"A budget tells us what we can't afford, but it doesn't keep us
from buying it."
—William Feather (American, 1889-1981)
Word
for the day
Auriferous (adj)
Yielding or containing gold.
Malice
towards none
The perfect storm:
- The government would want
Telcos to participate aggressively in the forthcoming spectrum auction.
- Banks would be reluctant
to lend aggressively to Telcos given the intensifying tariff war and poor revenue
growth visibility.
- Telcos may not like to bid
aggressively, but to survive competition they would need abundance of spectrum
and tower infrastructure.
First random thought this morning
All national parties ally with the smaller parties with parochial
agenda for electoral gains. But after winning the elections they find these
smaller parties' agenda regressive and want them to abandon it.
This is not gonna happen, Sir!
You are condemned to live with it and suffer.
Hope prevails!
The market was unusually indifferent to the below expectation GDP
data on Wednesday evening. No intense discussions in the TV studios; no press
conference or media release from PMO or the finance ministry; no significant
criticism from the opposition parties; and almost no reaction of benchmark
stock, currency market or bond market. This is a classical case of bull market.
The participants are either ignoring poor data points or
deliberately deriving positive inferences from it (rate cut etc.), knowing well
that in a world flirting with the specter of recession and deflation, high
growth will be hard to come by; regardless of what the government and its
planners may wish or claim.
I have been insisting that ~7% sustainable economic growth (5.5%
as per the old methodology) would be a truly great achievement under the
current circumstances, provided we can make it inclusive.
Aiming for 8% and higher growth by focusing on the top 20%
population would solve no problem at all, in my view.
From the data released on Wednesday, it is clear that so far there
is no respite to the rural populace which has been suffering from severe
drought for past two years. The standing crops are good. But these may not
results in immediate improvement in the rural income.
For one, the debt at household level has swelled in past two
years. A loan waiver by banks may be a partial relief as still a dominant part
of the debt could be outside the formal banking channel.
Secondly, like the last onion crop, many other vegetable crops may
not fetch remunerative prices to the farmers. Oil seeds, pulses may also see
lower realization.
A lot of hopes are being pinned on the seventh pay commission and
OROP payouts. As the payments are being made in the supposedly inauspicious
month, the spending may occur only in October, i.e., 3QFY17. My informal
inquiries from the trade channels are suggesting that except for automobile,
most other consumer durables (and staples also) are witnessing inventory
rundown. Acute shortage of cash in the trade channel, poor capacity addition
and widespread floods in many parts of the country could be the possible
reasons.
The Christmas shipments of exporters are almost done. What I could
gather from a few exporters is that the season is not great on any parameters.
The leverage for the government to keep spending is much lower
now. With fiscal targets almost breached, and budgeted spectrum revenue under
cloud, the growth in government revenue expenditure may not sustain. So it
would prudent to keep the expectations for 2QFY17 growth numbers also at
moderate level.
On positive side, the grand plans are beginning to take off. 3Q
could see positive momentum on the investment side.
I would not be surprised if an accounting jugglery or shifting the
goal post is used to show data in good light. After all we are competitors to
China!
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