Wednesday, December 16, 2009


Despite very good Growth rate during this quarter most Indian are suffering from insecurity. Bellying all predictions of low growth rate Indian economy charged forward with a growth rate of 7.7% during this quarter. Naturally Government of India’s burocrats and ministers are happy at the turn of event. The finance minister though is very hopeful that growth for the year could be 7%, most of the economists are still not convinced.

According to a section of economist recession would not be over soon. The export is still all time low. The food articles have become costlier every day. Some of the essential commodities are selling at all time high. The selling price of potatoes was never reached so high in last one decade. It is selling at Rs 27 a kg now as against the last year’s price of Rs 8 a KG. Exports of jewelry and clothes have gone down. Only tea is maintaining its export status somehow. But there are strong possibilities that export figures may also go down further.

India's exports and imports have been in the red, as demand in both overseas and domestic markets nose-dived due to the global economic crisis. However, exports have been improving since April, even though it continues to be in the negative territory. "In about seven months we have recovered considerably," commerce minister An and Sharma had said last week. However, the dip in imports did not show any signs of improvement contracting in the range of 18 to 39% in the April-September period. The commerce ministry is reviewing the performance of the export sector and will soon be releasing an additional set of incentives for labour-intensive sectors.
Trade deficit the difference between exports and imports during October stood at $8.8 billion, nearly 26% below the figure of $11.73 billion seen in the year-ago month. In the period between April and October, India's exports stood at $91 billion, a dip of 26%, while imports were valued at $ 148.36 billion, a contraction of 29.6%.
According to officials in the commerce ministry, the overall reduced rate of contraction in exports seen in the past seven months indicate that the stimulus package and foreign trade policy measures arrested the rate of decline. A labour ministry survey showed that in the second quarter, export-oriented factories added over two lakh jobs, a first since the economic crisis hit India about a year back.
There may small glimmers of hope in the economy but most Indian citizens are not confident about their financial future and many think they are already poor, according to a new survey. Inflation is going up. The finance Minster said that inflation is not due to cost push inflation. It is due to non availability of food product in enough quantity. The government of India has announced that it would not allow Indian to starve. If required food product would be imported. Is it practicable? The shortage of food is not the problem of India alone. It is a global phenomenon. It would be impossible to buy rice in a cost effective manner since even China is trying to import rice from various countries. Even in America common people have stopped buying vigorously during this holiday season. The condition of market , during the Thanks Giving festivities, was disappointing.
More than 70 percent of Americans questioned in a Zogby International poll said they could imagine becoming poor or already think they are. Indian Consumer worry about sliding into poverty has already dampened the spirit this year . The gap between current difficulties and people's expectations for the future might be due to the economic crisis not being severe enough to fundamentally alter consumer behavior.
Despite inflation on food products share market is going up. But most investor in the market are FII. The market sensex have been fluctuating between 15,500 and 17,200. The market is not smooth at all. It is the
FII who are dominating the field. Indian investors have burnt their fingers while participating in volatile market. The undertone of the market is aggressive. In this aggressive and volatile market INDIAN INVESTORS are worried. They have not been able to recover their investment made during 2007. Our suggestion to risk averse investors would be to stay away from the market unless they are in a position to keep their money invested for at least for five years. Surprisingly debt market is also dormant. Banks are offering all time low interest rate. Equity market is volatile. Most Indian investors have failed to make money except for a few powerful traders. This is not the time for common people to enter in the equity market unless they invest through SIP method for at least for five years. Our research revealed that equity give best return not in short period but in the longer period. It is essential to keep it in mind that equity may not give any good return less than five years period. Indian investors are worried lots because they expected huge returns within a year . It is true that Indian middle class survive on hope without commensuration of patience. An American Economist aptly described this contradiction on following words:
"There is a contradiction playing out in front of us between hopefulness and hopelessness," said Jenny Darroch, a professor at Claremont's Graduate School of Management in California. This contradiction forces us to take steps which ultimately make us sad. Indian middle class investors, like their American counterpart are sad lots. The days are not far off when Indian market may fall further down. So do not invest in the market unless you can wait for five years.


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