A friend who runs a small business was hit by a series of events post the North Atlantic financial crisis of 2008. The crisis wiped out a large chunk of the overseas market, hitting his business badly. Next, a series of poor business decisions and external events prevented him from recovering in the next few years. Just as he was getting it back together, GST (goods and services tax) compliance and bribes for refunds dealt the next blow. Thinking that the end was around the next quarter for many years, he got into a debt trap with unpaid dues to banks, suppliers, family and friends. The only way out of this tight financial corner was to sell some land bought more than a decade ago, the price of which had gone up exponentially, with lakhs now worth crores. The sale will more than clear the debt and then leave some capital for restarting the business or just retiring. But one year later, he remains in the market looking to liquidate the land. This story is a text-book example of why real estate is such a clunky, and sometimes dangerous, asset to own, maintain and dispose, and why it is a poor asset for an emergency bail-out situation.
A doctor friend will occasionally send a desperate SMS asking for clarity on the Narendra Modi government’s track record. He says he can’t make sense of the truth, flooded as he is with WhatsApp forwards, news, views and chatter that is so polarized that it looks like the messages are talking about two different countries. The next 10 months will see this divide get sharper and nastier as we roll up to Elections 2019.
The first thing we need to do when we enter this debate is to discard evidence by anecdote. For every anecdote from one side of the debate, the other side can give two more. My anecdote will always be more real to me than your story. Let’s stay with numbers. But numbers can also be hotly debated—depending on whether the GDP number is up or down, the validity of the data has been discarded or accepted. While numbers like the GDP or inflation or even manufacturing growth or investment are subject to a methodology which can be open to debate, the one number we can’t either fix or ignore is the Sensex, the broad market index made up of 30 companies. The Sensex seems to like it when Modi Sarkar wins elections. Look how it rose and then fell as the Karnataka elections changed colour from saffron to a muddled something.