September 2021
The world continues to heal and rebound from the ravages of the pandemic, and we have a sense of normalcy that has returned as even the Indian Prime Minister has made an international trip to the USA this month!
The Indian economy and the larger corporates seem to be bouncing back from the troughs of the pandemic very well. The GST collection and direct tax collection is a testament to this strength. The stock market is at new highs, we have seen a record number of ‘unicorns’ in the start up world and we have even seen a significant uptick in the property market with number of transactions and value of properties going up. While this is a great outcome for equity holders, a handful of startup entrepreneurs and developers, the inequality within the country has just increased materially over the last year. The unfortunate reality is that a lot of under privileged kids who might have leveraged education to take their families out of poverty, are facing a challenge as schools have still not opened fully and a number of these kids may not return to school.
China has taken a very stern stand against inequality and has been talking about ‘common prosperity’ whereby they will reduce income inequality and rein in the billionaires by regulating various industries including education and real estate. China’s largest property developer, Evergrande, is facing imminent bankruptcy and property prices in China have softened due to the strict financial norms set out by the government for developers. The Chinese government was aware of the problems that would ensue with their regulations and while a lot of people are fearing a ‘Lehman’ moment starting from China, there is a good chance that China may be able to manage the fallout from Evergrande’s collapse.
Since the beginning of the pandemic, as western countries have looked to diversify away from China in manufacturing and now with the stern actions being taken by the Chinese government across the tech sector, it seems that our ‘Make In India’ and PLI schemes will attract a lot of foreign capital. We all need to keep our eyes and ears open and look out for the opportunities as they come our way while the global power balances are reset.
