See the wage growth data. Not in line with the sales and profit growth of Indian companies. How will demand revive when companies are not willing to increase the wages of their workers? Only a handful of people are doing well in our country. Majority are suffering. Per capita income of $2500 looks good on paper. But if we see its distribution across different sections of people it’s highly uneven. See the education and hospital costs growing at 15% per year. Government has done absolutely nothing related to these sectors. Healthcare and education spending as a percentage of gdp has been very low. On one side govt is doing reforms by reducing taxes etc. but on the other side they are distributing freebies to women and unemployed people everywhere. Why would anyone want to work when you are getting free money? Almost 2L cr is being distributed in the women schemes alone.
Hi - thanks again for a couple of very good reads. One point missed I think from the first story is how the high ROCE that companies are reporting means that any new capex would probably lower that number, and might negatively affect the stock performance. Just another reason why managements might be wary to start capex spending.
I'm not very sure if that's the correct way to look at it. ROCE isn't the only thing that defines stock price. If that were the case then high ROCE, low growth stocks (Asian Paints, Castrol) won't be such stock market laggards.
The relationship b/w ROCE and stock price being ascribed here sounds oversimplified.
Re demand uncertainty as a reason for lack of private capex: The key is employment; it’d be nice to know what government - state and centre - is doing different here. AI and the hype around it is affecting IT employment visibly, but also other key industries, with ripple effects outward. Companies are investing less in Human Resources, feeling they can automate their way to reduced costs.
I think if some serious attention and money and policy actions - and there are many possible - were directed at this problem, we will see optimism revive, demand surface, & private sector investment increase.
That's a very valid way of looking at things. Demand is hugely driven by people's ability to spend which in turn is a function of their employment. These are all structural problems with very difficult answers.
See the wage growth data. Not in line with the sales and profit growth of Indian companies. How will demand revive when companies are not willing to increase the wages of their workers? Only a handful of people are doing well in our country. Majority are suffering. Per capita income of $2500 looks good on paper. But if we see its distribution across different sections of people it’s highly uneven. See the education and hospital costs growing at 15% per year. Government has done absolutely nothing related to these sectors. Healthcare and education spending as a percentage of gdp has been very low. On one side govt is doing reforms by reducing taxes etc. but on the other side they are distributing freebies to women and unemployed people everywhere. Why would anyone want to work when you are getting free money? Almost 2L cr is being distributed in the women schemes alone.
Hi - thanks again for a couple of very good reads. One point missed I think from the first story is how the high ROCE that companies are reporting means that any new capex would probably lower that number, and might negatively affect the stock performance. Just another reason why managements might be wary to start capex spending.
I'm not very sure if that's the correct way to look at it. ROCE isn't the only thing that defines stock price. If that were the case then high ROCE, low growth stocks (Asian Paints, Castrol) won't be such stock market laggards.
The relationship b/w ROCE and stock price being ascribed here sounds oversimplified.
Re demand uncertainty as a reason for lack of private capex: The key is employment; it’d be nice to know what government - state and centre - is doing different here. AI and the hype around it is affecting IT employment visibly, but also other key industries, with ripple effects outward. Companies are investing less in Human Resources, feeling they can automate their way to reduced costs.
I think if some serious attention and money and policy actions - and there are many possible - were directed at this problem, we will see optimism revive, demand surface, & private sector investment increase.
That's a very valid way of looking at things. Demand is hugely driven by people's ability to spend which in turn is a function of their employment. These are all structural problems with very difficult answers.