Recently we are hearing across many news items related to rupee depreciation, Capital outflows, widening current account deficit, low growth rate in GDP etc. After hearing all this ,is there any real growth rate in the economy , what are the real parameters to measure the country's development, I am doubtful whether such parameter do exists?
Does GDP , inflation, growth rate, interest rate, stock market alone will reflect about the country's overall development?. where is the sustainability in all these parameters....are we bringing the items like income growth, education levels, social development, human capital, personal growth, health index, job creation rate infrastructure development for such comparisons...??
If we look into the parameters what we really use for analysis and comparison is more related to corporates/business entities growth in a country than the real human capital growth. If we are able to find out how much leveraged the overall indian business entities i.e. the debt levels, it is a guess that it will be highly leveraged considering the country is over leveraged, in that case following interpretation may be true to some extent. but this yet to be tested with data.
As entities are over leveraged, the main source of funding will be through banks and as always due to competition banks want to fund companies in all possible ways. Just commenting on one of the recent marketing efforts and possible impact. These days we can see banks (in general) are offering finer pricing for corporates based on external rating through which corporates get huge benefit atleast 400 bps where inturn there is no direct benefit for the depositors, who are primarily public. As a regular phenomena and from the facts we can say atleast 60% public funds in banks is routed to corporates and nobody can really have a 100% check on how and where these funds are utilised . Again this will be acceptable if the normal economic cycle exists where this funds are used by corporates for creation of assets and jobs to public, does this happen in case of all corporate entities where non performance is at its peak now ?? And most of the times we can see funds are pushed into the mouth of corporates even if they don't want, as banks do live on the interest margins.so the growth is concentrated to corporates more often, and as a country we see more of divergent or dissipated growth. more opinions to follow.
Does GDP , inflation, growth rate, interest rate, stock market alone will reflect about the country's overall development?. where is the sustainability in all these parameters....are we bringing the items like income growth, education levels, social development, human capital, personal growth, health index, job creation rate infrastructure development for such comparisons...??
If we look into the parameters what we really use for analysis and comparison is more related to corporates/business entities growth in a country than the real human capital growth. If we are able to find out how much leveraged the overall indian business entities i.e. the debt levels, it is a guess that it will be highly leveraged considering the country is over leveraged, in that case following interpretation may be true to some extent. but this yet to be tested with data.
As entities are over leveraged, the main source of funding will be through banks and as always due to competition banks want to fund companies in all possible ways. Just commenting on one of the recent marketing efforts and possible impact. These days we can see banks (in general) are offering finer pricing for corporates based on external rating through which corporates get huge benefit atleast 400 bps where inturn there is no direct benefit for the depositors, who are primarily public. As a regular phenomena and from the facts we can say atleast 60% public funds in banks is routed to corporates and nobody can really have a 100% check on how and where these funds are utilised . Again this will be acceptable if the normal economic cycle exists where this funds are used by corporates for creation of assets and jobs to public, does this happen in case of all corporate entities where non performance is at its peak now ?? And most of the times we can see funds are pushed into the mouth of corporates even if they don't want, as banks do live on the interest margins.so the growth is concentrated to corporates more often, and as a country we see more of divergent or dissipated growth. more opinions to follow.
