What’s India doing right?
September 18th, 2020
⏰ 1 minute read
⏰ 1 minute read
Consumption & the stock markets
India
India has now reached 5.2m coronavirus cases & yesterday had 95,000 new ones. Indonesia is at 0.23m with 3,600 new ones. The Bombay Sensex index is 39,000 close to the record 42,2’73 & up 42% from March 2015. The JCI is 5,050 far from the record 6,628 & down -9% from March 2015. Why? My explanation; it’s because of consumption.
Consumption
Did you know that buying shares on the exchange is consumption, not investment? If you do then you know how important consumption is. In 1960 Indonesia & India had booming consumption, 80% of GDP! Then some bright spark said exports were the way to go & consumption collapsed to 56% by 2010. Now India is back to 61%, Indonesia, 57%.
FX
Here’s 3 suggestions to boost consumption & get our stockmarket booming too..By August, BI has bought FX reserves up to a new high USD137bn & since 2015 the rupiah is down from 13,000 to 15,000. India’s currency is weaker too, but less so. Stop buying FX & let the currency be stronger. That can increase purchasing power for our consumers.
Imports
Second is to allow consumers to buy whatever they want. We try to slow imports & in August we got a trade surplus of USD2.3bn. Imports are -15% lower than they were in early 2015, matching stocks. India had a record trade deficit in July! Let’s encourage our imports to rise up & stop worrying about deficits which are good.
Jobs
The third way to boost consumption is jobs. The way to get more jobs is encourage companies to expand, with fiscal incentives & allowing a lower tax to gdp ratio. India’s tax to GDP is down & below 11%, while Indonesia’s is up to almost 12%. A lower ratio now means a higher one later as incomes & consumption boom.
India has now reached 5.2m coronavirus cases & yesterday had 95,000 new ones. Indonesia is at 0.23m with 3,600 new ones. The Bombay Sensex index is 39,000 close to the record 42,2’73 & up 42% from March 2015. The JCI is 5,050 far from the record 6,628 & down -9% from March 2015. Why? My explanation; it’s because of consumption.
Consumption
Did you know that buying shares on the exchange is consumption, not investment? If you do then you know how important consumption is. In 1960 Indonesia & India had booming consumption, 80% of GDP! Then some bright spark said exports were the way to go & consumption collapsed to 56% by 2010. Now India is back to 61%, Indonesia, 57%.
FX
Here’s 3 suggestions to boost consumption & get our stockmarket booming too..By August, BI has bought FX reserves up to a new high USD137bn & since 2015 the rupiah is down from 13,000 to 15,000. India’s currency is weaker too, but less so. Stop buying FX & let the currency be stronger. That can increase purchasing power for our consumers.
Imports
Second is to allow consumers to buy whatever they want. We try to slow imports & in August we got a trade surplus of USD2.3bn. Imports are -15% lower than they were in early 2015, matching stocks. India had a record trade deficit in July! Let’s encourage our imports to rise up & stop worrying about deficits which are good.
Jobs
The third way to boost consumption is jobs. The way to get more jobs is encourage companies to expand, with fiscal incentives & allowing a lower tax to gdp ratio. India’s tax to GDP is down & below 11%, while Indonesia’s is up to almost 12%. A lower ratio now means a higher one later as incomes & consumption boom.
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