Lot has been spoken about the factors responsible for the present confusing financial situation of India. During last Global recession in 2008 & 2009, we did not even call it a recession. We called it a slowdown and overcome it with heavy dose of Government support by way of Stimulus package. This time it is not seems to be possible due to poor financial condition of Government . Last time we all described the slow down situation got imported from USA. This time it is imported from USA & Europe as well as grown in India itself . Our In-house factors are very critical at this stage.
ü Slowing GDP Growth rate since last few quarters and no big change expected in the next few quarters
ü Lower Corporate Earnings Growth
ü No Big Investment plan by Indian Corporate
ü Lower Tax collection
ü Fiscal deficit
ü No New Policy announcements. No movement in Critical proposed legislation like GST, Tax code, Companies Act etc
ü Government reluctance in big ticket capital expenditure due to shortage of Fund
ü Slowing FDI due to all above factors and lot more other reasons
ü Lack of Trust of FII's in Indian Capital market due to so many reasons
ü Constraint of RBI for keeping prolonged high interest rate period to curtail inflation
ü High Inflation rate for entire 2011, although it is expected to come below 7% by March 2012
ü Possibilities of higher Direct & Indirect Tax rate to cover up deficit
ü Increasing Trade & Current account deficit
ü Low comfort of Balance of Payment
ü Stagnating FX Reserve situation
ü Excessive dependence on Global Fuel (Crude Oil)
ü Rising USD exchange rate due to all above factors + Lot of International factors
ü Political Instability (although it is not visible)
ü Increasing role of Black Money in the Economy
ü Lack of focus/ no visible change in Critical sectors like Agriculture even after so much talk of Government
ü Political pressure for continuing unwarranted Subsidy
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