The State of our Economy

Have you ever suddenly woken up and found yourself someplace where you have no idea of how you got there in the first place? For the stoners, rollers, users of banned substances, it is possibly not uncommon. But for average, law abiding, everyday citizen, it is a sign of worry and some professional help is definitely on the cards.

The Indian economy is exactly in that situation. It is scrapping at the bottom of the barrel (yes, at 5%, while many parts of the world would go bonkers celebrating, as Indians, we react exactly how we react to our kids getting 89% and not 90% in their school results) and all the movers and shakers in the world are going tch tch and trying to find reasons to pin this on. A leading global think tank threw a dart on GST and that's got media pick-ups and many seem to agree. 

While I'm no expert and numbers like 5% or 10% matter to me just like the next century or duck scored by Virat Kohli (psychological yes, realistically - does nothing to me), I believe we're missing the whole point by a very long shot and whatever the stimulus actions are, it's seems like lipstick on a pig. 

Here's why I say this. Let's roll our memory back to where this narrative of the slowdown began and how fiction soon turned into reality. 

The Government during the first term, in its earnestness, starting taking steps to clean the economy, letting market forces to decide the future of business. In parallel, based on the election promise of a clean-up, the economic offence wing started following the money trail of the influential and very soon, all the poster boys of Indian Businesses, Party Boys, Diamantaires who had gamed the system to run their extravaganzas at the expense of the banks (and the middle class households) started having the noose tighten around their necks. A few corrupt bankers fell wayside soon enough, but the rich, with a thick rooster of informers and friends in high places, soon fled the coop. 

Let's not forget that we awarded, lauded and many even made calls for the coveted calendar or annual parties or whatever else crumbs the rich threw, of course, at the expense of middle class savings. Eventually, the party got over for a few and but there are still lots of them out there, knowing that they will soon be the next one to fall. When the companies fold, the owners go through a period of fall and disgrace, only to land back on some foreign shore to live off the siphoned millions. While the thousands of displaced employees try desperately to get a new gig, wondering if their loyalty and effort to make the whims and fancies of their masters successful was ever worth it. 

The second part of the theory is the new age technology companies, aggregators or digital market places or whatever else you call them. I’m understand that none of them are yet profitable and most of them are majorly in losses, (A documentary on Uber says that they are $ 4.5 billion down). And most of these losses are accumulated in trying to buy the market (or create a market as they’d like to call it). Deep discounting, offers, free rides and what not. Early in life I was taught that there are no free rides or free lunches. Slowly, as I grew older, I also learnt the ill effects of addiction. Combing the two, we have an entire generation of consumers addicted to low prices and buying stuff they don’t need (no…you don’t need to the 4th pair of sneakers or the 6th pair of jeans) and very soon, the retail industry - those putting physical stores as it existed a few years ago, are going bust. Over 2 billion people are expected to make some kind of online shopping in 2019 and online retail will churn around $ 5 trillion by 2021. 

The new-age business guys even have a fancy word for it. They call it, “Cash Burn” and it is an acceptable business practise and totally against everything one learns in a business school. Where does that money come from and taking into account all the loses, who is taking the hit?

Let’s focus on the money - where is that going out of? Shouldn’t there be accountability and if your new-age business cannot generate a profit in two years, the founder or whoever is bankrolling them should lose their clothes of their back. Conservative thinking, maybe but when I feel so agitated about the Amazon (the green cover in south America) burning, loosing so much money is infuriating, especially when the business guys and investors are rolling around in their Lambos, even after going bust. What they leave behind is a nation of addicted consumers, having nowhere to go. That’s what the zombie movies predicted. 

This, in my simplistic view, is why we find ourselves in a place where the economy is spooked. It is clear that as long as the Government is committed to let the law take its course and all those who lived and thrived as if the nation was freed, just to serve their selfish purpose, are brought to book.

The average joe will continue to feel the burn till maybe when there is a new dawn and business is back to the fundamentals instead of all smoke and shadows. Far away, yes. But better - DEFINITELY.