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Utterly delightful
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On reading Jacob Koshy’s wonderfully quirky piece on the frog species controversy (Mint, 12 February),I was spurred to write to you to convey my utter delight at the way Mint has shaped up. The Profiles are excellent, some of the columnists are world-class, Mark to Market seems right on the money, more often than not. In stories such as “Hungrier stomachs in a barrelling economy", issues concerning “the other India" are being handled constructively. One hopes that Mint continues to encourage such pieces and maintain its uniquely public policy of journalistic ethics. The Saturday edition is by far the best weekend edition of any Indian newspaper. My only quibble: Wouldn’t a few more indepth articles by academics and economists in the Views pages add to Mint’s weight?
- Rohit Thombre
As the famous investor Warren Buffett had said, “It’s only when the tide goes out, you discover who has been swimming naked". Most of us were caught in such an alarming state of undress as the shares of Reliance Power Ltd fell as much as 17% on its debut, because it was overpriced.
Operators in the Indian stock market have become used to making easy money in initial public offers (IPOs) over the past couple of years, given the irrational exuberance in the stock market.
However, the recent Reliance Power debacle, which is a setback to the fortunes of India’s record pipeline of IPOs this year, is a lesson that the government as well as the Securities and Exchange Board of India (Sebi) need to learn.
Millions investing in the stock have had their hopes and dreams shattered. The listing has especially hurt those who gambled on a high listing price and had borrowed money to buy these shares.
A company which does not have any operating assets was surprisingly allowed by Sebi to go ahead and raise money from investors. Reliance Power has neither an operating history nor meaningful earnings.
The result of all this is going to be a sad one, because the typical retail investor had just started returning to the stock market, and his confidence has been badly shattered.
This is not good for the overall stock market.
One needs to examine the role of Sebi and other regulatory bodies because, by now, it is clear that the issue was highly overpriced.
Anil Ambani was perhaps afraid to risk his own money and has thus passed on the risk of ultra mega power projects to Indian investors.
- Tsewang Dorjey
Niranjan Rajadhyaksha’s “Our urge to splurge" (Mint, 13 February) said the net savings rate for households has barely budged.
I was wondering about the following points:
1. Don’t the CSO/NSSO surveys only measure expenditure (i.e., out of take-home incomes)? Forced savings, such as PPF, etc., would probably not be accounted for in this survey. These savings would certainly have risen for the middle class, given the overall rise in salaries since 1999-2000.
2. Wouldn’t savings patterns have changed over the past seven years as well? Indian households have the option to save their incomes in many more instruments today then they did seven years ago (though whether they use these instruments isanother point of discussion). If saving is being done through long-term pension plans/mutual funds/IPO investments rather than FDs, a smaller amount of savings would generate a larger amount of total wealth.
3. The point about the net savings rate barely budging thanks to increased household debt is well taken. But, if a large part of this debt is going into houses or IPOs which are increasing the wealth of households, this may not be quite as important. I think a more useful indicator here would be the trend of household leverage.
- Aadisht Khanna
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