IS COMMON MAN REALLY GAINING OUT OF THE ECONOMY????
It is time to evaluate as to how our economy is working and see whether common man in particular and the nation in general benefited.
Is common man really gaining out of the economy?
Soon all fuels - LPG gas and kerosene will be sold at market rates. Rs 87/- LPG subsidy gap will be bridged. That means customer will pay full price, ie, double of what they used to pay before subsidy began to be phased out in two years ago. So no respite from price rise and inflation is expected to continue.
Common man is also hit by reduction in interest rates as small saving interest rates are progressively brought down, the 10 basis points cut came on 1st July. The rate cut was further eased to 25 basis points which appears to help no body except the govt as her borrowing cost will come down after the rate cut. For the common man 10 year investment bond will yield less than 6.5% after the cut and a vast multitude who keep their money in banks would earn less. The buck does not stop here. According to Ministry of Finance the rate of interest of PPF is reduced to 7.8℅ from 8.0% in December 2016; Kisan Vikas Patra reduced to 7.6% from 8.7℅ in 2015-16; and Senior Citizen Saving Scheme interest rates are reduced to 7.5% from 7.75% for a deposit of 1 and less than 2 years, which was further reduced to 7.25% for deposit of 5 years.
The industrialists are hesitating to invest in projects and continuing cost cut, mainly jobs. According to Center for Monitoring Indian Economy, Lucknow (CMIE) formal sector lost 67 lac jobs between January and April this year 2017. Total job loss - formal and informal combined - has been 1.5 million. According to KE Raghunathan President All India Manufacturers Association representing largely Small and Medium Enterprises (SMEs) claims that there has been 35% job loss in informal sector.
The rosy picture of equity market we are shown that it is soaring, in fact it hides inherent fragility of Indian economy. The most revered financial experts, the chartered accountants and the professionals from the equity market will agree with me that 4 years ago global broking firm Morgan and Stanley put India into dubious group of 'Fragile Five' - Indonesia, Turkey, South Africa and Brazil - that depended on foreign investor for their growth. Now India is out of the club. For this India was appreciated by IMF Chief Christine Legarde for maintaining, as ever before, the confidence of Indian Stock Exchange in the investors if not only for the interest luring investment.
On July 25 the NSE's Nifty Index crossed 10000 due to liquidity fueled by both - domestic as well as dollars pumped in by Foreign Portfolio Investors (FPI).
Now here is the catch. Even govt also came down to associate herself in the speculative game. According to the reports of Ministry of Statistics and Programme Interpretation (MoSPI) Govt also raised the cap on FPI investment in debt instruments hoping even if equities become expensive the dollars will stay in local debt instead of flowing out of the country. In 2017-18 so far FPIs have invested Rs.107,269 crore --
Rs. 90,768 crore of it in debt. This cushion (ie the difference) rests entirely on returns from other global assets remaining lower than Indian assets. There is a risk. Govt's economic policies are never framed on risk and speculations but on concrete fundamentals based on data and statistical analysis. We are rather concerned if other economies especially the US start improving, the risk of capital flight from India may increase. It is high time the govt come out with schemes / policies to encourage private capital to start investing in projects that create jobs and livelihood. Cleaning up of Balance Sheets of banks should be the first priority and need to be capitalized enough to start funding the entrepreneurs again before the people give way to their patience and collapse under the weight of economy.Is common man really gaining out of the economy?
Soon all fuels - LPG gas and kerosene will be sold at market rates. Rs 87/- LPG subsidy gap will be bridged. That means customer will pay full price, ie, double of what they used to pay before subsidy began to be phased out in two years ago. So no respite from price rise and inflation is expected to continue.
Common man is also hit by reduction in interest rates as small saving interest rates are progressively brought down, the 10 basis points cut came on 1st July. The rate cut was further eased to 25 basis points which appears to help no body except the govt as her borrowing cost will come down after the rate cut. For the common man 10 year investment bond will yield less than 6.5% after the cut and a vast multitude who keep their money in banks would earn less. The buck does not stop here. According to Ministry of Finance the rate of interest of PPF is reduced to 7.8℅ from 8.0% in December 2016; Kisan Vikas Patra reduced to 7.6% from 8.7℅ in 2015-16; and Senior Citizen Saving Scheme interest rates are reduced to 7.5% from 7.75% for a deposit of 1 and less than 2 years, which was further reduced to 7.25% for deposit of 5 years.
The industrialists are hesitating to invest in projects and continuing cost cut, mainly jobs. According to Center for Monitoring Indian Economy, Lucknow (CMIE) formal sector lost 67 lac jobs between January and April this year 2017. Total job loss - formal and informal combined - has been 1.5 million. According to KE Raghunathan President All India Manufacturers Association representing largely Small and Medium Enterprises (SMEs) claims that there has been 35% job loss in informal sector.
The rosy picture of equity market we are shown that it is soaring, in fact it hides inherent fragility of Indian economy. The most revered financial experts, the chartered accountants and the professionals from the equity market will agree with me that 4 years ago global broking firm Morgan and Stanley put India into dubious group of 'Fragile Five' - Indonesia, Turkey, South Africa and Brazil - that depended on foreign investor for their growth. Now India is out of the club. For this India was appreciated by IMF Chief Christine Legarde for maintaining, as ever before, the confidence of Indian Stock Exchange in the investors if not only for the interest luring investment.
On July 25 the NSE's Nifty Index crossed 10000 due to liquidity fueled by both - domestic as well as dollars pumped in by Foreign Portfolio Investors (FPI).
Now here is the catch. Even govt also came down to associate herself in the speculative game. According to the reports of Ministry of Statistics and Programme Interpretation (MoSPI) Govt also raised the cap on FPI investment in debt instruments hoping even if equities become expensive the dollars will stay in local debt instead of flowing out of the country. In 2017-18 so far FPIs have invested Rs.107,269 crore --
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