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Friday, February 15, 2008

The Sensex rise and fall means

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nothing at all

...for the bottom disadvantaged 80% of India

ThankA. Sandeep Editor, Business & Economy god for the Sensex (and the Nifty and similar indices), that news channels and media houses have front page news to write about. And why not! Didn’t the Sensex reach giddying historical heights of 15,800 odd points and also had the second highest fall in history to languish below 14,000 points, all in the last few weeks? In reality, apart from being ‘front page news’, for whatever the news, media might be imagining, these indices mean nothing at all to the majority India.

That’s no surprise, considering the fact that only a miniscule 4% of stock market investments are of retail investors, with 96% being in the hands of institutions! Consider this too – according to a most recent report by Asian Development Bank (ADB), over the last five years, while the share of retained corporate operating profits to GDP has shot up to an estimated 9.1% in F2 ’07 from 3.7% in F2 ’02, the share of wages to GDP has pathetically declined to an estimated 28.7% from 31%. The report further identifies that while pay packages for educated youth are skyrocketing, wages for unskilled labourers have stagnated. Even India’s Gini coefficient (a measure for income distribution inequalities), languishes at 36.2 – instead of being near zero – proving huge inequalities.

Of The Sensex saved our future...?!course, according to the World Bank, the percentage of Indians living below poverty line (earning less than $1 a day) has reduced from 45% in 1994 to 34.3% in 2004, the absolute number of poor Indians (about 400 million) is larger than the US population. If $1 a day was too easy a poverty line, UNDP confirms that India has 78% of its citizens living below $2 a day. How’s that for living in destitute misery? India now proudly also accounts for 1.9 million (18%) of the 10.5 million global deaths among children under five years of age – the highest for any single nation.

In this race of India from ‘underdeveloped’ to ‘developing’ and now to a ‘transforming’ (if the US State Department is to be believed!) economy, the gap between ‘haves & have-nots’ has been clearly increasing; and the Sensex falling or rising means, sadly, nothing at all!

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Source :
IIPM Editorial, 2007

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