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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Global economies now face a radically altered economic canvas in the
ongoing crisis and a “two-speed” world is emerging with a slower rate of
growth in developed regions such as Europe and the US and much faster
growth in emerging economies. Even within Euro zone states, a two speed
world is likely to emerge as stronger states may move towards closer
integration while the rest may end up in a loose “confederation”. Ironically,
within our country, a two-speed India exists with rural Bharat continuing its
long wait for basic social infrastructure while urban India is reaping the
benefits of economic growth and still crying out for more.
Taking a leaf out of socialist flavours in the pre-1990s era, India changed its
focus big-time to corporate/urban growth. In the last two decades, the
stature of corporates and the urban middle class has grown multi-fold.
However, with the growing economy, the gap between urban (India) and
rural (Bharat) income has increased significantly.
In an ideal economy, capital and labour between rural and urban economy
moves freely. However, we have seen that labour from rural India has
moved to urban areas for higher income but capital to rural India has not
moved to a great extent. Consequently, vast migration resulted in the
proportion of the rural population declining to 68% in 2011 from 75% of the
population in early 1990.
With the government’s revenue foregone in FY11 at more than | 5 lakh
crore, benefits to Corporate India through tax holidays and exemptions
have increased extensively. Whether it is state level exemptions or tax
holidays for multi years or minimum alternative tax (MAT) credit to certain
industries, we have seen that Corporate India has benefited tremendously.
This policy of incentivising India Inc. has favoured growth in urban areas at
the expense of rural India and somehow ‘inclusive’ growth has ‘exclusively’
been for urban India.
Over the last few years, the government’s focus has also moved towards
rural social schemes; be it increasing spend in the Mahatma Gandhi
National Rural Employment Guarantee Scheme (MGNREGA) or promoting
various rural schemes under ‘Bharat Nirman. Social spend through budget
allocations has surpassed | 3 lakh crore in 2012. This is almost double the
amount government allocated in 2008 budget.
We believe corporate benefits would continue to be part of the
government’s Budget but moving forward, the focus is most certainly more
towards social spending and rightly so. Even considering the content of the
proposed important bills in Parliament like Food Security Bill, Mineral &
Mining Bill and Land Acquisition Bill, most of them mainly focus on the
growth of rural people and the socialistic flavour seems to be back on track.
Some of the data used for our analysis may be not be an absolute value but
is indicative of the scenario. We have analysed various parameters across
sectors ranging from banking exposure to rural India or government
spending on rural road projects, budget expenditure on rural health and
education. Despite this budgetary expenditure increasing at a faster pace,
per capita expenditure of the rural population has been very low and needs
a leg up.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Global economies now face a radically altered economic canvas in the
ongoing crisis and a “two-speed” world is emerging with a slower rate of
growth in developed regions such as Europe and the US and much faster
growth in emerging economies. Even within Euro zone states, a two speed
world is likely to emerge as stronger states may move towards closer
integration while the rest may end up in a loose “confederation”. Ironically,
within our country, a two-speed India exists with rural Bharat continuing its
long wait for basic social infrastructure while urban India is reaping the
benefits of economic growth and still crying out for more.
Taking a leaf out of socialist flavours in the pre-1990s era, India changed its
focus big-time to corporate/urban growth. In the last two decades, the
stature of corporates and the urban middle class has grown multi-fold.
However, with the growing economy, the gap between urban (India) and
rural (Bharat) income has increased significantly.
In an ideal economy, capital and labour between rural and urban economy
moves freely. However, we have seen that labour from rural India has
moved to urban areas for higher income but capital to rural India has not
moved to a great extent. Consequently, vast migration resulted in the
proportion of the rural population declining to 68% in 2011 from 75% of the
population in early 1990.
With the government’s revenue foregone in FY11 at more than | 5 lakh
crore, benefits to Corporate India through tax holidays and exemptions
have increased extensively. Whether it is state level exemptions or tax
holidays for multi years or minimum alternative tax (MAT) credit to certain
industries, we have seen that Corporate India has benefited tremendously.
This policy of incentivising India Inc. has favoured growth in urban areas at
the expense of rural India and somehow ‘inclusive’ growth has ‘exclusively’
been for urban India.
Over the last few years, the government’s focus has also moved towards
rural social schemes; be it increasing spend in the Mahatma Gandhi
National Rural Employment Guarantee Scheme (MGNREGA) or promoting
various rural schemes under ‘Bharat Nirman. Social spend through budget
allocations has surpassed | 3 lakh crore in 2012. This is almost double the
amount government allocated in 2008 budget.
We believe corporate benefits would continue to be part of the
government’s Budget but moving forward, the focus is most certainly more
towards social spending and rightly so. Even considering the content of the
proposed important bills in Parliament like Food Security Bill, Mineral &
Mining Bill and Land Acquisition Bill, most of them mainly focus on the
growth of rural people and the socialistic flavour seems to be back on track.
Some of the data used for our analysis may be not be an absolute value but
is indicative of the scenario. We have analysed various parameters across
sectors ranging from banking exposure to rural India or government
spending on rural road projects, budget expenditure on rural health and
education. Despite this budgetary expenditure increasing at a faster pace,
per capita expenditure of the rural population has been very low and needs
a leg up.
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