Indian Economy: News and Discussion (June 8 2008)

Raja Bose
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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Raja Bose » 01 Dec 2009 21:29

Expat Indians find it tough to return home
Heather Timmons, NYT News Service


http://timesofindia.indiatimes.com/World/Indians-Abroad/articleshow/msid-5286531,curpg-1.cms

Returnees run into trouble when they "look Indian but think American," said Anjali Bansal, managing partner in India for Spencer Stuart, the global executive search firm. People expect them to know the country because of how they look, but they may not be familiar with the way things run, she said. Similarly, when things don’t operate the way they do in the United States or Britain, the repats sometimes complain. :roll:


Not that India is the epitome of efficiency and honesty but one hardly needs these "brown" sahibs who come in with their eyes shut and expect everything to be served on a platter.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Marut » 01 Dec 2009 23:24

Not everyone maybe a 'brown' sahib. To be fair to these repats, many a times their anger and frustration results from being scoffed at for their views and opinions. Not every desi looks up to them as brown sahibs. Many actually feel threatened by them and want to put them down at every available opportunity. Thus suggestions to improve services and introduce some new practices are met with some resistance, at times downright hostility. Of course it maybe no different anywhere in the world but they do feel slighted when turned down for some petty reasons more often in India than elsewhere.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 01 Dec 2009 23:30

I think calling such people 'brown sahibs' is a little harsh. They voluntarily moved back to their homelands, leaving behind the 'developed world'. So what if there's a re-acclimatization phase. Such significant life moves take a lot of practical planning, and those who fall short on that will suffer.

This is a topic more suitable for the NRI thread, but from an economic perspective, India offers the potential for significant remuneration and wage increments that they would miss out in the west where wages are stagnant, while the lack of creature comforts and conveniences, as well as facilities like cost-effective school options, remain a problem.

The western author's 'India still poor country' torn-shirt-open-fly tone is more worthy of criticism, considering the inflation in living standards in the west recently built upon overreaching beyond their means. They will now have to deal with years of deleveraging and deflation, and the associated high unemployment and stagnant wages.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Raja Bose » 01 Dec 2009 23:51

Perhaps grouping all of them into "Brown Sahibs" category would be a bit harsh but all the folks I know of personally who fall in that category are mainly due to:

1) As Suraj mentioned, lack of practical planning and expectations grounded in utopia instead of reality.
2) Have an attitude themselves that somehow being US returned they are "special" and also manifestation of the "This is how it is done in the United States" syndrome. Unfortunately one doesn't need to be a US citizen to be an "Ugly American".

Its a two-way street. The insecurity amongst the local desis wrt the R2I desi stems from (2) and our genetic fear/awe of goras. It is clash of sorts.

Reasons for moving back and expectations need to be grounded in reality and not in dreamy movies like Swadesh. One of the guys who falls in this category was a prof. in my ex-dept. who one fine day decided to go back to India to IISc. (and lectured us on how we were unpatriotic to come study in US). He was back in US within a year badmouthing IISc faculty and how he wasn't given due "importance". :roll:

Anyhow, I keep telling GHQ the above 2 points and in our own ways we have started planning for R2I (esp. investment-wise) within the next 6-7 years (hopefully she will be SHQ by then) - if we do it wont be due to patriotism, it wont be for "giving back to the country", it will be for sound financial sense and better quality of life.

Also a bit pi$$ed at the article coz Dr.Brahmachari is someone I know and it looks like a hatchet job by the reporter. :mrgreen:

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby negi » 02 Dec 2009 04:09

Indian banks in dock for FEMA violations

MUMBAI: The ghost of exotic foreign exchange derivatives could soon come to haunt India. This time, however, banks could be at the receiving end.

RBI is investigating Foreign Exchange Management Act (FEMA) violations by several banks
in India, which in 2007-08, sold those exotic contracts to gullible companies, importers and exporters, resulting in huge losses
. {Gents kindly elaborate...}

An interdepartmental group (IDG) of RBI has found several FEMA violations by some of the banks in India and the banking regulator is now considering action against those banks, a CBI probe has pointed this out in its preliminary report to the Orissa high court.

‘‘The IDG (of RBI) has identified (FEMA) violations which are serious in nature and they are being examined for further action against the banks concerned,'' the report by Mahipal Yadav, an officer of SP rank with the CBI, said.

The CBI conducted its investigations on directions from the HC which was hearing a petition by one Pravanjan Patra, alleging FEMA violations in selling forex derivatives products to companies, importers and exporters. The petition had alleged massive fraud on part of several banks and pegged the amount involved in the scam at Rs 25 lakh crore. CBI report did not name the banks being investigated, neither the number of banks under RBI scanner. It said that there were at least eight different types of FEMA violations by these banks.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 02 Dec 2009 04:51

The automobile sector is contributing handsomely to Q3 GDP so far:
Car sales up 63% in November
Fears of an imminent price rise, production spillovers owing to spare parts shortages plus a low base effect saw sales of the country's major car makers grow a record 63 per cent in November.

The eight car makers account for over 90 per cent of the country's total domestic car sales. They sold 154,367 in November this year against 94,295 in the same month.

The auto industry has, however, consistently managed to report healthy growth figures well before the start of the festive period. The industry grew by 16 per cent to 1,052,161 units in the April-October period.

Bike sales up 32% in November
The aggregate two-wheeler sales of Hero Honda, TVS Motor, Yamaha and Suzuki rose 32 per cent to 520,014 units last month, against the 393,604 units sold in the same month last year. Bajaj Auto and Honda Motorcycle and Scooters (HMSI) did not release their sales data today.

Trade data is leveling off. Exports are almost growing again, and will very likelt report positive growth again in November:
Imports fall 15%, Exports fall 6.6% in October
According to official foreign trade data released today, exports in October were valued at $13.19 billion, down from $14.13 billion during the same month last financial year.

Imports also continued to fall, at $21.9 billion, in October, down by 15 per cent from $25.8 billion in the comparable period.

As a result, trade gap narrowed further to $8.8 billion in the month from $11.7 billion in October 2008.

Exports started falling in October last year, following the deepening of the global financial crisis after the collapse of the US’ Lehman Brothers. This, coupled with a slowdown in developed markets, saw India’s exports taking a severe beating.

Exports fell a steep 39 per cent in May. The pace has narrowed since then, with October exports declining 6.6 per cent.

Pranab Mukherjee's statements on disinvestment. This answers several questions people put forth here last month:
10% cap in disinvestment to stay
Finance Minister Pranab Mukherjee today made it clear that the government would not travel the path of unbridled disinvestment. The 10 per cent cap on offloading shares of profit-making public-sector undertakings (PSUs) would stay for the next four years.

Mukherjee laid out the policy after industrialist and Rajya Sabha Member Rahul Bajaj asked him to be more “ambitious” in disinvestment and “not throw away taxpayers’ money” by running sick PSUs. He asked: “What are we holding the PSUs for? The government should take care of NREGA and health mission, tackle terrorism. Why should the government run hotels and loss-making airlines?”

Emphasising that the disinvestment policy of the second UPA government was not new and this process had been in practice since the 1990s, Mukherjee told Bajaj: “I normally accept his advice, but, in this case, I would rather like to be conservative and meek than bold.”

Justifying the decision to bring the disinvestment proceeds out of the National Investment Fund, Mukherjee said: “This level of fiscal deficit is unsustainable. We could go for National Rural Employment Guarantee scheme and loan waiver schemes because we had low fiscal deficit…that provided the economic muscle. I have sought this exemption because now we require a massive investment in the social sector.”

Mukherjee also said his government would not roll out a list of PSUs that have been targeted for disinvestment. “I don’t want to indicate time (when disinvestment would take place) to help stock brokers. I deliberately didn’t give a list in my Budget. Our objective is to get the maximum price from the market, not charity. The timing will be decided after consulting the experts, the PSU concerned and the nodal ministries.”

However, the finance minister said disinvestment in three power PSUs — NTPC, Rural Electrification Corporation and Satluj Jal Vidyut Nigam — would be completed in the current financial year.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 03 Dec 2009 01:40

Direct tax collections up 3.7% in first half 2009-10
Direct tax collections in the first eight months of the current financial year increased 3.7 per cent to Rs 1,83,822 crore, against Rs 1,77,251 crore in the April-November period of 2008-09.

Corporate tax collections went up 3.17 per cent to Rs 1,13,210 crore at the end of November 2009-10, compared with Rs 1,09,735 crore in the same period last year. Personal income tax grew 4.53 per cent to Rs 70,262 crore, compared with Rs 67,215 crore in the year-ago period, the Central Board of Direct Taxes (CBDT) said in a media statement on Wednesday.

During November 2009, net direct tax collection rose marginally to Rs 10,375 crore, compared with Rs 10,346 crore in November 2008. While personal income tax growth was 23.8 per cent at Rs 7,161 crore against Rs 5,785 crore last fiscal, corporate tax fell 29.5 per cent to Rs 3,214 crore, against Rs 4,561 crore last financial year.

In the April-November period, collections by way of the Security Transaction Tax — a tax on transactions on the bourses — stood at Rs 4,349 crore, up 4.44 per cent, compared with last fiscal.

The direct tax collection target of Rs 3,70,000 crore this year is 9.4 per cent higher than the actual collection last year, which fell short of the target due to the global economic meltdown. The government had collected Rs 3,40,000 crore, against a target of Rs 3,45,000 crore.

FDI dips by 11% to $15.27 bn in H1
The FDI inflows during April to September in the financial year 2008-09 were Rs 731,105.60 million ($17,211.17 million) as against Rs 741,827.83 million (USD 15,272.04 million) for the corresponding period in the current fiscal (2009-10)," Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply to Rajya Sabha.

Referring to the data available, he however said, the FDI inflows have shown an increasing trend on yearly basis since 2004-05 ($3.2 billion) until 2008-09 ($27.3 billion).

Credit growth back in double digit range
After a gap of six weeks, growth in bank credit is back in double digits.

In the fortnight ended November 23, bank credit grew 10.08 per cent, marginally better than 9.78 per cent at the end of the previous fortnight. A big reason for this faster growth is the base effect as outstanding bank credit went up by Rs 7,056.63 crore to Rs 28,98,769 crore.

In the corresponding fortnight last year, total credit outstanding of banks had shrunk by Rs 2,192 crore compared to the previous fortnight.

Even though there has been an improvement in the growth rate, it is far below the Reserve Bank of India’s (RBI’s) projection of 18 per cent increase in the year up to March 2010.

“The credit growth figures are definitely a concern. We were expecting credit growth to pick up from the third quarter of last year, but that has not happened even in the second half of November,” said Rupa Rege-Nitsure, chief economist at Bank of Baroda.

Bank deposits rose Rs 18,617.30 crore to Rs 41,85,923 crore ($905 billion) during the fortnight.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby a_bharat » 03 Dec 2009 02:28

Received the following in my e-mail. Note the immaturity of this lady Ila Patnaik, Senior fellow, NIPFP -- bad-mouthing the country and the Government (that probably pays her salary), perhaps overawed by the goras.

(Deleted promotional material.)

Wheeling and Dealing

Delhi is India's capital and where we intend to learn
about the country's expectations for its economy.
The construction dust outside Indira Gandhi International Airport in Delhi quickly coats the inside of your nostrils. It's tangible proof that India is intent on improving its rudimentary transportation infrastructure -- in this case, by building a massive elevated train line to connect the airport with downtown Delhi.

But government spending accounts for only a small portion of India's infrastructure opportunity. According to M. Govinda Rao, advisor to Prime Minister Singh and director of India's National Institute for Public Finance and Policy (NIPFP), government spending on infrastructure will check in at less than 2% of India's gross domestic product this year and barely more than that next year. That means there's a huge opportunity for private companies -- and private investors -- in this sector. The question, however, is whether they will step up and make the investments India needs in order to modernize.

Agree to Disagree

Ila Patnaik, Rao's colleague at the NIPFP, isn't sure that they will. That's because India, in her words, is close to being "a failed state."

She backed up that bold claim by pointing out that the NIPFP, an institution funded by the Ministry of Finance, is paying a private security firm to patrol its property, has its own generators in the basement because it can't rely on public power, and buys water coolers because the public water supply isn't safe to drink. These, she said, are basic needs that the Indian government can't meet.


The government-funded NIPFP protects itself with
private security.
Yet when faced with these issues, politicians continue to promise their constituents free water and electricity. These policies are bankrupting the state-level boards in charge of the country's water and electricity supplies and prevent them from improving transportation networks. It's become so bad that Patnaik estimates that half of the energy on the grid is lost to inefficiency, unmetered use, or theft. Can these conditions, she asks, really encourage further private-sector investment?


But India Is India

While Rao and Patnaik agree that government inefficiency has created an important role for the private sector in India's future, they disagree over how effectively the private sector will fill that role. Patnaik fears that as profits fail to materialize in key sectors, capital will leave those sectors and some of India's biggest problems will never be solved. Rao, on the other hand, sees no shortage of capital interested in India and thinks the country is more likely to end up with too much capital than with too little.

Why? Simply because investors want to make money, and India offers attractive returns. Remember this tidbit from our first dispatch: India is a big, young, fast-growing market, and the world's top fund managers are falling all over themselves to invest here. Even the otherwise skeptical Patnaik conceded that point. She said straightaway that investors would be daft to overlook India if only because of its weaknesses. "It has so many problems," she said, "that it has many opportunities for solutions. And solving just a few of these problems will mean significant upside for investors."

That may not sound reassuring, but remember that India has been posting 6%, 7%, and even 8% GDP growth over the past few years without good roads, reliable power, or potable water. Now imagine what the country could do with them.

You Don't Have to Imagine...

At least one of these problems is being tackled this year: roads. Government spending on roads rose 12% in the country's third quarter, and the state is on track to spend more than $20 billion this year to build 12 miles of new roads and highways each day.


India: The land of big government and small cars.
But as the government becomes smaller, the cars --
thanks to growing wealth -- should become bigger.
The person India has to thank for this progress is Kamal Nath, the new minster for road transport and highways. Government approval for new road projects used to be a long and arduous process (Novartis (NYSE: NVS) CEO Daniel Vassella told BusinessWeek in 2007 that "if you want to build a road in India, it'll take 10 years of discussion before you get a decision"), but Nath has already pushed through a record number of projects.

How does he do it? Well, Patnaik thinks Nath gets a cut or kickback from every concession awarded, so he has an incentive to finally get things done. We don't know whether that's true, but what's interesting to us is that Patnaik isn't outraged. In her view, India has gone so long without any improvements in transportation that the progress in this case may be worth it.

Coming Up

Highways and roads aren't the only opportunities in India, though. The government also needs help improving its education and health-care systems, and we'll sit down with a few related companies to find out whether there's opportunity in those sectors for investors like us.

Tim Hanson and Nathan Parmelee

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby vera_k » 03 Dec 2009 06:06

Much of what she says is true, so why bother? I was more concerned about the Kashmir and Arunachal-less map they are using.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby a_bharat » 03 Dec 2009 09:09

vera_k wrote:Much of what she says is true, so why bother? I was more concerned about the Kashmir and Arunachal-less map they are using.

The audience for her comments are international investors. She shouldn't have indulged in such loose talk, that too being on government payroll.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby bart » 03 Dec 2009 10:57

vera_k wrote:Much of what she says is true, so why bother? I was more concerned about the Kashmir and Arunachal-less map they are using.


What she said about needing a generator and tap water being not safe to drink are facts, and is actually known to anybody who has an iota of knowledge about India. But the way she spins it, and claims India to be a failed state etc is completely unacceptable and puts her right in Arundhoti Roy category. She shows a very thinly veiled contempt for her own country.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Prasanth » 03 Dec 2009 11:44

edit.
Last edited by Rahul M on 03 Dec 2009 11:53, edited 1 time in total.
Reason: it's an 8month old article that has been discussed to death here. do you at all look at the dates before you post ? what did it have to do with Indian economy anyway ?


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Re: Indian Economy: News and Discussion (June 8 2008)

Postby ramana » 04 Dec 2009 02:58

Now that Jairam Ramesh has announced India will cut emissions by 20 -25 % by 2020 from the 2005 level, how much impact will this have on the economic growth?

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 04 Dec 2009 03:24

I see Jairam Ramesh's statement as little more than a trial balloon release; GoI refused to commit to binding agreements on emissions caps. The Copenhagen summit is just the Doha round redux. As further evidence, here's AP's coverage, indicating that the pledge is not even to cut gross emissions, but to slow the growth of emissions to 20-25% of the rate of growth in 2005:
India to slow carbon emissions growth by 20-25 pct
India pledged Thursday to significantly slow the growth of its carbon emissions over the next decade, becoming the last major emitting country to announce a climate change policy before a U.N. summit opens next week.

The plan is less aggressive than those announced by the U.S. and China in the last two weeks, and one critic called it nothing more than a reiteration of the status quo.

But the pledges gave momentum to negotiations on emission limits, which had been snagged for months while three of the largest emitting countries waited for each other to make the first move.

Environment Minister Jairam Ramesh told Parliament that India plans to reduce the ratio of pollution to production by 20 to 25 percent compared with 2005 levels, but it would not accept a legally binding emissions reduction target.

The emissions measure, known as "carbon intensity," means India's emissions will keep rising but at a quarter of the pace they would otherwise have done.

I don't see a major economic downside. If anything, it provides plenty of opportunities to build industries tailored to generating products for the non-fossil fuel energy sector.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 04 Dec 2009 05:05

The process of getting India into various tents continues - now OECD courts India. Some of the OECD SecGen's statements are significant:
"India did not knock on our doors"
The Organisation for Economic Cooperation and Development (OECD) has identified India, China, Brazil, South Africa and Indonesia, together called the E-5, as countries with which it wants to enhance its level of engagement with a view to rope them in as members. In an interview, the agency's Secretary-General Angel Gurria tells Sidhartha that it is for India to decide when it wants to join the OECD, often referred to as a club of rich countries.

What about the E-5 countries?
They are all in enhanced engagement mode and we are working very intensely with all of them. In the case of India, we are here to do five different things over the next two days. This morning, at the seminar, we discussed the role of India, given the international economic recovery. In the past, we have done a review of regulatory policies of China, Brazil and Russia, and I am going to show these reports to (commerce and industry minister) Anand Sharma and say that we want to do this for India too.

Tomorrow, we will release the first OECD Investment Policy Review of India. We will discuss e-government, besides meeting all key members of the government. We also have a mission, which is talking to people at different levels, and we are starting the second economic review of India. Enhanced engagement is alive and very vibrant.

If you were to make a sales pitch to get India on board as a member, what would it be? How does India gain?
Regardless of what India gets from becoming a member, we need India. Our mandate is to enhance the engagement with India with a view to a possible membership. India did not knock on our doors, like many others. India is now a systemic player and it has to play a very important role in the stability, growth and welfare of the world.

What does India get?
We are the hub for discussion of global issues. We have committees where you can go. You discuss your challenges and we can advise you on what to do. You can participate in the process of preparing policy recommendations, rather than receiving it and seeing if the input fits.

Would it be fair to say that Indonesia, South Africa and Brazil have moved faster on joining OECD compared with India and China?
No. India, China and Brazil are countries with whom we have had a memorandum of understanding or some kind of a framework for 10 years. With Indonesia and South Africa, because we were starting from a more modest base, ties are growing very fast, especially in the case of South Africa.

What is your assessment of India becoming a member?
India has every condition. We will be willing to start the process of India's accession anytime it decides. It is up to India to decide the pace. But for Mexico, it took three years. Korea and Chile also took three years. Mostly, you see that if you have to do a hundred things, you have done 90 and you have been talking about eight. So, it is the two things that take a little longer. Since we share economic principles, it's fairly easy for a country to reflect.

RBI plans to revise GDP forecast upwards. Further, Subbarao seems to indicate RBI will not raise rates based on food price inflation, and only if broad manufactured goods inflation is apparent. It appears it is upto GoI to address the food price rise:
RBI to revisit growth forecast in Jan
"We will revisit that number in the January policy," Subbarao told reporters when asked if the sharp growth posted in the second quarter would lead to a review of the growth projection for the entire year. The central bank had earlier pegged India's growth for the current year at 6 per cent with an upward bias.

The economy expanded at 7.9 per cent in July-September, beating all estimates by a wide margin. India's gross domestic product (GDP) had expanded 7.7 per cent a year ago and 6.1 per cent in April-June. Subbarao, however, refused to comment if rising inflation coupled with improvement in economic growth could lead to monetary tightening.

The governor said the central bank was keeping a close watch on price stability and flow of credit to productive sectors. “One of the things the RBI does is to provide price stability, financial stability and ensure that credit flows to productive sectors,” Subbarao said.

“The behaviour of food prices is a worry. If this persists, it can affect others like manufacturing inflation, that will require monetary action,” Rangarajan said.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby tejas » 04 Dec 2009 06:50

IIRC, OECD membership once required a per capita GDP minimum of $10, 000. Has this since gone by the boards?

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Hari Seldon » 04 Dec 2009 08:17

Join the OECD, eh? Not bad for a country where two-thirds or thereabouts live on like two dollars a day. Reminds me of an old witticism (was it GB Shaw?):
I don't want to join a club that will have me.


That said, OECD membership will be a nice positive, not least because TSP's == fantasies will be broken beyond repair.

As for the 10k USD per capita, how come Mexico is a member then?

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Singha » 04 Dec 2009 08:52

sounds like it was relaxed or converted to ppp.

as the saying goes, we need to relentlessly raise the cost of keeping us outside any tent.
then we should reluctantly join any such club making sure no annual membership dues
and the service of the clubs most charming concierges.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby KarthikSan » 04 Dec 2009 12:34

ramana wrote:Now that Jairam Ramesh has announced India will cut emissions by 20 -25 % by 2020 from the 2005 level, how much impact will this have on the economic growth?


IMVVHO it wouldn't matter much. This emissions cut business is just hogwash propagated by the US to try and cut China and India down to size. The Chinese probably won't give a hoot after all this PR drama is over. It will probably be the case with India as well. If I know our desi babudom and netadom, they will enact a bunch of new emissions laws which will allow them to collect more hafta from companies flouting them! All maya onree.

I also heard that WB is lending a BILLION dollahs for cleaning up the Ganga. Some babus and netas are going to be pretty rich soon :x

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby tejas » 04 Dec 2009 19:30

Hari garu, that $10 k figure popped into my head from quite a few years ago, let me see if I can find anything on membership requirements.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby tejas » 04 Dec 2009 19:45

Wow, can't find squat on the net wrt membership requirements for the OECD. The group has nebulous goals such as "encouraging economic cooperation" and "raising living standards". For this it has an annual budget of over $ 500 million.

For anyone interested here's a link to their website.

http://www.oecd.org/document/58/0,3343,en_2649_201185_1889402_1_1_1_1,00.html

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby RamaY » 04 Dec 2009 20:46

It is a coincidence that I was doing PPP/Real GDP comparisons between India and PRC, yesterday.


Code: Select all

   
       Population Bil.*** Real GDP $B *** PPP GDP $B *** Percapita $PPP *** PPP/Real Ratio *** Real GDP for $10K PPP
India     1.166              1207           3304             2900              2.74                 4260
PRC       1.338              4327           7992             6000              1.85                 7244

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Vipul » 04 Dec 2009 21:11

FDI flow spurts by 56% in Oct.

The flow of foreign direct investments into the country saw a major increase in October, registering a 56 per cent jump to touch $2.3 billion in October against the same period last year, an official said.In October 2008, the FDI stood at $1.5 billion.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 05 Dec 2009 13:57

Gujarat tops India in GSDP growth
During the 10th five-year plan (2002-07), the state's gross state domestic product (GSDP) posted a growth of 10.6%, well ahead of the county's overall growth of 7.7%. It is also much higher than the growth rate of other 'developed' states.

What's more, the state's sustained its growth rate even in 2007-08, the first year of the 11th five-year plan. Gujarat's GSDP grew at 12.8% in 2007-08, and was second only to Karnataka's whose growth rate is marginally higher at 12.9%.

In terms of the GSDP growth achieved during the 10th five-year plan, Gujarat ranks third in the country, notably after smaller states such as Jharkhand at 11.1% and Manipur at 11.6%. Significantly, the actual achieved GSDP in both the plans is well ahead of the 10.2% target set for Gujarat in the 10th five-year plan and 11.2% in the 11th plan.

This data was released in the Rajya Sabha by Union minister of state for planning and parliamentary affairs V Narayanswami, in response to a question raised by Jharkhand MP, Parimal Nathwani. Significantly, for the period of the 10th five-year plan (2002-07), Andhra Pradesh posted a growth rate of 6.7%; Maharashtra 7.9%; Karnataka 7%; Tamil Nadu 6.6% and West Bengal of 6.1%.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Yogi_G » 05 Dec 2009 21:39

RamaY wrote:It is a coincidence that I was doing PPP/Real GDP comparisons between India and PRC, yesterday.


Code: Select all

   
       Population Bil.*** Real GDP $B *** PPP GDP $B *** Percapita $PPP *** PPP/Real Ratio *** Real GDP for $10K PPP
India     1.166              1207           3304             2900              2.74                 4260
PRC       1.338              4327           7992             6000              1.85                 7244


Ramagaru, on paper our economy is 1.2 trillion without taking the unorganized parts of the economy into consideration. Is there any way we can estimate the informal/unorganized sectors of the economy's contribution to GDP numbers? 2 trillion could be the real size of the Indian economy?

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby tejas » 05 Dec 2009 22:25

^^^ If we accept the above numbers, the PRC GDP is ~ 3.6 times the Indian GDP. Plus India's growth rate still lags China so the differential is increasing. Truly frightening if true. :eek:

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Rahul M » 05 Dec 2009 23:15

it it is some consolation, some of that difference will be wiped out if we adjust our base year of GDP which will create a significant upwards revision in GDP numbers, this is something PRC did in early 2000's IIRC.
at least that's what I understood from our resident eco-gurus. :)

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby RamaY » 06 Dec 2009 00:12

Rahul M wrote:it it is some consolation, some of that difference will be wiped out if we adjust our base year of GDP which will create a significant upwards revision in GDP numbers, this is something PRC did in early 2000's IIRC.
at least that's what I understood from our resident eco-gurus. :)


Perhaps that is the reason for higher real/ppp ration in favor of India. If we adjust the GDP base year, it will wipe out that difference and the PPP GDP will remain same.

In another thread someone said Indian GDP will reach $4T by 2020. If that is true, that is a commendable target. The only challenge will be to achieve lower GINI index, and improve civic/industrial/military infrastructure.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby tejas » 06 Dec 2009 01:00

By adjusting the base year we basically take a different weighted average of our economic output and by emphasizing more important items will raise the GDP estimate. For example car output is more significant than jute output.

Also by taking the nebulous black economy at least partially into account, obviously GDP goes up. Fundamentally, however, it is piss poor governance that keeps India poor. That {deleted} CM of UP wants to spend 2600 crores on statue maintenance while many of UP's social indicators compare unfavorably with sub-saharan Africa.
Some of the numbers from Lalu's Bihar had to be seen to be believed.

I think breaking up backward states into smaller pieces (and diluting out votes of sections which crucify the rest of the electorate with Lalus and Mayawatis) has to be done. Gerrymandering takes place in the US all the time, so it is no alien concept in democratic nations. In India's case it needs to be done to save people from themselves rather than favor Democrats over Republicans as in the US.
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Reason: Your next verbal transgression will earn you a warning.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby S.Gautam » 06 Dec 2009 02:53

In another thread someone said Indian GDP will reach $4T by 2020. If that is true, that is a commendable target.


This is actually a very easy target when we take into account total nominal growth - which includes inflation and rupee appreciation. Even without the latter and no base revision, 4 trillion is reachable with just 12% nominal growth (i.e. real + inflation). I think we ought to aim for 8-10 trillion PPP GDP by 2020, and ignore the nominal GDP because making that higher isn't always a good thing (e.g. higher inflation hurts the poor and stronger currency hurts exports though both these "help" the nominal GDP).
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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Hari Seldon » 06 Dec 2009 05:13

The economics of internal migration in India (WSJ)

Interesting read, plenty of stats (don't know how reliable) and overall a positive slant.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby harbans » 06 Dec 2009 07:06

By coinicidence i was wondering how much construction work is happening all over the countryside and how many workers could be involved in making roads, metros, malls, apartment complexes, stadia, airports and so on. Reading the WSJ above, i tried a rough calculation..(All estimates)

Individual plots and house construction all over India..300,000

Apartment complexes being developed all over India...200,000

If we say 20 people are working in each house being constructed we have..6 million

If we say 200 ppl work average in construction an apt complex..then: 40 million.

These figures maybe way too conservative and wrong, but i am not including malls, airports, power plants, nuclear installations, stadia, airports etc..but clearly the number of workers involved in construction activities is more than a 100 million.

If we have a 100 million people who work in the construction industry their efforts are easily providing for 400-500 million people. thats almost half the countries population is living off construction work!!

If we can provide a mechanism that the next generation amongst them get good education, we solve a major problem that ppl are not seeing through properly.

We are not focussing on this segment like it should be focussed on. Their hardwork keeps most Indians fed and glitzy infrastructure coming up. This is too massive a population to be ignored.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby RamaY » 06 Dec 2009 22:07

Harbans-ji,

That is what I was thinking too. That is why I think the Dubai crash is a goodthing for India.

1. It brings skilled labor back to India
2. It will bring project efficiency and better working conditions, as R2I workers bring those practices and culture
3. It reduces black-money flow to Dubai and keeps it in India.
4. Relieves farming labor shortage situation, reducing food grain production costs.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 07 Dec 2009 01:44

RBI's Gokarn Signals Policy Action As Food Prices Rise
“Persistently rising food prices may spill over into inflation expectation” and “do have an expectation impact,” (RBI Deputy Governor) Subir Gokarn told reporters in New Delhi today. “We can’t ignore that linkage.”

India’s gross domestic product expanded 7.9 percent in the three months to Sept. 30 from a year earlier, the fastest pace in six quarters, as a $130 billion cash injection through monetary stimulus shielded the $1.2 trillion economy from a global recession. China grew at a faster pace of 8.9 percent last quarter, while U.S. GDP rose 2.8 percent, Europe contracted 4.1 percent and South Korea increased 0.9 percent.

“With strong GDP growth and rising inflation, we think the pressure is rising on the Reserve Bank of India to partially pull back the monetary stimulus,” said Rahul Bajoria, an economist at Barclays Capital in Singapore. Accelerating inflation will likely “trigger action in the form of hikes in the cash-reserve ratio.”

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby shyamd » 07 Dec 2009 03:12

Fixed deposits back in limelight
Madhu T, TNN 7 December 2009, 12:03am IST

MUMBAI: Uncertainties in the bond market are giving risk-averse clients the jiiters. The advice given by some investment consultants to these clients, who want to park their money in debt instruments: ‘‘Go back to traditional products like FDs, postal saving schemes and senior citizen schemes.’’ Thanks to the uncertainties in the bond market due to a lack of clear direction on future interest rate movement, these experts are asking clients to keep off debt mutual fund schemes.

‘‘We have been asking clients to stay away from debt schemes for the time being. If you are going to park money in a debt scheme for two or three years in a short-term fund or liquid-plus funds, you can hope to get only around 4.0-4.5%,’’ says Kartik Jhaveri, director, Transcend Consulting. ‘‘It seems like rates are going to tighten soon and long-term bond yields are likely to go up. If you are holding medium-to-long-term debt, you are likely to face losses,’’ he adds. ‘‘The advice is based on expectations of a interest rate hike. If the rates go up, debt schemes may give negative returns,’’ says Mukesh Dedhia, director, Ghalla & Bhansali Securities. ‘‘If you put money in a fixed deposit or similar avenue, you are at least assured of a fixed interest on maturity,’’ he adds.

According to experts, nobody want to take a call on interest rates — though many expect it to go up anytime — as they are not sure when RBI would start tightening its policy rates. ‘‘Everybody knows that the RBI would start hiking rates soon, but when will it eventually happen, nobody knows. Even if it happens, we don’t know whether interest rates would go up immediately, since there is no great demand for credit at the moment,’’ says a senior debt fund manager, who doesn’t want to be named.

‘‘Even if the RBI hikes rates by 50 basis points (100 bps = 1%), there won’t be much impact on rates. But that is a theory, we don’t know if it will pan out,’’ he adds.

Despite the odds, Dedhia says he would still recommend long-term debt schemes to investors who are ready to park money for three to five years, as he expects the yields to even out in the long term. Also, he says he would recommend laddering technique to investors to ride varying yields over a period.

For the uninitiated, laddering (similar to SIP —in equity) advocates investing money in debt schemes at regular intervals. ‘‘If you park your money anywhere at one go, it will also come back as a chunk at some point in future. That means it carries a reinvestment risk. You have to invest the money again at whatever avenue and rate available for you at that point of time,’’ say Dedhia. ‘‘But if you spread out your investment over a period of time, you can invest at different yields prevailing at that time. It will average out your returns, also the money wouldn’t come at one shot,’’ he adds.


Bond yield may rise further
BS Reporter / Mumbai December 07, 2009, 0:33 IST

The yield on government bonds may continue to move up, on apprehension that Reserve Bank of India (RBI) may harden the monetary policy stance soon to manage inflationary expectations.

The prices of bonds may fall sharply if fears of tight monetary policy persist, dealers said. On Friday, the G-Sec market fell sharply by 30-50 paise, amid rumours that the central bank may raise the reserve requirement.The benchmark 10-year 6.90 per cent 2019 paper closed at Rs 96.10, implying a yield of 7.47 per cent. Yield had closed at 7.19 per cent last Friday (November 27).

The Centre and 19 state governments have lined up bond auction plans to raise Rs 28,500 crore from the market next week.

The government, after raising Rs 10,000 crore on December 4, will again tap the market on December 11, to raise Rs 10,000 crore again through bond sale.

Call rate may remain soft
The interest rates in inter-bank overnight lending market are expected to remain soft on comfortable liquidity in the system.

The overnight call rates moved between 3.10-3.35 per cent. On Friday, the absorption by RBI under Reverse Repo operation fell sharply to Rs 63,080 crore from Rs 1,25,920 crore yesterday. It did not infuse any amount under repo operation.

Rupee to remain range-bound
The rupee may move in a range, tracking trends in flow of capital in the stock market and fluctuation in the value of the dollar in global currency market.

On Friday, the rupee weakened considerably, to close at Rs 46.30 against the dollar. The forward premium rates eased over previous day’s levels. The six-month forward premium was 2.79 per cent.

The portfolio inflows, mostly from foreign institutional investors, of more than $19 billion have helped the rupee rise more than 13 per cent this year from a record low of 52.2 in early March 2009. In the currency futures market rupee contract for December 29 was priced at 46.34 in last trade.

People expecting rate hikes in the review in Jan end. I guess good time to repatriate money to Desh before rupee strengthening?

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 08 Dec 2009 02:03

Strong railway freight revenue growth is a positive indicator of the robustness of economic recovery:
Rlys' revenues beat estimates, register strong growth
A senior official at the ministry said: “Our revenue earnings have been better than the 7 per cent growth we had estimated. Revenue from freight traffic has registered a strong growth rate. If the trend persists, we are likely to earn more than the revenues estimated earlier this year.”

He, however, clarified expenditure had been proportionately higher than that estimated in the Budget, on account of higher wages paid under the sixth Pay Commission. The additional expenses would be met by the increase in earnings. “Targets will definitely be achieved,” the official said, adding “if the cost-cutting measures take effect, there is likely to be a surplus as well”.

Akhileswar Sahay, president of the infrastructure advisory division of Feedback Ventures, the project management agency says, however: “An increase in revenue is good for the railways, but the increase in traffic is riding on the better-than-expected GDP growth. The financial health of the railways will improve only if such an increase is accompanied by a cut in the operating ratio.”

The gross traffic receipts of the railways is estimated at Rs 90,626 crore (~$20 billion) in 2009-10, against the 84,233 crore garnered last financial year. The total expenditure for the year has been pegged at Rs 77,119.7 crore, compared to Rs 66,108.7 crore spent in 2008-09.

The railways intend to generate Rs 88,419 crore from traffic operations (freight + passenger) in 2009-10, Rs 58,525 crore, or over 65 per cent, of which is to come from freight earnings.

Till October this financial year, the railways earned Rs 48,322 crore, an increase of 8.3 per cent over the Rs 44,614 crore earned during the same period last financial year. Of this, Rs 32,216 crore has come from commodity-wise freight traffic, which has grown by nine per cent over the Rs 29,555 crore earned last year. Passenger revenues, too, have shown an increase —from Rs 12,575 crore to Rs 13,626.7 crore. If the growth rates persist, industry experts say, the railways may make another Rs 1,000 crore from traffic operations over the initial estimates.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby KrishnaMu » 08 Dec 2009 04:24

Despite a bad monsoon, India’s economy is motoring

MARUTI-SUZUKI, India’s leading carmaker, sold over 76,000 cars in November, 60% more than in the dire month of November 2008.
....

Its fiscal deficit, including the state governments’, is likely to top 10% of GDP in the year to March. Forgivable during the crisis, this unbalanced budget threatens to crowd out private investment as the recovery takes hold. The gap partly reflects special outlays that will not soon be repeated. The government is spending about $17 billion to forgive the debts of small farmers, for example. It is also absorbing the cost of the Sixth Pay Commission, which meets every decade or so, to set the pay of the government’s legions of employees. The commission’s recommendations last year included big dollops of back pay, or arrears. This arrived in bureaucrats’ pay packets just in time to prop up spending during the downturn. In the last three months of 2008, for example, as the world economy reeled, public consumption grew by over 50%, compared with the previous year. Never have “arrears” proved so timely.


Image

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Hari Seldon » 08 Dec 2009 15:45

India: No Rule Changes for Foreign Banks for Now

India's federal government isn't planning any changes to operating rules for foreign banks for now, the country's junior finance minister said Tuesday.


Good. IMHO, of course.

India Seeks Parliament OK to Spend More

NEW DELHI -- India's federal government has sought Parliament's approval to spend an additional 257.25 billion rupees ($5.53 billion) in the current financial year through March.

In the first batch of supplementary demand for grants--placed in Parliament--for the current financial year, the government has sought approval to spend a total of 309.42 billion rupees.

Of this, 52.17 billion rupees would be made up by savings of different ministries or enhanced government receipts.


Uh-oh. Not good. Hopefully, the extra spend will bear fixed assets or social returns.

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Re: Indian Economy: News and Discussion (June 8 2008)

Postby Suraj » 09 Dec 2009 03:01

November automobile sales data is out. Gross sales topped 1 million in the month, but more importantly, CV sales growth was strong:
Automobile sales grow 46% in November, commercial vehicles up 98%
Domestic sales of automobiles for November grew 46 per cent, to 1,037,133 units, over the corresponding period last year.

November sales of passenger vehicles grew an impressive 66.54 per cent. The industry sold 166,653 units of vehicles. “November car sales are the highest ever for this year and have come on the back of a low base of last year. All segments of the passenger vehicle sector have posted the highest growth on a year-on-year basis,” said Shashank Srivastava, Chief General Manager (Marketing) of Maruti Suzuki.

Large commercial vehicles sales, which turned positive in August held on to the trend. While October sales grew 64 per cent, November sales of large trucks and buses grew a whopping 132.66 per cent. The industry sold 19,369 vehicles against 8,325 last year. Last year was a low base in which the segment dipped between 50 and 70 per cent in the last quarter. Much of this growth for the last four months is directly linked to GDP growth and massive infrastructure spending by the government. “Truck operators who postponed buying last year citing freight overcapacity are returning to the market,” said Sugato Sen, Senior Director of SIAM.

Total sales of commercial vehicles for November, including smaller light commercial vehicles, stood at 40,847 units, which is 98 per cent growth against the number posted last year.

Two wheeler sales for November grew 39.31 per cent. The motorcycle and scooter manufacturers combined sold 790,613 units. Three wheeler manufacturers sold 39,020 units of goods and passenger vehicles last month, which is 68.45 per cent growth on a year-on-year basis. Much of this growth has come from autorickshaws.

Choices for customers:
Rate war in home loans market heats up
The interest rate war in the home loan market shows no signs of abating with ICICI Bank and Kotak Mahindra Bank entering the fray with their fixed-cum-floating rate schemes.

ICICI bank has announced a scheme under which the rate will be fixed at 8.25 per cent for the first two years. After that, floating rates will apply. The rates apply to loans sanctioned between December 2009 and January 2010. To avail of the offer, borrowers have to ensure that the first disbursement takes place before the end of March 2010.

Similarly, Kotak Mahindra Bank, which announced its scheme today, has fixed the rate on home loans at 8.49 per cent for 30 months from the date of the disbursement of the loan.

More on the supplementary spending plan. Apparently this was due to not all ministries being able to complete their budgeted expenditures in times:
Govt rejigs accounts to spend Rs 25,725 cr
The government has decided to give a Rs 3,000-crore cash subsidy to fertiliser companies and put in another Rs 800 crore in AI. Oil marketing companies, though, are unlikely to get any subsidy for the losses they incur on selling cooking fuel at subsidised rates in the current year.

Infrastructure companies may get some more business, as the government will put in Rs 1,000 crore for the Commonwealth Games to be held in New Delhi next year and another Rs 1,200 crore in drought and flood relief programmes to be carried out in other parts of the country.

“The government spending for the full year will continue to be Rs 1,02,083 crore this year, since we have cut allocation for programmes and departments where the pace of expenditure has been slow. We want to do away with the practice of the ministries spending money at the end of the year,” said a senior finance ministry official.


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