X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Economic Survey: Stress on better jobs, investments - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Feb 27, 2013

    Economic Survey: Stress on better jobs, investments

    Economic Survey for 2012-13 did not read very differently from that of preceding few years. But the difference lay in assessment of economic variable with clear cut targets in mind. Chief Economic Advisor Raghuram Rajan's maiden Economic Survey presented today enlisted three key objectives. These were reviving demographic dividend, shifting from consumption to investment-led growth and countering macroeconomic challenges like inflation and deficits.

    Sizing up demographic opportunities

    Outlining the gap in demographic profile of India with its emerging peers the Survey stressed on the need for job creation. A larger workforce in India cannot necessarily deliver better per capita income and higher GDP growth. Larger workforce translates into more workers only if there are productive jobs for it. Comparing India with where China was 10 years back may offer a good perspective. But the Survey suggests that blindly replicating their trajectory may be unwise. We completely agree with this. The risks and challenges for India are very different today than they were for China a decade back. And hence our approach to job creation and productivity improvement also needs to be different. Focus on education, skill development and industrialization could offer some meaningful solutions.

    Shift from Consumption to Investments

    Taking a departure from India's consumption focused growth approach, the Economic Survey stressed on investments instead. The fact that a falling trend in investments was responsible for India's growth slowdown is entirely true. There were two reasons for this. First of all the number of stalled projects saw a substantial rise since early 2009; in both value and volume terms. What is more, as of December 2012, six sectors accounted for about 80% of all stalled projects: electricity, roads, telecommunication services, steel, real estate and mining. Secondly, there was not much traction in new project investments. This was a fallout of the first problem notably that rise in the number of stalled projects meant that the ability to begin new projects was reduced. Various factors that have contributed to these problems include difficulties in land acquisition, coal linkages, and mining bans as well as policy issues relating to spectrum allocation. Firm interest rates also reduced the propensity of the corporate sector to make new investments.

    Given that the growth rate of the economy since FY04 has been strongly correlated with investment, it goes without saying that the Survey believes that a pickup in investments is very important if growth has to improve. The Survey states that policies to remove investment bottlenecks as well as structural reforms to encourage productive investment have to be put in place. Financing of the same will also be essential. Further, if inflation reduces further, a moderate monetary policy would also help in spurring investments.

    Short and medium term prospects

    The Economic Survey has projected that the Indian economy will grow in the range of 6.1-6.7% in FY14. This is based on the expectation that the three major sectors of the economy will overcome most of the challenges faced in FY13. Disappointments in terms of monsoon, moderation in inflation and recovery (albeit mild) in global growth could be the dampeners.

    We believe that adequate policy focus on the three key objectives of this Economic Survey coupled with timely execution could have a multiplier effect on India's long term growth rate.

      Tanushree Banerjee (Research Analyst), is the editor of ValuePro, The India Letter, and Stock Select, Equitymaster's oldest recommendation service. She is also the editor of Equitymaster's most popular newsletter read by over 200,000 subscribers, The 5 Minute WrapUp. Tanushree started her career at Equitymaster covering the banking and financial sector stocks along with scrutinizing the RBI policies. And over the last decade, developed our research processes that have helped us pick out various multibaggers, across all sectors. A firm believer of "safety first" when it comes to investing, Tanushree closely follows the investing philosophies of Warren Buffett, Jeremy Grantham and Joel Greenblatt.

     

     

    Equitymaster requests your view! Post a comment on "Economic Survey: Stress on better jobs, investments". Click here!

      
     

    More Views on News

    Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

    Jul 25, 2017

    Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

    Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

    May 27, 2017

    What happens when minority shareholders are short-changed in the normal course of business?

    Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

    Feb 15, 2017

    PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

    This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

    Aug 24, 2016

    And here's your chance to claim a free copy of this book...

    The Developed World is Dying because of Demographics, Debt, and Deflation (Vivek Kaul's Diary)

    Aug 12, 2016

    And Why India's demographic dividend could turn out to be a doubtful debt...

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS