Subbu's Solution

A Fair Game

The TV in my house is dead. My mother used to watch TV before she passed away. This was two years ago. Both my daughter and wife are hooked on to their iPads watching Netflix and Amazon Prime etc. With the type of content they watch, much has changed over the last two years ranging from international sports to rom-coms, what’s interesting to note is how they are consuming this content technology has changed a lot.

I have become reasonably adept in using technology and latest products such as mobile wallets. My tastes have changed and my surroundings too have changed. Swiggy and Uber Eats have given me a wider choice to order food with restaurants offering international cuisines due to the huge demand has made me lazy too! The other day I had ordered “Nimbu Pani” when I was alone at home. How tough can mixing lime and water be?? But there you go.

India is changing rapidly, and with it the needs of the people. Economic development such as new infrastructure is being built; developed roads, better metro connectivity and better airports. However, to name a few, social infrastructure which plays an important role as well as basic education, hospitals, health care services etc are still very weak.

Hmm!! But these are trends in Urban India.

Let’s talk about ‘Bharat’ and a visit to my native place presented a rather different picture.

Most of rural India has seen changes too as it is unrecognizable from what it was a decade ago. Adoption of technology is transforming the lives of India’s farmers by ways of better land irrigation, better network connectivity etc. Banking too has penetrated well. Availability of credit at low interest rates is made easier through operation of NABARD (National Bank For Agriculture And Rural Development) and branded products have made deeper penetration. E-commerce companies have also become active, with people at my village being able to order online products with delivery at the nearest district headquarters.

Rich farmers were comfortable as they had large houses, with children well settled, and mechanized equipment for their farms. However, I could also see distressed faces among farmers. Shortage of income and jobs was more visible. And school buildings were dilapidated which is always a disheartening sight.

What I described above is just a glimpse of the rapid changes happening across India and across various age groups. The changes are good for some and not so good for others. Disparity in living standards is very high.

While consumption trends are robust, the manufacturing side is still struggling. Our physical and social infrastructure needs dramatic improvements. The education system is in dire straits. Unplanned urban expansion is happening at a rapid pace, and ill-conceived projects are proving to be expensive, and at times irrelevant.

Given this brief background; there are multiple areas to be focused upon. It also means that reforms are needed to address these issues:

Immediate need is to create a suitable environment for Capex to increase. The number of private capex projects that have been stalled has increased over the last few years to near record high at 25.4% as per the CMIE data. This is an alarming number. Availability of bank credit and easier norms for land acquisition is something that needs urgent attention. Acquiring clean zoned land is a challenge. Interaction with medium sized entrepreneur, seem to suggest that acquiring land and all the clearances for starting a venture is still a huge problem. Therefore, land reforms are a priority. But land reforms without fair compensation is a non-starter. Hence adequate social infrastructure needs to be created for people who are displaced by these land reforms.

Between 2009 and 2019, close to 200 million new voters have come into the electoral system. It also means that young people are getting ready to work. So any reform or steps taken by the government should address this issue of job creation, it means stepping back and doing reforms on skills, education as well as encouraging new industries to flourish.

On Financial Markets

A commitment to a stable tax regime, in any form will help, but it needs to be stable and internationally competitive as India is competing to attract global capital and businesses into India.

Needless to say, the depth of every market has to be increased; be it the market for private equity, debt or the public markets.

Any reforms will have to address the disparity and a fairer distribution of income and wealth will help in the long run. The choice is not between generating wealth and distribution, it is both.


Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

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