India is rocking (NOT) ....and here's proof

In my last post "India is Rocking and here's proof" I had listed few instances to prove India is rocking and I immediately felt guilty.

Here's why ?



The above highlighted video is just a brief glimpse of the other side of India Rocking. No doubt India has grown by leaps and bounds but I think its back to a place where moving ahead is going to be challenging.

For foreign investors this is a Yellow flag. Yellow because I am still bullish about India (most of the challenges India is facing rite now is Infrastructure based or are historical reasons which have tried to make India's pace go slower and slower). India's rate of growth was touted at 10%, sure thing but inflation has started biting into this. Oil situation is not helping. And a substantial portion of India's GDP is going to be spent on subsidies (Fuel, farming etc.).

Agriculture has been the livelihood of majority of Indians. Guess what rapid growth and lure of fast money has made people (farmers, govt's) convert agricultural land into real estate for building more malls, businesses and what not. Where will that lead to rising commodity prices. Moreover the bottom of the pyramid (India) is made of the majority of poor people who struggle to make a livelihood. They need a mechanism to lift them from there, they need resources and someone needs to think about them before declaring India on a whole is winning. Rich are getting richer and poor are finding it hard to come out poverty. Its much better than it was 5 or 10 or 20 years back but India is not there yet. Much to do ..much more to do..

Infrastructure is still years behind. Who's going to push it. With this govt, I doubt. China has made legendary strides in Infrastructure but India is lacking there. Without Infrastructural support it would be difficult to maintain this growth rate.

Government has been pretty much dysfunctional in reforms area. There have been little or no reforms in India for past 4 years. Its a coalition and all the energy (after looking into personal interests and corruption) goes into maintaining a governing body. No work though.

Communists would be a challenge. Nuclear energy is curcial for progress, no progress made because no consensus reached.

And then there is that milestone. Elections. When all hell breaks lose. Agreed this is a victory dance for Democracy but India's is more of a chaotic democracy. With 100 languages , 30 official, several casts (and politicians ready to do every thing to please the castes), such diverse landscape who has time to think of progress.

Stocks: India's market have been a darling of emerging markets but how much of it was driven by valuations ? How much was bubble ? Need to be cautious there.

Overall still a Yellow Flag.

Ps: I own IFN to invest in India. IFN's top 5 holdings are:
1: Reliance Industries
2: Infosys Technologies
3: Bharti Airtel Ltd
4: Housing Development Finance
5: Reliance Communications Ltd.