Indian Economy: News and Discussion (June 8 2008)

Singha · Post by **Singha** » 20 Apr 2009 15:38

yes I read that entry after asking my query.

Bade · Post by **Bade** » 20 Apr 2009 22:07

That is why Issac Newton was a scientist. He tried to describe reality as it is. PC Mahalobis and the Planning Commission /JNU ding dongs are quacks, because, they tried to alter reality to their wonkish "models" by fiat/law/ and the Khaki clad underlings.

Vina, you should have at least read all about Newton's endeavours once his scientific juices started drying up, before making that comment. Newton spend considerable time in turning cheaper metals to gold and on theology. He was a nut case towards the end of his life.

Singha · Post by **Singha** » 20 Apr 2009 22:49

as usual there is a razor thin line between useful genius and 'the other side'

but his south sea investments, alchemy, occult hobbies surely didnt hurt millions of peasants?

Bade · Post by **Bade** » 20 Apr 2009 23:14

Why not...with the geniuses like Newton behind theological inquiries of the times, the missionary zeal must have felt empowered to convert the third world heathens, which only made life more miserable for the lot. When the thinkers did not question the core beliefs behind the atrocities of their times, why should they be preferentially absolved of the crimes.

Bade · Post by **Bade** » 20 Apr 2009 23:20

No less of an intellectual giant than Rajaji came out strongly , along with the Bombay Group way back in 1956 against this. Rajaji sacrificed his political career for that.

The same giant is alleged to have said as per Wikipedia,

In 1954 while Richard Nixon, then Vice President of the United States, was undertaking a nineteen-country Asian trip he was lectured by Rajaji on the consuming emotional quality of nuclear weapons.Rajaji told Nixon that it was "wrong to seek the secret of the creation of matter. It isn't needed for civilian purposes. It is an evil and will destroy those who [try]'. Nixon apparently did not interpret this as anti-American, and reported no argument with Rajaji's ominous prophesy.

He must be a commie for sure, or a religious fundamentalist to make such unscientific pronouncements.

Virupaksha · Post by **Virupaksha** » 20 Apr 2009 23:46

Bade wrote:
No less of an intellectual giant than Rajaji came out strongly , along with the Bombay Group way back in 1956 against this. Rajaji sacrificed his political career for that.
The same giant is alleged to have said as per Wikipedia,
In 1954 while Richard Nixon, then Vice President of the United States, was undertaking a nineteen-country Asian trip he was lectured by Rajaji on the consuming emotional quality of nuclear weapons.Rajaji told Nixon that it was "wrong to seek the secret of the creation of matter. It isn't needed for civilian purposes. It is an evil and will destroy those who [try]'. Nixon apparently did not interpret this as anti-American, and reported no argument with Rajaji's ominous prophesy.
He must be a commie for sure, or a religious fundamentalist to make such unscientific pronouncements.

In India, it is also known as MKG effect

Suraj · Post by **Suraj** » 20 Apr 2009 23:49

Hi folks, please, no more of the brickbats against Mahalanobis, Rajaji etc. This thread has been sidetracked enough. Further posts will be deleted. Thanks

Suraj · Post by **Suraj** » 21 Apr 2009 06:34

Economy to grow at 5.7% in FY10: RBI survey

The median forecast of professional forecasters' survey estimated that the economy would grow by 5.7 per cent during the current financial year and also revised the growth projections for 2008-09.

According to the Central Statistical Organisation's advance estimates, GDP is projected to grow by 7.1 per cent in the (just concluded) 2008-09. This would be the slowest growth since 2002-03, when the economy grew by 4 per cent. For three successive years up to 2007-08, GDP rose at a rate of over 9 per cent.

Agriculture, which is projected to grow at 3 per cent during the current financial year, provides a silver lining of sorts with services and industrial growth expected to moderate.

During the current financial year, imports and exports are projected to contract by 4 per cent and 8.4 per cent respectively. This indicates that the manufacturing sector would continue to feel the impact of the global slowdown for some more time.

The only good news is that there are signs of the economy bottoming out. During April-June, the GDP is expected to rise by 5.3 per cent, before improving to 5.6 per cent in the second quarter. The Indian economy is expected to grow at 6.2 per cent in the third and 6.5 per cent in the fourth quarters. During the third quarter of 2008-09, the Indian economy grew by 5.3 per cent as against 7.7 per cent in the first half.

RBI Estimates:

Code: Select all

Item              2008-09   2009-10
GDP               6.6%      5.7%
savings/GDP       35.3%     34.6%
investment/GDP    37.5%     35.4%

With savings/GDP and investment/GDP remaining strong even as the crisis bottoms out, the medium to long term situation is still very strong, despite the short term economic growth dip. Only a significant fall in savings and investment/GDP would imply a significant fall in ~5-yr averaged growth rate - the current rate of investment will stabilize growth back at a minimum of 7% soon.
High consumer price-based inflation worries RBI

The central bank’s report points out that, unlike the inflation based on the wholesale price index (WPI), CPI-based inflation in India, however, remains high with recent evidence of very modest moderation, “...and the transmission process of lower inflation at the wholesale level to inflation at the retail level has emerged as an important issue in the conduct of Reserve Bank’s monetary policy.”

Consumer price inflation remained in the range of 9.6-10.8 per cent during the January-February 2009 period as compared with 7.3-8.8 per cent in June 2008 and 5.2-6.4 per cent in February 2008.

Whereas WPI inflation stood at 0.2-0.3 per cent in March 2009 as compared with 12.9 per cent on August 2, 2008.

“The higher level of consumer price inflation, as compared with WPI inflation in recent months could be attributed to higher prices of food articles, which have higher weight in CPI,” the report said.

However, the central bank indicated that, in the wake of an expected improvement in agricultural production as well as low international commodity prices, inflationary pressures are expected to remain at a low level through the greater part of the 2009-10.

vsudhir · Post by **vsudhir** » 21 Apr 2009 17:20

Loans to become cheaper as RBI cuts short-term rates

amit · Post by **amit** » 21 Apr 2009 19:31

Acharya wrote: A very important post and one of the best post in this thread. Indians have to understand this.
Each point is a large topic to be discussed.

I will comment on this later

Eh? I thought it was the decision of the Mods to stop all posts dishing personalities?

Acharya, two points.

1) Everyone except die hard Commies, now agree post 1992 that Socialist Centralised Planning is a disaster. However, that was not so in the 1940, 1950s all the way up to the 1970s. In fact such a model had overwhelming support of the political class, one reason why the Swatantra Party was not popular despite it correctly understanding the dangers of Socialism.

2) When someone calls a towering academic like Mahalanobis a quack, charlton etc, enquiring minds would like to know the locus standi of the person doing so - things like his own academic achievement, excellence and contribution to any field of academic endeavour. Unless those are available, talk is cheap, even if they happen to be one-liners.

Suraj, if you deem this post as unacceptable, my apologies in advance and please delete this post. I think there's a limit to a display of hubris on this thread. Mahalanobis was one of India's intellectual giants of the 20th century and was a beauracrat who implemented the collective political will of that period which was self reliance and Socialism. You of all people know that there are a lot of factors responsible for that choice, including India's isolation. That does not detract one bit from his academic work which even a cursory Internet search would throw up. One of the best statisticians of the 20th century is being pithly called a quack!

Singha · Post by **Singha** » 21 Apr 2009 22:40

lightreading.

India Sets Subs Record
April 21, 2009 | Catherine Haslam

India's mobile operators added a record 15.64 million new connections during March this year, taking the total number of activated wireless lines to 391.76 million, according to the latest figures issued by the Telecom Regulatory Authority of India (TRAI) .

This set a new high, just beating the former record of 15.4 million set in January 2009. It also represents a 14 percent increase on the total added during February. (See India Adds 15M Mobile Subs in January and India Adds 13M Subs in February).

And, remarkably, the number of fixed-line connections also increased, though only by 230,000, to take the total to 37.96 million. That reverses a long-term trend of month-on-month decline, as Indian consumers have been abandoning their fixed lines and relying on their mobile services.

The growing popularity of fixed broadband (any line delivering a downlink speed greater than 256 kbit/s) appears to be one of the reasons for the reverse: India's fixed-line operators added 370,000 new broadband connections during March to take the total to 6.22 million.

That's still a very low figure for a country with a population approaching 1.2 billion: Mass market broadband is only likely to take off once high-speed wireless data services are broadly available, but that won't happen until the much delayed 3G and WiMax spectrum auctions take place. (See Indian Operator Expects Lengthy 3G Delay ).

In total, India now has 429.7 million telephone connections, giving the country a teledensity of almost 37 percent, up from 35.65 percent at the end of February.

Of the mobile operators, Reliance Communications Ltd. reported the highest number of additions at just over 3 million, closely followed by Bharat Sanchar Nigam Ltd. (BSNL) and Vodafone Essar .

Bharti Airtel Ltd. (Mumbai: BHARTIARTL), the country's largest mobile operator, was a close fourth with 2.81 million customer additions.

svinayak · Post by **svinayak** » 22 Apr 2009 00:21

amit wrote:
Acharya wrote: A very important post and one of the best post in this thread. Indians have to understand this.
Each point is a large topic to be discussed.

I will comment on this later
Eh? I thought it was the decision of the Mods to stop all posts dishing personalities?

Acharya, two points.

I dont want to bring in the personalities. It was the education and period which created that thought process.

Suraj · Post by **Suraj** » 22 Apr 2009 00:25

I've moved the discussion posts in question over to the Nukkad thread. No more on the topic please. This is not the sociology thread. Thanks.

Suraj · Post by **Suraj** » 22 Apr 2009 06:19

6% growth worst-case scenario: Chief Economic Advisor

“The worst-case scenario assumes that the global economy would be still in recession till March 2010. Even in that scenario, I expect the Indian economy to grow by 6 per cent, plus or minus 0.5 per cent,” Arvind Virmani, Chief Economic Advisor the Ministry of Finance, old Business Standard.

However, in the best-case scenario of the global economy recovering after September 2009, he predicts the growth rate of around 7 per cent in 2009-10.

In this case, the growth rate in the current fiscal would be similar to the previous one that ended in March 2008, where growth was bouyant in the first half before the global economic crisis put a spanner on expansion. “The implication (of best case scenario) is that the growth as a whole may average out to be the same as the previous year,” he added.

RBI surprises market with cut in short-term rates

Two of the country’s largest private sector banks — ICICI Bank and HDFC Bank — today reduced their rates, after the Reserve Bank of India (RBI) surprised the Street with a 25 basis points cut in the repo and reverse repo rates.

Projecting gross domestic product growth at 6 per cent for the current financial year, RBI lowered the repo rate to 4.75 per cent and the reverse repo rate to 3.25 per cent, which is 25 basis points lower than the interest rate paid on funds lying in savings bank accounts. The moves are aimed at spurring economic activity and consumer demand.

Credit growth at viable rates

With the Indian economy projected to grow 6 per cent during the current financial year and inflation expected to stay around 4 per cent, Reserve Bank of India Governor D Subbarao is trying to do his bit in reviving growth by increasing the flow of credit through reduction in policy rates.

By reducing the repo rate by another 25 basis points (bps), he is hinting at a further reduction in interest rates. And, through the 25 bps cut in reverse repo rate, he is trying to make it less remunerative for banks to park surplus liquidity with the central bank and instead prodding them to lend more to the productive sectors.

Between October and today, the repo rate has been lowered by 425 bps, while the reverse repo rate has been cut by 175 bps. Yet, the incremental credit flow has dropped and for most part of April, banks have parked over Rs 100,000 crore with RBI through the reverse repo window.

As a result, the governor wants Indian banks to lower interest rates and lend more to productive sectors. In fact, RBI has gone on to say that banks with strong deposit base should grow their loan book at 20 per cent or more.

Though RBI is aware of the difficulties posed by small saving rates on further reduction in bank deposit rates, the annual policy statement has said: “It may, however, be noted that small savings and bank deposits are not perfect substitutes. Banks should not, therefore, be overly apprehensive about reducing deposit interest rates for fear of competition from small savings, especially as overall systemic liquidity remains comfortable. There is scope for the overall interest rate structure to move down within the policy rate easing already effected by the Reserve Bank. Further action on policy rates is now being taken to reinforce this process.”

Subbarao has also factored in the overall resource flow to the commercial sector that declined by 13 per cent in 2008-09 to Rs 6,79,040 crore, mainly due to lower fund flow from non-banking channels. During the last financial year, flow of resources from banks declined by 6.72 per cent to Rs 4,14,902 crore, while fund flow from other sources, which included overseas debt, equity and loans from non-banking finance companies (NBFCs), fell by 21.32 per cent to Rs 2,64,138 crore during the year ended March 2009.

At the top of the policy stance in Subbarao’s first annual policy statement was credit expansion at viable rates, while preserving the credit quality to support a return to a high growth path. At the same time, the statement also said that a possible rise in non-performing assets (NPAs) during 2008-09 should not be seen to be unusual.

While a 25 bps reduction is not being seen as a very significant step, the governor has also said that RBI would monitor the global and domestic conditions and respond swiftly through policy adjustments to check adverse implications. The third element of Subbarao’s policy stand is maintaining a monetary and interest rate regime that supports price and financial stability, while factoring in lessons of the financial crisis.

RBI’s overall assessment is that there is little chance of a global economic recovery in 2009 and that would adversely impact access to overseas sources of financing for Indian companies.

amit · Post by **amit** » 22 Apr 2009 06:56

Singha wrote:lightreading.

India Sets Subs Record
April 21, 2009 | Catherine Haslam

India's mobile operators added a record 15.64 million new connections during March this year, taking the total number of activated wireless lines to 391.76 million, according to the latest figures issued by the Telecom Regulatory Authority of India (TRAI) .

This set a new high, just beating the former record of 15.4 million set in January 2009. It also represents a 14 percent increase on the total added during February. (See India Adds 15M Mobile Subs in January and India Adds 13M Subs in February).

391 million would put the Indian mobile phone industry roughly at the level China was in 2006-07 but growing at a faster clip than the Chinese market was growing then. So India will catch up to China in terms of mobile phone usage faster than was expected.

However, the trick is to use this growth to set up a handset making industry. China has done this very successfully - both domestic as well as foreign. In China and, increasingly in many cost conscious markets in Asia, handets made by the like of Legend and others in China compete neck and neck with the Nokias of this world.

Unless India can make this transition then we just give a great new market to the international handset makers without getting anything back in return.

amit · Post by **amit** » 22 Apr 2009 06:59

Acharya wrote:I dont want to bring in the personalities. It was the education and period which created that thought process.

Acharya,
I've responded in Nukkad.

amit · Post by **amit** » 22 Apr 2009 07:01

Suraj wrote:6% growth worst-case scenario: Chief Economic Advisor

Suraj,

There have been so many predictions about the growth rate, ranging from 3-3.5 per cent to 7 per cent.

Which one would you put your money on? I can't seem to understand since I no longer follow the Indian economy as closely as before.

Suraj · Post by **Suraj** » 22 Apr 2009 07:17

amit: my bet is only as good as anyone else's. I would prefer to see at least the 1st quarter, or better yet, 1st half data before claiming anything. Of course, that's 'cheating', but predicting GDP growth for such a short period (a single fiscal), with so many circumstantial issues, is not feasible. If at all you want a number, I'd rate RBI's projections closer to reality, since they literally have their hands on the wheel. However, even they have been arguably taken aback by the plunge in trade. For the longer term (5-yr average), I'm less concerned - with savings/GDP and investment/GDP remaining very strong through the worst part of this downturn, trend rate of growth will rebound.

amit · Post by **amit** » 22 Apr 2009 10:59

Suraj wrote:amit: my bet is only as good as anyone else's. I would prefer to see at least the 1st quarter, or better yet, 1st half data before claiming anything. Of course, that's 'cheating', but predicting GDP growth for such a short period (a single fiscal), with so many circumstantial issues, is not feasible. If at all you want a number, I'd rate RBI's projections closer to reality, since they literally have their hands on the wheel. However, even they have been arguably taken aback by the plunge in trade. For the longer term (5-yr average), I'm less concerned - with savings/GDP and investment/GDP remaining very strong through the worst part of this downturn, trend rate of growth will rebound.

Yes I also think the trend growth will remain 7 per cent and above. RBI estimate could be the most accurate but I found the Chief Econ Advisor's projections quite interesting in as much as his worst case scenario growth projection is 6 per cent. Let's see how the cookie crumbles.

I'd also be interested in seeing if the recent rate cut and Nano can revive the auto sector. FMCG sector should also benefit from the rate cut.

svinayak · Post by **svinayak** » 23 Apr 2009 03:07

http://www.scribd.com/doc/2700917/India ... r-Ghadiali

Description

Macroeconomic indicators and strategies adopted by MNCs in India.

Prasad · Post by **Prasad** » 23 Apr 2009 06:45

India being protectionist, says US wine industry

Did someone say buy US steel and not foreign? Doublespeak geniuses at work.

vsudhir · Post by **vsudhir** » 23 Apr 2009 08:01

There is room for banks to cut rates further: Subbarao

Suraj · Post by **Suraj** » 24 Apr 2009 02:00

Net direct tax receipts likely to post 10% growth

Buoyed by higher tax deducted at source (TDS) receipts, the Centre’s net direct tax collections are likely to touch Rs 3,40,000 crore in 2008-09, marginally lower than the revised target of Rs 3,44,600 crore.

At this level, net direct tax receipts would post 10 per cent growth compared to the previous fiscal’s actual collections.

Based on poor advance tax payments in the fourth quarter ended March 2009, revenue officials were fearing a higher slippage in revenue collections. After posting 25 per cent growth in the first half ended September 2008, direct tax collections slowed significantly, as the global economic crisis started to impact Indian companies.

“Since December last year, we started focusing on TDS and regular assessment to increase tax collections, and it has paid off,” said a senior revenue department official.

According to the latest data, TDS collections increased by 25 per cent to Rs 1,30,456 crore in fiscal 2009, compared to Rs 1,04,695 crore in the previous fiscal. However, advance tax collections under two major heads — corporation tax and income tax — dipped by 7 per cent to around Rs 1,68,000 crore.

Inflation rises marginally to 0.26%

The inflation rate, as measured by the wholesale price index (WPI), was 0.18 per cent last week and 7.95 per cent in the corresponding week in 2008.

Though the inflation rate showed an upward move, experts continue to believe that the inflation rate would go down in the negative territory (below zero) in 1-2 weeks.

Higher prices of primary articles are cited as one of the reasons for the inflation rate still ruling above zero per cent. This category rose by 0.5 per cent on a week-on-week basis, but on an annual basis the rate came down by 10 basis points to 4.36 per cent because of “base effect”.

“It is inevitable that the WPI will go into the negative territory, but it will happen because of base effect and will not be a deflationary situation,” said Indranil Pan, chief economist with Mumbai-based Kotak Mahindra Bank.

Items consumed by the common man like cereals continue to remain high, at around 10 per cent. “Though the inflation rate may look low, prices of essential commodities continue to be on the rise,” said DK Joshi, an economist with Crisil India, a ratings and research agency.

The rate of inflation for manufactured products stood at 0.9 per cent, against 0.75 per cent in the previous week.

amit · Post by **amit** » 24 Apr 2009 14:40

vsudhir wrote:There is room for banks to cut rates further: Subbarao

Actually I'm not so sure. As long as Post Office offers a 8 per cent return how can banks cut rates? All FDs and money will flow into Post Office deposits. Unless RBI can tackle that there's a limited downside for interest rate lowering, IMO.

Suraj · Post by **Suraj** » 24 Apr 2009 21:11

Post office deposits have a deposit maximum (Rs.1 lakh I think), and those schemes with higher limits are only for senior citizens. GoI adjusts the standard PO scheme rates down when prevailing interest rates fall. Give the RBI more credit than that - they're very unlikely not to be aware of such straightforward matters.

Suraj · Post by **Suraj** » 25 Apr 2009 01:40

Bank credit is a figure worth keeping an eye on. A healthy 20%+ growth would buttress the possibility of strong 6%+ GDP growth for the fiscal year:
Banks credit up 18.8%, demand rises 22.13%

Bank credit witnessed a moderate growth of Rs 1,429 crore in the first fortnight of the current financial year as banks were busy closing their balance sheet.

On a year-on-year basis, credit grew at 18.80 per cent to Rs 27,71,441 crore against Rs 27,70,012 crore at the end of March 27, 2009.

According to the latest data by the Reserve Bank of India (RBI), food credit went up by Rs 538 crore to Rs 46,749 crore.

RBI has revised the credit growth target for the current financial year and has asked banks to grow their loan book by 20 per cent and lend to the productive sectors.

“Demand for retail credit has picked up with the launch of the people’s car Nano and people are also showing interest in buying real estate. We expect the bank credit to touch RBI estimate of 20 per cent at the end of May. By the end of the financial year, it will cross the target as the economy will revive and banks will be more comfortable in lending,” said a senior executive of a public sector bank.

He added the banks were generally busy closing their books and finalising balance sheet during the first month of the financial year and that was reflected in lower growth in the loan books.

Bankers said the recent cut in repo and reverse repo would sooner or later translate into further reduction in the lending rates, thereby push up the credit off-take. “Customers are deferring their borrowing plans as they expect the rate to come down by another 50-100 basis points after the policy,” another executive added.

During the fortnight deposit went up by Rs 70,726 crore at the end of April 10, 2009.

Our FDI statistics are underreported because the default pronouncement does not include reinvested earnings, which are included in the figure elsewhere (e.g. PRC reports FDI as inclusive of reinvested earnings). For example, last years FDI of $28 billion increases to $40 billion of FDI, when reinvested earnings are included.
FY10 FDI to cross FY09 figures

“The investments may be delayed but the investor outlook remains optimistic,” said Gopal Krishna, joint secretary, Department of Industrial Policy and Promotion (DIPP), on the sidelines of a function organised by global consulting firm Booz & Company and the American Chamber of Commerce (AMCHAM).

If foreign firms reinvesting their profits in India are also taken into account, the total FDI inflow will touch the $40 billion mark in the current fiscal, the same level expected in the just ended financial year.

Though the ministry is optimistic of attracting more foreign investments in the current fiscal, the latest FDI numbers showed a sharp decline. FDI inflow is expected to decline to about $2.5 billion in March, compared with $4.4 billion in the year-ago period.

Commenting on the new press notes on FDI, he said it was an effort to simplify the complex foreign investment procedures, adding that investment through the automatic route had increased to 90 per cent in the last fiscal as against just 16 per cent in 2000.

Dileep · Post by **Dileep** » 25 Apr 2009 07:44

For the kind attention of gurus like Vina Dikshithar.

Saw a full page advertisement in todays rag about the Pension Fund Regulatory and Development Authority, and the new pension system being open to all citizens. They have a website too

http://www.pfrda.org.in/indexmain.asp?linkid=100

Now, what I understand from that is:

1. The babulog's pension used to be calculated based on the "salary last drawn", ie "defined benefit pension". The govt changed it to a "defined contribution based" pension. Mandatory for all new recruits and optional for old babus. This means, you contribute a fraction of your salary and draw whatever value your investment returns.

2. 22 state govts also did it.

3. In 2008, the management of the funds is moved into the corporate fund managers like ICICIPru.

4. You have the freedom to choose which 'kind' of investment to make, ie bonds, equity etc.

5. WEF 1st Aprl 2009, the scheme is open to all citizenry.

Now, some questions and musings:

1. Isn't it the same thing Dubya tried to bring to the social security system in massa and failed? I haven't heard any hue or cry here. Of course I was in massa when this happened (2003-2004). Did I miss all the fun?

2. What is the diff between a pension plan of say ICICIPru and this plan, which ICICIPru partially administers? I don't see any, unless there is some kind of govt guarantee, which obviously there isn't.

3. I find that the act is not yet passed by the parliament. What is going on? All these done with executive orders? What kind of democrazy are we? (Not that I oppose this or anything, but the fact that it came into effect in 2003, and and entire cabinet passed over it drives me a bit crazy)

Raju · Post by **Raju** » 25 Apr 2009 07:54

No Indian politician will question anything if it has the name 'Reliance' in it ! This group has thoroughly subverted the system and various checks and balances.

'hue and cry' is reduced because it was optional for old babus.

Suraj · Post by **Suraj** » 27 Apr 2009 03:53

The pension reforms try to address several goals, particularly greater inclusion (only part of the workforce has any pension cover right now), long term solvency (which isn't easy with a guaranteed 8-9% rate of return or benefit), broadening of the investment base from gilts to corporate bonds and equities, etc.

The primary hurdle against the passage of the pension bill (which was promulgated by the NDA in 2003), were the communists, whose union base was opposed to the changes. They argued for guaranteed rate of return, against lowering of the rate of return amidst historically low prevailing interest rates, and participation in equities. If an NDA administration hopefully returns to the helm, we can expect progress on this front.

A defined contribution system is more on the lines of a 401(k), where there are rules for how much of pre-tax income can be set aside in tax deferred retirement accounts, which administrators providing a range of investment options from equities to bonds to guaranteed treasury paper. Investment in equities is not such a bad thing. Large stable domestic investment administration houses will ensure that volatility in stock markets reduces. 4-5% daily equity index swings are symptomatic of a lack of breadth in the equity markets, and the ability of a few stocks and buyers to cause significant changes in the index. Who the fund manager is makes little difference, however, this system is not the same as an annuity plan offered by a private bank or financial service.

Further, this reform has the potential to significantly benefit government finances in the long run, since the current system obligates GoI to provide a defined benefit (not contribution) and a guaranteed annual rate of return, regardless of macroeconomic performance. This merely adds to the fiscal deficit. But then, the Left parties never cared about fiscal discipline.

Suraj · Post by **Suraj** » 27 Apr 2009 03:56

This is fairly important news - not meant solely for the oil/gas thread, since stable, cost-effective energy supply is critical to economic growth. The fruits of NELP:
India prepares for shift to gas-based economy

Welcome to India’s new gas economy. As gas supply increases and distribution infrastructure (cross-country pipelines and piped gas in cities) falls in place, India will transit from an oil-based economy to a gas-based one, says former head of the Directorate of Hydrocarbons, Avinash Chandra. He estimates that India will find at least 200 trillion cubic feet of gas (tcf) from the country’s east coast alone.

Reliance Industries, which has started producing gas from its D6 block on the east coast, will produce 40 million cubic metres per day or 235,230 barrels of oil equivalent (BOE) a day by July, and double this by end-2009. This will take care of the deficit, as there’s demand for 200 million cubic metres per day of gas (1.2 million BOE per day) against available supplies of 110 million cubic metres per day (647,432 BOE per day).

Two other companies, GSPC and ONGC, which also struck gas on the east coast, will bring in an additional 40 million cubic metres per day by 2012. In India, the fertiliser and power sectors account for 80 per cent of the demand for gas, which will continue. But as gas supplies increase, supply to other sectors like refining, petrochemicals, steel, industrial and city gas distribution (CGD) will increase substantially.

There is a large unmet demand for power in India which will promote the use of gas for distributed generation (like DG sets we see in office blocks). But gas engines can be costly: a micro turbine costs around Rs 8 crore per mega watt. “Everyone need not buy a turbine. An industrial estate or a business district can do so,’’ says an expert. 'Need not’ would read 'cannot’ or 'should not’ at these prices, even for business districts. Price, as we shall see, is key, and we’re still waiting for technology innovation.

New gas-based applications are being developed. “The development of fuel cells can meet the total energy requirement of a household through generation of power, hydrogen and hot water from gas,’’ says PMS Prasad, President & CEO (petroleum), Reliance Industries. Efforts are on to drive down the cost of fuel cells. Similarly, there’s huge potential to use gas as CNG, which is cheaper and cleaner than liquid fuels.

A network of pipelines is emerging in the country. Reliance has laid the East-West pipeline, which connects to the HBJ and other regional networks. GAIL is expanding the HBJ network to the north and east. Next, Reliance and GAIL will lay pipelines in the south and along the east coast. Thus, India will have a quadrilateral of pipelines, all interconnected; a pipeline grid will further spur investments upstream.

Similarly, piped gas would be available in many cities soon and the government plans to issue licences for 74 Indian cities in phases. Once the city gas networks come up, gas could be sold to any new industrial unit, malls, offices, vehicles or homes. Deepak Mahurkar, associate director, PricewaterhouseCoopers, though feels it would take two-and-half years for a new city to get gas but existing city gas networks can expand much earlier.

Equipment makers are warming to the opportunity. Maruti Suzuki will launch CNG variants for three or four of its car models by 2010 or 2011. Many cars in Delhi and Mumbai already run on CNG. Tata Motors will soon launch CNG variants for trucks and Tata Magic, the passenger vehicle built on the Tata Ace platform. Its buses and small and light commercial vehicles are already available in CNG variants.

In Mumbai, geysers are available which run on gas. Thermax and Voltas make gas-fired vapour absorption chillers, used in malls, restaurants, theatres and offices. The smallest of these is of 15 tonnes of refrigeration (TR), which can cool an area of 1,900-2,000 sq ft. The initial costs of Rs 12-13 lakh for a 15 TR will be a deterrent, but it does cut operational energy costs by half.

Vipul · Post by **Vipul** » 27 Apr 2009 21:34

Direct tax collection Rs 3.37 lakh crore in year 2008-09.

The direct tax collection during the last fiscal year 2008-09 was to the tune of Rs 3.37 lakh crore against Rs 3.12 lakh crore in financial year of 2007-08, a top revenue official said here Monday.

"The tax collection was, however, short of budgetary estimates of Rs.3.45 lakh crore. Similarly, the indirect tax collection was Rs 2.65 lakh crore as against Rs 2.81 lakh crore in previous year, Secretary, Department of Revenue, New Delhi, P V Bhide told reporters here today.(Net addition across Direct and Indirect Taxation is Rs 9,000 Cr).

Bhide, who was here to attend the passing out of 61st batch of Indian Revenue Service (IRS) at the National Academy of Direct Taxes (NADT), said the cut in duty taxes reduced the indirect tax collection.

Speaking at the valedictory function of induction course of 61st batch, Bhide called upon the young officers to be honest and strive for tax administration while their primary responsibility is tax collection.

Treat the income tax assessee as a client and not a criminal, he advised. The new tax code was being readied and would be brought in soon, he said.

Chairman of Central Board of Direct Taxes (CBDT), S S N Moorthy, Director General of NADT, N P Singh and other officials were present.

putnanja · Post by **putnanja** » 01 May 2009 02:34

A reformer speaks out

Like a wine that matures slowly, Dr Shankar Acharya, former Chief Economic Advisor, is turning into a person who, in an earlier age, would be called a savant. During the first few months of the current crisis, the Prime Minister used to call him in twice a month to get inputs about what to do next.

...

Seeing a little chink in the door, I thought I’d push the boat in through it. “Who was the worst minister you worked with?”

“Well,” says one of the most careful choosers of words in the world, “Manmohan Singh was the best, of course. Same wavelength, you know, and all that. And Yashwant Sinha was pretty good. In fact, he has not been given full credit for all he did. He complained a bit about that in his book, and I pointed it out in my review of it.”

There was a third minister, too, I asked, wasn’t there, during 1996-98, the Man from Sivaganga?

Dr Acharya’s response is classic Acharya. “I say,” he says, “this sushi is better than I expected.”
...

They were all pretty good at protecting the ministry’s agenda. But on some issues, they gave in, depending on who was putting the pressure and what the issue was.”

“All,” I enquire. “All” he says quietly. “But Yashwant Sinha became less prone to do so as we went along. Vajpayee cutting off that Swadeshi Jagran Manch was important.”

...

amit · Post by **amit** » 03 May 2009 22:04

Vajpayee cutting off that Swadeshi Jagran Manch was important

Many people who remember Gurumurthy and SJM antics at that time and earlier, especially during the Ramnath Goenka era, would agree this move was as important as any economic liberalisation policy measure taken by the Vajpayee. IMVVHO of course. (Don't want to stir a hornet's nest, again!

)

Sriman · Post by **Sriman** » 03 May 2009 22:24

RaviBg wrote:A reformer speaks out

From the article:

Looking back, he says, the big difference between then and now is that the climate was conducive to reform. “Everyone wanted it and in the government and at the RBI, the right people were there. Montek, Rangarajan, NK (Singh), Sivaraman, Vijay (Kelkar), Venu (Reddy), Rakesh (Mohan) you know, good men all. We got it done. That isn’t happening now.”

Why, I ask. Old Manmohan’s got the heebie-jeebies, is it? No, he says, the climate changed in 2004. “So much time has been wasted. And for what?”

amit · Post by **amit** » 04 May 2009 06:30

Sriman wrote:
RaviBg wrote:A reformer speaks out
From the article:
Looking back, he says, the big difference between then and now is that the climate was conducive to reform. “Everyone wanted it and in the government and at the RBI, the right people were there. Montek, Rangarajan, NK (Singh), Sivaraman, Vijay (Kelkar), Venu (Reddy), Rakesh (Mohan) you know, good men all. We got it done. That isn’t happening now.”

Why, I ask. Old Manmohan’s got the heebie-jeebies, is it? No, he says, the climate changed in 2004. “So much time has been wasted. And for what?”

Actually the 7-8 per cent growth from 2004 to last year (before this present crisis) was more due to the policy reforms carried out till 2004.

The Left support has been an Albatross around the Congress neck the past five years. Not only did they stymie every single reform move but more insidiously they encouraged the anti-reform part within the Congress-UPA (and this is a very significant underground movement within these entities - think Mani Shankar Aiyer for example).

I dunno what the present elections will serve up. But if the Congress/UPA again form government with Left support then forget 8% + growth over the next five years, IMO.

putnanja · Post by **putnanja** » 06 May 2009 04:34

RBI’s backseat driver Rakesh Mohan takes exit to Stanford

...

Sources said Mohan was not in favour of reducing key policy rates despite clear signs of a powering down of the economy. Subbarao, who took over as the RBI Governor at a time when India was pulled into the global financial crisis, was “held hostage” to the strong views within the RBI against loosening up the monetary stance, they said.

...

Singha · Post by **Singha** » 06 May 2009 09:44

India - starved for investment

http://www.nytimes.com/2009/05/05/busin ... .html?_r=1

a desi master-of-the-universe type (in this case a IIM-A alum):

GURGAON, India — Sumit Sapra is a member of that ambitious, impatient generation of young Indians who rode the crest of the global economy. In five years, he changed jobs three times, quadrupling his salary along the way. Even when satisfied with his position, he kept his résumé posted on job sites, in case better offers came along. And he splurged. In three years, he bought three cars, moving up a notch in luxury each time. For weekend jaunts, he bought a motorcycle.

Mr. Sapra’s last and best-paying job was at the Indian headquarters of the financial services arm of General Electric, investing western money in Indian energy projects. But last December, foreign money dried up and Mr. Sapra, with a prestigious degree, was laid off.

vina · Post by **vina** » 06 May 2009 10:06

Does anyone know the cost of mining high quality iron ore in India (Indian ore is of generally good quality) . I have a Goldman Sachs report which says that Brazil's Vale has a cost of $5 per ton (other Brazilian guys have $11), while Chipanda with it's poor quality low grade ore has $60 to $70 per ton.

No wonder Chipanda is long term screwed if it tries to make half the world's steel. The Brazilians, Aussies and Yindians will make them pay a hand and leg for trying to import iron ore (which is a highly concentrated industry, like Oil).

Singha · Post by **Singha** » 06 May 2009 10:38

chipanda has signed some massive deals with rio tinto already. other deals with south americans
must be there.

australia PM will GUBO at a moments notice to chipanda.

so I dont see what they have to worry about.

its Yindia where steel mega plants never get done over land and political issues while we export
iron ore continuously from east coast and goa to chipanda, japan, south korea.

Ananth · Post by **Ananth** » 09 May 2009 01:02

Y. V. Reddy's interview: http://www.livemint.com/2009/05/0823052 ... y.html?h=B