IIP + RBI Policy Review + Railway + Union Budget – Eventful Week Ahead
March 8, 2012
The forthcoming week is an eventful week for the market with the IIP Data, RBI Monetary Policy Review, Railways and the Union Budget.
IIP Data – The core sector growth of almost zero percent suggest the data is going to be week for almost 6 months now. Expectations are for 1% growth which is very weak. The RBI and government must understand that with 1.2 Bn population we cannot have slow industrial growth else there will huge unemployment problem in India.
WPI Inflation Data – With surprise huge upward revisions in index of previous months this month we may have index level of 158.1 assuming upward revisions to continue.
Will the Government Hike Oil Prices ? Everybody thought the hike will come as soon as election results are out but don’t really understand what the government is waiting for with very high fiscal deficit, can we can wait without a hike ? May be the government is nervous over the election results and may face backlash by coalition parties.
Railway Budget Well silently week before budget the minister has increased freight rates this again because of fear of not announcing it in budget and thus having it to rollback later on. this move will put pressure on inflation but it was required.
RBI Monetary Policy Review – With Inflation being the main reason for Rahul Gandhi to face the shame in Uttar Pradesh, the Congress may get tough on Pranab Da who in turn will summon the RBI Governor for stringent monetary policy and aggressive review of Rates to keep the prices under control. The RBI may not choose to go for the Repo rate cut in March policy and may decide to keep it for April one, but according to me that will be a mistake as things have seriously slowed down.
Union Budget – MNREGA Scheme + Food Security – No More the Favorite of Voters – The jury is out whether after poor election results will government be able to push reforms or will it be a populist budget. If the Governmenth as any sense, they should understand that MNREGA and Food Security Bill all have resulted in being a meaningful vote bank politics, so Parnab Da should go all out to bring fiscal down deficit to 4% by 2013, Announce new Tax reforms [Direct Tax Code], I see a higher tax surcharge on the super-rich of India, a baby step toward extracting more now.