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“B” is for….. - Views on News from Equitymaster
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  • Mar 1, 2002

    “B” is for…..

    “B” is a bad word these days with a lot of meaning to it. It could mean “bandh” as in what we are seeing in the country right now, it could mean “budget” if referring to the pronouncements made by the FM on Thursday, it could also mean “bogus” if referring to the reaction to those pronouncements from many, or it could mean “bowled out” if one thinks of what could happen to the present Vajpayee government over the Ayodhya issue, and it could also mean “bhikari” if one thinks of the long term vision for this country that the wise men who rule this country have in their heads.

    When all is said and done about this budget, 3 things will stand out:

    1. the BJP-led coalition government has done itself few favours by doing away with tax exemptions and reducing the interest rate on its small savings debt, acts which hurt its traditional middle-class base and has hurt the short-term attitude of small investors towards equity,
    2. agriculture remains a focal talking point (actions are another issue) and that is good since most of India’s population does not own shares and is more dependent on what happens in the rural economy, but note that the voting population here is large
    3. NRIs have yet another feature of convertibility as they can move their previously stuck income out of India, something which many Indians dream of doing.

    A lot of the other “stuff” that has been said is what was to be expected and cannot come as a surprise to anyone who reads the daily newspapers. Never to be achieved privatization targets, building roads with potholes, using tax payers money to blow up in another infrastructure equity fund, tinkering with excise duties and import tariffs, delaying government expenditures, hitting everyone in range to collect more tax revenues – none of this can ever come as a surprise for anyone with a right to vote. But, as an investor, do not let the macro worry you and focus on the companies and their long-term business opportunities.

    Think about this. During 1991- 92 India’s reserves were at US$ 5 bn, politics as messy as it is today, and communal tensions higher than today, companies like Infosys and Zee were just about born. There is always an opportunity, there is always a tomorrow. And if you don’t like what you see, get out and vote next time around – and don’t get swayed by religious passions. Meanwhile, while others are selling, use this as an opportunity to plan your future, take the “B” road, go out and “Buy”.



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