Indian Economy: News and Discussion (June 8 2008)

Prem · Post by **Prem** » 11 Nov 2008 10:53

Guess import will be down too. Oil prices easing up will help saving $.

Suraj · Post by **Suraj** » 11 Nov 2008 11:32

Prem: yes imports will fall too, thanks to both lower oil prices and a lower Rupee (which makes imports costlier).

About the Chinese 'bailout', we actually have a large government spending measure that coincidently will serve such a purpose. It is called the 6th Pay Commission... However it goes into the hands of consumers, and will therefore support consumer spending, as opposed to fixed asset investment as the Chinese intend with their own bailout.

Neshant · Post by **Neshant** » 11 Nov 2008 13:07

It is called the 6th Pay Commission... However it goes into the hands of consumers

Don't forget the 7th pay commission.... corruption. That 'stimulus' goes directly into the economy after being routed through a few pockets.

Raj Malhotra · Post by **Raj Malhotra** » 11 Nov 2008 16:00

Katare wrote:China announces $600bn relief for financial crisis

I bet lot of old programmes bundled together under new name

abhischekcc · Post by **abhischekcc** » 11 Nov 2008 16:03

Raj Malhotra wrote:
Katare wrote:China announces $600bn relief for financial crisis
I bet lot of old programmes bundled together under new name

Like the NREGS?

Srinivas · Post by **Srinivas** » 11 Nov 2008 23:03

Lengthy interview by Narayana Murthy (moneycontrol.com)

Greed leading to disasters: NR Narayana Murthy
http://tinyurl.com/5h3x3n

I believe that India is better placed than any of the leading economies of the world to recover from the mess that the world economy has got into because of a very simple reason. We are primarily a domestic economy focused nation. Our fundamentals are good. Our productivity is improving.

As far as the youth of this country is concerned, I would say that for the first time in the last 300 years, this country has received recognition in the global markets, and received certain respect. This is the time for us to work hard, this is the time for us to work smart and consolidate on the gains. Indians are generally not known to have the killer instinct or not known to run the last mile. Yesterday was a wonderful exception when the Indian cricketers beat the Australians. But that is a rare one.

We have to make it a habit. We have to make it a habit of what Dhoni and others did yesterday. That is make sure that all the good things that they have achieved in the last 10 years becomes a habit. To do that, you need continued discipline, hard work, smartness, integrity and putting the interest of the country above your own personal interest.

ramana · Post by **ramana** » 12 Nov 2008 00:19

vsudhir · Post by **vsudhir** » 12 Nov 2008 00:25

Well admist all the gloom, some looongterm investors do seem to be voting for India with their sacred cash...

Long-Term Players Unfazed by Sell-Off, Stay Bullish on India (BizWeek)

Top retirement funds that have come to Indian shores this year include American Airways, British Airways and American Legacy Foundation, an anti tobacco foundation.

Saurabh Mukherjea, head of Indian equities, Nobel, said:“Pension and such funds are considered to be sacred funds and entry of such funds means a long term investment horizon for the Indian markets.

Also with the dwindling Q2 earnings many cash strap companies are really finding it difficult to raise funds for their working capital. We might see lots of PIPE deals in the coming month from such funds even at the cost of greater equity dilution for the companies.”

Interestingly, funds from Mauritius continued to dominate the new registration. Of the 24 new FIIs registered last month, 11 FIIs have seen taking the Mauritius route owing to the favourable tax regime.

Many India and Asia-Pacific focused funds that managed to raise their money before the market meltdown and were sitting on the fence for the market to cool off are also now turning to the Indian markets for investments.

“The increasing number of FIIs getting registered with the Sebi is a good sign for the Indian markets. FIIs are always known to enter the markets at the lower levels and current levels are too tempting for them to miss.

Given the growth potential that India carries, it would certainly have an edge over other emerging markets and once the liquidity situation improves we might see a full-fledged participation by the FIIs,” Mithun Banerjee, vice-president-quantitative Research, Antique Finance said.

rsingh · Post by **rsingh** » 12 Nov 2008 01:53

Raj Malhotra wrote:
Katare wrote:
China announces $600bn relief for financial crisis

I bet lot of old programmes bundled together under new name

Like the NREGS?

Nothing new, this amount was to be spent on various projects during next 2-3 years anyway...............Japan tried that and failed.

Suraj · Post by **Suraj** » 12 Nov 2008 02:51

Interesting piece of data - the total planned and under execution capex projects over the last two fiscals amount to $1.5 trillion! Of course, this will be scaled back a bit, but even half of that is a phenomenal investment of ~70% of GDP.
India Inc goes slow on capex

A study by Credit Suisse estimated a month back that capital expenditure for a clutch of 34 projects with an investment of about $190 billion (around Rs 9.16 lakh crore) faced a 19-month delay on an average. The consequent cost overrun, it reckoned, would be about 30 per cent. The environment has only worsened since then — slowing growth and a serious liquidity crisis has hurt confidence.

True, Indian companies’ capacity expansion plans do not match those of ArcelorMittal’s — the world’s largest steel maker is believed to be pulling back from its eight-year $35-billion expansion plan. But projects planned and under execution over the past couple of years are estimated at $1.5 trillion (around Rs 72 lakh crore).

But with debt turning expensive, even some on-going projects could be delayed. Reliance Industries is believed to be taking it easy with the Special Economic Zone(SEZ) in Haryana because it anticipates less demand for such space.

Cautious about order inflows into engineering firms from the industrial sector and private sector projects that have yet to achieve financial closure, an HSBC report noted that “projects where solid progress has not been made run the risk of getting delayed”. Already, the sequential rise in the order books for a set of engineering companies was just 7 per cent in the September 2008 quarter over the June quarter though on a y-o-y basis, order inflows were up a strong 40 per cent.

However, Subir Gokarn, chief economist at S&P, Asia Pacific, pointed out that the machinery and equipment segment of the IIP has been slowing for about a year now. “Some amount of the slowdown in capital expenditure, we believe, would have happened even without the tight liquidity current situation," he said, adding, "However, now that the recovery could take longer than anticipated, more projects can be expected to be pulled back.”

Already, as DD Rathi, President, Grasim, observes, demand for cement looks like it could come off. “While it’s early days, the slowdown in housing and more capacity coming on stream could mean more supply than demand,” he said, adding that “ those cement projects that haven’t made too much progress, could be put on hold.”

If this doesn't scream 'rate cut'...
Indirect tax collection dips in October

Excise duty collections declined by 8.7 per cent in October this year as economic activity seems to have slowed. This is the second consecutive month the excise collections have slowed.

Also, Customs duty revenues fell for the first time in the current financial year, according to the latest data released by the finance ministry.

“The fall in excise duty collections is mainly on account of decline in manufacturing,” said a revenue department official. Excise duty collections had grown by 7.5 per cent in October 2007. The department has taken a number of steps to check evasion of excise duty. However, industrial activity has to pick up first, says the official.

Customs duty collections declined 0.9 per cent, compared with 24.7 per cent growth in the same period last year .

Centre summons Income Tax Commissioners

Concerned over the decline in direct tax collection growth, Revenue Secretary PV Bhide has called a meeting of chief commissioners of income tax tomorrow. The meeting is expected to evolve an action plan to boost direct tax collections in the remaining five months of the fiscal year ending March 2009.

The revenue department is worried that the growth in direct tax collections may slip unless efforts are made at this juncture. The growth slowed to 29.5 per cent in the seven-month period between April and October, as against 43 per cent in the same period a year ago.

This was mainly on account of a slowdown in advance tax collections. The decline became evident up to September, when the growth came down to less than 33 per cent, as against 40 per cent in the same period last year.

The chief commissioners, who exercise jurisdiction over at least one state, have been asked to come prepared with action plans to meet the Budget targets. Area-wise progress in assessment work will also be reviewed at the meeting.

The chief commissioners are also likely to be told to monitor advance tax payments by top 100 companies in their zones and try and ensure that the payments are in line with the companies’ expected profitability.

Govt looks at steps to boost exports

The decline in export growth is not only because of a waning overseas demand, but also on account of high growth of 48 per cent seen in the same month last year. Moreover, exporters have found it too harder to access credit due to tight liquidity in the system.

The meetings come even as the Reserve Bank of India (RBI) today asked exporters their views on extending the period of export credit, which is seen as a key measure in boosting export growth.

“The slowdown in exports in September and October was discussed at the meetings of the panel. Possible solutions are being prepared by the commerce ministry. The final call will be taken at the highest political level,” said a government official.

Sources also told Business Standard that the central bank has sought the opinion of exporters, whether they want an extension of pre-shipment or post-shipment export credit. At present, exporters get a 90-day period for post-shipment export credit and 180 days for pre-shipment export credit.

According to government sources, exporters told the central bank that they would like to have at least 270 to 365 days of post-shipment export credit, as foreign buyers are asking for more period to make payments.

According to the current practice, banks levy a penal interest on export credit, if payments are not made within the fixed period. “Clients aboard are asking for more time to make their payments and hence Indian exporters are not able to pay off their export-related loans. As a result, many small exporters are not getting fresh loans from banks,” said TR Manaktala, vice-president, Delhi Exporters Association (DEA).

vsudhir · Post by **vsudhir** » 12 Nov 2008 02:57

India and Bretton Woods II

svinayak · Post by **svinayak** » 12 Nov 2008 04:29

Indian Bonds Gain as RBI May Step Up Measures to Boost Funds
Bloomberg - 11 hours ago
By Anoop Agrawal Nov. 11 (Bloomberg) -- Indian bonds rose on speculation policy makers will step up measures to boost funds in the banking system as surplus ...

India's Jalan Says Central Bank Needs to Reduce Rates (Update1)
Bloomberg - 20 hours ago
By Kartik Goyal and Sam Nagarajan Nov. 11 (Bloomberg) -- India needs to cut interest rates further as two reductions in less than a month haven't been ...

Indian banks need to lend more - Bimal Jalan
Reuters India, India - Nov 9, 2008
MUMBAI (Reuters) - Indian banks need to lend more if a raft of measures taken to counter a cash shortage and shore up the economy against the global ...

svinayak · Post by **svinayak** » 12 Nov 2008 04:32

vsudhir wrote:India and Bretton Woods II

Until very recently, India could have taken the status quo of global openness for granted, and indeed that was India’s working assumption even in the context of the Doha negotiations.

But the financial crisis could easily undermine that assumption. The economic downturn in the US and EU could easily interact with pre-existing anxieties about globalization in these places to re-kindle protectionist pressures.

Nayak · Post by **Nayak** » 12 Nov 2008 08:00

EDITORIAL COMMENT | Get Real On Economy
http://timesofindia.indiatimes.com/Edit ... 700871.cms
Print Email Discuss Share Save Comment Text:
There's been a lot of unedifying punditry on the global financial turmoil's fallout on India. Consider, for one, the Left's self-congratulatory i-told-you-so. CPM & Co claim they fended off financial apocalypse by tying the UPA's hands on liberalisation and globalisation. Consider, also, the bureaucratic imperviousness on display recently, based on the belief that the Indian economy is "decoupled" from the world's. So we seem to be left with a Hobson's choice. Either we applaud the red brigade's growth-busters or we wear blindfolds, taking a cue from the petty mandarins of the system.

The Left would doubtless want a return to the days when we stagflated as the economy moved at snail's pace, when government monopoly killed entrepreneurship and the licence-permit raj empowered mandarins whose chief brief was to sit on files.

But those who turned once-prosperous West Bengal into an industrial wasteland should know that, if India has a growth story at all, it's because reforms took off in 1991. Recognised as an economic powerhouse, India, along with China, is today solicited by the West to heal the world economy. No credit to the Left for our rise on the international stage.

Today, not even China - with its budget surplus and trillion-plus forex reserves - thinks it's immune to the global crisis. Hit by declining growth, faltering exports and job loss, it has unveiled a $586 billion package to boost its economy. Even with a coddled banking system and manipulated currency exchange rate, China knows social unrest can erupt in a nation used to double-digit growth. But India's see-no-evil tribe turns deaf even when the prime minister admits growth may fall below 7.5 per cent. It turns blind to corporates and banks stressed by credit and liquidity scarcity and to low investor confidence. Surely the PM wouldn't talk of India's Keynesian moment - private sector sluggishness and need for public spending - had all been right with the economy.

Exports dipped 15 per cent in October, the first time in five years. Corporate profits have fallen and wealth has eroded in the capital market. The drop in auto sales is the biggest in eight years. Small and medium enterprises face paucity of affordable financing and weak global demand. Many SMEs - textiles, handicrafts, leather, small service providers, diamond processing, auto parts makers - face job loss or closure.

What India needs is robust economic fire-fighting, deploying its many aces including a solid banking system and domestic demand-driven entrepreneurial resilience. Burying our heads in the sand won't help. Neither will lending ear to ideologues who equate human well-being with economic paralysis.

vina · Post by **vina** » 12 Nov 2008 09:20

I recently spoke with some in the know and who actually does financing. The credit system is simply clogged. The banks are unwilling to lend. period. At best , they have been told to lend at 17% or so. At that price of credit, demand has fallen off the cliff. No bank, except HDFC is doing even token lending.

For eg, in the trucking hub of Salem/Namagiri, talk is a leading dealer of one of the two truck majors , who used to sell something like 300 trucks a month is now selling in SINGLE digits. What the auto manufacturers have done is that they have dumped inventory on to the dealers and are now cutting back on production. The auto dealers (car, 2 wheeler etc) are goosed. The fesitval season is over and it has been abysmal to say the least. Now those guys absolutely have to move stock soon. The new models are coming in Jan from nearly all manufacturers (Maruti, Tata (already there), Mahindra, Toyota, Honda.. every one in fact) and the old models have to be sold at close to cost /zero margins , or they will be impossible to sell in Jan when the new models start coming in. There is around 45 days or so to go for the year end and less if you consider holidays etc.

It is obvious that the quarterly numbers coming out in Jan, both for India and for the world as a whole are going to be abysmal. Credit will thaw only in the next 6 moths (end of 1st quarter next yr). No one, esp multinationals are willing to lend before year end and are not willing to take on any more commitments, hoping to put 2008 behind them. The only option is Psu banks and you know that paper work there moves at a glacial pace. None of the NBFCs , private banks and multinational banks are lending. Secret is much of retail credit is driven by these guys, so the effect is immediate.

Similar scene with industry after industry. The order to cash cycle is lengthening and everyone wants to use suppliers credit in times of credit scarcity and the suppliers and the other guys upstream are facing working capital crunch.

Regarding advance tax, there was an interesting article somewhere. It seems that the penalty for delayed tax being 10% , while cost of credit is 18% in the market, companies are willing to pay the penalty (ie, pay 10% to the govt) and consvere cash , rather than borrow at 18%..

In any case, it is not just rate cuts that will do the trick. The issue is confidence. All the bankers are scared of capital loss. Everyone is expecting NPAs to shoot up next year. That is when the real music is going to begin. This cycle can only be broken if the lending rate drops and lending begins again to sound credit worthy customers. Credit quality is going to be key. I think bank profitability is going to be hit very badly next year (esp in private sector biggies, known for aggressive lending), when NPAs across sectors, including real estate (esp) increase.

ramana · Post by **ramana** » 12 Nov 2008 10:16

So the article psoted by Nayak is right. There is severe congnitive dissonance in the governing sections of India too.

Dileep · Post by **Dileep** » 12 Nov 2008 11:30

Does this point to the need of retail credit rating in India? Lending to those who really CAN and WILL pay back is the key.

I am a self employed consultant. The credit limit given by the card company is 10% of my net monthly income!!

vina · Post by **vina** » 12 Nov 2008 11:58

Dileep, the cunning Yindoos have their own "credit" system when you go looking for credit. In US, they look at history of credit and lend against a score. In India, such a system doesn't exist. So what they look for is real assets.. Hence questions like what is your income (show me proof like IT return, pay stub , this that), do you have a car (if yes, paid off, what value etc..), do you have a house (are in rental or do you own one, if yes, value, loan against that), do you have a fixed deposit with the bank (this one is a favorite. you lend against cash already with the bank.. cant go wrong with that)..

So the Yindoo bank banias lend against real assets and collateral and make you deposit original documents with them as lein and will probably get some credit worthy individual as a co signer. Now unsecured loans like credit card , personal loans, etc, traditionally, they are very conservative.

The credit limits are very small indeed. For eg, when I came back to India, I didnt have any history and relationship in India, so ICICI was the only company that was willing to give me a credit card (yes, there is a credit buruau for credit cards in India and the top guys share info) and the limit is still at the same Rs 50,000 they offered me. I dont use that card much for various reasons including piss poor service and ridiculous charges that get tagged on for stuff that I have no control over and impossibility to get through to any person in authority to revers those. Yeah, Citi and HSBC came along and offered me cards with far higher credit limits (multiples of the ICICI limit), and free for life...

However, they keep an eagle eye on any large transaction, esp in a foreign location / online buying. For eg, when I book an international airline ticket for personal travel with family for a vacation or something, there is a spike in expense and immediately get a call from the credit card company risk mgmt dept confirming if I actually made the purchase and if it was not a fraud.

Suraj · Post by **Suraj** » 12 Nov 2008 13:43

India's Factory Output Accelerates in September

Output at factories, utilities and mines rose 4.8 percent from a year earlier after a revised 1.4 percent gain in August, the Central Statistical Organization said in New Delhi today. That was more than the median forecast of a 4.1 percent increase in a Bloomberg News survey.

Indian automakers raised production in September to meet anticipated demand ahead of the Hindu festival of Deepavali in October, which is considered to be an auspicious time to make large purchases. Manufacturing may still slow this year as the global credit crunch causes a shortage of money in India's financial system, affecting the ability of banks to extend loans.

``Production growth will remain subdued until next year,'' said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd. the local unit of Standard & Poor's. ``Interest rates need to be lowered to give a real boost to demand.''

India's factory output rose 4.9 percent in the six months to September from a year earlier, less than half the 9.5 percent pace recorded in 2007, according to today's report.

Manufacturing, which accounts for about 80 percent of total output, gained 4.8 percent in September from 1.4 percent in August. Electricity output 4.4 rose percent last month from 0.8 percent in August. Capital goods production rose 18.8 percent in September from 0.9 percent in August and consumer goods rose 13.1 percent from 3.9 percent August.

The industrial production numbers were ``encouraging,'' Finance Minister Chidambaram told reporters in New Delhi today. The growth in capital goods sector has been impressive, he said.

The slowdown in production and exports may hurt the pace of India's economic expansion, forecast by the central bank to weaken to a four-year low. The $1.2 trillion economy is expected to grow 7.5 percent in the year to March 2009.

India plans to accelerate spending on building roads, ports, utilities and other infrastructure to stimulate growth, according to Prime Minister Singh. ``Expanding investment in infrastructure can play an important counter-cyclical role,'' Singh said Nov. 3. The government estimates the South Asian nation will need an investment of $500 billion in the next five years for its infrastructure needs.

Raj Malhotra · Post by **Raj Malhotra** » 12 Nov 2008 18:21

RE Vina

Real Economy has been hit since mid 2007 but the stock market euphoria kept the problems hidden. The reality will show up in the books from mid 2009 onwards. The issue is whether there will be panic selling in the stock market. I think if there is no panic selling even then the market will be in the range of 7000-8000 BSE but if there is panic selling then 5000-7000 BSE. Comments?

vsudhir · Post by **vsudhir** » 12 Nov 2008 19:22

India's monetary policy:Traffic duty (Economist)

One jolly comment ('fess up, which BRFite did this??)

the Economist's stringer in India, one James Astill, is a rabid India-baiter. He is a drain-inspector (after Gandhi's comment on another rabid India-baiter), and so he sees only drains everywhere. The fact that the Indian banking system, barring just one bank, ICICI, has been almost entirely unscathed by the global catastrophe is quite extraordinary, but he dismisses it with faint praise about "slow but sturdy". These erstwhile champions of IMF shock-treatments and the virtues of the Anglo-American style of robber-baron investment-banking should be tarred and feathered for a) not anticipating the cataclysm, b) not even having the decency to be embarrassed. But then, despite the sneering superciliousness, the Economist is right only about 50% of the time, just like mere mortals. Paul Krugman pointed out at the height of the oil crisis (crude at $140+) that the Economist had, not long before, predicted crude at $10! So much for omniscience!

Update: Another jolly good one.

Editors should try to work on the tone/presentation of facts better -

"The rate cut was accompanied by other measures to unclog India’s banking system, which is becoming as congested as its city streets."

What about the congestion in the European and US money markets, which was the primary reason for the current global problems, impacting economies/banks that were prudent ?

"judging by its foreign-exchange reserves, which dropped by $15.5 billion in the week ending on October 24th"

And still has comfortable reserves unlike most countries - $250 bln (UK's was $50 bln?)

"which was briefly worth less than 2 American cents during trading in late October."

Historical trends on currency movements against the US $ in 2008 would provide a better perspective

"But the central bank’s purchases of the Indian currency have the effect of draining rupees from the financial system, even as it is doing everything else it can think of to pump more money in. The RBI’s traffic signals risk becoming a little confused."

How can this be confusing? They are defending the currency (weaker rupee dilutes the benefits of lower oil/commodity prices) and looking to unwind MSS that was introduced to sterilize the strong capital flows witnessed in the last four years (about $45 bln if my memory serves me right)

And probably the ML report on global economies should provide a better perspective on economies that are at risk -

http://alphaville.ftdata.co.uk/lib/inc/getfile/2755.jpg

http://alphaville.ftdata.co.uk/lib/inc/getfile/2757.jpg

Well, I guess, at least some desis with smarts are waking up to the Economist's tried and tested methods. Thats a start.

Sumeet · Post by **Sumeet** » 13 Nov 2008 02:23

Crosspost from IT industry thread

IT professionals form union to hold on to jobs

Das Kapital would probably not be on their reading lists, yet in their hour of crisis, India's information technology professionals have turned to collective bargaining techniques that Marx would laud.

Stunned by the recent wave of lay-offs in the sector as a result of the global financial crisis, the country's hitherto dormant Union for Information and Technology-enabled Services has enlisted the help of the mighty Switzerland-based Global Union Federation and Union Network International, which has 15 million members belonging to 900 unions from all over the world. The Indian union is now a chapter of the global union.

A group of top officials from the global union is scheduled to arrive in New Delhi on December 5 to meet Nasscom officials and Indian ministers to talk about how best the sector can safeguard employee's interests. After these discussions, office bearers of the Indian union will tour the country, talking to company managements about alternatives to firing employees.

"We tell them how to use the same skill sets of people in other sectors which are booming, like biotechnology and pharmaceutical research," said Karthik Shekhar, a former employee of IBM who is now the full-time general secretary of the Indian chapter of the global union.

The Indian union, which has about 15,000 members from top firms such as IBM and Infosys, estimates that firms in the sector have axed 10,000 jobs in the past three months. The Indian union may, however, be defying a long-standing diktat by the industry's umbrella body, the National Association of Software and Service Companies, or Nasscom, that IT professionals must not get involved in trade unionism.

“We don’t need intermediaries,” Ganesh Natarajan told HT. “The industry is very transparent.” The global union does not agree.

“Nasscom have got it all wrong,” Philip Jennings, the general secretary of the global union, told HT from Nyon in Switzerland. “They need unions as much as the staff do — if they are to get effective feedback and tackle common issues like high turnover and training deficits. Global cooperation between unions is also necessary to ensure that the increasing number of foreign multinationals arriving in India.”

paramu · Post by **paramu** » 13 Nov 2008 02:33

X-post
^^^
This looks like an attempt by international groups to enter India.

Nayak · Post by **Nayak** » 14 Nov 2008 08:05

Offers dip on Day Zero at IIM-A summer placement
14 Nov 2008, 0329 hrs IST, Kumar Manish & Vasundhara Vyas Mehta, TNN

http://timesofindia.indiatimes.com/Citi ... 710966.cms

AHMEDABAD: Day Zero of summer placement at Indian Institute of Management-Ahmedabad (IIM-A) reflected the morose mood of the world market as the number of recruiters and offers to students of 2008-2010 batch dipped by at least 50 per cent.

The absence of excitement was palpable on the campus, although the hottest selling offers continued to be from I-banks and consultants, minus the top recruiter Lehman Brothers. Against 36 companies which showed up on Day Zero last year, this year there were less than 20 and against 120 offers made last year, this year only 50 came.

"Among the recruiters on campus were a mix of investment banks and consultancy firms. These included Goldman Sachs, Merrill Lynch, McKinsey and Co, The Boston Consulting Group, Deutsche Bank and Bain and Co. Most of the consultancies offered domestic placements but I-banks offered placements abroad,” said one of the students. The placements abroad included projects in US, UK, Hong Kong, Singapore and other locations in Asia. The other stark feature was that companies did not divulge stipends. Usually, stipends to be paid were disclosed when the offers are made. The buzz on the campus is that the lull in the market was showing in the summer placements. The senior batch is hoping that things will get better by the time of final placements.

My 'sympathies' to the over-achievers.

geeth · Post by **geeth** » 14 Nov 2008 10:38

>>>the Economist's stringer in India, one James Astill, is a rabid India-baiter. He is a drain-inspector (after Gandhi's comment on another rabid India-baiter), and so he sees only drains everywhere.

Once upon a time I had subscribed to this magazine. Never renewed it, when I realised I am literally paying the Brits to scold India & Indians all the time. I don't remember reading anything positive about India in this shitty magazine even once!

vsudhir · Post by **vsudhir** » 14 Nov 2008 21:26

India Inc is responsible, not resorting to large-scale job-cuts: CII

Singha · Post by **Singha** » 14 Nov 2008 21:50

remains to be seen how many of the bideshi offers are honoured when time comes.
pay packages might see a steep downward revision.

vsudhir · Post by **vsudhir** » 15 Nov 2008 15:12

Jobs slash in India Inc

The sectoral table is depressing indeed.

Singha · Post by **Singha** » 15 Nov 2008 15:24

TV report says gems industry has lost 3 lakh jobs already.

UPA was hard at work running the nation into the ground, now global
woes have made them positively lethal for India.

shyamd · Post by **shyamd** » 15 Nov 2008 19:40

Manipulators stock it up in volatile market

NEW DELHI: We have been hearing about it for a while but it seems to be official now. The recent volatility in the stock markets appears to have made manipulators active.

A number of brokers, based in Mumbai, Delhi, Chennai and Ahmedabad, have colluded with promoters of small companies to manoeuvre their stock prices, an Intelligence Bureau (IB) report analysing India’s financial and commodity markets has said.

The IB report in its sub-head “market activity in specific stocks” has mentioned the detailed plans of manoeuvring stock prices of a number of companies. These include a Kolkata-based financial company, an Ahmedabad-based chemicals company, a Bangalore-based technology company, a Hyderabad-based chemicals company, a Mumbai-based mid-sized steel company and a large metals conglomerate. It also mentions names of around a dozen brokers and market intermediaries who have played an active role in the manoeuvering.

In fact, finance minister P Chidambaram had earlier warned that strict action would be taken against market manipulators. Meanwhile, market regulator SEBI has also decided to strengthen scrutiny to weed out manipulators during this volatile period.

According to the report, which tracked manipulations in September 2008, the types of market manipulations included placement of shares in benami and front entity company names, granting contracts to brokers to play with their shares and entering into agreement to indulge in circular trading thereby leading to price manipulation.

Highlighting the alleged insider trading in a large corporate house, the report mentions how the company had announced its decision to restructure it into three vertical companies before the decision was revoked. The report has also mentioned how the share price of the company first declined and then rose dramatically despite negative views expressed by analysts.

The IB report said the stock prices had already risen by 25% on the day the company announced the revocation of its earlier restructuring plan. SundayET mailed a questionnaire to the company, but failed to get any response.
When contacted, the official spokesperson of the ministry of home affairs (MHA) refused to comment on the IB report.

“Intelligence Bureau may come under our ministry, but I am not authorised to speak anything on IB reports,” he said.
The IB report also tracked commodity trends during the period and analysed the rising prices of onion and pulses, which has a bearing both on inflation and coming elections.

It said that onion prices were rising in the period July-September, 2008, on account of more demand for exports, higher stocks in storage and expectations of delayed kharif arrivals because of late sowing. In fact, the report cautioned that prices of pulses were likely to strengthen on account of a sharp decline in acreage resulting in lower production.

vsudhir · Post by **vsudhir** » 15 Nov 2008 19:56

Singha wrote:TV report says gems industry has lost 3 lakh jobs already.

UPA was hard at work running the nation into the ground, now global
woes have made them positively lethal for India.

And that India Today report says textiles lost upto a million jobs in this calendar yr alone. GoI also helped bring abt this scene, apparently.

It’s worse in textiles and garments. Rajinder Gupta, Trident chairman, says: “The pipeline of orders has almost dried up. The scenario demands a political call from the government if jobs are to be saved.” The Government has only messed up the scene. S.P. Oswal, chairman, Vardhman Group, explains this rather eloquently: “Thanks to votebank politics, the Government hiked the MSP for cotton from Rs 1,950 to Rs 2,800 per quintal. The 40 per cent hike came when international prices crashed by 40 per cent. Net result: Indian products are expensive and uncompetitive.”

IIRC, it was sometime last yr that I read on the Indian econ thread that textiles firms were so desperately short of labor in TN (tirupur, I guess) that they were bussing folks in from villages far and near. How things change within 1 yr!

vina · Post by **vina** » 17 Nov 2008 06:51

There is a front page leader in today's Al-Hundi by N.Ram , an interview with MMS on "Air India One". N. Ram was gushing about how MMS was "nearly reliving his Oxbridge days" and expounding on the current crisis and doling out Keynsian cures.

The gist of MMS argument is this "We already foresaw the downturn and that is why we took more fiscally liberal policies in the budge and the stimulus is already in place!

"

While this kind of sham I would have expected from lalu, this is not something I expected from MMS. The "dream team" of MMS, Chidambaram and Montek have collectively been a massive zero . The article on someone saying Chidambaram should be made the home minister and kicked out of the finance ministry is spot on.

Lets face the fact. If the Indian economy is comfortably placed today to ride out the storm and not faced with an external crisis like South Korea, Hungary , Turkey, Pakiland etc, it is because of one man and he was reviled until recently by the powers that be and pink rags in India.

Y.V REDDY , if there is any prize anywhere which says, thank you sir, you saved our hides from a potentially massive crisis, he gets it. . The measures he took to be concerned about the deluge of capital, his building up the mountain of forex , to build a war chest and keep the rupee for appreciating. all that is what gives our resilience today. If we had reserves of just $50b or so, India would have been toast and we would have been like Pakiland Guboing to IMF.

The MMS, Chidambaram, Montek trio, simply did not do the right things during good times. They went on a spending binge and total waste and the budget making of fancy, when the math would add, only if all the ducks lined up. Well, they lined up for 2 years, and obviously didnt' for the third.

They wasted the fiscal stimulus in the good years. Now INDIA DOESNT HAVE THE MANEUVER ROOM FOR A FISCAL STIMULUS. That is the cold fact. MMS spinning on how they "anticipated" a slow down and "already" put a fiscal stimulus in face is a bunch of Pakiesque lies. Shame.

sunilUpa · Post by **sunilUpa** » 17 Nov 2008 07:42

^^^Expect large scale layoffs in Pharma sector too. Ranbaxy is in bad shape, Sun just got a warning letter from FDA, and I hear that so will Lupin (despite what management is saying, what a bunch of thugs!). I expect another major to get atleast a warning letter (if not banned). Last year the salaries for my ex-colleagues in India were 20-25% higher that what is usual in Masaland (average 40-60L, many making 1 crore+), most of them General Manager + (the joke was in India everyone is Generally Manager).

Sigh..just when the poor were getting some chance..

ramana · Post by **ramana** » 17 Nov 2008 09:10

Vina, I got the feeling that UPA was attempting its own bubble economy(A la Reagan) to get a feel good factor for next elections. That is why they had all those deficits in the good years. Total grass hopper tactics. However the bubble burst before the elections.

geeth · Post by **geeth** » 17 Nov 2008 10:24

>>>Vina, I got the feeling that UPA was attempting its own bubble economy(A la Reagan) to get a feel good factor for next elections. That is why they had all those deficits in the good years. Total grass hopper tactics. However the bubble burst before the elections.

I doubt it..Rumour is that Gandhis and other politicians (including PC) have large chunks of money in share particularly in real estate sectors (Rahul Gandhi's pet is DLF I believe). No wonder they are armtwisting banks Incl. Reserve bank to give generous credit to Realty to revive them somehow. Desperate times I must say...

Suraj · Post by **Suraj** » 18 Nov 2008 00:09

The finance minister did resort to some creative accounting such as in the case of NREGS - rather than initiate an entirely new program, which would have been a fiscal blackhole, they just combined and pruned a bunch of old rural development packages and renamed it as NREGS. Until the Business Standard came out with a detailed analysis exposing this, GoI essentially got away with it. Even now, few DDM have mentioned this much, with the subject restricted largely to financial papers.

Reddy does deserve a lot of credit, as does Commerce Minister Kamal Nath. Robust >20% annual export growth year after year has a lot to do with Nath's efforts, which also earned him plenty of enemies, especially in the Finance Ministry. This years export target is over 3x what our annual exports used to be just 5 years ago - merchandise exports have grown from $65 billion in 2004 to the targeted $200 billion this year. The success of the SEZs also goes to his efforts.

While we are not as export dependent as China, our recent growth dynamics have been export driven, and the greater degree of employment generation is due to industries feeding the export engine. The sudden unwinding of export growth will have significant implications; it is the sudden downward change that is most damaging in several ways (especially political), not stagnant economic conditions.

I disagree that GoI has no means to spend on stimulus via fixed asset investment. They can do so. It's not the means as much as their own political expediencies being too important to think beyond. The current administration has not really shown the ability to follow a Keynesian approach; they are chronic deficit spenders regardless of the economic cycle, besides being greater advocates of central primacy on fiscal matters.

The fundamental difference in the NDAs approach was a greater desire for fiscal discipline (e.g. FRBM Act) and to devolve fiscal autonomy to states (Finance Commission), besides focussing on infrastructure development in a manner that was pathbreaking; while the prior Congress regime authorized the NHDP in 1995, it was the NDA that really drove results via the GQ/NSEW and Bharat Nirman projects at the turn of the century.

ramana · Post by **ramana** » 18 Nov 2008 00:54

Wasn't there a headline that the Cabinet is looking at the $200B exports target? So there are some misgivings on that front.

Katare · Post by **Katare** » 18 Nov 2008 01:07

What is the basis of claiming that this govt has been fiscally profligate? Each ruling year they have stuck with FRBM targets which has brought fiscal and revenue deficit as low as it has been in last couple of decades?

There is always a case of "could have done better" but on stand alone basis this is not too bad a govt when it comes to fiscal conservatism. We have had least amount of food crisis, we have had average inflation as compared to rest of the world and our financial system is hardly affected (in real terms, not market sentiments) by global turmoil. Taxes has more than doubled, direct taxes has over taken indirect taxes, VAT is implemented & consolidated, exports have tripled, Forex reserves more than doubled, State govt are wealthier than ever and economic growth has been highest of any govt. If it’s not a stellar performance by UPA govt than it can’t be called bad either.

This govt’s been a failure on security front, especially on internal security with minority appeasement and too soft an image to deter any segment of society from indulging in mischief. This doesn’t mean one should generalize its performance on all facets of governance.

vsudhir · Post by **vsudhir** » 18 Nov 2008 01:12

I have to agree with katare here.

Even though, a good part of the rosy growth, tax revenues and investment side story is at least partly due to the dramatic surge in the savings rate (shot up to ~35%) at about the time UPA took office. Quite fortuitious, I'd say. The FRBM act too had something to do with it. Though the bursting of the global leveraged-asset bubble will negatively impact the economy and that un-fortuitious blame will go to the UPA within India, seems like.

svinayak · Post by **svinayak** » 18 Nov 2008 01:29

vsudhir wrote:I have to agree with katare here.

Even though, a good part of the rosy growth, tax revenues and investment side story is at least partly due to the dramatic surge in the savings rate (shot up to ~35%) at about the time UPA took office. Quite fortuitious, I'd say. The FRBM act too had something to do with it. Though the bursting of the global leveraged-asset bubble will negatively impact the economy and that un-fortuitious blame will go to the UPA within India, seems like.

I have to agree with Suraj here.
One important area where the govt could have generated cash was disinvestment. It had the greatest opportunity during high liquidity and IPO friendly times to generate cash for all the govt programs and capital infrastructure investment.
The left is taking credit for preventing disinvestment when this opportunity is lost for atleast 5-10 years to generated cash at high valuation.

http://www.bloomberg.com/apps/news?pid= ... kGnaZAux3s

http://www.bloomberg.com/apps/news?pid= ... rp4Qw.viBY