Indian Economy News & Discussion - Aug 26 2015

[member_29172]

I am skeptical about that Bloomberg article. Gold doesn't strike me as something we'd leave lying under the ground if it could be extracted, considering its univeral desirability. I think Occam's Razor applies - we really don't have any significant known gold sources.

By your logic, so should we "not" have done the same with oil and gas , but we did exactly that and thanks to the idiotic interference in product pricing history of the Govt of India, we will continue to do so as well. Exact same thing with gold.

Trouble is, India does NOT have the technology and the capability to extract anything below 50 ms or so below the ground, including coal. We have NO deep underground mines (yeah, I know the KGF mines are the deepest man made hole in the earth, but that is historical, not recent).

Jot another win to the Baboon driven system and it's proclivity of shooting our own feet out from ourselves. The entire price fixing on a "return" of capital basis and the consequent command and control and micromanaging of investments, operating decisions and product pricing by Baboons and Mantri in Delhi has been a total disaster , especially in Oil and Gas and also in power. Yeah, the Modi Govt has freed pricing for new "marginal and difficult to reach fields" (whatever that means, again more Baboongiri and litigation ) . But that is really in line with it's strategy of making "headlines" and not doing much in substantive terms. This is more in line with the "tax of 25% for new business and startups" , "no taxes for next 3 years for startups" .. which is kind of inane, when you don't expect any real cash flow from most new business in 3 years anyways. What about the REAL substantive point , of cutting taxes as promised in the 2015 budget to 25% over 5 years and what has been the movement ? You get some waffling noises at best .

Isn't it better to use external sources of gold and pertroleum first before exhausting domestic reserves? And don't be nonsensical, Indian landmass is one of the oldest ones, making it very very unlikely to contain large reserves. I didn't bother reading the rest of your rant.

That's the problem with leftists and congi supporters, talk to them about oranges and they'll bitch about completely irrelevant and then utter something moronic like "cow+marx!!!!", as if that's supposed to mean something. This childish name calling might make you and other leftists think you guys are uber smart and cool, but it generally comes across as awkward and stupid.

Next time, instead of ranting, try replying to Suraj's comment in a more coherent manner. No one is stupid enough to sit on gold reserves, India is low on gold and I won't trust a western hackjob of a newspaper, run by american banker.
I don't know why these western propaganda articles are posted here as if the westerners care about the Indian economy or people or it's future. All they want is profits. They'll blabber whatever gets them the maximum profits.

They are psychopaths of the worst kind, you haven't nothing yet.

[member_29172]

^^ Imagine the kind of growth India's NITs and IITs have to go through to support this kind of growth in the economy. We are nowhere close to achieving this target in educating and developing the skill levels of the population. Just all these campuses put together can train only 30,000 students each year, when the number has to be ten times that.

You don't need IIT and NIT munnas for low skill and even high skill manufacturing. As if the current graduates doing anything useful for the country with their degrees. They just run away to the US, scrap their degrees and do administrative work for a nice six figure salary.

There are already ITIs being set up to train low skilled workers to standardize their crafts, update their knowledge and provide financial assistance if needed. Go do your research and you'd know. Last I checked there were some 30,000 temporary ITIs being set up for training close to 200,000 low skilled and medium skilled workers in various private and public industries.

[Singha]

>> Tata Steel Sells UK Plant For 1 Pound, Thousands Of Jobs May Be Saved

tata steel had spent good money acquiring corus. now they are writing off the entire investment for 1 pound under pressure from the british govt to save jobs. there is no payoff for the investor in this, as opposed to dismantling any usable plant machinery and infra and shipping that home. these EU cos always have lavish worker benefits and govt backing, so if things dont go well, the foreign investor has to take a haircut.

[member_29172]

Who cares, cut your losses and shift to more profitable pastures.

[hanumadu]

The sale is only for long products division, though Tata Steel is looking to exit its Europe business completely. The decision to sell is prompted by the UK govt refusing to raise tariffs against Chinese steel while the EU raised them. I hope Tata's exposure is limited and its the foreign banks which funded the acquisition that are taking the hit. Thankfully Tata Steel's Indian operations seem to be doing OK. In a way, this might be a blessing in disguise for Tata and India. If Tata had not acquired Corus, it probably would have invested heavily in India borrowing money from Indian banks adding to the problems facing the Indian steel industry and the banks they borrowed from.

[hanumadu]

http://finance.yahoo.com/news/indias-ta ... EEc2VjA3Nj

The head of US Steel accused Britain and the wider EU of negligence over China dumping cheep steel on world markets.

"The Europeans have been more negligent than anybody," Mario Longhi, chief executive of the biggest US steelmaker, told the Financial Times.

French economy minster Emmanuel Macron on Monday said Britain was "guilty of condemning the steel industry" by "naively" blocking EU attempts to impose higher tariffs on Chinese steel.

[hanumadu]

http://finance.yahoo.com/news/china-kil ... EEc2VjA3Nj

[Chinese] Steel output kept growing despite the decelerating rate of GDP expansion, zooming to 803.3 million tonnes in 2015—almost half of the global output.

With domestic demand falling, there was a huge increase in Chinese steel exports. With domestic demand falling, there was a huge increase in Chinese steel exports. As early as 2008, with exports of 59.2 million tonnes of steel, China was the top exporter of that product worldwide. In 2015, that figure surged to 107 million tonnes.

Many of these exports are reportedly being sold below the cost price, with adverse impact on Europe’s steel industries. Whereas EU countries such as France, Germany and Sweden took steps to protect their respective steel sector from the unfair Chinese competition without imposing tariffs, the government in Britain was laid back.

British business secretary Sajid Javid, a former managing director of Deutsche Bank, is a laissez-faire conservative politician, in thrall of the libertarian individualist ideas of the late American writer Ayn Rand, a right-wing ideologue.

Financial analysts in India were unimpressed and argued that Tata Steel paid too much for Corus. Most financial analysts in India were unimpressed. They argued that Tata Steel paid too much for Corus. Its shares slumped 11% overnight, and the rating agency Standard & Poor’s placed it a credit watch list. In response, Ratan Tata maintained that with China implementing its fast industrialisation and vast construction projects, global demand for steel would remain robust.

[vishvak]

UK ready to part-nationalise Tata Steel: Report
If an international business house had faced losses in India, that would have made a lot of noise.

No reason to believe anti-dumping duty would not have worked earlier.
link

[Suraj]

A day after Skynet's prediction, IMD also projects above normal monsoon this year:
At 106% rainfall, IMD predicts above-normal monsoon in 2016

This year's best news so far has just arrived. After two consecutive droughts, the India Meteorological Department (IMD) on Tuesday said the monsoon this year is expected to be “above normal.” It forecast monsoon at 106 per cent of the Long Period Average (LPA). This is the first time since 1999 that department has made an “above normal” prediction.

In its first seasonal forecast for 2016, IMD said rains, a lifeline for millions of farmers across the country, would also be distributed fairly, a factor which is as critical as total rainfall.

In fact, director general of IMD, L S Rathore said there could be a possibility of excess rainfall in some parts, but its prediction is difficult as of now. Advance preparation is being planned to tackle such a situation.

Monsoon is considered normal if rain during the June to September season is 96-104 per cent of the LPA. LPA is average seasonal rainfall over the country in the past 50 years, starting 1951, and it is estimated to be 89 centimetres. The forecast is with model error of five per cent.

The good news has come mainly because the dreaded El Nino weather phenomenon that caused the back-to-back droughts of 2014 and 2015 is showing signs of waning by the time India’s southwest monsoon gathers steam around July and August.

“We expect rainfall in all four months from June to September to be more than normal, with it gathering steam during the second half of the season,” Rathore told reporters. He said there is a chance of rainfall in the northeast and parts of Tamil Nadu and Rayalaseema being below normal, but given the quantum of rainfall in these parts is more than other areas, the impact would not be much.

IMF retain's India's GDP forecast, cuts global projection

The International Monetary Fund (IMF) on Tuesday retained India's growth projections for 2016-17 at 7.5 per cent, while it cut global economic expansion by two percentage points to 3.2 per cent for 2016 and one percentage point to 3.5 per cent in 2017.

According to IMF, India’s growth will continue to be driven by private consumption “which has benefited from lower energy prices and higher real incomes”.

In 2016-17, India’s growth would be higher than China’s by 1.3 percentage points. The country has overtaken China since 2014-15, becoming the fastest growing large economy in the world. For 2015-16, India’s growth was pegged at 7.5 per cent, a shade lower than official estimate of 7.6 per cent.

Industrial output up 2% in February

Industrial output in the country rose two per cent in February after falling continuously for three months, government data showed on Tuesday. The Index of Industrial Production (IIP), down 0.5 per cent in January, was boosted mainly by a 9.6 per cent rise in electricity generation and a five per cent rise in mining output.

Cumulative industrial growth for April-February, first 10 months of financial year 2015-16, over the same period of the previous year stands at 2.6 per cent, slightly less than the 2.8 per cent rise for the period a year before that.

Lower food price inflation pulls CPI to 6 month low

Retail inflation, measured by the Consumer Price Index (CPI), eased to a six-month low of 4.83 per cent in March from 5.26 per cent in February, according to data released by the Central Statistics Office (CSO) on Tuesday.

Retail inflation was at 5.25 per cent in March 2015. It is trending below the RBI (Reserve Bank of India)'s target of 5 per cent by the end of the current financial year.

If rainfall during this monsoon is as strong as preliminarily projected GDP growth may top 8% for this fiscal year. Previously posted data shows that the primary hurdle in the way of increased growth is subdued demand, primarily caused by 2 years of drought-driven rural distress. A change to this situation can also significantly boost growth, while also keeping food price inflation down, while hydrocarbon prices remain subdued so far this year.

[Bade]

You don't need IIT and NIT munnas for low skill and even high skill manufacturing. As if the current graduates doing anything useful for the country with their degrees. They just run away to the US, scrap their degrees and do administrative work for a nice six figure salary.

There are already ITIs being set up to train low skilled workers to standardize their crafts, update their knowledge and provide financial assistance if needed. Go do your research and you'd know. Last I checked there were some 30,000 temporary ITIs being set up for training close to 200,000 low skilled and medium skilled workers in various private and public industries.

The earlier report mentioned shortage of engineers not ITI level skilled workers. So all your fulminations are irrelevant. You are not going to jump-start an economy based on ITI level of expertise.

Yes, I just came out of a meeting with an IIT director and what do you know...most UGs including IITians & NITians are not leaving India. It is the next tier who are coming to the US for an education. This is the new trend, and some univs are complaining about the quality of the 2nd or maybe 3rd tier colleges. For your information the latest data shows, that PG student population is 60% of the IIT student population with a significant part being doctoral degrees in the hundreds each year. I believe you are the one who needs to do some more research on this.

No more here on this, but can be taken up in the education thread...as I learned of more information how the ecosystem is changing in the IITs at least.

[SaiK]

^^from Suraj's link
http://bsmedia.business-standard.com/_m ... 82-861.jpg

sounds like they chased after into feedback loop from previous metrics, and went over board every time.

way low, ok correct up!
oops went a bit high, ok correct a bit low,
oops, still not there, go bit lower
oops, the reality factor missed! correct bit high
oooopsie, that was way too high
lower it!,
darn, now it went up so high!

bottom: only irrigation system will help us out here

[member_28397]

http://www.foxbusiness.com/markets/2016 ... autos.html

The next sub-prime crisis could be lurking in the auto sector.


Gary Kaltbaum, president of Kaltbaum Capital Management, told FOX Business Network's Neil Cavuto on Cavuto Coast-to-Coast that easy money is to blame for increasingly easy lending policies.

“Incentives are at the highest ever, leasing last month was at the highest ever, and that is [companies] trying to keep the numbers up, and that’s where they lower the bar on lending down to the ground,” he said.

Kaltbaum said the losses are likely to hit the bond holders the hardest.

“If we get a bad economic scenario, I think all heck can break loose because lenders have gone too far trying to get people in who should not get the products they’re buying,” he said.

Indeed , Fitch Ratings service said in an end-of-February press release that delinquencies on subprime auto asset-backed securities (ABS) have reached levels not seen since 2009.

Fitch cited data that showed delinquencies of 60 days or longer hit 4.98% in the first month of 2016 – the highest level since September 2009, up 6% from December, and 4.8% higher than the same period in 2015.

“Weaker performance in the subprime sector is being driven mainly by weaker credit quality present in the 2013-2015 securitized pools, along with marginally lower used vehicle values,” Hylton Heard, senior director at Fitch Ratings, said in the release.

To that point, TransUnion data showed there were 1.21 million more subprime borrowers with auto loan accounts compared to 2014.

Ezra Becker, VP or research and consulting in the financial services business unit of TransUnion, said in a statement that lower energy and oil prices likely are playing a larger role in the rates of delinquencies among auto-sector borrowers.

“Lower energy prices and the resulting job losses in the energy-dependent markets have played some role in delinquency rates,” he said. “Even so, that impact appears at this point to be localized and mild in terms of national effect.”


If this is real Indian IT/ITES service sector will take a huge hit.

[Hari Seldon]

India planning to add 8 new major ports, says Nitin Gadkari (FE)

As part of its aggressive plans for port-led development, government today said it is looking to add eight new major ports to the already existing 12. “We are planning to add eight new major ports, including the three already announced – at Wadhwan in Maharashtra, Sagar in Bengal and Colachel in Tamil Nadu,” Union Shipping and Ports Minister Nitin Gadkari said here a day ahead of the Maritime India Summit.

He did not reveal the locations of the other five ports, but added that the aforesaid three ports entail investment of Rs 25,000 crore and work on them will start this year itself.

After Kandla in the 1950s, India has not built any other major port. Following rapid economic growth, country saw the development of private sector non-major ports.

Gadkari said the 12 major ports together have delivered Rs 4,200 crore profit in 2015-16, and their growth rates are faster than private sector rivals as well as global peers.

Apart from it, state-run corporations such as Shipping Corporation, Dredging Corporation and Cochin Shipyard will deliver another Rs 1,500 crore in profits, taking the overall contribution by the enterprises under his ministry to over Rs 6,000 crore, he said.

From a long-term perspective, the government is planning investments of more than Rs 12 trillion in the ports and waterways sector which will help generate 1 crore new jobs, Gadkari said.
Prime Minister Narendra Modi, who will inaugurate the summit here, will release a national perspective plan on the Sagarmala Project with details of investments, Gadkari said.

At the three-day summit, agreements entailing investments of over Rs 82,000 crore will be signed, he said, adding this includes 35 concession agreements of Rs 5,900 crore, 20 work orders of Rs 8,250 crore and 86 MoUs involving an investment of over Rs 68,700 crore.

More than a dozen union ministers are expected to address the summit, for which 3,000 delegates, including 300 from 41 countries, have registered, he said. Chief Ministers of Maharashtra, Goa, Andhra Pradesh and Gujarat will also be present.

To be held at NSE Grounds in suburban Goregaon, the summit will have 13 technical sessions, 200 exhibitors and 52 participants from South Korea, which is the partner country for the event.
It will also have a museum resembling a ship displaying the maritime history of the country, made by art director Nitin Desai.

India and South Korea also signed a memorandum of understanding for cooperation and mutual assistance in the port sector, Gadkari said.

World trade is in decline. Given rampant overcapacity in sector after manufacturing sector, what're the odds merchandise trade will revive and rebound enough to provide work for these new ports, I have to wonder... however, if its for domestic ferrying of goods etc, then, more power to it I say!

[Atish]

Trade decline is a cyclical phenomenon. In fact it is probably better timing to start work at a low ebb in trade. Moreover, the turnaround time is so poor at Indian ports that capacity is inadequate for current levels of trade.

[Suraj]

Atish is correct; trade is a cyclical phenomenon. You prime the pump during the ebb so that it flows much better when momentum builds. The manufacturing sector isn't arguably facing overcapacity, but rather muted demand, partly due to two years of drought - again a transient phenomenon. As the IMD/Skynet forecasts suggest, this year may be very different. Further, with industrial activity and Make In India picking up momentum, it's important to build up port capacity as well.

[vishvak]

The BSE Sensitive Index is up by about 400 points for 2 days now.
link - See graph for 1 week by clicking 1W.
This is most probably because of above normal monsoon after 2 years of droughts. Al-Nino winding down this year.

[Prem]

http://timesofindia.indiatimes.com/busi ... 822766.cms
India world’s largest remittance recipient in 2015: World Bank

WASHINGTON: India was the world's largest remittance recipient in 2015 despite experiencing a $1 billion drop from the previous year, the first decline in its remittances since 2009, the World Bank said on Wednesday.India retained its top spot in 2015, attracting about $69 billion in remittances, down from $70 billion in 2014, the World Bank said in its annual report "Migration and Development Brief"."Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries," said Augusto Lopez-Claros, Director of the World Bank's Global Indicators Group.."However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges including nutrition, access to health care and education," Lopez-Claros said..

.

[Suraj]

Will watch monsoon and rate cut transmission before more rate cuts: Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan has reiterated that future rate cuts will depend on a moderation in price rises and a good monsoon.

Going by the latest trend of inflation, Rajan may well worry less on prices. The central bank’s inflation-focused agenda has worked well for the economy as this has fallen steadily in recent months. Retail inflation fell to 4.83 per cent in March, from 5.26 per cent a month ago. Food inflation fell to 5.21 per cent from 5.3 per cent. RBI plans to keep inflation within five per cent by January 2017 and about four per cent thereafter.

Transmission by banks would also be critically monitored before deciding on rates. Banks have passed about 70 basis points so far.

The policy statement also said an erratic monsoon would chip off some of the growth prospects of the economy.

Deals worth over Rs 82,000 cr signed for 141 projects

A total of 141 agreements worth Rs 82,905.75 crore were signed during the two day Maritime India summit which concluded today. This apart, the union ministry of shipping and ports has identified another 240 projects worth Rs 4.50 lakh crore ($66 billion). The ministry has set up investment facilitation centre at the Indian Ports Association for the speedy implementation.

The investment deals were for the setting up of liquid cargo handling jetty, development of free trade warehousing zone, development of captive jetty, setting up of container terminal and multipurpose terminal, redevelopment of berths, construction of shallow draft vessels for inland waterways.

Some of these deals include JNPT and various private sector entities for projects well over Rs 15,500 crore, Kolkata Port Trust and domestic and foreign agencies for projects close to Rs 6,500 crore, Mumbai Port Trust & different entities for project of Rs 1,800 crore. The Sterlite Ports will redevelop berths at the Mormugao port which envisages investment of Rs 1,420 crore.

The state run Shipping Corporation of India signed agreements worth Rs 2,165 crore for long term crude oil transportation, carriage of crude from West Africa to India and acquisition of vessels. The Petronet LNG has signed agreement worth Rs 1,500 crore for setting up LNG terminal and power plant in Andaman and Nicobar islands and development of LNG bunkering facilities at Mumbai, Kandla, Cochin, Chennai, Vizag and Paradip Ports.

India to stop thermal coal imports; save Rs 40,000 crore. Only coking coal to be imported: Piyush Goyal

In view of rising production of the dry fuel, India plans to completely stop thermal coal imports in 2-3 years that would result in annual savings of Rs 40,000 crore, Minister of State for Power, Coal, New and Renewable Energy Piyush Goyal said on Friday.

Coking coal, however, would need to be imported, the coal and power minister said at the maiden Maritime India Summit here, adding that his Ministry was ready to tie up with Indian shipping companies for this purpose.

Record coal production by the world's largest coal miner Coal India Limited (CIL) helped India reduce its import bill of the dry fuel by more than Rs 28,000 crore in the last fiscal.

"I have no hesitation in saying that Indian companies used to import a lot of thermal coal. We want to completely stop the import of thermal coal in the next two to three years. We have already reduced imports by Rs 28,000 crore. We will save Rs 40,000 crore," Goyal said.

He said his ministry was ready to enter into pacts with Indian shipping companies for import and transportation of coal.

"This is the time for Indians to buy ships, to invest in infrastructure. This is the time for Indian shipping companies to own ships. I am happy to do long-term contracts with Indian shipping companies to transport our coal. Why don't we have a long-term contract," he said.

[chetak]

Why we don’t ‘feel’ the GDP growth

Why we don’t ‘feel’ the GDP growth

AARATI KRISHNAN


Sceptics argue the Indian economy can’t be growing when India Inc is in the doldrums. But RBI data proves otherwise

April 15, 2016:

“When facts change, I change my mind” is what the legendary economist, John Maynard Keynes, is believed to have said. But ever since India’s central statistical office flagged off its new GDP series, a determined band of sceptics have held that they would rather go by their gut feeling than these numbers.

So much so, that one hedge fund recently shut shop in India citing unreliable data, and another stockbroker has cobbled together an index that claims to capture real economic activity better than the official numbers. “If India is growing at 7-plus per cent, how come we don’t feel it?” is a common refrain of market players. They usually cite revenue and profit declines at Nifty companies and sundry statistics from India Inc to bolster their case.
The ‘real’ economy’s growing

But a recent data release by the RBI explains why the economy may, in fact, be doing reasonably well, without market commentators or stockbrokers being aware of it. What if it is the thousands of small enterprises that are leading this growth?

In any discussion about Indian business, it is listed companies, particularly the Nifty and the Sensex giants, that hog the airwaves. But these companies make up a minuscule portion of what constitutes Indian enterprise. As opposed to 6000-odd listed companies, there are over a 15 lakh companies registered with the ministry of corporate affairs (MCA). The country is also home to over 45 million MSMEs (micro, small and medium enterprises).

Given their fragmented nature, financial data on how the SME universe is faring is hard to come by. But the RBI recently drew on the MCA database to release aggregated financial data for over 2.3 lakh unlisted private companies (this excludes financial companies). From this data, it turns out, India’s large army of unlisted firms have been outpacing the listed firms by a long chalk for the last three years.

Growing faster

There are three clear parameters on which unlisted firms have been trouncing their listed peers. For one, unlisted firms managed far better sales growth in the last three years. They went from 13.3 per cent sales growth in FY13 to 8.7 per cent in FY14 before bouncing back to a healthy 12 per cent in 2014-15. In contrast, listed companies saw their sales growth dwindling from 9.1 per cent in FY13, to 4.7 per cent in FY14 and further to an abysmal 1.4 per cent by FY15.

The listed firms’ performance is no doubt a complete antithesis of the official GDP data which show the economy steadily accelerating from 5.6 per cent growth, to 6.6 per cent, to 7.2 per cent in the last three years. This is what has caused commentators to look askance at the official GDP data. While sales for listed companies may be out of whack with the GDP data, RBI’s new data set shows that numbers for unlisted firms are very much in line with the official data. As the latter make up a far larger universe than listed companies, which would you be inclined to believe?

While the data may seem counter-intuitive, the explanation for this divergence could lie in the kind of sectors that large listed firms operate in. While the listed universe features many giant-sized firms in energy, metals, mining and infrastructure, which are heavily linked to the commodity cycle and have a sizeable global leg to their operations, unlisted firms may have fewer representatives from these two segments of business.

Two, despite earning much lower profit margins than their listed peers, unlisted firms also managed higher profit growth in the last three years. The average operating profit margin of the unlisted firms tracked by RBI was just 9.1 per cent in FY15 as opposed to the handsome 13.6 per cent notched up by the listed firms.

But the pygmies of the unlisted space still managed net profit growth numbers that would be the envy of their listed peers. Their profits grew at 16 per cent, 23.6 per cent and 12.3 per cent in the last three years. Listed companies struggled with shrinking profits, their net profits falling by 2 per cent, 5.1 per cent and 0.7 per cent in the same three years.

Part of the explanation for the profit trends could lie in the fact that unlisted firms were far more cautious about bingeing on debt, than their listed peers. Despite much lower levels of profitability, unlisted firms featured almost the same interest cover (their profits were three times the interest outgo) as listed firms.

This is remarkable because most unlisted companies would find it far harder to secure credit from banks or other formal sources. If they do manage it, the interest rates would be far higher. The fact that unlisted firms have kept their debt servicing costs under check despite this handicap suggests that they have not been as profligate with their borrowings as some members of India Inc have been.

Overall, these numbers suggest that market players may be committing the cardinal error in statistics: that of using too small a sample to draw conclusions about the economy. Maybe their jaundiced view is because of their focus on what seems to be the worst performing segment of the Indian economy — the Sensex and Nifty companies!
Easy money

If this argument isn’t convincing, there are other indicators that suggest India Uninc is on a firmer wicket than India Inc. Over the last eight years, even as India’s primary market (where public firms raise fresh capital) has been dead in the water, there has been a flash-flood of private equity/venture capital money which has sought out domestic startups and unlisted firms.

Between 2006 and 2014, PE/VC firms poured capital of over $60 billion into over 3,000 small and medium businesses. This is more than three times the money raised in the primary markets, where just 350 firms were able to float IPOs in six years. This trend has accelerated over the last four years, with VCs/PEs pumping in over seven times the funds raised from IPOs. The availability of all this capital to a segment of the economy which has traditionally been capital-constrained, is bound to have boosted growth.

But what does the performance of India Uninc have to do with the new GDP computations? A lot, actually! One of the key changes made by the CSO when it tweaked its GDP computations in 2014 was to broadbase the universe of businesses that are used to measure GDP growth. While it earlier used the data from the Annual Survey of Industries, it now uses the far larger corporate database of the MCA (the same database from which the RBI has sourced its recent data for private firms).

So, if these facts don’t prompt GDP-sceptics to change their minds, they may have to look beyond India Inc to explain why they think the economy really isn’t growing.

(This article was published on April 15, 2016)

[Suraj]

It's hard to 'feel' the growth without broad based job creation in the formal sector. From a post on the last page:

It's important to track farm and non-farm payrolls across regions on a monthly basis to figure out where hiring needs to be stimulated. Only 1.5% of establishments have >10 people. Lots of tiny entities means low productivity growth and low hiring gains.

[Austin]

International Monetary Fund 2015

[SSundar]

Here's Why India Is About to Become the World's Most Important Economy

[disha]

^^ By 2020, we will be knocking or vaulting Germany (in nominal terms of GDP) and then the fun and games will begin. We would have blown past France and former UK.

[Neshant]

The west is abandoning capitalism & free enterprise which made it rich & innovative and turning their system into banker cronyism & shysterism with large govt to boot. Regardless of workforce, opportunities will diminish for the present and next generation as a result.

Its important India NOT follow that path.

Stick to the concepts of capitalism - respecting savings as opposed to idiotic theories of debasing & destroying the currency and have a system of low taxation - and it will work out.

[Suraj]

While merchandise trade growth has been negative for some time, there's a visible shift in that export growth is showing <10 loss, while import growth is falling >20%:
Exports fall for 16th straight month, down 5.47% in March

India’s merchandise exports fell for the 16th consecutive month in March this year. As compared to this, during the 2008-09 global financial meltdown, the decline was for nine months in a row.

Exports contracted by 5.47%, to $22.71 billion in March, against $24.03 billion in March 2015, according to data released by the commerce ministry on Monday. The cumulative exports for the 2015-2016 financial year was $261 bn.

Exports had last recorded growth in November, 2014 rising 7.27 % year-on-year.

Code: Select all

Month  ExportGrowth ImportGrowth
Mar2016  -5.47%    -21.56%
Feb2016  -5.66%    -6.03%
Jan2016  -13.6%    -11%
Dec2015  -14.75%   -4%

[member_29058]

http://www.rediff.com/business/column/c ... 160408.htm
Is the Indian economy finally turning around? Yes!
April 08, 2016 13:56 IST

If the economy gains momentum, that is a big positive for markets, given the strong macro of low inflation, falling rates, and a stable rupee, says Akash Prakash.

Many investors have grown tired waiting for an economic acceleration and are sick of seeing a continuous decline in earnings expectations. Most do not believe the official seven to 7.5 per cent growth numbers, with 5 to 5.5 per cent being the perceived true picture in most investors’ minds.

The fact that most companies and management teams continue to moan and groan about economic conditions, and seem totally disinterested in new projects has not helped investor confidence. Neither have record low profit margins and cash flows. Whatever economic positivity was left has been destroyed by the doom and gloom coming out of the banks, most of which seem totally paralysed and show continued balance sheet deterioration.

However, as is typical, just when most have given up and even stopped thinking about an economic revival, the signs of a turn are becoming more visible.

Just look at the data; electricity production grew by 9.2 per cent in February 2016, versus 0.7 per cent in November 2015. Cement production grew by 13.5 per cent versus -2.6 per cent year on year in November, and port volumes were up 13.4 per cent as compared to one per cent in November.

Two-wheeler sales, a very good barometer of rural and semi urban demand, have shown good acceleration in the last three months, now growing by 13 per cent y-o-y in February compared to 1.5 per cent growth in November. The Naukri job index in February is up 18.2 per cent as compared to less than 10 per cent in November.

Within commercial vehicles, we have seen growth broaden from just heavy commercial vehicles/haulage trucks to tippers and light and medium trucks. This broadening of demand implies genuine activity on the ground, not just market share shifts from rail to road. Tippers are used only for mining and construction activity and LCV’s for last mile transport (no threat of rail substitution).

Freight rates have also continuously improved over the past three months, more than justified by the rise in diesel prices. There obviously seems to be enough freight to move.

Construction equipment sales have also improved, with feedback from JCB indicating sales surging by 40 per cent in the last four months, along with a pick-up in after-market (implying strong usage).

Oil consumption growth is up from 6.6 per cent in November to 11.7 per cent in February, and many retail formats like Big Bazar, Shoppers Stop, Westside are reporting high single digit same store sales growth. Coke sales have also accelerated by 15-20 per cent.

Road traffic growth for both IRB and Ashoka Buildcon has accelerated to near double-digit growth compared to three to four per cent 18 months back.

After a gap of almost 12 months imports ex-oil and gems has again moved into positive territory. Both FDI and foreign tourist arrivals are surging.

Obviously all data points are not positive: passenger vehicle sales have slowed to single digits from 11.5 per cent in November and the feedback and sentiment on the ground for cars is not strong. This could be due to the recent hike in cess as well as the issues around diesel cars.

Rail freight volumes are still marginally negative, but this is due more to loss of market share than a decline in freight volumes in the economy. Exports remain negative, but this seems to be more about the weakness in the global economy.

The private sector continues to show no appetite to put up new projects, and hence no surge in capital spend seems imminent. The data here remain very mediocre. The banks have been shaken and credit growth has dropped to only 11.5 per cent.

Jefferies, the broking house, maintains an activity index, taking many of the above indicators into account. The three-month moving average of this index has seen growth rising to 4.7 per cent, a 12-month high. It also has a momentum indicator, which is also signalling improvement, with only six out of 36 indicators worsening.

Thus just when most people have given up, signs of a revival are growing. These signs are before we have seen any impact of the pay commission award and One Rank One Pension pay-outs. This stimulus should only add further impetus to the nascent recovery. We of course need a reasonable monsoon, given the poor rains of the past two years and the need for relief in rural stress.

[Suraj]

FDI inflows up 37 pct to $39.32 bn in 2015

Foreign direct investment (FDI) into the country increased by 37 per cent to USD 39.32 billion during 2015.

The foreign investment inflows stood at USD 28.78 billion in 2014, according to data by the Department of Industrial Policy and Promotion (DIPP).

Computer hardware and software sector attracted the highest FDI, followed by services, trading business, automobile industry and chemicals.

Singapore emerged as the biggest FDI source, followed by Mauritius, US, Netherlands and Japan.

The government has taken several steps to promote investments through a liberal FDI policy. It has relaxed norms in several sectors, including single brand retail, e-commerce and construction.

UMPP bid paper headed to Cabinet, Rs 1.5 lakh cr investment eyed

The Cabinet is likely to approve standard bid document for Ultra Mega Power Projects (UMPPs) based on domestic coal by next month, which will pave the way for investments of about Rs 1.5 lakh crore.

After Cabinet approval, tenders can be floated for five domestic coal-based UMPPs at Banka in Bihar, Tilaiya in Jharkhand, Bedabahal in Odisha, Deoghar in Jharkhand and Surguja in Chhattisgarh, a source said.

“The power ministry is almost ready with standard bid documents for local coal-based UMPPs. The ministry is likely to get approval of the Cabinet in a month. After that, tenders can be floated for five UMPPs with a total investment of Rs 1.5 lakh crore,” the source added.

“The four UMPPs are Banka, Tilaiya, Bedabahal and Surguja. Now, Tilaiya can be tendered again as all 18 power procurers have signed the termination notice issued by Reliance Power.”

According to this year’s Budget, a UMPP entails an investment of Rs 30,000 crore.

[vina]

I have no idea why the Modi Govt is playing with fire in terms of Provident Fund. If the overt attempt to legislate the grab of the PF corpus forever via the budget became a cropper, the covert attempts at "law making" by "Circular" , the specialty of a species known as Indicus Baboonus Boorocratus continues. Now that has met with flash strikes .

It happened in Bangalore yesterday, with Hosur road and Bannerghatta road garment workers going on a flash strike that happened without any leadership and is repeating again today . And the Indicus Baboonus Booracratus are trying to backpedal by issuing more "circulars" and "clarifications" whatever.

The Modi Govt either needs to kick out the Baboon Troop (led by the Economic Affairs Chief Baboon) behind the naked PF corpus grab attempt (which was overt) and the Baboons Troops trying to do it covert (via the Labour Ministry by doing "circulargiri") or face the fire which will not just singe it but rather burn it. The EPF office yesterday was saved from the wrath of he protestors only by the local police.

[kvraghav]

^^^
The flash strikes was to do with many garment factories not paying the PF collected from the employees. Was any circular issued to not release the PF by the modi govt or is there some other reason for the flash strike?

[Austin]

I have no idea why the Modi Govt is playing with fire in terms of Provident Fund. If the overt attempt to legislate the grab of the PF corpus forever via the budget became a cropper, the covert attempts at "law making" by "Circular" , the specialty of a species known as Indicus Baboonus Boorocratus continues. Now that has met with flash strikes .

It happened in Bangalore yesterday, with Hosur road and Bannerghatta road garment workers going on a flash strike that happened without any leadership and is repeating again today . And the Indicus Baboonus Booracratus are trying to backpedal by issuing more "circulars" and "clarifications" whatever.

The Modi Govt either needs to kick out the Baboon Troop (led by the Economic Affairs Chief Baboon) behind the naked PF corpus grab attempt (which was overt) and the Baboons Troops trying to do it covert (via the Labour Ministry by doing "circulargiri") or face the fire which will not just singe it but rather burn it. The EPF office yesterday was saved from the wrath of he protestors only by the local police.

I agree the PF grab is really shameless and affected many in a negative way. I mean which baboon came with the idea of keeping half of PF amount till you reach the age of 57

[hanumadu]

Coke sales have also accelerated by 15-20 per cent.

This is good news. Metallurgical coal sale increase means steel industry finally might be starting to ramp up capacity utilisation. They form a big part of bank NPAs.

[Suraj]

Good monsoon may push growth to 8.5%: Jaitley

Finance Minister Arun Jaitley on Monday said the government might revise its projection of economic growth in 2016-17 to 8-8.5 per cent from 7.5 per cent, if the monsoon rainfall was above normal.

Interacting with foreign institutional investors in New York, Jaitley expressed confidence that the Constitution amendment Bill on the goods and services tax would be cleared by the Rajya Sabha and said a joint committee was likely to submit its report on the bankruptcy Bill soon.

The Economic Survey had projected the economy would grow by 7.25-7.75 per cent in 2016-17. The International Monetary Fund had, earlier this week, pegged India's economic growth at 7.5 per cent for 2016-17.

Mining & Electricity growth hint at industrial activity revival

An improvement in mining and electricity in the Index of Industrial Production (IIP) for March 2016 could hint at a rebound in industrial activity.

Experts said with surplus coal available and a comfortable power supply situation, there could be a room for growth in these sectors.

The mining sector grew five per cent, year-on-year (y-o-y), in February. Over April-February 2015-16, it grew 2.4 per cent, up from 1.5 per cent in the same period of the previous year. Historic high coal production and availability led to the improvement in mining growth. Coal India’s production growth was nine per cent at close to 500 million tonnes (mt) in 2015-16. Current coal availability at power stations is at a record high of 26 days, with not a single power plant in the country facing fuel shortages.

As a major beneficiary of enhanced coal production, electricity generation grew 9.6 per cent, y-o-y, in February, higher than in the previous four months.

Wholesale prices decline for 17th month, 0.85% in March

Wholesale prices fell for a 17th straight month in March, declining 0.85 per cent against 0.91 per cent in February.

The Wholesale Price Index (WPI) had recorded deflation for a full year in 1975-76. WPI last showed inflation 18 months earlier in October 2014 at 1.66 per cent.

Official data released on Monday showed deflation had stood at 2.33 per cent in the corresponding period of the previous year.

For the full 2015-16, WPI deflation stood at 2.50 per cent on an average, compared to 2.05 per cent of inflation in the previous financial year, according a note by YES Bank.

Pressure points remained in food, inflation, which accelerated to 3.73 per cent in March from 3.35 per cent in February. However, this was lower than 6.27 per cent in the corresponding period of the previous year.

[subhamoy.das]

It's hard to 'feel' the growth without broad based job creation in the formal sector. From a post on the last page:

It's important to track farm and non-farm payrolls across regions on a monthly basis to figure out where hiring needs to be stimulated. Only 1.5% of establishments have >10 people. Lots of tiny entities means low productivity growth and low hiring gains.

If this data is correct then it is an eye opener and we should then bracket our enterprises into only 2 categories - small scale and large scale. Small being anybody < 5 and large being anybody > 5. The banks are still outside the limits of small enterprises as they donot give cash credit/over draft to enterprises below 50l of annual turn over. What a shame

[Suraj]

Yes the Chart 2 trend shows that despite liberalization, the employment trend is fracturing more, rather than resulting in more formal employment in medium or large companies. That means almost 70% of the employment base is in companies with 5 or fewer people, as compared to <55% of the employment base in 1990. In such small entities, the scope for income and productivity gains is very low. The contribution to the tax base through either corporate or reported personal income taxes will also be correspondingly low. I think GoI is very familiar with this issue, which is why there's such an effort to generate local employment in larger companies.

[Karthik S]

From FB, in general about socialism:

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan".. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that. (Please pass this on) These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

[Suraj]

India's Services Sector grew 10% a year in 2015-16: CII Report

India's services sector contributed about 61 per cent to India's Gross Domestic Product, growing strongly at approximately 10 per cent per annum in 2015-16, a report launched on Wednesday at the second Global Exhibition on Services.

The report, published by industry body Confederation of Indian Industry (CII) and KPMG says India is currently the second fastest growing services economy in the world. With the 2015-16 financial year witnessing dismal merchandise trade, the government is betting big on services trade. Incidentally, India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent.

The government has called for a renewed focus on the services sector which contributes 53 per cent of the country's Gross Domestic Product, 51 per cent of foreign direct investment and 28 per cent of employment. The government had earlier stated that almost 50 per cent of its current account deficit was met from exports in services.

The report states that India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent, placing India in the eighth place currently amongst the top ten exporters of services in the world.

State-run firms likely to launch $1-bn masala bonds in UK

As India gears up to raise funds to meet renewable energy target, state-run companies like NTPC, Power Finance Corp and REC are likely to launch masala bonds worth $1 billion in the UK in the next four months.

The bonds, which will be of $150-250 million, are likely to be limited to a band of five to seven years.

"Companies, including NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation and Rural Electrification Corporation are likely to launch these bonds in the next three or four months in UK to gauge investor appetite," Power Minister, Piyush Goyal said today.

These will be subjected to decisions made by the boards of the PSU energy companies, the minister said at a round table -- Financing Renewables and Energy Efficiency, organised by the city of London here.

As a primer, masala bonds are Rupee-denominated bonds issued offshore, as opposed to an FCCB that's issued and repaid in foreign currency. All you wanted to know about Masala Bonds. The broadening market for masala bonds is a sign of maturity of the Indian Rupee, since it implies buyers are willing to invest billions on bonds that have an exchange rate risk to them.
Food inflation to remain under check on subdued price trend

Food inflation is likely to moderate in the next three months on a subdued price trend in agricultural commodities and expectation of above normal rain in the coming monsoon season.

Triggered by a sharp increase in prices of agri commodities, led by those of pulses, sugar and vegetables, food inflation had moved up for six months. However, in February, retail inflation as measured by the consumer price index (CPI) dropped sharply after rising for the earlier six months; prices of mainline agri commodities remained elevated but had declined, relatively.

Agri prices had risen as a result of the deficient rain in the past two monsoons, with a fall in output and some crop damage.

India’s crude oil import bill halves to $64 bn in 2015-16

India’s crude oil import bill nearly halved to USD 64 billion in 2015-16 fiscal as global oil prices slumped to multi-year lows.

India imported 202.1 million tonnes of crude oil in the fiscal year that ended March 31, for USD 64.4 billion, according to latest data available from Petroleum Ministry.

This compared to import of 189.4 million tonnes of crude oil for USD 112.7 billion in the previous 2014-15 fiscal.

In rupee term, import of crude oil, which on processing converts into fuel like petrol and diesel, was Rs 4,18,931 crore in 2015-16, down from Rs 6,87,416 crore a year ago.

While the basket of crude oil India imports averaged USD 84.16 per barrel in 2014-15, it cost only USD 46.17 a barrel in FY16. Indian basket averaged USD 105.52 per barrel in 2013-14.

India’s farm crisis: Absurd agricultural subsidies, not IPL doing the damage

ICRIER points out that India’s Rs 175,000-180,000 crore of annual agriculture subsidies are around three times the government’s capital formation — in other words, cut subsidies and you can invest more. Investing the same amount of money on R&D — to produce drought- and flood-resistant GM seeds, for instance — is 22 times more effective than fertiliser subsidies when it comes to both boosting agricultural growth and in terms of being able to reduce poverty.

Rs 11.4 lakh-cr worth projects stalled till March: ICRA

Owing to unfavourable market conditions, increased funding constraints and inadequate raw material linkages, nearly Rs 11.4 trillion worth of infrastructure projects were stalled as of March 31, says ICRA.

According to the rating agency, though the number of stalled projects started declining since FY14, it took pace from the second half of 2015-16. Majority of the projects, which were stalled were from the private sector including from the sectors like steel, cement, aluminium, among others.

“The Project Monitoring Group (PMG) of the government helped in resolving 353 projects worth Rs 11.7 trillion stalled over the last 3 years, which were particularly in power sector, but addition to projects accepted by PMG outpaced projects resolved,” ICRA said.

The Group, which was set up in January 2013 in the Cabinet Secretariat to revive projects both in the public and private sector, had accepted 743 projects with an estimated cumulative investment of Rs 31 trillion till February this year.

According to ICRA, another 390 projects with a cumulative investment of over Rs 19 trillion are still facing hurdles.

[Melwyn]

Wise words from Raghuram Rajan on keeping India's economic uptick in perspective.

http://www.dnaindia.com/money/report-fu ... ne-2204297

To get to the experience, start first with where India is. India is the fastest growing large country in the world, though with manufacturing capacity utilization low at 70% and agricultural growth slow following two bad monsoons, our potential is undoubtedly higher.

Growth, however, is just one measure of performance. The level of per capita GDP is also important. We are still one of the poorest large countries in the world on a per capita basis, and have a long way to go before we reasonably address the concerns of each one of our citizens. We are often compared with China. But the Chinese economy, which was smaller than ours in the 1960s, is now five times our size at market exchange rates. The average Chinese citizen is over four times richer than the average Indian. The sobering thought is we have a long way to go before we can claim we have arrived.

As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy. Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years before we can give every Indian a decent livelihood. This is not to disparage what has, and is, been done. The central and state governments have been creating a platform for strong and sustainable growth, and I am confident the payoffs are on their way, but until we have stayed on this path for some time, I remain cautious.

We must remember that our international reputation is of a country with great promise, which has under-delivered in the past. This is why we are still the poorest country on a per capita basis among the BRICS. We need to change perceptions by delivering steadily on our promise for a long time – by implementing, implementing, and implementing. We cannot get carried away by our current superiority in growth, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing. This movie has played too many times in India’s past for us to not know how it ends.

[Singha]

wise words indeed.

[Yagnasri]

But very bad choice of words. It is as if he is living in a cocoon. This is what happens we give too much importance to the unelected and unaccountable people. They tend to give lectures to us and become powerful due to hollow we created around them. MMS is another one, and we all suffered a great deal because of our efforts to make a demi-god of reforms whereas the elected leader who has done reforms PVNR is made a demon.

I deal with RBI matters regularly, and I can there is nothing great done under him administratively. He, in fact, failed to do when something critical reported to him directly. I at least know one case personally.

Even now GOI efforts to bring down inflation are not appreciated by anyone. We all credit RR for it. This is MMS drama all over again.

[Suraj]

India overtakes China as top FDI destination in 2015: Financial Times

India has replaced China as top destination for foreign direct investment by attracting USD 63 billion worth FDI projects in 2015, says a report.

“India was the highest ranked country by capital investment in 2015, with USD 63 billion-worth of FDI projects announced,” according to fDi Intelligence, a division of The Financial Times Ltd.

Also there was an 8 per cent increase in project numbers to 697.

Major companies such as Foxconn and SunEdison have agreed to invest in projects valued at USD 5 billion and USD 4 billion, respectively, in India in 2015, it said.

“India replaced China as the top destination for FDI by capital investment following a year of high-value project announcements specifically across the coal, oil and natural gas and renewable energy sectors,” the report said.

It said the biggest change in greenfield FDI in 2015 was the near tripling of greenfield FDI into India, with an estimated USD 63 billion.

“In 2015, India was for the first time the leading country in the world for FDI, overtaking the US (which had USD 59.6 billion of greenfield FDI) and China (USD 56.6 billion),” the report noted.

India’s consumption, GDP growth to get boost from ‘La Nina’

The probability is improving for a La Nina event leading to a good monsoon in India which could provide a major boost to consumption, investment and GDP growth, says a Deutsche Bank report.

According to the global financial services firm, this year could throw up positive surprises for the country.

“In order to alleviate rural distress, India needs bountiful rainfall, with proper spatial and temporal distribution. Consequently, a La Nina event could provide a major boost to consumption, investment and GDP growth,” Deutsche Bank said in a research note.

According to the report, an analysis of over 30 year data indicates strong positive correlation between La Nina and India’s key macro/rural indicators.

As per the analysis, average annual rainfall in La Nina years has been 5.3 per cent above long term average and rural economy also posted strong growth during these years.

“Agri GDP in La Nina years grew at an average 7.8 per cent y-o-y as against an average of 2.3 per cent y-o-y in non La Nina years,” the report says.

The report further noted that the positive impact of La Nina is amplified further if it is preceded by an El Nino year, a situation similar to the current year.