Expert Zone
Straight from the Specialists
Why India slowed
This piece comes from Project Syndicate. The opinions expressed are the author’s own
For a country as poor as India, growth should be what Americans call a “no-brainer.” It is largely a matter of providing public goods: decent governance, security of life and property, and basic infrastructure like roads, bridges, ports, and power plants, as well as access to education and basic health care.
Unlike many equally poor countries, India already has a strong entrepreneurial class, a reasonably large and well-educated middle class, and a number of world-class corporations that can be enlisted in the effort to provide these public goods.
Why, then, has India’s GDP growth slowed so much, from nearly 10 percent year on year in 2010-11 to 5 percent today? Was annual growth of almost 8 percent in the decade from 2002 to 2012 an aberration?
Bear market a golden opportunity to shore up coffers
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The recent run of the gold bears in financial markets has been positive for India’s current account balance. If this continues along with the persistent softness of oil prices, as many expect at least for the short term, it just might give the government the opportunity it needs to implement certain measures that have so far run against popular sentiment.
The plunge in the gold price since the start of the year, triggered by speculation and hints that the U.S. Federal Reserve may trim its bond-buying program sooner than markets had assumed, has helped the rupee hold up well against the dollar. This is good for India’s fiscal house, where the trade and current account deficits are more or less permanent fixtures.
Pitfalls of the food security bill
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The food security bill will be introduced in the current budget session of parliament, more because of its populist appeal than any economic urgency. Even when the bill was discussed by the Cabinet, Finance Minister P. Chidambaram and Agriculture Minister Sharad Pawar reportedly had reservations. They had valid reasons.
Subsidized food distribution is nothing new. Already 400 million people avail of it from over 500,000 fair price shops. What the bill intends is to widen the scope of the present scheme and cover two-thirds of the population with five kg of grain per beneficiary at nominal rates.
Why FIIs are dumping India
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The Indian stock market is in a tizzy as foreign institutional investors (FIIs) seem to have pressed the sale button. Securities and Exchange Board of India (SEBI) data shows that while there was a considerable slowdown in FII inflow in March, we are seeing an outflow in April.
While net FII inflow in the equity markets remained above $4 billion for each month between December 2012 and February 2013, the net inflow for March was reduced to $1.68 billion. The trend reversed and during April 3-10, there was a net outflow every day, with cumulative outflow of $269 million during this period.
Investment boost needed to break India’s vicious cycle
(Any opinions expressed here are those of the author and not necessarily of Reuters)
The current account balance reported last month hammered in the fact that India is spending more than it saves. While it had been stubbornly in the red for all but a couple of years in the last two decades, reaching a record deficit in both absolute terms and in relation to the gross domestic product was sobering.
The stock market’s delayed response to Budget 2013
(Any opinions expressed here are those of the author and not of Reuters)
Finance Minister P. Chidambaram tried to humour the market in his budget by cutting the Securities Transaction Tax (STT) which had been one of its sore points. But the market was not amused. The Sensex continued to slide, indifferent to the budget which was presented with a lot of expectations.
This appears to be rather strange because the budget was well received by the industry, in spite of the increase in surcharge from 5 to 10 percent. It was possibly the realization that the finance minister lived up to his promise of cutting fiscal deficit to 4.8 percent which created an infectious confidence in growth revival.
Budget 2013: Political strategy, not economic blueprint
(Any opinions expressed here are those of the author and not of Reuters)
With the dust settling after Budget 2013, the picture is getting a bit clearer. Opinions on the budget have ranged from praise to outright criticism. The true position lies somewhere in between — depending on one’s political inclination, views on the finance minister and one’s financial interests.
Most agree there is considerable misalignment between diagnosis and prescriptions in the budget. The three biggest problems identified by P. Chidambaram are:
- rising fiscal deficit that needs to be controlled
- high current account deficit and
- declining economic growth rate.
Budget 2013 should trim expenditure
(Any opinions expressed here are those of the author, and not necessarily of Reuters)
Finance Minister P. Chidambaram is only too aware of the damage done by the last budget and has to an extent repaired it to unleash investment. The next budget should confirm his commitment to growth.
The year the Indian economy stalled
(Any opinions expressed here are those of the author, and not those of Thomson Reuters)
The year 2012 has seen the worst an emerging market economy can tolerate. Had the government been a little less reticent and more proactive, growth would not have dropped this low in spite of the economy being mauled by inflation. Other emerging market economies did exactly that.
Will Indian stocks end 2012 on a happier note?
(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Reuters)
The rally in the Indian stock markets, fuelled by the so-called reform announcements, seems to have fizzled out. Frontline indexes have retraced more than 60 percent of the gains made since Sep. 13, 2012, the day the reform measures were made public.
