Indian Economy: News and Discussion (Apr 1 2011)

Theo_Fidel · Post by **Theo_Fidel** » 26 Apr 2012 20:45

Marten wrote:TF, am sure you already know that Sugarcane is extremely water intensive and will require far more water resources than available. We do not collection mechanisms in place yet even though the sugar coops are well organized. Plus petrol cannot contain more than 10% ethanol for current engines to perform without modifications. Jatropa otoh requires very less water, grows in arid areas including semi-desert areas. It can also be used up to 15% as bio-diesel without any modifications to engines, although additives will be required. Our strategy was to convert public transportation (buses) to CNG, and promote EBP for passenger cars, and bio-diesel for the 10% gain in diesel. If they manage to reduce just this much effectively, we should see great savings.

Yah! As GKD pointed out earlier as well, diverting crop land for fuel does bad things to food prices as well.

It was just a thought. Some sky writing on the potential.

I have been hearing this Jatropa thing since the 80's. There was even an attempt to grow it near Thirunelvelzi in the late 1980's. Several complications were run into IIRC.

- Yield was very very uneven.
- To get better yield you have to fertilize and water.
- Harvesting was a serious challenge.
- Fallen fruit needs to be picked up. A lot of fruit fell before ripening. I some cases all of it.
- Soil needs to be very fertile but dry for yield.

Since then numerous attempts have been made but economic viability has been missing. Far too much effort for too little yield.

Sugar Ethanol is different, it piggy backs onto the existing Sugar industry. India is second largest in the world. It depends on molasses a waste product. It uses the heat from burning bagasse to process the mash. All these things Sugar ethanol reach energy payback of 8:1. For comparison the energy payback of corn ethanol is 1.5:1.

Vipul · Post by **Vipul** » 26 Apr 2012 21:13

IMD predicts normal monsoon.

The India Meteorological Department (IMD) has predicted a normal monsoon for 2012-13.The forecast may fuel expectations of better agricultural output.

However, it would be too early to expect a bumper kharif crop to result from the IMD's predictions. This is because the prediction is an all-India average for the entire four-month monsoon period.

It does not talk of the onset date for monsoon nor for that matter the spatial and temporal distribution of rains for the season. From a farmer's point of view, the rains matter more during the peak sowing month of July and August.

The forecast of normal monsoons for a third consecutive year will have a benign effect on the inflationary expectation in the immediate context. This is important given the resurgence in food inflation over the past few weeks, reversing an earlier trend of decline during January-March.

The average rainfall is expected to be 99 per cent of the normal long period average (LPA) of 89 cms during the four-month season from June 1 to September 30. LPA is the average of seasonal rainfall over the country as a whole from 1951 to 2000.

“This year's monsoon is most likely to be normal with a probability of 47 per cent,” said Mr Vilasrao Deshmukh, Science and Technology Minister, announcing the IMD predictions.

A good monsoon is particularly important for crops such as oilseeds, pulses, cotton and coarse grains that are largely rainfed crops as against wheat and rice of which the country has enough stocks.

Better than normal rains in 2011-12 helped the country increase food output by 3 per cent to an all time record of 252.56 million tonnes, up from 244.78 million tonnes in the previous year.

The Government has projected a GDP growth of 7.6 per cent for 2012-13, higher than the 6.9 per cent advance estimate put out by the Central Statistics Office for 2011-12.

The onset date for monsoon is likely to be announced by the IMD during mid-May. Forecast relating to spatial and temporal distribution of the rains will be done in June.

An analysis of 5 predictors or the long-range forecast indicates a 24 per cent probability for a below normal rainfall. But the probability of seasonal rainfall to be deficient or excess is less than 10 per cent, which is relatively low, Mr Deshmukh added.

The IMD's long range forecast has a margin error of 5 per cent.

“There is no negative impact of the prevailing westerly disturbances on the monsoon forecast,” said Mr L.S. Rathore, Director-General, IMD. The westerly disturbances have caused inclement weather conditions especially in North India.

However, the emergence of weak El Nino conditions cannot be ruled out during the latter part of the monsoon season, said Dr D.S. Pai, Head of Long Range Forecast at the IMD. El Nino is associated with below-normal rains.

“La Nina has ended and we are in a transition period. The probability of re-emergence of La Nina conditions during the monsoon season is very less,” Dr Pai said.

IMD will issue update forecast in June as part of the second stage forecast. Along with it separate forecast for July and August rainfall over the country as a whole and seasonal rainfall (June-September) over the four geographical regions will also be issued.

chetak · Post by **chetak** » 26 Apr 2012 21:45

Theo_Fidel wrote:
Marten wrote:TF, am sure you already know that Sugarcane is extremely water intensive and will require far more water resources than available. We do not collection mechanisms in place yet even though the sugar coops are well organized. Plus petrol cannot contain more than 10% ethanol for current engines to perform without modifications. Jatropa otoh requires very less water, grows in arid areas including semi-desert areas. It can also be used up to 15% as bio-diesel without any modifications to engines, although additives will be required. Our strategy was to convert public transportation (buses) to CNG, and promote EBP for passenger cars, and bio-diesel for the 10% gain in diesel. If they manage to reduce just this much effectively, we should see great savings.
Yah! As GKD pointed out earlier as well, diverting crop land for fuel does bad things to food prices as well.

It was just a thought. Some sky writing on the potential.

I have been hearing this Jatropa thing since the 80's. There was even an attempt to grow it near Thirunelvelzi in the late 1980's. Several complications were run into IIRC.

- Yield was very very uneven.
- To get better yield you have to fertilize and water.
- Harvesting was a serious challenge.
- Fallen fruit needs to be picked up. A lot of fruit fell before ripening. I some cases all of it.
- Soil needs to be very fertile but dry for yield.

Since then numerous attempts have been made but economic viability has been missing. Far too much effort for too little yield.

Sugar Ethanol is different, it piggy backs onto the existing Sugar industry. India is second largest in the world. It depends on molasses a waste product. It uses the heat from burning bagasse to process the mash. All these things Sugar ethanol reach energy payback of 8:1. For comparison the energy payback of corn ethanol is 1.5:1.

pawarful sugar lobby has been set for a long time to fleece the public on the ethanol business

wrdos · Post by **wrdos** » 27 Apr 2012 09:58

India's Growth Story Dims on S&P Downgrade

http://www.businessweek.com/news/2012-0 ... ts-outlook

The Indian growth story took another hit today. Standard & Poor’s announced that it has revised its outlook on India’s long-term rating—which had been stable—to negative. According to S&P, there’s a one-in-three chance of a downgrade to India’s BBB- sovereign credit rating. The threats to India’s rating include a weakening global economy, falling growth prospects for Indian gross domestic product, and political paralysis threatening fiscal reforms. At the same time, S&P revised its outlook to negative for seven “government-related entities,” including the Export-Import Bank of India, the India Infrastructure Finance Co., the Indian Railway Finance Corp., and the Power Finance Corp.

gakakkad · Post by **gakakkad** » 27 Apr 2012 20:46

http://www.livemint.com/2012/04/2717103 ... ned-I.html

Governance concerns weakened India’s biz sentiment: IMF

Suraj · Post by **Suraj** » 27 Apr 2012 22:33

These downbeat reports give me a deja vu sensation. During the spring lull in the past, various outlets come up with 'Is India's time up ?' articles, or entities question our ability to continue to perform. They said we were overheating in 2007 and 2008, that we were the worst placed at weathering the GFC in 2009, that we couldnt get back fast enough in 2010 and 2011. I'm still waiting for it to come true.

gakakkad, like you mentioned in the nuke thread, we're truly charmed. It seems we do our best to mess up as much as we can, yet things end up coming together anyway. I don't have particular concerns for the Indian economy in the near term. Yes, GoI cannot find it's own behind with two hands and an illustrated manual, but that is nothing new at all. The monsoon looks good. Trade continues to rise, even though the current account deficit needs urgent attention. Investment/GDP remains stable at 32-33%. By Aug-Sept, no one will be talking doom/gloom, is my prediction.

gakakkad · Post by **gakakkad** » 27 Apr 2012 23:24

^ true sir.. you predicted back in 2000s that India will be 1.5 t by 2010 ..

one thing about India is that when things reach a tipping point , reforms always occur...I have a feeling that things have reached a point where govt will be forced to make sound economic decisions ..People were talking about overheating in 2007 ..but we grew stronger than before..in the "post crisis" year we grew faster than anyone expected ..I am sure that will happen now also..

hnair · Post by **hnair** » 27 Apr 2012 23:26

^^^ I see these reports as good old fashioned attempt at arm twisting the political side of goverment as well as the establishment side. All this constant "oooo.... no reforms. you are going to die" surge in reports and downgrading of ratings usually mean some major policy needs to be changed to some external entities' satisfaction. In this case, my wager would be the FDI thingy, what with Clinton-amma meeting Mamta-maami etc

Not that we don't need to change, but "reform or die" reports are nothing but Jedi tricks being attempted against Toydorian babus. Reforms in India will happen only when the pain (for political side) of not reforming is immense. Not because some professor at Chicago suggests what is the best practice for Third world.

_________
That goofy planted story about "babus pleading with S&P" made me

our babus? doing that? sure

vishvak · Post by **vishvak** » 27 Apr 2012 23:29

Govt okays law to open banking

A day after Standard & Poor’s cut India’s credit rating outlook, the union cabinet approved a key legislation raising voting rights of stakeholders in private banks to 26 per cent from 10 per cent. For public sector banks, voting rights are proposed to be raised from 1 per cent to 10 per cent.
..
Boosted by higher voting rights, investors are expected to pump funds into the country’s private banks, over which they would effectively get greater control. The government has agreed to key recommendations of the Standing Committee on Finance, which included capping voting rights at 26 per cent for private sector banks. The finance ministry had originally proposed raising voting rights commensurate to investors’ shareholding.

However S&P cut unlikely to have adverse impact on mkts

So there are two things here with S&P's cut on ratings. Any gyan whether the S&P's cut somehow makes more investments after the cut given more control?

gakakkad · Post by **gakakkad** » 27 Apr 2012 23:31

^^
our babus are in the business of making other plead..not in the business of pleading ..

nawabs · Post by **nawabs** » 28 Apr 2012 01:29

Give farmers the highest market value for land acquired, rules SC

http://www.thehindu.com/news/national/a ... 361702.ece

Farmers whose land is acquired for a public purpose are entitled to the highest market value as compensation, the Supreme Court held on Friday.

“When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition,” said a Bench of Justices P. Sathasivam and J. Chelameswar.

Writing the judgment, Justice Sathasivam said: “It seems to be only fair that where sale deeds pertaining to different transactions are relied upon on behalf of the government, the transaction representing the highest value should be preferred to the rest unless there are strong circumstances justifying a different course.”

The Bench held that bona fide sale transactions proximate to the point of acquisition of the land “are the real basis to determine the market value.” It was not desirable to take an average of [amounts entered in] various sale deeds placed before the authority/court for fixing fair compensation. “The person entitled to the compensation awarded is also entitled to get interest on solatium and additional market value.”

In the instant case, Colonel Harindar Singh, since deceased, was the former ruler of Faridkot. In 1979, the Punjab government acquired 259 Kanals and 16 Marlas (33 acres) of his land for extension of the existing grain market at Faridkot. The total compensation it awarded including solatium at 15 per cent was Rs.4, 85,202.86. The trial court enhanced it by fixing the value of land at Rs. 1 lakh per acre. The Mehrawal Khewaji Trust, Faridkot, and others were aggrieved over a judgment of the Punjab and Haryana High Court, which refused to interfere with the trial court order. Allowing their appeals, the Supreme Court said: “The materials placed before the Land Acquisition Collector and the Reference Court show that the land is of great potential value inasmuch as the same was strategically located at a commercial hub abutting main roads and surrounded by commercial buildings…” The Reference Court erroneously determined the market price of the appellants' land by averaging the prices of all the three exemplars and thereby awarded a compensation of Rs. 1 lakh per acre.”

The Bench said the appellants made out a case for enhancement of compensation. “Accordingly, the same is fixed at Rs.1, 45,000 per acre with all other statutory benefits including interest on solatium and additional market value.”

Virupaksha · Post by **Virupaksha** » 28 Apr 2012 01:39

guess they have just ruled out all road expansion and land acquistion for industries/institutes in future.

hnair · Post by **hnair** » 28 Apr 2012 02:03

In the instant case, Colonel Harindar Singh, since deceased, was the former ruler of Faridkot. In 1979, the Punjab government acquired 259 Kanals and 16 Marlas (33 acres) of his land for extension of the existing grain market at Faridkot.

A case filed sometime around '79 got a verdict now? nice

Virupaksha-saar, the verdict has a few loopholes and built-in weasel defenses

- the verdict says "highest value should be preferred to the rest unless there are strong circumstances justifying a different course.”. Forget "strong circumstances" (wonder if they were clarified later in verdict?). Usually 99% of the land transactions are undervalued at the registrar's (with the registrar benignly aiding the process for chai-pani) and a prospective acquiree will have a tough time finding the "existing highest registered value" that is closest to the market value. Unless an honest deal happened very recently in his neighborhood.

- Considering the 33 year fast-track court procedures of this case, pragmatism (goon-induced or otherwise) will win, if the seller knows s/he are getting a good deal and cant hold off for long against his/her own natural death.

Anyways. For private sector (and concessionaire models like NHAI), all it means is more funky money will have to be used for such acquisitions and that is sort of a good thing for the local economy.

Theo_Fidel · Post by **Theo_Fidel** » 28 Apr 2012 06:09

Let me second. the cost of land acquisition is now only a small part of our projects. Often less than 10%. The real problem is actually acquiring it legally without court case tamasha.

Theo_Fidel · Post by **Theo_Fidel** » 28 Apr 2012 08:35

http://economictimes.indiatimes.com/new ... 898232.cms

India is expected to have received $63.7 billion in remittances in 2011, marginally more than China that got $62.5 billion from nationals working overseas, data released by World Bank on Friday showed.

The bank has lifted India's kitty by $5.8 billion from its earlier forecast.

"An upward revision to flows to India in 2011 (by $5.8 billion) is primarily due to a weak rupee and robust economic activity in the Gulf Cooperation Council countries, which are major destinations of recent migrants," the bank said in a release.

___________________________________

Also...

Prem · Post by **Prem** » 30 Apr 2012 05:49

http://online.wsj.com/article/SB1000142 ... 81646.html
ArcelorMittal Looks Abroad as Hurdles Persist in India

NEW DELHI—ArcelorMittal, MT +1.85%the world's largest steel producer, is focusing its investments on Canada, Brazil and Liberia, but India, where it has made little headway with three prominent steel projects, doesn't figure high on its list of investment destinations.
Chairman Lakshmi Mittal, an Indian steel magnate who is also one of the world's richest people, said three steel plants the company had planned to build in India continue to face regulatory hurdles.
"Capital is scarce, and in India for our projects, [the] process of approvals is still going on," Mr. Mittal told reporters Sunday during a visit here. "I feel bad; I feel a bit concerned" about delays in the steel projects.
"There's no way I can ignore India, and I am not giving up on these projects," Mr. Mittal said. But India isn't an investment priority for ArcelorMittal at the moment, he added.India's bureaucracy and Byzantine regulations have deterred foreign investment in several industries. Recent legislation that would increase the tax burden on investors has further dimmed their enthusiasm toward the country.Mr. Mittal said the global economic crisis of 2008 is partly to blame for India's slower growth. But he said he was optimistic about India in the longer term.

"The India story is definitely not over. The country is growing continuously. There's momentum. Annual growth rate of 7% to 7.5% is quite high and envy for the rest of the world," he said. He said ArcelorMittal isn't unduly worried about a slowdown in the demand for steel globally. "Steel is a cyclical sector. But even now, apparent steel consumption globally is maintaining a 4% annual growth rate," he said.

vera_k · Post by **vera_k** » 30 Apr 2012 07:46

hnair wrote:- Considering the 33 year fast-track court procedures of this case, pragmatism (goon-induced or otherwise) will win, if the seller knows s/he are getting a good deal and cant hold off for long against his/her own natural death.

Considering inter-generational dynamics, death doesn't affect these cases much. The sellers heirs would have kept fighting most likely. I won a case in Bombay High Court my grandfather had filed 40+ years ago.

gakakkad · Post by **gakakkad** » 30 Apr 2012 09:49

Some possibly good news..

Govt to start PSU stake sale by June; RINL to hit market first

http://www.livemint.com/2012/04/2915092 ... ale-b.html

New Delhi: The government will kick start its disinvestment programme for the current fiscal from June with stake sale in steel major Rashtriya Ispat Nigam Ltd (RINL) through an initial public offering (IPO) that could fetch about Rs. 2,500 crore to the exchequer.

“We will be filing the draft papers for 10% stake sale in RINL in the first two weeks of May. The IPO will hit the market in June,” disinvestment secretary Mohammad Haleem Khan told PTI.
In January, the Cabinet Committee on Economic Affairs (CCEA) had approved 10% disinvestment in RINL. The company has already initiated the IPO process and has appointed four merchant bankers --UBS Securities, Deutsche Bank, Edelweiss Capital and IDBI Capital-- as the book running lead managers (BRLMs) to manage the issue.

Last week, the shareholders of RINL had approved the stock split in the ratio of 1:100. This meant that one share with a value of Rs. 1,000 was split into 100 shares worth Rs. 10 each. This move is expected to help the company to ensure wider retail participation in its proposed IPO.

The shareholders also approved the conversion of RINL to a public limited company from private company under the Companies Act 1956.

The Vizag-based steel maker was given ‘Navratna´ status on 16 November, 2010, subject to the condition that it would list its shares in two years from the date of acquiring the status. Hence, it has time till November to come up with the IPO to fulfill the guidelines of being a Navratna firm.

RINL is likely to be the first PSU to hit the capital markets in the current fiscal. The government proposes to raise Rs. 30,000 crore through stake sale in PSUs in 2012-13.

The other companies which are lined up for disinvestment in the current fiscal include SAIL, BHEL, Hindustan Copper, Oil India and Hindustan Aeronautics.

The government is trying to kick off the disinvestment programme from the beginning of the fiscal so that it could garner resources throughout the fiscal.

Last fiscal, owing to volatile market conditions the government had to postpone its sell off plans and could only divest stake in Power Finance Corporation (PFC), Oil and Natural Gas Corporation (ONGC) and National Buildings Construction Corporation (NBCC).

As against the disinvestment target of Rs. 40,000 crore in 2011-12, the government could raise only Rs. 14,000 crore through PSU stake sale.

Yogi_G · Post by **Yogi_G** » 30 Apr 2012 13:16

How the black economy subverts India's politics

Here is an article which puts the black money in the economy being almost 30% of the GDP, ~600 billion dollars. So we are a 2.5 trillion dollar economy if the number is correct.

gakakkad · Post by **gakakkad** » 30 Apr 2012 17:31

RBI study for a higher FDI cap in insurance..

http://www.livemint.com/2012/04/3012483 ... cap-i.html

New Delhi: The Reserve Bank of India (RI) has said there is a case for hiking FDI (foreign direct investment) cap in insurance and some other sectors in view of India’s growing integration with the global economy, if local economic and political scenario permits.

“... as the economy integrates further with the global economy and domestic economic and political conditions permit, there may be a need to relook at the sectoral caps (especially in insurance) and restrictions on FDI flows (especially in multi-brand retail),” RBI said in a study, released earlier this month, on FDI flows to India.

The study said there are certain sectors, including agriculture, where FDI is not allowed, while sectoral caps in some sectors such as insurance and media are relatively low compared to the global patterns.
“In this context, it may be noted that the caps and restrictions are based on domestic considerations and there is no uniform standards that fits all countries,” it added.

RBI said the demands for raising the present FDI limits of 26% in the insurance sector may be reviewed taking into account the changing demographic patterns as well as the role of insurance companies in supplying the required long term finance in the economy.

Commenting on the need for a higher FDI limit in the insurance sector, Monish Shah, senior director of consultancy giant Deloitte in India, told PTI that insurance is a high gestation, capital intensive business and the sector needs fresh capital to fund its existing businesses and expansion.

“Increased capital will benefit the industry as a whole by increasing the insurance access and penetration in the country.

“Increase in FDI in insurance from a strategic minority to a dominant minority is one of the reforms which is being eagerly awaited by several industry players; as despite the slowdown, Indian insurance sector remains attractive in the long term,” he added.

Noting that life insurance industry is long-term in nature and requires years of capital infusion, MetLife India’s managing director and country manager Rajesh Relan said: “Capital infusion through FDI will help grow the industry by increasing customer coverage with a range of innovate products that are clearly focused on today’s uninsured.”

He further said that growth of insurance sector would also help in developing other sectors and providing capital to the government for long-term infrastructure projects.

The RBI study found that sectoral cap was higher than India even in China for insurance and a few other sectors, while countries like Brazil and Russia have higher sectoral caps than India across most of the sectors.

Prem · Post by **Prem** » 01 May 2012 01:58

India frees cotton exports, sugar may follow suit
http://news.yahoo.com/ministers-discuss ... nance.html

NEW DELHI (Reuters) - India has lifted a ban on cotton exports, the trade minister said on Monday, after a series of policy flip-flops from the world's second-biggest producer of the fibre, a move which will add supplies to an already flush market.The decision was announced by Trade Minister Anand Sharma hours before an unusual meeting of the farm, food, trade and finance ministers called by Prime Minister Manmohan Singh to sort out often conflicting policies on key export commodities which have highlighted divisions in the ruling coalition.The meeting, scheduled for 1900 local time (0130 GMT), could also decide to allow more sugar exports, government sources said -- another policy move called for by Farm Minister Sharad Pawar, who is a key ally for the government."A decision has been taken to remove the suspension of cotton export registration and fresh registration will be allowed," Sharma told reporters, adding that the government would review the export situation every two to three weeks.Additional exports of cotton and sugar would add to over-supplied markets and put pressure on weak benchmark prices for the products in New York. India is the world's second-biggest sugar producer.lobal sugar prices have fallen 8.9 percent so far this year while cotton, which was the worst-performing commodity in 2011, has lost another 4.8 percent in 2012 to date.China, traditionally India's biggest customer and the world's top cotton buyer, has already purchased huge quantities from top producer the United States. So, traders said any additional Indian cotton is likely to go to Bangladesh.Cotton on the ICE Futures U.S. exchange dropped 0.88 cent, or nearly 1 percent, to close at 91.23 cents per lb on Friday, while raw sugar futures dropped to their lowest in almost a year.

gakakkad · Post by **gakakkad** » 01 May 2012 20:15

More on the Doom and Gloom front..

March exports fall 5.7%; Government criticised amid slowing growth; $185 billion trade deficit for 2011-12 as oil rises

http://www.livemint.com/2012/05/0111094 ... t-tim.html

New Delhi: India’s exports in March fell for the first time since the 2009 global financial crisis as demand weakened in the United States and Europe, further clouding the outlook for the country’s balance of payments.

Exports fell 5.7% to $28.7 billion from the same period a year earlier, continuing a sharp slowdown in shipments in recent months that, combined with high imports of oil and gold, has sparked concern over the country’s swelling trade deficit.
The export drop is the latest bad news for India’s faltering economy. Ratings agency Standard & Poor’s cut its credit rating outlook for India to negative last week, reflecting investor concerns about hefty fiscal and current account deficits and political paralysis that has put a brake on economic reforms.

India beat the government’s target of about 20% export growth for the full fiscal year in 2011-12, which ended in March.

But trade secretary Rahul Khullar warned in January that exporters in Asia’s third-largest economy faced a “difficult year”, pointing to economic and financial weakness in the European Union, India’s largest trade partner.

“The contraction in exports is worrisome,” said Anubhuti Sahay, an economist at Standard Chartered bank in Mumbai.

“We still need to see if the contraction is just a temporary blip or not. It is not surprising, though, because if you talk about the main trading partners in Europe, there is a slowdown there.”

Government policy criticised

India’s balance of payments slipped into negative territory for the first time in three years in the three months through December on shrinking dollar inflows.

The current account deficit was $19.6 billion in the December quarter, higher than $9.7 billion a year earlier.

Rising global oil prices pushed up import bills for the country, which buys more than 80% of its oil from overseas.

The deterioration in the current account deficit is expected to pile pressure on the rupee, which fell nearly 16% against the US dollar in 2011.

The rupee recovered somewhat early this year, but has lost around 6% since February as foreign investment dried up, highlighting its reliance on volatile capital inflows.

Prime Minister Manmohan Singh’s government has been hit by months of criticism over corruption scandals and the wobbling economy.

Mark Mobius, one of the world’s best-known emerging market investors, was the latest to criticise New Delhi for “many, many big policy mistakes”. In an interview with Reuters on Tuesday, he singled out controversial tax reform proposals that would hit international firms.

India’s imports rose 24.3% to $42.6 billion in March, government data showed on Tuesday. Oil imports rose 32.5% to $15.8 billion. The trade deficit was $13.9 billion.

India’s exports rose an annual 21% to $303.7 billion for the fiscal year 2011-12, while imports rose 32.2% to $488.6 billion, figures released by the trade ministry also showed. The trade deficit for the full fiscal year was $184.9 billion.

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gunjur · Post by **gunjur** » 02 May 2012 11:57

India's breakout states

which are the states that clocked double-digit growth in gross state domestic product during the seven-year period from 2004-05? Only five states make that list. On top is Uttarakhand at 13.2 per cent, followed, as expected, by Bihar at 10.9 per cent, Maharashtra at 10.7 per cent, Tamil Nadu at 10.4 per cent and Haryana at 10.1 per cent.

From an average annual growth of five per cent in the ten-year period from 1994-95, Maharashtra doubled its performance to 10.7 per cent in the seven years under the UPA regime. Tamil Nadu’s achievement is equally remarkable, with almost the same base performance in the 10 years prior to 2004-05 almost doubling to 10.4 per cent in the seven years of the UPA.

Haryana’s growth story is perhaps the most remarkable. In the ten-year period from 1994-95, it grew annually by over 6.5 per cent. So there was no low-base effect for Haryana to bank on for its 10.1 per cent annual average growth in the seven years from 2004-05.

The performance of Gujarat in this period is a puzzle. In the ten-year period ended 2002-03, its average annual growth was relatively low at 3.6 per cent. In spite of that, however, it could grow by 6.3 per cent annually in the seven years from 2004-05 to 2010-11. Karnataka had a high base of over six per cent average annual growth in the 1994-2003 period, but it could raise the growth level to 8.7 per cent in the seven years from 2004-05.

Odisha, too, has done well in this period, although it had the advantage of a low base of less than four per cent average annual growth in the ten-year period ended 2003-04. But to have clocked 9.5 per cent growth in the following seven years is testimony to Odisha’s inherent economic potential and ability to grow fast.

No clear conclusions can be drawn from these data. What does emerge is that states with stable governments have a better chance to grow fast. Bihar, Haryana, Tamil Nadu, Odisha and Uttarakhand will fall in that category. Maharashtra may be an exception, as the state has seen changes in leadership and yet it has recorded double-digit growth in the last seven years. But then, how does one explain Gujarat? It has seen the most stable of governments for the last several years. And yet, it has seen its growth hovering at around six per cent for the last seven years. Or is there something more that helps in the emergence of what analysts would like to describe as the breakout states of India?

Suraj · Post by **Suraj** » 02 May 2012 13:02

gakakkad wrote:More on the Doom and Gloom front..

March exports fall 5.7%; Government criticised amid slowing growth; $185 billion trade deficit for 2011-12 as oil rises

http://www.livemint.com/2012/05/0111094 ... t-tim.html

New Delhi: India’s exports in March fell for the first time since the 2009 global financial crisis as demand weakened in the United States and Europe, further clouding the outlook for the country’s balance of payments.

From recent experience, one month trade data reporting period is not a reliable one. While full year trade data for last year was reasonable well corroborated because they had more time and information, monthly data reporting was beset by various anomalies - there were months with drastically high export growth, and months were data had to be revised up/down. I would not put much credence upon this report.

gakakkad · Post by **gakakkad** » 02 May 2012 17:17

@ Gunjur the article is a piss-ops against Gujarat...

here are the real stats from planning commission web ..

Industrial growth rate

average from 2004-2009.. Gujarat 12.65 , All India 8.54

Agricultural Growth Rate.. 2004-2009 Gujarat 7.46 ,,All India ..3.06

http://planningcommission.nic.in/data/d ... tab_40.pdf
http://planningcommission.nic.in/data/d ... tab_39.pdf

In both Industry and agriculture Guj exceeds haryana and All India.

Here is the real GSDP growth rate state wise.

http://planningcommission.nic.in/data/d ... ab_103.pdf

Barring 08-09 Gujarat grew much faster than all India ...you can clearly see acceleration of growth rate in Guj since Modi took over...especially in Industry and agriculture...

our method of calculation of gsdp also has faults..

Maharashtra is the only con ruled state which is doing well.. But that is mainly because of Mumbai which makes 50% of the states GDP...That is the reason of growth ..if mumbai is removed from the picture ,rest of the state is in pathetic state...

Theo_Fidel · Post by **Theo_Fidel** » 02 May 2012 18:52

Gakkakad,

Are we looking at the same chart? On the 103 Tab look at the last column. Average growth from 2004-2005 to 2011-2012.

Bihar 11.42%
Gujrat 10.08%
Haryana 9.30%
Karnatak 8.52%
Maha 10.75%
TN 10.27%
UP 6.81%

Delhi 11.81%

Of course GJ is growing industrially and Agriculturally fast but others seem to be growing other sectors of economy. Also Guj is growing on a high base so comparison with Bihar is weak. AFAIK GJ has not broken free of India trendlines. Like say HK broke free of China in 1960's.

gakakkad · Post by **gakakkad** » 02 May 2012 19:11

theo same page onlee.

the article which Gunjur posted described Gujarats growth rate as 6.8 from 4-11 when its is infact 10%+ .. ..i posted the industrial and agricultural growth only...

"The performance of Gujarat in this period is a puzzle. In the ten-year period ended 2002-03, its average annual growth was relatively low at 3.6 per cent. In spite of that, however, it could grow by 6.3 per cent annually in the seven years from 2004-05 to 2010-11. Karnataka had a high base of over six per cent average annual growth in the 1994-2003 period, but it could raise the growth level to 8.7 per cent in the seven years from 2004-05."

This is purposeful falsification of facts..you can look at the tone of the author.."even though stable govt yet low growth ".. When in fact Guj grew at 10% + in the period as per planing commissions website...higher than Indian growth of 8%+ ...The intent of the author seems quite clear ..the grpwth rate of other states too are falsified..

>> Also Guj is growing on a high base so comparison with Bihar is weak. AFAIK GJ has not broken free of India trendlines. Like say HK broke free of China in 1960's.

To achieve HK levels of growth first the basic infra needs to be in place ... Modi is doing just that..end of this year Guj will have 20gw + total installed capacity ..it needs to reach 60 MW to reach england level of per capita consumption..

Ahmedabad metro construction is about to begin...host of other road and infra projects are underway..once that happens guj growth will be gravity defying...

Theo_Fidel · Post by **Theo_Fidel** » 02 May 2012 19:53

Ah! I understand now.

Unfortunately there is lies and lies and then there is statistics. Honestly the author does not say where his data is from. So I would ignore it. You can make numbers say anything you please.
---------------------

Edit: It appears that is MOSPI data so now I don't know what to say. How do two GOI arms have such differing info.

gakakkad · Post by **gakakkad** » 02 May 2012 20:29

^^ Boss , the data upto 2003 is correct in the article..Gujarat grew at 3.6 in 01-03 ...due to the earth quak and riots 01 and 02 were not good..but from04 Guj has never looked back as reflected in the data..data from 04 onwards is falsified.. in some state it matches the planning commission data..in some states if is grossly different..

one more interesting thing in stats..

average real growth from 2004-2012

Code: Select all


                               Gujarat   Mahashtra    India             

agro                           7.46          5.91        3.06
industrial                     12.25         9.24        8.54
overall                        10.08         10.7         8.5

Gujarat has the fastest agricultural growth in the country... Barring the smaller states like andaman island , chattisgarh , Gujarat has the fastest growing industry...yet why does the overall growth become lesser than Mahashtra even though its industry and agro are growing much fast than Maha ?

1) Some statistical artefact ? ( like the ones created by getting construction in service..)

2)upward skewing of Maha growth by generation of small number of very high paying jobs in the service sector especially IT/ITES...
That means that gujarat growth creates better livelihood for more people..maha growth is skewed upwards by small number of very high paying jobs..

3) lagging behind of service sector in Guj is a possible explanation..unlike Bangalore /gurgaon/mumbai/poona/bangalore/chennai Guj has not had IT/ITES industry in a big way yet..Modi is working on it however..

one thing is clear , growth in Guj has generated better livelihood for aam aadmi as it is mostly from industry/agro...

Suraj · Post by **Suraj** » 02 May 2012 22:38

Comparing Gujarat's differential GDP growth to India overall, with that of HK vs PRC is just not really valid - one is a big state, the other is a small city state with ~1/10th the population. Either compare Bombay or Delhi cities to HK differential performance, or compare Gujarat to say, Jiangsu or Zhejiang province differential growth rate vs that of PRC overall.

saip · Post by **saip** » 02 May 2012 22:45

Yogi_G wrote:How the black economy subverts India's politics

Here is an article which puts the black money in the economy being almost 30% of the GDP, ~600 billion dollars. So we are a 2.5 trillion dollar economy if the number is correct.

I can believe that. A friend of mine sold her apartment in AP for 25 lakhs and received 10 lakhs in cash (i.e. 40%). That way the buyer saved a lot on Stamp duty and registration fees and the bribes (equal to registration fee!)

Prem · Post by **Prem** » 03 May 2012 00:56

http://www.marketwatch.com/story/india- ... 2012-05-02
India manufacturing up in April, along with prices

MUMBAI (MarketWatch) — Indian manufacturing activity rose in April for the first time in two months, but the improvement came with a substantial increase in prices, suggesting that the Reserve Bank of India has only limited scope to further lower interest rates. HSBC’s Purchasing Managers Index rose to 54.9 in April from 54.7 in March. A reading above 50 indicates expansion. Power outages continued to weigh on the output index, which fell to 56.1 in April from 56.3 the previous month. But the index for new orders rose to 61.1 from 58.1, while the one for exports rose to 56.1 from 55.6. “This component of the PMI is encouraging and ties in with the official view that non-inflationary rate of growth may have bottomed,” said Rohini Malkani, an economist at Citibank. Prices, however, were also on the rise. The index for input prices rose 3.6 points to 64.8 and output prices were up 4.5 points to 58.7, signaling that pricing pressure remains high. “This supports the view that given inflationary trends, we could see at best one more rate cut later this year,” Malkani said. The Reserve Bank of India last month surprised investors with a bigger-than-expected cut in interest rates as it expressed concern about a slowing economy. But it also said that future rate cuts would be limited by inflation risks. According to Leif Eskesen, economist for India at HSBC, April’s manufacturing data point to the risks that the central bank’s rate cut might have been “premature and too aggressive”.

gakakkad · Post by **gakakkad** » 03 May 2012 08:16

x post from piss -ops dhaga..

the piss-ops article about Gujarat growth has been spotted by people in beeb..

http://www.bbc.co.uk/news/world-asia-india-17919364

This morning, a piece in Business Standard, one of India's most respected newspapers, caught my eye.

Examining data on the economic performance of Indian states during a seven-year-period (2004-11), AK Bhattacharya, editor of the newspaper, wrote that he was puzzled by the data on Gujarat.

Gujarat is ruled by Narendra Modi, one of India's most controversial politicians, who has modelled himself as a no-nonsense economic reformer of one of India's fastest-growing states.

In March, a senior minister of his cabinet told me that Gujarat has been recording scorching double-digit growth, prompting even The Economist magazine to call it India's Guangdong. "Modi Means Business" said Time magazine when it put him on the cover recently.

Mr Bhattacharyya, however, wrote in Wednesday morning's edition of his paper that Gujarat's economy grew by 6.3% annually during this period, up from average growth every year of 3.6% - a relatively low base - in a 10-year period ending in 2003.

"It has seen the most stable of governments for the last several years," Mr Bhattacharya wrote. "And yet, it has seen its growth hovering around 6% for the last seven years."

I wrote a blog post with a link to the piece wondering whether Gujarat's red-hot economic growth was an invention of the foreign media which has been written extensively about Mr Modi's reformist government.

I had also wondered whether there was something amiss with the data on Gujarat in the Business Standard article.

Indeed there was - and I have updated the blog post to reflect this.

Since I wrote my earlier version, Mr Bhattacharya has carried out some crucial corrections in his Business Standard article - the modified version appeared on the newspaper's website later in the day.

He has written that Gujarat actually clocked a growth rate of 10.08% annually during a seven-year period beginning 2004-05. That is obviously far better than the 6.3% growth that he mentioned in the earlier version.

He has also taken out a paragraph in which he wrote: "It (Gujarat) has seen the most stable of governments for the last several years. And yet, it has seen its growth hovering around 6% for the last seven years."

Double-digit growth, of course, puts Gujarat in the league of the high growth states in India. The doubts that I had about it after reading Mr Bhattacharya's piece have now been clarified by the writer himself.

He writes in the modified piece:

"… which are the states that clocked double-digit growth in its gross state domestic product during the seven-year period from 2004-05? Only six states will make that list. On top of that list is Uttarakhand at 13.2%, followed, as expected, by Bihar at 10.9%, Maharashtra at 10.7%, Tamil Nadu at 10.4%, Haryana at 10.1% and Gujarat at 10.08%."

In the amended version Mr Bhattacharya also adds that "Gujarat's story is well-known and shows what sustained growth-oriented policies can do to a state's economic fortunes".

There is a vigorous debate on whether such high growth is delivering adequate social development in Gujarat. It is a point which many believe is valid is for the whole of India. But Gujarat, going by the data, is indeed

Soutik biswas is a known liberal nazi..but he too had to back track..

gakakkad · Post by **gakakkad** » 03 May 2012 08:28

http://in.finance.yahoo.com/news/mobius ... 18475.html

Mobius on retro-active tax..

SEOUL (Reuters) - India is faltering as an investment destination because of significant policy mistakes and stock prices there will slide if the nation's credit rating is cut, according to Mark Mobius, one of the world's best-known emerging market investors.
"The Indian government has been making many many big policy mistakes. The most important of all is the idea of having retroactive taxation," Mobius, executive chairman of Templeton Emerging Markets Group, told Reuters in a phone interview from the Bahamas.
Foreign investors have raised concerns on two Indian provisions seeking to tax indirect investments and combat tax evasion.
The first gives India power to retroactively tax the indirect transfer of assets. The second targets tax evaders via the General Anti-Avoidance Rule (GAAR), putting the onus on investors registered in countries with special tax exemptions with India to prove they do not intend to explicitly avoid tax.
Macquarie's Asia hedge fund in March exited its short positions in Indian single stock futures in response to the controversial proposed tax rules, fearing they would lower investment returns.
Mobius's team manages $50 billion worth of emerging markets equities for Franklin Templeton Investments, an arm of U.S. money manager Franklin Resources Inc.
India constituted 16.1 percent of Mobius's $17.7 billion Templeton Asian Growth Fund as of end-March. The flagship fund had Indian software exporter Tata Consultancy Services among its top-10 holdings.
Standard & Poor's last week cut India's credit rating outlook to negative from stable, reflecting the toll that hefty fiscal and current account deficits and political paralysis are exacting on Asia's third-largest economy.
The agency warned the country had a one-in-three chance of losing investment-grade status.
"If it actually happens, it will be a big shock. The market will be shocked and prices will sharply decline," Mobius said.
CHINA, KOREA
On China, the fund manager said the political scandal over deposed provincial political leader Bo Xilai reflected increasing pressure the country faces on political reforms but added it was not a big problem for equity investors.
Bo, the ambitious former leader of China's biggest municipality Chongqing, was sacked in March after police began investigating his wife on suspicion of murdering a former family friend, a British businessman, in a row over money.
"This is well isolated in one province and I don't think this is a big problem," Mobius said. The Asian Growth Fund had nearly 28 percent of its portfolio in China companies as at end-March, with PetroChina as its No. 1 holding.
Regarding South Korea, which faces increasing calls for faster reform in corporate management practices, Mobius said concerns about the ownership and governance structure at big, family-run conglomerates were dragging down share prices.
"They have to do much further than that to allow minority investors to have a greater say," he said, while praising some companies for handing some of the power that the founding families held to newly created holding companies.
"Right now, the reason why Korean stocks tend to sell at a discount is because of this problem. That's the single most important factor," he said. The flagship fund had 7.2 percent of its portfolio in South Korean companies, with SK Innovation Co Ltd among its top-10 holdings.
On Europe, the fund manager was optimistic about efforts that euro zone policymakers are making to avert a catastrophic collapse of the single-currency area, saying media reports and some harsh commentaries were overblown.

Suraj · Post by **Suraj** » 03 May 2012 08:43

Money will go where there's money to be made, regardless of all the handwaving. Mobius et al will just buy in when prices are down in the market anyway. Further, every country is clamping down on tax evasion to buttress government revenues, particularly the US and Eurozone who are massively in debt without means to pay it back other than by greater taxation and deliberate erosion of the value of their currency. So all that cash is going to be going around different parts of Asia. FII sentiment no longer has a huge bearing on general GoI policymaking; the days when foreign investor sentiment mattered a great deal are slowly receding; they will have to make do with the rules GoI makes if they want to make money in India.

Singha · Post by **Singha** » 03 May 2012 10:29

are the loans we take from japan development bank, ADB (mainly japan money) based off rates which vary as per our sovereign ratings set the ratings agencies or negotiated separately?
japanese money is crucial for next phase of our infra - afaik the delhi-mumbai industrial corridor, delhi metro, blr metro and many more are being funded off japanese money.

time was when the very mention of S&P or Moodys coming to town used to set off dhoti shivering and alarm bells in FinMin and they used to demand and get platinum grade access into GOI higher ups and data while living in 5* hotels.

Suraj · Post by **Suraj** » 03 May 2012 10:42

JICA loans are fixed rate, as far as I know. Here's a sample press release:
http://www.jica.go.jp/english/news/pres ... 29_01.html

The rates are set based on their own domestic rates, and serve to provide safe returns for the massive personal savings of their population. Their rates will remain low because most of their debt is held in Yen, and the low rate regime ensures that their 200% debt/GDP figure is manageable.

gakakkad · Post by **gakakkad** » 03 May 2012 17:50

live mint op-ed

Views | Indian economy: Is the worst over?

Niranjan Rajadhyaksha

Exhibit One: Home and personal care company Hindustan Unilever said on Tuesday that net sales in the quarter ending March were up by 20% over the same quarter in fiscal year 2011. The company also said that the sales growth was split equally between volume growth and price increases. Analysts say the strong growth in volumes is an indication that consumer demand has been strong despite high inflation.
Exhibit Two: The purchasing managers’ index (PMI) data for April came out a bit higher than its March level --- 54.9 versus 54.5 --- and significantly higher than the 50 level that marks the difference between industrial contraction and expansion. New orders and export orders seem to be growing well, though the increase in inventories shows a mixed picture. Stocks of finished goods are down but inventories of inputs for future production have also fallen, a fact that seems inconsistent with the data on new orders.

Exhibit Three: The third advance estimates for food production in fiscal year 2012 puts food grain production at 252.6 million tonnes (mt), around 7.8 mt higher than in the previous year. The first official prediction of the monsoon this year is also good, though there are growing risks of an El Nino that usually affects rainfall in India. Rural demand could hold up in case rainfall and farm output is strong in fiscal year 2013 as well.

Exhibit Four: The Reserve Bank of India released data on Tuesday that showed bank credit in FY 2012 growing slightly slower than in FY 2011. Yet, credit growth of 17.15% is pretty impressive in a slowing economy. The 3.67 percentage point gap could also be because nominal GDP growth has been lower in FY12, thanks to inflation coming off its peak. Bank credit is a useful gauge of economic activity.

These high-frequency indicators do not suggest that economic growth is about to rebound smartly; but nor does it suggest that economic activity is weakening even more. The macro concerns continue to cloud the scene: policy paralysis, a high fiscal deficit and balance of payments pressures, for example. Corporate profits from core operations continue to be fragile while corporate investments are still nothing to write home about. The HUL results as well as the PMI data shows that inflationary pressures persist, as companies find pricing power and input prices pressures carry on. Many of these factors will ensure that there is very little space left for effective policy action in case there is a global shock, perhaps from Europe, later this year.

Yet, recent data does suggest that the economic situation is not worsening --- a minor relief in such trying times.

Exhibit One: Home and personal care company Hindustan Unilever said on Tuesday that net sales in the quarter ending March were up by 20% over the same quarter in fiscal year 2011. The company also said that the sales growth was split equally between volume growth and price increases. Analysts say the strong growth in volumes is an indication that consumer demand has been strong despite high inflation.
Exhibit Two: The purchasing managers’ index (PMI) data for April came out a bit higher than its March level --- 54.9 versus 54.5 --- and significantly higher than the 50 level that marks the difference between industrial contraction and expansion. New orders and export orders seem to be growing well, though the increase in inventories shows a mixed picture. Stocks of finished goods are down but inventories of inputs for future production have also fallen, a fact that seems inconsistent with the data on new orders.

Exhibit Three: The third advance estimates for food production in fiscal year 2012 puts food grain production at 252.6 million tonnes (mt), around 7.8 mt higher than in the previous year. The first official prediction of the monsoon this year is also good, though there are growing risks of an El Nino that usually affects rainfall in India. Rural demand could hold up in case rainfall and farm output is strong in fiscal year 2013 as well.

Exhibit Four: The Reserve Bank of India released data on Tuesday that showed bank credit in FY 2012 growing slightly slower than in FY 2011. Yet, credit growth of 17.15% is pretty impressive in a slowing economy. The 3.67 percentage point gap could also be because nominal GDP growth has been lower in FY12, thanks to inflation coming off its peak. Bank credit is a useful gauge of economic activity.

These high-frequency indicators do not suggest that economic growth is about to rebound smartly; but nor does it suggest that economic activity is weakening even more. The macro concerns continue to cloud the scene: policy paralysis, a high fiscal deficit and balance of payments pressures, for example. Corporate profits from core operations continue to be fragile while corporate investments are still nothing to write home about. The HUL results as well as the PMI data shows that inflationary pressures persist, as companies find pricing power and input prices pressures carry on. Many of these factors will ensure that there is very little space left for effective policy action in case there is a global shock, perhaps from Europe, later this year.

Yet, recent data does suggest that the economic situation is not worsening --- a minor relief in such trying times.

gakakkad · Post by **gakakkad** » 03 May 2012 17:56

RBI sold dollars at Rs. 53.45 levels, three traders said, after the rupee touched a four-month low earlier in the session.The dollar rose to an intraday high of 53.4550, before being pulled back to 53.39/40 levels.
livemint via reuters..

vic · Post by **vic** » 03 May 2012 19:37

Jhujar wrote:India frees cotton exports, sugar may follow suit
http://news.yahoo.com/ministers-discuss ... nance.html

NEW DELHI (Reuters) - India has lifted a ban on cotton exports, the trade minister said on Monday, after a series of policy flip-flops from the world's second-biggest producer of the fibre, a move which will add supplies to an already flush market.The decision was announced by Trade Minister Anand Sharma hours before an unusual meeting of the farm, food, trade and finance ministers called by Prime Minister Manmohan Singh to sort out often conflicting policies on key export commodities which have highlighted divisions in the ruling coalition.The meeting, scheduled for 1900 local time (0130 GMT), could also decide to allow more sugar exports, government sources said -- another policy move called for by Farm Minister Sharad Pawar, who is a key ally for the government."A decision has been taken to remove the suspension of cotton export registration and fresh registration will be allowed," Sharma told reporters, adding that the government would review the export situation every two to three weeks.Additional exports of cotton and sugar would add to over-supplied markets and put pressure on weak benchmark prices for the products in New York. India is the world's second-biggest sugar producer.lobal sugar prices have fallen 8.9 percent so far this year while cotton, which was the worst-performing commodity in 2011, has lost another 4.8 percent in 2012 to date.China, traditionally India's biggest customer and the world's top cotton buyer, has already purchased huge quantities from top producer the United States. So, traders said any additional Indian cotton is likely to go to Bangladesh.Cotton on the ICE Futures U.S. exchange dropped 0.88 cent, or nearly 1 percent, to close at 91.23 cents per lb on Friday, while raw sugar futures dropped to their lowest in almost a year.

I think the yarn industries in India may suffer. Raw cotton will go up, so will prices of electricity, labor, diesel but yarn will fall in international market. Anybody tracking this aspect?