India was shining, rather boiling, by virtue of the flame lighted by financial goliaths. The flame was being fuelled by a defiant kid called hot money.
Hot Money?
It is billions of dollars of internationally mobile short term capital floating around like a gypsy in search of quick and instant gains. It makes an explosive entry into a nation with a short term view. The industry gets carried away and falls for it. They put their faith in it, plan long term projects, initiate their implementation and suddenly one fine day . . the gypsy has moved !!!
The gypsy has moved out of India and the industry is shattered. They are looking at RBI / government to inject a substitute.
Sadly!! It would not work . . . Why??
Because the money which came in had its origin in US, Japan and Eurozone who manage approximately 80% of global financial assets. India manages less than 2%, too little a corpus to perform efficiently the role of a substitute.
The government knows this and fortunately . . on second thoughts . . unfortunately owes it to only 2 of its ministers - the Prime Minister and the ex Finance Minister. Both of them have also given the solution -> Accept recession and Adapt by slashing prices. The message, however, has not come forth distinctly given the upcoming general elections.
The public statements were more or less hints like:
* Think long term as fundamentals are strong
* We are not insulated from global meltdown etc
Industry stalwarts are no doubt smart and understand everything. But in these times, greed exceeds smartness. They are overwhelmed by singular query
Que: Why should I charge Rs N/2 for what I was selling at Rs N yesterday?
Ans: Because, it was being sold for N/4 the day before yesterday. Right?
Well! I heard a No. I understand. It will take time to sink in and ultimately it would . . because the hot money . . has left.
No comments:
Post a Comment