Big Data Analytics Solutions | Financial Services in India |Decimal Point Analysis

Decimal Digest
15 Oct 2012


India: Misplaced Optimism?

In past few weeks, Indian financial markets have placed significant hopes on the recovery in macro fundamentals post announcements of much delayed reforms in a few non-critical areas of the economy. The chart below shows the extent of damage already done to Indian macro fundamentals and the extent of ground which India needs to cover before it can become fighting fit again.

Chart 1: IMF estimates of Twin Deficits

Source: IMF

The above chart shows that India needs to quickly announce meaningful reforms in sectors that are constraining the growth of India – Roads, Ports, Power, Education and Health. The current set of reforms announced potentially create further capacity in airlines, insurance and urban retail sector – all three sectors are already plagued with overcapacity or are constrained by misplaced regulations – which unfortunately are not yet addressed by the current set of reforms.

Unless India gets its growth engine back on track, simultaneously controls inflation, and produces positive real rates of returns for fixed income investors, the current optimism will not produce sustainable results.




×

Decimal Point Analytics (DPA) will process the information in this form to share information as requested. By checking the above box you confirm your acceptance to receive the communication. You can unsubscribe any time by clicking the ‘Unsubscribe’ link in the footer of any email you receive from us, or by contacting us at

We use cookies to measure website performance, provide social media features and personalize content.
Close this dialog to confirm you are happy with that, or find out more in the privacy statement.