Clipped from: https://economictimes.indiatimes.com/hindi/markets/share-bazaar/sensex-indicates-problem-is-over-but-it-has-just-started-raghuram-rajan/articleshow/80269817.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Car sales are increasing, due to which demand is increasing from the rich people of the country. But the sale of two wheels is not increasing. This is to say that Raghuram Rajan, former Governor of Reserve Bank of India. In an interaction with Maithili Bhusanurmath of ET Now, he openly discussed the state of the economy. Let’s know the major part of this conversation.
Sensex has reached close to 50,000. How do you see this big difference between the movement of the stock market and the economy? Is there a big shock?
It is difficult to say. You have to look at the world. Bitcoin reached $ 10,000 to $ 40,000 at the beginning of last year. It is a complete bubble. It does not create any kind of value. This is an asset that cannot be used for payment. My friend Austen Goalsby says that he does not take payments from bitcoins even in a Bitcoin conference, because it is very expensive and still climbing. The question is why are people buying bitcoins? They think it will go up. It is like creating a bubble at the level of thinking.
Tesla is another example. Its valuation has outpaced solid car companies like Toyota and General Motors. Still I would like to say that I do not want to be an expert of the stock market. I do not know about it. But, I would like to say that this is not a good time to be diversified (investing in different assets).
So do you see the disconnect?
Definitely in terms of demand and results. After a long time, demand is coming from the rich class in India. You can see this in the statistics of auto sales. Car sales are increasing, but two-wheeler sales are not increasing. The reason for this is that both of them cater to the needs of different classes. The upper middle class is buying cars, while the lower middle class and poor people buy two-wheelers.
Rich people are happy because of their wealth. Those who have no money, their situation is not good. It is very important to see where the demand is coming from. According to an estimate, 18 million jobs have been lost in India.
How do you see the global economic scenario?
With the introduction of the vaccine, it is expected that the corona epidemic will come under control. There is some uncertainty about vaccination, but by the third quarter of next year, most of the population in industrialized countries will be sustained. The question is how much control its second wave brings and what steps are taken for it. Britain has taken strict steps to control its second wave.
Second, changing the form of this vaccine is also difficult. Will the existing vaccine work on its other form. The answer is yes. But it is not completely clear. The market is expecting a faster recovery from the second quarter of this year. This is the reason why all asset classes are showing boom. It is also a boom in the Indian market. The question is, how correct is it given the economic situation.
aniltikotekar4sme.com 