Indian Economy: Drifting Policy wreaking havoc

Tuesday, December 02, 2008

Consumer demand world wide is the developed world this is because they mostly have everything they want...they are full..seconds are unwanted.  So austerity is in.  While the generalized view is that Americans are is not only in outward appearance.  The services and standards that Americans and the developed world enjoy are rather 'obese' from the point of view of the developed world...I am talking about China and India and not the forgotten African continent.

In India, the bad news is that the developed world is contracting...the good news is that our economy is not.  The bad news is that US has five to ten million excess homes...the good news is that we have a deficiency of good housing.  The bad news is that the US car companies are bankrupt...the good news is that our people need more cars.  And on and on and on...

India has pent up demand...the middle class is growing...the companies delivering to this segment must be encouraged and protected.  Which brings me full circle to Realty.

High real interest rates combined with the developed world contraction is threatening to overwhelm consumer sentiment in India...this erosion could lead to an implosion in demand followed by bankruptcies and a vicious circle which further weighs on demand.

Policy makers need to act...I do not believe a bankruptcy or two of high profile builders will be in the national interest.  The Word of the year is 'BAILOUT'.  A fiscal stimulus, lower interest rates and liquidity infusions are all available to policy makers.

The Finance Monster is gone...continuation of drifting policy threatens to wreak havoc on the economy.

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