I meet pupils who are in the final and pre-final year students in engineering colleges; I used to ask them one simple question. What if I give you, say an Rs.1900? Per month, what would you do with that? I keep on listening to a set of patterned answers which have two to three options. Some say that they would buy clothes; some to hang out in eat outs and some in purchasing gadgets. They don’t even consider buying a book. When I asked them why don’t they buy books? , they say that their parents are there for them to buy them books. Then diving more into it, if asked what kind of books their parents would buy them, it would be text book of the stream that they are studying in the college. It is not a bad thing that parents buy those books, but the point is they never read anything that is not associated with marks, grades and credentials. The post here is not about the learning out of syllabus, but it is about the amount of knowledge a student or an Individual has on finance and wealth. Is this one so important? Come let’s explore together.
A guy or a girl, who enter into a work force which are paid heavily definitely struggle to cope up with the money they are getting. I accept that software companies are not as heavens as it was used to be five years before, yet these people are getting a handful of salary. The problem comes when they are all alone in managing his money and finance. An interesting study says that people in software booze because they have money and no other reason. I used to interact with some people who are into software and booze of course. Whenever I ask them why they were boozing, they come up with the story of stress. I suggest them to spend a day with Eureka Forbes sales person. I wish they can at least then understand the real context of stress. As per my conclusion, the word stress has been inserted to our community by the western world while India opened herself for globalization. I have a small story to share on that before getting into the finance matter.
What is the heritage of dancing in India, especially in south India? No, it’s not Bharathanatyam. It is a dance called Dheveraatam and Karakaatam. Now please try and answer this question. When would one dance? Arguably when one is very happy and expressing his joy. Have you ever seen a group of people who while dancing, while at their peak of happiness, carry a weight in their head and balance, so that it does not fall? So the point is we Tamil people are genetically advantaged species while it comes to coping up with stress. So the people who are in software, booze not because of stress, but because of their poor money management skills.
In total of India’s 1.3 billion people, you would be shocked to know only 400 million people have bank account. That is approximately 29% of the total population. If somebody says that the people in the rural areas are the only ones who don’t have an account, please verify your facts. The point is how many youngsters within the age of 25 know to draw a DD in a bank? They are provided with an account and their ATM card from their company and they very rarely use their checkbooks, even if they use, they use it in a very casual way. My grandpa used to have an entire record slip which would be in the cheque book itself after all transactions by that cheque book.
I understand with all the net banking and mobile banking facilities all these stuffs are unnecessary. But my point is they know very few things about banking, even those net banking and mobile banking apart from withdrawing money from ATM. Ask a person who has just got out of the college or studying the final year college, what is the biggest drawback of India on the aspect of growth. You will get an immediate answer of poor infrastructure. But how does government rise funds to improve infrastructure. It cannot be done through tax as almost 70% population’s money transactions are mysterious or not traceable. If you suggest that it can raise funds by equity market, you have a bigger shock waiting. The total amount of money invested by FII in total Indian share market is 83%. The total amount of Indians who are into equity market is only 18 million. That constitutes only 7.2% of the total population. So even if a good government wants to raise funds to improve the infrastructure, it is left with no fund left.
hat is the problem of having FII’s Investment driven equity market? Everything is fine until they believe that this is a good place to invest. Even though India is one of the few places where global investors would put their money in, but considering the global economic position, they may pull out their funds selling shares on any day. India has a high liquidity state for FII’s. George sores is a very influential investment banker. He made one billion dollars through hedge funds while the whole US was shaking due to recession. When asked him to define equity markets, he replied with just six words. “Belief makes it; Panic breaks it”, that was what he said. So if FII’s happened to withdraw money from our equity market, then it would create a great panic. This scenario can be easily avoided. India has a huge human resource potential. If only 50% of the people enter into direct equity market (of course with all necessary understanding of it), Indian Equity market would rule the world. It would be a fine step to make Rupee as a powerful currency too.