Mumbai,June 1 Economic policy-makers ought to convince the Government to spend more to ensure that GDP growth hit by inflation recovers as early as possible, a leading equity analyst said."The Government ought to spend more and the RBI too should do more to ensure that GDP growth recovers.
Inflation has emerged as a concern and the RBI seems to be behind the curve," Morgan Stanley's Chief Asian & Emerging Market Equity Strategist,Jonathan Garner, told PTI on the sidelines of an event here today.
Garner said that he planned to meet Indian industry leaders to quiz them if reduced consumer spending and inflation would make them put their capacity expansion plans on hold for a while. "This would be one of the things I will ask industry people; if they plan to put their capex plans on hold due to a reduction in consumer spending which has emerged during our survey," he said.
He expressed concern that Indian consumers are worried about inflation and around 45 per cent households expect double-digit inflation. "This leads to changes in consumer behaviour, especially because wage growth does not seem to be keeping up with inflation. We can expect reduced spending on luxury goods and services, as well as air travel, as consumers cut spending.
Anticipating this, markets have gone to a lower price-earnings multiple. We are underweight on Indian equities and we believe that India will continue to under perform at least until the second half of this year," he said.
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