"Old men are dangerous:
it doesn't matter to them what is going to happen to the world."
—John Milton (English,
1608-1674)
Word for the day
Facepalm (n)
The gesture of placing the
palm of one's hand across the face, as to express embarrassment, frustration,
disbelief, etc. Often used as an interjection, e.g., "She read the
post and comments and did a facepalm.
Malice towards none
If a Muslim or Christian converts
to Hinduism, who decides which caste and Varna (Brahmin, Kshtriya, etc.) he
would take?
First random thought this morning
The summary dismissal of infamous 2G case by the special CBI
court, highlights a number important issues. The most important in my view, is
pathetic and blatant disregard for the "bail is a right" rule. Many accused,
who happen to be famous and reputed people in their own field, were apparently
incarcerated without any substantial reason or evidence. This was seen in the
famous Aryushi case also, where the parents were put behind bars on flimsy
grounds, without any tenable evidence.
There have been numerous cases where the morality of the issue
involved and media TRP of the case has taken precedence over the legality of
the material on record.
We need a stronger law on perjury, reparation for the wrongly
accused, and constitutional autonomy (on the lines of Election Commission) for
the federal investigating agencies (CBI, NIA, and ED).
2018-Macro outlook
The improvement seen in macroeconomic indicators, like twin
deficit, inflation and rates during past couple of years, seems to have peaked.
Though the consensus forecast so far is not indicating any dramatic
deterioration in the macroeconomic environment, most of the economists are
hedging their bets by highlighting the political risk. Particularly, in the aftermath
of the Gujarat election results, a common fear is that the government may go
soft on disruptive reforms and policies may be given a populist hue ahead of
key assembly elections in 2018 in run up to the 2019 general elections.
Globally also, there is a general sentiment of economic optimism.
From the Fed's action in 2017 and guidance for 2018, most economists are
drawing comfort that the normalization of the monetary policy may not be
disorderly.
With this background, my outlook for the likely macroeconomic
environment in 2018 is as follows:
(a) Inflation:
The consumer inflation may continue to remain above the RBI target of 4% for
most part of the year. The core inflation may rise on the back of higher raw
material prices and wages. Imported inflation shall remain elevated as global
commodity prices remain strong.
(b) Fiscal Deficit:
The government may persist with FRBM targets compromising with public
investment and consumption. Expect the present trend of delay in payment of
subsidies, tax refunds and contractors' payment to continue in 2018 as well.
The systemic liquidity may thus remain constrained most part of 2018.
(c) Rates:
Expect benchmark yields to average above 7% for the year. RBI may hold policy
rates during 1H2018, but if inflationary pressures persist a hike could be
considered. Deposit rates may firm up further as systemic liquidity remains
tight.
(d) Current Account:
Expect current account to worsen on the back of rise in energy import and
sluggish export growth.
(e) Savings:
Household saving may grow at slower pace as real wage growth remains poor.
Corporate savings though may be higher due to continued deleveraging and rise
in free cash flows.
(f) Investment:
The government investment expenditure may see some slow down due to fiscal constraints
and higher allocation to social sector ahead of elections. Private capex may
see recovery in some sectors as like consumption and commodities. Poor capacity
utilization may however keep overall investment growth under check.
(g) Exchange Rate:
USDINR may remain stable as higher yields continue to support inflows. Funding
BoP should not be a problem at all.
(h) Growth:
Expect higher rates to hit real GDP growth in first half. In 2H2018, we may see
growth recovering to 7.25% as GST benefits begin to kick in.
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