Slight change in the political fortunes has rendered UPA II paralysed. After last week’s postponement of the EGoM on diesel price, the Centre has now deferred a call on urea deregulation as well. Also, Murli Deora has confirmed there won’t be any hike in diesel or LPG prices for now.
The trend of ‘go slow’ on reforms may continue given the current political equations and a couple of important state elections this year.
A spate of scams has besieged the Congress-led regime even as inflation remains stubbornly high. And, while the bumper harvest of 3G auction and disinvestment will see it meet fiscal deficit target, current account gap has spiked to 4% of GDP.
At the same time, economic reports in the US have been encouraging lately, powering the rally on Wall Street in recent days. Even the European markets have held their own. So, the underperformance of India is a bit surprising. One has to wait and see whether we can break that pattern.
We expect an improved start and perhaps a better day amid firm overseas markets. But, there might be some softening later in the day.
