Do it yourself

The central government presently derives 63% of its resources from taxes (Direct Taxes 36% and Indirect Taxes 27%). 27% comes from borrowing and 10% from other sources. The present socio-political milieu is such that (i) the central government is becoming increasingly dependent on the regional parties, hence it is imperative that it would need to allocate more resources to the states ruled by the supporting regional parties; (ii) a larger proportion of the population is becoming increasingly dependent on the government for the basic necessities like food, shelter, education and healthcare, requiring the basic social sector spending to rise without any major improvement in the quality of life; (iii) supply side pressures are not abetting, keeping the inflation (including imported inflation) elevated, pressurizing USDINR and yields; and (iv) economic growth continues to be disproportionately dependent on government spending (both revenue and capex). Under these circumstances, the governm...

The bad things are easier to believe. Haven’t you noticed that? - Vivian to Edward in movie Pretty Woman While it is easy and fashionable to highlight the negatives to support the fear already instilled amongst the investors, I believe it would be in order to take note of the improvements that have taken place in recent times which would support the markets on their upward journey, whenever it begins. 1.     The current account deficit of India has shrinked to ~1% of GDP for 9MFY20 vs. 2.1% of GDP in FY19. The recent fall in current account deficit is primarily due to fall in imports due to poor domestic demand and sharp correction in energy prices (crude oil & natural gas). Fall in imports due to fall in domestic demand may not be a desirable way of lowering the current account deficit. Nonetheless, the breakdown of global energy cartel indicates that the lower energy prices may sustain for little longer, helping the recovery of Indian ec...