Indian Economy - News & Discussion 27 May 2012

[shyam]

Dude, I'm not talking about 22 carrot gold ornaments with labor cost added to it. I'm referring to gold bullion.

Ok. Trade your bullion (biscuits/ coins) and see what price you get . Surely it wont be the pre crash price!

You don't get it. When people want to buy bulk gold from metal dealers at current market price, they say that they don't have the stock. Either they are lying not wanting to sell at current low price, or it is just not available. If it is the latter, what keeps the prices low is paper gold.

[Theo_Fidel]

You don't get it. When people want to buy bulk gold from metal dealers at current market price, they say that they don't have the stock. Either they are lying not wanting to sell at current low price, or it is just not available. If it is the latter, what keeps the prices low is paper gold.

Shyam,

You are missing the point.

It is more lucrative for folks to sell jewellery of uncertain purity and workmanship than it is to sell bullion where the purity is known and margins are low. The margins are in the Jewellery business.

This problem has existed for a looong time, even in India.

[Singha]

In places without a major gold jewelry demand like new york i think its possible to buy certified gold bars and coins from the official makers in usa, canada, south africa etc.
Fw months back there was a huge scandal when thousands of 22k gold bars were found to be impure frauds though...got big play in the media.

[vishvak]

The unavailablility is not limited to India so this does not lead any vague doubts/theories about anyone. In fact paper gold is indeed something to be concerned about since paper gold is supposed to be linked to easy to value bullion gold. In fact paper gold means that the market should have enough gold worth the same.

[shyam]

Precious metal dealers sell gold at spot price, and they add their commission + tax to the price. The commission is where they make the money, and it varies from dealer to dealer and the quantity you buy. If the dealer is connected closely with the miners, you can even get discount from the spot price. If people are ready to compromise on purity requirement, he can get a discount upto 30%. I met a person with gold import license in India. He said he gets gold from people who deals with miners, he gets gold at 10-15% discount from the spot price, and sells them to jewelers. He said that big jewelers get gold directly from the miners, and they get them at heavy discount, but they sell to the people at market price + labor. No wonder why big jewelers are becoming billionaires in India.

[shyam]

The unavailablility is not limited to India so this does not lead any vague doubts/theories about anyone. In fact paper gold is indeed something to be concerned about since paper gold is supposed to be linked to easy to value bullion gold. In fact paper gold means that the market should have enough gold worth the same.

Paper gold is primarily futures contract, where they promise to give gold at certain price at a certain time. Recently there were reports that COMEX has allowed such contracts to be settled in cash, instead of real gold. So, these futures have no real meaning. Last time around the time these contracts were due, a major futures broker, M F Global, went bankrupt, taking customers money also with them. Its CEO was John Corzine who was Goldman Sachs head, and Democratic Governor of New Jersey before. Nobody from the company was tried for fraud / crime they committed.

[vishvak]

I was under impression that gold paper is like commodity receipt.

Thanks for the info.

Are the normal commodity markets also based upon futures contract mechanism?

[Prem]

There Was So Much Demand For Physical Gold In India This Past Week, Retailers Struggled To Keep Up
http://www.businessinsider.com/physical ... z2RJoNFDZi

Amid the gold crash, retail purchasers of gold are still buying heavily.
From Reuters:
Gold rebounded above $1,400 an ounce on Friday as strong buying of coins and bars continued, primarily in Asia, but prices were still on course for a fourth week of losses after a brutal sell-off. Gold retailers struggled to cope this week as parents buying dowries, casual shoppers and tourists snapped up bars, coins, nuggets and jewellery as a slump in the price of the yellow metal released years of pent-up retail demand.

[Neshant]

Neshant,
I note you don't offer an option. Offer an option and then you can criticize, till then it is pointless.

I'm not sure what you mean by option. I am pointing out that SS is a forced ponzi scheme. Speaking of options, it should have an opt out clause so those who are wise to it may have the option of jumping out of the pot.

We had this argument over ponzi scheme a few months back. This claim is easily discredited.

Which claim specifically are you referring to? SS is a proven ponzi scheme by virtue of the fact that people who pay in today will get far less than those who are collecting now. An ex-trustee of SS was interviewed on the radio and could not identify a single difference between SS and a ponzi scheme.

The vast majority of Americans do not make enough money to save.

This is the part of your post I don't understand. If the vast majority do not make enough money to save, where is the money coming from for them to retire? Right now, SS is setup as a classic Madoff ponzi scheme. As with all ponzi schemes, it is mathematically certain to collapse or default - which it already is doing via inflation statistics gimmicry and soon enough cuts altogether. In any ponzi scheme, the sooner it is ended the better off society is. If the Madoff scam was ended 20 years ago, a lot fewer people (especially the taxpayer who had to foot the "insurance" claims of his victims) would be better off.

Also I'd question your claim that "the vast majority" do not make enough money to save. They seem to make enough to buy LCD TVs, good cars, eat out at restaurants..etc. Lot of people are expecting someone else to save for them and they'll cash the check.

Between the crooked banking "industry" (which is a scam not an industry) and the folks above, US will decend into a semi-3rd world status country within the forthcoming years. The idea of honest labor, innovation and capitalism has gone out the window and in its place are a hoard of crony capitalism bankers, govt employees demanding gold plated taxpayer funded pensions, SS ponzi schemes and other such nefarious activities.

Its bad news br0thas.

[Neshant]

These days, not even the 401ks are safe.

There's been talk at the official level that it should be siezed by the govt and converted into a lifetime annuity (of worthless IOUs) to balance the ballooning debt problem. Plus turning it into a forced contribution scheme like the SS ponzi.

[Austin]

Indian economy impacted by global growth slowdown, says Chidambaram

[Suraj]

Indian economy impacted by global growth slowdown, says Chidambaram

I wish the Finance Minister would stop talking about why he thinks the economy is growing and starts talking more about what he intends to do to. First it's gratuitous statements to Indian citizens about gold, and now this. I've heard little from him recently on his plans to address structural issues with the economy.

[Austin]

I've heard little from him recently on his plans to address structural issues with the economy.

What kind of structural issue does Indian Economy needs to address , Can you you share your views on it ? Thanks.

[Suraj]

I've heard little from him recently on his plans to address structural issues with the economy.

What kind of structural issue does Indian Economy needs to address , Can you you share your views on it ? Thanks.

I'm not the finance minister But my own opinion is that policymaking must focus on enhancing savings and investment; GDP growth is just return on invested capital. Some thoughts:

High cost of capital makes borrowing expensive, and there's simply not enough domestic capital to invest in infrastructure projects. For example, major metro projects depend on low cost Japanese capital.

Aggressively promoting personal and corporate holdings of infrastructure related bonds through tax savings, and even tax amnesty schemes, e.g. no/minimal penalty if black money is declared and invested in infrastructure bonds. A more controversial measure might be that gold purchases eliminate tax savings for such bonds in a given year, or even more punitively, subject taxpayers to higher IT base rates. The goal here is to direct personal savings into public or corporate bond measures targeting fixed asset creation. This could include investment in rural investment projects (instead of dole programs like NREGA), e.g. investment in rural electrification or road development projects entitles individuals to tax savings or even tax credits (e.g. a fixed sum reduced from the tax bill) for a sizeable bond investment.

Clear and push the development of multiple major investment projects that have been stalled - UMPPs, steel plants like POSCO and Mittal's projects.

Further, promote export growth. The current world economic situation isn't substantially worse than it was 1-2 years ago. While export growth then was strong, it has fallen significantly this fiscal. Particularly, with the Rupee at essentially the lower end of the exchange rate band over the last 5 years, there's no reason exports should not be growing. Here's a very recent step in the right direction.

Overall, exports for the 2012-13 fiscal year declined by ~2% in dollar terms, after growing by more than 20% the previous year. This, despite exports from SEZs continuing to grow strongly each year. This suggests that without the low tax and regulation environment of SEZs export growth is difficult to maintain, and that there's significant potential for reforms that will lower the different in overhead between SEZs and non-SEZ exports.

Further deregulation of price controls on petroleum products and fertilizers so that prices move with global crude price trends will ensure GoI isn't saddled with a subsidy bill from the PSU refiners.

Targeting export promotion, investment in infrastructure bonds over gold holdings, lower oil subsidy cost to government, and eliminating programs like NREGA in favor of promoting rural infrastructure programs funded by tax advantaged bonds funded by the public, would lower the current account deficit and help lower domestic cost of capital and inflation.

[amit]

^^^^^

Nice post Suraj.

I would just add: Getting GST back on centre stage is another thing our FM should do asap. A GST regime could straight away do two things IMO: a) Add a couple of percentage points to our GDP growth number; and b) Make it worthwhile for companies to set up units in backward areas, thus improving GDP distribution.

BTW, has anyone considered the fact that Chidambaram Saab could be making these comments in order to begin the process of projecting himself as the PM candidate for the Congress in 2014? Since Rahul Gandhi seems more comfortable in back stage role like his mom, Congress is looking for a successor to MMS.

[member_20292]

Suraj...its not necessary that all the fixed asset investment that the govt makes, will lead to good returns??!

If the tax income does not pick up from all the aforementioned roads, then what will we do? How to service the bond returns???

[JE Menon]

>>BTW, has anyone considered the fact that Chidambaram Saab could be making these comments in order to begin the process of projecting himself as the PM candidate for the Congress in 2014?

Entirely possible. But for now, the momentum appears to be favouring RahulG in that role... None of the sycophants (which basically means everybody other than those in the family) have the balls to even look in any other direction it looks like. All neatly deballed and/or hysterctomised.

[amit]

>>BTW, has anyone considered the fact that Chidambaram Saab could be making these comments in order to begin the process of projecting himself as the PM candidate for the Congress in 2014?

Entirely possible. But for now, the momentum appears to be favouring RahulG in that role... None of the sycophants (which basically means everybody other than those in the family) have the balls to even look in any other direction it looks like. All neatly deballed and/or hysterctomised.

JEM,

The sycophants would certainly want RahulG (btw I like the way you shortened the name and thus put the accent on "G" ) to be the leader as they'd rather be a sycophant of the family rather than be one of a lesser being - a non family member.

However, Chidu bhai is saying all the right things. For example from here (yesterday's news).

Answering questions at The Economist's India Summit here, Chidambaram said he would like to "remain a worker of the Congress party".

"I did not have enough opportunity to work at party level, except for brief period when I was general secretary of state Congress party. I want to prove that I can also do party work. I will love to do party work, but I would do whatever the party asks me to do... I sincerely hope the party will allow me to travel, read and write," Chidambaram said.

Now doesn't this sound familiar?

BTW, if given a free hand (I know that's a damn big "if") IMO he'd any day be a better PM than Rahul Baba.

[panduranghari]

What kind of structural issue does Indian Economy needs to address , Can you you share your views on it ? Thanks.
I'm not the finance minister But my own opinion is that policymaking must focus on enhancing savings and investment; GDP growth is just return on invested capital. Some thoughts:

High cost of capital makes borrowing expensive, and there's simply not enough domestic capital to invest in infrastructure projects. For example, major metro projects depend on low cost Japanese capital.

Aggressively promoting personal and corporate holdings of infrastructure related bonds through tax savings, and even tax amnesty schemes, e.g. no/minimal penalty if black money is declared and invested in infrastructure bonds. A more controversial measure might be that gold purchases eliminate tax savings for such bonds in a given year, or even more punitively, subject taxpayers to higher IT base rates. The goal here is to direct personal savings into public or corporate bond measures targeting fixed asset creation. This could include investment in rural investment projects (instead of dole programs like NREGA), e.g. investment in rural electrification or road development projects entitles individuals to tax savings or even tax credits (e.g. a fixed sum reduced from the tax bill) for a sizeable bond investment.

Clear and push the development of multiple major investment projects that have been stalled - UMPPs, steel plants like POSCO and Mittal's projects.

Further, promote export growth. The current world economic situation isn't substantially worse than it was 1-2 years ago. While export growth then was strong, it has fallen significantly this fiscal. Particularly, with the Rupee at essentially the lower end of the exchange rate band over the last 5 years, there's no reason exports should not be growing. Here's in the right direction.

Overall, exports for the 2012-13 fiscal year declined by ~2% in dollar terms, after growing by more than 20% the previous year. This, despite exports from SEZs continuing to grow strongly each year. This suggests that without the low tax and regulation environment of SEZs export growth is difficult to maintain, and that there's significant potential for reforms that will lower the different in overhead between SEZs and non-SEZ exports.

Further deregulation of price controls on petroleum products and fertilizers so that prices move with global crude price trends will ensure GoI isn't saddled with a subsidy bill from the PSU refiners.

Targeting export promotion, investment in infrastructure bonds over gold holdings, lower oil subsidy cost to government, and eliminating programs like NREGA in favor of promoting rural infrastructure programs funded by tax advantaged bonds funded by the public, would lower the current account deficit and help lower domestic cost of capital and inflation.

Though your points are salient, the fundamental reason for the financial circumstances in India (in addition to the Socialist measures of the UPA government) is the changing paradigm of the debt based monetary system that is imploding globally. Historically - since west has dominated trade and commerce globally- every 40 years we have had a new financial system. The current system started in 1971 is using paper which has nothing backing it. In 1800's the US and UK controlled system was backed by gold and then silver and back and forth until 1907 when it was tied to gold. When America gained its ascendancy the UK pound (which stood for a pound of sterling silver) moved down the pecking order which started with the 1st world war. The US Dollar since 1907 was backed by gold at an exchange rate of 20$/oz of gold which rose to 35$/oz after the great depression of 1929 and Roosevelt forcing the Americans to turn in all the gold. The Bretton woods conference gave primacy to US dollar as main exchange standard. Though it was opposed by all, due to backing of gold the world just stuck with it. It finally changed when US went off the gold standard on 15 Aug 1971. The past 42 it has been an paper standard. The problem for poor third world countries has been that no matter how much they tried to save in dollars (as dollar was a de facto global currency) US could just print it for no cost. The G8 via IMF and World bank did the same as they saw the benefits. We in India suffered this and what we are seeing now is the terminal stage of this monetary experiment. The reason we have got to where we have got to is - Gold was taken out of the equation. The next financial system will have gold as an integral part of the set up. That is only way towards stability.

India and other developing economies are doing everything they can. but the game i rigged and the people who rigged it control the pieces.

Just my 2 paisa opinion.

[Theo_Fidel]

There is zero chance of the world going back to a gold standard.
For one thing the world GDP today is 40 times in real terms what it was when the gold standard was abandoned for worsening the great depression amongst other things.

For another mining techniques and equipment have improved to the point where 2,500 tonnes of gold floods into the world market every year. Consider that through history only about 90,000 to 110,000 tons of gold has been mined. In Alaska alone there are gold mining plans that will flood 20,000+ tons of gold onto the markets over the next few years. At $1,500 an oz there is literally millions of tons of gold that is financially viable to recover. There is no shortage of gold in the earths crust, extraction only limited by price.

[RoyG]

There is zero chance of the world going back to a gold standard.
For one thing the world GDP today is 40 times in real terms what it was when the gold standard was abandoned for worsening the great depression amongst other things.

For another mining techniques and equipment have improved to the point where 2,500 tonnes of gold floods into the world market every year. Consider that through history only about 90,000 to 110,000 tons of gold has been mined. In Alaska alone there are gold mining plans that will flood 20,000+ tons of gold onto the markets over the next few years. At $1,500 an oz there is literally millions of tons of gold that is financially viable to recover. There is no shortage of gold in the earths crust, extraction only limited by price.

It's all about the pricing per unit. If you drastically raise the price per ounce it's possible to represent most of currency in circulation. Gold is increasingly becoming a critical element in the stability equation. Central banks are preparing for it which is why they are trying to hoard as much as possible. I can see us going back to a 40% backing in the US.

[Suraj]

amit: Good point about GST. Unfortunately that issue has been so politicized lately that I can no longer recall which party has issues with what

Blaming fiat based currencies for our problems is funny. It sounds like things would have been ok if there was some form of a gold standard. Well, the Rupee has never been under such a standard in the first place. For most of our history, high structural inflation was commonplace, and it was worse than it is now. It is only the early 2000s that showed us the potential of a low inflation / high savings regime to generate growth.

A gold standard is just another form of FRBM act - it compels the government to be fiscally and monetarily prudent. They - certainly not either UPA regime - have not shown such a tendency at all. All that will happen if such a standard is applied, is that GoI will regularly pass executive orders raising the Rs/ounce base to support its continued monetary inflation, making such a standard essentially worthless.

[pentaiah]

there is no shortage of capital wih in India or with in Indian resources.
The basic threat to any capital intensive projects in India are the political uncertinities, the labor union and labor laws and finally the masive corruption with in GOI.

Everybody wants foreign aid to siphon, or bend the laws to amass wealth through favors, even tatas (radia Tapes)

as long as there is no deterent against corruption, and laws are not followed and justice is not swift nobody in their right mind will invest in lonterm, long gestation and time intensive projects to break even for get profits no one will invest.

[Neshant]

Gold just hit 1465, up from its low of 1350.

Meanwhile the UK is now officially in a triple dip recession - not that not it comes as a surprise. Masking the problem with currency devaluation through money printing and ripping off savers & wages earners will only get a country so far.

[Neshant]

For another mining techniques and equipment have improved to the point where 2,500 tonnes of gold floods into the world market every year. Consider that through history only about 90,000 to 110,000 tons of gold has been mined. In Alaska alone there are gold mining plans that will flood 20,000+ tons of gold onto the markets over the next few years. At $1,500 an oz there is literally millions of tons of gold that is financially viable to recover. There is no shortage of gold in the earths crust, extraction only limited by price.

Only 2% of the total amount of gold in the world is added to supply every year. 2500 ton production output has been static for the last 5 years - and that's with all the investments having gone into mining. Incidentally 2% is the real rate of growth the world historically achieves every year which makes gold a good representation of money.

It takes just 150 billion to buy up an entire years production of gold. By contrast the US alone is spending 1500 billion in deficit every year. That's deficit, not it's budget.

Where would 20000 tons be coming from, sounds like a made up story.

If the world did return to a gold standard, it's not because it wants to but because it has to. Loss of faith in paper money, banking crooks and govt being the reason.

Right now we are on a semi gold standard with prices reflecting faith in recovery and govt finances. I also notice that everytime gold is knocked down in price, people dump paper gold investments but use the opportunity to buy up physical gold. I'm watching the spread between paper and physical to see if it widens.

[panduranghari]

There is zero chance of the world going back to a gold standard.
For one thing the world GDP today is 40 times in real terms what it was when the gold standard was abandoned for worsening the great depression amongst other things.

For another mining techniques and equipment have improved to the point where 2,500 tonnes of gold floods into the world market every year. Consider that through history only about 90,000 to 110,000 tons of gold has been mined. In Alaska alone there are gold mining plans that will flood 20,000+ tons of gold onto the markets over the next few years. At $1,500 an oz there is literally millions of tons of gold that is financially viable to recover. There is no shortage of gold in the earths crust, extraction only limited by price.

Gold standard. Who is going back to gold standard? I never said anything about gold standard.

When you understand how it is that it is economically (and therefore politically) undesirable for other major currencies to appreciate against their peer currencies (which is exactly what would happen to any currency replacing the dollar’s reserve status), you will subsequently know why gold shall continue to emerge as the de facto solution to the international reserve question.

And here I emphasize de facto rather than de jure because this has become a global phenomenon driven by a natural evolution (survival and ascent of the fittest) and does not require any additional international treaty or enabling legislation as a prerequisite or for motivation.

The breeze is fair and the road ahead is clear for the ascent of gold.

http://www.ecb.int/press/pdf/wfs/1999/fs990108en.pdf

Look at line 1 of assets. The above statement is from 8 jan 1999 when Euro was launched.
This is the latest.
http://www.ecb.int/press/pr/wfs/2013/ht ... 23.en.html

And after you think about it for a while, maybe you'll start to understand why gold was the asset chosen to occupy the #1 spot on the Consolidated Financial Statement of the Eurosystem, and why this is a key driving force (along with impartiality and systemic stability) behind the evolution to a 90+% gold proportion of reserves in the new international "Freegold-RPG" monetary system.

[Prem]

Why India Will Pass China - And How To Invest
http://seekingalpha.com/article/1367251 ... -to-invest

The eastern hemisphere is growing at a rate much faster than the western hemisphere, with China recently announcing GDP growth at 7.7% (compared to U.S estimates of 2-3%), but just who exactly will be the powerhouse in the east over the next 20 years?China's reining position as the world's most populous country is projected to come to an end by 2025, when rapidly growing India's population is expected to surpass that of China's. While demographic professionals have long been aware of this looming shift, projections have moved the date for the expected shift earlier.In 2009, The U.S. Census Bureau released population estimations for 21 countries, in which it determined that China's population is projected to peak at slightly less than 1.4 billion people in 2026, and that India's population will surpass that of China's in 2025. As of 2012, the World Population Data sheet [pdf] estimates China's population at 1.35 billion and India's at 1.26 billion.

The Census Bureau data also estimates that new entrants into China's labor force may be near its peak, as the population of Chinese 20- to 24-year-olds is projected to peak at 124 million this year. India's population of 20- to 24-year-olds is not expected to peak until 2024, when it hits 116 million.
Despite China's shrinking younger population, its labor force may continue to grow for a few more years, as the population that includes ages 20 to 59 is not expected to peak until 2016, when it is projected to reach 831 million, an increase of 24 million over the current level."Given that China and India together account for 37 percent of the world's population, their demographic trends have major implications for worldwide population change," noted the Census Bureau in releasing its revised figures. Population changes also hold inherent major economic implications. "These changes in China's age structure may affect its economic growth and competitiveness in the world marketThe aforementioned statistics provide support for my contrarian belief that democratic India will emerge as the economic powerhouse of Asia, as opposed to autocratic China. Ultimately, I personally believe that India will take over as the most powerful economy is the east within the next two decades. I also believe that India holds far more promise than China as a long-term investment, especially given how rapid and high up China's economy has climbed in the past decade

[Prem]

Chart If GeeDeePee JII

[Prem]

http://www.firstpost.com/economy/huff-p ... _medium=hp
Huff, puff, India will finally be a $2 trillion economy this year

After missing the bus for two consecutive years, thanks to an accelerating slowdown, India will probably keep its tryst with a $2 trillion economy this year.

According to the Prime Minister’s Economic Advisory Council (PMEAC) headed by C Rangarajan, the Indian economy’s GDP will hit $2,126 billion (i.e. $2.12 trillion) this year if growth rises to 6.4 percent as projected in real terms. Even if it doesn’t, making the leap from $1,847 billion last year to at least $2,000 billion will be nixed only if we have a further dramatic slowdown this year. Which, even the UPA’s ill-wishers will acknowledge, is unlikely in an election year, when a flood of black money usually rejuvenates the economy.The real story, though, is the story of missed opportunities. The PMEAC had predicted an economy of $1,944 billion in 2011-12, which, with some rupee appreciation in a high-growth year, could have hit $2 trillion. But not only did the economy head south due to the policy paralysis, even in the following year (2012-13) the rupee’s weakness ensured that the $2 trillion target was not achieved.
Even now, if growth falters for whatever reason, and if the rupee tanks to Rs 60 because the current account deficit (CAD) soars again, we may still miss the $2 trillion mark in 2013-14.As we said, that appears unlikely at this point, but then who thought growth in 2012-13 would hit a decade’s low?None of this has prevented the PMEAC from hoping for pie in the sky. Says the Council’s report: “The next decade will be a crucial decade for India. If we grow at 8-9 percent per annum, we will graduate to the level of a middle-income country by 2025. It is once again a faster rate of growth which will enable us to meet many of our important socio-economic objectives.”The reality is this: raising growth from 5 percent to 8-9 percent will remain a pipedream without dramatic reforms. Especially in factor markets such as labour and land. While there is no sign of labour reforms, land reforms are heading in the direction of a further escalation in costs, which can only slow down growth and destroy jobs.To be sure, India is already a “lower middle income” country by World Bank definition. The Bank classifies countries with per capita national incomes below $1,025 as low-income, those in the $1,205-4,035 range as lower-middle income, those between $4,036-12,475 as upper middle income, and those above $12,476 as high income countries.

The PMEAC is chuffed that gold and oil imports are falling, but even with this it is projecting an increase in the absolute CAD numbers for 2013-14 at $100 billion, against $94 billion in 2012-13. The merchandise trade deficit itself was $200 billion last year, and could rise to $213 billion in 2013-14. Only remittances and more foreign borrowings enabled us to bridge this gap last year. It will be the main challenge this year too. “Controlling CAD remains our main concern at present,” the PMEAC acknowledges.In percentage terms, CAD is expected to decline from 5.1 percent of GDP last year to 4.7 percent this year, but one wonders if this is entirely consistent with expectations of higher growth of 6.4 percent. The question is whether growth will worsen the CAD (growth requires more energy, especially oil) or improve it, unless exports revive. If CAD worsens beyond what the PMEAC estimates, and if the climate for foreign investment inflows is negative, we should expect the rupee to stay weak.

[RoyG]

A Decade of Decay thanks to policies of Congress.

[JE Menon]

Amit, macha I entirely agree with what you said about Chidu in the first post... he has the ambition, and the intelligence to be the PM under SoniaG. Which means that instead of being the result of a Wiki image search for "Catatonic" (like our current PM), he might graduate to one which is merely "platonic". This will give enough time for RahulG to grow into the role, which is to say he will get some gray hair, lose some hair, spend some more time in the "heartland", perhaps get an expression that has evolved from one of permanent perplexion to occasional understanding, and maybe - just maybe - show something in the manner of a personality in a way that the whole country can see it (if it chooses to, which it may not).

>>BTW, if given a free hand (I know that's a damn big "if") IMO he'd any day be a better PM than Rahul Baba.

As things stand, my uncle's german shepherd would be a better PM than that chap, even on a bad day.

[Arjun]

Amit, macha I entirely agree with what you said about Chidu in the first post... he has the ambition, and the intelligence to be the PM under SoniaG.

Hmm, interesting. You may be right... Chidu probably does not cross the threshold of ambition and intelligence that would disqualify him as a puppet PM for the Dynasty.

[Suraj]

Chidambaram isn't a party heavyweight. He's neither a big vote winner, nor has a history as a kingmaker or right hand man like PVNR. He's a young turk and his past history in the finance ministry makes it unlikely to me that he will make a half decent PM. Lots of smoke without much fire is how I see him.

[Gus]

The only reason Chidambaram looks good is because of dimwits and numbnuts there. Look a little deep and you will realize that he has not really done much in the past 10 years.

[gakakkad]

chidu has a history with the trade unions and was a ardent leftie during his college days..god knows where he got the tags of "pro-reform" or "pro bij-nej".. perhaps because he is mba from hairbird..

people think he is intelligent because he speaks decent angreji... typical yindian mindset of associating intelligence with angreji...

[vic]

I have dealt with Chidu on professional basis and he is one of the most brilliant minds there is! Off course everybody has a right to differ with what he does use this brain for.

[Singha]

Imo ak antony might make a better pm esp given the hyenas gnawing away at the borders

[RoyG]

I have dealt with Chidu on professional basis and he is one of the most brilliant minds there is! Off course everybody has a right to differ with what he does use this brain for.

Intellect doesn't always translate into wisdom.

[Suraj]

I have dealt with Chidu on professional basis and he is one of the most brilliant minds there is! Off course everybody has a right to differ with what he does use this brain for.

I haven't dealt with him directly, but know someone quite close to me who did, for several years. I don't question his intelligence. He has plenty of that. I just do not think that alone qualifies him to be a good PM. He would make a spectacular uber-bureaucrat though. I would say he could make a great right hand man/consigliere but he doesn't have the background within the party that PVNR did, nor any substantial grassroots vote generation power outside his constituency.

I agree with Singha: AKA is a good choice for the Congress party . Yuvaraj can stick to his chosen profession of doing youth icon photo ops in the middle of nowhere.

[Prem]

Foreign investment funds march back into India
http://gulfnews.com/business/markets/fo ... -1.1175847

Deep-pocketed foreign funds are trooping back into Indian stock markets in the wake of expectations that Asia’s third largest economy may have bottomed out and a recovery would revive investment, boost corporate earnings and ensure higher returns to investors.In five trading sessions to Thursday, foreign portfolio flows into shares topped $1.3 billion (Dh4.8 billion), data from the Securities and Exchange Board of India showed. That was a big turnaround from being net sellers for much of early April.“Confidence is returning to the market,” said equity salesman Anmol Bhushan. “There is a strong feeling the worst of bad news is behind us. The big boys have scooped up bargains but prices are still very attractive.”Providing a shot in the arm to the bulls will be an interest rate reduction by the Reserve Bank of India on Friday, when the central bank reviews monetary policy. Expectations are for a 25 basis points cut in the short-term repo rate, and a commentary indicating more reductions in the coming months.
Lower borrowing costs could deliver a strong incentive to revive consumer spending and help bolster sales of everything from cars to refrigerators and TVs. It will also encourage companies to pour money into expansion and new projects, both vital to create jobs and boost economic growth that has slowed to its weakest pace in a decade.Ahead of the RBI decision, the US Federal Reserve and the European Central Bank will hold their meetings and indications are that they would continue with their easy monetary policy, ensuring global liquidity remains well oiled.“For India, the excess cash in the global banking system is good news,” said equity strategist V. Venugopal. “It means portfolio inflows will stay robust as investors chase potentially higher returns.”
C. Rangarajan, the chairman of the Prime Minister’s Economic Advisory Council, forecast the nearly $2 trillion economy to expand 6.4 per cent in 2013-14, compared with around 5 per cent estimated for the past financial year ended March. Although the rate is well off the near 10 per cent rise until two years ago, the pace is sharply above those in the US and Europe.
“I believe we have reached the bottom, the economy will now continue to grow at a faster rate,” Rangarajan said. “The very high level of investment rate that we have even now gives us the hope that if we take action for speedy implementation of projects, we can achieve the higher rate of growth quickly even in the short term.”The flush of global liquidity is also driving foreign investors to Indian debt, which offers far better returns and relatively lower risk. A government auction on Monday of entitlement to buy Indian federal debt drew a solid interest. Foreign funds put in bids for Rs 348.5 billion of quota, a third more than the Rs291.08 billion on offer.Based on the limits won, the foreign investor can buy government debt. Under simplified rules announced early this month, foreign investors can invest up to a combined $25 billion in government debt and up to $51 billion in corporate debt a year.Such inflows could receive another boost if global rating agencies upgrade their call on India. New Delhi has made a strong pitch with Standard & Poor’s, highlighting measures undertaken to rein in a high fiscal deficit, kickstart investments and revive growth.