Looks like all the stories about India shining are soon to be history. Latest news about investors and rupee going down drastically tell the story that is different from few months ago.

I found this story quite interesting:

http://in.news.yahoo.com/over-india-story-article-070053155.html

Here are a few excerpts that caught my attention:

It all seemed to be going very well. Till recently, India was hailed as the future economic powerhouse and emerging super power. International industrialists, businessmen were moving to invest in India. They had confidence in India's democracy, rule of law and fairness of the Indian system even as they were aware of the corruption, corrupt practices and bureaucratic hurdles. Their local partners usually cleared those hurdles.

The budget of 2012 opened a Pandora's box by bringing in legislation on retrospective taxation, and GAAR (General Anti-Avoidance Rule) mainly to fix Vodafone. Why so in the face of judgment by the Supreme Court of India is the question that the world is asking of India.

By their lack of foresight or an understanding of the world of international finance and investment, the Indian leadership has created a crisis that could have serious repercussions for the economic health of the country. Who are these managers of Indian economy? Most of them great professors, people filled with theoretical book knowledge, politicians who have hardly ever worked in the world of business and industry. They are the experts.

An apt writing of Ayn Rand that was sent to me recently perhaps best describes the crisis that India's growth story faces. It reads "When you know that in order to produce you need to obtain permission from men who produce nothing, when you see that money is flowing to those who deal not in goods, but in favours, when you see that men get rich more easily by graft, rather than by work, and your laws no longer protect you against them but protect them against you, you know that your society is doomed". Is this what is now happening to India now?

India's middle class was the envy of the whole world till recently. All of a sudden, the fall of the rupee, rising prices and rising inflation all seem set to destroy a large section of that middle class- the families that earn between Rs.10,000 to Rs.50,000 per month. Has anybody worked out the impact of rising fuel prices, rising inflation and depreciating rupee has on these families? They are doomed. And politicians of India cannot understand this, for they have hardly ever earned their living.

Today, India faces crises on multiple fronts. The country has ushered in huge welfare plans which are no more than doles being given out in the name of MNREGA and so on. Instead of empowering the poor and illiterate to get jobs, the country is guaranteeing minimum number of workdays to the poor at the cost of the state. It is all very good if you can afford it. Printing currency notes under deficit financing and then distributing them only accentuates inflation. It still does not bring votes to those who fathered these ideas.

Any nation where the cost of energy is high can hardly ever grow rapidly. The cost of energy in India is among the highest in the world. Look at the pricing of petrol, diesel and other oil products that carry a huge tax burden. India's financial planners are using energy as a revenue-generating source. Indirect taxation carries a huge burden even for the poor of the country and here again India has one too many indirect taxes.

In the world today, there is serious crisis of confidence in India and its political system. India's image has taken a very serious beating in the light of huge corruption scams that have emerged in the last few years. There seems to be no end to them. A situation exists today wherein any foreign investor is afraid of committing any funds into the country. here seems to be total lack of faith in the country's regulatory system and its management. That faith cannot be revived by mere assurances. Some one will have to have the courage to take the basic first steps to restore order in the system.

Thoughts??

Be its any state, if its natural resources are not in an acceptable proportion to the population, it is bound to face very tough times when there is shift in the stream.

- Fresh water.
- Energy deposit.
- Cultivation land mass.
- Logistics
- technology.
- management
- morale & discipline of the society.
- defense technology.

Give your rank to any state based on this, a state that compromise this is bound to face more issues than the state that are good enough to stabilize and accumulate the above.

Take some examples.. Dubai, Iceland, Indonesia, Malaysia, Singapore. All these countries experience the roller coaster trend as and when the factors above adjust.


I leave this to individual to decide...

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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM

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Originally posted by JRF

- Fresh water.
- Energy deposit.
- Cultivation land mass.
- Logistics
- technology.
- management
- morale & discipline of the society.
- defense technology.

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Originally posted by ashedfc

Its the flow of capital which decides the fate of any nation..
As of now there's enormous pressure for capital to move towards USD, (this move is happening from all-over the world; even our own CDN is close to touching 96 handle per USD very soon). Given the current circumstances, its no surprise that there's lots of pessimism.
Although its a temporary phase, How much strength is in USD (is an untold fact, everyone knows US has the largest debt on the history of the planet). Once Eurozone solves its mess (either Greece leaves Euro, followed by other PIIGs nations; or they launch Eurobonds; or.... or.... etc.) & the reality will very soon set-in for USD to move down. & Capital flow will again rush back again to emerging markets.

India's story has just started, it has a long way to go.. there will be bumps on the way, but by 2045 India will be the largest GDP in the world..

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Originally posted by web2000

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Originally posted by JRF

- Fresh water.
- Energy deposit.
- Cultivation land mass.
- Logistics
- technology.
- management
- morale & discipline of the society.
- defense technology.

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We have all the above in Canada but still 70% of the people are poor.

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Originally posted by ashedfc

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Originally posted by san-hugo
Poor but not deprived !! My poor kid will go to good school come September, will have fresh water to drink, will not endlessly wait for sweaty power cuts to end and will perhaps require lesser morale and self security lectures and will live longer.

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This is what we call living in an illusion.. similar to the one called "Frog in a boiling water"

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Originally posted by ashedfc

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Originally posted by san-hugo
Poor but not deprived !! My poor kid will go to good school come September, will have fresh water to drink, will not endlessly wait for sweaty power cuts to end and will perhaps require lesser morale and self security lectures and will live longer.

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This is what we call living in an illusion.. similar to the one called "Frog in a boiling water"

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