Indian Economy - News & Discussion Oct 12 2013

[gakakkad]

>>Oh, India was certainly among the leading trading nations. Gujarat, Tamil region, Kalinga, Vanga, Malabar and other regions were all trading vigoruously overseas at various points in history. The point was more about merchants (Vaishyas) strongly integrating with the rulers (Kshatriyas) and each actively supporting the other to achieve their objectives.

true.. we did not have conquest solely for the purpose of trade..

Pirate integrated with UQ navy..so did the EIC..Other example is a fictional one in Asimov's foundation...Hober Mellows was a trader who conquered ...IMHO the dynamics of trader-conqueror are nicely shown in foundation 2..(The Hober Mellow episode..)

[Supratik]

Arjun, it collapsed due to collapse of powerful empires on Indian soil. The smaller states did not have the resources. In Bengali and Oriya folklore there is clear indication of people moving to SE Asia to trade and settle down. However, after the rise of Arabs and Islamic states in India the trade shifted into the hands of Muslims. This is how Islam reached SE Asia.

[Singha]

the chettiars of TN were very active in myanmar trading but after independence of myanmar they were forced out and moved back to India.

[vishvak]

For some info about trade control around the Indian ocean:
Portuguese Conquest & Colonization

The Arabs were controlling the spice trade with India since the end of the 12th century AD. During the 15th century AD, Spain and Portugal, the then main maritime powers of Europe, initiated a series of expeditions with royal patronage. While one such voyage led to the discovery of West Indies by Columbus, another voyage brought the Portuguese to India
..
Indian spices and spread of Christianity were the two driving factors behind this voyage.
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The Portuguese eyed the Arab monopoly of Indian spice trade and tried to overthrow the Arabs. They succeeded, however, after continuous battles with the Arabs within twenty years of their arrival in India.

Pedro Alvares Cabral led the second voyage in 1500 AD when he brought 17 missionaries to convert the Hindus. He established the first Portuguese factory at Cochin and established friendship with the Chief of Cochin and Cannanor.

In his second voyage in 1502, Gama was instructed to snap the Arab trade with India. He destroyed the Muslim business at Calicut.
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In 1505, the King of Portugal appointed Francisco de Almeida as his Viceroy in India for three years. Almeida built forts at Anjediva and Cannanor, developed friendly relations with Emperor Vir Narasimha of Vijaynagar. He defeated the combined naval might of the Sultan of Egypt and the Sultan of Gujarat in 1507 and initiated the Portuguese domination of sea-trade from Indian shores.
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His successor Afonso de Albuquerque (1509-1515) furthered the cause by capturing Goa (1510), Malacca (1511) and Ormuz (1515), although he failed to capture Aden.

The Portuguese prestige and might received a tremendous boost. The Samudri of Calicut, the Emperor of Vijaynagar and the Sultan of Gujarat sent their envoys to establish friendly relations with Albuquerque.
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Now Vijaynagar and Bijapur both approached him to ensure a steady supply of Arab horses. But no arrangements could be reached with any of them.
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Albuquerque established the Portuguese authority over Goa and took a series of measures to safeguard it. He made drills compulsory for the troops to keep them physically fit, allowed Portuguese men to marry local women in order to create a loyal population to be known as Casados, who got homes, cultivable lands, provisions and government jobs to settle. Their offspring could be recruited to the Army and the Navy to raise a local defense force.
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During years of rivalry for naval supremacy and control of spice trade, the Dutch entered into alliances with various anti-Portuguese Indian Kingdoms, and drove the Portuguese out of all the forts and territories along the west coast of India.

In addition, the Dutch captured Malacca and Ceylon. Thus by 1668, the Portuguese were left with only Chaul, Bardez, Salcete and Tiswadi or the Island of Goa.
..

The Portuguese broke steady supply of Arab horses.

Another point is how for hundreds of years Arabs and Europeans fought naval battles to control sea trade to India. We should never forget this part, and invest big in naval strategies that offer such long term safety for Indian naval forces.

[member_22733]

If history teaches us any lesson, it is that we should aim to have the largest naval fleet in the world with enough megaton nukes to destroy the world a few times over.

[Bade]

That Assumption island agreement in the Indian Ocean so close to Africa indicates where things are going to shift in Indian involvement. It has the reverse effect of what is being discussed above minus the conquest. It is trade centric and protection of the maritime route combined with an Indian "Diego Garcia" for power projection.

[Prem]

http://www.bloomberg.com/news/articles/ ... -ambitions
Rajan’s Wins at India’s Central Bank Hint at Broader Ambitions

One of the greatest dangers to the growth of developing countries is the middle income trap, where crony capitalism creates oligarchies that slow down growth,” Rajan said in a speech last year. “To avoid this trap, and to strengthen the independent democracy our leaders won for us 67 years ago, we have to improve public services, especially those targeted at the poor.”
All of which raises an intriguing question: Might Rajan someday jump in the raucous world of Indian party politics?“I would not be surprised if the RBI governorship was not his last stint serving the government of India,” said Milan Vaishnav, an associate in the South Asia program at the Carnegie Endowment for International Peace in Washington. “Whether he would make for prime ministerial material is hard to say.”Analysts and friends say his various policy interventions merely show passion for subjects that he has long cared about, rather than political ambitions.“I don’t think he is injecting himself into politics as much as he is injecting himself into broader discussions,” said Shang-Jin Wei, chief economist at the Asian Development Bank in Manila who worked under Rajan at the IMF.The governor wasn’t available for an interview, according to Alpana Killawala, a spokeswoman for the RBI. She referred to his public remarks on his agenda for the central bank and relations with the government.The RBI has produced one Indian leader in the recent past. Former Prime Minister Manmohan Singh, the Oxford and Cambridge trained economist who appointed Rajan, ran the central bank from 1982 to 1985.Rajan’s speeches over the last seven months have wandered into policy matters not usually associated with central banking.He has proposed direct cash transfers to the poor to liberate millions from corrupt middlemen and politicians, and called for new bankruptcy law and courts to restore “the sanctity of the debt contract.”At the same time, Rajan has advised against subsidizing exports as part of “Make in India,” Prime Minister Narendra Modi’s flagship plan to boost local manufacturing.
Rajan’s bid for greater influence does carry some risks. For one thing, he’s a holdover from Singh’s Indian National Congress-led government.
His economic policy goals -- taming inflation and winning greater independence for the central bank -- haven’t traditionally been big priorities for Modi’s Bharatiya Janata Party, whose base consists primarily of Hindu conservatives and small business owners. At least one fringe member of the party publicly called for his ouster.Asked in a Feb. 4 interview with Bloomberg TV India whether the government is listening to his suggestions, Rajan laughed and said: “I hope they are,” adding: “There is a dialogue that is constant, that is on a variety of issues, and I think there is a very cordial relationship.”Rajan’s ability to persuade Modi’s government during a year of negotiations to sign off on a formal 4 percent inflation target, plus or minus 2 percentage points, in its latest government budget was one of the biggest victories for the central bank in its 79-year history.Economists said policy makers now have a powerful tool to tame one of Asia’s fastest inflation rates, with the political legitimacy to keep interest rates higher than the government may wish if required.
Rate Cut
Tensions over interest rates, while common, had flared and come out in the open between Rajan’s predecessor Duvvuri Subbarao and then Finance Minister Palaniappan Chidambaram.
“India’s adoption of an inflation target is an important step forward in strengthening the operational independence of the RBI,” Eswar Prasad, a former chief of the IMF’s China division and now an economics professor at Cornell University, said in e-mailed remarks.
In a signal of Rajan’s deft political maneuvering, days after the inflation agreement was unveiled he lowered interest rates a quarter percentage point to 7.5 percent in his second unscheduled move in as many months.That reduction, which came sooner than economists expected, was viewed as an endorsement of the government’s budget even as consumer price gains have quickened. While inflation in India has slowed sharply from a double digit pace last year, it remains the third fastest among 17 Asian economies tracked by Bloomberg, accelerating 5.37 percent in February.
Inflation Target
In a statement explaining the move, Rajan cited weak growth, softer inflation, and the quality of the government’s fiscal plans as justification. He also said the rupee, Asia’s second-best performer against the dollar this year, remained strong relative to peers. India’s benchmark stock index, which climbed to a record soon after the rate cut, is among the world’s top five biggest gainers over the past 12 months.Traders continue to bet that more rates cuts are coming and some economists believe that the government is still pressing Rajan to lower rates. “He’s under substantial pressure to cut interest rates and he has had this pressure for a while,” Abhijit Banerjee, Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology, said by phone.India’s move to introduce an inflation target comes decades after New Zealand’s central bank first came up with the formula. The tool may not be as effective in India as other economies because the consumer price index is almost half made up of food, the supply of which depends on the weather and can be hampered by insufficient storage capacities and infrastructure. That means prices can be easily distorted.
RBI Reforms
“Inflation in India is subject much more to supply shocks than it is in other countries, which makes an inflation target difficult,” said Charles Goodhart, a former member of the Bank of England’s Monetary Policy Committee and a professor at the London School of Economics.The inflation target isn’t Rajan’s only ambition for the central bank, though so far, the changes have been slow. He wants to diversify management, encourage staff to specialize their skill sets and appoint a chief operating officer to look after its day-to-day functioning. Faced with staff resistance he has had to put some of his plans on the backburner.Other changes are slated to come. Modi’s government, with Rajan’s input, plans to introduce a monetary policy committee to steer policy in a process similar to the Federal Reserve or Bank of England.Details on the structure and make up of the planned decision making body haven’t yet been announced. Banking reforms, including efforts to corral bad loans, are also likely to remain a focus for Rajan, who already issued new banking permits for the first time in more than a decade.
Rajan Warning
Rajan’s tenure as chief economist at the International Monetary Fund between 2003 and 2006 catapulted him onto the world stage. His warning in 2005 of a financial crisis was largely ignored at the time but later won him plaudits in the wake of the 2008 financial crisis.
After leaving the IMF, Rajan took up a role at the University of Chicago’s business school. “He can see through to the heart of the problem and also see solutions,” said Randall S. Kroszner, professor of economics at University of Chicago’s Booth School of Business and a former Federal Reserve governor, said by phone.Not all of Rajan’s policy interventions have gone smoothly. In a speech in January, local press seized on his remarks that strong governments may not always move in the right direction-- Hitler’s Germany was one of his examples--a veiled advice to Modi, they wrote. Neither Rajan nor the government commented on the reports.
IMF Job?
He has ruffled feathers on the world stage too. In 2014 as the Federal Reserve signaled it would end its program of quantitative easing, Rajan warned of a breakdown in global policy coordination and called for greater cooperation among central banks to avoid upheavals in emerging markets.
That view didn’t resonate in Washington, where a rapidly improving U.S. economy has the Fed on course to tighten interest rates. “I thought it was a rather strange criticism for him to make but it is water under the bridge now,” said George Magnus, an independent economic consultant and senior economic adviser to UBS Group AG.Rajan’s stint as governor, which expires in September 2016, can be extended by another two years if Modi wishes. That’s also around the time Christine Lagarde’s term as the IMF’s managing director comes to an end.Asian governments are likely to push hard for a successor to come from the region, and Rajan could be top of the list. “He is certainly one of the finest monetary economists of the current generation,” Goodhart said.

[pankajs]

On the last part, that exactly was Bhagwati's point i.e bring these highly acclaimed Indian academic into government (RBI Gov, Econ Advisor, Neeti Aayog chair) and it will add weight to their resume and in turn increase their chance to some day head some of IMF/WB type of institution.

[Suraj]

R Jaggi makes a forceful and persuasive case for a new bankruptcy code to be made law urgently:
Jaitley's auction paradox: Without bankruptcy code, high bids also endanger banks

The other side of policy success is often financial hazard. The successful holding of two auctions – for allocating coal mines, and the ongoing one for the reallocation of telecom spectrum, which have collectively drawn bids worth more than Rs 3 lakh crore - brings with it a big danger: that some of the bidders may have bid unwisely, and could, at some point in the future, face business failure.

Finance Minister Arun Jaitley has a paradoxical problem on his hands: the same policy that will fatten the public purse has the ability to flatten it if the high prices paid at auctions end up ruining the balance-sheets of banks, forcing him to recapitalise them at public expense.

The “winner’s curse”, where successful bidders find that they may have paid too much for an asset they cannot monetise adequately to keep their heads above water, has consequences that go beyond just the company involved: they impact banks, who may have lent them the money, and also overall economic efficiency in a market economy.

The problem is not that bidders may have paid too much, but the mechanism to put them out of business quickly is too weak to handle the consequences of bad business decisions.
...
As Omkar Goswami, author of ‘Corporate Bankruptcy in India: a comparative perspective’, wrote in The Indian Express yesterday (16 March), “barriers to prompt and efficient exit are nothing other than barriers to entry. No country with tedious, never-ending bankruptcy processes can expect to get significant direct investments, be these from local entrepreneurs or foreign shores. Where I can’t exit, I shan’t enter.”

So what we need pronto – as of yesterday – is a quick and efficient bankruptcy code for failing businesses: an exit policy for management, so to speak.

India does have a bankruptcy code called the Sick Industrial Companies Act (SICA), but the procedures prescribed by this Act are making industries sicker than before, not healthier. The Act is used to delay recovery or euthanasia – and hence needs to be consigned to the dust-bin.

Even laws specifically intended to help banks recover dues are being blunted by court decisions. For example, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB), is an effective washout, thanks to courts that seem to think that the first priority for banks should be revival, not closure. Courts also tend to favour so-called “weaker” sections like farmers or workers, which makes a bankruptcy code even more urgent.

In two recent cases, the courts almost drove the last two nails in the coffins of existing bankruptcy laws.

In a case involving Arihant Threads Ltd (read the full judgment here), the apex court held that SICA would take precedence over RDDB, which means reviving a company that may (or may not) be in terminal decline will be given priority over the right of banks to recover their dues by selling the collateral pledged with them. The case, relating to the mid-1990s, was decided only in 2014.

The existing bankruptcy code is clearly a bankrupt idea.

Another case, also decided by the Supreme Court, involved denying a bank effective rights over collateral. The case was simple: the SBI lent money to sugar mills in Uttar Pradesh against the collateral of sugar stocks. But some of these sugar mills apparently had not paid growers their dues for cane due to low sugar prices. When a growers' association, the Rashtriya Kisan Mazdoor, moved the Allahabad High Court, the latter quashed the banks' right to their collateral and asked collectors to sell the stocks and pay growers first.

Seeing its Rs 3,000 crore loans to sugar mills turning rapidly go up in smoke (or into bad loans), SBI went to the Supreme Court, where it got only this pious statement. "In view of the suicides among farmers, let us put a quietus to this," The Times of India quoted the bench as observing, before dismissing SBI's appeal.

Even without the courts doing the damage, the fact is cases drag on endlessly, making a mockery of the very idea of debt recovery. For example, Vijay Mallya’s Kingfisher Airlines owes banks more than Rs 7,000 crore, but despite going bankrupt years ago, a very small portion of the money has been recovered.

India’s banks had over Rs 3 lakh crore of bad loans as at the end of December 2014. A lot of it could have been recovered by now if we had had a proper bankruptcy code, since many of the loans were given against asset pledges or collateral like land, shares or factories and buildings.

The USA has a bankruptcy code called Chapter 11 under which companies which can’t pay their lenders can seek temporary shelter under the provisions of the chapter. During this period of temporary relief, lenders and management can renegotiate their loans – usually a part of the loans will be written off, while the company will sell some of its assets to stay healthy. This way, in just a few months, a decision is taken on whether the company can be revived or will have to be closed.

Arun Jaitley made a reference to the need for a bankruptcy code in his budget speech. It should have been one of the first pieces of legislation the NDA government should have grappled with. It could even have been sold as an anti-crony law, with provisions to help rehabilitate labour included in it.

This law is vital as we stare at the success of two major auctions of natural resources. Some of the winners of coal blocks and spectrum may not succeed. The government has to quickly enact a new bankruptcy code to ensure that even though some fail, they money lent is not locked up endlessly in court cases.

The main elements of the law should be the following:

One, anyone, from the company itself to its lenders, should be able to trigger a statement of impending bankruptcy. The law can specify the circumstances in which this declaration can be made. Individuals should also be allowed to declare themselves bankrupt.

Two, once an entity is declared a potential bankrupt, there should be a small window – say, three months – during which the lenders and the company (or individual) should negotiate what part of the loan will be written off, and what part will be repaid on what terms, and whether the company can be revived.

Three, certain assets – like workers’ dues, an individual’s provident fund, etc – should be completely out of reach of lenders. There should also be provisions to pay workers, say, six months’ wages, financed by an unemployment tax that could be 0.10 percent of a company’s annual wage bill.

Four, if no agreement is reached between lenders and company, the company should be closed and a liquidator appointed to auction the assets and repay bankers whatever is left.

A country without an effective bankruptcy law will end up creating zombie banks and a walking wounded corporate sector.

The last line is forceful. The reason companies cannot capitalize on the Make in India push is just that.

[pankajs]

http://economictimes.indiatimes.com/ind ... 616592.cms
Coal auctions: Biggest transfer of wealth from corporates to poor

At the last count, the coal auctions had fetched over Rs 2 lakh crore from just 33 mines. There are 170 more to go. This is the money going out of corporate pockets to the states, mostly poorer eastern ones. ET explains the transfer.

[Singha]

AMWAY is investing 550cr in a multi product plant 20km from Madurai. hiring is already on , not just food but consumer durables i heard

http://www.business-standard.com/articl ... 633_1.html

[Kakkaji]

India Inc cheers as coal mining opens up to Indian and foreign private companies

NEW DELHI: Parliament has opened up coal mining to Indian and foreign private companies and allowed transparent auction of coal, bauxite and other minerals by passing two game-changing laws that could potentially free private enterprise from decades of socialist controls resulting in billions of dollars of investments by Indian and foreign miners.

The new coal law gives the government the power to allow private companies to mine coal and sell it in the open market, ending four decades of state monopoly. So far private companies could mine coal only for use as fuel in their own factories. The government has assured workers of Coal India that the state-run giant's interests will be protected, and that it is not in a hurry to get private firms to start commercial mining operations, but the new law allows it to go ahead whenever it wants.

[pankajs]

cross post

NDTV Profit ‏@NDTVProfit 9m9 minutes ago

Government rejects low winning bids for 4 'outlier' coal mines http://profit.ndtv.com/news/industries/ ... nes-748453 …

India has rejected winning bids for four of 33 coal mines put up for auction in the past two months, the top civil servant in the country's coal ministry said on Saturday, in a decision that will most hurt Jindal Steel and Power Ltd.
...........
Jindal Steel, controlled by former lawmaker Naveen Jindal and one of the biggest beneficiaries of the previous method of mine allocation that a court ruled illegal, has now become the biggest loser with three of its bids rejected.

Aluminium maker BALCO, majority owned by mining major Vedanta Ltd, is the other company whose bid was cancelled, according to a list in Swarup's message.

[pankajs]

EconomicTimes ‏@EconomicTimes 27m27 minutes ago

#MMDR amendment will bring investments, to push up costs too: Experts http://ow.ly/KCawB

[A_Gupta]

Cheerleading:
http://www.globalatlanta.com/article/27 ... d-economy/

[Suraj]

Steel output is finally picking up momentum. Next target is to overtake Japan's output.
India overtakes US as 3rd biggest steel producer

India has overtaken the US to become the third-largest steel producer in the world with a production of 14.56 million tonnes (MT) in first two months of the year.

India has been the fourth-largest steel producer for the past five years, behind China, Japan and the US.

Data compiled by World Steel Association (WSA) showed that the country's production growth was the highest during the January-February period at 7.6% as compared to the global average of just 0.6% at 127.6 MT.

Production in China, which accounts for nearly half of the global steel production, fell during the period by 1.5%. It produced 65 MT steel during the period.

Japan, the second-largest producer, reported a total output of 17.4 MT, but production in the country fell 2.2%.

The US, which was the third-largest steel producer since 2010, produced 13.52 MT during the January-February period, giving away its position to India.

HSBC raises GDP growth forecast:
India's GDP to grow at 8.3% in FY17: HSBC

According to the global financial services major, GDP growth in the first three quarters of the current fiscal year (ending March) has averaged 7.4%, y-o-y -- an improvement over the previous year and the trend is likely to continue in the coming months as well.

"We expect growth to improve from 7.4% y-o-y in FY2015 to 7.8% in FY2016 and 8.3% in FY2017," HSBC Chief India Economist Pranjul Bhandari said in a research note, "The stars are gradually aligning".

Key drivers of economic growth will be the government's push on kick-starting investments, continued reform momentum, re-starting of stalled investment projects and an accommodative monetary policy stance, Bhandari said.

On prices, HSBC said there would be continued disinflation, partly due to weaker commodity prices and the absence of demand-led price pressures.

[pankajs]

http://profit.ndtv.com/news/economy/art ... ary-748688
FDI via Approval Route Surges 162% in April-January

Foreign direct investment or FDI into India through the approval route shot up 162 per cent to $1.91 billion in the first ten months of the ongoing fiscal year, indicating that government's effort to improve ease of doing business and relaxation in FDI norms may be yielding results.

During the full 2013-14 fiscal year, India had received $1.18 billion FDI through the government approval route, according to the figures collated by the Department of Industrial Policy and Promotion (DIPP).

"The FDI figures during April-January period clearly reflect that the government is giving faster clearance to the proposals. It is reacting fast on the needs of foreign investors," said a senior official in the Commerce and Industry Ministry. Some experts think likewise.

"Relaxation of FDI norms in some sectors and steps to improve ease of doing business have started generating positive environment in the country," said Krishan Malhotra, head of tax and expert on FDI with corporate law firm Amarchand & Mangaldas.

"Foreign investors are very positive about India. Sentiments are also improving. There is lot of positivity in the business environment."
...........
During the April-January period, the total foreign inflows too have increased by 36 per cent year-on-year, to $25.52 billion.

In January, the foreign direct investment (FDI) in India more than doubled to $4.48 billion - the highest inflow in the last 29 months.

In 2013-14, FDI stood at $24.29 billion compared with $22.42 billion a year earlier.

http://profit.ndtv.com/budget/rajan-bac ... ers-748664
Rajan Backs Removal of RBI's Debt Powers

Reserve Bank of India (RBI) Governor Raghuram Rajan on Sunday cautiously backed a government plan to hand public debt management to a new agency, as the two sides played down reports of friction over the biggest regulatory shakeup in a generation.

In February, the RBI formally adopted inflation targeting as its central function for the first time. In the future, monetary policy will be set through a committee and, besides losing its debt management role, the RBI is expected to give up powers to regulate government bond trading.

"A public debt management agency as a professional organisation, independent of the (central) bank, independent of the government, is something that is desirable," Mr Rajan told a joint news conference with Finance Minister Arun Jaitley.

However, Mr Rajan emphasised that details of how the new agency would operate still have to be thrashed out.

[nawabs]

How exactly does this work. Anyone?

To boost exports, Centre may revive interest subvention plan

http://www.thehindubusinessline.com/eco ... yndication

With exports declining for three consecutive months in an uncertain global market, the Centre is looking at reviving the interest subvention scheme to give select sectors a boost.

The Commerce Ministry is working out the details of the scheme, which would entitle exporters of beneficiary sectors to get credit at a subsidised interest rate.

“The proposal would be first sent for approval of the Expenditure Finance Committee and then the Cabinet Committee on Economic Affairs (CCEA),”an official from the Directorate General of Foreign Trade (DGFT) told BusinessLine.

There is, however, no clarity yet on when the Foreign Trade Policy, which includes incentive schemes to support sagging exports, would be announced.

“Although there is a general expectation in the Commerce Ministry that it will be unveiled on April 1, there is some uncertainty as the Commerce Minister will be out of the country during the month-end,” the official said.
Priority list

The interest subvention scheme, if finalised, could be announced either as part of the FTP or independently.

“It is part of the non-Plan expenditure of the government and is not directly related to the FTP,” the official added.

While products from the small-scale sector and labour-intensive industries remain in the priority list of items being considered for the interest subvention scheme, sectors that hold potential for growth such as pharmaceuticals and certain engineering items are also in the running, the official added.

The rate of subvention, earlier pegged at 2 per cent, is also to be finalised. “It all depends on the level of expenditure the EFC is comfortable with,” the official said.
Exporters’ choice

The previous interest subvention scheme, that expired last April, included items such as handicrafts, carpet, handlooms, readymade garments, processed agriculture products, sports goods, toys and a few engineering items.

To find out the effectiveness of the previous interest subvention scheme, the government has approached the National Institute of Bank Management, Pune, to do an impact analysis.

Exporters have long been calling for revival of the scheme as cheaper finance could help them retain their share in the increasingly competitive global market.

“Ideally, we would want all sectors to be covered under the subvention scheme because most have taken a hit, but at least the crucial ones, both small and big, need to be included,” said Ajay Sahai from exporters’ body FIEO.

The Commerce Ministry is also trying to analyse the reason for the decline in exports in the last three months.

It is mostly due to a combination of weak world demand, falling value of major currencies such as the Euro and the Japanese Yen, which is making exports dearer.

[nawabs]

Sebi clears norms for international finance centres

http://www.business-standard.com/articl ... 545_1.html

On International Financial Services Centre (IFSC)

Guidelines to be set up under SEZ Act 2005
Will allow arm’s domestic & foreign stock market intermediaries undertake business at IFSC
To permit issue of DRs, debt securiites under FCDR Scheme
To allow listing of foreign company shares and other derivatives products
All category of investors eligible under FEMA will be allowed
MFs, AIFs set up in IFSC will be allowed to trade
Gift SEZ at Gujarat could be the country’s first IFSC

Muni bonds

Municipalities to be allowed to issue bonds, which will be listed and traded
Bonds will need to obtain rating from credit rating agencies
Minimum tenure will have to be three years
Municipality shouldn’t have defaulted during previous 365 days
Should have positive net worth for three preceding years

India has moved a step closer towards having being a Singapore or Dubai-like financial services hub with the country’s capital market regulator approving framework for setting up International Financial Services Centre (IFSC). The Securities and Exchange Board of India (Sebi) after its board meeting in Delhi issued broad guidelines for IFSC, which will primarily be aimed at reversing the export of India’s financial markets.

The Sebi board also for the first-time allowed listing and trading of municipality bonds—also known as muni bonds— to help the government in its smart cities initiatives. The regulator, among other things, eased the pricing formula to help financial institutions convert debt of distressed borrowers into equity. Sebi also cleared the framework to enable local fund managers simultaneous manage offshore funds and unveiled some key initiatives it plans to take in the new financial year.

Sebi said IFSCs, to be set up under the Special Economic Zone (SEZ) Act, 2005, will allow subsidiaries of both domestic and foreign stock exchanges set shop. It will allow issue of depository receipts and other securities by foreign issuers under the Foreign Currency Depository Receipts Scheme, 2014.

“The guidelines also provide for listing and trading of equity shares issued by companies incorporated outside India, depository receipts, debt securities, currency and interest rate derivatives, index based derivatives and such other securities as may be specified by Sebi from time to time. Non Resident Indian, foreign investors, institutional investors, and Resident Indian eligible under FEMA may participate in IFSC,” Sebi said in a release.

The country’s leading exchanges the National Stock Exchange (NSE) and the BSE have already in-principlely agreed to set up international exchange at Gujarat’s Gift (Gujarat International finance Tec-city), which is likely to be the country’s first IFSC. Gift is an equal JV between state government of Gujarat and IL&FS.

“Sebi is one of the important regulators and it certainly opens up chances of setting up international exchange. We are hoping that other regulators like RBI, IRDA will also frame rules by the end this month,” said Ramakant Jha, managing director, GIFT City.

With the help of tax concessions and relaxed regulatory framework IFSCs will aim at reversing or at least stemming the export of India’s financial market. Due to easy regulatory environment and lower costs major portion of trading on the country’s benchmark stock indices and currency has shifted to markets like Singapore or Dubai.

“We should also have a liberal tax regime and more efficient legal system comparable to Singapore, Dubai because we are in direct competition with them. The government is working on those issues right now,” said Jha.

According to the Sebi chief the stock exchanges in IFCs would need an initial networth of Rs 25 crore as against the Rs 100 crore requirements for bourses present in India. For clearing corporation the initial requirement has been revised from Rs 300 crore to Rs 50 crore.

However, these market infrastructure institutes would be required to meet the networth criteria as per Sebi act over a period of 3-5 years.

Meanwhile, Sebi board also proposed to relax certain norms in its Takeover Code regulators to allow banks conversion of debt into equity. The regulator said the conversion can now take place at through a “fair price formula” within the face value being the floor price. Under the current framework, the conversion formula often made it unviable for banks to go ahead with conversion. Both Sebi and RBI have been working together to arrive at a new framework that will provide a balance to both the lenders as well as the existing shareholders of a company.

“This is intended to revive such listed companies and provide more flexibility to the lending institutions to acquire control over the company in the process of restructuring, to the benefit of all the stakeholders,” said Sebi.

The markets regulator also approved regulations for listing and issuance of debt by municipalities by way of muni bonds.

A municipal bond or ‘muni bond’ is a debt security issued by a state or municipality to finance its capital expenditures such as construction of highways, bridges or schools. There is a huge market for municipal bonds globally, as these offer a higher coupon rate than government securities.

“Investors such as insurance companies, pension funds, foreign pension funds who used to shy away of being a part of this market (muni bonds) with these regulations they will now get the adequate comfort,” said UK Sinha, chairman, Sebi.

A few municipal corporations, in the past, have raised capital by issuing municipal bonds under guidelines issued by the Union government but trading hasn’t been allowed in these.

The regulations for Muni bonds stipulate that issuer’s contribution for each project shall not be less than 20 per cent of the project costs. These issuances should have a minimum tenure of 3 years and mandatory credit rating.

The Sebi chief also stated that the board has reviewed the requirement of continuous disclosure by listed entities.

On the disclosure norms the regulator clarified that the outcome of the board meeting would be done within 30 minutes of the closure of the meeting. All disclosure of events would first need to be made to stock exchanges within 24 hours of the event.

Before the board meeting the Sebi board met Finance Minister Arun Jaitley where he was briefed on the progress and issues surrounding the implementation of budget proposals.

“The merger of Forward Markets Commission (FMC) with Sebi was discussed, certain steps required we are working on that,” said Sinha.

[Prem]

India replaces US as No. 3 steelmaker
http://m.timesofindia.com/business/indi ... 657580.cms

NEW DELHI: India has overtaken the US to become the third-largest steel producer in the world with a production of 14.6 million tonnes (MT) in first two months of the year. India has been the fourth-largest steel producer for the past five years, behind China, Japan and the US. World Steel Association data showed that the country's production growth was the highest during the January-February period at 7.6% as compared to the global average of just 0.6 per cent at 127.6 MT. Production in China, which accounts for nearly half of the global steel production, fell during the period by 1.5%.

[Supratik]

I have a feeling that the smart city project is going to be much bigger than what we thought. That is why the JNNURM has been discontinued. I don't think it is going to be isolated CBDs. Waiting for the norms to come out.

[nawabs]

In a first, Centre will float 40-year bonds for borrowing

http://www.thehindubusinessline.com/ind ... yndication

In 2015-16, the Government will for the first time, use bonds (Government Securities or G-secs) with a 40-year maturity period for its borrowing. Currently, the bonds have a maturity period of up to 30 years.

“We will use a 40-year bond to borrow up to ₹10,000 crore," Finance Secretary Rajiv Mehrishi told reporters after a meeting with Reserve Bank of India officials. The actual amount could be between ₹5,000 crore and ₹8,000 crore. However, dates are yet to be finalised for the launch of this longer-maturity bond.

The announcement came even as RBI Deputy Governor R Gandhi, addressing a debt market summit in Mumbai, said the corporate debt market had been hindered by the surge in government borrowing through bonds.

The Centre uses dated securities for long-term borrowing. These securities carry an interest rate (technically known as a coupon rate) and are issued for more than one year.

The Finance Ministry, in consultation with the RBI, has decided to borrow ₹3.60 lakh crore during the first six months of the next fiscal year.

This is 60 per cent of the gross borrowing target of ₹6 lakh crore proposed in the Budget.

However, as a percentage of total borrowing, this is lower than the amount borrowed in previous years. Bonds with longer maturity are popular in various countries. The UK, for instance, has Government bonds with a maturity of up to 60 years.

Rajat Bhargava, Joint Secretary in the Finance Ministry, said that such bonds bring stability in the system, besides helping in benchmarking interest rates and easing redemption pressure. These bonds could be very useful for pension funds in their long-term investment strategy.

The Finance Secretary said that average weekly borrowing during the first six months would be ₹17,000-18,000 crore. With repayment of over ₹1.35 lakh crore, net borrowing would be ₹2.25 lakh crore.

Short-term borrowing

Mehrishi also said that short-term borrowing through Treasury Bills (T-Bills) during the first quarter of the next fiscal year would be ₹1.88 lakh crore.

T-Bills are instruments issued in three tenors — 91 days, 182 days and 364 days.

They do not carry any interest, are issued at a discount, and are redeemed at face value on maturity. Borrowing through these instruments is not included in the gross borrowing.

The Government also has plans to switch high-cost and near-maturity securities worth ₹50,000 crore with low-cost and long-maturity securities. Last year, it switched securities worth ₹48,000 crore.

Only 20 smart cities may be shortlisted this year

http://www.business-standard.com/articl ... 899_1.html

The proposed 100 smart cities are likely to be selected in three phases — 20 this year and 40 each in subsequent years, according to Karuna Gopal, president of Foundation for Futuristic Cities (FFC).

The Foundation is developing a protocol for Indian cities in collaboration with government and corporate entities. Gopal was speaking here on Monday at a smart city round-table, reiterating a pact between India and the Netherlands government.

A business delegation from Netherlands, led by Mayor of Amsterdam Eberhard van der Laan, is in India for a week to discuss investment opportunities, as well as the smart city project.

The Amsterdam mayor said, “We would want to help Prime Minister Narendra Modi’s ambitious project.’’

Even as the government is still tweaking the public-private partnership (PPP) funding model for smart cities and working on the concession agreements, international interest in the venture has been phenomenal. Foreign delegations are routinely showing their keenness to be a part of the smart city project, said Gopal.

The visiting officials from the Netherlands pointed that an MoU was signed between the Dutch ministry of infrastructure and environment and India’s urban development ministry in 2013, and the two sides would now like to build on the same for the smart city project. The US, Japan, China, Germany, Spain, France and Singapore are among the countries interested in collaborating with India on the project.

The 100 smart cities are likely to be a combination of greenfield development, redevelopment and retrofit projects. Also, the smart cities may be linked to other key projects of the National Democratic Alliance (NDA) government such as Digital India and Swachh Bharat, officials said.

For smart cities, the core areas will include municipal reforms, e-governance, zero emission, connectivity and mobility.

[Vayutuvan]

What do resident BRF economists think the coupon rates for these binds would be? 40 years is long but since they are tradeable on BSE/other exchanges, reasonable coupon rate is a good way to participate in India's infra building venture. This is ideal for those NRIs who are planning to RTI after retirement 20+ years. Bonds can be sold (or loan against them taken) to buy/build in the burbs of smart cities. In that time, all the outlying areas will become inner-city - just like Abids' of Hyderabad which was chi-chi area is on its way to become inner city. Charminar and shah ali banDa has become an inner city by 1980s itself.

[chilarai]

http://m.economictimes.com/wealth/credi ... 667151.cms

Ru-pay debit cards to be launched tomorrow. One small step at a time. This is a welcome move. Each time this card is used would mean less money going out of the country to visa/MasterCard. Will have to see if it allows ATM withdrawal without charges, then would be ideal for NRIs during their India trips.

[pankajs]

http://profit.ndtv.com/news/industries/ ... ard-749230
Railways Launch RuPay Pre-paid Debit Card

Railway passengers can now book their tickets, do shopping and pay service bills using RuPay pre-paid cards, as the IRCTC launched the debit card service here today.

The service was launched by the Indian Railway Catering and Tourism Corporation (IRCTC) in collaboration with the Union Bank of India and the National Payment Corporation of India.

[Uttam]

INR has appreciated to about 62.20 against USD, reducing export growth. The inflation is tame as well as the Oil prices have been stable. The central govt. is likely to manage borrowings with disinvestment in Q1 instead of waiting for Q3 and Q4 in most of the other years. Finally, the US Fed is in no rush to raise the interest rates.

So what is all of the above leading to? I believe another round of cut in interest rates. We need it and we need it now to prevent further slow down. The successful bidding of coal mine should encourage mining and industry growth rate. A cut in interest rates will be a booster shot.

[Nitesh]

I am not sure why GoI is not pushing for Ru Pay, the charges are lesser here, when I go to small cities and ask for using cards, they try to add 1.5-2% on the total, otherwise, they say, please bring cash. This way, GoI can enable the small merchants to accept the cashless transactions, it will help in longer run. RuPay can bargain with Visa/mastercard about the cut of the fees. Need not only the cards, but POS too

[nawabs]

Indian infrastructure companies continue to be debt laden: S&P

http://www.business-standard.com/articl ... 365_1.html

The total debt level for India's top 100 corporates (except subsidiaries of multi-national corporations), whose members are based mostly on market capitalisation, according to the report, stood at Rs 10.5 trillion in fiscal year ended March 2011 and have steadily grown ever since – to Rs 13 trillion in fiscal year ended March 2012; Rs 15 trillion in fiscal year ended March 2013 and Rs 18.5 trillion in fiscal year ended March 2014.

Indian corporates, S&P says, have been investing for growth and in expanding economy, they have been comfortable with free operating cash flows. However, the problem arises from the pace of debt built up over the past several years.

According to the report, the debt in utilities & infrastructure sector has increased more than 2.5x and by more than 1.5x in the metals & mining sector over the past five years to fiscal 2014. That's compared with an increase of less than 1.5x by the top Indian corporates overall.

"Even though there is an increase in leverage over the last several years for all countries in emerging Asia, companies in these countries have focussed on growth. This led to higher investments, which in turn resulted in capital spending that caused higher debt levels," said Mehul Sukkawala, senior director for corporate ratings (South Asia), Standard & Poor's Ratings Services.

Debt levels

As a part of the study, S&P analysed the operating, cash flow, and leverage data of India's top 100 corporates (except subsidiaries of multi-national corporations), whose members are based mostly on market capitalisation. The overall ratio of debt to earnings before interest, depreciation, taxes and amortisation (Ebdita) for these 100 Indian corporates, according to the report, stands at 1.5.

"More than 50% of these 100 corporates have debt vs Ebdita of 1.5 or below, which reflects the conservative financial policy that a lot of companies follow. In contrast, less than 40% corporates surveyed in Chinese and the ASEAN regions have this ratio," Sukkawala says.

"On the other hand, when we look at highly leveraged companies, i.e. companies with debt-to-Ebdita of more than 5x, in India about 20% of the companies fall into that category, as compared to more than 25% in case of ASEAN and China," he adds.

Capex plans

Despite India and the US being the two bright spots in the global economic scenario, corporate India is likely to go slow on capital expenditure (capex) plans. The capex spending, the report says, will only pick up in FY17 as many corporates are waiting for the government to put policy into action before investing further.

However, government companies are likely to continue spending on capex, besides Mukesh Ambani-led Reliance Industries (RIL) among the private peers.

The key to corporate growth will be whether the government can deliver on its reform promises. If it does, S&P believes the top players will be ready to capitalise. In the meantime, the Indian corporate sector will maintain its conservative stance toward growth rather than throw caution to the wind.

"Companies are likely to consider new projects only after they can sense the operating environment in India is improving at the ground level. They would also need to be confident that current investments are likely to generate good cash flows before committing fresh investments. This is positive from a credit assessment perspective over the next 12 months, especially for companies with weak financial ratios and liquidity," Sukkawala adds.

[nandakumar]

This may not be the most appropriate thread for this subject. But not quite Nukkad material either. This Guardian news report talks of a 8 year long study into researching the presence of precious metals in seweage waste.
http://www.theguardian.com/science/2015 ... nvironment
An extract from the above news link.
The eight-year study, which involved monthly testing of treated sewage samples, found that 1kg of sludge contained about 0.4mg gold, 28mg of silver, 638mg copper and 49mg vanadium.

A sewage treatment facility in Tokyo that has already started extracting gold from sludge has reported a yield rivalling those found in ore at some leading gold mines.

[pankajs]

CNBC-TV18 ‏@CNBCTV18Live 4m4 minutes ago

NEWS FLASH: Spectrum Auction Concludes After 19 Days, 115 Rounds

[Suraj]

The original estimate was Rs.80,000-100,000 crore, but they finished with Rs.109,000 crore
Govt mops up Rs 1.09 lakh cr from sale of spectrum

RBI pushes to regularize external borrowing norms:
Part-hedging must for ECBs: Sahoo panel

Sources said the recommendation to make hedging mandatory for a part of a company's ECB loans was due to the massive exposure companies have to a global markets crash, or a currency meltdown, as was seen in 2013-14, when the rupee plunged to a lifetime low of 68.85/$ (August 28, 2013). During that financial year, Indian companies borrowed to the tune of $33.23 billion from abroad. At the closing rupee-dollar exchange rate of 53.81/$ on May 2, 2013, that amount is equivalent to Rs 1.78 lakh crore, while at an exchange rate of 68.55, it is equivalent to Rs 2.29 lakh crore.

The high levels of unhedged foreign loans put the larger financial system at risk and in case of a meltdown, these force the government and the Reserve Bank of India (RBI) to step in.

Fin Min prepares list of companies for strategic sale

The finance ministry has prepared a list of companies, wherein the government proposes to give up its management control. The government will go for strategic sale of these companies.

The ministry is eyeing Rs 28,500 crore from strategic sales, out of Rs 69,500 from total disinvestment proceeds for 2015-16.

Strategic sale refers to transfer of a block of shares and management control to a strategic partner.

[Prem Kumar]

Not that I am an expert in these things, but I did find an echo of what you are saying in this speech by Shri Gurumurthy. Please do watch, he states that the Indian economy is feminine in nature, as it is family oriented with savings as the main driver, which is why a rights based approach (like social security, etc.) is not a good tempalte for us to follow.



I will be remiss if I don't mention this: A hat-tip to pankajs-ji for sharing the video about Shri Gurumurthy's speech about "ten years of economic destruction under the UPA" - I have learned a lot more new things about our economy and feel more confident about its future, thanks to this video and subsequent ones I saw as a consequence.

+108. I highly recommend Gurumurthy's talks on YouTube, especially his SASTRA University talks. I learnt a lot about what truly runs Indian economy, concepts like economic anthropology etc. His knowledge is not bookish, but based on a nationwide tour that he & like-minded people did over 2 years covering 42 Industrial clusters. Some interesting snippets from him:

a) Highest per-capita income in India is in Morvi, where Ajanta Wall Clocks are made
b) Non-agricultural SMEs employ 100 Million people in India. These SMEs don't even have access to bank-capital & instead rely on personal savings or borrow at usurious rates. This is where MUDRA comes in
c) FDI constitutes a negligible fraction of our investment. Media's focus on FDI & Stock Market are laughable, because the real economic engine is elsewhere
d) India cannot adopt a US style economy because our respective societies are like chalk & cheese. Economy is deeply tied to Culture (example: the propensity to save, the in-built tendency to care for your parents/siblings which obviates a need for Social Security etc)

[subhamoy.das]

Why is there such a luke warm response from the international financial institutes about India growing at 8+% in the coming years ? India will be, for the first time, be world's fastest growing major economy ahead of China, the darling of the international investment community. Is this just a fluke due to accounting adjustments or is this growth for real on the ground? The silence seems international folks are not buying this growth story yet.

[svinayak]

Why is there such a luke warm response from the international financial institutes about India growing at 8+% in the coming years ? India will be, for the first time, be world's fastest growing major economy ahead of China, the darling of the international investment community. Is this just a fluke due to accounting adjustments or is this growth for real on the ground? The silence seems international folks are not buying this growth story yet.

This growth is despite all the roadblock and trade barriers to Indian exports worldwide. Indian political leadership was shunned for almost 10 years in the international scene with roadblocks for even the approved nuclear deal. Indian military was under pressure in all the borders with threats from small terrorists/rebels to nuclear armed military states. Indian business and commerce was left alone from major trade blocs which are border neighbors of India.

In spite of all the barriers India is a net economic powerhouse and net security provider in the region now growing faster than all freemarket nations of the world.

India is changing the story different from the narrative they wanted to see. THey need India inside a box for financial dependency and political dependency. Investment is only for profit and control over the direction of economic growth. Indian internal growth is not under the control of any international institutions.

These are some of the reasons for such a luke warm response from the international financial institutes about India growing at 8+%

[gakakkad]

Why is there such a luke warm response from the international financial institutes about India growing at 8+% in the coming years ? India will be, for the first time, be world's fastest growing major economy ahead of China, the darling of the international investment community. Is this just a fluke due to accounting adjustments or is this growth for real on the ground? The silence seems international folks are not buying this growth story yet.

elaborate on the "luke warm" response..

[pankajs]

http://economictimes.indiatimes.com/new ... 714507.cms
Govt plans $10-billion push for chip manufacturing

NEW DELHI: In a major boost to chip manufacturing and designing, the Centre plans to pump $10 billion into facilities in Gujarat and Uttar Pradesh, where a consortium of firms have come up as production bases. The new push is part of India's plan to meet a growing domestic demand and reduce imports in the next few years.

"India would also be investing $400 million in developing an Indian version of micro-processor. These are part of the initiatives that are under way to create an ecosystem that focuses on high-ended innovation," RS Sharma, secretary, Department of Electronics and Information Technology (DeitY), said at the first Indian Electronics Expo organised by Electronics and Computer Software Export Promotion Council.

A dedicated Electronics Development Fund had been created to leverage the use of venture capital funds to promote more start-ups in the country, he added.

Infrastructure for chip manufacturing and designing will be considerably strengthened in India to cater to the growing domestic demand and to cut down the imports in the next few years, he said.

Sharma said India provided an exciting hub for electronics investment mainly on account of the surging domestic market and infrastructure, logistics and financial support being provided to the investors, whether they are from India or abroad.

He mentioned that Make in India coupled with Digital India program initiated recently by the government, can renew the interest in electronics production in the country and can help India achieve the target set for zero import of electronics into the country by 2020.

[subhamoy.das]

I would have expected headlines in WSJ, Bloomburg, Economic Times, New York Times, Times etc such as "The elephant finally moves ahead of the dragon", "The silent rise of chaos", "Chaos prevails over discipline", "Worlds largest democracy is now its fastest", "The upcoming Indian decade in Asia" etc etc.

[Arjun]

I would have expected headlines in WSJ, Bloomburg, Economic Times, New York Times, Times etc such as "The elephant finally moves ahead of the dragon", "The silent rise of chaos", "Chaos prevails over discipline", "Worlds largest democracy is now its fastest", "The upcoming Indian decade in Asia" etc etc.

All of which will happen when we move beyond predictions & India does land up surpassing China. There have been some false dawns earlier with India. Personally I would prefer they wait to see this happen for 3 years in a row before tom-tomming...

[SaraLax]

Not that I am an expert in these things, but I did find an echo of what you are saying in this speech by Shri Gurumurthy. Please do watch, he states that the Indian economy is feminine in nature, as it is family oriented with savings as the main driver, which is why a rights based approach (like social security, etc.) is not a good tempalte for us to follow.
.
.
.

I will be remiss if I don't mention this: A hat-tip to pankajs-ji for sharing the video about Shri Gurumurthy's speech about "ten years of economic destruction under the UPA" - I have learned a lot more new things about our economy and feel more confident about its future, thanks to this video and subsequent ones I saw as a consequence.

+108. I highly recommend Gurumurthy's talks on YouTube, especially his SASTRA University talks. I learnt a lot about what truly runs Indian economy, concepts like economic anthropology etc. His knowledge is not bookish, but based on a nationwide tour that he & like-minded people did over 2 years covering 42 Industrial clusters. Some interesting snippets from him:

a) Highest per-capita income in India is in Morvi, where Ajanta Wall Clocks are made
b) Non-agricultural SMEs employ 100 Million people in India. These SMEs don't even have access to bank-capital & instead rely on personal savings or borrow at usurious rates. This is where MUDRA comes in
c) FDI constitutes a negligible fraction of our investment. Media's focus on FDI & Stock Market are laughable, because the real economic engine is elsewhere
d) India cannot adopt a US style economy because our respective societies are like chalk & cheese. Economy is deeply tied to Culture (example: the propensity to save, the in-built tendency to care for your parents/siblings which obviates a need for Social Security etc)

Prem Kumar Sir et Al,

The bold, underlined lines (which i did to highlight) in your above post is very similar to what Lee Kuan Yew (LKY) said in a very publicized interview to Fareed Zakaria almost 2 decades back.
See the below quoted snippet from one of Lee Kuan Yew's answers in that 'great-to-read' interview.

[LKY] :
..... But Asian societies are unlike Western ones. The fundamental difference between Western concepts of society and government and East Asian concepts, when I say East Asians, I mean Korea, Japan, China, Vietnam, as distinct from Southeast Asia, which is a mix between the Sinic and the Indian, though Indian culture also emphasizes similar values, is that Eastern societies believe that the individual exists in the context of his family. He is not pristine and separate. The family is part of the extended family, and then friends and the wider society. The ruler or the government does not try to provide for a person what the family best provides.

In the West, especially after World War II, the government came to be seen as so successful that it could fulfill all the obligations that in less modern societies are fulfilled by the family. This approach encouraged alternative families, single mothers for instance, believing that government could provide the support to make up for the absent father. This is a bold, Huxleyan view of life, but one from which I as an East Asian shy away. I would be afraid to experiment with it. I’m not sure what the consequences are, and I don’t like the consequences that I see in the West. You will find this view widely shared in East Asia. It’s not that we don’t have single mothers here. We are also caught in the same social problems of change when we educate our women and they become independent financially and no longer need to put up with unhappy marriages. But there is grave disquiet when we break away from tested norms, and the tested norm is the family unit. It is the building brick of society.

So i believe in a way - what Gurumurthy sir is saying is not some garbage stuff but a very true fact that is very much in line with what other Asian stalwarts (like Lee Kuan Yew) have observed about the Asian societies (and their highly explicit cultural differences with most of West). MUDRA is a great way to start planning for strengthening existing MSMEs & engendering more MSMEs but the key from now on is the all important 'execution' of the plans.

That Fareed Zakaria - Lee Kuan Yew is a great interview and has lots of insights into dilemma's faced by fast economically growing East Asian countries and much of that applies for India too. On the aspect of Asians getting Westernized ... LKY particularly states that the Asian countries may not take up all aspects of Western thought but they will definitely modernize. He says that many East Asian countries have grown so fast into Industrial Mode society from Agricultural type society that some of them feel the stress of this compressed, rapid growth and this had led to search & acceptance of foreign systems into the country (like he states the rapid growth of Christianity in South Korea) as a possible scenario providing relief and understanding. At the same time many other sections of the society are feeling that in the pursuit of growth they have forgotten the roots connecting them to their mother culture and are thus looking at their past cultural & traditions (buddhism, taoism, confucianism) in a newer way too and new sects of these older religions are also rapidly sprouting up.

This is something that is happening in a slightly different way in our country too. Additionally - there is also this fake idea of 'Hindu Rate of Growth' and the thought being fed from leftist quarters that our old ethos & culture & tradition is responsible for holding us back .... when in fact the reigns holding India down where a highly govt regulated, socialistic idea of governance (fabian socialism) with red-tap'ism dripping out of all facets of governance. Very few societies other than those having Hinduism & Buddhism as their cultural base - have Gods & Temples dedicated to Education, Wisdom, Arts, Wealth, Health, Commerce and Bravery. This is in itself a great sign of inherent ethos & aspiration of the society following these traditions to prosper & go ahead further in their way of living and to explore newer areas of knowledge, wealth creation and well-being in general. Of course - the bad habits that have crept in like the castes based discrimination, practise of un-touchability and similar such in-equal stuff need to be rooted out quickly and the perception of the corrective efforts must be made well-known to outside world (not that Christian or Islamic societies are examples of 'all-humans-are-equal' paradigm ... cue ... their treatment of blacks, aborigines, slavery and etc).

[panduranghari]

What do resident BRF Economists think the coupon rates for these binds would be? 40 years is long but since they are tradeable on BSE/other exchanges, reasonable coupon rate is a good way to participate in India's infra building venture. This is ideal for those NRIs who are planning to RTI after retirement 20+ years. Bonds can be sold (or loan against them taken) to buy/build in the burbs of smart cities. In that time, all the outlying areas will become inner-city - just like Abids' of Hyderabad which was chi-chi area is on its way to become inner city. Charminar and shah ali banDa has become an inner city by 1980s itself.

If you are asking for advice, this is a wrong place to do that. If you are asking for opinions - the infra bond is a very good idea. It will be worth investing in something like this but I believe it will be primarily targeted at institutional investors. The caveats apply. If Modi is re-elected in 2019, then there is a guarantee that all the projects he is launching will come to fruition. Else its a high risk. The problem also is how will Indian banks respond to this. They are in severe debt and without Indian bank sector involvement, this may not succeed.

In essence, this is a very good idea.