The European deal yesterday to cut Greek debt by half and to re-capitalize European banks (those that would take a hit on account of the deal) has led to much relief around the world. Stocks worldwide rebounded by 2-5% on the back of renewed confidence in the euro, the European economy and European leaders. The Greek deal – alongwith the data of the US economic growth (2.5% GDP growth in the Sept quarter) – could mean a lot for India
A recovery inEurope means that the nervousness plaguing foreign funds will reduce. Hopefully, if we now take decisive and bold policy actions, the funds will not only stay invested in India US
If we have to capitalize on these favorable global conditions, we have to break out of the negativity that has gripped the country. Corruption issues have (perhaps rightly) dominated media and public discussions over the last 15-18 months. The public agitation by Anna has made sure our law makers prioritize the drafting of new laws to deal with corruption and to give confidence to the people. I am not saying that these issues should not have been raised, but its time now to get back to focusing on the economy. The cleansing of the political system has to happen alongside economic growth; not at the cost of it. The government has been making statements that it is committed to bringing a strong Lokpal bill – maybe even making it a constitutional body – and we need to give it some time now. It’s important not to let the engines of growth stop for whatever reason. It’s important that we stay focused on the global opportunity available to us – an opportunity that we cannot take for granted.
The government has to take decisive action. The winter session is going to be a test of the government’s ability to govern. It has a unique opportunity now to seize the initiative. The BJP is a little downbeat – with the corruption scam in Karnataka, the resignation of two CMs (in Karnataka and Uttarakhand), the Gujarat Lok Ayukta embarassment, the party’s obvious involvement in the cash-for-votes scam, its likely involvement in the 2G spectrum issues during its own tenure at the Center……and the internal power struggle for the PM’s job exerting pressure on the party. Even Team Anna has been a little on the receiving end from media and others on account of its internal fissures. Also, the personal integrity of Team Anna has been severely hit – and no matter what Anna supporters may say, their moral authority to kick Parliament around with another agitation is severely dented. The timing is right for the government to kickstart the legislative process – starting with the Lokpal Bill and then taking up the several other bills in the pipeline.
The Land Acquisition Bill, the new manufacturing policy, the new mining bill, the new Telecom policy, the new Whistleblower bill, the new Public procurement bill, the policy to allow FDI in multi-brand retail…..are all waiting to be cleared. If the government can ensure that these go through, it would set the stage for a renewed thrust towards economic growth.
I have argued earlier against getting too worried about the inflation numbers. Most of the inflation is coming from food articles…..and today’s story in the papers clarifies that the inflation is not in wheat, rice and pulses, but in veggies and fruits. With the onset of winter, supplies of veggies are bound to improve and that should provide relief to urban middle-class consumers. Apart from this, the urban middle-class really has no reasons to complain – their salary increases take care of any impact inflation may have on their purchasing power.
In the September quarter, top listed companies have reported healthy revenue growths – upwards of 25% as per a recent report in the papers. However, profit margins have been under pressure on account of higher input costs. The higher revenue growth indicates that demand is solid – and in spite of inflation, demand is not slacking, except in some sectors. It’s time that the RBI realized the futility of continued interest rate hikes – and reverses the practice. We need lower interest rates to encourage investments – else we’ll have a problem with GDP growth in the future. Food inflation cannot be removed by increasing benchmark rates….
As expected, worldwide commodity prices rose in an almost instantaneous reaction to the Greek debt deal. Oil prices soared and nullified all effects of a stronger rupee…..landed price inIndia India
The real truth is that if we are smart, we can gain from the existing global conditions. At times, I grudge the Chinese their system of government. There is no scope for dissent there; no scope for agitations; no satyagrahas; no nothing. It’s not like there isn’t any corruption there – but inChina India
A recovery in
If we have to capitalize on these favorable global conditions, we have to break out of the negativity that has gripped the country. Corruption issues have (perhaps rightly) dominated media and public discussions over the last 15-18 months. The public agitation by Anna has made sure our law makers prioritize the drafting of new laws to deal with corruption and to give confidence to the people. I am not saying that these issues should not have been raised, but its time now to get back to focusing on the economy. The cleansing of the political system has to happen alongside economic growth; not at the cost of it. The government has been making statements that it is committed to bringing a strong Lokpal bill – maybe even making it a constitutional body – and we need to give it some time now. It’s important not to let the engines of growth stop for whatever reason. It’s important that we stay focused on the global opportunity available to us – an opportunity that we cannot take for granted.
The government has to take decisive action. The winter session is going to be a test of the government’s ability to govern. It has a unique opportunity now to seize the initiative. The BJP is a little downbeat – with the corruption scam in Karnataka, the resignation of two CMs (in Karnataka and Uttarakhand), the Gujarat Lok Ayukta embarassment, the party’s obvious involvement in the cash-for-votes scam, its likely involvement in the 2G spectrum issues during its own tenure at the Center……and the internal power struggle for the PM’s job exerting pressure on the party. Even Team Anna has been a little on the receiving end from media and others on account of its internal fissures. Also, the personal integrity of Team Anna has been severely hit – and no matter what Anna supporters may say, their moral authority to kick Parliament around with another agitation is severely dented. The timing is right for the government to kickstart the legislative process – starting with the Lokpal Bill and then taking up the several other bills in the pipeline.
The Land Acquisition Bill, the new manufacturing policy, the new mining bill, the new Telecom policy, the new Whistleblower bill, the new Public procurement bill, the policy to allow FDI in multi-brand retail…..are all waiting to be cleared. If the government can ensure that these go through, it would set the stage for a renewed thrust towards economic growth.
I have argued earlier against getting too worried about the inflation numbers. Most of the inflation is coming from food articles…..and today’s story in the papers clarifies that the inflation is not in wheat, rice and pulses, but in veggies and fruits. With the onset of winter, supplies of veggies are bound to improve and that should provide relief to urban middle-class consumers. Apart from this, the urban middle-class really has no reasons to complain – their salary increases take care of any impact inflation may have on their purchasing power.
In the September quarter, top listed companies have reported healthy revenue growths – upwards of 25% as per a recent report in the papers. However, profit margins have been under pressure on account of higher input costs. The higher revenue growth indicates that demand is solid – and in spite of inflation, demand is not slacking, except in some sectors. It’s time that the RBI realized the futility of continued interest rate hikes – and reverses the practice. We need lower interest rates to encourage investments – else we’ll have a problem with GDP growth in the future. Food inflation cannot be removed by increasing benchmark rates….
As expected, worldwide commodity prices rose in an almost instantaneous reaction to the Greek debt deal. Oil prices soared and nullified all effects of a stronger rupee…..landed price in
The real truth is that if we are smart, we can gain from the existing global conditions. At times, I grudge the Chinese their system of government. There is no scope for dissent there; no scope for agitations; no satyagrahas; no nothing. It’s not like there isn’t any corruption there – but in
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