Government Election Carrot giving way for the Dollar to Rise
Its our Irony that some of the most educated and renowned people are in power currently and the Indian economy is bleeding like never before, thanks to the short-sighted desicions by the government.
Were we prepared for another subsidy in the form of Food Security Bill or an 10% hike in the DA of the Central government Employees. Dealing with Fiscal Deficit at a very high tate it is just 5 months in this FY and we have already consumed the Fiscal Deficit limite we have banked upon and still 7 more months to go for this FY. C/A Deficit at its all time high. these two bills passed recently are just another nail in the Coffin it may be a Lucarative Carrot Factor Seeing Elections in the near future 6-7 months later, the government is determined to leave no stone unturned for coming back for another 5 years. Since its performace and the array of scams mounting will not make it a easy task, they have started throwing the carrots in the air for the "MANGO PEOPLE" who would be happy yet again not understanding that government does not have any funds ready for these anouncements, neither they are bothered with that.
Result, it eveident Dollar and other stable currencies like Yen, Pound have started making new highs and supported by the stability in the Off-shore market it is surely going to create a Vicious Cycle. Subsidies and Bills willl cost government to add losses to its deficit, which will hamper the GDP growth rate and it would inturn downgrade the ratings of Indian economy in the world market. FII's inspired by the US growth story may pull out all their money gradually from the Indian Bond and Equity market and invest it in other developing economies for better return. FII moving out will create pressure on Indian Rupee, It will fall as Dollar will move up and subsequently Government has only 3 options left-
1-Increase Fuel rate especially Diesel to counter the Subsidies amount,
2-Sell Dollars from the reserves RBI have and lastly
3-To Pledge some GOLD again (which the RBI and Banks don't have in enough quantity) so either will borrw it from "Mango People" or from Hindu Trusts and other Religious Institutions sitting on the Mountains of the precious metal.
this will definitely give some soothing effect to the Rupee and it may strengthen a Bit but not fundamentally only for a time being......
End result would be Inflation will cross all limits(owing to Diesel price hike), all commodities will be costlier and again the common "Mango People" are the only one who are going to suffer.
Time now for the Govt to take some Long-Sighted measures for Income generation and Employment generation and drive the Indian Economy on its + Factor "its Population".
VS..
Were we prepared for another subsidy in the form of Food Security Bill or an 10% hike in the DA of the Central government Employees. Dealing with Fiscal Deficit at a very high tate it is just 5 months in this FY and we have already consumed the Fiscal Deficit limite we have banked upon and still 7 more months to go for this FY. C/A Deficit at its all time high. these two bills passed recently are just another nail in the Coffin it may be a Lucarative Carrot Factor Seeing Elections in the near future 6-7 months later, the government is determined to leave no stone unturned for coming back for another 5 years. Since its performace and the array of scams mounting will not make it a easy task, they have started throwing the carrots in the air for the "MANGO PEOPLE" who would be happy yet again not understanding that government does not have any funds ready for these anouncements, neither they are bothered with that.
Result, it eveident Dollar and other stable currencies like Yen, Pound have started making new highs and supported by the stability in the Off-shore market it is surely going to create a Vicious Cycle. Subsidies and Bills willl cost government to add losses to its deficit, which will hamper the GDP growth rate and it would inturn downgrade the ratings of Indian economy in the world market. FII's inspired by the US growth story may pull out all their money gradually from the Indian Bond and Equity market and invest it in other developing economies for better return. FII moving out will create pressure on Indian Rupee, It will fall as Dollar will move up and subsequently Government has only 3 options left-
1-Increase Fuel rate especially Diesel to counter the Subsidies amount,
2-Sell Dollars from the reserves RBI have and lastly
3-To Pledge some GOLD again (which the RBI and Banks don't have in enough quantity) so either will borrw it from "Mango People" or from Hindu Trusts and other Religious Institutions sitting on the Mountains of the precious metal.
this will definitely give some soothing effect to the Rupee and it may strengthen a Bit but not fundamentally only for a time being......
End result would be Inflation will cross all limits(owing to Diesel price hike), all commodities will be costlier and again the common "Mango People" are the only one who are going to suffer.
Time now for the Govt to take some Long-Sighted measures for Income generation and Employment generation and drive the Indian Economy on its + Factor "its Population".
VS..
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