To the Editor,
In the last week of November there was much excitement in the Indian stock market as Reliance Industries rapidly dethroned Tata Consultancy Services (TCS) which had a market capitalization or market value of about Rs 8 lakh crores and was the most valuable company in India. Reliance became the first company in India that crossed Rs 10 lakh crores in market capitalization. Analysts as usual are trying to figure out what led to this rapid rise. Was it some changes in the Telecom policy which would benefit Reliance owned Jio or was it due to the recently announced strong alliance Saudi Oil giant ARAMCO etc etc.
Nevertheless what very few people have noticed is the performance of the financial services group HDFC which is into banking, housing finance, insurance and mutual funds. The HDFC group has recently shot past the hitherto largest Indian industrial group the Tatas and also Reliance. What was started as an enterprise by government owned financial institutions, HDFC today is majority foreign owned though the management is still Indian. In Fact HDFC Bank is being listed as one of the outstanding banks globally and has more than double the market value of the largest Indian bank, the government owned SBI.
We see daily in the media that economists are lamenting the plummeting figures of growth in Indian GDP from the heady 8-9 to now below 5 per cent. In fact the latest figures are 4.5 per cent and the next quarter might be even lower. With the government in denial and arrogantly rubbishing any inconvenient economic data, Dr Subramanian Swami an economist and ruling BJP’s MP in the Rajya Sabha suspects that the actual growth rate is perhaps 1.5-2 per cent. That is less than the population growth rate of 2.4 per cent!
But then what explains the stock market indices hitting record highs? It clearly shows that the stock market yo-yo has very little to do with the real economy where farmers are facing great agricultural distress, working class is faced with layoffs and youth are faced with unprecedented unemployment while the cost of education and health care have zoomed up.
This is another glimpse of today’s economy where it is increasingly dominated not by manufacture, services or agriculture in other words the productive sectors of economy but the wholly parasitical and speculative finance capital. The alarming thing is that there is a concerted move to move people’s house hold savings towards this speculative financial sector through mutual funds etc. In fact increasingly workers’ pension and provident fund are being pushed towards stock markets with the false promise of higher return. This is a sure road to disaster.