It may be too early to decide whether the bulls have enough wind to outrun the bears. But there are signs that recovery could be just round the corner. That may require the government to do something it has appeared incapable of doing – move on with its policies. With coalition partners playing the regional card, policy paralysis became the buzzword for all that was wrong in government decision-making. Industry has been vocal in demanding government action, and it may finally get that. The ET Intelligence Group homes in on policy changes that could kickstart recovery.

After a gloomy 2011, the year 2012 has begun with much optimism. Whether the recent rally in the stock market is a mere technical pullback or the beginning of a new bull run is a still debatable. But what is beyond debate is that the government’s policy decisions from here on will have a long-lasting impact on the economy as well as equity markets.

The ET Intelligence Group tries to highlight the policy changes under government’s active consideration which will shape the future of Indian industry. The year 2011 was painful for investors.

Equity markets slumped 25%, the rupee lost nearly 20% of its value and the spectre of macroeconomic challenges materialised – slowdown in economic growth and widening budget deficit. The most common factor that was blamed for the pain was “policy paralysis”. The government couldn’t come up with a resolute policy response in the face of tough global conditions, even as RBI continued monetary tightening in a bid to contain inflation.

Despite all this 2012 opened with a bang. In the first month itself the benchmark BSE Sensex has gained 12%. Unfortunately, the underperformance of 2011 and the resultant attractive valuations by themselves don’t assure us that 2012 will be a year of outperformance. The reason being the uncertainties and critical problems some of the most important sectors such as banking, infrastructure, power and telecom are facing due to policy inaction.

Leading power equipment maker BHEL’s results make a good example – the company revealed a fall in its order book in the December quarter as lack of fuel availability forced its customers to cancel power projects. For more visit: Economic times

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