Thanks for the reply. You make some good points – quite possible my perception about the smallcap correction is incorrect. However, I don’t think the GDP numbers are all that accurate and while govt capex has supported, it’s not as great as it’s touted to be either. Part of it is shifting things around too – e.g. NHAI off-budget debt being stopped (which is still extremely high) and budgetary allocations increased instead. The ex-finance secretary had a recent column about it (edit: actually, last year – not recent) – Hype and reality of Modi government’s capital expenditure. Some of his inferences I am not sure add up, but broadly, true capex increase is not as much as touted.
Regarding the points about the govt adopting the Korean model and the taxation policy, I have quite different views about the wisdom of such policies. Rather than bold, I would call some of that misguided, if not foolhardy. But this is not the forum to discuss that and who it favours, so won’t go into it.
If, as you think, they are capable of continuing with such policies, then you are probably right in terms of what it means in terms of stock picking. I don’t think they will be able to, but will review my hypothesis. And, of course, we will know anyway as things play out.
