[V.Narayan]

Originally Posted by dragracer567

Some of the facts stated in this video are just jaw-dropping - a reminder that our economic growth carries many challenges along with it, least of all, our attitudes towards women.

Of course, these statistics & facts might seem alien to us upper-middle-class lot, since we've grown up seeing women in our family and friends circle prosper in their respective careers, an unfortunate bubble we live in. Also matters by region, Tamil Nadu has a relatively higher rate of female employment due to a strong manufacturing sector while based on what I've heard from my friends, some rural areas of UP, Bihar & even Haryana are no better than pre-2017 Saudi Arabia. Economic growth won't fix everything I assume.

In most of India especially North, East and Central a large part of the farming work is shouldered by women. I wonder where that gets accounted for in studies like this one. The men control the "economic" end of the activity - harvest, transport to the mandi, selling, collecting the sale proceeds etc but the women do the heavy lifting or such has been my limited observation.

[dragracer567]

Originally Posted by V.Narayan

In most of India especially North, East and Central a large part of the farming work is shouldered by women. I wonder where that gets accounted for in studies like this one. The men control the "economic" end of the activity - harvest, transport to the mandi, selling, collecting the sale proceeds etc but the women do the heavy lifting or such has been my limited observation.

This was partially addressed in the video. The contention was that while women were employed in farming work in decent numbers but there had been a reduction in the workforce employed in agriculture in recent decades - I'm assuming due to better technology. While in East Asian economies, this surplus labor was absorbed by a growing manufacturing section, employment in the manufacturing sector has been stagnant while services (which also employs a lot of women & include selling in Mandi etc) don't have the scale to absorb the excess labor available. Much of the labor is being absorbed by the construction industry instead which according to the video doesn't favour women (But I've seen a lot of women in construction in India, though my exposure is too limited). Then offcourse, there is the fact that there is a general increase in unemployment.



I'm curious about another fact claimed in the video. It is claimed that most businesses in India don't expand to more than 9 workers since having 10 workers or more would expose them to arcane labor laws. I'm hearing for the first time though, is this outdated information?

[Samurai]

Originally Posted by dragracer567

I'm curious about another fact claimed in the video. It is claimed that most businesses in India don't expand to more than 9 workers since having 10 workers or more would expose them to arcane labor laws. I'm hearing for the first time though, is this outdated information?

No, it is not outdated. The moment you reach 10 employees, you have to provide EPF, ESI, Gratuity and implement POSH act. I won't call them arcane labor laws, but they are pro-employee laws. It will increase the paperwork, and doesn't let employers fly under the radar.

Most minimum wage employees don't like EPF because it takes a big bite out of their paycheck. I remember one young employee who wanted his salary offer told in net and not gross. He didn't want to know about taxes or other deductions.

[V.Narayan]

Demographics, Economic Growth, Unemployment & Investments.

Last month, global ratings agency S&P projected that India will be the fastest growing major economy in the world for the next three years. Similar numbers for India are a range of 6.7% to 7.1%. China's growth has been estimated to slow to 5.4% in 2023, 4.6% in 2024, 4.8% in 2025 and 4.6% in 2026-dragged down largely by its property market woes and slowing domestic demand. S&P said it expects Asia-Pacific's growth engine to shift from China to South and Southeast Asia pegged by India.

The decline of China, and at the same time the rise of India, has one common factor: population and its composition. Chinese are gradually shrinking in numbers and aging, which is bad for the manufacturing powerhouse which needs young labour to stay in the leadership position. India, on the other hand, has more than 50% of its population below the age of 25 and more than 65% below the age of 35. 7% of India’s population is 65+. In China that figure is 14%.

In India so many young people at work could propel economic growth …. provided, but provided we skill and train them and encourage investment in manufacturing otherwise a young unemployed populace is a reason for political unrest.

As per the Chinese government, their population dropped by 2 million people in 2023 in the second straight annual drop as births fell. The number of births fell for the seventh consecutive year reflecting a long-running economic and societal challenge for China. Similarly, the number of marriages in China declined for nine consecutive years, falling by half in less than a decade. In 2022, about 6.8 million couples registered for marriage, the lowest since records began in 1986, down from 13.5 million in 2013.

Realizing the full potential of India's labour market will primarily hinge on the upskilling of workers. Otherwise it could be a demographic nightmare.

Rules, red tape, reintroduction of the inspector raj in the last 10+ years are all holding back investment in India. FDI {foreign direct investment} inflows are a good bell weather indicator of the world's investors' confidence in any country. Let’s have a look. FDI figures provided by the Reserve Bank of India shows that gross FDI into India in the first half (April-September) of this financial year stood at just $10.1 billion or less than 1% of GDP. Net FDI was 0.6%. The last time it was lower than this was in the first half of 2005-06 when our economy was literally one third or one fourth of what it is today. Some of this is a reflection of lower FDI all across the globe. A lot of it is removal by India of Bilateral Investment Treaties with 68 out of 74 countries. These treaties allow a large foreign FDI investor to use a third country {in our case Singapore and UK and USA are most common} for arbitration to ensure that an incoming large FDI investor does not get locked down in local red tape, politics and constantly shifting Govt policies. This is a global best practice which for reasons I do not understand India is actively disengaging from.

Unemployment is another bell weather number. Between 2008 and 2015 our unemployment stood at or around 5.4% plus or minus 0.2%. Today it stands at 10.1% for the first 7 months of 2023-24 i.e. twice as high. Unemployment is the elephant in the room that few in the media talk about being preoccupied by other events with better TRPs and political safety. Let’s bear in mind unemployment affects the youth and typically these percentages are much higher amongst the youth than the whole working age population.

Like most I strongly believe we will grow to be the 3rd largest economy even in nominal terms by ~2030 with a GDP of $ 5+ trillion or thereabouts however we or at least our fawning media is tending to ignore unemployment, weak upskilling infrastructure and dropping FDI.

[PearlJam]

Originally Posted by V.Narayan

The decline of China, and at the same time the rise of India, has one common factor: population and its composition.

A growing population is generally good for the economy as a whole - more consumption, and more young people to contribute to the manufacturing and services sectors. This also keeps contributions into the government coffers flowing. It's an easy way of achieving growth, without a more nuanced approach. But this can strategy can come apart as our population growth stabilizes.

On the other hand, our large population (and population density) is causing extreme stress to the already scare resources and environment. Most of our cities are bursting at the seams. A lower per-capita income means that the masses (mostly the lower income ones) don't have a good quality of life. On the other hand, the tax money (hardly 4-6% of our population pay direct taxes) is getting distributed among a huge population, and this amount is hardly sufficient for education, healthcare, sanitation, housing, roads and water.

Every large industrial project invariably causes controversies with regards to land acquisition - because the land that these projects need is either densely inhabited, or is pristine forest land. Any arid and waste land is generally economically unviable.

So while I'm very happy with the growth numbers, as this is the main way in which we can bring a large percentage of our people out of poverty, I feel that the current growth model is unsustainable. This might to boomerang on us in the longer term. We need to quickly get to a low population density, high productivity orbit, before we run out of resources and land! (Ofcourse, there is the theory that we will never run out of resources, since the demand-supply pricing ensures that - but that's another topic!).

If we generally see the population density of rich nations, it is (and always has been) way below China/India. Ofcourse, we can say that the rich nations had a headstart in economic growth - they could provide for their people with nobody to question them on the resource and/or environmental impact at that time - and are now lecturing us on emissions and what not. I think India has been quite balanced in putting our foot down when it comes to resisting external pressures (like in economic subsidies as well as environment), when we need to provide for our people as the first priority. But we need to have newer ideas now for the next phase of growth.

[vamsi.kona]

While I am not an economist as such, two things concern me about tbe situation that India is in. While in the short to medium term our huge population of young working age adults will help propel the economy I am not sure how this will play out in long run. An economy like Japan and China, which ran and continue to run huge trade surplus and scooped in huge amounts in reserves are still finding it difficult to handle the care of ageing population. It is inevitable that India will face similar situation going forward as birth rates decline and current young population ages. Unless we plan for such thing from this moment on I am not aure how we will be able to handle that. I don't think any government and even economists are looking in that direction.

Being a non-techie I am not sure of the impact of AI and improving robotics on jobs. I already see huge impact on service sector where literally most companies have resorted to deploying a chatbots for initial customer interaction/query resolution. With further advancements, which are happening at a rapid pace, we may even see AI telecallers within the next decade. With the help of AI platforms people are able to create basic level apps, a threat to entry level coding jobs. But it is manufacturing that caters to most job creations apart from agriculture in India. If automation of production processes reaches a stage where robots can further replace humans at certain levels, then the huge population will be a curse as unemployed working age population can be a time bomb.

The above are still.things which are in our control to some extent. But climate change can be something which can have huge impact on us. The direct impact of course will be on agriculture which still employs the most by numbers if not by value. Not only employment adverse impacts of climate change can also impact our food security.

I am sure we will grow on the whole and become a major economy. I also strongly believe that no matter what there will never be a society where everyone has equal access to resources. However, with high population and the factors mentioned above I hope we won't be in a situation where even access to basic necessities like food and water doesn't become unreachable for many.

[SmartCat]

India has always been an "under-achiever" when it comes to receiving FDI. I don't think it is because of terrible bureaucracy. Because, we have seen automobile companies standing in line with their cheque books and states competing among eachother to roll out the red carpet. My theory about India's relatively low "FDI to GDP ratio":

1) For MNCs, India is attractive primarily from software & services sector point of view. And setting up a software company in India does not require large FDI.

2) Most countries in top 10 FDI are manufacturing powerhouses, that require comparitively larger FDI. Unless India turns itself into a manufacturing/goods exporting country, it is unlikely we will ever see $150 to $200 billion per year FDI.

3) India's corporate culture of NOT selling their companies too could be a reason. Our promoters would rather build the company slowly over their lifetime and then transferring it to their children. This drastically reduces the scope of receiving FDI, because the foreign investor will have to start a company from scratch in India. Which is a relatively risky proposition.

[anandhsub]

Originally Posted by SmartCat

3) India's corporate culture of NOT selling their companies too could be a reason. Our promoters would rather build the company slowly over their lifetime and then transferring it to their children. This drastically reduces the scope of receiving FDI, because the investors has to start a company from scratch in India.

I feel like FDI and FII there should be a third category for this case where a foreign entity buys out or takes controlling stake in a domestic company.

Currently I guess this is under FDI, but FDI in my opinion should be more abut the money that is invested directly in the real economy vs indirectly via buying a company. For eg the parent Hyundai funneling USDs into its Indian subsidiary to expand operations in MH or TN should only be considered as FDI vs say Suzuki investing in Maruti a decade or so back.

I believe a lot of countries that are top FDI destinations are only because of tax/ headquarter reasons. Even Walmart taking a controlling stake in Flipkart would be considered an FDI into Singapore when eventually those USDs ( ex the payment to VCs) are going to enter India.

[SmartCat]

Originally Posted by anandhsub

I feel like FDI and FII there should be a third category for this case where a foreign entity buys out or takes controlling stake in a domestic company. Currently I guess this is under FDI, but FDI in my opinion should be more abut the money that is invested directly in the real economy vs indirectly via buying a company.

Yes, but just to be clear:

1) When a foreign entity buys 1% of Infosys, it is NOT considered FDI. It is just considered as FII trading activity. There is no money flow into the 'real economy' here, because it is just a small % of shares changing hands. The seller of Infy shares in this example might buy shares in some other stock.

2) But when somebody like Honda Japan bought out Hero group shares of Hero Honda, then it is considered FDI, because it has a direct effect on business operations of the company. Also the seller in this case (Hero group) will not buy some other shares. Instead, he is likely to bank the money. As soon as foreign money enters and stays in the banking system, it is having an effect on the real economy.

[PearlJam]

Just after the news of India overtaking Japan in the sales of Passenger Vehicles + Commercial vehicles (https://www.team-bhp.com/forum/india...to-market.html (India beats Japan in global car sales in 2023; remains 3rd largest auto market)), we have now crossed another milestone:

https://economictimes.indiatimes.com.../107064803.cms

India’s stock market has overtaken Hong Kong’s for the first time in another feat for the South Asian nation whose growth prospects and policy reforms have made it an investor darling.

The combined value of shares listed on Indian exchanges reached $4.33 trillion as of Monday’s close, versus $4.29 trillion for Hong Kong, according to data compiled by Bloomberg. That makes India the fourth-biggest equity market globally. Its stock market capitalization crossed $4 trillion for the first time on Dec. 5, with about half of that coming in the past four years.

Equities in India have been booming, thanks to a rapidly growing retail investor base and strong corporate earnings.

Ofcourse, the vagaries of the markets means that this position is not set in stone, but nevertheless, it's a milestone, given where we started from.

[SmartCat]

Originally Posted by PearlJam

Ofcourse, the vagaries of the markets means that this position is not set in stone, but nevertheless, it's a milestone, given where we started from.

This is probably a sign that Hang Seng index is hugely undervalued. If we look at its long term charts, it is at 1997 levels. Hypothetically, if somebody had invested in Hang Seng index in 1997, their returns over 27 years timeframe would be zero.



I wonder why global investors are fleeing Chinese stocks. Perhaps frequent interference by the CCP (Eg: Jack Ma/Alibaba) is spooking the markets.

If anybody is interested, they can invest in Hang Seng via ETF or mutual fund. However, ETF is not very liquid, so MF is a better bet.
https://www.valueresearchonline.com/...ang-seng-bees/

[am1m]

Originally Posted by SmartCat

If anybody is interested, they can invest in Hang Seng via ETF or mutual fund.

Thanks! Always good to know about opportunities in other markets. Have any similar index funds opened for markets of African countries? (That are accessible to retail Indian investors.)

[SmartCat]

Originally Posted by am1m

Thanks! Always good to know about opportunities in other markets. Have any similar index funds opened for markets of African countries? (That are accessible to retail Indian investors.)

There is a roundabout way of investing in Africa, but it is not worth the trouble. If South African index goes up 30% in 2 years, but Rand depreciates by 30% against INR, you net returns will be zero.

Here is the full list of 'international funds'
https://www.valueresearchonline.com/...international/

There are specific funds investing in:

- US (S&P500 or NASDAQ)
- Western Europe
- Japan
- Taiwan
- Brazil
- ASEAN region
- China

Then there are specific themed international funds too. We have a mutual fund that invests in companies associated with Electric & autonomous vehicles!
https://www.valueresearchonline.com/...f-direct-plan/

It's portfolio seems to have random tech stocks though.



Note: From taxation point of view, international equity mutual funds are treated as "debt funds", and not equity funds.

[anandhsub]

Originally Posted by PearlJam

https://economictimes.indiatimes.com.../107064803.cms



Ofcourse, the vagaries of the markets means that this position is not set in stone, but nevertheless, it's a milestone, given where we started from.

May be just the trigger the authorities needed..

China announces $278B stimulus to boost stock markets

[DigitalOne]

Originally Posted by SmartCat

There are specific funds investing in:

- Japan

This youtube video sums up the greenshoots in the Japanese economy.

https://youtu.be/N1dAM2rPtKo?si=IbK91oJlqrt1jd1B

Inflation which the Japanese have been craving for decades is creeping up. Wages have declined/stagnated making Japanese manufacturing competitive again. Increase in friendshoring means some manufacturing will move back to Japan from China, as Japan is friendly to US, India, or Europe.

A recent Franklin Templeton newsletter also made a case for investing in the Japanese stock market, making more or less the same points.

Nikkei has given a 33% return in the last 1 year.