WHY SOARING SENSEX IS NOT A RIGHT INDICATOR OF ECONOMIC GROWTH
Past few days have evident of many ups and down in financial indicators like SENSEX and nifty and so do with the corona cases in the country. India finally surpassed Russia and secured third position in corona hit list. The rise in financial indicator defies the idea and reviews given against the economic health of the nation. How can that be possible? Are investors not paying attention to the reports or reviews or they are in cashing the opportunity arose due to Corona crisis. Make a wild guess as why shares of automobile will rise when people are not buying new vehicles? This is called economic paradox.
The investors are happy as government announced relief packages and banks pumped up more liquidity in market. However, the economist has already warned investor as this is temporary situation and it would be irrational to be happy about as the G.D.P. is not growing and financial indicator are insufficient to mirror that in realistic term. Economist says that having a good market does not mean having a good economy. They also suggested that India should not only focus on agriculture as even though India replicates the growth of year 1951-52 even then it accounts for mere 2% of G.D.P. On the other hand, investor should be ready to repay the loan after September when the relaxation of six month will come to an end. It is also expect that there will be 5% downfall in Indian G.D.P. There can be a time when N.P.A growth surpasses its previous records. The recent moratorium case is evident enough that how financial institutions are turned into opportunist enough to secure even their rate of interest even in lockdown period. The PIL is pending in the Supreme Court and government has told to intervene. However, RBI has given the extension of time to do the valuation of loss if such waver is given to public.
Pic Credit:- www.india.com
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