Trade Resources Economy Heralding Three Path Breaking Reforms in Retail

Heralding Three Path Breaking Reforms in Retail

As the national economy sea saws between revival and slump the impasse over turn of fortune remains unbroken. UPA government sensing the impending economic holocaust with the fiscal deficit and inflation remaining obdurate has stuck with belated drive to spruce economy.

Heralding three path breaking reforms in retail, airlines and insurance sector in a bid to infuse investment and generate demand and employment it seemed all was not lost. High inflation-low growth had come to characterize Indian economy and the sole panacea was fundamental economic reforms setting aside political and emotional considerations in the interest of national economic survival.

Market sentiments pegged on the reforms coming through the political muddle. Winter session of the parliament began in the shadow of complete standstill during monsoon session as political parties eked for mileage out of coal gate castigating nationalistic economic considerations to the wind. However sensing over dosage of righteousness might pick axe the moral high ground opposition acquiesced for debate on FDI under rule 184 to complete its legislative obligations rather than nationalistic compulsions. Ironically FDI in retail touted as the biggest cash spinner for the beleaguered economy is a policy decision and legislative approval is technically redundant the fear of yet another parliamentary session getting washed off bulked the government.

Although other two less cantankerous decisions viz., 49% FDI in airlines and insurance sector calls for legislative sanction.

Meager 5.3% GDP growth in Q2 ( 6.7%) and equally emaciated industrial production at 2.8% (3.7%) was a pale shadow of economy having tasting blood of nearly double digit growth even during 2009 and 2010 .

Steel sector has unabashedly towed the pattern regardless of momentary blips backed by momentary sentiments. Halo of India being the brand bearer of whirlwind growth in steel production backed by demand vanished in no time bringing mills and buyers to the knuckles.

However passage of the above bills not only restores confidence in the government and its noble intentions but will translate in generation of steel demand from construction and reality sector. Infrastructure potential of USD 1 trillion would work wonders steel industry even with a slice.

Enormous potential of the Indian economy seems figurative rather than expressive at present. However winter session would be path breaking and trend setter if the government is able to steer through the bills.

Some sparks have flown with Indian mills hiking steel price by INR 500-1500 per tonne in December on a cautious note to milk the advantage of rupee depreciation and tickle in international price. Nonetheless sustainability can be assured only after radical demand generating decisions are executed.

Next fortnight will chart the course of Indian economy either way till that time market holds the breath.

Source: http://www.steelguru.com/indian_news/Steel_market_revival_in_India_hinges_on_parliamentary_approval_of_reforms/294006.html
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Steel Market Revival in India Hinges on Parliamentary Approval of Reforms