Indicus in News

The opportunity lies in tightening implementation, cleaning up rules and procedures, removing contracting hurdles, setting up a real-time monitoring mechanism, and improving cross-ministerial interaction. All of this can be achieved without new bills and policies. But this government preferred to use monetary and fiscal means to circumvent implementation hurdles. The economist politicians perhaps know the pointlessness of using the hammer of fiscal and monetary policy to tighten the microscopic nuts and bolts of implementation. But the poor guys are unable to do more; at some point in the near future the real politicians will have to once again run the economy – only they can manage on-the-ground reforms.

Going ahead, the outlook shows that while the broad trend is one of downward momentum, some sectors like infrastructure, agriculture show promise. Though data are not in, agri input suppliers, and rural marketers are reporting a boom in sales – likely due to a good crop combined with higher prices. Infrastructure sector will continue to improve steadily going by the allocations and the announcements. However, there is some time lag and a few months may pass before we can hope to declare an infrastructure sector boom.

Again, big business is likely to recover much faster than the small sector, which will need significant recourse to credit to get back into business. Small businesses are reporting a steep fall in their working capital and access to credit, and also a sharp rise in payments due from large companies. This is even more so in the case of services oriented small businesses. Expect extremely poor times ahead for this segment.

What is also clear is that by the second half of 2009, there will an overall improvement. Though another crash in the US housing market cannot be completly ruled out, it is unlikely given the large give-aways disguised as stimulus packages in the western countries.

For once we join the leftists in saying ‘do not copy the west’. We have all seen the great opportunities that economic freedom, devoid of fund allocation by governments, can create. The markets are now in the self correction mode, and the growth slowdown is a symptom of this. The bubbles in the real estate and high end salaries need to subside if India has to emerge a stronger economy. Indian and international governments have stopped the assets markets from crashing further and saved many large private firms. There is no need to save any more.

In other words, it is now the right time to get over our collective pessimism (or should we call it the slowdown syndrome?)

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