Green-Shoots are Visible...

The PMI has recorded expansion in the economic activity... People also hold investment due to closing of the Financial Year and the Budget.... which would resume after those events... FM and RBI couldn't be more supportive and stimulative... If the greenshoots are not visible then we are also not going down, the economy has been more stable... Lower interest rate and higher fiscal deficit would increase the Public Spending and income multiplier would work... Lower gst and corp-tax would also help increase real wages and income and demand and spending and growth... Higher income expectations could boost demand, spending and prices and growth...

Investment was put on hold due to the Budget... INDIA is in a cyclical demand slowdown... which happens every year... Food and vegetables have been more speculative due to drought, in some parts and floods in some other... People speculate on monsoon and food prices which is also manipulative sometimes... ie expectations around prices play an important role in investment in stocks and supply... it happens every year... Food and fuel have a significant effect on inflation 'coz they are key elements of the consumption basket of the poor and real incomes and demand... core inflation also depend on CPI because of wage demand and inflation.... Nonetheless, lower demand could lower the ability to pass on price increase to consumers... Higher incomes and demand could increase core CPI or or price expectations... and increase spending and growth... Lower investment could be attributed to the Budget...

Lose Regulation of the shadow banks and the NBFCs have been the source of systematic risk and NPAs... we have evidence of risky lending by shadow banks in the US and China... Better regulation (like banks) could mitigate that risk, since banks are already lending big money to NBFCs... In INDIA NBFCs have lend on a large scale when the PSBs were holding credit growth due to the stressed assets... The RBI must make crop insurance and hedge investment necessary for loans... That would make the investments safe....

The Govt has more than $ 500 billion in the foreign exchange reserves with the RBI which is lying idle/passive... INDIA's CAD is around $ 70 bllion and the reserve is enough for 6 months imports... The reserve could also help increase investment in skills and productive areas... $ 500 billion is 35 lkn crore rupees... More supply of dollar could lower it and make the rupee strong and oil cheap which could also increase competitiveness of the Economy... The Gov and RBI should try to bring rupee denominated bonds get indexed in foreign indices...

The skills gap has constrained the productivity and production and wages and incomes and demand and growth in UP... With biggest land area UPs growth rate is lackluster compared to other States like Gujarat... Industrialisation could further improve jobs situation... UP has the potential to become a leader in Agro-processing and attract FDI in under-penetrated areas for job creation...

INDIA's Debt-GDP ratio 69% is low compared to the developed and is close to Germany's one of the best among... and lower than Japan, US and UK... INDIA’s debt is 1,294 billion usd and of US is 23.25 trillion usd.....

The Center and State fiscal deficit combined doesn't give the right picture... Decentralisation and devolution of more funds to State and alternate sources of revenue, like fuel, has kept States' fiscal deficit in check... The need really is to ask states to increase spending to restore recovery... States fiscal deficit is 2.5% and Center's is 3.8%... States could still increase spending....

Inflation (core) is stable, when gov increases spending it increases demand and prices, like UPA2... Bonds yields and lower interest rate... have also been stable... Monsoon and Oil pose greater risk to inflation and interest rate expectations.... and demand/spending and growth and expectations...

Manmohan Singh's comment spread pessimism and could could hurt business expectations and reinforce low growth (only)... He shall stop giving forward guidance to the investors... that may hurt the Economy.... Monmohan Singh's counseling of the investors is not right... Inflation in INDIA is running above the target... Does it signify slowdown, even core-CPI...? Slowdown means deflation or a sustained period of low demand and prices.... Is it all observed...

Everybody knows that the Budget wanted to crowd-in the Private investment.... The theme was ADC- Aspiration, Development and Care...

Demo was not supported by Urjit Patel... MPC continued a hawkish stance even when inflation was way below the target...

This is time domestic players increase business by lowering prices and increase demand and prices and expectations... when everybody would spend it would increase price expectations...

At one place Covid-19 would reduce demand and prices China and higher price in other countries (importing countries).... Spending would increase in other countries 'coz of higher price expectations and less spending in China due to lower price expectations... This is an adaptive expectations model, which could reduce CAS in China and also reduce CAD in other countries... Lower price expectations would delay spending in China and higher price expectation could increase demand and spending and growth in other countries... Expectations play an important role in spending, especially the investment spending, the speculative demand (with savings) which then also creates employment and demand... In this process both demand and supply increase upto full employment... China hit that wall and wages have not remained competitive both, nominal and real coz of full employment... Stimuli could help balance growth... Recovery in China is also important to increase supply and contain or stabilise prices and expectations and spending globally...

Market Capitalisation is at all time low and may point recovery soon... They (Mutual Funds) could if you invest in daily SIPs... It would give you better cost averaging returns... Investors must chase the bottom of the stock price of the good PE companies by buying more on significant dips/corrections till the gap closes to 20%... a good stock could go 20% in a day.... So it is not a big difference... and you could easily wait for good returns... this one is short run strategy.... PB ratio shows, less than three, that the current price is a good bet and PE ratio shows that the earnings and returns expectations are high... Growth ensures that the stock would be in demand... If followed this could help accumulate more stocks when they are cheap till it bounces back in less money and sell high... A good stock could easily give 50% returns in a year... or 5% per month...

If a company buysback it would benefit both the company and investors, afterall the company is the promoter and carry the majority of shares, its share price goes up to, people invest more in such companies...  The Govt has only discouraged buybacks recently... The rest would be a gain...

During the US President visit to INDIA… The analysts hope the US would help INDIA maintain its oil reserves, since it creates uncertainty for growth …. Sofar the success has been limited, US has shown little interest in exporting oil to INDIA... US has also big bio-diesel reserves which produce less pollution when blended with fuel... INDIA should try to import more bio-diesel than fuel to tackle climate change...

INDIA may try for the continuation of free trade agreement under Generalised System of Preferences -GSP - to access the US market at low cost for exports and more foreign exchange and stability... The INDIAN Economy, though, has reduced the poverty at a higher rate, but, it is still less than 4rth of the US economy and home for a large number of poor people in the population... Creating good jobs for its poor population would help bring them out of poverty....

It is clear that people having a (legal) passport and identity cannot be denied entry and citizenship... Anybody from a religious majority terrorist country must be identified... Terrorism is a menace for INDIA... It's for security of INDIAN's and to provide benefits to the poor... Opposing CAA, NRC and NPR is self-destructive... The gov's around the world are planning RFID chips to be used for security concerns... If gov brings anything like that, then, what would happen???

The question of religion doesn't arise... It is about majority and minority and the protection of their rights... INDIAN muslims are not denied citizenship anyway... and could enter INDIA only if he has a valid passport and visa

A law passed in the Parliament could only be challenged in the Court... (Not on the streets; added)... Kapil Sibal...

Budget, the MPC and the Economy...

The Budget had it all... it was a very good Budget... We had spending on the Agriculture, Education, Heatlhcare, lower Income Tax, removal of DDT and push for privatisation through disinvestment and protection of domestic producers and employment through import duty... All money would ultimately go to people's hand which either might be saved or spend or both which the economy needs at this point of time... It was a prudent budget that would help crowd in private investment and consumer demand... Higher savings could increase the productivity of capital by reducing interest rate... The spending would work through multiplier...


It is not the duty of the gov to increase investment or unproductive spending, it is up to the private sector, the gov though could incentivize investment by increasing people's income... The budget has given full space to the private sector to increase investment without crowding out, but crowd in... The budget would help stabilize the growth rate... what the gov would spend would be also somebody's income... Lower consumer prices could further boost real incomes... Core-inflation or manufactured goods inflation, excluding food and fuel has been low...


The gov may increase import duty on the finished product and lower on the intermediate products... Employment generation through protection/import-duty and higher price expectations in the domestic economy for the domestic producers could be the right thing to do... It could also help increase productivity and exports... Production in INDIA is important to provide jobs... Domestic producers would be happy with the move...


Import duty increase could help protect domestic producers and increase employment... FM provided everything except LTCG relief in the Budget... It is not rationale to expect common-man a Budget expert... Spending would work through multiplier...


If the gov wants to stabilise the stock market it may try to increase STCGT (short-term capital-gain tax, less than 6 months, or variable for the time period, higher on less time and less for longer time) instead of LTCGT... It would help the stock market investors against too much volatility in the short-run...


INDIA is already $ 3 trillion dollar economy which means  Rs 210 lkh crs... People have money, but not value and it would happen when supply/productivity/competitiveness/production would increase for which lower borrowing cost is sine qua non... The RBI might try to increase supply when demand is high and decrease supply when demand is low which could help stabilize prices within the inflation target, higher inflation could further erode value of money... Lower and stable prices could help maintain financial stability... 10% inflation target could also help boost supply and lower prices and create value... people would increase investment and demand at lower prices and low borrowing cost... which could increase demand and price expectations... 10% inflation is very minimal... 0.10 per rupee or 11 on 10...


5% growth per quarter is good when the external environment is reeling under uncertainty and low global growth which could easily add 2% to the total growth rate... China, US, Europe all had been affected by trade wars and supply chain disruption... and, now, the corona virus


If transmissions are not passed to the borrowers... the RBI may cut real rates to zero or neutral real interest rate... Inflation excluding food and fuel is 3.5% and nominal interest rate is 5.15%... Therefore, real interest rate is 1.65%... RBI is no profit organisation... though it pays dividend to the gov... In a less rich economy people save less and positive real interest rate is important to increase competitiveness.... and productivity... lower and stable prices are important for financial stability... Everybody knows that fuel creates uncertainty for growth in INDIA... which INDIA now exports more than it imports...


With Monetary Policy accommodative along a 25 basis point cut and the a neutral real interest rate of 1.25% in a world of negative real rates could help the stock market scale new heights... The market is ready for this, though, higher money supply through OMOs and lower SLR and a lower reverse repo rate could induce banks to lend more at lower rates...


A change in psychology of the investors has been observed that they may take a rate cut or too much easing as signals for that there are underlying problems with the growth or something is wrong... But, Sensex is positive, both mathematical and sentimental... As Analysts are seeing shoots of a bounce back in demand/supply/prices/consumption/savings/investment/employment/growth/expectations....


Rate cut and accommodative Money Supply would increase competitiveness and productivity of capital and investment and lower prices may increase real wages and incomes reinforcing demand and supply and growth... exports would increase too....


The PSBs are also not passing the rate cuts by the RBI, if they take lead, others (PrSBs) may follow as there would be competition to increase the market share...


In Jan inflation increased to 7.58%.... Lower real interest rate and inflation expectations could increase spending and growth, too, as long as as RBI remains accommodative or neutral... The Economy swings between excess demand and excess supply and lower price/higher quantity or higher price/lower quantity, though excess could push prices and expectations down/up by increasing demand/supply and prices and expectations... too much supply/demand could delay spending which might reinforce prices and expectations... In this, if people expect that a(ny) policy or stimuli or expectations that would further increase volatility until it becomes a reality or is completely suspended... Uncertainty also reinforces prices and growth and expectations...


There are alot of things we have that are going through stagnant demand and prices compared to food (except food), fuel, too, just two of the categories which create alot of uncertainty for growth, too.... which directly affect real wages and incomes and demand and growth, food and fuel demand is high in INDIA, but demand in other categories is low which must have credit supply at cheap rates to create jobs... These must have separate funds or incentives to increase production through investment, too... supply creates demand...


The slowdown is an oppourtunity to invest more at lower prices... The real balance effect would work, also through incentives and inducements... Lower prices increase demand and price and expectations and spending and growth and expectations...


Germany’s internal devaluation is a better model than China's external devaluation... Lease of land could lower the cost of land in INDIA....


Now investors and especially SIPs which is a favored route of investment would keep the stock market get going with an upward bias in the medium to long run...


BJP lost some elections due to limited reach to the poor condition of rural and agricultural areas... though, last budgets had been dedicated to fill that gap... If provided skills to the rural population, rural hinterland could prove to be positive for next elections...


Donald Trump the US’ President is scheduled to visit INDIA in Feb. Like always US would like to strike arms/defense deal, investment in indigenous industry could be a success... The President and PM post do not provide any incentive to increase trade and negotiations... like other jobs... They are there to increase investment and create employment in the Economy... Security even above that...


It is a cyclical slowdown... checkout on Google... though, green shoots of recovery are visible in INDIA….

Budget 2020...

The FM started with the fundamentals of the Indian economy, probably pointing to low inflation and contained Fiscal deficit and Current Account… and reiterated the commitment to increase income and the purchasing power to boost demand and growth… with respect to Late Former FM Shri Arun Jaitley…

She also tried to underscore her vision and past success by numerating formalisation of the economy, adding 16 lkh more taxpayers and providing jobs to the workforce…  The FM told that the average consumer saves 4% more due to lower gst and transmission to consumer prices equivalent to 1 lkh crore… The license permit raj is behind and the economy is more market based on the forces of actual demand and supply… 

Aspiration, Care and Economic Development was on the top of mind of the FM and was the theme of the Budget… She said several millions have been lifted out of poverty and the gov-debt has been lower compared to few years back…

She presented a 16 point plan to double farmer income and tried to incentivize farming through allocation of money for water and irrigation and farm credit of Rs 15 lkh crore… The Budget sought to increase production of the fodder through MGNREGA… Investment in transportion, cold storage and warehouses was among the top priority of the agri-budget…

The Budget would provide 69 thsd crore for improving the healthcare sector… Govt intends to eliminate Foot to Mouth Disease…

Rs 99, 300 crore have been allocated for the education and Rs 3, 000 for the skill development of youth… Engineers would be updated through skills and internship programmes to increase employability..

The FM tried to contain Fiscal Deficit target between 3.5 to 3.8%...

Our FM gave tax relief to millions of taxpayers by reducing tax and altering tax bracket… Now, taxpayers with R5 lkh to 7.5 lkh would pay 10% tax, from Rs 7.5 lkh to 10 lkh would pay 15% tax, 10-12.5 lkh would pay 20% and 12.5 -15lkh would pay 25% tax… Now on average everybody would pay 5% less tax on their income… and in some cases as lower as 10%...

The FM has removed Dividend-Distribution-Tax (DDT) altogether which is a big positive for the stock market, but let LTCG tax unaltered …

The gov set a disinvestment target of 2.1 lkh crore and try to raise money through LIC IPO and disinvestment in IDBI bank which pushed related stock during the day…

Our FM also allocated a lot of money on a number of heads including steps to incentivize technology and IT… which would increase spending in the economy…

Agriculture which needs structural reforms to increase investment got maximum funds which was largely expected and would help boost farm incomes and demand and growth in the economy… Lower incomes tax and lower tax for the affordable housing could increase demand and spending, too… The FM underlined her commitment for Land, Labour, Capital and Tax reforms going ahead…

This is an expansionary budget which is likely to put money in people’s hands, especially the agriculturists and the salaried and working…