An economy turning sepia
After six months of a new government, the growth plank is unsteady. The July-September quarter saw most companies report an 8% growth in operating profits year-on-year, down from the double-digit growth rates recorded in each of the four preceding quarters. Aggregate sales growth too has dipped to 3.2%, from 10%-plus levels. The state of the economy is best summed up by the huge discounts on cars, offered month after month. Fuel is cheaper and winter keeps vegetables both green and affordable. And yet consumer sentiment remains dormant. Even sighting a vague omen to animate, seems to be eluding both the brave and the timid of the economists. The government is perennially in election mode and fervently engaged in making external friends. The budget keeps it fully tied up to preclude inspiring fresh energy into the domestic economy. The insipid global economic scenario would keep our exports stagnant for a quite a while. Any financial effervescence that we see, remains endemic to stock markets, but in no way seeding capacity addition. If the battery of economy went into gradual discharge under the UPA-2, there is not much evidence of it being put on charge six months down the line. Even a token attempt at reducing key rates as a modest sparkler, is being lost to excessive musing.
Janaki Narayanan, Ghaziabad
For a quick capex revival
At present the government is experiencing difficulty in modifying the land acquisition Act and the success of the insurance Bill appears to be distancing away as the Opposition is not in a mood to cooperate with the Bills which require assent of the Rajya Sabha. No doubt, few projects which are in abeyance can be taken up depending upon the flexibility being developed in clearances. Although equity surge is there, whether it is possible to alter the debt with equity is not something that can be taken for granted. Even the FDI in defence sector is not something which can be easily accessed as it involves issues such as management. There is respite from inflation and it appears that inflation at least will not trouble till there is recovery in the US, Europe and Japan, when there can be a spike in the commodity prices. There are economic issues created out of geopolitical imbroglio in West Asia and Eastern Europe and hence are throwing grim picture about the commodities. India is least empowered to ignite the growth in the falling economies in real sense. However, by offering its own markets, it can increase investment. But in the current circumstances, things are not looking very rosy.
RK Arya, Faridabad
Please send your letters to:
The Editor,The Financial Express, 9&10 Bahadur Shah Zafar Marg, New Delhi-110 002
or e-mail at: feletters@expressindia.com or fax at Delhi: 91-11-23702044