Back in February, the Indian media had acquired a hysterical edge, dishing out story after story of a looming economic Armageddon; of collapsing growth and of a meltdown in India Inc. This magazine had taken a contrarian view and listed out ten reasons why the India growth story will continue despite bad news from across the world. Now that good news is pouring from across the country, it is time to once again list those ten gospels that define India. They are:
- Since FDI accounts for less than 1% of GDP, a fall in foreign investments-even if that were to happen-will not make much of a difference.
- Falling exports will become a fact of life for a while; but again with minimal impact since India has the lowest exports to GDP ratio of major economies.
- In India, consumption accounts for 65% of growth while investments account for 65% of growth in China. So falling investments will impact India far less than China.
- The largesse doled out by the Sixth Pay Commission will ensure that millions of middle class Indian families will keep buying goodies. Sales figures across diverse sectors like electronics, auto, telecom and tourism bear this out.
- We talked about how the myriad welfare schemes launched by the then UPA government will have a strong impact on semi-urban and rural India despite corruption and leakages. The election results have shown that these schemes made the Indian voter happy-the way only money can make you happy!
- India continues to have the highest real rate of interest in the world and the magazine had clearly predicted-not that it needed any rocket science or wisdom that interest rates will fall. They are falling-though not by as much this columnist would like.
- Even as banks in America and Europe teetered on the edge of bankruptcy, Indian banks – with a few rare exceptions – were boasting of incredibly good balance sheets. Financial figures for 2008-09 bear that out with a vengeance.
- Even as others saw gloom and doom for India Inc., this magazine said that good Indian companies will in fact emerge stronger and maybe even make more overseas acquisitions. Look at what Bharti has done just recently with the South African telecom giant MTN. Look at the results announced by India Inc. for 2008-09. And look back again and eat your words for being needlessly alarmist and hysterical!
- Expectations in India are so low that even bad news is accepted with famous Indian equanimity. Barring overpaid fat cats, most middle class Indians have an almost genetic ability to do more with less. And they have been doing that since October 2008!
- The last ‘Gospel’ that this magazine had mentioned was the simplest and yet the most complex one to comprehend. It is called democracy and the innate ability of the Indian voter to prove all so called pundits, experts and psephologists wrong. India badly needed a stable government and at a time when doomsday prophets talked of multiple Prime Ministers, democracy delivered what India needed – a stable government that will not be blackmailed by “allies”.
I rest my case.