My sasural is about 20 light years away from my current residence, which means
- I need to travel long distances
- I need to find loopholes in relativity theory to be able to manage my vacation plans
- Every trip is a good excuse to catch up on reading.
On one such recent trip, I picked up a copy of Business World, and pretty soon I was exasperated by the quality of some of their articles.
To pull out an example (from memory, I lost the hard copy), there was this story about a dip in sales in the automotive industry. The news (facts) were simple:
- Sales of automobiles – in India – in the previous few years have shown strong growth (about 32% year on year)
- Sales of automobiles – in India – in the first half of 2007 has shown a relatively lower growth rate (about 26% or something) over the corresponding period of previous year.
Now, this is obviously bad news for the automotive business. But is it bad news for business in general? That’s what the article tried to imply:
- It said that sales of automotive industry are an indicator of economic activity because if sales of automobiles are increasing, it means that more goods are being transported, which is an indicator of economic activity. Ok, accepted. But the key word is “indicator”. The two things are co-related, but not necessarily by a cause-effect relationship. So, if sales of automotives slump, it doesn’t imply that the economic activity has slowed down or will slow down (which the article tried to imply). It could be that transportation has become more efficient, or that it has become redundant (think paper less offices, work-from-home empolyees, SEZs, blah blah). It could be that transport infrastructure has saturated, or businesses are doing more international trade (which requires alternate transportation). There are 2*n reasons for a slump in automotive sales, which don’t imply a slump in economic activity. Further, the fact is that only the growth rate of sales has slumped, not sales itself, which kind of makes the whole argument moot!
- From #1, the article went on to suggest that RBI should decrease interest rates, to boost economic growth! What! Excuse me, but WTF!!
According to the article itself, RBI has recently increased interest rates to cool down the economy (to control inflation). (Whether policy makers should play with interest rates is itself debatable. See this article). Now, just for the sake of a subset of businesses, the article suggests that RBI change its fiscal policy!? - Macro economic considerations aside, isn’t it just plain good news at an individual level, that automotive sales are slumping!? For example, it could mean:
- Most people who could afford to own a car, do so now, so atleast they are happier.
- People have finally become intelligent and decided to travel by two wheelers instead
- Less cars on roads are going to mean, less pollution, less congestion and a better lifestyle for all
The article doesn’t touch up on these issues at all!
Apalling!
Anyway, with all this food for thought, I had a good trip!
🙂