Wednesday, July 08, 2009

Economy as a train

I agree with Deepak Parekh when he says the market has not understood the budget well.

Think of an economy as a train. A train needs large amount of power while starting to overcome the static rolling resistance. However, very little power is required while cruising at constant speeds.

Similarly, different conditions of an economy demand different power requirements in form of budgetary reforms. The Indian economy train is chugging along at a good pace and the brakes of recession are not hard enough to slow it down significantly.

What is important though is to get more people on board the train. More people, means more mass, means more inertia. So the train becomes even more unstoppable as it gathers pace. That's exactly what the Finance Minister plans to do - extend a hand out to the onlookers who have been left out of the recent economic growth.

And the best time to board a train is when it is a bit slow...