Indian Economy - News & Discussion 27 May 2012

Yogi_G · Post by **Yogi_G** » 31 Jul 2012 21:28

Aditya_V wrote:Low level accountants make 8K-12K a month, considering they are all graduates and have in many cases to put in 12 Hour shifts, deal with MIS, Tax departments and compliance issues, I dont workers are that underpiad, in fact auto drives make around 17K a month in Chennai and call taxi drivers around 25K-30K.

saar, that seems less for (share) auto drivers and call taxi drivers. One share auto guy I met told me that the daily rental for his share auto is 700 rupees. So I deduced that he must be making atleast 1200-1500 rupees a day in order to be able to pay that off. I know of a call taxi driver who makes easily around 40,000 a month, he hardly sleeps and that probably explains why he is able to make more than the average.

putnanja · Post by **putnanja** » 31 Jul 2012 21:57

In cities like Mysore, teachers in private primary and high school make in the range of Rs 7000-14000 per month. Know couple of relatives in this profession.

Uttam · Post by **Uttam** » 31 Jul 2012 22:11

While discussing wages are we forgetting the two most important factors that determine wages in the private sector: Demand and Supply of labor? I see the point that it is very difficult to live in a big city at such low wages. However, these wages are above the required minimum wage. The debate can be whether we should have different minimum wage depending on cost of living. But any constrains placed on business (as it is we have a plethora of archaic labor laws) will further constraint investment and thus further depress wages.

nakul · Post by **nakul** » 31 Jul 2012 22:18

The issue is sharing of profits. The car industry is raking in tons of money. The change can be seen in the salaries of the top management. But this does not relect in the wages of workers who still live on scraps. It is difficult to make a living when the salary is so low. Unlike rickshaw/ taxi drivers, they don't see increases regularly. This is further amplified by inflation. This discrimination hurts the poor most.

Uttam · Post by **Uttam** » 31 Jul 2012 22:29

nakul wrote:The issue is sharing of profits. The car industry is raking in tons of money. The change can be seen in the salaries of the top management. But this does not relect in the wages of workers who still live on scraps. It is difficult to make a living when the salary is so low. Unlike rickshaw/ taxi drivers, they don't see increases regularly. This is further amplified by inflation. This discrimination hurts the poor most.

What would hurt more stagnant wages OR no wage at all. Admit it or not we are in a global market. A high cost producer here will be priced out by low cost producers else where. Just to remind you India is not just at the receiving end of the global competition. In fact, India reaped in significant benefits from it as well. What hurts more than stagnant wages are the populist stupid fiscal policies of the government where only a few paise reach the poor out of every rupee spent by the government. These bad fiscal policies contribute in big way towards inflation and that hurts the poor.

The private sector in fact helps to check inflation by increasing efficiency. I still remember when my parents bought a color TV in 1984 by paying Rs 9000 in cash. What is price of a color TV today? A Maruti 800 has been priced at about Rs 200,000 for almost three decades now. Now look at the government sector that manages food security. The food storage routinely waste 50% of produce. The food markets are constrained by all kind of restriction across city limits as well as state limits. That is what hurts poor people more than anything.

nakul · Post by **nakul** » 31 Jul 2012 22:33

The poor get the short end of the stick. While it is kosher to increase the CEO's income from 1.5 to 2 crore, an increase of 3000 for workers has to face endless reviews. This is what hurts the workers. An increase from 10k to 13k might make the difference between a public & private school for a kid. For the CEO, he might have to purchase a Merc over an Audi. Hence, the angst.

Theo_Fidel · Post by **Theo_Fidel** » 31 Jul 2012 22:49

Yes! it sucks to be an under-educated/under-skilled worker in a poor over populated country. What is the revelation here. The unions try to artificially increase pay through violence and hartals.

nakul · Post by **nakul** » 31 Jul 2012 22:52

What else can they do? Saying "Please, increase my salary" will be met with a my way or highway response. The hartal is the uneducated man's way of saying the same thing.

Uttam · Post by **Uttam** » 31 Jul 2012 23:32

nakul wrote:The poor get the short end of the stick. While it is kosher to increase the CEO's income from 1.5 to 2 crore, an increase of 3000 for workers has to face endless reviews. This is what hurts the workers. An increase from 10k to 13k might make the difference between a public & private school for a kid. For the CEO, he might have to purchase a Merc over an Audi. Hence, the angst.

With all due respect, sir, you seem to have bigger problem with high income of a CEO instead of the low income of the workers. You did not even read the forces I mentioned that determine wages: Demand and Supply of labor. No, I don't think anybody is entitled to anything more than a living wages, be it CEO or the shift workers. The CEOs make those wages because their skill set is more in demand and less in supply. The workers make low wages because their skill set is less in demand and more in supply. By not putting a cap on CEO salaries, you are more likely to attract talented managers who will help increase investment and thus demand for labor leading to higher wages of the labor.

Don't forget that the IAS officers are also a kind of CEOs whose salaries are capped. See how well they perform.

Theo_Fidel · Post by **Theo_Fidel** » 31 Jul 2012 23:58

nakul wrote:What else can they do? Saying "Please, increase my salary" will be met with a my way or highway response. The hartal is the uneducated man's way of saying the same thing.

How about doing some thing about the under-educated & under-skilled part. Or find a better paying job, elsewhere. The truth is Indian manufacturing skills are not in high demand world wide. Its all well and good to complain about wages and benefits but you are not contributing high demand skills into the pot. Can any of these folk operate even a CnC machine. Or for that matter the Tunnel boring machine in Chennai that Panda workers have to be imported for.

Just to give you some comparison.

Chennai BMW single shift production - 6,000 cars annually.
Alabama Mercedes single shift production - 80,000 cars annually.

Similar numbers of workers.

Suraj · Post by **Suraj** » 01 Aug 2012 00:06

Just a comparison of production numbers and workers in the Chennai BMW plant and Mercedes AL plant does not provide enough information. Their outputs are driven by their production goals for the individual markets. Wages are based on prevailing rates in each place. But I accept the underlying argument that we lack skilled manufacturing manpower.

V_Raman · Post by **V_Raman** » 01 Aug 2012 00:08

Theo - it is easy to compare USA vs India vs China. building and working with machines is a way of life which we have just started learning in India.

It takes many decades to build up the skill set of a country and you need sustained good economic environment for that. china climbed out of its agrarian ways during a period of exceptional stability that lasted close to 4-5 decades and they are still not there upto USA.

Unfortunately, we have the 2008 bust :-( and a drought to pile on :-(

vic · Post by **vic** » 01 Aug 2012 00:11

From personal knowledge- In Ludianan textile belt, a single machine requires one worker +assistant while similar factories in Cina have single lady worker for 3 machines.

Suraj · Post by **Suraj** » 01 Aug 2012 00:16

V_Raman wrote:Theo - it is easy to compare USA vs India vs China. building and working with machines is a way of life which we have just started learning in India.

It takes many decades to build up the skill set of a country and you need sustained good economic environment for that. china climbed out of its agrarian ways during a period of exceptional stability that lasted close to 4-5 decades and they are still not there upto USA.

Unfortunately, we have the 2008 bust :-( and a drought to pile on :-(

Worker training issues are not particularly correlated to macroeconomic cycles. There's no vocational training/school system to quickly impart skills, whether it be basic (e.g. concrete application) or advanced (something like glass cladding and TBM operation I would think). Most learn onsite. Imported Chinese workers are fine as long as they're used to train us and then sent back.

V_Raman · Post by **V_Raman** » 01 Aug 2012 00:21

my BIL sent his son to siemens automation training in chennai to gain exposure -- 2-weeks -- 1L and he is doing his MBA in dubai after BE in Instrumentation!

not affordable in india for majority of the workers nor are they skilled to take/understand it. we should have had more time to build up wealth with sheer labor supported by lot more MNC shops.

2008 crisis is truly unfortunate for the country...

Theo_Fidel · Post by **Theo_Fidel** » 01 Aug 2012 00:46

Suraj wrote:But I accept the underlying argument that we lack skilled manufacturing manpower.

It’s a bit more complicated than that.

We have skilled labor, it just is not at Manesar.

I keep coming back to the Asahi Glass plant in Chennai. Productivity rivals anything in USA and China. Almost every employee is a 4 year engineering graduate. 4 years ago the starting pay was Rs 8,000/m, with Rs 12,000/m+ after 1 year, but for engineers.

When you can hire a skilled engineer for Rs12,000/m the Manesar folk are clueless about the reality of their predicament. My guess is they will all be washed away like the deceased Bombay textile behemoth. In the past 20 years they have done precious little to upgrade their skills.

We always salivate about German workers without understand the enormous sums they spend on training and licensing.

Suraj, such training exists. It is called going to college and graduating.

V_Raman · Post by **V_Raman** » 01 Aug 2012 02:17

theo -- 1 plant as an example for india -- simply not enough nor is there enough talent regardless of the location. china needed gazillion factories for its population. we will need the similar scale for similar timeframe. there are no shortcuts.

MMS once said that we live in a unique period in history where development of india is not seen as a threat and the world is willing to help in that cause. i hope that remains the case even after 2008...

Singha · Post by **Singha** » 01 Aug 2012 08:34

how do the chinese manage to train such a enormous number of workers most of whom are presumably migrants from the villages?

are they trained for a while inhouse for focussed tasks or they have a system of ITI-MKI type schools stretching back to the fringes of the CAR grasslands in kashgar and gansu...?

perhaps they are best to learn from rather than a completely different culture and timeline like germany or khan.

khan · Post by **khan** » 01 Aug 2012 08:41

Singha wrote: how do the chinese manage to train such a enormous number of workers most of whom are presumably migrants from the villages?

Chinese workers don't have unions. The way to advance in Chinese society is to work harder and upgrade your skills (on the job if necessary). The labor force keeps improving.

In India the Unions keep the status quo. There is no real difference in the skill level of factory workers from 1980 to today.

Theo_Fidel · Post by **Theo_Fidel** » 01 Aug 2012 08:47

Singha, your assumption that Chinese labor is highly trained is faulty.

Chinese workers get paid same as Indian workers is how. That is why they are known for shoddy quality but cheap....

Singha · Post by **Singha** » 01 Aug 2012 10:28

well the same very same chinese workers you say have shoddy quality are producing a lot of high quality manufactured goods like iThings, telecom gear, ships, "pilkington glass" and so on.

this isnt a elite sub platoon, but lakhs of workers in foxconn and jabil circuit type setups. millions of workers in construction who are putting up expways, HSR, shiny shakinaw buildings at a rate unheard in human history.... they are even coming here to train indian workers in construction and so on.

nandakumar · Post by **nandakumar** » 01 Aug 2012 14:21

Theo_Fidel wrote:
Suraj wrote:But I accept the underlying argument that we lack skilled manufacturing manpower.
It’s a bit more complicated than that.

We have skilled labor, it just is not at Manesar.

I keep coming back to the Asahi Glass plant in Chennai. Productivity rivals anything in USA and China. Almost every employee is a 4 year engineering graduate. 4 years ago the starting pay was Rs 8,000/m, with Rs 12,000/m+ after 1 year, but for engineers.

When you can hire a skilled engineer for Rs12,000/m the Manesar folk are clueless about the reality of their predicament. My guess is they will all be washed away like the deceased Bombay textile behemoth. In the past 20 years they have done precious little to upgrade their skills.

We always salivate about German workers without understand the enormous sums they spend on training and licensing.

Suraj, such training exists. It is called going to college and graduating.

Theo
Hope you don't see it as nitpicking. Is it possible that you are referring to Saint Gobain glass making facility in Chennai and not Asahi?

Yagnasri · Post by **Yagnasri** » 01 Aug 2012 19:55

Suraj wrote:Just a comparison of production numbers and workers in the Chennai BMW plant and Mercedes AL plant does not provide enough information. Their outputs are driven by their production goals for the individual markets. Wages are based on prevailing rates in each place. But I accept the underlying argument that we lack skilled manufacturing manpower.

Is the plant in Chennai is the same are Alabama? With all the advanced gadgets? I do not think so. With regard to High Salaries of IIM damabaji fellows most of them does not deserve anything more than a clark salary. Most of the salary is being paid for brand value and nothing else. Some reasonable salary can be paid so that there is not much bad feeling among workers. Too much disparity in living standereds is not good.

Theo_Fidel · Post by **Theo_Fidel** » 01 Aug 2012 20:42

Narayana Rao wrote:Is the plant in Chennai is the same are Alabama? With all the advanced gadgets? I do not think so.

Can any of the Manesar types operate such equipment? I didn't think so either.

Singha,

Manesar type don't belong in a modern car factory. They will learn this the hard way....

WRT to Panda, they have cornered the market on ALL the low skilled items. From toys to widgets. If we want that low margin/high damage industry we will have to out do them in squandering resources and cheap everything. Are we ready to do that.

hnair · Post by **hnair** » 02 Aug 2012 03:18

nandakumar wrote: Theo
Hope you don't see it as nitpicking. Is it possible that you are referring to Saint Gobain glass making facility in Chennai and not Asahi?

I thought of the same. I heard good reports about the Saint-Gobain one.

Or maybe Theo-saar is correct and Asahi has a plant there?

Theo_Fidel · Post by **Theo_Fidel** » 02 Aug 2012 03:51

It's been 5-6 years since I visited the plant but it is Asahi Automotive division, don't think they do any Architectural glass there. I don't think too many people even know it is there to be honest. It is all B2B.

I have heard good things about Saint Gobain as well but I have no knowledge of their operations or hiring policy. Havn't managed to find a contact to arrange a visit so far.

Singha · Post by **Singha** » 02 Aug 2012 08:19

St gobain also has a plant in harohalli indl area on kanakpura road south of bangalore.

abhishek_sharma · Post by **abhishek_sharma** » 02 Aug 2012 20:49

shyam · Post by **shyam** » 04 Aug 2012 11:36

Jim O'Neill To India: 'What Is The Matter With You Guys?'

Not a great week – again. The country’s huge power blackouts highlight once more the scale of their challenges, and at the same time, ongoing economic indicators lead more to scale back cyclical GDP forecasts. In addition, they are the one BRIC nation that doesn’t appear to be here on mass in London. What is the matter with you guys? And yet the Indian Sensex index sits there proudly, +11.45% year-to-date.

gakakkad · Post by **gakakkad** » 05 Aug 2012 17:44

its been a while since I have posted in this dhaaga..been very busy of late...but i realise not much a moved here...neither has it on the Yindian economy front...

wonder if there is a place where Modi's Japan visit was adequately covered...

vera_k · Post by **vera_k** » 07 Aug 2012 06:57

Amazon will overtake Wal-Mart as world's biggest retailer by 2020

Rony · Post by **Rony** » 07 Aug 2012 22:06

India - a perfect example of perceptional economy ?

What else can we call an economy running on perceptions of the people and experts of that country?

Economy of perceptions is the term which can be coined for the Indian Economy. Indian economy started suffering FII rollbacks and domestic investor disbelief since the S&P rating downgrade in India. The inference of this downgrade was that the Indian Markets are not conducive for investments. In a very lay man term it said that the Indian Government’s Debt paying capacity was questionable, the Indian bonds were risky assets to invest in. India being a country ranked as third best economy to park your money or rather one of the best economy where in the time of doldrums all could rely upon with your investments was bought into question.

The S&P downgrade was followed in a few days by our Prime Minister Dr. Manmohan Singh announcing a bailout package of $ 10 billion for the Greece crisis.

The reactions were witnessed largely in stock markets and the currency fluctuations as well. The irony being that the anticipation of Greece crisis having huge Impact on India, being a major contributor to these turn of events.

When some data provided by Department Of Commerce & Import and Export Bank of India were analysed it was seen that
1. There was a downfall in the Indian Exports in the year 2011-2012 and that took a large dip but the reason behind this downfall was never the Greece Crisis or the downgrade it was the global economic scenario which in the coming days does not seems to ease up. For a matter of fact Greece contributes only 0.2526% of total Indian Exports which did notice a minute jump from the previous year.
2. Greece ranks 83rd amongst top 100 countries with which India has trade relations. Total trade being 2058.00 crores where as India’s total trade amounts to 2,826,102.04 crores

So for a country of India’s calibre which has continuously witnessed a decline in the External Debt to GDP Ratio over a period of last decade and a half being downgraded and a country’s people which will be, by far very mildly hit by a country’s crisis to fear in a big way is so very perceprtional.

Looking at the Indian Economy today we can see that we are surrounded by too many pressures of
1. High Inflationary Problems
2. Large amount of Scams
3. Black Money
4. Political Instability of our country

It is mere perceptions of the people of India that a slowdown is on the cards due to the expected downfall of Greece and some signals of the negative macroeconomic conditions in our country like expected slowdowns in many countries, distrust of people in their own economy and several other issues which is affecting India’s Trade Balances.

Despite so many issues concerning our economy there are so many companies in India which still finds India as a land of opportunities as for example Coco–Cola plans has planned an investment of $5 billion (Rs.28000 crores).

India Inclusive Growth story is not hidden from anyone. It may be on a decline due to many factors but “India Inclusive Wealth”. INCLUSIVE WEALTH REPORT2012 recently published by the United Nations under the supervision of Sir Partha Dasgupta of Cambridge University has found India amongst top 5 countries in creating Inclusive wealth.

In the time where Samsung SIII sales (Rs 38000 mobile) is leading in handsets being sold in India we are asking a question whether India has what it is required to sustain.

India’s biggest problem today is the perception of its country’s people towards its economy. Despite steady growth in GDP at a pace of 5%. India which is regarded as one amongst the top havens of investment is witnessing FII rollbacks and declining currency. The most perfect example of a “PERCEPTIONAL ECONOMY”.

Arjun · Post by **Arjun** » 08 Aug 2012 08:04

Rony wrote:India - a perfect example of perceptional economy ?

Amateurish article, probably because the author seems to be a newbie student. Not really clear what he was trying to convey. Global capital flows for any country have always been determined by a mix of perception regarding future outlook and hard reality / statistics - and India is not any different.

svinayak · Post by **svinayak** » 08 Aug 2012 11:10

Speaker: Patrick French
Chair: Professor Stuart Corbridge
This event was recorded on 3 February 2011 in Sheikh Zayed Theatre, New Academic Building
Award-winning historian Patrick French looks at the cultural roots of India's transformation: how a stagnant planned economy has become an entrepreneurial powerhouse, who gets super-rich and who remains super-poor - and why. Patrick French is the author of The World Is What It Is, Liberty or Death and Tibet, Tibet. This event marks the publication of his new book, India: A Portrait.

nawabs · Post by **nawabs** » 09 Aug 2012 06:11

Chidambaram hints at easing interest rates

http://timesofindia.indiatimes.com/busi ... 382967.cms

Finance minister P Chidambaram on Monday said the government was conscious that current interest rates were high and vowed to take measures to spur investment and ease the burden on consumers.

"High interest rates inhibit the investor and are a burden on every class of borrower, be it a manufacturer of goods or a purchaser of a home or a two-wheeler or a student who takes an education loan," Chidambaram said. "Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers. We will take appropriate steps in this regard," the finance minister said. Rising interest rates have increased the payout on home loans and have hurt auto and apartment sales.

The Reserve Bank of India (RBI) left interest rates unchanged in its latest policy review last month and highlighted the heightened inflationary pressures. It also put the onus on the government to reduce the stubbornly high fiscal deficit and restore the health of public finance for interest rates to come down. The RBI had raised interest rates 13 times since March 2010 to tame stubbornly high inflation. It eased policy rates by a surprising 50 basis points in its April review but had cautioned about inflationary risks. Since then, it has left interest rates unchanged twice. High interest rates have been cited as a key reason for the slowdown in growth and sluggishness in industrial growth.

abhishek_sharma · Post by **abhishek_sharma** » 09 Aug 2012 20:48

nawabs · Post by **nawabs** » 10 Aug 2012 06:54

Subbarao wants cash economy to go binary

http://www.dnaindia.com/money/report_su ... ry_1723708

The value of banknotes and coins in circulation in India tots up to 12% of GDP.

That’s too high a figure compared with emerging markets like Brazil, Mexico and Russia, said Duvvuri Subbarao, the governor of the Reserve Bank of India (RBI).

With just six non-cash transactions per person per year, India remains largely a cash economy.

“Retail payment systems, disappointingly, remain paper-centric,” he said, and asked banks to increase the pace of ‘electronification’ of transactions, pointing out that large-value payment systems have mostly made the shift.

Subbarao said India has just 63 ATMs and 497 points of sale (PoS) per million people, which is far too low for this day and age. Also, only a fraction of the 10 million-plus retailers in India can accept card payments.

“Though the usage of mobile banking and internet banking is growing, a significant percentage of customer base is not covered,” he said.

The shift away from the cash-based system has implications for monetary policy, Subbarao said, and asked: “Are banks taking the easy way out by being content with the measures initiated by the regulator, and following, rather than leading, the effort towards electronification of payments?”

He said banks need to focus as much on issuing cards as enabling retailers to install card-reading systems.

“Should we mandate that for a certain number of cards issued, the issuing bank should have a prescribed proportion of PoS terminals as well? There are cheaper user-friendly alternatives such as mobile PoS.”

Mobile network operators (MNOs) have already implemented a sharing system of towers and the same model can be adopted by the banks, Subbarao suggested.

Innovative products like Paypal Virtual Account and Google Wallet, which are popular in e-commerce because they are convenient, safe and efficient, have not been developed in India, Subbarao lamented.

Limited product innovation thus has led to sluggish growth of retail payment systems. Although private non-bank entities including MNOs have introduced prepaid payment instruments including mobile wallets, the market is yet to deepen, he said.

Tracing the historic transition of paper-based payment and
settlement systems to electronic modes like RTGS, NECS and NEFT, the governor said the central bank will continue to ensure that all such systems are not only safe, efficient, interoperable, authorised and accessible, but also further financial inclusion and compliance with international standards.

Gaurav_S · Post by **Gaurav_S** » 10 Aug 2012 07:19

^^Don't think Axis, ICICI even have mobile banking website. They do have mobile banking app but not dedicated mobile banking website. Only 63 ATM per million seems too less when you see ATM's here and there in every corner, but this is possibly limited to urban areas only where banks can get enough customers to justify the expense of having ATM and security guards.

Govt has 'badly lost its way', hurting economy: Moody's

nawabs · Post by **nawabs** » 10 Aug 2012 07:46

Industrial growth in June contracts by 1.8%

http://www.thehindu.com/business/Econom ... 745778.ece

Pulled down by a dismal show by the manufacturing sector, especially capital goods, industrial growth contracted by 1.8 per cent in June, the third such slide in four months, to reflect a further deterioration in the overall economic scenario.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, as well as Finance Minister P. Chidambaram, who had sought to talk the economy up at his maiden press briefing earlier this week, dubbed the IIP (Index of Industrial Production) numbers for June as “disappointing” while India Inc. found enough powder in the data to clamour for immediate policy action to prevent a further slide.

Reiterating the need to promote critical sectors to boost growth, Mr. Chidambaram, in a statement, said: “The Quick Estimates of IIP for the month of June are disappointing.

“It is important to focus on the critical sectors, remove bottlenecks, and give a fillip to production…The production will revive if there are new investments in the demand creating industries.”

Mr. Ahluwalia, however, found no reason to be very optimistic. “The industrial numbers have been disappointing for the first few months...I do not see robust industrial growth in the current fiscal,” he said while hoping that the initiatives announced by the Finance Minister on August 6 should help in boosting the economy during the second half of the fiscal year.

In fact, the IIP data released here on Thursday reveal such a dismal industrial growth scenario that Mr. Chidambaram will have to quickly translate the initiatives announced by him into action to boost investor confidence and investments to retrieve the situation.

As per the data, industrial growth in June declined to minus 1.8 per cent from a robust expansion of 9.5 per cent in the same month a year ago.

Consequently, the cumulative IIP growth during the first quarter (April-June) of the current fiscal stands pegged at minus 0.1 per cent as compared to a far healthier 6.9 per cent growth achieved in the same period last fiscal. In particular, the slide in factory output has been mainly on account of the capital goods sector showing up with a negative growth of 27.9 per cent in June.

No surprise, therefore, that the manufacturing sector as a whole ended up in negative territory with a 3.2 per cent contraction in growth during June.

The poor June performance of the manufacturing sector, which constitutes over 75 per cent of the IIP basket, also reflected in the April-June quarter with a decline by 0.7 per cent in growth as compared to a 7.7 per cent growth in the same quarter of 2011-12. Likewise, capital goods output also contracted by 19.6 per cent during the three-month period this fiscal as compared to a robust expansion of 17 per cent witnessed in the same period last fiscal.

Industry chambers, which had been alerting the government of the dismal situation over the past few months, expressed disappointment and demanded immediate policy actions to arrest further slippages.

Apex chamber FICCI called for a cut in interest rates to revive demand and boost investment. “There is a strong case for the RBI to cut interest rates further at least by 50 basis points immediately so as to encourage investments,” FICCI President R. V. Kanoria said.

As for the other segments of the IIP, mining output in June grew by just 0.6 per cent against a contraction of 1.4 per cent in the same month a year ago while its production in the April-June quarter declined by 1.1 per cent compared to a growth of 0.6 per cent in 2011-12.

Power generation saw a growth of 8.8 per cent during June, a tad higher than the 8 per cent increase logged in the same month a year ago. Electricity generation increased by 6.4 per cent in the first quarter of this fiscal as against 8.3 per cent in the same period in 2011-12.

Meanwhile, the industrial growth rate for May, 2012, has been revised upwards to 2.53 per cent, from the provisional estimates of 2.4 per cent.

nawabs · Post by **nawabs** » 10 Aug 2012 07:51

E-insurance will start soon: IRDA chief

http://www.thehindu.com/business/Indust ... 735081.ece

The Insurance Regulatory and Development Authority (IRDA), on Monday, said it would come out with exposure draft on investment norms, including swaps and hedging, for insurance products by the end of this week.

“The insurance industry has today reached an inflection point, and we can look forward with confidence to a couple of measures brought in to address issues. An exposure draft that we have been working on with industry representatives on the boundary condition of products will hopefully be up by end of week,” said IRDA Chairman J. Hari Narayan while addressing the 15th Confederation of Indian Industry insurance summit here.

“The new norms will have provisions such as swaps and hedges. We have taken baby steps towards risk based solvency. The exposure draft will have some measures and if we move along that route, we can correspondingly have a look at solvency margins. Conceivably, it will come down.

“The point is to think long-term and I do hope that 30 years from now, we will look back and say that the inflection point was well managed,” Mr. Narayan added.

Referring to the performance of the non-life sector, Mr. Narayan said, “the real growth, challenge and opportunity in insurance today lies in the non-life insurance sector in India. The existing insurance companies will have to recast themselves to take advantage of it.”

Mr. Narayan talked about some radical steps when he said, “To reach the full potential of the industry you need to ask yourself if you will allow agents to work across companies and whether an open architecture is feasible. And shouldn’t we, across companies within the group, share agents.”

At the same time, he stated that the industry needed to remember its core essentials. “The insurance industry can’t merely be pegged on better return of money. Its core remains the area of protection. Going forward, the focus of insurance will move towards protection and annuity provision.

And the industry will have to move so that the Life Insurance Corporation does not remain the only company providing annuity. Other players will have to move into the annuity market and give customers a genuine choice,” Mr. Narayan added.

IRDA Chairman also said e-insurance would start soon. “Repositories have already been selected and it will be in place shortly,” he added. The repositories are: NSDL, CDSL, Stock Holding Corporation of India, Karvy Group and Chennai-based CAMS Repository Services Ltd.