Do it yourself

  Sitharaman, Powell toss the ball in Das’s court Wednesday night, the Federal Open Market Committee (FOMC) decided to maintain the status quo on policy rates for the fourth successive review. The Committee reiterated that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward two percent.” The Committee however made it quite clear that any rate hike from the present level is no longer on the table. In the post-meeting press meeting, Fed Chairman Jerome Powell indicated that FOMC may not consider rate cuts in its next meeting in March 2024. The market is thus expecting a rate cut in May 2024. In another development, the Union Finance Minister, Ms. Nirmala Sitharaman, presented an interim budget for the fiscal year 2024-25. Two notable features of the interim budget were (i) Nominal GDP growth projection for FY25 at 10.5%, implying a well-controlled inflation environment; and (ii) F...

This morning I see the finance minister as CFO of a financially stressed company. She faces all the problems a highly stressed business could in bad times. For example— The business of the company has witnessed considerable slow down in past few years. The revenue has shrinked and losses have increased. The ability to modernize and expand has been constricted as stressed balance sheet and poor cash flows are hindering capital expenditure. The investors are reluctant to commit more capital as the return on past tranches of investments has been poor. The company is not able to sell non-core businesses and assets to mobilize the resources needed to sustain the ongoing capex as well as the current repayment obligations. The competitors have snatched market share with competitive pricing and better delivery. The ability to retain talent has been hampered due to a variety of constraints. The rating agencies have put the company on watch list for a possible down ...