David Fuller's view -
The long-term positive macro story is still largely intact
● We met with a number of technocrats in place in key ministries who seem
well in command of their brief. We heard no complacency as yet on the need
● Quiet progress on longer-term structural reforms in some areas (National
Infra Fund, reducing Energy subsidies, direct transfer of subsidies).
● Significant progress on increasing coal production and dealing with
transport/environment clearance bottlenecks.
● Recognition that the MAT was an 'own goal' and committed to defusing the
● Feeling that corruption levels are diminishing and ease of doing business is
● Strong conviction that some big-ticket reforms will in fact occur, especially
GST, where we heard widespread agreement that if passed, this would have
significant positive impact.
● Near-term progress has been slower than expected
● Passing reform legislation through Parliament is proving an obstacle (the
opposition is focusing on polarizing issues like land reform, and retain control
of the Upper House)
● Lack of progress in addressing balance sheet problems for PSU banks and
corporates, limiting appetite for private investments
● General sense that onshore monetary conditions are tight and, in our view,
over-optimism about near term RBI easing
● Rural incomes/spending under stress due to weak commodity prices and
lower government spending, with no obvious near term relief
These and the other points mentioned sound reasonable to me. India (weekly & daily) from the time Narendra Modi threw his hat into the electoral ring in September 2013, before peaking at 30000 in early March of this year. I have maintained that it would experience a well deserved consolidation before eventually moving higher.
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