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To: Joseph G. who wrote (3985)	8/18/1998 12:24:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 86076

Not sure. The Rupee is slowly eroding, not tanking. I think the sanctions, though not as severe as first announced, are beginning to hurt. Prior to the sanctions itself the economy was stalled or in mild recession. Over the span of last 6 years, the real estate was over-built in major cities. After Hong Kong real estate slump, people of Bombay took a hard look at their own lunatic heights of the property markets. Besides, Bangalore took a lot of charm and the world beauties (-g-) from Bombay. Now, out-of control rise in Bangalore property prices is being checked by shift in businesses to Hyderabad. In general, there is a weakness in the real estate market - both business and residential. My sister recently bought a Flat 10% under the year ago prices. The prev government pulled a tax miracle in January which cut the deficit by about 2 bil dollars. The current Govt is targeting the NRI's to invest in bonds that pay 7 1/2% tax free yield for the next 5 years - in dollars! I suppose, the reserves are in deep doo doo. As with the consumers, most people who can afford cars already bought. Two-wheeler (scooters and motorcycles) transport has become ubiquitous. When I was in college, bicycle is my vehicle. Now a good number of college students commute on two wheelers. Unlike in the US, people in India do not change a vehicle every so often. To some extent, I should say the growth has peaked. Unless the economy grows to a point where people at lower income levels can afford life's luxaries (refrigirator is a luxary in India, atleast it used to be), I doubt if the growth will continue. There is a great demand for computers, though. Everybody wants to learn VB, Oracle, PeopleSoft or SAP and come to the US to get rich. In general, I see a possibility of devaluation - no bigger than 10%. Avoid for the short-term. I think India will be one of the first to recover from the Asian slump.