple of months and extensive betting business would find a significant growth.

The reasons I find India might get a very hard rating since total financing needs (defined as the current-account deficit plus debt that needs rolling over) are $250 billion over the next year. India’s reserves are $279 billion, giving a coverage ratio of 1.1 times. Well by the time I finish my writing I would be dumb founded since more research numbers I am getting the ink of pen is getting dried very fast. The government has pushed up the diesel and petrol prices just to maintain a favorable balance of ratings. But that’s too spooking up the inflation despite of a healthy monsoon.

Consumption theme has been ruling India but now it seems people are more concerned for savings rather than investments and borrowings. My friends are busy in cutting down the loans which they have taken for properties and cars etc since cost of lending is going up and majority of the loans are flexible ones. At the end I find doctors would be making more money since mental pressure from all angles of the life would force us to visit doctors. Today it has been proved that inflation control mechanism is very much useless and primitive method. It has damaged the Indian economy and now its damaging the individual life from job cuts and layoffs. Well where the sensex and nigty would touch can be predicted by an wild guess which is an correct guess. For rupee i find new fixed levels of trading which would be above the 58 level.Reasons simple once which goes up eating the common people never comes down.


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