The Indian Economy: Surging Ahead

True: Every budget gets mired in a bit of poetry towards the end; just so as to prolong it superfluously. But deficit problems, inflation and recession notwithstanding, tossncook look up, and the sun is shining bright on the Indian economy. Eight of the Government master plans for developing 54 cities as ‘Solar cities’ have been approved. Agra, Aizawl, Delhi, Chandigarh, Moradabad, Dombivli Indore and Kohima will soon find themselves on the solar power maps of the world. Commerce and Industry Minister, Anand Sharma has also agreed to approve oil and gas projects in ’30 days’ flat while urging Gulf businesses to take advantage of investment opportunities in India. Nuclear power too may see rapid progress if the demand for safer nuclear plants becomes more emergent. So, the energy sector is about take a sea change, spelling good times for the power deficit economy of India.

This budget is also likely to see policy reforms to strengthen existing ones and proposals of new ones; reforms in land acquisition and new banking licenses are on the anvil. Some needs are practical. Subsidies have done nothing but fuel inflation; moves are on to stop populist gestures of keeping subsidies on cooking gas and diesel. The nation’s current account deficit had soared to a record 5.4 percent of the GDP in the July- September quarter, primarily led by oil and gold imports. All efforts must be on to bring this below 5 percent level in order to keep it manageable, and get the required sovereign ratings. This would also improve higher foreign investment prospects, hoodpay which is much needed. Addressing fiscal consolidation, an HSBC report says the RBI is likely cut in interest rates in its next policy meet on March 19. This would give impetus to the reforms push by the government for the economy of India.

Thinking ahead, in its February review this year, the Centre for Monitoring Indian Economy (CMIE) predicts a 6.8% growth in 2013-14. Even on a more vibrant note, CMIE says ‘growth will be aided by easing supply constraints, lower inflation, softening of interest rates and fast tracking of investment projects.”

As for the high flyers, there is more good news. India already boasts of being home to the second largest business jets number in the pan Asia region with a diverse fleet of 165, this is expected to double in the next five years says global consultancy expert PwC. A new entrant, Nextant, is all set for India with its ‘remanufactured’ Hawker Beech craft business jets: This would reduce their costs by almost half as well as bring down operating costs tremendously; enabling them reach from Delhi to Beijing or Delhi to Riyadh on a single tank of fuel! Well, panasiabiz high times for the super rich too! Two surveys by the PHD Chamber of Commerce and Ficci, of majority of Indian corporates indicate that they are optimistic and expect better business conditions. This could translate into more sales and higher profit margins in the coming 6 months to the next three years.

So what to expect in this budget? Finance Minister P Chidambaram is more or less likely to announce changes in the regulatory regime governing capital markets. He is expected to scrap the cap on amount Foreign Institutional Investors, allowing them to invest in corporate debt. Also expected is a simpler regime for foreign investors in bonds and stocks, kevythirsi to boost the investment climate.


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