Rathin Datta, Chairman, PwC India

We live in economically unique times. Perhaps for the first time in India's history, the values of all asset classes are rising together-stocks, bullion, real estate, debt instruments... even interest rates are rising. Classical economic theory says some of these share an inverse relationship with each other-stocks and bullion typically move in opposite directions, as do real estate price and interest rates-but someone evidently forgot to tell these asset classes that. However, though this is a new phenomenon in India, it is not without precedent in world economic history.

Amiya Bagchi, economist and Director of the Institute of Development Studies, says: "This is how the Thai Tiger became the disabled Siamese Cat in 1997." He's obviously referring to the East Asian currency crisis. "Thailand built up what we call a bubble economy between 1988 and 1997; it is characterised by a rapid speculation-fuelled increase in asset prices; this is not sustainable over the long-term. In India, too, the rise in prices across asset classes is fuelled by speculative capital. The abolition of capital gains tax has only accentuated this trend. Everything naturally is heading north. This artificial rise in values also encourages money laundering; some people use the arbitrage opportunities to legitimise their unaccounted wealth," he says.

Bagchi, however, does not apprehend an East Asia-like meltdown in India, though he adds that individual investors may be affected. "That's because our economic fundamentals are better, stronger and more diversified. And the Reserve Bank of India is more conservative than its Thai or other East Asian counterparts. But the uptrend will definitely reverse when investors find other, more attractive, investment destinations and divert their 'hot money' there. A lot of people will get badly hurt when that happens," he adds.

Rathin Datta, Chairman, PricewaterhouseCoopers India, strongly disagrees with this view. "The most compelling argument against an asset bubble is that a large part of the investment is being pumped into productive industrial, social and personal assets. This massive demand is raising asset prices and leading, consequently, to a shortage of money; hence, the rising interest rates," he adds. "The simultaneous rise of stocks, bullion, real estate and other instruments reflects the confidence of the investing community in the Indian economy," adds Dipak Rudra, former chairman of UCO Bank.

India Inc agrees wholeheartedly with this assessment. "If I look at it over a 12-month horizon, I expect all asset classes to move north, of course, with some interim corrections. Yes, there are speculators making money out there, but there are equally serious investors as well," says Sanjiv Goenka, Vice Chairman, RPG Enterprises.

PwC's Dutta puts the phenomenon in perspective. "There are stages of economic development. Interest rates and returns on some instruments begin to fall in mature economies. We had wrongly assumed that India had reached that stage a few years ago when rates started declining," the PwC Chairman explains, adding that he expects the current all-round buoyancy to continue for at least another three-to-four years, barring some major natural or man-made catastrophe.