cheeni: (Default)
In response to http://bullnotbull.com/archive/dow13k-1.html

This is a description that would fit the current state of the Indian economy rather well. In an inflation ridden India of first time frivolous consumers and debtors, it seems difficult to afford a decent urban home and a primary school education on an honest income.

The US maybe headed for a fall, but a similar fall in India will have rather more pronounced and dire consequences. The banking and financial system in India is weak, without being backed in any serious measure by economic or military might. A fall in property prices, the US economy or foreign investment is sure to bring doom both to the foolish debtors and the wise who stayed away from debt.

I don't have much confidence in our TV reporters, but one statistic I heard yesterday of 9 out of 10 car buyers taking out a loan to finance their purchase strikes me as about right.

I am currently shopping for a car, I have been so for the past several months. It has never been an urgent necessity for us, since my wife and I are rather content to make our way around on public transport after we sold our last car. Nevertheless, having made up my mind to put an end to procrastination, I visited the local Tata showroom for a looksie, intent on getting a cheap set of wheels.

I was amazed at the number of new cars being bought on a rather ordinary and not particularly auspicious and "god-friendly" Sunday. The sales personnel took a good 20 minutes to notice that I had entered the premises, which left me rather happy since I could wander around and inspect the vehicles without a nosy, ignorant salesman hindering my progress.

The salesman who finally accosted me was more interested in selling me a car loan, than in selling me the car. This to my mind strikes the most discordant note of all, the financial industry is so heavily leveraged on foolish property and consumable debts that it risks the economic stability of India.

The salesman was rather crest fallen when I announced that I had no need for a loan. The fall in his interest levels was rather dramatic as he abandoned me for yet another 15 or so minutes as he wrapped up some potentially cozy loan deal.

In the end my visit turned out to be in vain since I was rather definitely told that they had a policy against allowing test drives in the dangerous evening traffic.

By any measure the value that Indian cities seem to offer in lifestyle benefits, living space, property ownership and civilization seems rather scarce. On an idle Saturday afternoon I must have done some thinking for the idea that I pay more than half of my income in taxes has come to be rather firmly implanted in my mind. It's not hard to get at such a figure when you compute my basket of direct and indirect taxes - namely, income tax at 33.33%, sales tax on anything I consume at 12.5%, miscellaneous upstream taxes such as excise and customs, and property and road taxes.

For this I don't get medical insurance, nor do I get the right to live in a strife and peril free country. I have bad traffic, chaotic infrastructure, inadequate supplies of dirty water and a corrupt government that beggars contempt.

Were I to be rash enough to splurge on a house of my own at the present moment, it would cost me a rather large fortune, financed no doubt by usurious debt. Debt which I would possibly find hard to repay if the Indian economy were to hit murky waters. Debt that would be in vain were I to lose my land to some fancy record keeping at the land records office, no doubt inspired by the invisible and sometimes all too thoroughly visible hands of the land mafia. Debt that would make me look like a fool when the property price like water finds its true level.

Wise men have observed land is always a good investment for they don't make more of it any more! Under ordinary circumstances that would hold, but what we have in India is a spiraling inflation of urban land prices while rural land continues to lie untouched by the Indian economic miracle unless it has some potential of touching the margins of our ever expanding urban zones.

Cities unlike our planet with its arguably finite quota of land can be created by mere men in rather short time spans with a stroke of a pen. All that an Indian city seems to need is a good road or two, meager quantities of civic infrastructure and power and a legislation declaring some lands as urban and the rest as SEZs (special economic zones).

Which kind of brings me to the final note of doom that I think about during the summer power cuts since I don't own a car or I'd have those thoughts at the fuel pumps as well. Energy is central to our existence, and the smart economies have squirreled away these essential resources through a combination of forethought and action, whether it be through wars or industrial take overs backed by military might. India on the other hand has a rather tenuous grasp over a vaporware nuclear future that could go up in a puff of smoke in the next decade or so that it will take to deliver results, and a gas pipeline through the lands of a sworn enemy.

If all economic cycles are like the Titanic with rather fanciful notions of invincibility until the iceberg moment, the US economy travels in first class with access to life boats and priority off loading, and the Indian economy travels below deck, in the cargo hold, sure to sink with no access to so much as a sight of the stars on an icy night. Well, maybe that's a blessing too, we will never know what hit us.

Profile

cheeni: (Default)
cheeni

April 2009

S M T W T F S
   1234
567891011
12131415 161718
19202122232425
2627282930  

Syndicate

RSS Atom

Most Popular Tags

Page Summary

Style Credit

Expand Cut Tags

No cut tags
Page generated Sep. 26th, 2017 09:19 am
Powered by Dreamwidth Studios