Budget Hopes; Import Wheat; Equity Meltdown

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Opinion Watch

Budget Hopes

With Rs 16.50 lakh crore of fiscal deficit and gross tax revenue set for going past over Rs 30 lakh crore, the Narendra Modi-led NDA government has no alibi not to take measures to boost growth. Inflation too is moderating. Food inflation is indeed a worry. Finance Minister Nirmala Sitharaman has to cast her vote on growth versus inflation debate on Wednesday.

The Asian Age in an Editorial has urged upon ‘Madam FM’ to cast her vote for growth. The daily argued that a person without a job suffers most because of inflation. It added that growth is the only way out to give more new jobs to the people. The daily also stated that the worries of fiscal deficit may be ignored, for rapid job creation at all levels – states and Centre – will bring political windfalls to the incumbent government as well. The daily has warned that the middle class be not taken for granted (again).

Indian economy is characterized by jobless growth. This bind has been in existence since at least 2010. Additional baggage is the inability of the economy to create high income employments. The skill set mismatch remains a challenge. India is not rapidly skilling to create high value employments. This has led to the revival of the animal spirit among the youth for government jobs. The challenges are too acute and classical economists such as Arvind Panagariya thought better to teach in the US then guide the ruling dispensation. The people are also contented with the free foodgrains scheme to worry about jobs, as they busy with YouTube entertainments.

Import Wheat

India banned export of wheat several months ago. Yet, the wheat and flour prices are over the top, giving additional legs to food inflation. The public wheat stocks are also at six-month low.

The Indian Express in an Editorial has asked the government to import 2-3 mts of wheat from Russia, which has a landing price here for about Rs 28.5/kg. The prevailing wheat price in the country is Rs 30-35/kg. The Noida-based daily has also cautioned that while wheat crops are standing on over 34 million-plus hectare, vagaries of weather should not be underestimated since new wheat stocks will arrive only in April. The daily also added that domestic ghee and butter prices are also on fire, and the government should import milk fat.

Russian wheat has arrived in Pakistan, which is in the midst of unprecedented food crisis. Climate change impact is severe on wheat crops globally. This calls for India to prepare well.

Equity Meltdown

The equity market regularly is hit by black swan moments. Adani Group brought deep corrections in the Indian equity markets, even while their global peers are at their peaks. Can SEBI do anything about it? No! The people have to gain better understanding as they invest in the equity markets.

The Hindu in an Editorial has given an account of the short-seller Hidenberg Report hitting the Adani Group of stocks. The Chennai-based daily has argued that the likes of LIC and the SBI are strong pillars of the economy, but are exposed to risky bets with exposure to Adani Group of stocks. It also noted the global debate surrounding credibility of rating agencies, urging regulators to step in.

The LIC investment in Adani stocks is of Rs 28,000 crore, and currently valued at Rs 56,000 crores, down from the peak of Rs 88,000 crores after the rout. That’s still 100 per cent gain. Investors must know that they should buy in panic and hold tight to make gains.

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