Thought for
the day
“It is great to be a blonde. With low expectations it's
very easy to surprise people.”
-Pamela Anderson (American, 1967-)
Word of the
day
Wight (adj)
Active, nimble, strong and brave
Active, nimble, strong and brave
(Source: Dictionary.com)
Shri Nārada Uvāca
Is the current UP sugar crisis a Samajwadi Party conspiracy
to create distress in the bastions of Ajit Singh (western UP); Gandhi family
(eastern UP) and Mayawati (liquor lobby)?
The twitter is that having failed to gain support of cane
farmers in Merrut, Muzzafar Nagar, Rae Bareilly, Shahjahanpur, Lakhimpur Khiri,
Sultanpur and liquor producers through carrot, SP government is now trying
sticks!
Green shoots seen…
While it is pertinent to keep a watch on the periodic macro
data, these data points often do not always reflect a “trend”. Personal
investment strategy therefore should look at the medium to long term growth
trends to identify any need for change in direction and magnitude.
Also,
given the exuberance in the equity market primarily on account of global
economic stability, abundant liquidity and domestic political optimism, it is
important to do some realty check.
People
starved of good news for long may sense “party time” from 2QFY14 GDP growth. In
our view, the data definitely has some positive signs which raise hopes of a
macroeconomic bottoming over next few quarters. However, the data does not
provide much evidence to suggest that the boom time is around the corner.
Core
sector improves, external demand, weak INR leads 16% surge in exports
Industry
growth picked up to 2.4% in Q2FY14 from a mere 0.2% in the previous quarter.
The revival in industry was led by an improvement in the core sectors – mining
and utilities and construction. Electricity sector grew at 7.7% – its fastest
pace in last eight quarters. Compared to over 1% decline in Q1, manufacturing
grew by 1% showing some signs of recovery, primarily boosted by strong exports.
In Q2, exports grew by a 16.3%, led by improving global demand and a
depreciated rupee.
Agriculture
supports household consumption
Above-normal monsoons lifted agricultural growth to 4.6%.
Hopefully, higher farm incomes will raise rural incomes and help drive a
recovery in private consumption growth in the second half of the fiscal year.
Downsizing affects government spending, services growth at
decade low
Sharp decline in government spending was visible in Q2. As
slowing GDP growth adversely impacted tax revenues and a weak rupee raised the
subsidy burden of the government, a 10% cut in non-plan expenditure has been
announced. As a result, growth in community, social and personal services
almost halved to 4.2% in the second quarter, dragging down growth in overall
services to less than 6.0%, lowest in more than a decade.
Share of private consumption falls to lowest, investment
recovers qoq
Private consumption had been one of the major factors in
resilience of Indian economy during previous global crisis. At 59.8% of GDP,
the private consumption has fallen to lowest level in decades. Investment at
29.4% continues to be dismal and even lower than 1QFY13 level of 29.9%.
No fiscal leverage left
The Centre’s fiscal deficit touched Rs 4,57,886 crore or 84.4%
of its Budget estimate of Rs 5,42,499 crore between April and October, 2013 on
the back of slowing tax revenue and non-debt capital receipts outpaced
expenditure.
Given that the FM is committed to the fiscal deficit as
budgeted, there is little fiscal leverage left with the government over next
five months.
…to continue
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