Its too late i have been writing since last time. It has been a situation of incessant mess in the Indian Economy with Inflation, Scams, etc. A situation of dismay for every Indian and particularly investors who have been at the losing end in the past couple of months. I intend to brief up the current scenario and see for the positivities as well.
As we know an economic depression is definitely not the only trouble around in our country. As compared to the previous similar headwind kind of situations the reason was predominantly the global slump. But this time as the value of Indian Rupee deteriorates its the Indian Economy having a relative deterioration with respect to the world.
More or less the issue today is of credible governance or the lack of it. The corruption issues and scams that came out in the open over the past few months have dented the investor sentiment to a certain extent. They tend to get nervous when they feel that the government set-up itself is shaky. With the Upcoming Budget, this credibility is set to undergo its ultimate test. There are a whole lot of issues to be resolved before the government.So undoubtedly all eyes and expectations are set high on this one. The issues in common and critical concern are->
1.Future growth and the lack of required infrastructure spending and the removal of bottlenecks that threaten to derail the India growth story.
2.Need to come out with policies that would lay down the foundation for India to achieve the aspirational double-digit (10% plus) growth in the gross domestic product (GDP) in future.
3.Biggest issue facing India today is the compulsion to increase spending on rural development and social schemes to achieve an all-inclusive economic growth. But at the same time, the growing gap in the government finances does not give the government the required leeway to do so and leaves little room for infrastructure spending and urban development, which are also necessary to support the high growth in economy.
As from the Prime Minister, he himself had his few expectations expressed in a number of interviews recently. He admitted that government has moved quite slow in terms of implementation of some key reforms and they would like to see some signals or any roadmap for the next two years in terms of reforms on the tax code, on managing the deficit, spending etc. He expects the finance minister to take some action on the marketing of agriculture produce so that wastage and hoarding and the demand-supply mismatch it creates in agriculture produce can be tackled. He also emphasised the need for a developed debt market in India so that the financing needs of the large infrastructure projects can be fulfilled.
Well lets see for the positives. What we expect and hopefully should be the course of things with the upcoming budget-2011. There is money available domestically and globally. Now it is up to the government and the policy makers to attract the overseas money in the form of long-term foreign direct investment commitment rather than short-term and unpredictable portfolio investments. The solution is to keep it simple and transparent for the investors. As the macro indicators such as the Index of Industrial Production and inflation among others start to fall in place, long-term funds will start looking at India again. The next two to three quarters would also see the impact of higher interest cost and higher raw material cost fully panning out on the Indian companies. Then these investors would be able to take a clearer call on which companies are managing their costs better, which ones have the pricing power etc. Till then India can remain a range-bound trading market.
As I say there is definitely something very bright and promising waiting for the Indian Economy with the Budget-11. Thank you!
Are you expecting a populist budget this time?
ReplyDeleteYes this budget is expected to be basically a populist one as per the need of the common man who has already suffered a lot with more than considerable price rise due to inflation. At the same time Indian Market needs some assurance from the government to stabilize it with some relieving policies. I sum up the ratio to be of 70:30 in favour of the common man which consequently is to benefit the country's economic system as a whole. Keeping my fingers crossed.
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