Buy Indian products, as far as we can.

By Mohan Guruswamy

Answers to Questions posed by a FB friend.

FB friend: If we do these, can we help Indian economy ?

1. Buy Indian products, as far as we can.

2. Cut down drastically on fuel consumption.

3. Immediately stop buying gold.

Mohan Guruswamy Sir can enlighten us more on this?

Mohan Guruswamy:

1. By and large I agree. But remember foreign ownership of a firm manufacturing and selling goods here doesn't make it a foreign product. The act of manufacturing in our country benefits our economy. Eg. A car. A Suzuki or Ford or Hyundai car is over 90% India sourced and accrues huge value additions here. But buying a Mercedes or BMW means buying a car with foreign assembled parts. Not much value addition and hence must be avoided. Ditto for a Pajero or Jaguar assembled by Indian owned company like Hindustan Motors or Tata Motors.

Eating a MacDonalds hamburger is not the same as eating an imported chocolate bar. (You should avoid it for reasons of personal and not national health.) The dividend stream is the smallest of the outflows of a company. The other benefits to the economy far outweighs it. So buy an Indian manufactured product irrespective of who makes or sells it or what it is called.

2. Cutting down drastically on fuel consumption is good for everybody. Its good for your pocket, good for the trade gap, and its good for the environment. But also remember that every litre of petrol or diesel means 60% tax revenue which goes for the common good. Thats the downside. The best way to help the country is to be willing to pay the full price for hydrocarbon fuels and not demand they be subsidized.

3. Gold is the most useless thing you can buy. It's a dead investment. And also remember, you will never get anywhere near the quoted sale price when you go with your gold bits to the market. Last year Indians imported over 800 tons of gold and it cost $71 billion in cash. Without that we would have been far better off to face the crisis today. Our Current Account Deficit would have been halved.

If you still want to buy gold as an investment, buy Gold Bonds. They are an interest carrying investment that is also useful for the economy

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