Saturday, September 1

Is the India growth story intact?


India has been able to withstand some of the biggest global financial meltdowns in recent times. This was attributed to a very strong regulatory environment (particular credits to the Reserve bank of India) and the Great Indian Consumption story. 

These two factors have led to the world expecting a lot from us. The last couple of years have shown that we have under delivered, badly. The global investors are shying away from investing in India given the government indifference to the industry requirements. 

Who's responsible for the mess around?
The opposition succeeding in keeping the government's attention away from more core issues by highlighting one issue or the other (read 2G and then Coalgate). They worsened this themselves by trying to override the Supreme Court's judgment on Vodafone case. Unnecessary! 

Consequently, the world has been able to blame the government for policy paralysis and lack of judiciary relevance. Only the government is responsible for all the mess around.

What happened to the consumption story?
The mess along with the global factors (read Euro crisis) has led to a drop in growth. There needs to be an environment for investment which drives the environment for demand to arise. Currently, the affordability has taken a big hit as people are not able to afford to buy more commodities due to high inflation. The India growth story is clearly Not Intact.

The RBI's concern is appreciable but holding on to high interest rates for so long has not helped ease inflation enough. 

What's the way out?
While the list is endless, some of the things that can be taken care of are:
1. The Government should pay attention to the business and industry as well, while tackling with political issues.
2. Leave the judicial issues to the judiciary.
3. Address Infrastructure and Power issues. Only unclogging coal will help release power capacity of 20,000 MW that's un-utilised. 


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