Do it yourself

Continuing the debate on growth slowdown from yesterday ( see here ), I would argue that the economic growth trends in an economy like India (which is large, diverse and runs a multiparty democratic system) would usually take a longer time to establish. It would be unreasonable to attribute the slow down or acceleration in growth completely to any plan, strategy, measure (legislative or administrative) etc that has been implemented in recent times. Construction of core infrastructure like power plants, highways, ports, coal mines, etc usually entails a long gestation period that in many extends to more than 5yrs (full term of a government). The full impact of these projects on growth is therefore felt only after these are completed and commissioned. The current acceleration in growth therefore is mostly result of the efforts made in past many years. Similarly, a significant change in the economy like (i) opening more sectors to global competition; (ii) withdrawal of subsidie...

The dismal GDP growth data for 1QFY20 released last Friday has fueled a multitude of debates in the country. Most of these debates could be classified in three categories, viz., 1.     Political Debate: Whether the incumbent NDA government led by PM Modi has failed in handling the economy properly? The debate encompasses a variety of issues, e.g., (i) whether demonetization and GST have impacted the growth momentum so severely that it may take many years to recuperate from the side effects; (ii) whether the government is focusing on too much on political issues ignoring the evident socio-economic concerns; (iii) whether the Narendra Modi administration has adequate talent to manage a economy in serious crisis; and (iv) whether UPA government led by Dr Manmohan Singh managed the economy well or is it due to the vacuum created by that government that the current government is trying hard to fill? The former Prime Minister Dr Manmohan Singh has acti...

1QFY20 Earnings - pain aggravating The latest earning season has been disappointing on most counts. If we can avoid getting into the nitty-gritty of the performance relative to corresponding quarter of last year or immediately preceding quarter, we shall find the reported earnings much below par across most sectors. The earnings totally belie the high hopes, the street had from FY20 earnings. There is a stampede amongst analysts to downgrade earnings estimates to bring these in line with the market conditions. The unfortunate part is that the revised earnings estimates also mostly appear driven by the prevailing stock prices and not by the earnings potential and prospects of businesses; and hence may not be reflecting the true state of the anticipated corporate performance. A significant majority of corporate managements guided caution in terms of near term growth, indicating that the 2QFY20 earnings may also not be encouraging. 2HFY20 outlook is generally opti...