The economic survey came out today and it was quite interesting to say the least.
http://www.thehindu.com/news/resources/read-economic-survey-2017-18/article22550202.ece
I presonally felt that it hides more in number than it reveals. One example is that ES talks about how the growth in the stock markets is due to demonitization!!! Apparently, investors now have less illicit money and hence are OK putting it in asset classes that require more disclosure. Yet ironically , the document tells us that the PE valuations are at record high and the market risk premium might be finding a new normal.
In the foot notes it does mention that investors are choosing the mutual funds route which have seen a staggering growth of five fold to be at about 1% of the GDP! The authors in my opinion are confusing the cause as a trivial fact. The markets have grown because of the massive advertizing going on behind MFs. Also , the fine brains at commerce ministry mention that such high stock valuations show that the investors expect an economic rebound.
Personally , I dont think that the average investor is sophisticated enough and has any idea of P/E valuations being record high. Most investors are buying into MFs due to the bombardment of emotional advertising everyday. And as such the stock market shold not be seen as a indicator of the indian economy.
Some other points :
The GDP growth rate for this year is estimated to be 6.75% ( The media has been harping it to be 7.5% , but that is the estimate for the rest of the year which will bring the average to 6.75%).
The authors have talked about how the Indian economy is decoupled from the rest of the world to justify the Indian economy going down while the rest of the world's major economies are growning.
They keep changing the countries and time scales to make the graphs look more palatable.
