Easiest Way To LIE - Use AVERAGE. Is our Government doing the same?

3^rd February 2024

Easiest way to lie – use AVERAGE. Is our government doing the same? 

Dear Fellow Investors,

Jai Shree Ram! Whether all the NEEDY, Poor or Lower Middle class has got the house or not – Modi Ji could arrange a magnificent home for Lord Ram. This is historic moment for all Indian Citizens. I really appreciate Modi ji for the same. The only quality which is a must for any investor is to be Optimistic for future. If you don’t see the future is more positive than today – it makes sense to spend all your money today rather than to invest. People have become more optimistic and confident after Ram Mandir. 

The other most important quality is to remain on the ground. When you are on the ground – your chances of falling are less and if at all you fall – your injuries will be normal. Those investors who remain in AIR or behave as if some miracles will happen in spite of the negative ground realities – they end up doing financial suicide or actual suicide after financial wipe out.

Let us see some of the ground realities in India of Today despite the optimism. 

Use of AVERAGE in GROWTH FIGURES: -

The best way to lie without sounding a Lier is to use the average figures. Let me share an example of a typical Indian family. 

Say there are 6 people in a family. Father – Mother – Son – Daughter in Law – Grand Son and Grand Daughter. 

1.   Father is retired and getting a pension of Rs.3 lakhs per annum.

2.   Mother has interest income of Rs.1.2 lakhs  per annum. 

3.   Son is working in a MNC and earning Rs.25 lakhs per annum. 

4.   Daugher in law is giving home tuitions and earning Rs.5 lakhs per annum. 

5.   Grand daughter is in 10^th std and Grandson is in 7^th std. Both are not earning. 

Total income of the family is Rs. 34.20 lakhs per annum. 

If you divide the same by 6 – you get average income of Rs.5.70 lakhs per annum. 

Now, the Son got the promotion and his income goes up by 20%. So, he will be earning Rs.30 lakhs. 

Total income of the family now will be  Rs. 39.20 lakhs. Average income per person will be Rs. 6.53 lakhs. 

Now, if we say the average income per member has gone up by 14% ( 5.70 lakhs to 6.53 lakhs). Though statically correct, the conclusion is a lie. 

A 5 out of the 6 people are earning below the average income. 2 people are 100% dependent in the family. 2 seniors are not having even 10% of the total income. 

The point is all the increase in GDP – if at all has happened – is for the ADANIS and AMBANIS. Maximum 2-3 lakh lucky people will fall in the populations of the 140 crores who have seen massive increase in their income. 

Like the two students in the above examples – 80 crore Indians are being giving FREE FOOD as per MODI JI. Tons of schemes were announced by FM in budget for them. 

Look at the results of the FMCG companies – they are facing headwinds in the rural market. Their sales growth is around 2-3% while the economy is growing at 7% as per the Government. 

So, there is a selective VIKAS. 

Employment Generations: - 

When you have to feed 80 Crs people – it means somewhere there are no opportunities to gainfully employ them. If I divide them by 4 ( assuming a family of 4), then too 20 Cr people who are ready to work are not getting the work.

With the ADVENT of AI in the work place – the situations is going to be worse in the coming time. Unfortunately, there are no serious talks about the same in main stream media. See the situations at the Top 4 IT companies. They are not increasing their work force. They are reducing their work force or stopping the new appointments as per their recent results. 

Believe me or not – this one single factor, if proper actions are not taken,  will ruin the Indian economy in the coming times. Our Demographic Asset will become Demographic Liabilities. If you are an investor like me – keep your eye on this figure rather than how many people went to RAM TEMPLE on day one and day two. 

Banking system in problem: - 

We have seen in the above example that out of 6 only one is growing. But the kids are getting the mobile – lap top and wife is also buying jewellery and oldies are going for religious tour. So, in spite of the low income – consumption is happening. 

The secret lies in CREDIT CARD LOANS and PERSONAL LOANS. 

As per recent report in Economic times Bulk of Credit Card Loans are SUBPRIME. Subprime was the famous word in 2008.  There is a 2.45 lakh Cr outstanding in CREDIT CARD as per the report. This money has gone for buying the things like Mobile and personal consumptions. Incidentally, there was a news in the same paper that HDFC bank became the first bank to touch the 2 cr credit card issued figure.  

Advances against FD stood at Rs.1.13 lakh crore. 

Loans against Jewellery stood Rs.1 lakh crore. 

Advances against FCNR / NRNR deposits stood at Rs.1.13 lakh crore. 

Out of Rs.149 lakh crs loans – RETAIL loans accounted for Rs.50.60 lakh crs. Almost 30%. 

So, if you are being happy with the GDP Growth – understand that it is coming out of LOANS – which may not be paid fully and out of the old savings. 

Truth of GDP Rise: - 

In 2018 0r 2019 – our FM said – India will be a 5 trillion economy by 2023. Today we are in 2024 and we are nowhere near that figures. Rather than discussing the reasons for the failures and take corrective actions - they have started a new JUMLA – USD 7 trillion economy by 2030!! The funny aspect is NORMAL people are believing them.  

In reply to the USD 5 Trillion target - in parliament debat in 2018 or 2019 – Mr.Chidambaram had said that if your inflation increases by 10% - your economy will double every 7 years. ( I don’t remember exactly what he said but he said something like this for sure). 

He made a valid point. There should be some FIXED price on which your economy should be monitored. If you see the documents – the USD 7 trillion figure is just mentioned – they have not said on fixed price or at current price.

Just find out your monthly expenses PRE-COVID and POST COVID. I am sure you will see marked increase in your expenses. All that increase is nothing but inflation and that has added to the GDP. Your real income has not gone up. In fact, the way people have to borrow against gold and break FD or take credit card loans – it means AVERAGE Indian has become poorer than the richer. 

Rise in SMALL INVESTORS in share market: - 

In the month of December 2023 about 4 cr new demat account were opened. The total is approximate 13.9 cr demat account as of now. 

While there is overall positivity for this – the truth is something else. 

Normal shopkeeper and job goers are not earning enough or are unemployed. So, they are trying their luck in the stock market with loans or whatever little capital they have. So, that they can run their show. 

The irony is they are not trained in the stock market. The most of them are doing based on the TIP or by looking at their lucky friends or lucky neighbour who have earned good money by fluke. I have a deep concern for such investors and their remaining capital. 

So, those who are celebrating the retail participation – should be extra mindful about the situations of the normal people at the ground level.

When the REVOLUTION happens in the real sense?

Normal people care a damn for FREEDOM ( that’s why they want job) and religions. They can be instigated for a short term on the name of religions and FREEDOM for sure. In Jaliawal baug shoot out – Indians working for British killed the fellow Indians. Those who worked for British they had the home to run and they were doing job. They didn’t care for FREEDOM. 

Normal people care for FOOD with other basic facilities. In When they don’t get these - they will come and destroy the state. 

Look at 18^th century French revolution and Russian Revolution in early 19^thcentury. Russia could do away with GOD after that as the citizen was promised ROTI – KAPDA and MAKAN. 

The common causes in both the revolution were income inequalities – food shortage. India has income inequalities for sure. Natural calamities will bring food shortages in the coming time. 

Just think what will happen if these 80 crores are not provided FREE FOOD and MEDICAL facilities in India? Do you think normal citizen can freely move or stay peacefully in their home? There will be a mass looting. 

The question is this figures will rise in the coming time with the AI and other technological developments. ( It really puts me off when our leader takes pride that they are doing so and so for poor. They are trying to saw as if they are doing favour to them. Frankly they are insulting them).

What is the MESSAGE for the Investors?

The word investor includes the optimism by default. I am the eternal bull on India. But I keep these factors in mind all the times when I do my investments. Don’t get carried away by big talks and big targets. We have miles to go before that can happen. 

Market was there. Market is there and Market will be there long after we all die. The point is – how seasoned and mentally balanced you are when you are investing your hard earned money? Your success will be dependent on this single factor. 

If you want holistic guidance on your personal growth or investment growth – you are most welcome to approach us. 

Go beyond obvious my friend. You will bless me for life. 

Jai Shree Ram!

Follow me on Twitter @hiteshmparikh Or on Whatsapp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

Hitesh Parikh.