Year 2001: Has the government delivered? - Views on News from Equitymaster

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Year 2001: Has the government delivered?

Dec 31, 2001

As we approach the end of the year 2001, the state of investor's mind is no different from that in January 2001 - confused. The market movements in the last few days clearly prove this fact. While purely on fundamental basis, valuations are attractive; the military movements on the border are not giving a sense of comfort to the investors. This is evident from the fact that immediate profit booking has followed every rise in the market post Dec'13.

Further, what is giving further discomfort is a spate of confusing statements emanating from New Delhi. The finance minister recently confessed his reservations on whether the April'02 deadline for the APM dismantling would be met. The FM and oil minister have from time to time assured economists, analysts and other sector experts about the process being on track and the government commitment to meet its deadline. However, barely 90 days ahead of the schedule they seem to realize that complete dismantling is not possible due to practical reasons.

Talk to any of the oil companies and they would vouch for the fact they themselves are not clear what decontrol would finally mean. Whether cross subsidization for kerosene and LPG would continue? Whether all refineries would be able to hedge their oil requirements? Whether PSU refineries can actually decide their own product mix without any interference? Whether marketing companies can actually expect a spurt in margins? Even a broad picture is not clear at this point of time.

Take for instance, subsidy rationalization and labour reforms. It seems we have miles to go before Corporate India would witness a flexible labour market in the country. It was only because of these bold initiatives, which the FM had touched upon in February this year that he was given a huge applause with a 9 on 10 rankings for its budget proposal. He was termed as a reformer then but now is clear that the government has under delivered on its promises.

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