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Should you buy India's welfare story?
Wed, 5 Mar Pre-Open

If publicity before elections is anything to go by, all seems well with the Indian economy. However, we all know the ground realities. The economic growth has been showing a consistent slowdown since the last couple of years. What is worse is that there is no concrete plan of action that could offer some hope in the near future.

The problem with the pre election propaganda is that focus is shifting from real issues such as lack of asset creation, capital formation and sustainable growth. Even schemes like food security and employment guarantee come along with leakages and do not offer sustainable growth.

If the interim budget is anything to go by, the Government seems to be keen on meeting the targets in numbers without making any tangible positive difference to the life of the common men or economy. As suggested in an article in firstbiz.com, the fact that inflation seems to be easing can hardly be credited to the Government or central bank. The same seems to be driven more by seasonal factors and supply side dynamics.

Hence, for all the pre election publicity, we have little reason to be impressed. Going forward, the Government has no clear plan to steer the economy out of the slowdown. Whatever welfare measures are being taken seem to be driven by vote bank politics rather than any clear focus on growth. Despite investment clearances on paper, most of the plans are stuck and far from implementation stage. In short, amid all tall claims, the achievements have been few. Hence, we believe that investors should not get carried away by populist policies which might not necessarily be pro growth.

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