Economic Slow Down – Structural issue or Cyclical ?

There is a plethora of global Investments awaiting the right country positioned to deliver better returns and country equipped better to face the slow down and come out as a winner.. Those countries will attract mad Money from the global investors.. Every Next Article we read is about Slow down the economy is facing, Let’s evaluate the Slowdown and dig little deeper to understand why the slow down is more Structural than Cyclical..

GDP Slow down & Per Capita Income– Asia’s 3rd Largest Economy, slowing down has a deeper impact on domestic as well as global Business and employment.. Indian govt focus towards reducing poverty, and off tracked Govt’s focus on boosting demand, Protecting Investors, Corporates and Global Investors.. India’s GDP is growth at the slowest pace of 5%, it has pushed India behind Indonesia and many other such country. For $5 trillion by 2024, India will have to grow approximately 8% to 9% to reach to the desired targets.. and this is the Number Global, Domestic investors are waiting for.. Continuous Low GDP growth can downgrade India as an Investment Destination and can invite further trouble.. On the other hand, one of the major issues is India’s Per capita income. According to Bloomberg’s data India’s Per capita income is $2000/- for the years Vs China’s $9800/- and US’s $ 62,600/-. less than 6% GDP growth may not even help india to compete with countries such as Indonesia and South Korea, Indonesia’s per capita income is $3,900/- and South Korea’s $ 31,000/-

Fiscal & Monetary Tool –

Govt papers are yielding 8.3% yield and GDP is growing at sub 6%, a layman can also point out the desperation to bring the GDP numbers up or else the debt scenario can go ugly..

Monetary is the tool which Govt is using at the moment to boost investments in the economy.. Fiscal tricks may not work with low GDP numbers, as low GDP implies Low Tax collection, Slow Economy results in a down turn of Equities Market and disinvestment will never yield returns in falling market.

Reducing Interest rates and creating liquidity, also seems failing to create the demand as Global Trade war fears and Low sentiments in the domestic market is not inducing the Indian Inc to take a bold decision on corporate investments and spending even with low interest rates

Adding to the misery, GDP slow down can result into Low GST collection, which can become an agony for State govt to run the state efficiently and these tax collection plays a major role in State development..

Corporate Governance – India has recently got the title of Worlds Worst Bad-Debt pile. The prolonged Cash crunch in India’s Shadow-Banking NBFCs along with Bankruptcy Norms is hitting the country from within, these are the new white collar mafias, sniffing off Bank’s and Investors hard earn money. India’s corporate governance standards needs to be re-look again, it has created a big dent in terms of India’s Image, How these care takers hide 1000’s Of crore and report a wrong Balance sheet, Without Auditors, Promotors, Directors and board of the company knowing about this ?? strange ?

The list of Poor and Sub-Standard Management is now increasing every day, CG power is last among the lot, Nirav Modi, Kingfisher, DHFL, ADAG group Of companies. Govt have to replenish the Banking system again and again and Now finally have to start merging and cover the damage of these banks.. This is also being noticed by Rating agencies and global investors

FII continues the exodus, despite of govt taking prompt step to woe the Local and global investors, FII are not finding it enough to hold back Investment in India, Every day FIIs are net seller in India Equities Market. one of the reason is FIIs are unable to interpret the Macro picture of Indian Economy, why this perplexed situation, Indian Equities is undergoing more of the structural issues, which may not give the confidence to the FII to continue pumping money, Once these dark clouds gets away, we can see afresh round of Capital coming in..

we will read further in the article about the Structural issues in India.. According to Bloomberg In first 100 days of Modi 2.0 Capital Markets have lost 14lakh Cr of Wealth..

Global Factors – Global factors will continue to play their role, US – China Trade war is now back in action, Followed by the Global Debt markets witnessing negative yields for more than $16trillion. We also hear of global slow down and global recession, which is again breaking the confidence of the India INC to act brave and bold, go against the tide and get the point.. Gold prices are cooling off basis, US and China agrees for fresh round of discussion.

Investors & Traders should keep evaluating Markets with their own experience and stay updated and ahead to take rational Investment Decision.. Right set of consumption companies and high growth companies can set up the right mix of portfolio.. Right Investments in the troubled markets helps yielding most of return for the Brave Investors