Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  


Yet another policy disaster for India?
Thu, 27 Mar Pre-Open

Here is yet another example of poor policy making in the country. Around 9 months back, an announcement in the increase in gas prices was hailed as a path breaking reform in the Indian oil and gas sector. However, just one week away from the proposed time of implementation, the decision has been deferred. The Election Commission has put the gas price hike decision on hold in view of the upcoming elections and influence of such move on the results of the vote.

Earlier, the hasty announcement was made by the Government under pressure to save the sovereign credit ratings. The reasons cited were the incentives through gas price hike that would revive the interest and investments in the India's upstream sector. However, as suggested in an article in Wallstreet Journal, the delay and a likely backtracking over such a crucial policy has taken away the credibility from India's policy making process.

We believe that the big issue here is not whether a price hike is positive or negative for the sector. With the recent deferment, the entire episode seems like a farce. Instead of helping the sector, we believe that this event has added more uncertainty and is likely to weaken the investment sentiments further. Whether the decision will be implemented in future will depend upon the next Government. However, we believe that the damage has been done. The event is likely to send negative signals to foreign investors. Going forward, we will not be surprised if every reform announced fails to create the desired impact.

In the past also, the country has suffered due to lack of clarity when it comes to crucial policies in the country. However, it seems like no lessons have been learnt. The way prospective investors are being treated in the country is quite callous and appalling we believe. It is time we value good governance. Let us see if the next Government will be better at offering it.

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

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Yet another policy disaster for India?". Click here!