Indian Economy - News & Discussion 27 May 2012

subhamoy.das · Post by **subhamoy.das** » 19 Aug 2013 08:29

I donot think that it is the CAD which is causing the rupee to tumble. It is because the business community has given up on the UPA lead GOI for ushering in populist measures after measure for vote bank - remember they have no mass leader and hence the relying on populist measure - and no real reforms has been done in last 10 years and not only that they are undoing the reforms done between 1990 and 2004. So if I ware an investor i will run with my money and come back only if the reforms kick in. CAD it self is around 4% of GDP which is not bad. Fiscal deficit is also 4% and not bad. So the real cause is the complete trust deficit the investors have in the folks handling the economy. And u can see the same trust deficit in the citizens at large. So the current situation has 200% to do with vote bank politics.

Christopher Sidor · Post by **Christopher Sidor** » 19 Aug 2013 14:31

India Markets Plunge Pressures Singh as Economy Teeters --- Bloomberg Dated 19Aug2013

UPA has been in power for close to a decade. In these ten years we have actually seen CPI in excess of 10% for every year that UPA has been in power. All due to constraints on the supply side. On the demand side the things a fine. There is a pent up demand. But it is the supply bottlenecks which are causing issues. This is not a revelation in the fag end of UPA tenure. Rather this was a revelation in the fag end of UPA-I. For the past 10 years, this government has simply sat on itself and become addicted to the opium of cheap foreign inflows. There is a saying, money hides a thousands flaws. In our case Cheap foreign money chasing alpha, has hidden a million flaws.

We had snickered at LK Advani when he had said "This is a nikama PM." Right now his words are ringing in true, not only for the PM but for the ruling dispensation too. No wonder people are comparing the decade long rule of UPA with the rule of Narendra Modi in Gujarat.

Cosmo_R · Post by **Cosmo_R** » 19 Aug 2013 15:04

Here's the new narrative taking shape to replace the 'rising power' one of yesteryear;

http://www.nytimes.com/2013/08/19/busin ... world&_r=0

" But after more than a decade of largely futile efforts not only to tap into India’s domestic market but also to use the country’s vast employee base to manufacture exports for the rest of Asia, many major foreign companies are beginning to lose patience. And just as they are starting to lose heart, a reviving American economy has led investors to shift funds from emerging-market economies back to the United States.

The Indian government recently loosened restrictions on direct foreign investment, expecting a number of major retailers like Walmart and other companies to come rushing in. The companies have instead stayed away, worried not only by the government’s constant policy changes but also by the widespread and endemic corruption in Indian society. "

habal · Post by **habal** » 19 Aug 2013 15:39

India has been set up by Chidambaram, & gang to replace India's foreign exchange reserve by IMF SDR. Future loan will also come via this route and it will become defacto Indian international currency. We always knew that our dollar income was less than dollar outflow, yet the mechanism that was selected to gloss over this was FII hot money, which now seems like a method to wean in more sucklers into this system. Now slowly that is nearing an inflexion point, we shall be taken away from life-support. Check how corrupt Pakistan is also in front of the IMF line. Maximum number of sell-outs in the world reside in both these countries. They at least have some religion-based ideology, we don't have that either.

think about it, the govt in power, plays so innocent and helpless to not realize what is coming. It does not take preventive measures then, but increases the dollar inflow-outflow gap further by splurging. What is happening now, is pretense of band-aid. RBI intervention is only name-sake, there is hardly any report on how much dollar-release RBI does to control rupee fall. It used to be the case 10 years ago. Precise numbers and figures were released from RBI on how they stabilized rupee. Nowadays it's jsut RBI tried & failed. Poor thing, can hardly get anything done.

India is fully in sync with IMF, another ex-IMF guy is coming in to ensure that we do not commit any silly error. Everything going as per plan.

Muppalla · Post by **Muppalla** » 19 Aug 2013 15:54

For more than a decade, Indians are consuming a lot and now asking them to change habits like in 90s is difficult. In simple terms a person who become upper-middle class to go back to lower middle class life style is difficult. He will do everything and sometimes compromises even on values to maintain the acquired lifestyle.

Now if India goes into IMF ring again like in 1990s, we are heading for a realistic shot at CTBT, NPT and giving up Nukes kind of deal before the regime that was anointed on India for the same reason goes out.

vishvak · Post by **vishvak** » 19 Aug 2013 16:01

While it's easy to tax gold, UPA has not shown the same zeal to target Chinese items for a decade now that directly competes with local industries, no dumping duties or done nothing to stop addiction of debt management with FII hot monies or plain debt to service debt.

habal · Post by **habal** » 19 Aug 2013 16:08

Chinese are in all likelihood going to be managing-partners of this new system, & thus the need to keep them in good humor.

The decade of high-consumption was obviously a ruse to get in more people addicted to the present skewed system. This is an elaborate charade.

Christopher Sidor · Post by **Christopher Sidor** » 19 Aug 2013 16:20

NaMo's Letter to PM opposing Food Security Bill as it stands

NaMo makes 5 points. Out of which only one point is relevant the fourth one. All the other 4 are nitpicking not worthy to be spent time on. I will quote verbatim what he has said

NaMo's letter to PM on Food Security Bill wrote: I am also pained to note that the Food Security Ordinance does not assure assure an individual of having 2 meals a day. I fail to understand that how food security for the individual is being assured. The proposed entitlement of 5kg per month per person implies the supply of 165 gm per person per day. Persons involved in labour intensive activities require about 2500 calories per day as per NIN 2009 recommendation. As 100 grms of food will give about 350 calories, 165 grms would provide only 500 calories per day which is hardly 20% of his daily calorie requirements. Even in the Mid-day mean scheme administered by the Ministry of Human Resources Development, Government of India, school going children are entitled to about 150 gm of food grains, and 30 gm of dal for one day meal i.e. about 180 gm of grain. As against this, an adult food insure person is proposed to be given only 165 gm for 2 meals per day. This does not address even the calorific security, not to talk about nutritional security which is the main objective of the food security

Ignore the first two sentences of what NaMo has said. They are simply what he believes, i.e. it is his opinion. The crux of the matter is given in the highlighted text. According to NaMo the Food Security Bill is proposing to provide 25 kgs to a family of 5, thus the figure of 5 kg per person. But as we know the poor have more offspring than 3. Also there is the case of grand parents as a part of the family. This is a very valid concern.

Now this is not a reason to stop the Food Security Act, rather it is definitely a reason to have a hard look at its short comings of this act, and especially what NaMo has said about nutritional security. Many moons ago Bloomberg did this fantastic article. I have given extracts over here. But the basic premise remains the same. Heavy manual labour requires an excess of 2700 calories intake a day. Poor Indians are being fed a diet high in Carbohydrates, which has the following two characteristics
1) People felt less hungry
2) People feel a constant sense of lethargy -- they move more slowly and took longer to recover from short bursts of labor like at the construction site.
The intake of proteins and other important ingredients, provided by milk or its allied products, fruits, non-veg items like meat, fish, eggs, etc is totally missing. That is what we should be concentrating on and that is totally missing from the current Food Security Bill. Further the requirement of 2700 calories is not being met at all.

Hunger Stalks My Father’s India Long After Starvation End --- Bloomberg Dated 23-Oct-2012

Hunger Stalks My Father’s India Long After Starvation End --- Bloomberg Dated 23-Oct-2012 wrote: ....
....
In 1973, villagers ate just under 2,300 calories a day, according to the National Sample Survey Office, a branch of the ministry of statistics. By 2010, that number had dropped to about 2,020, compared with the government floor of 2,400 a day to qualify for food aid. The mismatch manifests itself in some of the world’s worst scorecards for health: half of all children under three weigh too little for their age; eight in 10 are anemic.
....
....
This diet, heavy in cereals and other carbohydrate-based calories, is what most rural Indians eat. In 2010, 64 percent of the calories consumed by villagers came from cereals, about 9 percent from oils and fats, less than 5 percent each from sugar and pulses like the lentils we ate. Fruit and vegetables, meat, eggs and fish together made up about 2.5 percent, according to studies of meals across rural India by the statistics ministry.
....
....
I watched Ghanshyam carry bricks for an hour, his pace slacking as the sun climbed. By 10 a.m., the temperature was 102 degrees Fahrenheit (38.9 degrees Celsius). When the foreman yelled at Ghanshyam for being too slow, I took his place. We dug ditches and broke bricks to mix in the mortar. It had been a week since I had migrated to the village diet, and by noon, I was exhausted. The men around me had withered too, their movements slower, their ribs glistening in the sun.
....
....
In the village, the cereal-laden meals sat heavy in my stomach, and I felt less hungry than I had imagined I would. The most obvious impact was a constant sense of lethargy -- I moved more slowly and took longer to recover from short bursts of labor, like at the construction site. My weight dropped by about 5 pounds in the two weeks I lived there.
....
....
Before I left for the village, I called Deaton, who teaches at Princeton University. He was irritated that my questions focused only on calories -- the environment in which those calories were consumed and burned, and the manual labor the person had to endure were equally important, if not more so.
....
....
Deepankar Basu and Amit Basole, two University of Massachusetts economists. In a draft paper last month they found that while Indian incomes have gone up, a rise in spending on other essential items -- such as healthcare and transportation --meant the amount of money left over for food has remained stagnant at a time of high inflation.
The lives of Ghanshyam and other villagers in Auar seemed beyond what 1,700 calories or even the government recommended minimum intake of 2,400 calories could sustain. India’s state medical research council says workers doing moderate or heavy labor need 2,730 to 3,490 calories.
....
....
About an hour after dinner, as I packed my gear for the trip back to Delhi, I heard a rustling behind me. I thought it was a stray dog going through the empty plates and Styrofoam boxes, and I turned on my flashlight to scare it away.
Instead, the beam lit up Ghanshyam’s wife. She’d come back, she said, for the chicken bones I’d thrown away. For a family too poor to buy meat, even boiled-up bones make a valuable addition to the diet.

Oh there is something even more crucial. This article was published in a foreign journal. The depth and scope along with the figures is breath taking. None of the Indian publications come close to the coverage provided. It is truly a shame that a foreign journal is giving us a more incisive insight than all of our domestic publications combined.

Austin · Post by **Austin** » 19 Aug 2013 16:22

Rupee fall: How Gulf-based NRIs are making money

Dubai: Indian expatriates in Oman and other Gulf Cooperation Council (GCC) countries have started taking personal loans in a bid to take advantage of a record fall in the value of Indian rupee against local currencies, a report said.

Money exchangers and bankers in Muscat said that non-resident Indians or NRIs have started resorting to personal loans as rupee touched an all-time low of 62.03 against the US dollar on Friday, a newspaper from the region reported. The Indian rupee of Monday continued to bleed as it touched a fresh low of 62.82 on Monday.

Exchange houses in Oman were offered Rs. 160 for an Omani riyal on Friday. The rate continued for three days as foreign exchange market is closed on Saturday and Sunday.

"Indian expatriates started taking personal loan for remitting money back home," said Rajeev V G, general manager of Global Money Exchange, which is managed by the State Bank of Travancore.

"We have witnessed a substantial increase in remittance and high-volume transactions, which is a clear indication that expatriates are taking loan for arranging funds for remitting money," another exchange official said, adding that there has been a 10-15 per cent growth in remittance on Friday over the previous day.

Since rupee's value crossed the Rs. 154-155 level against the riyal, NRIs in Oman started remitting their savings.

The Central Bank of Oman or CBO has also started taking measures to find out the sources of funds for foreign remittance.

Those who remit above 2,000 Omani riyals will have to produce proof showing that the money was withdrawn from their own bank account. Earlier, this was required only for amounts above 5,000 riyals.

The country has recently made it mandatory to credit employee salary only through a bank so that there is a check on sources of income.

Money exchanges in Oman also submit a report with details of different ranges of remittance transactions to various countries on a monthly basis to the CBO.

Supratik · Post by **Supratik** » 19 Aug 2013 17:45

They seem to be clueless at this stage. Sonianomics at work. Basically nothing much other than some social sector spending and a few things here and there e.g. airports, universities, etc was done for the last 10 yrs. It is all showing up now. Things could spiral out of hand.

subhamoy.das · Post by **subhamoy.das** » 19 Aug 2013 19:02

http://economictimes.indiatimes.com/new ... 915979.cms

Inching towards the grand days of 1990!

subhamoy.das · Post by **subhamoy.das** » 19 Aug 2013 19:05

In the name of being populist they also rubbed large MNC(s) on the wrong side - Vodafone, Novartis. Now the empire is striking back. There was another pet poplulist scheme of giving mobiles to all MNREGA folks. Seems like that has been put on hold hastily.

gakakkad · Post by **gakakkad** » 19 Aug 2013 20:33

Government bans duty-free TV imports from August 26

http://timesofindia.indiatimes.com/tech ... 916660.cms

desparate steps to check INR depreciation. not that it would help much. The annual import of flat panels by foreign travellers comes to a few hundred million USD at the most. Would hardly make an impact.

Financial news services are filled with doom and gloom stories ,mainly...the next GOI will have a real hard time setting the mess right...

Supratik · Post by **Supratik** » 19 Aug 2013 22:11

They are trying to put band-aid on a gunshot wound.

JohnTitor · Post by **JohnTitor** » 19 Aug 2013 23:23

I hope you are all enjoying the secularism

shyamd · Post by **shyamd** » 19 Aug 2013 23:34

If Dawood or any smugglers are listed on BSE/NSE - their shares would be going through the roof.

Virupaksha · Post by **Virupaksha** » 19 Aug 2013 23:39

shyamd wrote:If Dawood or any smugglers are listed on BSE/NSE - their shares would be going through the roof.

I wouldnt worry. The private investors inside govt have more than enough stakes in that company.

KJo · Post by **KJo** » 20 Aug 2013 00:29

http://timesofindia.indiatimes.com/indi ... 915107.cms

In part, the problems are age-old: stifling red tape, creaky infrastructure and a seeming inability to push through much-needed changes and investment decisions. For years, investors largely overlooked those problems because of the promise of a market of 1.2 billion people. Money poured into India, allowing it to paper over a chronic deficit in its current account, a measure of foreign trade and investment.

I remembering telling my uncle this back in 2007. He was high on his Mutual Funds making 50% and 70% and I was cautioning that this will not last forever. A whole generation in India has been raised on easy money, the Paki attitude of "we are shining onlee" and the feeling that the US has sunk into unending recession and it is India's millennium. These 13 years should have been a time for fixing old problems that plague India, not a time for looting. Everyone looted, from the Government, to the common peon. My Indian friends would laugh that India's economy did not depend on the US, it was self sustaining. We are in some ways no better than Pakis when it comes to self delusion.

Life is a chakra. Things go up and down.

Abhijeet · Post by **Abhijeet** » 20 Aug 2013 00:56

I'm trying to understand the reason for the suddenness of the changes that have been taking place. The rupee has now slid from 50 to 63 in the space of a few months, the government is making lunatic-level tweaking at the fringes (no more duty free TVs

), the stock market is tanking, and suddenly everything seems to be doom and gloom.

It seems to me that the troubles have been building up in plain view over years, and so should have been priced into the market gradually. Why should things turn negative so quickly?

Leaving aside the conspiracy theories, which are unimaginative and uninteresting, I can think of the following reasons:

1. The government has recently taken steps that have made the situation much worse than say a year back. (What steps are these?)

2. The cumulative effect of the mismanagement over the last 10 years has brought us to some kind of a tipping point. (What tipping point if any are we near?)

3. Markets are momentum driven and the pendulum has swung too far toward the pessimism side from bubbly optimism as recently as a couple of years back. (In which case this is a good buying opportunity.)

Which of these is it? Are there other factors?

member_27444 · Post by **member_27444** » 20 Aug 2013 01:04

Don't worry be happy
We have Dr in Economics as Prime mover of the country
And allowalia as his prime adviser both need wiser council

Where Chidambram treads nothing grows except his sons wealth

svinayak · Post by **svinayak** » 20 Aug 2013 01:19

Abhijeet wrote:
Which of these is it? Are there other factors?

Start thinking in terms of global cartels.
Central bank cartels, MNC cartels, commodity cartels, trading cartels, exchange cartels, banking cartels etc.
If Indian interest is not part of this cartel then things can change.

Suraj · Post by **Suraj** » 20 Aug 2013 01:28

It would help to look at the exchange rates of several other EM currencies, not just INR. All of them have depreciated vs the USD in recent months:
USD vs Indian Rupee
USD vs Brazilian Real
USD vs Indonesian Rupiah

Abhijeet · Post by **Abhijeet** » 20 Aug 2013 01:41

Looks like over the last 2 years INR has performed better than the Brazilian real and much worse than the Indonesian rupiah. Same over the last 5 years.

So why the recent panic?

svinayak · Post by **svinayak** » 20 Aug 2013 01:48

Excess free money and currency which was floating and had increased to a pib percentage has depleted after the 2008 crisis

This money was used by all the central banks and cartels had more leverage. The pool has reduced and the big funnel of deficit from the largest central bank is sucking up all this floating money. There is lot of pressure on the currency to keep stable and global trading was giving stability in terms of liquidity and txns.

Singha · Post by **Singha** » 20 Aug 2013 04:08

if you look at retail side of stock investing like direct stock sales and mutual funds, things have been bad for years....layoffs in that sector and firms just trying to keep afloat.
if you look at insurance cos, most of the foreign JV partners of insurance cos have suffered losses and are pulling out india. these losses again have been happening for years.

when the focus of a govt over a long period of 10 years is just rural NregA type picks n shovels job creation , ultimately something has to break in a diversified economy like india and it has started breaking down from the top imo - less jobs, less spending on top level goods like cars , houses and bikes .....

Cosmo_R · Post by **Cosmo_R** » 20 Aug 2013 04:46

A couple of years ago I got sucked into an exchange with a fellow BRFite regarding FDI and its importance. I forget who it was but it was right after the fiasco over FDI in the retail sector wherein the GoI did somersaults and back flips as opposition grew from the mom and pop shops. This followed the fiasco on the nuke deal.

It's coming home to roost now. To give yet another example of how people are simply giving up:

http://www.telegraph.co.uk/news/worldne ... ntain.html

These people are the same as the ones who did this:

http://www.savingiceland.org/2008/07/or ... ning-firm/

"We watched as the Dongria made a special offering to the gods, the sacrifice of a water buffalo. It was brutal. The animal was tied to a stake. The witchdoctor let out a shriek, and a dozen men set up on the buffalo with sticks and axes.

It bellowed and struggled for its life as they beat it and slashed at it all over. Finally it sank to the ground with a groan. Its head was severed and carried back to the village in triumph.

The way of life of the Dongria is still, in many ways, primitive and harsh. But they fear the sort of development Vedanta wants to bring, as they worry it may mean an end to their ancient way of life."

I don't know about you guys but I'm rooting for the water buffalos.

gakakkad · Post by **gakakkad** » 20 Aug 2013 08:32

India defies laws of conventional economics..

There are several contradictory stats and anecdotal evidences.

the television sales , consumer electronic sales etc are booming greatly.

http://www.livemint.com/Consumer/VA75Jq ... ruple.html

The world’s fastest-growing market for consumer electronics has few homegrown makers of flat-panel TVs and no producers of mobile phones or the semiconductors and displays used in the devices. Last year, the nation of 1.2 billion people spent $14.2 billion importing screens and smartphones, accounting for 90% of demand, government data show.
India’s technology manufacturers haven’t kept pace with its software industry, which last year contributed 4.7% of the country’s $1.8 trillion gross domestic product (GDP).

Automobile sales have gone down.IIP has gone down too.

FDI and FII have been on the higher side.

http://profit.ndtv.com/news/economy/art ... ist-323781

FDI inflows in India seen rising 15 per cent in 2013: UN economist

exports too have increased .

yet we have a severely depreciating currency due to massively increased imports. Now imports have increase because of demand. And demand increases because people have money..

net,net till supply side issues are not dealt with ,things will remain bad . may end up worse. presently a strong demand indicates that people have wealth. and we still have strong fundamentals...but it may not last forever..

Arjun · Post by **Arjun** » 20 Aug 2013 09:16

Abhijeet wrote:It seems to me that the troubles have been building up in plain view over years, and so should have been priced into the market gradually. Why should things turn negative so quickly?

Leaving aside the conspiracy theories, which are unimaginative and uninteresting, I can think of the following reasons:

1. The government has recently taken steps that have made the situation much worse than say a year back. (What steps are these?)

2. The cumulative effect of the mismanagement over the last 10 years has brought us to some kind of a tipping point. (What tipping point if any are we near?)

3. Markets are momentum driven and the pendulum has swung too far toward the pessimism side from bubbly optimism as recently as a couple of years back. (In which case this is a good buying opportunity.)

Which of these is it? Are there other factors?

Its everything coming together at the same time - the perfect storm, if you will. Anybody associated with Indian business has known for several years that there is serious rot in the system - however the extent of the rot that has surfaced through data over the past year has surprised and shaken even those in the know.

Secondly, the political uncertainty given the upcoming elections adds to the misery. Right now opinion polls project no decisive mandate yet (though things may change). Third Front coming to power is of course an absolute economic disaster for the country. UPA coming to power after they have been responsible for the biggest hash of things ever after Independance will only be regarded by Sonia as a mandate for continuing the Dynasty's destruction of India (similar to the takeaway she imbibed from the 2004 mandate - which is that India is not really keen for development, directly leading to the wholesale economic destruction of the last 10 years).

Thirdly, till 2012 the rosy picture of BRICS and China / India as future of the world, and bad economic news from US/Europe continued. But 2013 has seen a change in the economic perception of the US and more respect for the driving power of its innovation economy.

vera_k · Post by **vera_k** » 20 Aug 2013 09:54

Think the BRIS were really just a balancing act against the C.

USD vs Chinese Yuan

Philip · Post by **Philip** » 20 Aug 2013 12:13

The 10 years of the UPA has been an unmitigated economic disaster.From being a manufacturing nation,we have been steadily reduced to that of an importing nation by its asinine eco policies,where all that we have to export is mineral wealth,which is dominated by illegal mining.Oil and gas prices are also adjusted so that we can "Rely" upon a favoured corporate entity to monopolise the production.We allow imports of the cheapest of cheap goods form China decimating our small-scale industry,adding to the woes of the rural and mofussil folk, and total mismangement of the PDS allows commodity crooks to artificially keep prices high while the Middle Classes are caught between a falling value fo the note the rupee-gravely reduced purchasing power of the currency and the skyrocketing prices ,loan interst rates,etc. The great hoodwink about opening up and selling off the family silver so that FDI can come in,never tells us that FDI also flows out,in far larger qty. than when it entered,thus beggaring the poor Indian investor who has now lost billions of $$$ in the stock market.

As for the rupee,the less said about the Humpty Dumpty's managing its health.They are clueless as to how to stop the fall.The right word has been coined for the UPA's eco policies,"Sonianomics".Stopping TV imports while gold trundles in unabated is like trying to stop a dam bursting with a toothpick! The beauty is that on the day of the worst fall of the rupee and market,with great pomp and ceremony,Rolls Royce unveil their latest ware the Wraith at a staggering almost 5 crore pricetag while onions have become a luxury food item.As a Nina cartoon put it well,we now have an "Onion" govt. ,which like the onion has layers of corruption making us cry!

shyamd · Post by **shyamd** » 20 Aug 2013 12:24

This panic is overdone. In effect forcing all the Emerging market countries to close their current account deficit will mean that global economy will grind to a halt. The main reason these countries were running deficits were because they were buying from developed markets. Now who's gonna buy from the developed markets? They are shooting themselves in the foot.

The current situation poses huge opportunities for NRI's, assets in India are now a lot cheaper

habal · Post by **habal** » 20 Aug 2013 12:28

a very specific question ?

What kind of intervention does RBI actually carry out in respect to preserving value of rupee ? Do they intervene when Interbank is about to close or do they intervene in morning ?

Since all kinds of crooked characters infest Indian politics and bureaucracy, folks must insist on very minute details to know if the so-called stake holders actually are intervening effectively or they are just bluffing.

Abhijeet · Post by **Abhijeet** » 20 Aug 2013 12:32

Thanks shyamd.

svinayak · Post by **svinayak** » 20 Aug 2013 12:51

Arjun wrote: Thirdly, till 2012 the rosy picture of BRICS and China / India as future of the world, and bad economic news from US/Europe continued. But 2013 has seen a change in the economic perception of the US and more respect for the driving power of its innovation economy.

Not really

http://www.latimes.com/business/la-fi-t ... k=lat-pick

Tech industry slips into a surprising slump
After a six-year boom ignited by the introduction of the iPhone in 2007, tech firms are in the unusual position of being laggards in the U.S. economy's recovery.

Mian chalks it up to the lackluster global economy. Tech firms are increasingly dependent on sales and profits abroad, where corporate spending remains weak. In the U.S., others have pointed to the faster-than-expected collapse of PC sales.

"That's having a ripple effect through a lot of sectors of technology," said Greg Harrison, a corporate earnings research analyst at Thomson Reuters.

Consumers, meanwhile, appear to be showing signs of fatigue after embracing so many new gadgets in recent years.

PC sales have been devastated by tablets. But now tablets are losing steam, with even Apple reporting a decline in iPad sales in the most recent quarter.

Worldwide tablet shipments fell nearly 10% in the second quarter compared with the first quarter, according to an August study from IDC.

Real estate bubble is still a risk

Christopher Sidor · Post by **Christopher Sidor** » 20 Aug 2013 12:56

habal wrote:a very specific question ?

What kind of intervention does RBI actually carry out in respect to preserving value of rupee ? Do they intervene when Interbank is about to close or do they intervene in morning ?

Since all kinds of crooked characters infest Indian politics and bureaucracy, folks must insist on very minute details to know if the so-called stake holders actually are intervening effectively or they are just bluffing.

The most effective means of RBI to prop up the Rupee is to use its Foreign Reserves. i.e. RBI buys Rupees and gives dollars in return. Some 200 billion USD or more. The problem is that if we do that we end up reducing our effective import duration. This can be termed as the direct-action.

The other means is what RBI and GoI are trying to do. They are squeezing the liquidity, reducing the rupee supply in the economy. One of the means which a central bank contains inflation caused due to excess inflow is to drain excess cash equal or proportional to the amount of cash introduced by buying foreign currency. They are also trying to reduce outflows which are done by DII or Domestic investors or Domestic companies. But all of these are indirect steps.

What RBI cannot do and what falls directly under the preview of the GoI is getting our house in order. That is something which GoI has not done. Increasing FDI limits or making it easier for FIIs or foreign companies to enter the market is not getting our house in order. We have serious supply side constraints in our economy. These constraints add inefficiency to our economy and make the cost of doing business very high. The other offcourse is the corruption and bureaucracy apathy. A classic case was the doubling of gas prices to about 4 mbtu and then again redoubling it to about 8 mbtu which was advantageous to Reliance only. Or let us take another example of Telecom where Reliance was allowed pan 4G roaming along with voice calls, when the initial license of 4G did not have any voice calling inside it. Now contrast this with the restrictions which have been placed on 3G services, like non-roaming or non-sharing of infra. This has been done with the view to help Reliance only.

Arjun · Post by **Arjun** » 20 Aug 2013 14:28

Acharya wrote:
Arjun wrote: Thirdly, till 2012 the rosy picture of BRICS and China / India as future of the world, and bad economic news from US/Europe continued. But 2013 has seen a change in the economic perception of the US and more respect for the driving power of its innovation economy.
Not really

http://www.latimes.com/business/la-fi-t ... k=lat-pick

Not talking of quarterly ups and downs out there.....No other country has an innovation sector as value-creating as the one in the US. And there is a realization that the theme of perennial rise of China and India need to be tempered with that reality.

At least until either India / China or any others actually get to create an equally robust innovation sector.

wong · Post by **wong** » 20 Aug 2013 15:38

vera_k wrote:Think the BRIS were really just a balancing act against the C.

USD vs Chinese Yuan

The Chinese netizens have been complaining for years that BRIC was just stupid and that 'B', 'R' & especially 'I' were just riding China's coattails.

vishvak · Post by **vishvak** » 20 Aug 2013 15:41

Chinese have manufacturing, USA has cutting edge tech and innovation, Russia has oil too, we have imported a lot more than we should have without realizing constraints like import lobbies. These threats must be factored in - import lobby tax for lack of RnD and infra development in Oil and Natural gas sector.

habal · Post by **habal** » 20 Aug 2013 16:04

wong wrote:
vera_k wrote:Think the BRIS were really just a balancing act against the C.

USD vs Chinese Yuan

The Chinese netizens have been complaining for years that BRIC was just stupid and that 'B', 'R' & especially 'I' were just riding China's coattails.

India has not yet justified it's inclusion in BRIC, but it will be a competitor to China, in future under right political direction. India has until yet just given glimpses of what it is capable of, it's main show has not yet begun. Investors are not confident in India because of inability to execute and complete various projects. Instead the govt conspires with more red tape of it's own.

The most effective means of RBI to prop up the Rupee is to use its Foreign Reserves. i.e. RBI buys Rupees and gives dollars in return. Some 200 billion USD or more. The problem is that if we do that we end up reducing our effective import duration. This can be termed as the direct-action

.

I am aware of that. I was specifically asking the quantum of intervention each day. Earlier the RBI used to be very forthright with it's statistics. There used to be daily bulletins on how RBI offloaded $XXX million to stabilize the market on such-and-such day. Now it's unavailable or vague. There was a debate in parliament where D. Raja in Rajya Sabha argued that intervention was not taking place on any reasonable scale. But just bulletins were being issued that RBI had intervened. D. Raja asked the govt to come out with specifics and the numbers, something the UPA is just not inclined to do.

Each time Mickey has been incharge, Indian currency has devalued by Rs.20 to a dollar. So from 45 where he began, his target seems to be 70. But he doesn't seem to be incharge in this case, so maybe we will have a freefall to 80 or 100. Forward trading on currency and currency speculators are also gleefully making profits but they are yet unchecked for whatever reason. Instead of issuing import curbs, controls put on money traders may yield immidiate results. The govt should have data on the quantum of currency speculation taking place. But they are quiet on this as they were during all scams.

Supratik · Post by **Supratik** » 20 Aug 2013 16:22

With rupee in free fall in dollar terms the economy is receding perhaps to 2008-9 levels. So 4-5 wasted years. We were talking of 2 trillion only last year.