Investment company Ambit, in its report, has urged the investors to invest in those companies which have more exposure in the South than the North as it found that there is more 'social unrest' in the northern part of the country.
The North has seen a rise in communal violence, farmer and civil protests, said the report, adding one of the reasons for the social unrest is the youth remaining dissatisfied due to lack of jobs and tepid wage growth.
The report, that analysed 13 states, stated that social unrest lies majorly in four states — Uttar Pradesh, Madhya Pradesh, Punjab and Haryana.
In January, a leaked copy of a report by the National Sample Survey Office (NSSO) claimed that the unemployment rate stood at a 45-year high of 6.1 percent during 2017-18.
This can become problematic as it can lead to a disruption in the production, particularly in the North, as the region has seen more unrest due to lack of jobs.
"Unless the jobs problem is resolved aggressively, the next decade may not be as peaceful. And whilst the problem of economic discontent remains at large, there is also a risk of India's political discourse getting captured by competitive populism," the report stated.
Ambit advised the investors to stay away from 'discretionary and leveraged consumption plays', reasoning that the household savings ratio of the country has hit a 20-year low of 16 percent in the financial year of 2016-17, which could result in a further drop of India's overall GDP growth. This is because the savings pool of a country can only grow if the economy is able to create jobs and in turn, see growth.
First Published: Feb 19, 2019 1:34 PM IST
