The recent crash in our stock markets and erosion in the value of rupee defies all logic and rationality. The most plausible reason advanced is that, the US Economy is on the road to recovery, and hence there could be a tapering of QE3 followed by strengthening of US Dollar, and hence we witnessed a flow out of the FII money from various emerging markets including India, which contributed to this mayhem. But wait a minute. While the US Economy is finally managing a positive rate of growth, even the most pessimistic opinion on the Indian economy would not peg our GDP growth for the current FY at anything less than 5%. Then, if indeed all the investors including the FIIs are rational decision makers, should they not allocate a substantial chunk of their money to India? And finally, a word about the general elections due next year. Irrespective of which coalition comes to power at the centre, the pace of reforms would continue, unless of course the coalition is highly unstable or led by the leftists which should be a remote possibility. So, was all this mayhem warranted?
Posted on: Sat, 24 Aug 2013 07:43:51 +0000
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