The press in India the rich are enriched, the poor are becoming poorer

The COVVI-19 pandemic dropped 230 million people below the poverty line in India.Meanwhile, the stock markets have reached heights and the list of billionaires has extended.

Nithin Kamath did not have much to do to move from the status of multimillionaire to that of billionaire.The influx of new fellows on the Indian markets - more than 14 million since the start of the pandemic - has been responsible for exploding the value of Zerodha, the brokerage application of which he is the founder, an emulator of theAmerican Robinhood.

M.Kamath is much less enthusiastic than the Indian media about his inclusion in the list of billionaires in the country, which has gone from 102 to 140 names recently."This label is based on a theoretical value and not on real money," he says.In my head, I am worth the money I have in the bank and not through the emotional value that we give to my business.»»

Zerodha's growth has not changed practically nothing either to its operating mode, except for telework, a practice thatM.Kamath intends to perpetuate."We had a team of 1,100 employees when we had 2 million customers before the pandemic, and now that we have 6 million, our team is still 1,100 employees.»»

When the COVVI-19 hit, inMarch 2020, the Indian government imposed one of the most severe confinements on the planet.Since then, the vagaries of restrictive measures have made the Indian economy - which remains informal more than 80 % - has never been able to find its wander to go.Between April 2020 andMarch 2021, the country's gross domestic product (GDP) dropped by 7.3 % and millions of Indians found themselves without work.

During this same period, the BSE Sensex, the country's main stock market index, was multiplied by 1.8, crossing for the first time in its history the 50,000 point mark in January.

Stock market

Faced with the poor health of the real economy, investors, young and old, turned to the stock market looking for growth.The youngest and most skillful with technologies used Zerodha and other competing applications that allow you to control your wallet without the intermediary of a broker.

Books contracted by the government to revive the economy have made the value of the actions jump.Also a good deal of the good deal, foreign investors have put themselves in the game, giving another push up to the Indian stock market indices.

However, given the great inequalities already present in the country, only a small fraction of the Indians can one day invest in the stock market. Nithin Kamath estime ce bassin de boursicoteurs potentiels à « 70 ou 80 millions»», sur une population de 1,35 milliard.

For the overwhelming majority, the pandemic rather meant a draconian fall in the standard of living.When the press went to cities and villages of the States of Jharkhand, Bengal-Western and Uttar Pradesh in July, the observation was unanimous: everyone had seen their income decrease in substantially during theLast and a half year.Certain government aid, in food form and more rarely bank transfer, made it possible to survive, but many had to go into debt to join both ends.

For Duvvuri Subbarao, ex-Governor of the India reserve bank from 2008 to 2013, theModi government's strategy to invest mainly in business support to support the economy during the pandemic had the consequence of exacerbatinginequalities.

« On met l’accent sur la croissance, mais moins sur la croissance qui crée des emplois et contribue à réduire la pauvreté»», noteM.Subbarao, who is also concerned about the disinvestment of the state in health and education."The problem is not as long as large companies have prospered due to the decisions ofM.Modi, but that the poor did not take advantage of it at all.»»

In the opinion ofM. Subbarao, le risque est maintenant que la reprise économique post-pandémique se fasse en forme de « K»», soit que les riches continuent de s’enrichir et les pauvres de s’appauvrir.Already, before the COVID-19, the 10 % of the wealthy Indians had 80.7 % of the wealth of the country.

"The growth of inequality is not just a moral issue," he adds.It lowers consumption and mine long -term growth prospects.»»

Financial bubble

Nithin Kamath is also concerned about the repercussions of inequalities on the Indian economy.He also advocates, among other measures, the adoption of an inheritance tax so that wealth in the country are better redistributed.

If it remains optimistic over a horizon of a decade,M.Kamath believes that the Indian economy is not at the end of its sorrows for the moment.It is obvious according to him that speculation of the last months has created a bubble which threatens at any time to burst."It is difficult to say when it happens, but internally, I keep saying [to my employees] that we must prepare for a 50 % decrease in our income in the next year and a half.»»

When this bubble broke out, small investors will lose a lot and may temporarily withdraw from the markets.M.Kamath is nevertheless hopeful that his business will be able to absorb the shock and even remain profitable.

However, it is aware that those who will suffer from the burst of the bubble will be the most disadvantaged in society.Because if the correlation between market health and that of the real economy is large, it most often only works one-way, he recalls."The economy that is bad and the markets that are fine, it often happened in the past.Mais les marchés qui s’écroulent et l’économie qui continue de bien aller, ce n’est jamais arrivé nulle part.»»