Subsidies at the heart of India's economic woes: Jim Walker, Asianomics

HONG KONG: Stating that Indian equities are likely to trade in a tight range with limited upside, Jim Walker of Asianomics told ET Now that the markets are attractive at the current levels.

'Policy paralysis', he said has been a major concern for FIIs and lack of progress on the reforms front is keeping investors on the sidelines.

On the possible appreciation of the rupee, Walker said that the Indian currency is still undervalued versus the US dollar. The rupee may move back to levels of 50 versus the dollar, he said. Walker said that there will be a significant improvement in the balance of payments account owing to the current levels of the rupee.


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Walker is of the opinion that subsidies are at the heart of fiscal and economic problems in India. He expects the budget deficit to be as high as 6 per cent in the current financial year.

Asked whether India would be able to meet its fiscal deficit target this year, Walker felt that there was "very little" chance. Walker said that the fiscal deficit will worsen if the government doesn't maintain discipline.

Walker also sees the Indian GDP growing in the range of 4-6 per cent in FY13.

Citing both credit and liquidity growth as factors that may increase inflation, Walker said that the RBI is likely to maintain a status quo on key interest rates in ist monetary policy review on September 17.