The Government seems to be pushed to the walls as they have restarted some economic reforms once more, come what may be. We are convinced this is the dawn of a new age of reforms in India, potentially as momentous as the ones in 1991. However still many amongst us reacts decidedly ho-hum, and who think that the government has done little and quite late and will actually be able to operationalise little of what it has announced.
There’s some truth in both views and from here on. The government measures announced so far will only take care of 25 to 35 per cent of the diesel losses. The other announcements, if and when followed up by actual changes in laws and regulations, might will entice some foreigners to invest.
Everything else, like the softer attitude on retrospective taxation and GAAR are some time from fruition. And the less said about myriad issues from infrastructure to inflation the better. The investment markets are operating on hope or softer interest regime & retrospective higher bottom-line for India inc., along with the news from the US and Europe that their currency would be depreciating going forward for long time to come.
All of which still means that the outlook is still much better than it appeared to be a week or two back. Investors are eternal optimists, and a promise of some real reforms, some chance of actual implementation, plus some hope of liquidity—that adds up to cause for a great deal of optimists.
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