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.
Economy: Good governance will help! - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 19, 2004

    Economy: Good governance will help!

    As we have seen in past few months, sentiments in the Indian stock markets have taken precedence over fundamentals in the short term. After touching record highs of 6,123 in the month of January, markets finally started sinking due to political apprehensions regarding which party will come into power and once this was evident, the continuation of the reforms process further spooked the markets. In this backdrop we conducted a poll on our website asking investors their perception about the new government in light of the recent measures taken by the UPA (United Progressive Alliance) government?

    Of the total votes received, around 38% voters had a positive view towards the government's reform process, while 28% were neutral, a higher 34% were not so happy. So a mixed opinion overall!

    Soon after resuming power, the UPA government came out with the six point program mentioned below in which they have talked about achieving 7% to 8% GDP growth over a decade, providing employment opportunities to people in rural areas, thrust on welfare of farmers, etc.

    1. To preserve, protect and promote social harmony.

    2. Ensure that the economy grows at least 7-8% per year in a sustained manner over a decade.

    3. To enhance the welfare and well being of farmers, farm labour and workers, particularly those in the unorganised sector.

    4. Fully empower women politically, educationally, economically and legally.

    5. Provide for full equality of opportunity, particularly in education and employment.

    6. To unleash the creative energies of our entrepreneurs, businessmen, scientists, engineers and all other professionals and productive forces of society.

    The program sounds convincing because until rural India develops, higher GDP growth will not be sustainable for long. The fact that if there are enough employment opportunities, the per capita purchasing power will also improve, which in return will help the consumer driven industries to grow. However, what remains to be seen is that, is there any long-term vision behind this motive or is it just a way to please the larger chunk of the vote bank.

    Certain measures such as the distribution of free electricity to farmers by some of the congress led state governments is definitely not in sync with the reforms in the power sector as envisaged in the Electricity Act 2003. If there is real intention to support farmers then they should be provided with better technology for farming. While, it may be too early to judge the actions of the government, doling out of such subsidies (which provide only a short term solution) does not augur well for the image of the government who has stated that the control of fiscal deficit is one of its foremost priorities. It may be wiser on the government's part to slowly and gradually make farmers independent. However, we believe if the focus on the development of rural India introduced by the government is carried out well, it can be big positive for the country in the long run.

    As far as industry is concerned, by proposing a hike in the FDI limits in sectors like telecom, civil aviation and insurance, the UPA government has shown openness to foreign capital (again in line with the CMP), though some of its allies have already opposed these proposals. But bold steps like increasing domestic oil prices in line with the rising international crude prices and removal of subsidy on the cooking gas to some extent has shown the intentions of the government to carry reforms. Also the government has restated that it will continue to invest in the infrastructure projects, which is likely to support GDP growth over the long-term.

    From a broader economy perspective, if the government is able to implement its policies in areas like the continuation of thrust in infrastructure development, addressing fundamental issues like poverty, education, rural development and healthcare then the targets set in the CMP may be met. At this time 'intention' is not the area of concern, 'action' is. How the new government manages to placate its allies and at the same time carry out crucial economic reforms remains to be seen.



    Equitymaster requests your view! Post a comment on "Economy: Good governance will help!". 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...

    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


    Aug 18, 2017 (Close)