“Should I be investing in India?”
The frequency with which this question was asked earlier has gone down noticeably since the heady days of 2009-10. Then, central banks had just rescued the global economy, and a “reformist” UPA-II, promising permanent prosperity, had been sworn in. Unfortunately for investors, the India story became a tragedy while politics descended into farce. The stock market (as measured by CNX NIFTY index) is up a mere 25% (as of 14 March 2014) since end-2009 (equivalent to roughly a 6% annual return), which hasn’t even protected against inflation. The plight of foreign investors is even worse. The rupee having depreciated 30%, they have earned negative returns on investment. Moreover, Indian bonds have provided no safety either with 10-year yields more than a percentage point (7.6% on 1 January 2010 to 8.7% on 14 March) higher in the given period (i.e. prices are down). Real estate may be the one bright spot, but that too has been moribund of late. Also, given the prohibition on foreign nationals buying immovable property, real estate is usually not in focus for most people asking the question above.
More in the latest column at LiveMint here