You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time. - Abraham Lincoln.
When the UPA was elected to power the stock market saluted it with a 20% circuit up with a firm belief that this Govt. will put India on a strong growth path through a spate of developmental activities led by second generation reforms. In retrospect the collective wisdom of the market as defined by stock indices was a classic case of fooling all the people some of the time. As time progressed all that the markets saw from the Govt. was mere hope and talk with very little action bringing our belief for a sustained high single digit growth to a virtual standstill. �All talk and no work has made Manmohan a dull Prime Minister�
While all this happened the stock market bulls quickly set themselves up for a long haul. They saw the ticker race towards the earlier top of 21,000 and the first rule for a market participant is that anyone in this market can lie but not the ticker. So they piled up with gusto buying the old beaten down names, stocks that hadn�t moved and waited for the ones that made new highs to collapse �a classic case of what happens in the every market cycle. After two and a half years all that remains of those stocks are memories - both bitter and forgettable.
As the markets kept postponing its expectations and pre-poning the celebration the Govt. kept disappointing through inaction with complete disregard to the irreparable damage that they have inadvertently done to this nation and its economy. These include mindlessly raising interest rates to show en effort towards curbing inflation whereas the source of the problem was elsewhere, trying to be a green man by cutting down mining and developmental work to a point where the Power companies suffer from acute shortage of coal and the lending agencies from risks of non-payments, slowdown in infrastructure activities and finally statement by the RBI of its inability to defend the rupee have taken a toll on our growth momentum as we run the risk of sub 7% growth for the next two years.
A Govt. that is made up of Lawyers at the top seems to do just one thing -argue and postpone. Meanwhile our Prime Minister seems to follow a policy of avoid, delay and defer. Instead of clamouring for FDI in retail with limited support the PM should focus onthe basics. POSCO�s US$ 10Bn project lies stuck between the files, several mining projects have been stopped because the Govt. has suddenly turned green? FDI in retail is a five year plan. How can Wal Mart improve delivery from farm to fork in the immediate future? We did not have FDI in retail when we clocked 9% growth in GDP? The proposed Food security Bill is another of those legislations being introduced with an eye on vote bank politics. It will encourage people to sit back at home and work for three days a week instead of five. This is a colossal waste of public money and is against the basic roots of capitalism. I guess 2G was better because it was a one time expense but this one will continue for years because once done no party can reverse the process once it is done.
The only hope for an investor is that India will survive inspite of the Govt. and its policies and these times could be one of the better ones to invest in but only for someone who has a long term view but don�t ask me how long is the long term? How-ever there are a lot of landmines in the market with a few more live explosives in them so it is better to walk the concrete path (strong names) rather then take the shortcuts (beaten down stocks) even though it would mean taking a little more time in reaching to our destination.
May the problem is NewDelhi has too much power. Other day I was talking to a retired MLAs he says the local govts have power to propose but not implement. All the money approvals need to come from Babus.
[QUOTE=manishdave]Govt. should give Rs. 25,000 to every citizen over 18(whoever can vote) per month to ensure everybody has food, nice home, a TV, a car etc. Then plant trees where money grows. We all can sit back watch TV and become happiest country in the world. Socialism so far was not enough. Then we got NREGA which was not enough either. So we will have FSB which I doubt will be enough. So lets invent a tree where money grows and then throw money from helocopter.[/QUOTE]
Maybe if RonPaul rises in US it could kick some sense into general polity or may be I am dreaming or hoping against hope
I was looking at govt budget data. 20% goes towards interest payments. We spend 10% of GDP on subsidies which are effective only by 10%...I am not misquoting here.
And we manage to spend less than 3% of GDP on education.
May be the only way out is to let inflation go even higher, which I am confident as Mr. Montek is confident of controlling it, like Ben Bernanke he has been consistently wrong.
The damage with inflation more than 10% is ridiculously high.
I disagree with Basantji on RBI hiking interest rate. Infact I am furious at RBI for doing too slowly and causing long term damage. Had they been more aggressive the pain would have been short lived. Its the job of RBI to protect the saving of savers. There is a moral hazard here otherwise. The blame is squarely on the govt. for spending instead of investing.
Other day I was reading about effectiveness of NREGA. I says the agricultural productivity would have been higher and sustainable had the money spent on NREGA be used to build irrigation projects. Big irrigation projects were not required smaller ones like check dams. They are the assets which keep on giving.
If This UPA was welcomed with a 20% up Circuit.... Maybe their Exit will be a 20 % down Circuit.
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To use an analogy from the markets, the govt is behaving like a short-term trader, but without having stop-losses or booking profits, instead of creating wealth like a long-term investor.
No matter what we say, Govt. will never listen to us.
फूड सिक्योरिटी बिल और लोकपाल बिल में क्या फर्क है?
फूड सिक्योरिटी खाने का हक़ देता है और लोकपाल 'खाने' का हक़ छीनता है!
For our PM,
तूफ़ानी समॅंडर,तेज हवा,और टूटी हुई कस्ति,यह असबाब कम थे,उपर नाखुदा तुम हो.
Posted on:12/18/2011 12:37:49 PMdatta.supratik
Nicely summed up. The least we can do after this is be a bit more frustrated!! We have failed to act in the future...may be before the elections we will have a raise of income tax slabs, a few more minority 'helping' hand!!