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Three months into cash ban...

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Three months into cash ban... Empty Three months into cash ban...

Post by confuzzled dude Sat Jan 28, 2017 11:48 am

Three months into a cash ban that has sucked out momentum from one of the world’s fastest-growing economies, Prime Minister Narendra Modi has little room to boost spending.

While economists urge more investment in roads, ports and railways when the government presents its budget Feb. 1, and maybe even direct cash transfers to boost consumption, a splurge carries the risk of a rating downgrade. India is rated just one step above junk by S&P Global, Moody’s and Fitch, who cite Asia’s widest budget deficit as a drag on the sovereign rating.

Any erosion in credit quality risks scaring investors who’re already net sellers of Indian bonds and stocks this year, which can push the rupee toward a record low and stoke inflation. Moreover, a downgrade could tarnish Modi’s reputation -- already hit by the abrupt demonetization move -- before a slew of state elections starting Feb. 4

"The government has limited avenues available to stimulate the economy," said Neelkanth Mishra, managing director for equity research at Credit Suisse SA in Mumbai. At best Finance Minister Arun Jaitley could scrounge up about 2.5 trillion rupees ($37 billion), an "insignificant" amount for the $2 trillion economy that saw 86 percent of its currency invalidated in November and is estimated to face cash shortages through May.

https://www.bloomberg.com/news/articles/2017-01-26/little-room-for-india-to-beat-cash-ban-gloom-with-budget-goodies

Indians (especially, Modibhakts in the US) can kiss goodbye to reforms and come to grips with the fact that India will remain a license raj.

confuzzled dude

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Join date : 2011-05-08

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