Why are the Indian so resilient in terms of creating wealth?

We have few issues to deal with every time it comes to investing. Particularly in reference to equities and equity linked products. More often than not the markets around the world are nervous. And the experts are never tired of harping on how dangerous is the macro and the micro conditions of the world economy. The best of the best, the capitalists, the pragmatic communists, the right winged liberals and the right winged fundamentalists and of course the progressives come to Davos every year, hoping and also successfully convincing the Governments around the world that any institution can be bailed out with little help of the ex-chequers money!

Let us very sadly remember that the world which gloated on the greed and pride in selling asset backed mortgages brought innocent citizens to disaster. In United States of America alone, millions lost their jobs! And… their homes. We called it subprime crisis.

And yet we continued living our lives, expecting nothing, having nothing to give save the eternal hope that it shall be different this time. The Chinese President, Xi Jinping, accepted in his speech that all the economies are so intricately linked to one another that you cannot but jump into it. During the great American subprime crisis, Bear Stearns was destroyed. Lehman Brothers was destroyed. The image and capability of all the major American banks were dented. And yet the asset backed mortgages continue to rule the roost.

However I am not here to spell another doomsday in near future. Frankly I doubt whether anyone can. Yet, like all, we are deeply concerned about these few yet unavoidable issues.

1.      The reemergence of BREXIT.

2.      Demonetization in India.

3.      Sluggish growth in world economy.

4.      President Trump.

5.      Emergence of nationalist leaders.

6.      Devaluation of currency in emerging markets.

Who suffers? The people.

Why? Because they are uncertain about  future outcomes.

The truth is we have had greater problems in the past.

Let us come to the first problem. Let us not go in details but it may suffice to say that the BREXIT shall only show true colours may be after a couple of years.

The second point related to demonetization is very interesting though. The GDP should come down by at least 100 to 150 basis points. The World Bank has already cut its projections by around 100 basis points. The demonetization is not the issue. The issue is of a post digitalized India.

For point three, World economy can only pick up with newer innovative areas of wealth production and following job creation. That may take a couple of years.

Point four. Let us look at the emergence of President Trump and Indian Prime Minister Sri Narendra Modi. Both are nationalists to the core. And… they are astute businessman to the core. Both came to power by their promise to serve their country and people catering to the nations need first. Hence the slogan Make in India or Make in America. So Trump is good for America! At least, for the American companies!  

The major areas of problem lies with the emerging markets where the dollar is a stronger currency than the national one and where the total import is greater than the total import. India is suffering.

Yet again I come to speak a bare truth; the truth which the Indians have learnt and have persisted with it. Even when the world economy suffered in 2008, the Indian banking system was extremely resilient. 

And it came from a very interesting habit of the Indians.  

What are those habits that make them bell weathers in all forms of adversities?

Well, to be frank, it is the unfathomable desire amongst all to save!!!

Yes save money! 

Remember Della in The Gift of the Magi? How she would bargain with the vegetable seller and the grocer for pennies? That is it. Right from the child to the old man is eager to save money in India. The children are taught delayed gratification. They are taught to save small and dream big. And in all probability it is cultural. The child saves over a long period of time to buy a bicycle or may be a fancy dress. The man saves to buy a home for the family. And remember if the real estate prices are very high they won’t even look at them !!!

They wait! They wait patiently, even for years for the lending rates and the housing prices to come down. No Indian buys an overpriced house. The old man saves money so that he can pass it off to his next generation. Remember there is no taxation for passing their wealth to the successors! And all is part of a cultural habit. This, this very simple habit has seen them grow wealthy over the years. And without much trouble!!!

This simple habit of savings and investments is what works wonders for the Indians. This is what make them value what they have!!!