MARKET IS NOT A FOOL

Our finance minister P. Chidambaram(PC) has been the face of Govt. defending the economy and calming the nerves of market. Rupee depreciation, which began in late May this year, is in no mood of turning around, in spite of various steps taken by RBI & assurances by PC. He has been trying to calm the market nerves almost every day, he is ‘said more than done’, due to which Re has touched life time low of 68 on 28^th Aug.. Mr. PC be clear that ‘MARKET IS NOT A FOOL’, u work on the basics & market will respond accordingly, be sure that we cannot run export-import imbalance of 150-200 bil. $ year on year, when total exports is just 300 bil. $. Imbalance in the domestic production is not only affecting CAD, but also inflating prices, which is dragging the investment and economy.

Growth Slowdown

India’s GDP growth is on the doldrums for quite a long time now; in one of the previous blogs, I have elaborated various reasons for slowdown in GDP growth accusing primly UPA government. Q-o-Q GDP growth has been slowing with no recovery seen in the near future. Slow down in Manufacturing is bound to spill over to services sooner than later, with services accounting for almost 60% of GDP output, severe slowdown in services is going to be a huge setback for the sector. May be we are already witnessing severe slowdown in services too as per HSBC services PMI for July ’13(which has shown y-o-y contraction). Agriculture sector is expected to perform better this year, however we may not expect more than 4-5% growth for entire FY’13-14. Assuming Industrial growth at 1-2%, we have a serious issue at hand with overall growth slowing down further to 4% in the quarters ahead.