If I look at budget and stock market, the government just did the right thing. It would have been better had the govt. offered one or two leeways to the corporate world. Though it was good to have these 'goodies', it was not essential.
It is time to correct the most fundamental problem: Agriculture. Allocating money will not suffice, it is time to correct the implementation part otherwise inflation will go out of control and RBI can't do anything about it. Agriculture reforms are two folds: 1) Increase farm productivity and get better with supply-demand projections. 2) Decrease human capital involved in Agriculture and put them to manufacturing. Tata Motor 'Singhur' project is the first step in this direction.
It will benefit in more than one way: 1) The country is creating more people whose consumption will increase because their statndard of living will go high due to an unofrom cash flow through out the year. 2) Political reforms will start happening because the fundamental vote bank will be transformed.
My conclusions on benefits may be far fetched but it is what India needs now and we have to go in this direction.
'How these reforms are carried out' will be interesting to see but investment in Agriculture and rural infrastructure will take India forward here on.
Share Market: I don't see any point why you should not invest if you are committed for 2-3 years. I am investing right now because stock prices are at mouth watering level. As I beleive, the bull is in Indian economy and not in the Indian stock market, therefore, I am investing in Indian economy. One concern is Real State. Real state will go into consolidation phase where small entities will not survive because cost of money has gone up. It may take a toll on Bank's NPAs but strong regulatory control of RBI should take us through.
We need to be vigilant on Current Account Deficit and ensure that foreign currency keeps flowing in India. Mrs. Sonia Gandhi has given a decisive blow by holding Bharti-Walmart retail initiative. It will send a wrong message to the world. FIIs are sceptical of government moves after Congress defeat in two states. Here, we have to see what Dr. Singh does...Does he act like a typical congress leader (what Sonia will force him to do) or behave like a reformist economist who will emphasis more on agriculture and rural infrstructure. Dr. Singh can balance economy and politics only in this way and that is what this year budget told us too.
I am still bullish on Indian market and economy.
Let me have your views.
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