Indian Economy News & Discussion - Aug 26 2015

Sicanta · Post by **Sicanta** » 13 Apr 2017 17:41

Service tax to move up from 15% to 18% under GST, says Hasmukh Adhia

http://www.business-standard.com/articl ... 481_1.html

There are 60 services exempt from service tax, including education, healthcare, religious pilgrimage

JayS · Post by **JayS** » 13 Apr 2017 18:06

Do we see any clarify on the effect of GST on RE, particularly the normal home buyer..??

Sicanta · Post by **Sicanta** » 13 Apr 2017 18:42

Statsguru: Worsening state finances

http://www.business-standard.com/articl ... 035_1.html

States be given more leeway to meet deficit targets, says FRBM panel

http://www.business-standard.com/articl ... 853_1.html

Kashi · Post by **Kashi** » 14 Apr 2017 07:40

hanumadu wrote:About time. What took so long after first saying to encourage palm oil production in India to curb imports.

Where are they going to find land for palm oil cultivation? In Malaysia and Indonesia, Palm oil plantations are one of the biggest causes of rainforest destruction.

Sicanta · Post by **Sicanta** » 14 Apr 2017 08:27

Alstom, Bombardier tap India as urban railway export center

http://www.business-standard.com/articl ... 013_1.html

India services export up 5.9% in February, import up marginally

http://www.business-standard.com/articl ... 011_1.html

hanumadu · Post by **hanumadu** » 14 Apr 2017 16:42

Kashi wrote:
hanumadu wrote:About time. What took so long after first saying to encourage palm oil production in India to curb imports.
Where are they going to find land for palm oil cultivation? In Malaysia and Indonesia, Palm oil plantations are one of the biggest causes of rainforest destruction.

They are talking about waste unused land.

JTull · Post by **JTull** » 14 Apr 2017 18:09

If this is not wasteland cultivation but a substitution of current crop with palm oil, then we've a problem heading our way.

The biggest problem India will face with palm oil is the lack of corporate involvement in cultivation. Western African countries are expanding land under palm oil cultivation at a rapid pace but similar to India, large sections are cultivated by individual farmers. After harvest, the fruit has useful life of about 3 days during which it must be processes by a mill. In Africa, most mills are corporate owned who would rather process their own fruit before other farmers. In India, we'll have another situation like sugar mills, which will squeeze the farmers no end.

This needs to be under a cooperative setup - cultivation to oil.

Suraj · Post by **Suraj** » 14 Apr 2017 22:04

NASA nighttime satellite imagery shows huge growth of Indian urbanization on four years

Singha · Post by **Singha** » 14 Apr 2017 23:03

Fake analysis. I think chronic power shortages in narth being fixed post 2014 is the real reason

Bheeshma · Post by **Bheeshma** » 14 Apr 2017 23:14

Absolutely. It should go into Modi govt achievement thread.

Suraj · Post by **Suraj** » 14 Apr 2017 23:17

Singha wrote:Fake analysis. I think chronic power shortages in narth being fixed post 2014 is the real reason

Why is that fake ? Fixing infrastructure is an essential component of sustainable urbanization.

Austin · Post by **Austin** » 14 Apr 2017 23:18

India - Travel & Tourism Competitiveness Index2017 edition 40th / 136

http://reports.weforum.org/travel-and-t ... conomy=IND

Singha · Post by **Singha** » 14 Apr 2017 23:27

There is no huge urban growth in these 3 years as article claims esp in bihar up. The power situation improved.

Suraj · Post by **Suraj** » 14 Apr 2017 23:31

Well you cannot really call an area urban without reliable power and transportation. Until then its just a glorified slum. Yes it may mostly not be greenfield urban, but it is about places that went from barely more than a crowded slum with unreliable infrastructure, to visibly far greater electricity in under 5 years.

vera_k · Post by **vera_k** » 14 Apr 2017 23:51

Well, areas around Bengaluru and Mumbai-Pune-Nashik belt shows more light as well. Doubt these places were suffering from power shortages back in 2012.

vnms · Post by **vnms** » 15 Apr 2017 00:29

I have a seen a lot of posts regarding a lack of storage facilities for food in India. So, is this area a good investment opportunity? My friends and I are looking for business opportunities and this seems like a good proposition as there seems to be demand for this.

However, I need more information on what kinds of foods are we talking about, if refrigeration is required or not etc. I have questions on everything that's got to do with food storage. Can anyone suggest where I need to look for more information on this?

Thanks in advance.

Suraj · Post by **Suraj** » 15 Apr 2017 01:19

I recommend getting a handle on how GST progresses. Due to freer interstate commerce, a lot of big players will invest in sizeable centralized hub and spoke storage and distribution facilities, not just for food but general merchandise. You may incur losses if you can't invest on that scale. But I can't pretend to know the details of your business plan beyond that caution.

Kakkaji · Post by **Kakkaji** » 15 Apr 2017 02:45

The Government is also encouraging private warehouses for grain storage to supplement the storage capacity of the Food Corporation of India. So, building such warehouses at the district level may be viable where the mega deep pocket companies may not enter.

vnms · Post by **vnms** » 15 Apr 2017 04:02

Suraj wrote:I recommend getting a handle on how GST progresses. Due to freer interstate commerce, a lot of big players will invest in sizeable centralized hub and spoke storage and distribution facilities, not just for food but general merchandise. You may incur losses if you can't invest on that scale. But I can't pretend to know the details of your business plan beyond that caution.

I do not have a business plan. I'm just looking at it an opportunity. There is a demand. I'm trying ascertain the exact type of demand. Grain vs vegetables vs cold storage vs something else.

People obviously have money in India. Why haven't they invested in this. Is it a cost benefit issue? Is it an ROI issue. Who would actually use these warehouses? So on...

Still in info gathering mode.

Suraj · Post by **Suraj** » 15 Apr 2017 04:14

vnms wrote:I do not have a business plan. I'm just looking at it an opportunity. There is a demand. I'm trying ascertain the exact type of demand. Grain vs vegetables vs cold storage vs something else.

People obviously have money in India. Why haven't they invested in this. Is it a cost benefit issue? Is it an ROI issue. Who would actually use these warehouses? So on...

Inter-state commerce in India is still in its infancy due to tax/duty barriers at state borders. This leads to a fragmented market and lack of ability to scale, particularly when it comes to food storage and distribution. GST should dramatically change things here, but I think the biggest spoils will go to the deepest pockets.

A_Gupta · Post by **A_Gupta** » 15 Apr 2017 05:02

vnms wrote: I do not have a business plan. I'm just looking at it an opportunity. There is a demand. I'm trying ascertain the exact type of demand. Grain vs vegetables vs cold storage vs something else.

People obviously have money in India. Why haven't they invested in this. Is it a cost benefit issue? Is it an ROI issue. Who would actually use these warehouses? So on...

Still in info gathering mode.

There is material out there, e.g.,
http://keralaagriculture.gov.in/htmle/b ... torage.htm
Scroll down to Annexure II and beyond

Annexure II

Assumptions for working out economics of a 5000 MT capacity potato cold storage

Capacity utilization : First year - nil, Second year - 80%, Third year onwards - 100%.
70% of the capacity is rented out and rest 30% capacity is used to store potato owned by the promoter(s).
Rental charges per season per MT of potato are Rs. 700/-.
Marketing margin on own potato considered at Rs. 3000/- per MT.
Pledge loan margin of 2% has been assumed on 20% of total handling, considering per ton price of potato at Rs.2500/ MT.
Electricity and other utilities expenses considered at Rs. 210/- per MT per annum.
Lump sum establishment and office expenses considered as Rs. 2 lakhs per annum.
Expenditure on maintenance and repairs considered as Rs. 20/- per MT per annum.
Expenditure on gas, fuel and lubricants considered as Rs. 10/- per MT per annum.
Labour charges for loading and unloading of potato in the cold store considered as Rs. 15/- per MT.
Insurance charges for the potato considered as Rs. 20/- per MT per season.
Interest on working capital considered at 18% per annum for six months on an average in a year.
Margin money considered at 25% of the financial outlay.
Interest on term loan considered at 15% per annum.
Even though the life of the cold storage will be much more, the life has been considered as 15 years for working out internal rate of return.
Depreciation rate of 5% and 15% has been considered for civil structures and plant & respectively.
Repayment period of nine years with one year grace period has been considered. The interest during first year has been capitalized and repayment of principal has been considered from third year.

Singha · Post by **Singha** » 15 Apr 2017 09:39

https://mobile.twitter.com/galka_max/st ... 67/photo/1

Nice little euro economic chart.

Thing which raises the cost of cooling anything in india be it food or offices is need to have diesel genset for backup...how much depends on state to state. In eu nd massa cheap grid power is 24x7. In india in states like ka even grid power is expensive.

And some areas get really hot so ac power draw will be more like delhi is 42c today going to 44c mid of next week.

You can study the ops of existing ops like Coldex to see their model

http://coldex.in/

Karthik S · Post by **Karthik S** » 15 Apr 2017 09:50

Really need to speed up the under construction nuclear plants. Considering nuke power plants are more efficient in generating power than thermal, wind or solar, we need to prop up more such plants to satisfy our power needs. France for instance, draws around 75% of its electricity needs from nuclear power.

https://en.wikipedia.org/wiki/Nuclear_p ... wer_plants

Austin · Post by **Austin** » 16 Apr 2017 09:42

India is the Best International Market to Invest in 2017 - Jeffrey Gundlach HD

Uttam · Post by **Uttam** » 17 Apr 2017 19:09

Very significant impact of public policy on the lives of masses. The reduced consumption of Kerosene will result in health benefit, it will help reduce petrol adulteration, etc. Great news.

Use of kerosene, diesel falls, LPG consumption rises on clean energy drive

Consumption of kerosene dropped by 21% in 2016-17 from a year ago to 5.3 million tonnes, while that of LPG jumped 9.8% to 21.5 million tonnes in the same period

Sicanta · Post by **Sicanta** » 18 Apr 2017 00:25

Low credit growth, high GDP suggest decoupling: SBI

http://www.business-standard.com/articl ... 593_1.html

Credit growth falls to 60-year low

http://www.business-standard.com/articl ... 024_1.html

Suraj · Post by **Suraj** » 18 Apr 2017 03:48

World Bank's estimate for current year:
Economy to grow 7.2% in FY18; GST to have positive impact: World Bank

Having seen a “modest setback” due to demonetisation last fiscal, the Indian economy will claw back to 7.2 per cent growth this financial year and rise further to 7.5 per cent in 2018-19, says a World Bank report. In its report on South Asian Economy, the World Bank said that “significant risks” to economic growth could emanate from fallout of demonetisation on small and informal economy, stress in the financial sector and uncertainty in global environment.

Also, a rapid increase in oil and other commodity prices could have a negative implication for the economy, it added. The country’s economic growth is expected to see an uptick at 7.2 per cent this fiscal and further accelerate to 7.5 per cent in 2018-19, the report said.

The growth slowed down to 6.8 per cent in 2016-17 due to a combination of weak investments and the impact of demonetisation, the World Bank said, adding that timely and smooth implementation of the GST could prove to be a significant “upside risk” to economic activity in 2017-18.

Merchandise exports grow for 7th straight month

Merchandise exports jumped as high as 27.6% in March from a year before — growing for a seventh straight month even in the aftermath of demonetisation — thanks to a rebound in the outbound shipments of engineering goods, petroleum products and garments, apart from a favourable base. With this, exports in the last fiscal grew 4.7% to $274.64 billion — a much-needed rise after two successive years of decline.

Imports, too, jumped 45.3% in March — aided by a jump in the purchases of petroleum products (101%), gold (329%) and electronic goods (32%) — with merchandise trade deficit touching $10.44 billion. Despite the latest jump, imports in the last fiscal eased 0.2% to $380.36 billion.

Uttam · Post by **Uttam** » 18 Apr 2017 18:43

Suraj wrote: Merchandise exports grow for 7th straight month

The above news of exports growing despite INR versus USD going up by almost 8% shows that there is a lot of efficiency in the system to be exploited before currency movement will significantly impact export growth. The 8% gain in INR value is despite RBI buying hordes of USD to keep INR from rising even more. The currency movement can and should be exploited for competitive advantage only after the system efficiency has been considerably exploited.

KrishnaK · Post by **KrishnaK** » 19 Apr 2017 13:15

Demonetization, Digital Identity and Universal Basic Income – How Big Ideas Are Changing India and What It Means for the World

vnms · Post by **vnms** » 22 Apr 2017 06:11

A_Gupta wrote:
vnms wrote: I do not have a business plan. I'm just looking at it an opportunity. There is a demand. I'm trying ascertain the exact type of demand. Grain vs vegetables vs cold storage vs something else.

People obviously have money in India. Why haven't they invested in this. Is it a cost benefit issue? Is it an ROI issue. Who would actually use these warehouses? So on...

Still in info gathering mode.
There is material out there, e.g.,
http://keralaagriculture.gov.in/htmle/b ... torage.htm
Scroll down to Annexure II and beyond
Annexure II

Assumptions for working out economics of a 5000 MT capacity potato cold storage

Capacity utilization : First year - nil, Second year - 80%, Third year onwards - 100%.
70% of the capacity is rented out and rest 30% capacity is used to store potato owned by the promoter(s).
Rental charges per season per MT of potato are Rs. 700/-.
Marketing margin on own potato considered at Rs. 3000/- per MT.
Pledge loan margin of 2% has been assumed on 20% of total handling, considering per ton price of potato at Rs.2500/ MT.
Electricity and other utilities expenses considered at Rs. 210/- per MT per annum.
Lump sum establishment and office expenses considered as Rs. 2 lakhs per annum.
Expenditure on maintenance and repairs considered as Rs. 20/- per MT per annum.
Expenditure on gas, fuel and lubricants considered as Rs. 10/- per MT per annum.
Labour charges for loading and unloading of potato in the cold store considered as Rs. 15/- per MT.
Insurance charges for the potato considered as Rs. 20/- per MT per season.
Interest on working capital considered at 18% per annum for six months on an average in a year.
Margin money considered at 25% of the financial outlay.
Interest on term loan considered at 15% per annum.
Even though the life of the cold storage will be much more, the life has been considered as 15 years for working out internal rate of return.
Depreciation rate of 5% and 15% has been considered for civil structures and plant & respectively.
Repayment period of nine years with one year grace period has been considered. The interest during first year has been capitalized and repayment of principal has been considered from third year.

Thank you very much Gupta saar

Austin · Post by **Austin** » 22 Apr 2017 12:20

Just a question here , Can any country buy Indian Government Bond like GSEC , The way we buy US Tressuries.

If any country wishes so can they buy Indian Tressuries as part of their forex portfolios ?

Suraj · Post by **Suraj** » 22 Apr 2017 12:30

SEBI reports this data regularly.
Investments by FPIs in Government Securities: April 3 2017

SEBI circulars are here

Summary: foreigners hold Rs.2.6 lakh crore ($40 billion) of Indian government debt. That is the prescribed limit permitted by RBI.

Austin · Post by **Austin** » 22 Apr 2017 12:34

Suraj wrote:SEBI reports this data regularly.
Investments by FPIs in Government Securities: April 3 2017

SEBI circulars are here

Summary: foreigners hold Rs.2.6 lakh crore ($40 billion) of Indian government debt. That is the prescribed limit permitted by RBI.

Thanks Suraj , That tells me FPI can buy short and long term bonds but there is a cap to it

Does RBI declare list of countries that hold our bonds just incase if some country does ?

I think our bonds should pay handsome in interest for any country that wants to hold it without any fear of GOI defaulting it

Karthik S · Post by **Karthik S** » 22 Apr 2017 12:37

Interest is a function of how much risk a security carries. Lower the risk, lower the interest earned.

Austin · Post by **Austin** » 22 Apr 2017 12:45

Karthik S wrote:Interest is a function of how much risk a security carries. Lower the risk, lower the interest earned.

Agreed and India is well placed for any country who wants to earn ~ 6.5 % for a 10 year bond , instead of earning says 2-3 % from other countries for the same period that would barely grow more than 2 % and have debt of 100 % or more of their GDP.

We have a growing economy gurantee to grow atleast 5-6 % or more for next 20 years , have good forex and gold reserves , Indian Bond Should be a good buy for any one who looks at low risk with high yeald , As I see it they have laid a cap of $30 billion on FPI which should be fine any ways may be they will increase that later on.

Suraj · Post by **Suraj** » 22 Apr 2017 12:47

Austin wrote:Thanks Suraj , That tells me FPI can buy short and long term bonds but there is a cap to it

Does RBI declare list of countries that hold our bonds just incase if some country does ?

I think our bonds should pay handsome in interest for any country that wants to hold it without any fear of GOI defaulting it

Yes there's a cap on it, and there's been a lot of demand to raise the cap, and RBI has done so several times. I posted about this in detail quite some time ago (~a year back). Indian GSecs are very attractive to many emerging bond fund managers.
RBI increases FPI limits in govt bonds by Rs170 billion
From 2 years ago:
India to allow additional $18.2 bln in foreign purchases of govt debt

Austin · Post by **Austin** » 22 Apr 2017 13:06

Suraj wrote:Indian GSecs are very attractive to many emerging bond fund managers.
RBI increases FPI limits in govt bonds by Rs170 billion
From 2 years ago:
India to allow additional $18.2 bln in foreign purchases of govt debt

Yes GSec is a good buy safe even for Indian Investers

Austin · Post by **Austin** » 22 Apr 2017 14:19

BTW when they Foreign Buyers buy our bond they may be paying in USD or Euro to buy these Gsec bonds and earn the interest but when they redeem it do they get paid back in same USD/Euro etc ?

JohnTitor · Post by **JohnTitor** » 22 Apr 2017 15:39

^^ I would have assumed that the bonds are bought and sold (including payment at maturity) in rupees - how you obtain those rupees is irrelevant. For instance, your broker/FI might do the conversion for you. But the actual transaction would be in rupees. This de-risks the govts borrowing from currency fluctuations & administration of multiple currencies. At least that's how sovereign bonds in many western countries works.

Also, as a side note, high interest rates alone do not make a security attractive. The risk element is quite important. So in the case of sovereign bonds, the country's growth rate, currency stability, inflation, political stability all play a part. Zimbabwe might have paid 1000% or even 10000% interest on the now defunct currency, but that wouldn't have attracted buyers. Countries such as the US will attract buyers for their security no matter how low their interest rates because of the "stability" the country offers as well as the "confidence" in their currency (note the two words in quotes, it is about perception even though that may be disconnected from reality). If the govt focuses on development, efficiency and growth, buyers for the bonds will automatically queue up.

Austin · Post by **Austin** » 22 Apr 2017 18:19

Wouldnt a foreign bond investor be it any country or FII while purchasing bond would convert USD/Euro etc to Rupee via RBI buy those bonds and end of maturity period would redeem the interest + capital convert to USD/Euro etc and take it out ?