We have double digit CPI (aam admi affecting) inflation, Double digit fiscal deficit, huge govt borrowing above 80% of gdp, A sizable corporate borrowing from external sources that will not be swapped for equity due to the market crash, and a govt that seems to announce packages and doles at regular intervals, without even looking at its consequence on the fisc..
SnP (one of the disgraced international rating agency s) has just downgraded India to negative and others are considering the Junk status .
The Rupee has been crashing and it wont be long before we see 52+ to the dollar. FIIs the most reliable asset of the Sleeping FM and current HM(who expected us to trust him unconditionally) are bailing out on a regular basis scared of the loose fiscal policy.Things have never been better Worse!
Yes, The Americans are doing something similar but the difference that there is a new govt there and there is so much accountability (something absent here ) and a national debate on it all , and more importantly at least there is a plan, something non existent in the annals of the Finance ministry here.
What scares me is not the doles, stimuli and bailouts but the adhocism of the Central Govt, which has announced a 5th stimulus ? yesterday, and a govt that has a temp fm that too in such a terrible economic environment.
When shit hits the ceiling, gravity is bound to take its toll, and that very shit is bound to start to fall on our heads someday….
Im worried about what fate awaits the aam admi post elections, when the politicians have no reasons to humor the electorate . All that i can pray for now, is that elections be held every year because i can see no other solution to this predicament.
Update 6/3/09 : The slowdown is serious , from the retailer to the wholesale dealer everyone is complaining of the slowdown. This is all that im hearing. Chk out this interesting NDTV profit interview
The worldwide recession is real and people are facing job losses. India might loose a substantial amt of gulf remittances thanks to the depression in real estate in Dubai. The rupee could head to 54+ now that it is hovering around 52.
See CNBC Video of a talk with Shankar Acharya discussing the govts ad-hocism and huge borrowings and uncontrolled spending will eventually lead to a rise in the long end interest rates or inflation, sometime in future .
Must see for people interested in policy…