This Post is being Provided as Guest Post By SAHIBA BIJRAL
What makes one nation rise and
another fall? Will India succeed or fail?
Every region in the
world has suffered a slowdown since 2008, and 2016 marks the seventh year in
the weakest global economic expansion cycle in modern history.
Also, the very important question ‘Is Bruit a part of global revolt?
The Trends that define global economies are Brexit. People want change is a key
message and who so ever comes in is swept out.
One should
clearly know the post crisis trend and the 3 factors that define post crisis
trend are –
The global anti-establishment wave and Brexit is a
part of this.
Secondly,
the world is turning inwards i.e.
trade collapsing from 8% to 0% so much less global GDP and protectionism is on
rise globally. The new buzz word is deglobalisation.In other words, Brexit is
deglobalization, not worrying in trade.
Third reason
being income equality is another
defining term of the decade. It is exploading before the crises only 1000
billionaries now it has been doubled so it has got worse since 2008 crisis.
People who are benefitted are the rich as easy money spread and when we look at what has recently
happened in voting pattern in Uk is based on the line- Show me where is wealth and I will show you
where is the vote. All the wealthy places in London in Uk voted to remain. Thus
it clearly shows that yes, Brexit is part of gloabal revolt.
In one of the New York’s top selling book ,” The Rise and Fall of Nations” is a tome. It clearly addresses the 10 rules
that makes difference between success and failure. This is discussed below
keeping in mind the rules:
Working population –
Today
30% population is
declining led by china in terms of working population so big working population
is falling. On the other hand, India scores well after Philippines. India has a
positive working age population index particularly when china is having negative
trend. Today, only two countries, Saudi Arabia
and Nigeria, have labor force growth above 2%. GDP growth is just 1.8% in
countries where the working age population is shrinking. Also increase in
working age population is necessary but not sufficient for economic growth.
Circle of
Life –
Every nation
has to goes four stages of birth and rebirth ie, Crisis then reform followed by
revival then complacency leading to crisis. At present, different countries
like India have looked for new leader. It has been seen that when leader comes
, a country gain 90% in first two years, 10% in next 3 years, next 5 years 0%.
Billionaires
matters-
When we look
at different countries billionaires in Japan is 2% being lowest ,China
being 5% , India and USA being same
at 15% and Russia has highest
billionaire to 18%. Moreover, inequality threat is top in India . In India the share of billionaire wealth is 30% from
corruption prone where you need government contact, licences, while the world
average in 25%. India made many billionaires through innovation and hardwork.
Also, Good billionaires create their
wealth in industries such as technology, manufacturing, pharmaceuticals. On the
contrary bad billionaires', are those industries which are more corruption
prone - often it can be real estate, mining. Every country is going to have
some billionaires from all these sectors but the balance is key and India is
balancing well. Moreover, Crony
capitalists are those creating wealth by government connections, are not doing
well. The stock market has gone up 50% between 2010-2015 but the value of the
crony capitalist companies have gone down 50 %.
Beware of perils of state-
There has been a big rush towards quality
companies over the last decade. In India, the share of the Public Sector Banks in the overall
banking system is 70%, the highest in the world. The average for emerging
markets is just 33%.India needs a strong private sector specially in banking
and important part to strike a balance between public and private sector banks..
New City-
The creation of
new cities is very important in the development of a country. New
India has a very less new city being 2 cities in kerala because of the
redrawing of the district map as
compared to china which has 19 new city. So, India as getting better
urbanization, needs to get a much better spread of urbanization.
Factories First-
India is not focused on manufacture as
30% manufacturing is done by China, Thailand, Korea .Only 17% manufacturing is
by India and 13% is done by brazil.
Private sector manufacturing is not
picking well in India and it is even below government investment.
Low
inflation sign of healthy growth-
High
inflation kills growth and in last two years India’s inflation is average. 90% economy of the world is in inflation and
because of Raghuram Raja, India finally has an inflation target. India’s inflation is moving towards emerging
inflation
Cheap is good-
For foreign
investment and export cheap is good. Less expensive countries being Malaysia,
India and Japan followed by most expensive country which is Australia, France and China.
Countries
that appear cheap attract Foreign Direct Investment(FDI). India amongst highest
foreign investment at 1.8% especially
after make in india slogan. Brazil
being 3% where average is 1%. Russia is very low. FDI has been a success story of India.
Moreover, locals are not taking money from India as much as earlier and India’s
current foreign account position is reassuring. Historically nation which
invest in manufacturing have high growth so economy rise by manufacture.
Kiss of
Debt for nation-
High debt
leads to slowdown nation where debt is increasing by over 40% in 5 years. India
has a reverse problem too as there is little private sector credit growth .
India has lowest and china has highest. China debt has risen, and now there is
big slowdown on horizon credit growth in India. Also, there is difficulty for
Indian entrepreneurs to get credit.
Terrible
attack on media- a hype watch
Country
slows down when nation is hyped, and as a result downturn follows. Decline
follows good cover stories and vice-versa. A good story has decline in magazine
and a bad story has rise in magazine. Also, the expectations from India is very
high.
To
summarize, India stands on ten factors
in following manner-
Positive Score-
1. People
matters.
2. Price of
onion.
3. Cheap is
good.
4.Kiss of
debt
Middle score-
1. Circle of
life.
2. Billionare
matters.
3.Factory
first.
Negative Score-
1. Perils of
state.
2.New city.
3. Hype
watch.
So overall,India
looks good relatively. India is on good side but India disappoints optimists
and pessimists. At the same time when looking at different countries it can be
concluded that more concern is on countries like China as it has taken more
debt compared to India , secondly Russia led in wrong direction as Russia not
doing well because of wrong decisions taken. Further European country like
France is ugly as it is very expensive country whereas Poland, Germany,
Phillipines looks good. Korea is highly manufacturing country so it ranks
middle. South Asia is turning for better. Bangladesh, Pakistan and
Srilanka is reviving. Moreover, Britian
share in global economy is declining and India and china is rising after
Brexit.
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