Silver lining amidst global turbulence -Networth
RAJESH DESAI
Crisis: The mother of all reforms
India responded in 1991 to the Balance of
Payment crisis in the form of initiating slew of reform measures, to
liberalise industries to attract FDI with a motive of securing a decent
base of Fx reserve. Morale of the story what we learnt is - something
has to go beyond roof to send the alarm bell to policy makers to carry
out fire-fighting actions to douse the critical issues. They (policy
makers) hardly ever considered any proactive pro-market measures to ward
off any economic crisis, save in the area of vote banks (like MNEREGA).
Overstatement of ambitions has been a regular trend and India is now
branded among the global investors as one of the “Break Out Nations”-
meaning failing to keep her promise.
Now, we are at the crossroad and confronting the
identical situation, albeit distantly, when we are witnessing few
burning issues which need urgent remedial measures from the Center lest
growth would slip past well into negative zone, and we probably risk
losing the “Investment Grade” status among international investor
communities, which may usher in disastrous consequences. Hence, it is
imperative that the incumbent slumber government has to put its feet
down very soon and kick-start the dormant economy to set right the
issues, like
- Fiscal consolidation- to be
mended by rationalising subsidies on fuels & farm inputs and
annulling unproductive plans to free up resources towards growth
oriented ones
- Addressing trade imbalance by more trade diversification via merchandise value addition and greater geography reach
- Attracting long-term fund (FDI) to reverse the dollar flow and boosting Rupee
- Identifying policy bottlenecks/regulatory hurdles for speedy clearance of investment proposals
- Improving supply side precisely to rein in food inflation
- Revamping transportation modes beyond road, to reduce logistical cost which aid inflation
- Targeting value addition in every field of export to expand external trade merchandise and geography
- Curb speculative investment
demand across unproductive asset classes like Bullion, Realty etc. so as
to channelize the internal available funds for productive purposes
- Health and education reforms
Conclusion
Market from many indicators has indicated
bottoming out. Mid-cap stocks are getting strong support and gaining
strength by the passing day. Govt seems resolved to fight the current
economic mess head on. More than the reform, a strong will power, and
showcase of the same in few days will in a great way go a strong message
to investor community that “Government has finally woke up to the
occasion”. Networth sees no reason why the market from here onwards
after brief consolidation should not take a big leap. Networth advises
investors to participate in the India Growth Story, before it bounces to
its deserved zone.
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CA. Rajesh Desai