Even after discounting the known anti-BJP bias of the author, the article is inconsistent and unconvincing at best. Nearly every point made by the author can be countered. Let’s try:
- After the great recession of 2008-09, economy bottomed out at 6.9%.
Thanks to a misguided stimulus. Led to devastating inflation for which we paid the price right at least till 2014 if not beyond. When inflation strikes, it is the poor who are hurt the most. Nothing to celebrate about ‘UPA bottom being higher than BJP bottom’
- The data will be revised downwards.
Prediction, so allow me to ignore it. Time will tell. In any case, he himself says 2018 will be much better than 2017.
- Three / four paragraphs are devoted to ‘there is no increase in global productivity after electricity & IC engine’.
But then he counters his own arguments by saying this does not apply to India. We can get huge productivity gains just by catching up with the West. I agree with this latter part.
- India created no new star sectors in the 2010s. No country has grown strongly without export growth.
Many sectors are growing – e-Commerce, logistics, transport, domestic defence, finance, aviation, etc. Export growth helps, but India also has a large domestic market, something with most other economies (with the exception of China) don’t. In India, economies of scale are possible even by just serving the domestic market, so dependency on exports is lower. And developed economies have also started recovering.
- A long wish list in the last para which starts with ‘…far better infrastructure and logistics’ and ends with ‘…and major reforms in the markets for land, labour and capital’. Then he says “These are not on the horizon”.
In all of these, we are better off now than before. Improvement is a journey, so one can always make an argument that things could have been even better. They could. But direction is more important than speed.
A problem with economists is that they think GDP is everything. People getting toilets for the first time, house wives graduating from stoves to LPG, youth acquiring skills under Skill Development initiatives, sharp reduction in infant mortality, widespread internet penetration in rural areas, availability of clean water and improved health care – all of these matter for individuals but does not figure anywhere on an economist’s radar because they cannot be correlated directly to “output”, especially of the organized sector. In fact, not much is being written about Skill Development in the mainstream media but I understand it is doing very well. Combination of Skill Development + MUDRA is probably keeping unorganized sector buoyant.
Another irony of the Keynesian economics is that savings are “GDP negative”. Huge savings that we have seen in nearly every field like defence, railways, power, internal security etc. – simply due to better governance and absence of high level corruption are all GDP negative.
I always take GDP numbers (whether good or bad) with a pinch of salt. To the extent that we are hostage to global situation, nothing can be done about it. Even domestically, there is no doubt that there is tremendous scope for improvement. But still, I don’t find anyone around me who is worse off now than he was 3 years back. That’s enough for my stock investing. Debating whether this is thumbs up or bottoms down is a matter of semantics, like whether the glass is half full or half empty. Unless the economy is at one of the two extremes – and I believe it is not - macros can be safely ignored.
I am therefore focusing only on company fundamentals.