Morgan Stanley “talks up” the Indian Economy! Hello!! Deja vu?? Remember the South East Asian Financial Crisis?

Morgan Stanley becomes the latest global bank to “talk up” the prospects of the Indian Economy! Adding to the string of positive reviews and future of India@75, MS released a report which predicts the Indian Economy would attain greater heights by 2030.

Open any pink mag or business website and scroll to the section on India, you are sure to find “glowing” writeups on how this decade is “India’s moment”. The “spin” is commendable and also reflects some realities of what a complex society like India needs to do to “get there” and “arrive”.

Right from Economist to The Wall Street Journal including Financial Times (largely though they do “dissent” time to time), the Western business media sure thinks India is the place where both the “smart” and the “hot” money is headed. Indeed, it almost seems Amritkaal has begun.

Not to be the “partypooper” here but, I’m old enough to remember the exact gushing about South East Asia in the 1990s, which ultimately ended in the “bubble” bursting with the South East Asian Financial Crisis in 1997-’98. Already there are faint indications of “frothiness” in real estate, export oriented sectors, aviation, and to some extent, even services, the “traditional” avenues for global capital.

My concern here is that the “irrational exuberance” around the Indian Economy should not lead us down the path which Thailand, Malaysia, and Indonesia went, as the aforementioned “smart and hot” money is notoriously “lightfooted” and global capital doesn’t respect “flags” and is instead laser focused on “returns”.

Given the recent “brouhaha” over Adani and Hindenburg Research, we should be a bit more circumspect before we let global capital “flood into” our markets and the sectors mentioned above. For instance, both GoAir Airlines and SpiceJet Limited are “struggling” despite the “booming” Aviation sector. Lest we forget, the dust up of IL&FS Financial Services Ltd (IFIN) happened “only” four and half years ago.

Of course, I don’t detract anything from the “India story” and being a direct “beneficiary” of both Financial and Services Globalization, I am all for the “caged” Elephant to be “unshackled” and for India to have its “sunny” future. Just that we shouldn’t repeat the “mistakes” of the Asian “tiger” economies and end up with a “lost decade”, with ensuing political and economic “instability”.


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