Indian Economy: News and Discussion (June 8 2008)

Vipul · Post by **Vipul** » 04 Jun 2009 19:38

India lucky to have NREGA, says World Bank official.

Even as the freshly-elected UPA government goes full thrust on its National Rural Employment Guarantee Programme, the scheme has won praise from the World Bank.

"India is fortunate to have in place a programme that people can fall back on to find work in these hard times", The World Bank's country director for India Roberto Zagha said at a book launch in New Delhi on Wednesday.

Describing the NREGA as innovative programme, he said it is ''an important cushion for poor people living in rural areas who might be at risk of being pushed further into poverty''.

Noting that nowhere the potential impact of safety nets is larger than in India, he said the country spends more of its income on safety – more than 2 per cent of GDP – than most developing countries.

Meanwhile, it is reported that the government may expand the scope of work offered under NREGA by introducing skilled jobs like spinning and weaving under the programme as part of its agenda for the first hundred days.

The textiles ministry has prepared a project to train rural people in textiles processes including spinning and weaving. It wants people trained under this initiative should be given employment under the NREGS, according to Financial Express.

''We have identified activities like spinning and weaving to train 50 lakh people in rural areas of the country in the rest of 11th Plan period (2007-2012). We want to dovetail with the ministry of rural development for the project so that these people could get employment under the NREGA,'' textiles secretary Rita Menon told the newspaper.

At the same time, the Congress-led UPA government has allocated Rs813.53 crore to Left-ruled Tripura under the NREGA for the current financial year. The allocation has been sanctioned on the basis of labour department accounts, which state that each labour card holder will be given 100 days of work a year, state rural development Minister Jitendra Chowdhury said in Agartala.

Last year, the state received Rs514.27 crore for carrying out the national flagship programme, of which Rs24 crore remained unspent, he said.

While Rajasthan was the best among the states in executing the NREGA in the last financial year, Tripura was second, Chowdhury told reporters on Wednesday. He said that an average of 95.42 per cent allocation under the NREGA was spent in the state with only 4.50 per cent remained unspent.

Suraj · Post by **Suraj** » 06 Jun 2009 00:12

Direct tax collection up 17% in May

The government's direct tax collection in May this fiscal recorded a 16.88 per cent jump at Rs 11,919 crore this fiscal from Rs 10,198 crore in the same month last year.

However, the collection for April declined by 3.19 per cent to Rs 12,239 crore against Rs 12,642 crore a year ago.

In the first two months of this fiscal, direct tax collections rose by 5.77 per cent from Rs 22,840 crore in the same period last fiscal, according to the figures released by the government today.

New land acquisition policy to be reintroduced

President Pratibha Patil today said the government would reintroduce the Amendment Bill to the Land Acquisition Act and the Rehabilitation and Resettlement Bill in the forthcoming budget session of Parliament.

If the Bills are enacted, it will not only help in better implementation of infrastructure and industrial projects, but also safeguard the interests of farmers. That is because both the Bills contain clear guidelines to be followed while acquiring land, like compensation package and the quantum of land to be acquired.

Both the Bills were mooted in the backdrop of violent protests across the country in 2007 against acquisition of land by state governments for industrial projects in West Bengal, Haryana, Maharashtra as well as Goa. Many of these projects were related to special economic zones (SEZs).

The Land Acquisition (Amendment) Bill limits the role of the government in land acquisition for private projects. Broadly, this Bill allows government to acquire only 30 per cent of the land for private projects, while the rest will have to be bought by the developer himself. Moreover, land rights will be extended to tenant farmers, artisans and those indirectly drawing sustenance from the land in question. Also, compensation could be in the form of jobs and equity shares in the company that has bought the land.

The Resettlement and Rehabilitation (R&R) Bill lays down guidelines on how the people affected by projects will have to be rehabilitated and the contours of compensation packages. In addition, this Bill also seeks to set up a National Rehabilitation Commission.

The above bills should help projects like these:
Mumbai SEZ in danger of being scrapped

The threat to the SEZ follows the Supreme Court’s refusal to stay the land acquisition process that otherwise has to conclude by Monday, June 8. A Bench headed by Justice B Sudarshan Reddy dismissed Mumbai SEZ’s plea challenging a Bombay High Court interim order that refused to stay the land acquisition process. A stay by the Supreme Court would have made the deadline redundant.

The company has spent Rs 600 crore on land acquisition but the process had stalled following protests in 22 villages. The state government then held a referendum on the project among villagers last year but has not yet released the results.

Mumbai SEZ had filed a writ petition last month before the high court, seeking a direction to the Raigad district administration to speed up the land acquisition initiated under the provisions of the Land Acquisition Act, 1984.

Land acquisition for SEZs has to be completed within two years from the date of approval.

The Mumbai SEZ project, which was to come up over 10,000 hectares at an investment of Rs 40,000 crore, was approved in June 2005 and the deadline has been extended twice.

Senior Maharashtra government officials, however, said the project’s future appeared bleak, given that the state was headed for Assembly elections in October. Land acquisition for industrial projects is a highly emotive issue and no government wanted to do anything that was perceived as being harmful to the villagers' interests.

Sources familiar with the developments, however, said there was hope for Mumbai SEZ. One, the Supreme Court simultaneously issued a notice to the Maharashtra government on another plea by the Mumbai SEZ, seeking to transfer its petition pending before the Bombay High Court.

Convener of the People Against Globalisation, Ulka Mahajan, who headed the anti-SEZ agitation, welcomed the apex court’s decision and said, “The decision has strengthened our belief that even mighty corporations can be forced to eat humble pie using peaceful and democratic means of agitation.”

svinayak · Post by **svinayak** » 06 Jun 2009 01:11

Samay wrote:same goes for industry standards as well as other standards, that were made after some investment .
logically it is because the R&D in India is still following that of US

Does the pub culture come under the same topic

ramana · Post by **ramana** » 06 Jun 2009 07:24

Sorry if already posted...

http://economictimes.indiatimes.com/Ind ... 606117.cms

THE ECONOMIC TIMES

India can now emerge as Asian superpower

2 Jun 2009, 1303 hrs IST, Stephen S Roach,

In recent years, the global view of India has been couched in terms of the daunting China comparison. It wasn’t all that long ago — 1991, to be precise — when Asia’s two giants had similar levels of income per capita. That was then. Now, China’s standard of living is more than three times that of India.

The China comparison has been India’s wake-up call — a striking example of how economic development can be galvanised by pro-active government policy. It’s not that India has floundered. To the contrary, over the 2001-07 timeframe, India’s real GDP growth averaged close to 7.5% — an impressive pick-up from the 5.5% pace of the 1990s. Perhaps the most remarkable aspect of this accomplishment was that it occurred despite the government — in the face of stiff political headwinds.

Those headwinds could now quickly become tailwinds. Thanks to the stunning victory of the Congress-led UPA in the recently concluded elections, there is a distinct chance that India could now benefit from its own strain of proactive, development-friendly government policies.

The same reformers that were so successful in opening up India in the early 1990s were stymied by the politics of coalition management over the past five years. The massive win of the Congress Party all but removes that impediment — hinting at a new era of reforms that could well unshackle the increasingly robust potential of the Indian economy.

The dirty little secret of the Indian economy is that it has actually been performing much better, beneath the surface, than the China comparison might otherwise suggest. India has long had a much better micro story than China: A large population of world-class companies, outstanding entrepreneurs, a well-educated and IT-competent workforce, relatively sound financial markets and banks, a well-entrenched rule of law, and democracy.

By contrast, India has suffered more from its macro deficiencies — especially when compared with China. That’s especially been true of savings, foreign direct investment and infrastructure. Yet, in the past three-four years, India has made impressive progress on at least two of those counts.

Gross domestic savings rates have moved from the low 20s (as a percent of GDP) in the late 1990s to the high 30s in 2007-08. Foreign direct investment accelerated to a $40 billion annual rate — still short of Chinese style numbers but a four-fold increase from the pace of India’s inflows as recently as 2005. Even on the infrastructure front — where development constraints remain quite serious — the GDP share of such investments is up from the rock-bottom levels of the late 1990s.

Therein lies India’s great potential — an increasingly virtuous cycle brought about the self-reinforcing interplay of its micro and macro drivers that now stand a real chance of being augmented by pro-active government policies and reforms.

The new government needs to seize this moment — moving aggressively on four fronts — public sector deficit reduction, infrastructure support, privatisation, and deregulation of pension funds, retail, and banking. These are all tough battles for any politician to wage. But, if the government makes a down-payment on these critical initiatives, the Indian economy is well positioned to benefit for years to come.

The world has fallen in love with the China miracle. India has slipped between the cracks in all this euphoria. Yet, China now faces increasingly daunting challenges in coming to grips with long-simmering imbalances of its export — and investment-dominated macro structure. That could be a great opportunity for the ’sleeper.’ Shifting political winds now give a well-balanced Indian economy a real chance to emerge as Asia’s biggest surprise in the years immediately ahead.

(The author is Chairman, Morgan Stanley Asia)
_______________________________________________

Vipul · Post by **Vipul** » 07 Jun 2009 04:30

India is now flooded with $1 bn per week.

After six months of financial drought, global money is flooding into India at the rate of $1 billion a week. If sustained, this will be the
mother of all financial stimuli,eclipsing the finance minister’s budgetary endeavours. The dollar flood is not due to the Congress election victory.

In April, foreign institution investors (FIIs) poured $1.3 billion into Indian equities. They poured another $1.87 billion in the first half of May, before the election result. For May as a whole, the inflow was $4.14 billion, or a billion a week.

This is part of a global phenomenon. Since April, $20 billion has flooded into all emerging markets. The Sensex is up 50% in 2009. But Russia is also up 63%, China 57%, Brazil 60%, and Argentina 45%. So, the dollar flood is not India-specific: it is part of a global rush into all emerging markets, especially the BRICs (Brazil, Russia, India and China).

Till March, global markets were paralysed by fear. The global meltdown had brought down some of the world’s biggest corporates, the top five investment banks, the biggest insurance company (AIG), the biggest bank (Citibank) and the biggest auto company (General Motors). Global investors fled into US gilts carrying almost zero interest, fearing that anything else was unsafe. FIIs pulled $12 billion out of India in 2008, and the biggest Indian corporates couldn’t get global funding. Their profits and projects were hard hit.

But the darkest hour is before dawn. After hitting rock bottom in March, global investors finally sensed that governments across the world had, by pouring trillions into rescues, ensured that the crisis would not get worse. The pall of fear lifted. And investors started moving out of US gilts earning virtually no interest into investments with higher returns.

Now, economic conditions in the US, Europe and Japan remain grim. Despite rescues, their financial sectors remain stressed, as rising defaults in credit cards, realty and corporate loans add to the travails from the earlier housing bust.

The IMF estimates negative to zero growth in these large economies till late 2010. But emerging markets, especially the four BRICs, are registering positive growth. India’s quarterly GDP growth of 5.8% may look very weak compared to its earlier peak of 9%, but is nevertheless fabulous compared with zero or negative rates in the advanced economies. China has decelerated from 12% to 8%, but that remains the highest in the world.

So, with fear lifting, global billions are moving out of safe havens into growth havens. Risk premiums on all financial asset were sky-high in dollar but have now fallen sharply. So, global billions are moving into junk bonds, corporate debt, commodities, and emerging markets too. Idle money waiting to be invested adds up to at least $2 trillion, maybe much more. If just $100 billion of this goes into emerging markets, that will fuel huge stock market booms.

Sceptics say this is another bubble in the making, unjustified by current profits or any change in India’s economic fundamentals. Now, foreign direct investment in factories is certainly better than FII inflows into stock markets. But the flood of $1 billion per week is not just speculative froth, it is actually improving our economic fundamentals.

Earlier, the economy was hit by a negative feedback loop. That is, stress in banks reduced credit to industries, which then suffered falling profits and loan defaults. These in turn worsened the balance sheets of banks, which then lent even less to industry, in a vicious downward spiral.

The new flood of $1 billion a week is changing the negative feedback loop into a positive one. Suddenly real estate companies that were almost insolvent and could not attract either loans or equity have been able to place almost $2 billion with qualified institutional investors.

If shady real estate companies can attract money, anybody can. Suddenly access to finance has become easier and cheaper. Improved finance means improved profits in industries, which means fewer loan defaults. This in turn means better balance sheets for banks, which will be able to lend more to industries, in a virtuous upward cycle.

Thus, a positive feedback loop is replacing the negative one. The bad news is that exporters will be hit by the appreciation of the rupee caused by the dollar flood. The dollar has gone from Rs 52.06 on March 20 to Rs 46.84 on June 4. Still, the positive feedback loop should lift India’s GDP growth to 6-7% in 2009-10, up from earlier estimates of 5-6%. That is a substantial gain, though not revolutionary.

Paul · Post by **Paul** » 07 Jun 2009 06:35

Expat talent willing to take a cut in pay to stay on

‘SLOWDOWN’ OFFER.
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“They are even willing to work for rupee equivalent and not demanding dollar salaries.”
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A file picture of expats who work with Icrisat

Anjali Prayag
Bangalore, June 6 A large Indian retail chain that hired a South African expert a couple of years back to set up its malls/stores recently made him a ‘slowdown’ offer: to continue to work at an Indian salary (which meant a 50 per cent cut in his annual compensation) or quit. Interestingly, he opted to stay for a ‘decent India salary and top management perks.’

This is not an isolated case, but a trend seen increasingly in the present job scenario, says Mr N Srinivas, Practice Head, India and Middle East, Maxima Global Executive Search. Expats, who considered the Indian stint as de rigueur but at the same time exacted a hardship allowance, are now working for salaries that are just about 5-10 per cent higher than that of their Indian counterparts.

Senior expat managers in the Rs 2 crore-Rs 3 crore annual pay bracket are now willing to take home about Rs 1 crore-Rs 1.5 crore, say search firm sources.

“We are seeing this trend across the industry, but more so in the infrastructure and IT sectors,” says Mr P Thiruvengadam, Senior Director, Deloitte Touche Tohamatsu India. While earlier expat talent could get away with demanding a 100 per cent premium on reigning Indian salaries, they are now willing to settle for just a 10 per cent higher salary . “They are even willing to work for rupee equivalent and not demanding dollar salaries.”

US salaries

“Some of them are asking Indian companies to only protect their US salaries, which may be marginally higher than Indian salaries now as compensation here too has become competitive,” agrees Mr N Srinivas. They may instead request for elite club memberships or bi-annual return airfare to their home country. “What is also different is that they are asking for fixed contracts and specific job roles and incentives on completion of a project,” explains Mr Srinivas. This is a trend witnessed in venture capital and private equity firms too, according to him.

The salary dip could also be attributed to the trend of the average expat hire getting younger, with most of them falling in the 28-38 year group, points out Ms Radhika Vivek, Practice Head, Consumer Retail and Services, Ma Foi Consulting.

BIG-TICKET compensation

“For a big-ticket person like a CEO or a CFO, the compensation is still at a premium, but for executive leadership and senior management positions, the overall compensation has come down quite a bit,” says Mr Joy Nandi, Client Partner, Global Technology Market at Korn/Ferry International, a global search firm.

As India – previously considered a ‘tough terrain’ – is now a ‘must-have’ on their resumes, the expat relocation comes with fewer expectations on the compensation front.

I was told by certain sources that certain MNcs have started processing Payroll for their US employees from India offices.

Good luck to senator durbin and Grassley.

Singha · Post by **Singha** » 07 Jun 2009 07:57

we all know its a choice between work and get paid here or join the unemployment queue there.

imo all these $$ packages are not necessary and any expats should be offered a comp at par with INR salaries and perks only. I cant think of any expat who has been such a devastating success as to be indispensable.

indian cos should lose their fascination of having gora fatcats running the show and bringing in "international experience"

all these bi-annual plane trips/club memberships are a total waste of shareholder money. they
should be cut and outlawed for indian employees too.

Suraj · Post by **Suraj** » 08 Jun 2009 00:40

Equity markets cross Rs.50 trillion ($1.1 trillion) mark, attract new investors

The ongoing surge in the stock market has pushed the shareholders' wealth past Rs 50,00,000 crore mark — in the process bringing in over one lakh new investors on-board in just one month.

A total of about 1.2 lakh new stock market investors opened their demat accounts, which is necessary to trade in equities, during the month of May, according to data available with the two depositories, National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL).

This has increased the total number of demat accounts in the country to over 1.5 crore.

The total investor wealth, measured in terms of cumulative market capitalisation of all the listed companies, has soared to about Rs 51,00,000 crore. This represents a gain of about Rs 23,00,000 crore from the level seen in later October last year, although it is still about Rs 20,00,000 crore below the peak seen in January 2008.

Mumbai SEZ can buy time from BoA for land acquisition

Mukesh Ambani-promoted Mumbai SEZ, a multi-product trade zone that is close to getting scrapped over its failure to acquire land for the project, has the option of approaching the Board of Approval to extend the deadline beyond Monday.

"As the in-principle approval of the project would lapse... They will have to approach the Board of Approval (headed by Commerce Secretary) to seek time extension for completion of land acquisition," a senior Commerce Ministry official told PTI.

The Mumbai SEZ Ltd, which was given in-principle approval in 2006, was to have come up at an investment of about Rs 40,000 crore ($9 billion). But, it ran into problems after local farmers opposed the land acquisition exercise.

Realty firms plan to raise over Rs 25,000 cr by share sale

Enthused by improving market conditions, eight real estate firms including Unitech, Parsvnath and Sobha Developers are looking to raise more than Rs 25,000 crore together through sales of shares, mostly to foreign investors.

After struggling for funds and soaring debt levels in the recent months due to a slump in property as well as financial markets, these firms are now looking to raise about Rs 3,000 crore by issuing convertible warrants to their promoters, while more than Rs 22,000 crore is intended to be raised from institutional investors such as FIIs.

Unitech tops the tally with plans to raise over Rs 11,000 crore.

It is followed by HDIL (about Rs 3,000 crore through QIP and Rs 850 crore through promoter warrants), Parsvnath and Akruty (Rs 2,500 crore each), Anantraj (Rs 2,000 crore), Sobha Developers (Rs 1,500 crore), Puravankara (Rs 750 crore) and Orbit Corp (Rs 500 crore through QIP and an unidentified amount through promoter warrants).

Vedanta to invest Rs.25000cr in Orissa

Armed with 'Stage I' clearance, mining major Vedanta has announced its plan to start bauxite mining project in Orissa's Niyamgiri Hills within a month and to invest Rs 25,000 crore more for its aluminium units in the state in next two years.

"We are going to start our bauxite mining project within a month from today for which Stage I clearance has already been granted," Vedanta Resources Chairman Anil Agarwal said after a meeting Chief Minister Naveen Patnaik here last night.

Asked whether the bauxite mining project could start this month itself, he said 'may be'.

Asserting that Vedanta was going full steam in implementing its Orissa projects despite economic recession, Agarwal said the company has already invested Rs 25,000 crore in the state and an equal amount would be pumped in during the next two years.

Katare · Post by **Katare** » 08 Jun 2009 22:35

Industry on road to recovery; output nearing last year’s high

pgbhat · Post by **pgbhat** » 09 Jun 2009 05:02

The ‘I’ in Indians
by Michael Walton

Identity remains salient after decades of public action in the US. Barack Obama’s election did not mark the beginning of a post-racial era. Yes, there is a black middle class, but measures of deprivation are substantially worse for the African-American community. Hispanics are also relatively deprived, and the new waves of migrants are keeping a stronger Hispanic identity than earlier migrant waves.

So what about India? The two major planks of direct action around group-based deprivations have been affirmative action through reservations and universal provisioning of public services to all citizens. Affirmative action has had some success in the nascent emergence of a middle class among scheduled castes and scheduled tribes. In 2004/05, 11 percent of all professional and technical workers were from scheduled castes and 4 percent from scheduled tribes. However, there is still evidence of discrimination, of employers preferring graduates from non-SC/ST backgrounds with the same qualifications. And there is a broader downside: reservations, and demands to be categorised as a deprived group, are intimately linked with the state as a mediator of patronage and rents.

However, while reservations are often caught in rent-seeking processes, an exclusively group-blind policy is not the answer—even if it were politically feasible. Aspirations and discrimination are profoundly shaped by the narratives that people live with, narratives shaped by histories of unequal recognition. Affirmative action is hard to do well, but has to be part of the story of breaking through socially embedded structures of inequality, in schools, work and public life.

Identities are dynamic and socially shaped. They don’t just dissolve with economic advance. Engaging with identity-based differences and conflicts is increasingly recognised as a core economic, as well as a societal issue—see for example the recent book by Nobel prize-winning economist George Akerlof and Robert Schiller. Effective engagement with identity-based differences is central to India’s long-term prosperity.

—The author is at the Harvard Kennedy School, the Institute of Economic & Social Change and the Centre for Policy Research...

arun · Post by **arun** » 09 Jun 2009 22:07

Jim O'Neill, Goldman Chief Economist and the person who coined the term BRIC in 2001:

INTERVIEW - Crisis speeds BRIC rise to power - Goldman's O'Neill

Tue Jun 9, 2009 5:39pm IST …………............

India is predicted to grow at an average rate of 6.3 percent from 2011 to 2050, China 5.2 percent, Brazil 4.3 percent and Russia -- constrained by forecasts of a declining population -- just 2.8 percent. …………………...........

Reuters

sugriva · Post by **sugriva** » 10 Jun 2009 12:21

Govt may appoint NM Rothschild to advise on divestment in PSUs

http://in.reuters.com/article/indiaDeal ... 1720090603

vsudhir · Post by **vsudhir** » 10 Jun 2009 16:26

Cut lending rates: FM to banks

Pranab Mukherjee says reduction in key rates by the Reserve Bank is not adequately getting reflected in the reduction of benchmark prime lending rates of banks.

Singha · Post by **Singha** » 10 Jun 2009 17:55

Rothschild

- Aha...a certain guru I know wont be pleased to see this!

svinayak · Post by **svinayak** » 11 Jun 2009 01:21

sugriva wrote:Govt may appoint NM Rothschild to advise on divestment in PSUs

http://in.reuters.com/article/indiaDeal ... 1720090603

Reuters news service is owned by Rothschild Foundation.

SwamyG · Post by **SwamyG** » 11 Jun 2009 04:31

Reuters News Service is part of Reuters that merged with Thomson - the new entity is Thomson Reuters

svinayak · Post by **svinayak** » 11 Jun 2009 05:29

SwamyG wrote:Reuters News Service is part of Reuters that merged with Thomson - the new entity is Thomson Reuters

Check the THomson. I have met them

SwamyG · Post by **SwamyG** » 11 Jun 2009 05:49

Check the THomson. I have met them

What do you want me to check? They are Canadians.

vsudhir · Post by **vsudhir** » 11 Jun 2009 07:52

State Spending Masks Weakness in Indian Economy

But don't pop the corks just yet, economists warn. Instead, a deeper look into the Indian figures reveals a worrying trend, they say. Since October, India's economic growth has been mostly buoyed by government spending, not by actual private-sector growth. In the last quarter of 2008, for instance, increased government expenditure made up almost all of India's growth, according to estimates by Singapore-based HSBC (HBC) economist Robert Prior-Wandesforde and by BusinessWeek. Without the government spending, the growth figure would have been a paltry (and stock-market melting) 0.1%.

Huh, really?

More gems from Mehul Srivastava who's dropped such gems previously also on bizweek.

To some extent, this trend of increased government spending is true worldwide. Both the U.S. and China, for instance, have announced stimulus packages that are far bigger than India's $50 billion to $80 billion in new spending and tax cuts. (China's stimulus was about $586 billion.) But because India's economy is still relatively small (about $1.1 trillion), and the private sector is still small except for the large, publicly traded companies, the government's role in the economy is much greater than in the U.S. or China.{Really? wow}

In most years since 2000, spending by India's federal government has made up more than 10% of India's economy; that number has recently shot up to 13%. (China doesn't release data the same way the Indian government does, making such comparisons difficult, says Prior-Wandesforde.) {Hmmm, comparisons are difficult but that hasn't stopped Mehul from comparing yindia-china Gubmint share in GDP unfavorably onlee}

vina · Post by **vina** » 11 Jun 2009 10:52

Rothschild

Cool it guys. N.M Rothschild is just an Advisory boutique. I see no reason to even bat an eye at it. The is the only remnant left of the Rotschild banking family and that too much diminished.

Vipul · Post by **Vipul** » 11 Jun 2009 20:14

Pranab for fast-tracking GST, wants tax system in by April 2010.

Suraj · Post by **Suraj** » 12 Jun 2009 00:51

FIIs pour money back into Indian stock market

Foreign institutional investors (FIIs) have invested more than $5 billion (over Rs 25,000 crore) in Indian stock markets so far this calendar year, with as much as $3.2 billion coming since the UPA government came to power.

A little over a third of this has come in just the first nine trading days of this month — net investments were $1.15 billion (Rs 5,436 crore) on these days. Data with the Securities and Exchange Board of India (Sebi) show that FIIs made net purchases worth $5.4 billion, or over Rs 25,910 crore, since the year began, with a major part of this coming in the past three months.

Between March 12 and June 9, FIIs made net investments of $7.2 billion (Rs 35,039 crore), against a net outflow of $1.8 billion (Rs 9,118 crore) till March 9. The Bombay Stock Exchange (BSE) Sensex has appreciated 89 per cent from 8,160.40 on March 9. It closed at 15,411.47 On Thursday.

Since the beginning of this fiscal year, FIIs have started putting money in domestic stocks, including blue-chips. In May alone, FIIs made gross purchases worth Rs 74,776 crore and sold shares worth Rs 54,659 crore, resulting in a net investment of Rs 20,117 crore ($4.1 billion).

After pulling out a record $13.1 billion (Rs 52,987 crore) from the Indian stock markets in 2008, which saw the Sensex plunging 51 per cent, FIIs turned net buyers during the last week of March.

Inflation falls to 30-yr low of 0.13%

The inflation rate for the week ended May 30 came down to 0.13 per cent primarily due to decrease in prices of manufactured products on an annual basis. The inflation rate stood at 0.48 per cent for the previous week ended May 23 and 9.32 per cent during the corresponding week in 2008.

The index for primary articles, which had been on the rise since last month, saw a marginal fall of 35 basis points to 0.13 per cent. The inflation rate for manufactured products registered a decrease of 60 basis points to stand at 0.39 per cent.

Food prices however continue to rise with double digit inflation rates. Cereals marginally rose by 6 basis points on an annual basis to 12. 95 per cent while inflation for pulses dropped marginally by 26 basis points to 15.09 from the previous week.

paramu · Post by **paramu** » 12 Jun 2009 01:35

What is causing inflation rate to come down so low?
There must be few items in India whose prices must have crashed heavily. Any idea what they are?

Suraj · Post by **Suraj** » 12 Jun 2009 13:34

Industrial growth is back in positive territory:
India’s Output Rises as Rate, Tax Cuts Revive Demand

India’s industrial production unexpectedly rose for the first time in three months, suggesting interest-rate cuts and government stimulus measures are helping resuscitate demand in Asia’s third-biggest economy.

Output at factories, utilities and mines advanced 1.4 percent from a year earlier after a revised 0.75 percent drop in March, the statistics agency said in New Delhi today. Economists expected a contraction of 0.1 percent.

The lower borrowing costs, tax cuts on consumer products and higher spending by the government are bolstering local demand even as exports plunge. Coal production in April rose 13.2 percent, more than twice the pace in March, while the growth in cement output accelerated to 11.7 percent.

Manufacturing expanded at the fastest pace in eight months in May, helped by domestic demand, according to Markit Economic’s Purchasing Managers’ Index.

AnimeshP · Post by **AnimeshP** » 12 Jun 2009 19:33

Rags remain India's true story

The author ...

Kunal Kumar Kundu, a former senior economist with a leading bilateral chamber of commerce in India, now works with the Knowledge Service Division of Infosys BPO Ltd. He has a Masters in Economics with specialization in econometrics from the University of Calcutta. The author here is expressing his personal views.

My question to guru-log here ... Mr. Kundu has talked mostly about Human Development factors here ... Is the problems as serious as described by the author or is he speaking in hyperbole ? Do we really have this level of abject poverty in India at such a large scale ?

The reason I am asking these questions (which may seem naive), is that I come from a background where I have never seen this kind of poverty. I can be considered as an "Elite" based on my background (Army brat, always lived in good neighbourhoods in big cities & currently working abroad in IT-sector). Therefore, I have no background information to form an opinion on these issues. Any pionters to reading material would be most welcome.

Mods, if this needs to be moved to another forum, please let me know.

Rahul Mehta · Post by **Rahul Mehta** » 12 Jun 2009 20:43

g.kacha wrote: My question to guru-log here ... Mr. Kundu has talked mostly about Human Development factors here ... Is the problems as serious as described by the author or is he speaking in hyperbole ? Do we really have this level of abject poverty in India at such a large scale ?

I am NOT one the guru-log. But still I would answer. The problem of poverty is WORSE than what he is saying and is proven by facts that per capita daily pulse consumption came down by 25% in past 17-20 years and per capita grain consumption came down by some 5%. And one can also see than since 1991, Naxalism and conversions both are on rise.

---

Just give an ad in job that you want a clerk, with no computer experience and English knowledge required, and put salary as Rs 4000/mo (Ahmedabad level). See how many people apply. Your mail box will be flooded. Amongst them, many will be married and with kids. That alone speaks of how many people make LESS than Rs 4000/mo.

svinayak · Post by **svinayak** » 12 Jun 2009 20:49

Rahul Mehta wrote: My question to guru-log here ... Mr. Kundu has talked mostly about Human Development factors here ... Is the problems as serious as described by the author or is he speaking in hyperbole ? Do we really have this level of abject poverty in India at such a large scale ?

I am NOT one the guru-log. But still I would answer. The problem of poverty is WORSE than what he is saying and is proven by facts that per capita daily pulse consumption came down by 25% in past 17-20 years and per capita grain consumption came down by some 5%. And one can also see than since 1991, Naxalism and conversions both are on rise.

Something is wrong in the setup for the last 20 years. The pockets of new wealth is very small to make a real dent in the large population. The rural farming community and economic viable means of earning which held for many decades and even centuries are not being able to cope up with this modernization.

Suraj · Post by **Suraj** » 12 Jun 2009 21:50

The 'pulse consumption has gone down' argument has taken a life of its own, particularly in the poverty business. How about data for aggregate caloric consumption ? Per capita dairy, egg and meat consumption ? These have significantly greater energy density and their production and consumption have increased significantly over the period in question. From personal observation at least, school kids even in small towns these days are inches taller than they used to be 10+ years ago, and there are far more pudgy kids around, not just in big cities.

Katare · Post by **Katare** » 13 Jun 2009 00:55

I have posted this data in detail at least couple of times before but in a nut shell----

Per capita consumption of some of the most energy dense food items like oil, Vanaspati ghee, sugar, egg, fish, meat, poultry etc has gone up by 2x to 10 x since they started keeping records (1951 and later). With these essential nutritious food available in plenty still total food grain consumption remains higher than what it was in 1951.

Production of fruits and vegitables (although not as dense in calorie as oil/sugar or grains) has also grown much faster than population growth.

Another aspect that we need to keep in mind is that each year more automation, tractors, harvestors, bikes, machines, electricity, transport etc are removing hard manual labor from rural life eliminating need for very high calorie diet. While ever increasing urbanization also replaces food grain with more expansive and nutritious food items.

sivabala · Post by **sivabala** » 13 Jun 2009 02:31

I posted the following in agro thread some days ago.

I was doing some research on Protein consumption in India and came across some facts which left me dumb found.
1) Avg. Protein consumption in India is < 10g/day. World Avg (inc. Africa) is > 25g/day. Developed countries avg is > 50g/day.Link
2) Peanuts (Ground nuts) is one of the protein rich source(25%/wt). India is one of the largest producer of the peanuts. Guess what we do with it. We extract oil out of it and sell the cake to other countries or to cattle industry. wiki Link
3) Whole wheat and rice has a rich source vitmain and protein in the germ. We gently remove the nutritous germ and make oil out of it and discard the nutritious part of the food to cattle.Wheat Processing. Brown rice
4) When rice and wheat was processed with old methods the wheat flour and dehusked rice retained majority of their nutrients. With industrialization and modernization the people are left with no option to eat only nutrient less rice and wheat.
5) If the situation continues the effect of lack of essential nutrients will come at the old age. The population will be left with living on food supplements of essential nutrients, which are stripped out of the common food.
6) Already companies started selling vitamin E (E-Vion) an important nutrient. This is nothing but the extract of the wheat germ oil.Web Link
7) I suggest an education program to be carried out on the importance of eating whole foods. The government whould force 'atta' and 'flour' companies to add essential nutrients back after processing rice and wheat, as being done in western countries. Govt should suggest ways or formulate policies to increase the utilization of proteins to a greater extent.
J.M.Ts.

The consumption data Suraj etal. quoted could be based on supply side consumption. However, enduser consumption has gone down with time and automation of most of the labor intensive works. I believe most of the nutritious food is getting processed to some form that may be getting exported and/or sold to selective pockets of population that is getting fatter and fatter.
I will add more refs as I find time, becos the research was a few days old.

Suraj · Post by **Suraj** » 13 Jun 2009 02:34

sivabala: please list the sources of all your data & statements. Thanks.

sivabala · Post by **sivabala** » 13 Jun 2009 03:16

Suraj, I added more references to statements I made. I will add more as I find time.

As Per APEDA (Agricultural and Processed Food Products Export Development Authority) India exported 36,000 crores of food products last year alone. I wonder, if this has been accounted in your estimates of supply side data of food consumption.

Suraj · Post by **Suraj** » 13 Jun 2009 03:42

Thanks for adding some of the links. This is a pretty emotive issue, and it is important that conclusions not be made unless there is sufficient data. Just because there are feedstock exports doesn't mean the general population does not get sufficient nutrients, unless that has been established through studies. One or more items cannot serve as a proxy for a general statement about nutritional intake.

Further, some of the arguments sound sensational or just poorly argued, e.g. the case of peanuts being processed for oil and the cake exported. This isn't zero-sum situation, nor are peanuts the sole source of nutrients . If a producer gets a better price by exporting it, it enables them to pay higher wages, and those earners therefore have greater latitude to buy food. This is not mentioned or analyzed at all; instead the argument is made as if to suggest we're just giving it away for no net benefit at all, and sitting at home hungry. So why not look past the surface of the statement ?

Also, I suggest you focus the agrobusiness/feed export discussions in the agriculture thread.

Rahul Mehta · Post by **Rahul Mehta** » 13 Jun 2009 13:49

Suraj wrote:If a producer gets a better price by exporting it, it enables them to pay higher wages ...,

Say I am a producer. If there are too many unemployed, why would I pay even a dime more no matter my profits double or triple? IOW, no matter how much producer earns, when unemployment or underemployment is looming, he will pay no more than pittance.

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We should ban exports of ALL food products till Indians have enough to eat. Ban even exports of Basmati rice. They can sell in India or grow something else that sells in India. If they find farming uneconomical, they are welcome to sell the land and jump to more profitable areas like IT. But no exports of food in any form.

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Per capita calorie consumption too has decreased in past 15-20 years.

http://www.swaminomics.org/et_articles/et20070606.htm

By Swaminathan S. Anklesaria Aiyar

The 61st NSSO round shows (see accompanying table) that per capita calorie consumption in India has declined once again in 2004-05, measured in kilocalories (popularly referred to simply as calories). Consumption has fallen to 2,047 calories in rural India (against the norm of 2,400) and to 2,020 calories in urban areas (against the norm of 2,100). .... However, per capita calorie consumption has been falling steadily in virtually every NSSO survey between 1972-73 and 2004-05. .....

Swamy in above article "proves" that decrease in calorie intake is a good indicator !! I am merely using his article to cite the data.

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And while life needs less hard work, that would NOT result into reduction in food intake. People would keep adding fats to their body,but wont reduce food. eg whole fo West, which has very low menial labor but still calorie consumption is high. The data on increase in AVERAGE milk consumption does not prove that milk consumption of all increased uniformly (pls see wikipedia on "fallacy of composition").

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In one article, I read that calorie consumption in Kerala increased, but in most states it is decreased. This makes sense, as due to high gulf income, Kerala has more prosperity which spread across the population.

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The school going kids are taller. But most of the kids of REAL poor, bottom 70% population, dont go to schools. The decrease in food consumption is most pronounced in tribal areas and dalit areas. Which is why both conversion and naxalism is rising in almost all tribal areas in India. The per capita food consumption of top 30% has surely increased - there is no denying in that. It is bottom 70% I think is eating less. But dont worry.

Katare · Post by **Katare** » 14 Jun 2009 23:23

sivabala wrote:Suraj, I added more references to statements I made. I will add more as I find time.

As Per APEDA (Agricultural and Processed Food Products Export Development Authority) India exported 36,000 crores of food products last year alone. I wonder, if this has been accounted in your estimates of supply side data of food consumption.

Siva,

It pays to do a commonsense check on what jurnos write. Per capita wheat consumption alone provides more than 10 grams of high quality whey protein to an average Indian. I think what the writer ment was that certain small part of our society might be getting as little as 10g of protein. Average protein consumption of an Indian would be close to world average, may be on the north side.

This is a good article on the "politics of Pulse"

It calculates based on NSSO data that other major (non cereal) protein sources provide an average of 16g/day of protein to an Indian. Add protein from cereals (wheat/rice etc) and you should get average 25-35g/day.

PS 100grams of wheat provides 10+g of protein

Abhijeet · Post by **Abhijeet** » 15 Jun 2009 11:07

http://www39.wolframalpha.com/input/?i= ... ita+income

Look at the slope of the per-capita GDP graph post-2000.

Suraj · Post by **Suraj** » 15 Jun 2009 11:47

Abhijeet wrote:http://www39.wolframalpha.com/input/?i= ... ita+income

Look at the slope of the per-capita GDP graph post-2000.

That graph is just upto 2005. The per-capita income figure increased by over $100/year in each of the next three years as well, and is well north of $1000, as of 2008.

The massive Rupee devaluation of the early 1990s significantly lowered the measure of GDP in USD terms, and the constant erosion of the exchange rate until the last few years ensured that these figures didn't rise much. Now that we have both significant GDP growth as well as an appreciating currency, the USD denominated figures are also up significantly.

Bade · Post by **Bade** » 15 Jun 2009 19:25

From the same link, if you add PRC data it shows something interesting. If not for the drop in per capita GDP for India in the early 1990's, the secular trend would have more closely followed that of China.

svinayak · Post by **svinayak** » 15 Jun 2009 20:45

Bade wrote:

From the same link, if you add PRC data it shows something interesting. If not for the drop in per capita GDP for India in the early 1990's, the secular trend would have more closely followed that of China.

The period of deep economic problem was 1991-1994. The base for capital formation and growth of industrial production, agriculture and trade was the lowest.

vsudhir · Post by **vsudhir** » 15 Jun 2009 21:19

Also the impact of the devaluation of the INR (by upto 49%, IIRC) was also highest in this period of adjustment, IMO. No Wonder Shri PVN gets a lot of flak for the poor economic situ at that time even though it wasn't of his making. His then finance mantri though has cornered the glory for subsequent robust growth.