Have a feeling that the market is expecting too much from Modi. He might reduce the Corporate tax and income tax, but the treasury is almost empty after almost 10 years of UPA rule
If you review the data of my prior post, you see that India total debt is more than 200% of GDP. As the global economy collapses in 2016, where is corporate income going to come from?
GDP will shrink globally by 30% or so, thus debt-to-GDP ratios will increase.
If Modi fails due to this bad timing, then won't the populace return to a socialist "solution" out of desperation? Which will only make the downslide worse.
The problem is that 1/4 of India's population can't even eat without subsidies.
And the crooks who run the country go along with reforms for as long as debt is expanding and they can get their slice of the boom, but in a bust the crooks have to turn to socialism to drive up government spending so they can milk the public spending spigot.
The point of my prior post was the developing world had been in a phase of expanding debt due to the West's ZIRP which caused fixed income to chase higher yields in the emerging market debt.
This caused the "taipans" in each emerging market country to go along with "reforms" in order to receive higher bond ratings and get their slice of that free money.
But in 2016 the trend will have radically shifted and the "taipans" will revert to their former paradigm of milking the public spigot, because the free bond money will be running back to the dollar and the USA as rates rise there and the global economy turns to chaos.
Make sure you understand this, as it applies to all emerging markets.
