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.
More room for stimulus - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 23, 2009

    More room for stimulus

    As governments across the developed world contemplate on printing currencies to evade a prolonged recessionary cycle, we are probably better off. That is because we have more headroom to cut interest rates and take recourse through monetary policy measures even as fiscal measures stand deferred until the elections. The Planning Commission deputy chairman Mr. Montek Singh Ahluwalia has indicated that while the new government will almost certainly continue the fiscal stimulus policies, the Reserve Bank of India (RBI) will in the meanwhile drive policy rates to levels required to revive investment and spur consumption in Asia's third-largest economy.

    It must, however, be understood that be it by way of printing currencies or lowering interest rates, the impact that these liquidity pumping measures will have on the economy will be similar. If the fact that the headline inflation level (measured in terms of WPI in India) is heading towards zero is the rationale behind Mr. Ahluwalia's indication, excessive liquidity may fail to relieve the inflationary pressure at the consumers' level (measured in terms of CPI) which is still in double digits.

    Indian IT majors vie for US$ 6 bn government projects
    Its 'home sweet home' for the big boys of Indian IT. While there is a slump in demand from cash-strapped global customers for new technology services, the domestic market is increasingly looking good for these IT players. Particularly, with several big deals from the government up for grabs, with contract sizes matching the ones available overseas.

    The government departments, now taking the nascent steps to become technologically equipped, have plans to spend as much as US$ 6 bn on IT projects. This number is only set to increase with the central and several state governments planning to introduce e-governance and digitise everything from land records to tax filing. Companies such as TCS, HCL Tech and Wipro have already won significant government business in recent months, while Infosys has recently bid for a railway project related to creating a Locomotive Management System and ERP implementation.

    But what may dampen the spirits of the IT companies looking for a share of the pie is the long time frame for government project approvals. As per Nasscom, three years is the typical time frame for such projects. Case in point being the Rs 10 bn project for digitising passport records, which took the ministry of external affairs almost three years to conclude and was finally awarded to TCS.

    Empty shop floors bring back memories of Great Depression
    If the financial turmoil was not enough, the rapid decline in manufacturing activity the world over has spread global anxiety with regard to the longevity of the economic slump. The depth and speed of the plunge in manufacturing activity is bringing back memories of Great Depression for several economists.

    As per the International Herald Tribune, in Europe where manufacturing accounts for nearly 20% of GDP, industrial production is down 12% YoY from a year ago. Even in China, which is called the workshop of the world, production growth has slowed and exports have fallen by nearly 25% resulting in millions of factory workers being laid off. India's manufacturing sector, which accounts for 16% of her GDP, recently recorded its first quarterly production decline in more than a decade.

    Since April 2008, despite tax cuts and a US$ 64 m stimulus package, Indian textile makers have slashed half a million jobs. Although the US is perceived to be relatively less dependant on its manufacturing activities, the same still contributes two-thirds of US exports. Lesser production of defense equipments, locomotives, medical devices, pharmaceuticals and some high-tech products are expected to hurt US' growth prospects.

     

     

    Equitymaster requests your view! Post a comment on "More room for stimulus". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    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.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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

    S&P BSE SENSEX


    Aug 18, 2017 (Close)

    MARKET STATS