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By:

C.S. Krishnamurthy

21 June 2025 at 7:45:51 pm

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's...

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's growth story remains intact, but investors should not mistake a strong economy for a risk-free stock market. The latest corporate results offer considerable comfort. The economic momentum built over the past few quarters has not been derailed by geopolitical tensions. The margin pressure feared across several industries has also been less severe than expected. More importantly, earnings growth has been reasonably broad based. Large, mid and small companies have all shown healthy growth. If oil-related businesses, which are somewhat different in their earnings pattern, are excluded, the gap between the three market segments is not particularly wide. Financial services have been among the strongest performers, with banks, NBFCs and capital-market businesses reporting good growth. Capital goods, metals, telecom and power have also done well. For investors, this is significant. A stock market supported by genuine improvement in corporate profits has a much stronger foundation than one driven merely by enthusiasm. Domestic Risk The monsoon, however, remains an important domestic risk. Rainfall has been below normal so far, although the impact on the rural economy has not yet been alarming. Tractor and two-wheeler sales remain reasonably strong, suggesting that parts of rural India continue to spend. At the same time, increased demand under the rural employment guarantee programme suggests that weaker rainfall may be affecting poorer rural households more severely. Food inflation adds another complication. Higher food prices may improve the income of farmers who sell their produce, but they also increase the expenses of families who buy food. Therefore, higher food inflation cannot automatically be interpreted as stronger rural purchasing power. India is nevertheless better prepared than it once was. A healthy IPO market is a positive development. It allows companies to raise capital and gives investors fresh opportunities. But there is a point at which too much supply begins competing for the same pool of money. The current market provides a striking example. The much-awaited IPO of the National Stock Exchange is reportedly being considered at a size of around Rs. 24,000 to Rs. 25,000 crore, down from earlier expectations of Rs. 30,000 crore but a very large issue nonetheless. The message is not that investors should avoid IPOs. It is that an exciting new issue should not automatically be preferred over an established company merely because the new issue is attracting headlines. The bigger uncertainties are global. Brent crude has moved close to $100 a barrel as tensions in the Middle East have intensified. For India, which imports most of its energy requirements, expensive crude can mean higher inflation, a wider trade deficit and pressure on economic growth. US bond yields are another concern. Higher yields make dollar investments more attractive and can reduce the appetite for emerging markets such as India. This does not necessarily mean that global investors have abandoned India. It shows how quickly investment decisions can change when oil prices, interest rates and currencies move. Domestic investors, particularly mutual fund investors, therefore have an important role in providing stability. Their regular investments can partly offset foreign selling, although domestic flows cannot make the market immune to global shocks. Faster Growth The enthusiasm for small and mid-cap stocks is understandable. Many of these companies offer faster growth and have rewarded investors handsomely. But if investors pay too much for expected growth, even a good company's share price can disappoint. Large-cap companies, after a period of relative underperformance, may offer more comfortable valuations and greater stability. The right mix will depend on an investor’s financial goals, investment horizon and ability to withstand market fluctuations. India’s economic story remains encouraging. Corporate earnings are healthy, domestic demand has resilience and the economy has become better equipped to absorb individual shocks. But the stock market is not the economy. For the common investor, therefore, the most useful question today may not be, “What should I buy?” It may be, “Is my portfolio balanced enough to withstand what I cannot predict?” (The writer is a retired banker and author. He can be reached at krs1957@hotmail.com. Views personal.)

Caste-based Census Sparks Nationwide Debate

Writer: Darshan Solanki
Darshan Solanki
Oct 2, 2024
3 min read

Updated: Oct 22, 2024

Caste-based Census

Caste-based identities continue to dominate rural India, directly or indirectly shaping electoral outcomes. Many major elections are influenced by specific caste groups. After the Bihar government released the first phase of its caste-based socio-economic survey, the caste census became a hot topic. The results, backed by evidence, showed improvements in the living standards and social status of marginalised communities, both in cities and villages. With parties like the JDU and NCP backing a caste census, there is growing momentum for the government to conduct one. However, every story has two sides—joy and sorrow. Even Mahatma Gandhi, the Father of the Nation, raised concerns about the caste census.

Rahul Gandhi accused the BJP of being “anti-Bahujan.” The clear meaning is that his father and forefather refused to execute a caste-based census, which might have far-reaching effects and even permanently fracture India’s social fabric. This may be negative for caste-based beneficiaries. The last caste census in India was conducted in 1931 by the British government. Those times were different from the present scenario. The data was made public and became the basis for the Mandal Commission Reports and reservation policies for Other Backward Classes. Rashtriya Swayamsevak Sangh (RSS) has clarified that the caste-based population count data will not be used for core politics. But the agenda for politics is always twisted and expanded.

The Central Government also joined the legal debate by filing an affidavit with the Supreme Court, leaving the matter unresolved. India’s partition, rooted in the divide-and-rule strategy, is frequently cited as a cautionary tale. Including caste in official census data could further deepen social divides. This issue has become a political pressure point, with various states pushing the Centre for action. Although the Constitution uses the term “class” instead of “caste,” the Supreme Court has consistently ruled that caste is a relevant, and at times, sole or dominant criterion for defining a backward class.

After the release of caste-based census data in Bihar, discussions around conducting similar censuses have gained momentum in states like Rajasthan, Chhattisgarh, and Jharkhand. Karnataka, which has already conducted its own caste census, may release its data soon as well.

Notably, all these states are governed by anti-BJP parties. Congress leader Rahul Gandhi also announced that Congress-ruled states have committed to carrying out caste censuses. Meanwhile, the BJP has remained silent on the matter, creating a significant roadblock.

Caste-based censuses focus on proportional representation in areas like jobs and education, with the argument that this will aid in targeted planning for the disadvantaged. However, the situation remains unclear, much like a foggy winter morning. The BJP’s stance on caste-based censuses and reservations seems different, as they fear the caste-based calculations could fragment their traditional Hindu voter base—an underlying concern for the party.

Professor Sanjay Kumar from The Centre for the Study of Developing Societies, says, “Let alone the BJP; no party can openly oppose it; it is not free from danger. BJP gets a large number of votes from the OBC community, their population across the country would be around 52%. Another downside is that the caste-based censuses could disrupt the balance of socio-economic zones. Data theft is a common issue in government systems, and people may feel disconnected from their actual rights.

The moot question is that if the financial status of an ST/SC/OBC or Dalit citizen moves up by a few notches, will his social status change automatically? The lifestyle of any class will only change when the income of a particular class is changed. The actual source of income is employment. The reality is that only metro cities have enough place and space for workers. Aside from the GIDC and IT sectors, less than 30% of industries have their own designated vacancy periods. After a decade, the Jamnagar and Rajkot Corporations have opened their doors to newcomers alongside experienced staff. However, age and caste bias often operate behind the scenes. It’s important to recognise that poverty is also widespread among many upper-caste individuals, and their needs cannot be overlooked. In the overall interests of the nation, terms like SC/ST/OBC, Dalits, etc. must be deleted from the nation’s vocabulary. Every citizen should have only one classification, that of being an ‘Indian’, in the spirit of the constitution.

Last year, when the Bihar government decided to conduct a caste survey in the state, the BJP was also Nitish Kumar’s partner in the state government, and it supported it. Political expert and former professor of Tata Institute of Social Science, Pushpendra Kumar, says, “It is not that the BJP does not talk about caste. It tries to reveal the caste of the Prime Minister as well. For caste politics, the BJP also tried hard to raise the issue of Pasmanda Muslims.”

(The writer is a management professional based in Ahmedabad. Views personal.)

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