Having a vision of making an Indian economy to 5 trillion USD by 2025 and demonstrating 20/20 vision in the implementation are two different aspects. 20/20 vision is a measurement of person’s ability which is considered as normal while driving, reading and watching. When we discuss about vision of a country apart from driving the economy ,reading the minds of people and watching ground reality are vital measures and it also needs to have peripheral vision i.e. how one see off to the side without turning an eye. As we enter the year 2020, a leap year a big leap is required to achieve the vision of 5 trillion USD.
Reserve bank has predicted a growth forecast for the year 2020 at 5% cut sharply from 6.1% projected earlier. With the impact of untimely rains , the last Monitory Policy Committee meeting of RBI has revised the consumer price inflation (CPI) projection upwards for the second half of the financial year 2019-20 at 5.1 – 4.7 per cent . Similarly for first half of year 2020-21 it has been projected at 4 – 3.8 per cent. This is within the target of band of 4 per cent (+/-2 )
Last year began with not so interim budget in spite of an election year. Before the general elections, government came up with a novel scheme of annually crediting Rs 6,000 to farmers accounts under Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN), scheme to nearly 1.4 crore needy farmers.
One of the positive outcomes of last year has been major changes made in the Insolvency and Bankruptcy Code (IBC). The amendments to the law proposed to enforce absolutely strict 330-day deadline for the insolvency resolution process. It also streamlined the process of objections to be raised by various government agencies which were hindering the process. Supreme Court in its landmark judgement also upheld the secured creditors’ right on the sale or liquidation proceeds of bankrupt companies. This will play a major role in recovery as well as revival.
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Then came something which was unwanted. Sort of left turn by the government by imposing hike in surcharge for the super-rich from 15 per cent to 25 per cent for income range between Rs 2 crore and Rs 5 crore, and from 15 per cent to 37 per cent for higher incomes. This led to downturn in the industry and more pessimism in the market.
Then we witnessed roll back and lots of U turns and ultimately corporate tax reduction. Proactive step to reduce the corporate tax rate from 30 per cent to 22 per cent and to 15 per cent for new manufacturing companies will have a long term positive impact .This bold move should give fillip to fast-moving consumer goods (FMCG). In order to boost the lending and liquidity capital infusion of Rs 70,000 crore was done by the government into public-sector banks.
In spite of all the efforts, growth in the agriculture sector has been dismal. Reforms like the national agricultural market (e-NAM) the national agricultural insurance have limited success. Two main causes for dismal growth are industrialists reluctant to take risk on account of disastrous events in financial sector and other being slow down in rural consumption. Current trends are indicating a hint of stabilization in the Indian economy. Short term pains on account of cleaning up in the financial sector are getting over. Liquidity is no more a concern now but credit off take has to take place. Recent reforms on infrastructure developments area welcome but the pace of implementation needs to be monitored .Coming year will be definitely for people having appetite for risk. Still the economy may continue to see a subdued trend as far as growth rate is concerned. We may expect a real surge in growth rate in the last quarter more so because of the lower base in the last quarter of financial year 2019-20 being an election year. Private investment is key factor. We are witnessing lots of positive moment in selective stocks. Due to extreme slow down markets are underperforming except for selective index stocks. As we go into 2020, wishing all the readers all the best for the New Year,
- UDAY TARDALKAR
CORPORATE CONSULTANT AND TRAINER