Is INDIA really SHINING ?

Recently, BJP's L.K.Advani, in his speech at Shimla, Haryana stated that the campaign slogan used by his party in the previous election, namely "INDIA SHINING", was a mistake. He said it should have been "INDIA RISING".

I agree with him, but only partially. I think "INDIA SHINING" falls miserably short of the truth. India is not yet rising. It is still trying.

What exactly do we mean by India's growth story ? What does 8%-9% growth actually mean ? The PM, Manmohan Singh, says over the next five years India can achieve 10% growth. 10% of what ? GDP obviously.

Gross Domestic Product - defined as the market value of all final goods and services produced within a region in a given period of time.

Is GDP the most accurate measure for quantifying an economy's performance ? I'm not sure if the answer to this question is a yes. How can I possibly be convinced that GDP growth of 10% or whatever is a measure of India growing ?

The way I see it, growth should happen in more than just one sphere. At least two, namely economic and social. Of course there may be more, but these two I think are a must.

GDP increase shows economic growth. What do we use to measure social growth ? Actually I don't think it's social growth, it should be social development.

Lets take a simple example. The Sensex is an indicator of India's growth story. How many people actually know what sensex stands for ? If I were to say, sensex stands for sensitivity index, how many people would be surprised ? I'd say a lot. It's easy to get carried away by the hysteria and get brain washed into believing that all of us are in the middle of enormous growth opportunity.

The Sensex is based on 30 companies. It represents 13 sectors and the sum of free market capitalization of these 30 companies adds up to approximately 50% of total market capitalization. The Nifty is based on 50 companies. It represents 24 sectors and the sum of free market capitalization of these 50 companies adds up to approximately 60% of total market capitalization.

Both these indices are built on the fairly simple concept of sampling. We draw on a sample from a population and hope that the population is best represented by the sample. Anyone who has any exposure to basic statistics will tell you, that sampling techniques, however advanced they may be, are always accompanied with what we call "sampling error".

What is this error ? No matter how carefully we choose a sample, it never completely represents the population in it's entirety. There is always a chance that the indicators are wrong.

By using the sensex as an indicator, we are looking at only 50% of total market cap. The other 50% is neglected, on the assumption that this 50% will follow the movement of the other 50% which is being tracked.

When the sensex goes up, what does that mean ? It only means that the market cap of the companies in the list of 30 has increased or the market cap of some of the companies has increased to an extent that is more than the fall in market cap of the remaining, which has a net effect of increased market cap on the index.

So, the price of a few equity shares goes up and suddenly India is growing ?

Mukesh Ambani recently bought a plane for close to 350 million dollars. How many people do you think have bought anything for 350 rupees let alone millions or dollars ?

As an internationally accepted benchmark index, the Sensex is useful. It is an indicator of possible trends in the financial markets. Thats all it is. Nothing less and most definitely nothing more.

A 1000 point gain on the sensex over 4-5 trading sessions does not mean that in those 4-5 days India has suddenly become a better place to live in.

How has day to day life for the common man changed between the time the sensex was at 19,000 and the time it crossed 20,000 ? This has only affected those few smart people who put their money in the right place at the right time, those gutless people who just followed the crowd and got lucky and those really dumb fools who didn't follow the crowd but still got lucky.

You know why there has been no change in day to day life ? Because there have only been indications of economic growth and no signs of social development.

You can ask me what does social development mean ? How do we measure this development ?

With my limited knowledge on the subject, I will attempt an answer.

When a majority of people can write their own names I consider it as social development. When a majority of people have a job or are employed in some capacity I consider that as social development. When a majority of people can sustain their own livelihood I consider that as social development.

In other words, the measures are:

=> Literacy level
=> Employment level
=> Per capita income level

When was the last time you heard our Finance minister, P.Chidambaram, speak of anything that is not connected to the stock market ?

There are enough people to worry about the stock market. There are enough "analysts" to monitor, advise and comment on the equity markets.

Exactly who is going to worry about social development ?

If anyone can answer this question, I'll accept Advani's statement.