It was all Roses, not long ago, 22k,25k all seemed possible. Most of the experts spoke about India's great economic development, India as a superpower. Decoupling theory, was the latest fad. Everyone spoke about Decoupling effect and how India was insulated from the rest of the world particularly the US. Reasons were given to the people to Justify the BULL RUN which the market was then.

Cut to present and the markets have corrected by more than 35% and now most of the experts are attributing it to Rising Crude, Weakness in Global Makets, US economic slowdonwn. Dunno how suddenly India has got Coupled again. Rupee is hitting lows after lows and suddenly everything looks bleak and experts are warning us for Tough times and a bear market.

Well, Anyone who has been following these experts on a daily basis will now mostly be in a mentally unstable condition. Politicians pale in comparison when it comes to speaking in different voices. General Public must be very confused.

So what is actually the reality and what can be expected?

Here is my analysis( Oops ppl must have got fed up of this word) or take on this whole thing.

To Begin with, Yes India is indeed decoupled to a great extent from the rest of the world and it is not like a China or a Taiwan or for that matter even a Japan all of which are export dependent, India has got a huge middle class consumer population which is 30 million strong. Add to this the fact that Rural population has not yet developed, if they are provided with a platform to grow into even Middle Class,India would have a Colossally big Domestic Market.

It is also true that India is growing and growing at quite a pace.

However India's Stock Markets are not decoupled from the rest of the World. For that markets Indian Stock Markets is Decoupled from Indians. Yes, thats the truth with around 70% of India' s household savings lying in Banks in the Form of Fixed Deposits and Savings and only around 5% in the Stock Markets, our own market is actually decoupled from us.

Add to this the fact that Pension funds are also not allowed to Invest in Equity markets, we have a scenario, where our economy to a great extent is dependent on Ourselves, but our markets are not. FIIs hold the remote for our market and the market dances as per their tune.

FIIs had loads and loads of money ( thanks to Fed ) to play with (thnks to P-Notes, which allowed and encouraged them) and they took the markets to dizzying heights in a jiffy, Cometh Sub Prime crisis, cometh Liquidity crunch and they are now selling left, right and centre to shore up their balance sheets, which are in a state of Hemorrhage.

Reuters report puts the current losses at 400 Billion Dollars US and this is just half of he problem, add all the Personal Loan defaults and other consumer loan defaults that we can expect it to be in touching distance of a Trillion Dollars!!!!

Now our analysts are saying abt Crude, Inflation and other stuff, If i remember correctly when Sensex was at 21k Crude was more than 100 even then and RBI was warning of potential Inflation, Yet no one cared.

Now they have started again, Most of the Analysts are painting an all gloom report again.

Hmm, the way i see it, India is all set to grow, Favorable Demographics, Educated and skilled workforce and a huge Consumer Base, means that we have all the Ingredients ready. But this growth of 8+% on a consistent basis is not going to possible unless we sort out a few things(on which is going to be my next article). Till these things are sorted out, India will grow Despite the System and not because of the System, but one thing Growth is for sure and with the Economy growing can the Markets be far behind??

However as Bufet said " Markets are like Voting machine in the short term and Weighing machine in the long term", So have a long term perspective (2+ years advisable) and set ur goals( i have already written on this) and Happy Investing :)

http://www.expressindia.com/latest-news/Food-crisis-Try-rats-says-Bihar-govt/350268/
This is the status in one of the states of our country. Absolute Shame. 9+ growth, Foreign Investments, Booming Real Estate, but still people are starved for Food. One more example to show that the growth is not INCLUSIVE and still there is a huge section of the population has not come under the Beneficiaries bracket.

The worst part is not that the people are asked to eat Rats. The worst part is the confession of the Official that " Half of the grains in the Godowns are eaten by rats". Yet nothing is being done to stop that. Although agriculture is neglected, we still manage to produce enough food to feed the whole of INDIA, the problem is Poor Storage, Black Markets and Hoarding.

"Eating rats serves double purpose" says the Official, Dunno whether he will feed on them, however well cooked it might be?

To Sum it all up "Shame On Us"

Readers will remember my article on Rupee where i had advocated for a strong Rupee.
Here we have Swaminathan Aiyar presenting that as an election stargey to make sure that Inflation is controlled, by making the Imports cheaper.
http://economictimes.indiatimes.com/Opinion/Columnists/Swaminathan_S_Anklesaria_Aiyar/Will_a_strong_rupee_win_votes/articleshow/3321111.cms

Uhh, finally i have decided to write on this, after days of research,i found that i was getting deeper into the Excess Information Trap.

What is this meeting all about?
Simply put,the Developed world( Read US and the EU) wants the developing world to do away with the Tariffs on agriultural goods, which the Developing countries enforce to protect their farmers against cheap imports. The Developing world( Read India,China) wants the Developed nations to do away with the Subsidies which they dole out for their farmers

Are all Developing countries agains the removal of Tariffs on Imports?
No,Although a part of the developing block, Brazil, Uruguay wants the developing countires to do away with the Tariffs, because of their vested Interests in agricultural exports.( This is excluding US and EU)

Subsidies to US and EU farmers?

Yes, you are reading it right, US and the EU does give subsidies to its farmers. And these are Multi Billion Dollar Subsidies doled out. Subsidy amounts that is greater than the GDP of some of the Third World Countries.

Why this Subsidy?

Farmers on an average hold about 200 hectares of land to the 1 hectare average that an Indian Farmer holds. Now these US farmers although they hold this much amount of land cannot bargain for a price as they deal with all Big Retail Giants like Wal Mart, who buy in huge qunatities and stock it up. Now the US governmnet or for that matter any Government cannot force the Corporate Giants to increase their prices,so they allow the farmers to sell at low prices and then give huge subsidies to the farmers to compensate for the loss.

Current Scneario:

There is now a deadlock with the US n EU not agreeing to reduce on the subsidies and India n China refusing to do away with the Tariffs, to protect their poor farmers, who are still in the Dark.

My Take:
My humble opinion on this would be that India and China have got it spot on. Liberalizing the service sector and liberalizing agriculture are 2 different things altogether.While the former does have corporates running the show, the latter consists of lot of powerless Individuals. Liberalization of course should happen, but before that either of the 2 mentioned below must happen
A) Governement must make farming a viable business and educate the farmer or B) The US n EU must do away with the subsidies, so that the farmers of the Developing world are not at any significant disadvantage compared to their peers.

Which of the 2 will hapen first? Well, Ur guess is a good as mine

P.S:I will call this Only an Intro article, More on the Subsidies given on Cotton, Rice, Soya, Brazil's win over US in the Cotton Issue and other details coming soon.