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.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
Reform planning alone not enough! 
(Tue, 23 Aug Pre-Open) 
 
The Planning Commission under the chairmanship of Prime Minister Dr Manmohan Singh has finalized the approach paper to the 12th five year plan (2012-17). The economic body has pegged the average gross domestic product (GDP) growth rate at 9% for the 5 year period. But in order to achieve this target the Prime Minister has said that some tough decisions have to be taken. The government will have to evolve a national consensus on various policies to aggressively push forward the reform agenda which are necessary to achieve the growth target.

The government has faced flak for the slow pace of reforms and some of the hard decisions that need to be taken involve quick implementation of Goods and Services tax (GST) and direct tax code (DTC). The insurance sector reforms and the pension reforms are long overdue. The biggest challenge that is hampering investment in the country is the issue of land acquisition. Projects worth massive Rs 6.7 trillion have been stalled in India in the past decade mainly due to land acquisition problems. An effective land acquisition bill needs to be introduced quickly to fast track the process of growth.

Major chunk of government's expenditure goes towards subsidies which are estimated at 1.6% of GDP. The government has taken steps to reduce subsidy burden by decontrolling petrol prices but more needs to be done like decontrolling diesel prices. The approach paper has recommended a strong framework for direct cash transfer of subsidies on food, fuel and fertilizer which accounts for major portion of the subsidy bill. But all this requires political will and the government will have to take some unpopular decisions.

The other key issues which the government needs to address are the problems of inflation and rapid implementation of infrastructure projects. Reforms in the agricultural, health and education sector are very important to reduce inflationary pressure and improve rural income.

The approach paper for the 12th plan period lays emphasis on issues like implementation and governance of various flagship programs like National rural employment guarantee scheme (NREGA) to improve their effectiveness. So in order for India to achieve the target growth rate of 9 % the government will have to act tough and bite the bullet in some of the key result areas.

What needs to be clear in the minds of the policymakers is that planning of the reforms is no longer enough. Unless the execution and implementation of reforms are reasonable enough, investors will no longer take the Planning Commission's word for it.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "Reform planning alone not enough!". Click here!

  
 

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


Sep 20, 2017 (Close)

MARKET STATS