Indian Economy - News & Discussion Oct 12 2013

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Suraj
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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 23 Sep 2014 04:00

Market is betting in favor of no more monetary tightening, i.e. subdued inflation. Interestingly, no one is betting on a rate hike. Most estimated it would remain unchanged, while the rest bet on cuts ranging from 25bp all the way to 100bp (1% reduction), suggesting strong confidence in higher growth and lower inflation:
Street expects RBI to hold rate until end of fiscal year
The current financial year might end up being the first in seven years to see the Reserve Bank of India (RBI) keeping the benchmark repo rate unchanged, indicates a Business Standard poll among 15 financial experts, days before the central bank’s review of its monetary policy.

As many as nine respondents — all leading names in the public sector, private and foreign banks, as well as other financial intermediaries — said RBI would hold the repo rate at eight per cent at least until the end of March 2015.

There are, of course, a few bravehearts who are betting on a repo rate cut of 25 basis bps (four of the 15) to 75 bps (one) and even 100 bps (one).

The repo rate — the rate at which banks borrow from the central bank — was last kept unchanged through a financial year in 2007-08, at 7.75 per cent.

After Rajasthan, MP liberalizes labour laws. The only way to push through nationwide reforms on this subject is to impose peer pressure. When a critical mass of states have liberal laws and attract business, other holdouts will be forced to do the same to get business. Good way for BJP states to corner business and money.
MP agrees to amend 20 labour laws
The Madhya Pradesh cabinet on Monday approved amendments to as many as 20 labour laws. Of these, 17 are central government laws and three state laws. “All the central labour laws will be forwarded to the President of India for his assent,” said K C Gupta, labour commissioner.

Madhya Pradesh has become the second state, after Rajasthan, to propose amendments to labour laws, including the Industrial Disputes Act, 1947, and the Factories Act,1948.

In an important amendment to the Industrial Disputes Act, 1947, the cabinet gave its assent to the retrenchment of workers, lay-offs and the easy closure of units. “Lay-offs, retrenchments and even closures will not require any permission,” Gupta said.

When asked if this was akin to a ‘hire-and-fire’ policy, Gupta said, “Yes. But it has certain conditions. The amendment will be applicable only if the industrial establishment has up to 300 workers. Earlier, it was applicable to industrial units having atleast 100 workers, employed on an average per working day for the preceding 12 months.” The cabinet approved this amendment to offer an option to employers to retrench unproductive and inefficient workers.

Such workers would lose job security but would get better compensation packages. “The principal of ‘Last Come First Go’ will remain intact. The employer can retrench employees by giving them a three-month notice and wages of three months in lieu of the job,” Gupta said.

Vis a vis state labour laws, the cabinet cleared an amendment to the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961. It would give an easy option to employers of small and medium enterprises (SMEs) to terminate any employee without giving any reason or conducting any enquiry. This would apply to SMEs having worker strength of less than 50.

Similarly, an amendment to the Trade Union Act, 1926 has also been given clearance.

Among other amendments, the state government has cleared the proposal to stretch “overtime” from 75 hours to 125 hours but “with the consent of the worker”, through an amendment to the Factories Act, 1960 and also extend working time from the maximum 60 hours to 72 hours.

To protect their interest, the state has cleared certain exemptions to micro industries from certain labour laws mainly the Contract Labour (regulation and abolition) Act, 1970, the Factories Act, 1948, MP Industrial Employment Act, 1961 and the Trade Unions Act, 1926.

Also, the state has now empowered the labour commissioner in lieu of labour inspector to prosecute employers in case of any violation of labour laws. To make them free from inspections, state industries will not have to maintain as many as 68 registrations and furnish 16 returns under 19 different laws. “Now, they will be required to maintain only one register,” Gupta said.

GoI continues to stick to its guns and refuse to make a deal on TFA if it doesn't get its way on agricultural subsidies:
TFA panel meet: India to stick to its stance at WTO meet
India is going to again push for its demand to have a parallel agreement on public stockholding for food security purposes, as the preparatory committee on a trade facilitation agreement (TFA) is set to meet on September 29 at the World Trade Organization's (WTO), headquarters in Geneva.

After missing the deadline of July 31, when the protocol of amendment to the TFA was expected to be signed, member-countries were expected to reach a possible consensus on the demand made by India. It seems after a month-long break, countries have rather hardened their positions. While the majority of developed and developing countries have agreed to convert the TFA into a legal framework, India and some countries have demanded a parallel agreement on public stockholding for food security.

A senior commerce department official told Business Standard: "WTO has a long history of missing deadlines, mainly pertaining to those that benefit developing countries. So, missing the July 31 deadline did not bring the world to an end. Deadlines are important but not sacrosanct. India is not backing off from the TFA. All that we have asked for is a parallel agreement on public stockholding. If the Bali Package has to be implemented, then the whole package has to be implemented."

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby hanumadu » 23 Sep 2014 04:14

How come the unions in these states are not making a hue and cry?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby sivab » 23 Sep 2014 07:12

http://www.financialexpress.com/news/no ... ys/1291708

No special route, govt tells China to bid for highways

China had specifically asked for award of nine projects — with a combined contract value of over R9,000 crore — in Punjab, Haryana, Odisha and Andhra Pradesh.


According to a senior government official privy to the development, “The investment proposals by China under the model suggested by them would not be feasible. We have told the China government that they can participate in the tenders to be floated for PPP projects being awarded on the build–operate–transfer (BOT) mode.”
China proposed to take up construction of 890 kms of highways (nine stretches) worth R9,125 crore that the government was planning to award on the EPC basis during Chinese president’s visit to the country. It proposed that Chinese firms would pick up these projects, finance them completely and also bring their own contractors for construction. China also wants to take up the projects on a turnkey basis. “The Chinese proposal was to bring Chinese labour, plant and machinery to construct the highway,” said the source, adding that India was concerned about this.
“It is practically impossible for the government to agree with such a proposal from China. Award of road projects in the country follow a process and everyone has to adhere to it
,” said M Murali, director-general, National Highway Builders’ Federation.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Avarachan » 23 Sep 2014 08:05

Sanjay wrote:Also, I noticed that for cheap goods Indians fawn over chinese products saying they are better than local. My experience with products of the same nature exported by China compared to India (decorations etc) is that Indian products compare quite favourably. What's going on?


I haven't noticed that. When I was in Chennai in 2011, I had to buy a bag for trekking. The salesman showed me a few different bags. I picked up a stylish one, and the salesman said, "It's made in China. It's junk." I ended up buying a bag made in India. It's held up well.

I had the same experience when I had to buy a flashlight, for the same trekking trip. A salesman at a different store told me that customers who buy the Chinese flashlights often return them because they don't work properly. He recommended one made in Singapore instead.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby panduranghari » 23 Sep 2014 15:30

Suraj wrote:Market is betting in favor of no more monetary tightening, i.e. subdued inflation. Interestingly, no one is betting on a rate hike. Most estimated it would remain unchanged, while the rest bet on cuts ranging from 25bp all the way to 100bp (1% reduction), suggesting strong confidence in higher growth and lower inflation:
Street expects RBI to hold rate until end of fiscal year
The current financial year might end up being the first in seven years to see the Reserve Bank of India (RBI) keeping the benchmark repo rate unchanged, indicates a Business Standard poll among 15 financial experts, days before the central bank’s review of its monetary policy.

As many as nine respondents — all leading names in the public sector, private and foreign banks, as well as other financial intermediaries — said RBI would hold the repo rate at eight per cent at least until the end of March 2015.

There are, of course, a few bravehearts who are betting on a repo rate cut of 25 basis bps (four of the 15) to 75 bps (one) and even 100 bps (one).

The repo rate — the rate at which banks borrow from the central bank — was last kept unchanged through a financial year in 2007-08, at 7.75 per cent.



There are many internal clashes within US federal reserve. The only hawk within the federal reserve resigned last week. I am getting a feeling that they will raise the interest rates. RBI will follow suit.

At the end of a two-day meeting of the Federal Open Market Committee (FOMC) a few days earlier, Fed released quarterly economic and interest rate projections by its policy makers. These suggested a faster pace of rate increase than envisioned in earlier projections.


Only bank mobsters and realty people dream of rate cuts. Us mango people?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 23 Sep 2014 20:22

I don't understand. If the doves are even more stronger in the Fed now, why would they *raise* rates ? It's the hawks who want to do that. The doves are in favor of loose money.

Mango people loved low rates in the early-mid 2000s, as did corporates. Low EMIs, low borrowing rates, rapid income growth in real terms. Might be different in the ZIRP regime, but quoting US arguments in the Indian context today is misleading.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby panduranghari » 23 Sep 2014 20:47

Unfortunately its the Business Standard people who quoted FOMC meeting. My discussion ensued with regards to what the FOMC meeting meant. What BS percieved is wrong.

Doves have to become hawks to preserve what they have. But thats not how central bankers think, this is my opinion. CB policy is quite difficult to predict and BS makes it really confusing by their theory.

Putting US situation aside, India needs to control inflation and fast. The 800 page document you linked earlier, clearly proves there is no sign of inflation abating in the short term.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 23 Sep 2014 21:02

The reduction in crude prices has had a significant effect on WPI, which, combined with food storage and distribution reforms, can also impact CPI in the near future. It would be useful to keep an eye on that data through end of the year. The effect of the weak monsoons on supplies doesn't seem to have been very significant yet.

So far, we've depended on monetary policy action regarding inflation. That's because the UPA was essentially absent from the post and did not do its legislative duties well. That's no longer the case, so monetary levers aren't the sole option to tackle inflation now.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 24 Sep 2014 04:24

Interesingly, FIIs are showing particular interest in rupee-denominated government securities. So much so, that the $20 billion cap on FII investment in it was reached:
As G-sec cap nears, FIIs increase corp bond buying
Foreign institutional investors (FIIs) have increased their purchase of corporate bonds as they near the limit they can go in government bonds.

The demand is for corporate bonds in the tenure of two to three years which are issued by public sector undertakings (PSUs) and have been given the highest rating by rating agencies.

Earlier this month, Reserve Bank of India deputy governor H R Khan had said there was no plan to raise the sectoral debt limits.

“The government bonds which are being bought are of longer tenure. The FIIs are putting money which will be beneficial for the country. But on the corporate bonds side, it is more of arbitrage funds. Till the time the view on the currency is positive, you might see this trend continuing,” said a senior treasury official of a foreign bank.

The latest data shows FIIs have bought corporate bonds worth Rs 12,252 crore in September so far, the highest in calendar year 2014. The FII investment cap in corporate debt is $51 billion.

According to data from the National Securities Depository Ltd, as on Monday, 47.17 per cent of the limit was exhausted. The government debt (auction) limit had been used to the tune of 98.58 per cent.

“The view on interest rates has been very positive among FIIs in the past few months. There is a very constructive view among FIIs that RBI's monetary policy stance would ultimately help in containing inflation in the long term,” said Manish Wadhawan, managing director at HSBC India. He said high levels of interest rates among emerging market peers had helped.

In July, RBI had raised the FIIs' sub-limit in government bonds by $5 bn, after the existing $20 bn limit was almost exhausted. However, the overall limit for FII investment in government bonds was kept unchanged at $30 bn.

Willingness of FIIs to buy so much g-secs and corporate bonds indicates street believes that:
* Interest rates will remain stable or fall
* Exchange rate will remain stable and not appreciate significantly

Based on recent analyst polls and FII actions, I think the rate hike process has ended and we'll see a slow rollback as the economic growth rate increases. The wild cards at this point are mostly external in the form of competitive devaluation efforts by other central banks.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 24 Sep 2014 11:16

CNN-IBN reporting HMT is being closed down.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 24 Sep 2014 20:13

The scare tactics of the beneficiaries of Coal scam could not save them in the court today.

http://www.financialexpress.com/news/fi ... kh/1292441
Firms which lost mines in coal block allocations case should have refusal right: PC Parakh
"The Supreme Court has cancelled all the blocks except four. I believe that the blocks cancelled will be re-allocated and if present holders are given the first right of refusal then there would not be much dislocation of work. If there is a wholesale change and new people come, it would have a very severe impact," the former Coal Secretary said.

...
The severity of the impact could be mitigated if the company holding mines prior to today's cancellation are given the option to match the price of the highest bidder in the auction and the mine should be alloted to the highest bidder only after his refusal, he said.

...
He also wondered why there was no "investigation into reasons as to why it took about eight or ten years to implement a decision which was taken in 2004," and said "this issue has not been investigated by CBI here at all and Supreme Court has not directed CBI to look into this aspect."

He asked why "no investigation has taken place" against those who failed to implement a transparent policy. "That is one big lacuna in the way investigation is going. People who made the mistake of following wrong policy and making wrong allocation, no action was taken against them."

...
In reply to a query he said there was difference in blocks allocated prior to 2004 and after that period.

"Prior to 2004, perhaps nobody at that point of time realised that things going wrong. In 2004 it was already assessed that system is not correct. The PM also agreed to that and he approved and proposed that you should go through bidding system and yet policy was not implemented for eight to ten years," Parakh said.

In reply to a query whether bidders would be there if the government goes for auctioning, he said there would be no dearth of bidders as there is a huge unfulfilled coal demand in the country, which many companies meet through exports at a cost much higher than what is possible to mine.

Also "coal mines that are operational or are yet to be operational are undoubtedly good mines", he said.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 24 Sep 2014 20:17

http://www.financialexpress.com/news/co ... es/1292472

Coal blocks cancellation: Banks with Rs 1L cr exposure sitting on mine of worries
The mass cancellation of coal blocks by the Supreme Court has sent banks in a jittery mode as they have extended over Rs 1 lakh crore loans to power plants that were fed by these mines.


http://economictimes.indiatimes.com/ind ... 353124.cms
Coal block allocation: Concerns of all stakeholders will be kept in mind, says official
"The concerns of all the stakeholders will be kept in mind," the official, who spoke on conditions of anonymity, said.

"The court has given six months for smooth transition. We will explore all options," he added.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 25 Sep 2014 04:06

Rajasthan continues to be at the forefront of labour law reform:
Union labour ministry okays 4 Rajasthan Bills
The Rajasthan Assembly on July 31 had passed changes to the Factories Act, Industrial Disputes Act, Apprenticeship Act and Contract Labour (Regulation and Abolition) Act. These are on the concurrent list.

"If the ministry has given its approval, there should be no problem in the Bills getting the Presidential assent," said Prabhat Chaturvedi, former labour secretary.

Clock turns back: Now, only Centre, its entities can mine
Along with annulling the mining rights of captive coal miners, the court has de-allocated mines given out to state government entities on the grounds that only the Centre and its entities can mine coal under the Coal Mining Nationalisation (CMN) Act. The legal framework for coal mining flows from the CMN Act and the Mines and Minerals (Development and Regulation) Act, 1957, which governs the mining sector in general.

While the CMN Act was enacted when the Union government took over mining operations from the private sector in the 1970s, the MMDR Act vests the authority of giving out mining rights with state governments.

"The current situation has arisen because of the conflicting provisions in the two laws," said an expert involved with changes in the mining laws.

GoI might be better off amending the Coal Mining Nationalisation Act.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Yagnasri » 25 Sep 2014 09:32

Just e-auction the coal mines at Delhi, fix eligibility criteria like 100 Cr paid up capital of some other S*** idea. Open auction with all the bids are made in open with every one knowing the price and bids which are being made. Yearly fixed royalty with Bank guarantee for the entire lease period.

Alternatively make holding company for each mine or a set of mines in a locality and sell 75% shares in a public issue. Freely permit mergers and acquisitions of coal mining companies GOI can have management and own 25% of the mines and will get the revenue accordingly. Shares in mines which are successful will be purchased at market price by people who wish to acquire them.

I am worried about the wait up to March 2015 as per the Supreme Court. I guess the e-auction should start now it self with a cut of date at 1.04.2015. On 01.04.2014 the sale of mines to the highest bidder can be announced. If forming of companies is the method that also can be done now and shares can be issued on 01.04.2015.

Approaching the SC for early closure of the issue for fresh bids etc may not be a easy option given the conduct of the SC in the recent past.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 25 Sep 2014 12:32

Suggestions like re-auctioning the mines ignores the basic substance of the SC decision - the coal mine nationalisation act makes authorizes only "the central government or its entities" to mine coal. This isn't a matter of irregularity in the auctioning process alone, but the central legality of private ownership of mining. It's a fairly damning act from the days of high socialism, that this government should junk, in order to free up coal production. Otherwise, CIL and associated PSUs are the only ones permitted to mine coal.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Yagnasri » 25 Sep 2014 15:20

Any act can be modified sir. I am sure any auction of blocks will be done only after that. SC is only showing that there is no basis in law for private parties to mine and the "sale" was arbitrary and not transparent.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby svinayak » 25 Sep 2014 18:05

http://www.makeinindia.com/

'Make in India' will spur positivity & inspire confidence among manufacturers. My thanks to all those who joined the programme today. Talked about the need to give more impetus to manufacturing & creating a development & growth oriented environment that draws industry.
Mantra of our Government is to win the trust of each & every Indian. An atmosphere of trust can change a lot of things! I invite you to visit the 'Make in India' website- http://www.makeinindia.com



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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 25 Sep 2014 21:49

Yagnasri wrote:Any act can be modified sir. I am sure any auction of blocks will be done only after that. SC is only showing that there is no basis in law for private parties to mine and the "sale" was arbitrary and not transparent.

That's exactly what I said. There's no point in discussing the re-bidding process now, which is why I responded to your earlier post. The hurdle in the way right now is the act forbidding private coal mining. Any form of transparent reallocation is fine once the law is fixed.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 26 Sep 2014 19:01

Meanwhile the immediate shocks continue. GOI needs to move quickly on this issue. Handing 52 million tonnes of coal production back to CIL is stupid. Back door nationalization.

http://www.thehindubusinessline.com/eco ... 449743.ece

Code: Select all

India's annual coal imports could jump by as much as a third to more than 200 million tonnes for the next few years as a result of a court ruling this week that will halt mining of the resource by most private companies from next year.

India’s shipments rose to 168.4 million tonnes last fiscal year, and the government estimated before the court ruling that the domestic shortage will range between 185 million and 265 million by 2016-17.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby hanumadu » 27 Sep 2014 04:54

If all things went well, we would be importing Oz coal in significant quantities by now. That way, we would have saved some digging in our own country while getting better quality coal from outside.


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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 28 Sep 2014 11:01

http://www.business-standard.com/articl ... 129_1.html

India needs over $250 bn investments in power sector
"Total investment of over $250 billion is required for development of the power system during the 12th plan," Integrated Research and Action for Development said in its report.

This will give an ample opportunity for investors, developers, power equipment manufacturers in developing power projects and associated transmission infrastructure, it said.

During the 12th plan period (2012-17), India plans to add 88,537 Mw capacity, out of which 69,280 MW will come from coal.

The government has planned additional renewable energy capacity addition of around 30,000 MW (5,000 MW wind, 10,000 MW solar and 2,100 small hydro).

Currently, India's installed generation capacity, from all sources of energy, is close to 2,50,000 MW.

"It is estimated that around 25,000 Mw capacity is being sub-optimally utilised because of inadequate availability of domestic coal," the report observed.

It said that the country is likely to suffer a coal shortfall of 200 million tonnes (MT) by the end of the 12th plan period.

"India is facing lot of difficulties in production of domestic coal due to various reasons. The scenario is likely to remain the same till the end of the 12th plan," it added.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby KrishG » 29 Sep 2014 08:38

Five Reasons India Shouldn't Worry About Its Trade Deficit With China

3. That said, economists agree that bilateral trade figures are pretty much irrelevant. The presence of global supply chains and regional hubs of production means that always-balanced bilateral trade is neither possible nor desirable.

This is especially true for China, as the last stop in the East Asian manufacturing supply chain. China is the place where high-tech components made in Korea, Japan, Taiwan, and elsewhere are assembled and shipped out for sale. As many economists have observed, trade figures record the total value of the exported good as a “Chinese export,” even though China is responsible for only a small proportion of the added value – only $6.50 of a $187 iPhone in 2010, for example.

The countries that buy these iPhones and other goods assembled in China run large bilateral trade deficits with China in part because China is just the last stop on the manufacturing train. Korea and Japan, meanwhile, run a trade surplus with China. The only way for India to circumvent this process would be to integrate itself in the East Asian supply chain.


To what extent is the above true? I always thought China was also into actual components manufacturing than just assembly.

If what is being told here is true, what amount of effort will it take to reroute this supply chain to India in the next 10-15 years?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 29 Sep 2014 13:46

FirstBiz ‏@FirstpostBiz 1m

Govt cancels SEZs of Adani, Hindalco and Essar: CNBC-TV18

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 29 Sep 2014 23:24

Why?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 29 Sep 2014 23:28

Government cancels SEZs of Hindalco, Essar, Adani
The government has cancelled approvals of nine special economic zones, including that of Hindalco Industries, Essar and Adani as no "satisfactory" progress was made to execute the projects.

The decision was taken in the meeting of the Board of Approval (BoA) headed by Commerce Secretary Rajeev Kher on September 18.

"The Board noted that the progress made by the following developers/co-developers is not satisfactory. The Board, after deliberations, decided to cancel the formal approval/ notification/co-developer status, as the case may be, in 9 cases," Commerce Ministry said.

It said the developers have to refund the duty benefits availed by them.

"The approval is subject to the Development Commissioner furnishing a certificate... that the developer has not availed any tax/duty benefits under SEZ Act/Rules or has refunded any such benefits availed by it and subject to the state government furnishing it's no objection certificate to the proposal," it added.

Hindalco Industries had proposed to set up an aluminium product SEZ in Orissa. The formal approval to the developer was granted in July 2007. The developer was granted extension from time to time and the last extension granted expired on December 31, 2013.

Essar Jamnagar SEZ Ltd, which had proposed to set up a multi-product zone in Gujarat, got formal approval in August 2006. It was expired in August 2009. The developer did not make any request for further extension of approval.

Similarly, Adani Townships & Real Estate Company Ltd had proposed an IT/ITeS zone in Gujarat. The BoA granted formal approval in June 2007, which expired in June 2010.

The developer had reported that they could not proceed with the SEZ project due to adverse demand scenario from IT sector and accordingly they are not interested in perusing the project.

Nothing suspicious here. This is just administrative housekeeping work that the UPA-2 should have taken care of 3 years ago.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28722 » 30 Sep 2014 03:38

Yet to see something major and original come out of the current government

Its either clearing UPA-2 backlog of 2013 or implement policies which they designed but could never implement due to the mess of coalition politics and babudom.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_22733 » 30 Sep 2014 03:44

^^^ Yep. Let's go back to the planning commission days and also have 5000 layers of environmental governance to stall any major employment generating project for the foreseeable future.

Totally. Modi should bring back Planning commission and resign right now.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28722 » 30 Sep 2014 03:51

KrishG wrote:Five Reasons India Shouldn't Worry About Its Trade Deficit With China

To what extent is the above true? I always thought China was also into actual components manufacturing than just assembly.

If what is being told here is true, what amount of effort will it take to reroute this supply chain to India in the next 10-15 years?


Interesting article. My guess is High-tech items are assembled in China with components coming externally whereas low techs are developed by reverse engineering the former and the entire supply chain for that exists in China.

The concluding part if spot on. Our major problem is our dependence on oil import for energy. Taping local gas sources for energy with parallel nuclear energy is the only way to break that deadlock. It also maintains our $$ reserves.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28722 » 30 Sep 2014 04:06

LokeshC wrote:^^^ Yep. Let's go back to the planning commission days and also have 5000 layers of environmental governance to stall any major employment generating project for the foreseeable future.

Totally. Modi should bring back Planning commission and resign right now.


India's problem has been coalition politics not Planning commissions or Environmental clearance. The success stories of Gujarat, TN, Bihar are due to single party governments. Just check Maharashtra, inspite of being way ahead of the curve till the 90s and having the economic capital as its capital the last 2 decades of coalition rule have made it a mess.

Planning Commissions exceeded their target in all their 5 year plans except between 1960-1975 due to consecutive wars. The 1980 Planning commission was the first time when economic liberalization was proposed. Our problem post 1985 has been implementation and not lack of planning. That is primarily due to a lack of strong leadership at central level. Coalition mess at center and state for last two decades have made it worse.
Environmental governance also ensures that industries don't destroy environment in name of job creation. We are seeing effects of climate change globally

No tool is bad, it needs to be used properly. Only time will tell whether these decisions are good in the long run.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_22733 » 30 Sep 2014 04:11

Sure, I can exceed any target if I set it too low :). If I define Mars to be 2 feet high from earth, I have been to mars and back many many times over.

Even if the target was high, I am surprised that with all the planning and everything we were reduced to a beggar with nothing in our treasury in 1991. Was that also planned?

I am sure any sane person who lived through the 70s and 80s will find it hard to call those times good. Sure we were left in deep poverty by the colonialists. But we had enough time to "plan" and recover by the 80s, yet we were close to bankruptcy at the end of it.

After a colossal 60 year rot infested with criminal mismanagement by using colonial era (mis)administration, you are expecting an instant change in 100 odd days just because there is a strong leader in the center. I find it rather hard to understand where you are coming from.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28722 » 30 Sep 2014 04:20

I am not expecting any change in 100 days. I am not pro BJP but I totally agree that after the rot of UPA, anyone needs to give 5-10 years to a single party government before passing judgement.

And of course our targets were low, its not like the Brits left us with overflowing coffers. Plus we went through 4 wars in 40 years and had the most developed country as consistently hostile to us. I doubt any 'developed' country had that problem. Its only post the IT revolution that we have been on upswing. Unfortunately that happened when central leadership lacked decisiveness.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_22733 » 30 Sep 2014 04:22

So if demolition of planning commission, online process of environmental clearances, major structural changes in the ministries, complete 180 degree change in foreign policy is not "anything substantial", what in your opinion is substantial?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28722 » 30 Sep 2014 06:06

All three are essentially rollbacks w.r.t UPA / previous governance model.
Substantial would be actually implementing a governance/development related item from the 2014 election manifesto. Its a pretty long list. I am assuming its not a 5 year target list as that would be almost impossible.
But I would expect them to start moving towards implementing minor items within 6 months with the target of finishing the implementation within first 2 years.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_22733 » 30 Sep 2014 06:22

Here is the manifesto:

http://bjpelectionmanifesto.com/pdf/manifesto2014.pdf

I can see a lot of it already being implemented or on the cards.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby deejay » 30 Sep 2014 14:37

saurabh.mhapsekar wrote:
India's problem has been coalition politics not Planning commissions or Environmental clearance. The success stories of Gujarat, TN, Bihar are due to single party governments. Just check Maharashtra, inspite of being way ahead of the curve till the 90s and having the economic capital as its capital the last 2 decades of coalition rule have made it a mess.



Just a correction - NiKu government in Bihar when it did succeed was in an active coalition with BJP. Once the alliance broke down the growth has kind off taken a back seat in priorities.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Pratyush » 30 Sep 2014 14:51

The reason why Bihar is suffering, is because NiKu was reported to have said that we provided electricity to the people to run TV. They fell for the propaganda of the BJP. Or something to that effect, post GE 2014, results were out and the scale of the debacle became clear.

From that moment, it was clear, as to what the economic trajectory of Bihar is going to be. The only way it can be changed is to remove the current setup and replace it with a forward looking govt. Post 2015 election.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 01 Oct 2014 06:58

Core sector output again growing strongly:
August core sector output rises 5.8%
Driven by good expansion in steel, coal, cement and electricity generation, the output of eight crucial core sector industries rose 5.8 per cent in August from 2.7 per cent in July, official data showed on Tuesday.

The eight industries had risen 4.7 per cent in August, 2013-14.

For the first five months of 2014-15, the eight grew 4.4 per cent, marginally higher than the 4.2 per cent in the corresponding period of the earlier year.

This might boost industrial growth data for August, which had dipped to 0.5 per cent in July. The eight industries constitute 38 per cent of the Index of Industrial Production (IIP).

Earlier, there was apprehension over IIP growth in August after a mere 2.35 per cent rise in merchandise export for the month. The August core sector data had allayed this fear about industrial growth in the month, said ICRA senior economist Aditi Nayar.

Crude oil, natural gas and refinery products saw production contracting in August. In July, five industries had seen a decline. Steel, which saw production falling 3.4 per cent in July, rose 9.1 per cent in August. Electricity generation rose 12.6 per cent in August after doing so by 11.2 per cent in July. In the first five months of the current financial year, electricity generation has grown by double digits in four months. The exception was May, when it expanded 6.3 per cent.

Production of coal, a vital raw material for electricity generation, increased 13.4 per cent in August, more than double the 6.2 per cent in July and the highest growth in it during the first five months of 2014-15. However, the recent Supreme Court decision on coal block allotments, cancelling all but four of the 218 made since 1990, makes it unclear if this can be sustained, said Nayar.

Cement posted 10.3 per cent growth in August, though lower than the 16.5 per cent in May. The fact that August also showed a monsoon revival showed that construction activity, either for infrastructure or for personal dwellings, is on the upswing.

RBI keeps repo rate unchanged; market sees prolonged pause; banks may trim deposit rates
Reserve Bank of India Governor Raghuram Rajan on Tuesday underscored his reputation as an ‘inflation hawk’ by keeping the benchmark lending rate unchanged in a fourth straight monetary policy review.

Most market participants said they expected a “prolonged pause” on rates, as the rate of retail inflation was unlikely to fall to six per cent before January 2016 — the target set by the central bank. “We expect interest rates to remain on hold until the end of 2015. The RBI’s framework puts a higher weight on policy stability and positive real rates,” Nomura said.

Samiran Chakraborty, managing director & regional head of research (South Asia Global Research) at Standard Chartered Bank, said he expected the RBI to be on an “extended pause” (no rate cut in 2015) as the disinflation process took shape and the government took necessary steps to improve food supply.

In a move that was widely expected, the Governor maintained the repurchase rate at eight per cent and said while the near-term retail inflation outlook was balanced, “with a slant to the downside”, risks to the January 2016 target of six per cent were “still to the upside, though somewhat lower than in the previous policy statement”.

Speaking to the media later, Rajan said: “As of now, we are reasonably set to reach that target but a lot can happen in the world. Oil prices, which are low now, could go up or could become even lower. Every other factor is subject to some uncertainty. The policy will be contingent on data.”

Coal output bottlenecks hurt rail traffic growth:
Rail freight traffic rise lags expectation
In the first five months of this financial year, Indian Railways (IR) carried 446 million tonnes (mt) of goods across its network, 4.6 per cent more than the 426 mt carried during the same period last year. Freight revenue earned was Rs 40,358 crore, a little over a tenth higher than last year's collection.

However, according to the official position paper and experts, the growth elasticity for railway freight movement in relation to overall change in gross domestic product (GDP) is 1.25. Meaning, IR freight volume should grow by 1.25 per cent for every one per cent growth in GDP. Railway volumes should, therefore, have grown 6.9 per cent so far this financial year, not only by 4.6 per cent.

Senior railway officials say the core sectors could take a while to pick up. “The services sector can hope for nearly recovery but our traffic reflects the core sectors, directly linked to manufacturing and production. It will take time before these sectors pick up. At least for this financial year, we are not expecting any major revival,” said a senior IR official, on condition of anonymity.

A rise in freight rates happened in June, by 6.5 per cent under the Fuel Adjustment Component (FAC). The next FAC rise will happen in December. Coal, which accounts for about 40 per cent of the overall traffic, grew at a mere two per cent, compared to about six per cent growth in the same period last year. In the current financial year, coal carried for washeries showed a sharp decline of about 51 per cent and that for public use declined nine per cent. It was only coal carried for steel plants and thermal power houses that saw a rise, of 4.75 per cent and 6.43 per cent, respectively.

Similarly, owing to the ban on mining in several states the volume of iron ore carried for export had come down by 35 per cent. It was a similar trend last year, when the volume of ore for export dropped 40 per cent. Domestic users had pushed the overall share of iron ore in rail traffic last year with a 20 per cent annual rise but this has been sluggish since. Ore carried for steel plants and domestic users saw a rise in volume by a mere 1.7 per cent and 0.2 per cent, respectively.


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