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Global commodity prices have crashed in the recent times. The crash is mainly on account of lower demand for the same. To add to this, during the recessionary period most of the big commodity players have added excess capacities. Presently, such excess capacities are lying un-utilized due to subdued demand. In order to utilize the same at their full capacity, companies are offering heavy discounts, which have in-turn led to the fall in the prices.
Further, total exposure of the banking sector to the steel and infrastructure space is more than Rs 12,370 bn, which accounts for a fifth of the banking sectors overall loan exposure. However, these loans accounts for nearly half of the total stressed assets of the banking space. This data gives a hardcore evidence of the steel and infrastructure space being in a bad shape.
To add to this, India has faced deficient monsoon for the second consecutive year. Reportedly, a situation of 'drought' is declared in nine states in this year. Emergence of horticulture has helped to reduce the implications of a drought situation. However, infrastructure in relation to irrigation is required to be improved drastically in order to further reduce the consequences. During the calendar year, 2,750 farmers have committed suicide in Maharashtra and Karnataka, which are the worst affected drought areas.
However, instead of focusing on healthy debates on such topics, media and politicians are concentrating on petty issues. Recently remarks made by a renowned actor were displayed and debated about for an entire day. Various political party representatives supported or contradicted the views put forward by the actor. The controversy went on until several days in the media.
However, it's high time political parties move away from such petty debates and give prime importance to the development of the economy. The first sign of the same will be to get the 'Goods and Service Tax' Bill passed in the Upper House of the Parliament. GST will play an important role to kick-start the reform process.
Recently, Ankit Shah (Research Analyst), Managing Editor, Equitymaster's Secrets, had written an article in relation to the implications of the Goods and Service Tax. Read this interesting piece to get an insight in to GST.
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