GLASS HALF FULL OR HALF EMPTY?

about 2 months ago
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The rising CPI for Sept and the falling IIP for Aug – none of these were unexpected or out-of-the-blue news. We all knew that the rains have been patchy and erratic, we all are paying much more for food than what we did last year and overall, we all have been affected, in a small or big way, by the higher cost of living. We might not have had to cut down on expenses as such but surely most of us do have a rethink before we order something online – the price tag today of almost everything does make one pause and assess – need or want?

Well, the markets are down and this too was expected; after all the market will spit out what it has been fed and since the past few days, it’s been only bad news.

Take at look at some of them:

  • World Bank cuts India's GDP growth projection for 2022-23 to 6.5%
  • IMF had cut India's FY23 growth forecast by 80 bps to 7.4% 
  • IMF has warned that the ‘worst is yet to come’ for global economies and the financial impact on people. 
  • Intel to lay off thousands of employees across the world
  • Byju’s to fire 2500 on growth fears
  • Interest rates expected to continue to rise
  • Bank credit growth slowdown may continue
  • Fiscal deficit to overshoot by Rs.4.12 billion

Get the gist of it? But then, like in life, if we concentrate only on the negative, we will never, ever be happy. And that’s probably what the market is also teaching us. The market did not exactly crash through the floor – it is down but not down and out. And that’s because the market, which is said to be barometer of the Indian economy does reflect that all is not well but its not a time to despair. Like the market, we should be cautious but no need to be pessimistic. Let’s try and focus on some of the positive news as well –

  • The IMF has cut India’s GDP estimates but still, India's growth is projected to be the fastest among major economies - China was at 4.4% and the USA is projected to grow at 1%, with Russia, Italy, and Germany forecast to degrow.
  • Net direct tax mop-up over 52% of full fiscal target so far
  • PSUs achieve 43% of their annual capex target of Rs.6.6 trillion during April-September 2022 in a bid to help spur economic growth.
  • Preliminary data from CMIE’s CapEx database show that investment proposals worth Rs.3.1 trillion were made by the private sector during the quarter ended September 2022.

What we need to understand is that India is facing the tailwind of the storms blowing in the West. For us, these external storms are becoming hurricanes. The festive season and the revenge buying post Covid just does not seem to abate. And this domestic demand will keep the economy buoyant.

Undoubtedly, India is in a much better position than many other countries but during such times, to keep these storms at bay, the Govt needs to move quickly, show its agility and this upcoming Budget will once again assume immense significance. RBI too will need to tread cautiously with one eye on inflation and one on growth; merely hiking rates alone will not suffice.

These are tough and volatile times and though our ship is not rocking violently on these turbulent seas, its best to stay anchored – caution is always the best mast to fly when we see a storm on the horizon.

PS: Regarding the question whether the glass is half full or half empty – well, the glass is always full; air exists even when there is nothing in the glass. Thus the glass is always full.

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