India Shining is the new campaign by the Government. Aimed towards the urban dweller, primarily. That talks about the current economic feel good factor. But as a trained economist I see some trends that are truly worrying. They are, in no particular order of importance:

Low Interest Rates. While this may have been a boost for industry. It really has been a mixed blessing for the consumer.

However, lower Interest Rates allow you to get into long term debt easier. And while, Much of the middle class is earning better than usual. But they are also spending better than usual. debt is becoming a very real facet of Indian life. Especailly in the last 10 years. Call it liberalisation, call it globalisation, call it conspicious consumption. But the undeniable fact is that individual borrowing is up. Also companies are preferring debt to equity. Not really a good idea. While it may reflect as a “feel good factor” now – it has the potential for disaster.

The value of savings has eroded – especially for senior citizens. My father and mother – who have squirrelled away resources all their lives suddenly find – bingo they get two thirds of what was planned.

Employment: The face of modern employment in India seems to be call centres. centres staffed by empty headed, gum chewing, american accented 18 year olds, who get a 5 figure salary per month. This face hides a different truth. Unemployment is up. we have over a 100 million – in the employable age out of work. Key sectors such as textiles, oil, gas, utilities, government jobs -are on the decline. And these are sectors that provided employment to the socio economically weaker sections. Today with the disappearence of jobw – we will come to a situation where more are being added to “below the poverty line” than subtracted.

Infrastructure: The one thing that the recent state elections proved was that the issues are BSP – Bijli, Sadak aur Paani. Electricity, Roads and Water. I would add to this Health, Education and Sanitation. All of them are woefully lacking. There are more TV sets in India than access to a closed washroom.

I live in Mumbai. The commercial/financial/cinema capital. The roads are truly terrible. Pot holes, illegal constructions. affordable health care is still a dream for most. Education quality is shakey at best, with no standardisation except for the Board. Parents are increasingly spending upto a fourth of their disposable income on high quality education. My maid servant who earns Rs.2600 spends Rs.600 on education. My driver who earns Rs.4500 spends Rs.1500. My friend who earns Rs.30,000 spends Rs.8000 a month on education. All of them are uniformly dissatisfied with what their kids get.

FII Investments: it is my gut feel that much of this FII investment is hot money in the chase of the best possible return. In a world of low exchange rates, India probably offered a slightly competitive advantage. Money came here. Let someone else go a quarter of a percentage higher the money will move there. The RBI else has to spend a considerable chumk of its well earned foreign reserves to prop up the Rupee. that could have the intended corrective action, but it would be a very painful correction for all of us.

Inflation: Screw the wholesale price index and the Retail Price index, and ask yourself one question. Do things cost more this year than last year. Not things like mobiles or cars. But things like onions and potatoes, meat and milk. education and entertainment:) The answer is simple. Much more. And that really is inflation. Salaries are not going to be able to keep up, if companies want to be competitive. We are going to face a major pinch here.

Exchange Rate: The rupee has gained crazily against the dollar. so less rupees now buy a dollar. conversely, more dollars are required to pay for their imports from India – either goods or services. Which means that Indian goods would be dearer abroad.

What does that say for future balance of trade issues. what does it say for Western countries continuing to find our products and services “competitive in price”. What does it say for our BPO industry that is already begun to face tough competition from China.

Over and above this is the deficit. Sooner or later the Government would have to take corrective action. My guess is that who ever comes to power, tough economic times are ahead. They have already begun for some sections of society, but the down turn chain reaction is still some step away. If this government possessed moral fortitude and respect for its people – it would start the corrective measures now. But morality and politics are like the earth and the skies. appearing to meet – but not quite.

Mrs. Sonia Gandhi and the Congress Party need to focus their election campaign. It is truly the “economy, stupid”:)