Indian Economy News & Discussion - Nov 27 2017

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Gus
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Gus » 27 Sep 2018 01:04

Suraj wrote:Over those four years, the norms for declaring stressed assets and NPAs has evolved. Where one could previously kick the can down the road, they can't. In other words, it's not a case of a problem getting worse, as much as the scope of the problem being properly acknowledged. What's happening now is the right thing to do.

There are quite a few article references on this topic in this thread, but I'm short on time to look for them. There are RBI circulars and stories from 2015-16 on this matter , and the subsequent rapid increase in declared quarterly bank losses . Banks now have an incentive to declare the losses because they cannot pursue willful defaulter actions under the Insolvency and Bankruptcy Code without actually declaring their losses properly.


Yes..and ironically / predictably ..the opposition is going AHA! SEE !..Modi has increased NPA..the mudi sud rejine.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 27 Sep 2018 06:05

Kharif grain production pegged at a record 141.59 million tonnes in 2018-19
India's kharif grain production in the 2018-19 crop year, which started in June, is projected to touch an all-time high of 141.59 million tonnes (mt), up 0.6 per cent more than last year, despite an almost 10 per cent shortfall in monsoon as the rains were well-distributed and timely.

According to the first advanced estimate of 2018-19 kharif crops, rice production is estimated to be 99.24 mt, which is 1.79 per cent more than the kharif production of 2017-18.

The 2017-18 production was as per the fourth advanced estimate.

Image
Cabinet clears proposal to convert GSTN into government-owned company
The Union Cabinet Wednesday cleared a proposal to convert GST Network (GSTN), which provides IT infrastructure for the new indirect tax regime, into a 100 per cent government-owned company, Finance Minister Arun Jaitley said.

Briefing reporters about the decisions taken in the Cabinet meeting, the finance minister said after the restructuring of GSTN, ownership will be equally divided between the Centre and states. Shares for each state will be worked on a pro-rata basis.


Currently, the Centre and states together hold 49 per cent stake in the GST Network. The remaining 51 per cent is held by five private financial institutions -- HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.

Jaitley said the policy decision to change the ownership structure of the GSTN was taken earlier and was also approved by the GST Council.

GSTN Board will initiate the process for acquisition of equity held by the private companies.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 27 Sep 2018 09:57

yensoy wrote:
JayS wrote:Also in Q1 of this yr the recovery has seen 49% increase Y-o-Y. So the process is picking up speed. Many big accounts will be closed in coming 1-2yrs.


The main problem with tightening the screw on NPAs is the threat of chain defaults which could take down even nominally healthy accounts with it. So while the popular voice would clamour for shutting down non-performing crony corporations, one needs to exercise some caution in shutting them down.


Perhaps you misunderstood. Closing down a loan account doesnt mean closing down the business. Its about shunning crony businessmen, not the businesses themselves. If the business is losing money there is no point in keeping it running the same way anyhow. By selling it, new owner can bring in fresh capital and do things differently and make it profitable once more. The banks get part of their dues from the auction. The business runs better than before. Take a case of Bhushan steel for example.

RBI has given norms to declare NPAs. The banks are not going to declare loan accounts as NPAs thoughtlessly. All that we see happening is acknowledment of existing ailment. And there is no big threat of shutting down of industries en masse which would have a cascading effect because industries are not gonna be shut down, but sold to new owner. If anything, that will only improve things. As for the companies like Kingfisher airlines, which became unviable, they better be shut down rather than sinking more money in it and increasing NPAs further.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 27 Sep 2018 11:39

Suraj wrote:
hanumadu wrote:Thanks A_Gupta. How can a quarter of industry be stressed after 4 years of 7+ growth? And GNPAs are rising at a faster rate in the last two quarters and perhaps into the next year too.

Telecom Industry is not included in the last graph. Perhaps its under Engineering? It's one more industry on the brink, but at least the users are getting much cheaper call and data rates.

At this rate, I don't see profitability in the industry for close to another decade. Banks will continue to face losses for many years to come.

Over those four years, the norms for declaring stressed assets and NPAs has evolved. Where one could previously kick the can down the road, they can't. In other words, it's not a case of a problem getting worse, as much as the scope of the problem being properly acknowledged. What's happening now is the right thing to do.

There are quite a few article references on this topic in this thread, but I'm short on time to look for them. There are RBI circulars and stories from 2015-16 on this matter , and the subsequent rapid increase in declared quarterly bank losses . Banks now have an incentive to declare the losses because they cannot pursue willful defaulter actions under the Insolvency and Bankruptcy Code without actually declaring their losses properly.


According to Raghuram Rajan, the process of declaring NPAs and cleaning the books should have been over by March 2017. But we are still seeing an increase in the NPAs as % of total advances.

https://indianexpress.com/article/business/business-others/we-hope-to-clean-up-banks-balance-sheets-by-march-2017-rajan/

The NPAs were estimated to top at 10%. Now it is approaching 12% overall and 16% for PSBs (A_Gupta's graph above). They are expected to continue further into next year. Some (or even a large part) of it must be telecom.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 27 Sep 2018 13:25

March 2017 ?? In a statement in Dec 2015 ? The total stressed assets as estimated at the start of 2016 was $120 billion or Rs.8 lakh crore. One has to be in fantasy land to assume that much stressed assets could be declared and cleaned up with 15 months.

It's worth pointing out that RBI's own Dec 2015 Financial Stability Report makes no such rosy prediction:
2.16 The macro stress test for credit risk suggests that under the baseline scenario, the GNPA ratio may rise to 5.4 per cent by September 2016 from 5.1 per cent in September 2015, but could subsequently improve to 5.2 per cent by March 2017. However, if the macroeconomic conditions deteriorate, the GNPA ratio may increase further, and it could rise to around 6.9 per cent by March 2017 under a severe stress scenario.


The progressive growth in gross NPAs is seen in this document.
https://infogram.com/bank-gross-npas-1h8j4x73gkxp6mv

The Insolvency and Bankuptcy Code wasn't even passed until May 2016, shortly before Rajan demitted office.

RBI's latest summary of the situation is described in its June 2018 Financial Stability Report . It estimates gross NPAs rising to Rs.11 lakh crore by end of this fiscal, or about 12% gross NPA ratio.

The IBC is certainly playing a part in pushing more debt to be declared NPAs. Without such a declaration, it's not possible to initiate the IBC proceedings. Further, the IBC marks a radical departure from debtor-in-possession norms, to creditor-in-control. In other words, until IBC, when a company's loans became NPA, the company owners still retained control, and continued to work out an arrangement with the banks. The banks themselves, lacking control over the process, often had to extend terms suiting the company owners.

IBC changes things dramatically - rather than the company owners maintaining control and dictating terms, the IBC insolvency professionals take over for the creditors, and specify a time-bound process of handling the restructuring efforts. EY's IBC document is a worthwhile read. Another document from EY from late 2017 with an IBC status update . And a August 2018 IBC status update from PWC.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 28 Sep 2018 16:33

https://wef.ch/2QWiHnZ
Accelerating Sustainable Production

Learn about the opportunities that Fourth Industrial Revolution technologies could bring to the Indian state of Andhra Pradesh and its resident companies to enhance competitiveness in the automotive and electronics industries while creating positive social and environmental impact, resulting in a $5 billion annual opportunity by 2022.

The key findings, case studies and recommendations are intended to inspire the public sector and local and international companies in the state to seize this opportunity. Leaders at the national and global level are encouraged to become aware of this new approach to technology, competitiveness and sustainability, and to support and magnify the effect of local action to trigger changes in global systems.

This paper is intended to foster public-private collaboration that can accelerate the transformation towards more competitive and sustainable production systems.


http://www3.weforum.org/docs/WEF_White_ ... t_2018.pdf

Any thoughts?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 28 Sep 2018 19:05

India's IMPS Payment service rated best.

https://swarajyamag.com/insta/indias-im ... ong-others

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 28 Sep 2018 21:23

https://www.livemint.com/Money/cK8atrCc ... crore.html
Centre cuts gross borrowing for second half by ₹70,000 crore
Economic affairs secretary Subhash Chandra Garg says the government is confident of meeting the fiscal deficit target of 3.3% of GDP

The government on Friday decided to cut gross borrowing by ₹70,000 crore to ₹2.47 trillion in the October-March period of the fiscal year.

Briefing reporters, economic affairs secretary Subhash Chandra Garg said the government was confident of meeting the fiscal deficit target of 3.3% of GDP as revenue collection and expenditure had been in line with budget estimates.

The government chose to borrow ₹2.88 trillion, or 48% of its annual target, in the first half of this fiscal year, departing from its usual practice of frontloading borrowing, amid rising yields and diminishing demand for government securities.


Garg said small savings schemes would provide an alternative which should help the government avail a higher net amount from the National Small Savings Fund (NSSF), compared to its target of ₹75,000 crore in 2018-19.

After keeping them unchanged for two quarters, the finance ministry on Thursday hiked interest rates on small savings schemes, which are linked to the yields for government of India securities, by 30-40 basis points for the quarter starting October. This is largely in line with the uptrend displayed by gilt yields of various maturities during the trailing three months.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 30 Sep 2018 19:56

I am not sure if this is good. We want them to manufacture components in India.

https://economictimes.indiatimes.com/te ... 010831.cms

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby jpremnath » 30 Sep 2018 20:19

I guess its like a chicken and egg situation. Manufacturing of those components here wont happen unless each of those manufacturers find critical volume for final assembly here. This is pretty much how the Chini ecosystem was also built..the initial components came from Taiwan, Korea and Japan for the local assembly...and once the assembly operations shot up, the components industry followed...I am sure the whole policy tweak came after considerable internal discussions and industry meetings..

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 30 Sep 2018 21:11

Hope so.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 30 Sep 2018 21:55

Generally the most effective way is to attract the assembly line with nicely timed set of honeymoon terms that have a clear sunset clause, and subsequently attract the suppliers in, as the sunset approaches.

Big win for government; FY19 borrowing estimates cut by whopping Rs 70,000 crore beating market expectations
The Narendra Modi government has made a winning statement today by announcing borrowing estimates cut by whopping Rs 70,000 crore beating the market estimates, which is likely to give a positive surprise amid the challenges.

Addressing a press conference on Friday, DEA Secretary Subhash Chandra Garg has said that the government will borrow Rs 2.47 lakh crore via bonds in the second half of the financial year, cutting the market borrowing by Rs 70,000 crore. The market was anticipating a borrowing of Rs 2.68 lakh crore.

Economists have welcomed the move, saying that it gives a positive signal to the market that the chances of fiscal deficit by the government are less. The government has fixed the fiscal deficit target of 3.3% for FY19.

This is a west dominated play, but as one of the top 6 services exporters, we're strong enough to benefit significantly too:
IMF, WB and WTO seek removal of barriers to service trade
The International Monetary Fund, the World Bank and the World Trade Organization Sunday collectively sought liberalisation of the global service sector, asserting that the barriers to these services trade currently is roughly as high as those to trade in goods about a half century ago.

The report “Reinvigorating Trade and Inclusive Growth” brought out collectively by the IMF, the World Bank and the WTO, comes at a time when the Trump administration has taken a tough stand on the H-1B visas issue, a move which has badly hit not only the technology professionals and highly skilled individuals from India, but also pioneering Indian IT companies.

Services comprise some two-thirds of global GDP and employment. Yet the limited opening of service sectors to foreign competition impedes trade and productivity growth throughout the sector and the broader economy, the report said.

India’s story compelling evidence that openness in services contributes to growth, say WTO, WB, IMF in joint report
India’s economic reforms and growth story offer compelling evidence that openness in services contributes to long run growth performance, the IMF, World Bank and WTO said in a joint report Sunday. India’s reforms in the 1990s brought more openness, better regulation and greater investment, allowing Indian manufacturing firms to source services from a range of domestic and foreign providers operating in a more competitive environment, the report said.

The report — ‘Reinvigorating Trade and Inclusive Growth’ — was released by the International Monetary Fund (IMF), World Bank and World Trade Organization. Manufacturers’ access to better, more reliable, and more diverse business services enhanced firms’ ability to invest in new opportunities and technologies, to concentrate production in fewer locations, to efficiently manage inventories, and to coordinate decisions with suppliers and customers, it said.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prasad » 01 Oct 2018 07:20

The exemption appears to be of manufacturing equipment and not components themselves. Might make it cheaper to manufacture components here as we are trying to pull in more of these guys to make here. We aren't at China's level yet to start making those tools too. So good move imo.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 01 Oct 2018 17:15

India September factory growth picks up pace
Nikkei Manufacturing Purchasing Managers’ Index rose to 52.2 in September from 51.7 in August
https://www.livemint.com/Politics/sTb12 ... -pace.html

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 01 Oct 2018 17:39

Fearing Tough Action Under Modi Government’s Insolvency Code, Companies Pay Up Rs 1.1 Lakh Crore
https://swarajyamag.com/insta/fearing-t ... lakh-crore

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Zynda » 01 Oct 2018 21:35

Not sure if this is the right thread, but found this interesting document about current employment condition in India.

https://cse.azimpremjiuniversity.edu.in ... a_2018.pdf

Key take away:
1. Growth Creates fewer Jobs than it used to: A 10% increase in GDP now results in less than 1% increase in employment

2. Wages are rising but they continue to be well below the 7th Central Pay Commission Minimum: Adjusted for Inflation,wage rates have grown in most sectors at 3% per annum or more.

3. There is a slowdown in the replacement of workers by machines but work is becoming more precarious in the organised manf. sector

4. Productivity has increasingly diverged from Wages: Labour Productivity in organised manufacturing increased by 6 times over the past 3 decades but wages increased by only 1.5 times

5. Surplus Labour Industries still dominate as new service economy grows slowly

6. Gender disparities are still high but are reducing in some cases

7. Women's participation in the paid workforce is low but some states perform much better than other

8. Caste disparities remain large but public policy is effective in reducing them

9. Crafts remain big employers and are central to the rural non-farm economy

10. Towards a 'National Employment Policy'.

We need to create new industries in volumes to provide capable employment to growing masses going forward. I think current demographics is like 50%+ of India compromises of youths. With Western countries gradually closing doors down on immigration, employment will be quite a challenge.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Philip » 02 Oct 2018 13:52

Il & FS collapse is yet another financial scandal after the banks' loan scam involving Nirav Modi and co. How did this financial liability over $5B happen ? That too after the mega bank loan scams whose ultimate cost to the nation and taxpayer is still a mystery as to how many billions have been swindled.

Surely the Fin.Min., RBI and Fin.Min. babus must be held responsible.Getting LIC and and a huge inflow of cash to save the IL&FS ultimately hits the citizen's pocket.We suckers have to pay for the incompetence of the govt and its financial " wizards"!
Last edited by JayS on 02 Oct 2018 19:02, edited 1 time in total.
Reason: Edited. Baseless allegations against GOI without an iota of evidence and clearly motivated from personal political biases are not acceptable on this forum. If you want to do so, you are free to join political party and say any random things but not here.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 02 Oct 2018 14:18

It is a private company. In a market economy companies collapse for whatever reasons. Get used to it. Also Arun Jaitely has denied govt bailing out ILFS. Check his tweets. It is a political propaganda by you know who. Why should govt bail out when the insolvency code is there. Below is some of what is happening.

https://economictimes.indiatimes.com/in ... 036382.cms

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Austin » 02 Oct 2018 14:51

India Dodges a Lehman Moment. That Was the Easy Part,Now a government-directed IL&FS board must clean up the shadow lender’s mess

https://www.bloomberg.com/view/articles ... -easy-part

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 02 Oct 2018 19:04

Philip wrote:Il & FS collapse is yet another financial scandal after the banks' loan scam involving Nirav Modi and co. How did this financial liability over $5B happen ? That too after the mega bank loan scams whose ultimate cost to the nation and taxpayer is still a mystery as to how many billions have been swindled.

Surely the Fin.Min., RBI and Fin.Min. babus must be held responsible.Getting LIC and and a huge inflow of cash to save the IL&FS ultimately hits the citizen's pocket.We suckers have to pay for the incompetence of the govt and its financial " wizards"!


There is never going to be an utopia where there will never be losses on loaned amounts. So chill. There is still hope that the company will be saved without GOI bailing it out.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mort Walker » 02 Oct 2018 19:30

^^^These losses may weigh in on Rupee exchange rates. We are now $1 = Rs. 73. At some point dollar deposits in Indian banks could be pulled out causing further devaluation the Rupee.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JTull » 02 Oct 2018 19:39

This looks like a serious case of mismanagement rather than outright fraud. Long term assets were being financed by short term liabilities. This is a classic yield curve play which has high probability of going wrong towards the tail-end of the economic cycle. India is right in the middle of big growth so this wasn't the case. Based on the news filtering out, there appears to be non-existent Asset Liability Management. Since the CFO and other Treasury roles in IL&FS had a fiduciary responsibility, Authorities should start by restricting the movements of personnel in those positions. These would be a flight risk.

People who are blaming collapse of Piramal deal proposed 3 years ago, should look at how much the parent and the subsidiaries continued to lend and borrow in the last 3 years. Any bad manager would look to deflect attention from himself.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 02 Oct 2018 20:36

Mort, dollar is rising against rupee for different reasons. Rate hikes in US leading to a pull out and rising oil prices anticipated to increase the deficit.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 02 Oct 2018 21:03

Mort Walker wrote:^^^These losses may weigh in on Rupee exchange rates. We are now $1 = Rs. 73. At some point dollar deposits in Indian banks could be pulled out causing further devaluation the Rupee.


USD exodus is the least of our worries currently. Good news is GOI has cut down borrowing significantly and still is confident of meeting fiscal deficit target.

I expect INR may settle somewhere 75/USD eventually. We are going to see one more rate hike soon by RBI, I think.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 02 Oct 2018 22:23

RBI's latest June 2018 Financial Stability Report (Page 47) has a chapter on contagion analysis in the financial sector. This is pertinent because the push to declare NPAs has the inherent risk of sparking a contagion of failures in the financial system if not handled properly. IL&FS arguably has been a long festering problem, but a macro environment of greater willingness to acknowledge NPAs, combined with higher cost of capital in a sector like infrastructure has the risk of triggering events like what happened at IL&FS. It's necessary, but needs careful management.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 02 Oct 2018 22:38

Swarajyamag has a good article focusing on the pressure coal imports are placing on the trade deficit, recent history and the prognosis:
India’s Coal Imports Are An Economic Reality, And Why Coal Sector Efficiency Gains Since 2014 Should Be Acknowledged
Between 2008-09 and 2013-14, CIL output went from 400 MT to about 460 MT, a 15 per cent rise over five years. After 2014, when Piyush Goyal took over the Coal Ministry, the CIL has witnessed faster growth, going from 460 MT to about 570 MT in 2017-18, a 24 per cent rise over four years.

The raw coal production across CIL, SCCL, and other sources has increased from 566 MT in 2013-14 to 676 MT in 2017-18, an absolute increase of 110 MT. The absolute increase in coal production in the previous four years across all sources was 34 MT.

Unfortunately, this production growth has been insufficient to service the needs of a growing economy. There have been three main challenges.

Firstly, CIL has to service existing coal linkages for power plants. As the need for coal for captive power goes up, it has not been able to fulfill all demand. The captive power plants are used by commodities and manufacturing industry; with about 30 gigawatts (GW) of coal-fired power plants in use.

Secondly, CIL off-take has been under target in 2017-18, where the off-take stood at 580 MTs against a target of 600 MTs. While Indian Railways took several measures to improve the off-take, there was still a 3 per cent shortfall in the last financial year. With several new railway lines being commissioned in Chhattisgarh and Jharkhand over the last couple of months, the capacity of Indian Railways to transport more coal will gradually improve.

Thirdly, the private coal mining hasn’t taken off yet. In late 2014, the Supreme Court cancelled the licences of coal mines assigned during the previous Congress regime. After this, the Modi government conducted transparent coal auctions, where 83 mines have been allocated until August 2018. However, not all mines are operational yet. There has been delay due to litigation as well as due to issues in obtaining necessary clearances for mine operations. In fact, mines allocated even for National Thermal Power Corporation (NTPC) and some of the state utilities are under litigation. Finally, 50 of these 83 mines are supposed to be operational only between 2018-19 and 2022-23, with pre-work on site and production readiness taking its own time.

If imports grew at the same pace as they did from 2009-10 to 2013-14, India would have imported 205 MTs of coal in 2014-15, 252 MTs in 2015-16, 309 MTs in 2016-17 and 380 MTs in 2017-18. Instead the actual imports were 218, 204, 191 and 208 MTs. In fact, the 2017-18 import volume is under the 2014-15 volume.

The temporary spike has been caused due to the abovementioned factors as well as due to spike in thermal power requirements. With the 2018 monsoon season ending at 9 per cent deficit, higher agricultural power use has been reported from Maharashtra, Karnataka and Telangana, which has resulted in higher spot power prices as well as more thermal power generation.

Image
Red: extrapolated trendline
Blue: actual coal imports
The import cost is entirely due to the rise in commodity price and not volume growth.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 02 Oct 2018 23:12

Suraj wrote:Swarajyamag has a good article focusing on the pressure coal imports are placing on the trade deficit, recent history and the prognosis:
India’s Coal Imports Are An Economic Reality, And Why Coal Sector Efficiency Gains Since 2014 Should Be Acknowledged
.


Quite right. I used to follow coal related news back in 2012-14. CIL was in a situation where they basically had given up on any hope of ever reaching even 500Mil Ton figure. When new govt came they set an audacious target of 1000M T in 5yrs to come I think. Not all has gone as per plan, but still quite good achievements on this front. Perhaps the reduced commodity prices in international market reduced the urgency of increase in Coal production on war footing. I think it also helped that Piyush Goyal held both Power and Coal ministries simultaneously. He worked to synergise the power and coal mining sectors.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 03 Oct 2018 00:03

I don't think there was any lack of urgency. Coal fields don't come up overnight. As the article indicates, most of the blocks from the coal auction are in prep, or clearing litigation. Coal unfortunately has many ministry moving parts - the coal, power, rail, environment, law ministry, finance, commerce ministries PLUS legislative effort to begin with...

1000MT is a stretch goal. Getting from 400MT to 700MT by current fiscal is a pretty big deal considering the amount of effort it took, and there's quite a bit of additional capacity coming onstream next 3-5 years.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 03 Oct 2018 05:32

Will availability of domestic coal make any of the NPA power plants viable?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Philip » 03 Oct 2018 08:10

Mod Note: Deleted. Poster is advised not to post on this thread, because of a record of repeated thread derailment with sensationalist political diatribes.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby pankajs » 03 Oct 2018 11:29

^^
The post/report is political. How does one reach such a conclusion? Just check if the quote offered on the forum or the report is "selective".

What about this in instance? Lets evaluate the post and the report on "selectivity".

http://www.newindianexpress.com/busines ... 80409.html
Major stakeholders of IL&FS slept on crisis for four years: Former official
There was a mismatch between the tenure of assets and liabilities (in IL&FS) and has been discussed by the board for the last 3-4 years. All (shareholders) were aware,” Bhargava told TNIE.

He, however, dismissed the notion that no efforts were undertaken. “An IPO was planned twice, but people didn’t want shares of an infrastructure company. A rights issue didn’t happen because shareholders weren’t willing to subscribe. The proposal to bring an outside investor didn’t go through as one of the shareholders rejected it,” he recalled.
See what the same person is saying, which is in different from a rephrased "No one raise a red flag and carried on as usual".

Notice how this former official, presumably Bhargava the only one quoted, is definitely NOT saying what the headline is pushing. It is all there in the news item, even while the item itself spins it differently.
Last edited by pankajs on 03 Oct 2018 19:24, edited 1 time in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Neshant » 03 Oct 2018 19:19

Mod Note: Deleted . Off topic .

Atish
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Atish » 03 Oct 2018 20:30

Lehmann was bankrupt many times over. ILFS is insolvent but has net asset value. Govt can take over provide liquidity and get out or dissolve at a profit in future.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Austin » 03 Oct 2018 21:39

Opinion | A $75 billion question for Indian policy makers

https://www.livemint.com/Opinion/eFmtzl ... akers.html

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 03 Oct 2018 23:17

Austin wrote:Opinion | A $75 billion question for Indian policy makers

https://www.livemint.com/Opinion/eFmtzl ... akers.html


from the article

The import tariffs are more an attempt to switch demand from the foreign market to the domestic market. What is needed right now is not such demand switching but demand compression to bring down the current account deficit.


I wonder why he says that. Does not provide reasoning.

In my view demand switching -- what i would call encouraging domestic production rather -- is exactly what is needed. Partly being done via tariffs by govt., partly the market automatically doing it via rupee slide.

Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 03 Oct 2018 23:50

"Demand compression" is such a fancy term for "stop buying stuff" . I agree that switching to domestic sources is a far more useful idea - it's not like the economy is overheating, and trying to bridge the demand-supply gap due to a rise in the import bill by reducing demand, sounds just very wrong.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Uttam » 04 Oct 2018 00:37

The balance of payment problem as well as INR depreciation will get worse if the government tries to manage Petrol prices by changing its taxation. Since we import 81% of our crude oil need, a reduction in it's price will only lead to more demand for it. This will further deteriorate BOP and depress INR. All the solution that come to mind are long term in nature. Energy source substitution is the only way forward, but it's impact will be seen over a 10 year period. So for the time being, we are going to try patchwork and that includes NRI deposits, increasing external commercial borrowing, tariffs, export promotion, etc.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 04 Oct 2018 01:20

Yes, there are no short term fixes to the problem. I'd like to see GoI use the tax gains into encouraging investment in EV and battery production.

RBI swings into action again; allows oil firms to borrow long-term working capital from overseas
The Reserve Bank of India (RBI) Wednesday relaxed policy on borrowing from overseas to allow state-owned fuel retailers to raise up to USD 10 billion external debt for working capital needs. Till now oil marketing companies were not allowed to raise external commercial borrowing (ECB) for working capital needs on a long-term basis. They could raise a maximum of one-year overseas loan by way of buyers credit, repay it within 12 months and raise it again thereafter.

Now, the RBI has allowed them to raise ECB of minimum maturity of 3 or 5 years. The move comes at a time when international oil prices have hit four-year high of near USD 85 per barrel and the rupee plummeted to close at an all-time low of Rs 73.34 to a US dollar.

Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) will be allowed to raise overseas funds with a minimum average maturity period of 3 or 5 years under the automatic route.

Supreme Court upholds GST (Compensation to States) Act as constitutionally valid
The Supreme Court Wednesday upheld the constitutional validity of Goods and Services Tax (Compensation to States) Act saying it was not beyond the legislative competence of the Parliament. The top court said the Compensation to States Act, enacted by the Parliament in 2017, is not a “colourable legislation”. A bench of Justices A K Sikri and Ashok Bhushan said the Act does not violate the Constitution (One hundred and first amendment) Act, 2016 nor is against the objective of Constitution (One Hundred and First Amendment) Act, 2016.

It held that the levy of ‘Compensation to States’ Cess is an increment to goods and services tax which is permissible under the law. The bench while dealing with constitutional validity of the (Compensation to States) Act said that the expression ‘cess’ means a tax levied for some special purpose, which may be levied as an increment to an existing tax.

“The Scheme of Compensation to States Act, 2017 as noticed indicate that the cess is with respect to goods and services tax. There are more than one reason to uphold the legislative competence of Parliament to enact the Compensation to States Act, 2017,” it said. The bench said that Article 248 read with Articles 246 and 246A clearly indicate that residuary power of legislation is with the Parliament.

More evidence of GST’s benefit for economy: Dramatic growth in warehousing space
Amid dissenting voices on success and effectiveness of the GST, here’s yet another proof that India’s sweeping indirect tax reform has provided a major impetus to the economy, in the dramatic rise in handling of goods. GST has improved efficiencies and cost savings for warehouses, resulting in a significant growth in warehousing space, according to a report.

The total warehouse space in eight primary locations in India is expected to reach 204 million square feet by the year 2019, driven by strong demand and investment in the short to medium-term, KPMG said in a recent report. Further, warehousing spaces is expected to witness an increase of 112 per cent by 2021, said the report citing industry experts as saying.

“It is noteworthy that the implementation of GST has dramatically improved efficiencies and cost savings with a ‘Hub and Spoke’ model of warehousing. Pre-GST implementation CAGR (2014–16) of 15% has increased to an expected post-GST implementation CAGR (2017–21) of 21% for Grade A and B warehouse stock projections in the top eight cities in India,” said the KPMG report.

Notably, transaction volumes of warehousing spaces has registered a massive rise, increasing by more than 85% in 2017 to 25 million square feet across India’s top cities – Mumbai, NCR, Ahmedabad, Bengaluru, Pune, Chennai, Hyderabad and Kolkata.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Philip » 04 Oct 2018 09:11

Deleted
Last edited by Suraj on 04 Oct 2018 10:03, edited 1 time in total.
Reason: Poster banned for 1 month

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Kashi » 04 Oct 2018 09:23

Stop with this non sequitur ranting and muddling up this thread as you are wont to do in the military dhaga.

What does increasing the gains from taxation as a consequence of GST have to do with the bankruptcy of IL&ILFS?

And what does THAT have to do with the rupee and rising fuel prices?


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