Languishing GDP growth!

It is no surprise to learn that in the quarter ending June, the GDP growth of India got weaker, exhibiting its lowest in three years, at 5.5 percent. With this exposure, there seems to be no respite for Prime Minister Manmohan Singh. The economic agenda that he created is no wonder paralyzed owing to a series of political scandals. And the coal scandal exposed by CAG has added fuel to the fire. As he is trying to escape those scandals, the GDP report for June Qtr acted as an eye-opener, hitting him worse!

Exports have been hit due to weak demand in the West. But such fluctuations do occur. It is lack of government reforms and overspending that has affected greatly the GDP growth. Investors hoped that the weak GDP growth would influence the RBI to lower interest rates at its next policy meeting to be held on September 17. But again the stubbornly high inflation has come on the way!

After the GDP data report, sensex recovered to about 80 points from it's lowest point of the day and Nifty too improved by 25 points from it's lowest point. However, due to fall in ICICI bank shares, sensex fell by 0.92% and nifty fell by 1.1%.

After-effects of CAG reports!

CAG reports are creating headlines and it would no wonder affect India’s already volatile stock market. The reports reveal losses amounting to billions of dollars being incurred. The government was accused for the losses.

These reports were on three sectors, viz. coal, power, and aviation. Coal blocks, Delhi's flagship airport, and power projects were allocated at a fraction of market prices, which cost the exchequer tens of billions of dollars in lost proceeds. Developers got the airport land at a tenth of its market value, thus gaining an undue profit of $4.3 billion. Had the allocation happened wisely, results would have been otherwise in the CAG report.

It is now the PM’s turn to receive a blow of negative criticism and the opposition is already seeking answer from the PM, even demanding his resignation, as he was linked to the coal allocation in favor of private companies. It is to wait and watch the effect of the CAG reports! But the effect on the India stock market was evident with the falling share price of those named by the CAG!