As expected Post Demonetisation and GST there is an economic slow down. This is a temporary phase and it is beautifully explained by Jay Panda of BJD in his article in TOI in a very simple way and also by Mr Arvind Panagriya the former Vice Chairman of NITI AYOG, a renowned Economist.
If one is not a Pathological Hater, I am sure he would be rationale enough to understand.
The salient points of the two articles are as follows
1. If you have a doubt about the success of DEMONETISATION you just walk up to a Builder and an owner of Private Educational Institutions and you would know the true story. These two sectors were the BIGGEST USERS of Black Money.
2. Data mining by the tax authorities linking PAN CARDS to ADHAR will cause grief to those who can not explain the source of their funds.
3. Finally the GST has given a severe blow to these sectors which were heavily dependent on Cash particularly Black money.
4. Yes there is a slow down But then you can not claim that it has happened because of demonetisation and GST while also insisting that BLACK MONEY did not get effected. It would rather be correct to say that because These two Reforms effected the BLACK MONEY, that, there is a slow down.
5. According to INDIA Head of WORLD BANK, GST is a TECTONIC SHIFT which is likely to propel India to 8% Growth.
6. This 8% Growth would come by increasing the Public expenditure. The Govt which is now Cash rich( Remember the Govt did not cut down the duties on Oil despite the Crude Oil rates went down and also number of TAX PAYERS increasing) can spend more money on INFRASTRUCTURE, DEFENCE, RAILWAYS, AND RURAL ELECTRIFICATION.
7. As regards FDI it is growing steadily setting anew record last fiscal year.
8. However, the Domestic private investment has suffered and there is a need to Boost their Confidence which requires easy Credit flow. Today NITI AYOG has recommended release of some ONE LAC CRORE to Public sector Banks for improving the Credit flow situation.
9. Devaluing the Rupee is also an option to Boost the Exports.
10. With Growth reaching 7-8% in coming Quarters the Jobs will also increase. But there is a STARC reality BECAUSE of DIGITSATION and Technology automation even 8-10% Growth will not support as many jobs as it used to be. Radical measures like UNIVERSAL BASIC INCOME(UBI) will need to be considered.
11. Arvind Panagriya says ;The Govt must resist the temptation to go on a spending spree pre emptively. It has taken Three years of determined effort to achieve Fiscal consolidation. This achievement can not be sacrificed without compelling evidence justifying it. This means ……
One, While the Govt must be vigilant to the decline but it should avoid being overreactive as the decline has come because of the GST, Demonetisation and Cleaning up of Bank NPAs.
Two, The Data available does not show any fundamental weakness in Economy.
Three, The known sources of weakness are Two fold ; One is twin balance sheet problem and the other is poor performance of merchandise exports. The first one is taken care of by RBI and the second one needs to be taken care of by Govt by reducing Tariffs, taking further actions on trade facilitation and creating COASTAL EMPLOYMENT ZONES.
In view of the above, I am pretty sure that things are going to smoothen by the end of this Financial year and there is no need to be overly worried and join the PATHOLOGICAL HATERS. BECAUSE ULTIMATELY THEY HAVE TO ONCE AGAIN SHOVE THEIR FOOT IN THEIR MOUTHS.
This is rather the best time to Buy shares of Good companies.