Expert Zone

Straight from the Specialists

If change does come in 2014

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The market is pregnant with expectations of a change after the general elections which must be held by next May. You would have to travel far and wide before you come across anyone in India’s financial market who is not hoping – even praying – for change.

The mood on the current policy direction is so gloomy that any alternative is looking like manna from heaven.

I am obviously not competent – I doubt anybody really is – to predict the outcome of the elections. In a vast and varied country like India, forecasting national trends with any degree of reliability is hard. But it is safe to say that a strong momentum for change is being built by BJP’s prime ministerial candidate Narendra Modi.

While a victory for the BJP is far from certain, it is still pertinent to reflect on what a Modi-led central government could mean for the markets and the economy.

Invisible hand of market at work

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

India’s economic situation is at least grave, if not exactly in dire straits. Growth is at a decadal low, consumer inflation is persistently high, jobs have never been as scarce, the currency is volatile and the investment cycle is showing no signs of revival. Many of these problems are a result of bad policy and global economic conditions, but several are also the outcome of a natural economic cycle.

Asian financial crisis and lessons for India

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Several economists have gone to great lengths to say that India in 2013 is not facing a repeat of the 1991 balance-of-payments crisis or the Asian financial crisis in 1997. Clearly, the crisis India faces now is unique – as most economic crises usually are.

That does not mean there is nothing to be learnt from past crises. We believe there are several similarities between the Asian one and India’s situation today.

Budget 2013: A high-calorie budget

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(Any opinions expressed here are those of the author and not of Reuters)

India’s left-leaning government believes in the ‘eat more, burn more’ philosophy in managing its finances. Budget 2013 takes that idea further with an even stronger projected rise in spending.

If the increased spending is aimed at productive use, it may still end up doing some good. But the track record does not inspire confidence. I hope that after talking the talk, the finance minister will not lose his nerve when it’s time to walk the walk.

What we want to see in Budget 2013

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(Any opinions expressed here are those of the author and not those of Reuters)

Over 15 years have passed since P. Chidambaram presented what was called the ‘dream budget’. It was a budget that changed the discourse of financial policy and offered a vision of India matching the growth and dynamism of the tiger economies of Southeast Asia.

In the last full budget of his government’s term, the finance minister once again has a chance to alter the discourse of policy away from handouts and towards efficiency. Our advice to him is to be as bold in ideas as his conviction permits and as ruthless in execution as the law allows. A few ideas for him to chew on:

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