Indian Economy: News and Discussion (June 8 2008)

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

Postby Singha » 21 Nov 2009 10:00

a good start would be for FinMin in a unrelated talk to the media publicly insult all of them as incompetents and point out some glaring cases as mentioned above, tell everyone there time is over and they better clean up their act or risk more ridicule.

give them a timeline of 3 months to hold discussions with GOI or get out.
using the stick - hard and often on their british backsides is the only way to control them.

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

Postby anishns » 21 Nov 2009 12:09

Nobody noticed this in the same article?

There has been increasing concern about the emergence of the super-rich in India, a country in which 800 million people live on 20 rupees (30p) a day.


Really?? Is this an overdose of takleef :(( :(( :((

KrishnaMu wrote:Recession, what recession? Number of Indian billionaires doubles

In India, the rich just got richer. Despite one of the worst global recessions in history, the number of billionaires in the subcontinent has almost doubled since last year.

Figures show that there are now 52 billionaires in India, compared with 27 last year. Over the course of the year, the stock market has gained more than 75% and the economy has grown at almost 7%, pouring billions of dollars into the bank accounts of India's richest people.

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

Postby Prasanth » 21 Nov 2009 18:04

Deleted trolling post
Last edited by Suraj on 21 Nov 2009 23:01, edited 1 time in total.
Reason: User warned for thread disruption

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

Postby Rahul M » 21 Nov 2009 23:18

There has been increasing concern about the emergence of the super-rich in India, a country in which 800 million people live on 20 rupees (30p) a day.

this 'pulled out of the wazoo' kind of data gets more ridiculous by the day. :roll:
even a few years ago it was apparently "$ 2 a day", now they are telling me it has actually gone down from that level ? :lol:
even my vegetable vendor who sells on a push cart moves around with a nokia n-series mobile, I wonder how he can afford it on Rs 20/day !

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

Postby vera_k » 22 Nov 2009 01:52

Let's say, the RBI continues to buy gold as it comes on the market. After buying it, they securitise it and sell the resulting paper on the market. I'm not trained in the financial art, but won't this reduce the cost of borrowing since the paper will be backed by gold?

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

Postby anishns » 22 Nov 2009 01:57

Well the writer seems to be Indian or of Indian descent. Do we have a term similar to DDM for such elites?

http://www.guardian.co.uk/profile/randeepramesh

Rahul M wrote:this 'pulled out of the wazoo' kind of data gets more ridiculous by the day. :roll:
even a few years ago it was apparently "$ 2 a day", now they are telling me it has actually gone down from that level ? :lol:
even my vegetable vendor who sells on a push cart moves around with a nokia n-series mobile, I wonder how he can afford it on Rs 20/day !

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

Postby Suraj » 22 Nov 2009 02:39

Folks, lets please not waste our effort and bandwidth on this thread addressing pinpricks. We all know that there's poverty, but that there's a significant difference between a properly researched article and a standard cut/paste 'oh, and remember, there's a lot of beggars in India' bottomline. The latter merely telegraphs the template nature of the article, and to fume at it repeatedly merely gives them undeserved attention.

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

Postby ss_roy » 22 Nov 2009 08:48

Reliance Makes Cash Offer for Bankrupt LyondellBasell (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRXJvr0PE8cs&pos=4

By Jack Kaskey and Dan Hart

Nov. 22 (Bloomberg) -- Reliance Industries Ltd., owner of the world’s largest oil-refining complex, made a cash offer yesterday to buy a controlling stake in closely held LyondellBasell Industries AF, the bankrupt chemicals and fuels maker.

Terms weren’t disclosed. The buyout would be coordinated with emergence from bankruptcy and represents a “potential alternative” to its reorganization plan, Rotterdam-based LyondellBasell said in a statement. The offer is subject to due diligence and sufficient creditor support, Mumbai-based Reliance said in a news release.

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

Postby Sanjay M » 23 Nov 2009 07:10

India's antiquated labour laws are leading to ugly clashes:

http://online.wsj.com/article/SB125858061728954325.html

Pricol Ltd., which makes instrument panels for the likes of Toyota Motor Corp. and General Motors Co., was rocked in late September when workers burst into the office of Roy George, its 46-year-old human-resources boss. Angry over a wage freeze, they carried iron rods, witnesses say, and left Mr. George in a pool of blood. Police arrested 50 union members in connection with his death, their lawyer says. Charges haven't been filed.


Garbage like this need to be sent to Siachen or Tibet.
Maybe we can sign a joint MoU with China to take some of our union leaders for a stint in re-education camps.

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

Postby Hari Seldon » 23 Nov 2009 21:59

India Minister: Shortage of Chinese Engineers May Delay Power Plants (WSJ)

NEW DELHI -- About 4,000 megawatts of power projects being built in India by Chinese companies may face delays due to non-availability of engineers from these companies, the junior power minister said Monday.

"These projects are in advanced stages of commissioning and urgently required the services of Chinese engineers for the commissioning activities," Bharatsinh Solanki told the upper house of parliament in a written reply.

India asked Chinese engineers to leave the country by Oct. 31 after it found that Chinese nationals with a business visa, which doesn't permit citizens of other countries to work in India, were taking employment here.

India in July had decided that business visas will be issued only to businessmen and that business visa holders currently employed in India will have to apply again for employment visas in order to return for project related work.

"The Ministry of Power has, therefore, requested the Ministry of Home Affairs to expedite issuing of employment visas to Chinese engineers so that plants can be completed on time," Mr. Solanki said.

India issued 38,924 business visas to Chinese nationals up to October this calendar year. In 2008, business visas were issued to 58,658 Chinese nationals.

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

Postby milindc » 23 Nov 2009 23:16

Rahul M wrote:
There has been increasing concern about the emergence of the super-rich in India, a country in which 800 million people live on 20 rupees (30p) a day.

this 'pulled out of the wazoo' kind of data gets more ridiculous by the day. :roll:
even a few years ago it was apparently "$ 2 a day", now they are telling me it has actually gone down from that level ? :lol:
even my vegetable vendor who sells on a push cart moves around with a nokia n-series mobile, I wonder how he can afford it on Rs 20/day !

All these clowns are quoting it from Arjun Sengupta's 2007 report. Per his report, 77% Indians (about 836 million) consume less than Rs. 20 a day. He also says that people who consume less than Rs. 9 per day are poor. He bases his scientific report :roll: on data from 1993 thru 2005.

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

Postby SwamyG » 24 Nov 2009 00:33

For folks who are interested in trends and numbers, here is a handy link: http://indiabudget.nic.in/es2008-09/esmain.htm

Sorry if this was posted earlier, since some numbers were being discussed I thought it will be nice onlee.

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

Postby KrishnaMu » 24 Nov 2009 01:41

milindc wrote:All these clowns are quoting it from Arjun Sengupta's 2007 report. Per his report, 77% Indians (about 836 million) consume less than Rs. 20 a day. He also says that people who consume less than Rs. 9 per day are poor. He bases his scientific report :roll: on data from 1993 thru 2005.


In my college once my economics teacher reminds us, we are not poor when we take gold into account.

Example: Out of 1 bn, take out 500 mn are poor dont have gold at all. Remain 250 mn ppl are woman. If any every once of them has 1gm gold.

That is almost 250000 kg (kilograms) or 551156 lb (pounds) given today's values of gold per gm is $ 16997.68 per lb (US dollars per pound)
gives massive figure of 9.36837*^9
We ain't poor. :-)

India's membership of Asia remains primarily cartographic

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

Postby SwamyG » 24 Nov 2009 04:17

Where to Invest in India
Though the slant is from an investment perspective, it offers a portfolio manager's views on Indian Economy. Ensoy.

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

Postby Suraj » 25 Nov 2009 05:03

Centre-state financial ties to change with GST
The Constitutional amendment for the introduction of goods and services tax (GST) is likely to make more than a dozen changes in the articles relating to Centre-state financial relations, besides changing entries in the Central and state lists.

The last amendment to the Constitution dealing with a financial matter was in 2000, when the Centre was given the power to tax services.

A crucial issue being discussed is the wording of entries in the lists. Article 246 in Part 11 of the Constitution defines matters on which the Centre and states will have the authority to frame laws. These matters are enumerated in the Seventh Schedule under Union, state and concurrent lists. At present, the Centre is entitled to tax manufacturing of goods and services, while states can tax only sale of goods.

“While making changes, the power to tax goods and service cannot be placed in the concurrent list since, in that case, the central law will prevail over the state law. Central GST and state GST also cannot be explicitly listed in the respective lists since specific taxes are not mentioned in the lists,” an official said.

Experts see the Constitutional changes as being “technical in nature”. Satya Poddar, partner, Ernst & Young, said: “There may not be substantial hurdles in the passing of the Bill, assuming there will be a consensus on the broad design of GST. The Constitution was drafted more than 50 years ago when the state of the economy and taxation was different. Revisions should be made to the Constitution, compatible with modern reality.”

ComMin and FinMin debate GST in SEZs
Differences have arisen between the ministries of finance and commerce over a proposal on application of the Goods and Services Tax (GST) on ‘non-processing areas of special economic zones (SEZs)’.

The Ministry of Commerce and Industry wishes to contest the idea of not allowing the benefit of zero-rating to these zones, proposed in the first discussion paper on GST, released on November 10 by the Empowered Committee of State Finance Ministers.

In other words, says the commerce ministry, SEZs must get uniform tax treatment, not split into zones for this purpose. “The GST Act cannot supersede the SEZ Act. These are contentious issues and would be taken up with the department concerned. The SEZ policy is completely transparent; there is nothing called a processing zone and a non-processing zone,” the source said.

However, Asim Dasgupta, chairman of the empowered committee and finance minister of West Bengal, had earlier said the government would not extend any tax benefit and incur loss of revenue is those areas within SEZs where manufacturing work is not conducted.

At present, SEZs are given tax exemptions in the form of duty-free import of goods from DTAs for development, operation and maintenance of SEZ units. Under Section 10AA of the Income Tax Act, SEZs are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent of the ploughed-back export profit for the next five years.

SEZs are also exempt from Minimum Alternate Tax under Section 115JB of the Income Tax Act. These are also exempt from central sales tax and service tax, state sales tax and other levies imposed by state governments.

“There is no problem as long as the tax benefits re available to the processing zones where the actual manufacturing takes place and the units are housed. Non-processing areas are non-bonded areas, which are not customs-bonded and house social infrastructure like schools, hospitals, malls, from where no transaction will take place,” PricewaterhouseCoopers Senior Manager Tapan Sangal said.

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

Postby astal » 25 Nov 2009 08:47

KrishnaMu wrote:That is almost 250000 kg (kilograms) or 551156 lb (pounds) given today's values of gold per gm is $ 16997.68 per lb (US dollars per pound)
gives massive figure of 9.36837*^9
We ain't poor. :-)


Is this really a lot of money? Would this make India "Rich"? It is about 10 Billion Dollars which is 4% of our forex reserves. So I think this is a poor analogy.

Though I do not agree with the tone of the original article, most conventional measures, especially per capita, put India firmly in the category of "poor". We cannot wish that away.

Gold has no intrinsic value. Real "wealth" is measured not by static measures such as gold or minerals held, but by the productivity of workers, technological advancement and standard of living. Though we are on a trajectory for improvement in these measures, unfortunately most Indians are still relatively poor.

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

Postby krishnan » 25 Nov 2009 12:16

9368373318.08 USD

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

Postby Abhijeet » 25 Nov 2009 13:46

You have to only take one look at any Indian city or village to know that India is poor. What is the point of claiming otherwise?

And 9368373318.08 USD is $9.3 billion as Astal says. Hardly a huge sum.

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

Postby Hari Seldon » 25 Nov 2009 16:06

India plans to buy more gold from IMF

India is open to buying more gold from the International Monetary Fund It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation.

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

Postby krishnan » 25 Nov 2009 17:10

Abhijeet wrote:You have to only take one look at any Indian city or village to know that India is poor. What is the point of claiming otherwise?

And 9368373318.08 USD is $9.3 billion as Astal says. Hardly a huge sum.


You related to any of the top 5 rich people in the world?

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

Postby Abhijeet » 26 Nov 2009 01:24

A billion doesn't go as far as it used to.

The $10B figure, even if true, is: (a) spread over 1.2 billion people, so less than $10 per head; (b) value that can only be counted once, not recurring income (i.e. it is not something can be added to India's GDP). It's the same as if a company used part of its earnings to buy gold. It can claim that gold as part of its assets, but can't include the purchase price of that gold - only the appreciation - in next year's earnings report (earnings being analogous to the country's GDP).

So even if we count the $10B of gold, it would give us a one-time bump of $10 per person in per-capita GDP, and whatever appreciation gold has in coming years (which will be less than 100% annually). I'm not sure that would bring us quite to the top of the rich country tables.

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

Postby Najunamar » 26 Nov 2009 02:04

True enough statement about the Billion not going far enough. Wealth as someone explained earlier is a concept that is ever changing/evolving. Income however, is a different issue Abhijeet since you could be having a high income and yet not accumulate wealth (as in the US case) and vice versa (seems to be true of India, China in recent times). But, as Julie Andrews sings in "The Sound of Music" Strength does not lie in numbers/wealth but in confidence, something that seems to be eroding in the case of the USD.

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

Postby sanjaykumar » 26 Nov 2009 11:10

The usual figures are 1 to 2 trillion US dollars gold hoarded in India and perhaps 1 trillion stashed away in Honest Swiss accounts.

By any reckoning that is a lot of money. But it is not wealth.

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

Postby vina » 26 Nov 2009 21:30

Does someone have the amount of forex reserves held by the UAE ?. I am not quite sure if the UAE Dirham/USD peg will hold. The UAE Dirham has to be depegged and will have to devalue.

My strong advise to desis in UAE. GET YOUR MONEY AND SAVINGS OUT ASAP before you lose tremendous value in devaluation and /or are unable to take your money out if capital controls and repatriation restrictions /freeze on deposits are possibly put in place in case there is a temptation on the part of the UAE govt to "manage" the possible flight of capital out of UAE, esp Dubai.

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

Postby tejas » 26 Nov 2009 22:29


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

Postby Suraj » 27 Nov 2009 04:07

Keep in mind that Dubai-based realty cos like Emaar and Nakheel have a presence in India. Those who have investments in real estate from these developers, please make sure that the i's are dotted and the t's crossed.

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

Postby sanjaykumar » 27 Nov 2009 12:13

My strong advise to desis in UAE. GET YOUR MONEY AND SAVINGS OUT ASAP


very unlikely indians would not have anticipated a nasty denouement, doubt if any body sophisticated enough to do business in dubai would leave any more than loose change there. and if they did.......

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

Postby abhischekcc » 27 Nov 2009 12:37

Dubai is not the main economy of UAE, it is Abu Dhabi. And the Abu Dhabi Investment Authority is the largest SWF in the world at USD630 billion. UAE sovereign ratings are based on Abu Dhabi, not Dubai.

Abu Dhabi has already extended $5 bn help to Dubai, out of hte $10 bn it needs. It is unlikely that AD will let Dubai fail. What is happening instead is that Dubai's independence is being curtailed. Mind you, AD is deeply conservative, unlike Dubai. This crisis is helping make UAE more conservative than it already is.

------------

Bahrain has already announced it will start taxing income.

------------

Most oil countries will retain fixed rates to the dollar. It is in their interest to do so. They may devalue, but it will be a lower fixed rate again.

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

Postby shravan » 27 Nov 2009 23:53

Govt puts shipping sector on alert post Dubai financial crisis

NEW DELHI: The government today said it has sought detailed information from all ports associated with DP World to assess the impact of Dubai debt crisis on Indian shipping sector.

"Alerted after reports of Dubai financial crisis, we have begun an internal examination of the situation. DP World, owned by Dubai government has significant presence in Indian ports," a senior Shipping Ministry official told PTI.

"Most likely on Monday, we are going to hold a meeting to assess the situation and take a decision. We have already sought information from all ports, where DP World is present, seeking details, including the volume of trade," the official added.

Dubai World's arm DP World, the world's fourth biggest container port operator, has operations on India's west coast in Mundra (Gujarat), Navi Mumbai (Maharashtra), Kochi (Kerala) and on the east coast in Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Kulpi (West Bengal). It has operations in 31 countries.

Reeling under a USD 59-billion debt, state-owned investment holding company Dubai World has sought extension of time for repayment to creditors, raising another storm in the financial world which had the world markets plunging.

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

Postby Hari Seldon » 30 Nov 2009 12:43

India GDP Up 7.9% on Year

NEW DELHI -- India's economy in the July-September period grew at its fastest pace in 18 months as a surge in manufacturing helped offset sluggish farm output and stirred talk that the central bank may raise interest rates as early as in January.

Gross domestic product grew 7.9% from a year earlier after rising 6.1% in the previous quarter, the Central Statistical Organization said Monday. The growth was the highest since the January-March quarter of 2008, when the economy expanded 8.6% from a year earlier.
...
India doesn't release seasonally-adjusted annualized GDP data.

Growth was led by manufacturing, mining and social spending, which rose on the back of government stimulus measures and previously unpaid salary increments to civil servants.

The data sent stocks and government bond yields higher, as investors saw the print as further evidence that Asia's third-largest economy had turned the corner after being hit by last year's global downturn.


However, inflation is set to accelerate in the coming months as a favorable statistical base effect that masked a steady increase in prices since the turn of the financial year in April is now wearing thin.

Steady growth in the economy may therefore allow authorities to tighten their purse strings, analysts said.

"The expansion in farm sector output was a positive surprise, despite weak monsoon rains, and the growth in the financial, insurance and property segments signal strong local demand which will force the RBI (Reserve Bank of India) to unwind its accommodative monetary stance," said Sonal Varma, an economist with Nomura Financial Advisory and Securities.

Ms. Varma expects the Reserve Bank of India to raise the repo rate, its key lending rate, by 25 basis points at its January monetary policy review meeting.


Had the honor of hearing Sri D Subbarao speak in person on the challenges in the Indian Economy following the global crisis. He mentioned that while the WPI held, each of the 4 CPIs we have have soared. Food inflation has reached alarming territory.

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

Postby Suraj » 30 Nov 2009 12:59

In an earlier post, I used monthly data to estimate Q2 GDP growth to be 7-7.5%, but it appears I underestimated services sector growth, though I'm very happy about that. Manufacturing was the star, though.
Official CSO press release: Q2 2009-10 GDP growth
First half GDP growth was 7.0% . On a positive note, investment/GDP (gross fixed capital formation) increased from 31.6% in Q1 to 34.7% in the second quarter, with the average investment/GDP for the first half being a healthy 33.2% .
India’s Economy Expands 7.9%; Fastest in Six Quarters
Gross domestic product grew 7.9 percent in the three months to Sept. 30 from a year earlier after gaining 6.1 percent in the previous quarter, the statistics bureau said in New Delhi today. That was more than all estimates in a Bloomberg News survey of 22 economists, where the median forecast was 6.3 percent.

“This is a surprising number,” said Sonal Varma, a Mumbai-based economist at Nomura Securities Co. “It will make it easier for the Reserve Bank of India to exit from the emergency low interest rate regime adopted last year.”

To steer India’s $1.2 trillion economy through the worst global financial crisis since the 1930s, Subbarao kept the central bank’s key reverse repurchase rate at a record-low 3.25 percent since April. Government spending and tax cuts took the value of stimulus measures to 12 percent of GDP.

Manufacturing rose 9.2 percent last quarter from a year earlier, the biggest advance since June 2007, according to today’s report. Trade, transport and communication services grew 8.5 percent, the fastest pace in a year. Agriculture gained 0.9 percent, the least since December 2008.

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

Postby S.Gautam » 30 Nov 2009 14:05

Ah, my favorite sort of news, even more than something blowing up in Pakiland. Even farm output was up, and we have a tendency to revise figures upwards later. Hoping for 7.5 this fiscal. Just two weeks ago RBI revised down to 6.0% from 6.5%. :D

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

Postby Neshant » 30 Nov 2009 14:07

Let us not make the same mistake as everyone else and enter bubble territory followed by a massive bust.

Start putting the brakes on the hot money flowing into the country now.

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

Postby Asit P » 30 Nov 2009 17:59

Hari Seldon wrote:India GDP Up 7.9% on Year


Great news. With Q2 coming up with a better than expected growth rate, all eyes will now be set on the results of Q3 & Q4. That's when we will get an idea as to how much has the Dubai crisis impacted us.

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

Postby Katare » 30 Nov 2009 21:13

Pleasent surprise! 8) Since the base would be lower (~5%) for next two quarters economic growth would appera even better for rest of the year.

Somehow the economic growth has not shown up in govt Tax collections so far. Time for both tax boards to whipup some bad boys to collect tax for hidieous budget deficit we have created to pay for this turnaround.

Pranav M and his side kicks at finance bhavan preparing next budget would be the happiest lot today....time to take out most if not all of the emergency tax breaks.

Next goal....

Control consumer inflation
Aggresively bridge budget revenue deficit to zero in next 3 years
Increase Tax/GDP ratio to 15% in 3 year
Bring back off balance sheet liabilities in the budget process and than meet goal # 1 (after 3 years)

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

Postby sanjaykumar » 30 Nov 2009 23:43

7.9% growth, what will Pakistan think...I am worried for peace in the Pakistani subcontinent with this aggressive Hindu 7.9% figure. India should stay poor so pakistan feels less need to send terrorists to America and Englaand.

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

Postby Suraj » 01 Dec 2009 03:25

Some analysis of the Q2 GDP performance:
Agriculture performance better than expected
Growth in agriculture in the second quarter of the financial year despite the worst drought in 17 years has been a major surprise for most analysts.

They had given conservative GDP forecasts, as they expected agricultural GDP to be negative for second quarter. However, the sector saw marginal growth of 0.9 per cent and, backed by good growth in mining and manufacturing, overall gross domestic product grew by 7.9 per cent.

“While trends in industry (8.3 per cent) and services (9.3 per cent) were broadly in line, agriculture surprised on the upside, with a positive reading of 0.9 per cent. Although we had factored that most of the 17.9 per cent production decline in the summer crop would take place in October-December 2009, similar to the 2002 drought, we had expected some impact in the second quarter as well,” observed economists Rohini Malkani and Anushka Shah in a report by Citigroup.

Mining and quarrying grew by a significant 9.5 per cent in the quarter ended September, against a marginal growth of 3.7 per cent in the corresponding period in 2008. Natural gas production in the Krishna-Godavari basin operated by Reliance Industries Ltd has been the major source of growth for the sector. Manufacturing, which grew by 9.2 per cent in Q2 as compared to a meagre growth of 5.1 per cent in Q2 of 2008-09, was primarily driven by increased government spending and augmenting of investments in the sector.

“The growth in mining is driven primarily by the KG gas production, which was nil last year. The growth in manufacturing is due to the increased unlocking of investments in the sector. Therefore, recovery is in place,” said Pronab Sen, Chief Statistician for the government and secretary of the ministry of statistics and programme implementation.

Analysts cheered by Q2 growth in private consumption
Higher consumption expenditure from the government in the form of pay arrears given to its employees contributed to a high GDP growth of 7.9 per cent in July-September, while gross capital formation slowed to a seven-year low of 1.6 per cent. Private sector consumption also showed a 5.6 per cent increase.

Consumption expenditure and capital formation are two components of expenditure on GDP. Public consumption increased by 27 per cent in the second quarter of 2009-10 from 10.2 per cent in the April-June quarter and private consumption also went by 5.6 per cent from a low growth of 1.6 per cent in April-June this year.

“While headline consumption rose 8.4 per cent, led by public consumption up 27 per cent (largely due to the pay arrears), perhaps the most encouraging bit of data was the uptick in private consumption, which rose 5.6 per cent in the second quarter of 2009-10, compared with a dismal 1.6 per cent in the previous quarter,” Citi said in a research note on Monday.

India Inc wants monetary, fiscal policies to continue
Industry bodies were enthused by the more than anticipated GDP growth of 7.9 per cent in the second quarter (Q2) of the current financial year, 2009-10, along with the increase in consumption and investment. However, they are apprehensive about the sustainability of growth.

Contraction is expected in the agricultural growth rate and in that of manufacturing in the third and the fourth quarters. Major busness chambers said there’s a need for the government to continue with the existing monetary and fiscal policies to sustain the process of economic recovery. “The latest quarterly GDP figures are a further confirmation of the Indian economy recovering. It is, therefore, important that we do not do anything to disrupt this process of recovery. At this rate, we feel we can look to a near-seven per cent growth for the whole year,” said Harshpati Singhania, president, Federation of Indian Chambers of Commerce and Industry (Ficci).

The Confederation of Indian Industry (CII) also said the high numbers indicate government policy measures have been successful in reversing the impact of the global slowdown. CII accorded the growth in GDP to the sharp increase of over 25 per cent in government consumption spending during the second quarter. And said GDP figures might moderate, as the impact of the increase in government spending fades away over the next two quarters. “It would be important for the RBI (Reserve Bank) to maintain policy rates at the current levels to prevent the growth momentum from slackening,” said Chandrajit Banerji, director-general of CII.

The third quarter number will be crucial to establish what the effect of the poor monsoon was. Unless industrial growth continues at the same pace, Q3 GDP growth will probably be lower than Q2. Overall fiscal year growth will be above 6% unless by some disastrous reason the Q3 and Q4 growth numbers are both below 5% . My expectation is that Q3 GDP growth will be around 6.5%, and that Q4 GDP growth will be close to 8% (partly due to high rabi crop sowing), for a full year growth rate of roughly 7% .

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

Postby ramana » 01 Dec 2009 04:15

All this despite the massive floods in Andhra Pradesh and Karnataka.

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

Postby negi » 01 Dec 2009 07:15

Since this thread is archived

Robust 7.9% GDP growth, a pleasant surprise

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

Postby munna » 01 Dec 2009 07:27

ramana wrote:All this despite the massive floods in Andhra Pradesh and Karnataka.


Ramanaji not to gloat but something I wrote on 4 Oct 2009. I still maintain we will be surprising the Econ gurus on the upside, god willing.
munna wrote:
csharma wrote:However, the latest forecast by Ficci is in line with the IMF. Sharp drop in far output because of the drought is the reason for the shortfall.

Farm output shortfall to hit GDP, says Ficci


http://www.ptinews.com/news/313100_Farm ... says-Ficci
New Delhi, Oct 4 (PTI) India's economy is expected to grow between 5.2-5.8 per cent in 2009-10, much lower than last year as the agriculture output is estimated to decline significantly(rubbish) because of drought in 276 districts of the country, an industry paper has said.

The GDP projections for the current fiscal made by the Federation of Indian Chambers of Commerce and Industry (Ficci) are far dismal than the estimates of 6 per cent by the Reserve Bank of India and 6.3 per cent by the Planning Commission

Csharmaji such papers often rely on slightly back dated data and this one might also be based on data from June-July-August timeframe thus it is discounting the late revival in Monsoons and also the fact that 20% shortfall in rainfall can be very easily dealt with by the farmers of Western UP, Haryana and Punjab ie the bread bowl of India. Please check this report by Economic Times. Click
We are closely monitoring the scenario. There seems to be no need for a blanket waiver scheme or interest rate moratorium. In most of the states whether it be Haryana, Uttar Pradesh and Punjab, standing crops have survived as farmers were able to use ground water with the state government providing free electricity,” said a senior finance ministry official who has been monitoring the situation.
The whole rain fed agriculture scenario was very valid till mid 90s but with a 20% rain drop we can easily withstand one season without having a crisis. What makes it all the more interesting is the fact that this drop in rainfall is not uniformly distributed across the nation hence it makes no sense to comment on agricultural output without taking into account the Kurtosis of production in India and the effects of Monsoon's delay in areas with heavy agricultural production.
The credit offtake for farming sector which had nose dived in June, on account of delayed onset of monsoons, has witnessed a robust uptake in the month of September. Officials at various public sector banks including Indian Overseas Bank, Union bank of India and Indian Bank confirmed this. The banks are expected to direct 18% of their entire lending to agriculture sector under priority sector lending norms

Again confirms my hypothesis that it was not a failed but a delayed Monsoon and this can be easily tided over.
Monsoon rains, the life line of agricultural production, in Asia’s third largest economy has been close to 20% below normal.
This drop will not destroy our agricultural output it may stagnate but will not be so huge relative to the rest of the economy to cause a drop in the growth all by itself. FICCI's chaps think that reading WEO makes them some kind of Econ gurus well then all I can say is :P . Now back to my self imposed exile from Econ.


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