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Will Indian Market Rise with Massive Corruption Wave + Breakdown of Government Machinery + Policy Paralysis ?

March 23, 2012

The Central Government doesn’t seem to get anything right – Budget Proposals Rolled back, Railway Minister Sacked, etc All these are steps backward for the forward looking Equity Analysts as the Congress Government does not want anybody with Brains to push Progressive Reforms and Policies but require muppets and puppets 🙂 [Old Man always seen complaining, Coalition Compulsions, Ufff!!!] Now that a media favored by the ruling party leaked a massive mother of all scams investigation report by CAG that will rock the nation soon – CoalGate – Coal Blocks Allocation Scam. Did the media have vested interest in telling Government, especially the PMO to go CYA 🙂

Anyway, Goldman Sachs has upgraded India to Equal-Weight and set a NIFTY Target to 6100 by March-2013. That will be the best time to Book Profits in your Long Only Holdings as the Indian Political Equation is heading for Worse and Rouges of the Worst Class may come to power. Here is a quick assessment of the state of Reforms and Policies in the Government.

Cleaning Corrupt Politics with Media, Rise of Regulators, Watchdogs and Legal Course, OfCourse 🙂 All this began with the CAG Report on the Massive 2G Wireless Telecom Spectrum Scam which directly landed in the Supreme Court instead of CBI and all eye-washing inquiries. You should note that the Competition Commission of India (CCI) see itself rise in prominence comparable to the RBI over the next few years. CCI has already punished erring Real Estate Company DLF and will bring to book many such firms. Media firms are now recruiting journalists dedicated to exposing stories on the business-politics nexus and experience with the RTI.

Breakdown in Centre and the State Relationship Government machinery point to is the recent inability of the Centre to foster a consensus with States. The Centre has been attempting to phase-out the CST in a bid to introduce the new Good and Services Tax (GST) under which State levies would be subsumed into a single tax. States are being undercompensated for the phase-out of leading them to demand a an increase in the CST thereby jeopardising the GST implementation agenda.

Senior Government Officials indicated that post State elections and pre Union Budget is a time when typically fuel price hikes are administered. Union Government is unable to push through the same is a leading indicator of the inability of the current Government to push through any decision that is faintly anti-populist. The decision to increase coal prices and the eventual roll back as well as the sacking of the Railway Minister following his decision to increase rail fares reflect the fragility of the Congress Government.

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One Response to “Will Indian Market Rise with Massive Corruption Wave + Breakdown of Government Machinery + Policy Paralysis ?”

  1. Dr. Rajan Economic Adviser to Prime Minister Manmohan Singh Trashes Govt | FreePress India on April 8th, 2012 12:11 PM

    […] On Policy Paralysis, The deficiencies here (governance and regulation) are more alarming than the inadequacies of our roads, rail, ports and airports that we are in the process of addressing. […]

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