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String of God's Gifts Makes Modi Sarkar GOLD-Plated Sharp drop in gold & oil prices adds to monsoon cheers

String of god's gifts makes modi sarkar gold plated

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Page 1: String of god's gifts makes modi sarkar gold plated

String of God's Gifts Makes Modi Sarkar GOLD-Plated

Sharp drop in gold & oil prices adds to monsoon cheers

Page 2: String of god's gifts makes modi sarkar gold plated

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• Thanks to god, gold and oil, India's businesses and consumers may be in for somewhat better times than has been the case in recent months.Rain gods have been kind, gloomy monsoon forecasts have proved off the mark so far, with rains just 5% short of normal. Oil and gold two of India's biggest imports have seen sharp price falls.

• Crude oil prices are down 15% in the past month and trading at half the price that pre vailed in June last year.

• Gold has plunged to a multi-year low. Most analysts expect these trends to continue.

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• The implications of il being kind to India god, gold and oil being kind to India now and in the near future means the festive season India's annual high point of consumerism will likely see consumers feeling they can spend some serious money . Businesses will both have healthy demand and be free of fear of interest rate hikes. And the government may find it easier to pump prime the economy, thanks to better current account and fiscal situation.

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Contd..• Think basics: gold is cheap, cooking oil prices are down and likely

good harvests means higher rural demand for cars, motorcycles, tractors, jewellery and FMCG products. Plus, the rare combination of near-normal rain and much lower import bill for oil and gold means the government and RBI need not lose sleep over fears of inflation. So, little pressure on raising rates.

• Jyotinder Kaur, Principal Econo mist, HDFC Bank, said India was lucky that global prices of commodities, particularly energy, had softened. “This has provided a buffer to us and will help keep headline inflation below the nearterm target of 6% set by the RBI.This will, needless to say, provide comfort to Governor Raghuram Rajan in his deliberations about the future course of monetary policy,“ she said.

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• Analysts also say the government can raise public investment to offset private sector capital spending blues and raise more money from disinvestment as blue-chip oil firms now command a better value.

• The oil price fall will reduce the borrowings of refiners and cut ONGC's subsidy burden. “This, along with the policy reforms augurs well for the sector, and will help the government get good valuations if it goes ahead with divestment in these companies,“ said K Ravichandran, Senior Vice-President and Co-Head, Corporate Ratings, ICRA.

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BENEFITS GALORE

• The fall in oil prices has had a double benefit. Consumers are paying a low, while the government has cleverly used the opportunity to raise excise duties. Analysts say that in effect, India will get the benefit of more than Rs 1 lakh crore which would s otherwise have gone to some OPEC country if prices had not dipped.

• Further, better cash flows for oil sector giants mean that these companies can kick off their investment plans, which will generate demand for goods and services in the economy.

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Contd..• On gold, the basic math is also simple: If a person wanted to buy

10 grams of gold two years ago, but had put the money in his savings bank account instead of buying, he will now be able to buy 15 grams of gold. Indians have a voracious appetite for gold, as the metal is regarded auspicious and a great hedge against inflation.

• The fall in prices of gold and oil means that the rupee will remain stable and the country's fiscal arithmetic will be comfortable.This in turn means that Finance Minister Arun Jaitley will have the latitude to step up infrastructure spending and reduce direct taxes. When RBI cuts rates, households will be able to spend much more and generate more demand in the economy, setting the stage for good growth.

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• “The improvement in monsoon and the fall in prices of crude oil and gas have resulted in a favourable fiscal and current account situation. This provides more fiscal power to the government to make stronger investments,“ says Anis Chakravarty, chief economist and senior director at Deloitte India.

• Of course all this doesn't mean that the economy will get turbocharged. But Finance Minister Arun Jaitley certainly has more elbow room.

Page 9: String of god's gifts makes modi sarkar gold plated

Parveen Kumar Chadha… THINK TANK

(Founder and C.E.O of Saxbee Consultants & Other-Mother

marketingandcommunicationconsultants.com)

Email :[email protected]

Mobile No. +91-9818308353

Address:-First Floor G-20(A), Kirti Nagar, New Delhi India Postal Code-110015