Nothing to get euphoric about

The Sensex is up and away, and opinion-makers are beside themselves with merriment. India has arrived, reaching out to the world of the rich and famous as in Michaelangelo's Genesis ��� so they would have us believe. All this is nothing short of a delusion.
True, the bull run this time is more broad-based than ever before and the price-to-earnings multiple is a credible and sober 16, but this cannot be taken to mean that stock markets mirror the health of the economy.
The monsoons still determine economic growth more than any other factor; poor monsoons affect farm output and incomes and industrial performance. That we saw high growth in 2003-04 and 2004-05 is in no small measure due to the relatively good monsoon in these two years.
A reversal of this trend and we could slide back to 4-5% growth, as in the late-90s. To the extent that markets reflect corporate performance, they will turn tail as well.
It is another matter if a Ketan Parekh enters the scene and keeps the market going in defiance of fundamentals, with the help of certain private bank bosses. But can such a market be taken seriously?
The economy will have to overcome structural problems for the bull run to seem sustainable. Agriculture is mired in a trap of low productivity and income, with the green revolution having run its course.
Information technology firms are on the threshold of diminishing returns and will have to move up the value chain through innovation to stay as leaders.
The education system is ill-equipped to create an army of skilled workers which can weather gusts of change and ride the wave of globalisation.
India Inc needs to boost not just bottomlines but create jobs so that industrial growth creates its own demand. In sum, we are only a scrawny, dark horse in the globalisation race. Strange, the punters haven't figured that out.