I know why Economics is called a dismal science – because economists and economic writers an see only the bleak part of life. They first demonised demonetisation. Then they took all deaths all over and converted that to a gau rakshak based lynching. Now they are saying GST can only create huge inflation and burn the economy.

So some of my observations

  • For all the people around me, standard of living has ONLY gone up
  • Rate of change of prices aka inflation is around 3% – an all time low that I have seen
  • NOBODY is complaining about inflation at all
  • Commodity pricing power has collapsed
  • All children of cousins and friends are studying abroad or in expensive Indian institutions
  • Middle class India is found in airports, railway stations are for the poor.
  • Indian Growth rate is either 7% or higher – the arguments are only about the decimals over 7is!
  • Middle class India is paying more than Rs. 50L for education for each kid
  • Middle class India is spending in millions for children’s wedding
  • The question is always – ‘which car do you have’ our parents asked ‘do you have a car?
  • Child mortality has collapsed
  • Longevity is increasing – 90+ is the new norm?
  • Middle class is cribbing about luxury items price rise – higher education and expensive treatments
  • Exponential growth in capital available for young entrepreneurs
  • World GDP is at an all time high, adjusted for inflation
  • India’s cabinet ministers are ALL talking about growth – and achieving them partially at least
  • Our airlines are growing at 25% p.a. and look like they will do for 5 more years
  • 3 of our airlines have/ have orderedpr more than 100 aircrafts
  • Our planes and hotels are full, and you cannot find parking in clubs and restaurants
  • Poverty is collapsing INTERNATIONALLY
  • Migration out of UP, Bihar and AP is again at an all time low
  • Agricultural labor is in short supply because low end jobs are being created – talk to the farmer

You still want to find a reason to crib? I agree that a bull market has lulled a lot of people into believing that 18% is the new normal and 22% p.a return in midcaps is their birthright. I find IFA assuming 18% pa. equity fund returns over 20 years, and find that amusing.

PS: I do think that people are generally pessimistic and love criticising those in power and those who are successful. The middle class will keep cribbing about how honest they are – while taking their money and investing in their parents name in order to divert income. The younger kids will routinely provide fake rent receipts, fake medical bills, throw thrash all over – and say ‘how clean is Singapore’. Like Rama Bijapurkar said ‘we are like that only’. We are.

I am aware that the market is at an all time high. I do agree that the risk reward ratio is not favoring the new investor or the coward investor. I am fully invested – and my cash is waiting for some more juicy deals. All said, I am not expecting an imminent crash. We could remain at elevated PE levels – which means LOWER returns. We may correct the PE by increasing earnings, or market stagnating till ‘E’ increases.

Let me reiterate, I am fully invested, but do have a nice big trading position – and not willing to commit too much to investing at current levels. Repeat, I do not mean a crash is imminent.

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  1. “The question is always – ‘which car do you have’ our parents asked ‘do you have a car?”
    This is so true – one such incident happened with me; when one of our relative visited our home and was surprised on the fact that we don’t own a car. 🙂 🙂 🙂
    Different benchmark to assess the success I say 😛

  2. One key metric that gets ignored is avg household debt. Yes the middle class is rising but so is the debt. Taking a loan was almost taboo back in 80’s now you cant find a single person in middle class without some sort of loan (home,car,marriage,education,creditcard). So the progress is being done with tomorrows money so there is bound to be a feel good factor for a few decades to come.
    Rural debt is at an all time high, coupled with govt waivers this is going to put stress on banks unless govt bails them out. The next crash will be knows as the banking bubble, govts will fails if they try to support the banks from failing. While the party lasts lets enjoy our so called standard of living and order another 100 more planes for airindia at 25cr debt. Its time to PARTY!!!!

  3. Seriously how the parameters of assessing success have changed: “which car” vs “do you have a car” is just one example. Never even imagined about foreign vacations when I was a kid, now it is taken for granted! Going to exotic oriental destinations is as mundane as buying bread from local grocery!

    But thankfully, some folks are sane regarding cars [at least in Bangalore] – there is a lot of demand for Uber pool – that too from really well to do people.

  4. Food for thought, Subrabhai. Gratitude!

    I must admit I was a happy cribber, but shall reconsider before fault finding the next time.

  5. I wonder when I read this type of articles whether Subra is satirical or just making fun. I really wonder why he thinks that so called middle class is rich and the children are studying in foreign, taking luxurious treatments, spending lavishly on hotels. It seems he does this all and he false thinks he is middle class and so attributes this to whole middle class. He often says that he doesn’t trust govt data but takes CPI so seriously. Vegetable prices increasing, eating out (i meant basic eating out in a roadside hotel), fuel prices increased, public transport prices increased, small schools also charging higher fees, real estate prices are still in the sky and people are buying only with loans. He just likes to write about so called middle class who are spending money in 5* hotels, Switzerland, studying in foreign, living in 2 crore flat etc.

  6. Very true….great article..
    The same Middle Clazz which fills clubs,restaurants,flights,expensive theaters would come on streets if price of LPG cylinder is increased by 10 RS

  7. I also echo Sreekanth’s comment above. I am not sure whether Subra sounds sarcastic on this topic.
    The same thing happened during the NDA campaign in 2014. They tried to sell the ‘India Shining’ story by seeing all these hunky dory glib of the ‘middle class’. But the real India lies elsewhere. Who told migration is ceasing in rural areas? Come to Kerala and you can see Indians from all over India flocking the job market to take up jobs which locals are unwilling or lazy to take up.
    Instead of blaming the farmers’ uprising as politically motivated, try to think from their perspective. De-monetization effectively put them more in a debt trap. People were exhorting to bear the short term pain. The ‘middle class’ can bear it with their plastic monies. But its a matter of daily survival for the rural folk. And they comprise the major chunk of our population. Not the vocal ‘middle class’.

  8. Great post, and a perspective which everyone needs to think and analyze on, there are things mentioned in the blog which are so true like – “The question is always – ‘which car do you have’ our parents asked ‘do you have a car?”. My father in law had the same question when we went for the discussion my marriage, how much I earn and which car I have, then you mentioned about middle-class people can now be seen in airports.

  9. The party cannot last long. Consumerism culture will have to end at some point in the future. For example USA appears to have peaked out on consumerism based on perpetual credit. Credit is nothing but borrowing money that doesn’t belong to us for buying things that we do not require. Right from the year 1970, when gold standard was eliminated and unlimited dollar money started getting printed, the deterioration is visible everywhere such as climate change, terrorism etc., When excess money is printed and given out as loan, the consequence is opulence and perversion which is palpable today.

  10. One thing is clear. It is true that Middle Class is stretching beyond themselves to buy cars, gadgets and expensive vacations. After social media, this frenzy picked up. If your neighbor or colleague went on foreign vacation, you want to score a point by going to much expensive exclusive location.

    Thanks to e-commerce and increased global travel, society is turning hell materialistic than ever before.

    No one want to hear about Subra’s personal finance, discipline, values, retirement and compounding etc..

  11. I remember the first time I was submitting income tax proofs in my company. Apart from the usual buy life insurance advice practically 99% of my colleagues were filling fake rent receipts and at being financially ignorant at that time I almost did the same. When i reasoned out what I was doing was basically wrong, everyone around me was like, you’re overthinking this just fill out the receipt and sign. To this day I haven’t filled out the fake receipts rent or medical. As you say Subra, we are like this only.

  12. Before reading the article I used to think I was a middle class guy. I might have to think again now. I do not own a car. I still travel in trains. I am afraid of family planning because I am afraid I might not be able to afford a kid. For holidays I go to Himachal and uttranchal. I think I might be well below poverty line as per the author 😉

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