WHAT is common between the Office of Profit, the GDP growth and stock market. Well, it is all about ?profit?. The only problem is that two of the three profit parameters have become most unprofitable?one for Congress President Sonia Gandhi, in which the government obviously has a stake and other for the hapless investor in the stock market. While, the government certainly does not have as much sympathy for the losing investor as for Sonia Gandhi, Finance Minister P Chidambaram should have realised by now, his folly by not trying to talk the market up.
The CSO figures showing over nine per cent GDP growth, thanks to recovery in the agriculture production in the last quarter of fiscal 2005-06 were lapped up on May 31 by Chidambaram who made all the efforts to make a virtue out of it more for himself and less for
the farmers who toiled hard to get a little improvement. But, the day Chidambaram, as the country'sChief Finance Officer (CFO) was trying to pat himself, the Sensex again tanked by close to 400 points and rout continued the next day so much so that the last thing that a retail investor wanted to talk about was the stock market. The CFO has found an easy explanation for each of the dives that the Sensex takes. It is quite easy. Put the blame on the ?global cues?, principal being the continuous jacking up of interest rates by the US Federal Reserve. Where is the so-called India growth story that Chidambaram, Commerce and Industry Minister Kamal Nath and Planning Commission
Deputy Chairman Montek Singh Ahluwalia kept talking about? Many of the analysts are now blaming the hedge funds for tanking the markets in emerging economies. The hedge funds, essentially trade through the participatory notes in which nobody has an idea on whose behalf they are operating in the market place. For all you know, some of the black money in the domestic system might be getting diverted to the stock market through the Mauritious route, aided by these funds.
The Reserve Bank of India has all along been wary of the hedge funds and the participatory notes. It was not all enthused by the hot money coming into India through the foreign institutional investors. The central bank wanted to rein in these hedge funds. But then, the North Block was rejoicing new Sensex highs trying to convey an impression about the India growth story and what not. The entire government joined in this campaign trying to woo the middle class till….. the middle class was hit by the Mandal resurrected. Whatever the outcome of the brave struggle by the medicos, the screaming headlines in the press has punctured a lot of the bull around the India growth story. ?The issue of reservations is indeed one of the most incendiary in Indian politics??, the London-edited weekly The Economist has said.
According to this publication, availability of quality human resource remains one of the key challenges for sustaining the global brand equity of the home-grown companies, especially in the IT and automobile sectors. Quoting an IIT study which shows that one-half of the seats reserved for down-troddens and tribal people are lying vacant, the magazine says that the fundamental failure of the Indian education is not discrimination in tertiary institutions; it is the inability of primary and secondary schools to produce enough qualified students. ?A shortage of well-qualified college graduates has become one of the biggest threats to the continued rapid growth of India'sservices and other industries and hence to the booming economy??, it says.
According to the survey, while on the one side there are not enough jobs, 70 million people will join the labour force in the country in the next five years. Currently 260 million people live on less than a dollar a day.