Indian Economy: News and Discussion (Jan 1 2010)

nachiket · Post by **nachiket** » 28 Mar 2010 07:56

shyam wrote: BTW, how did our ancestors create seeds for thousands of years without these modern seed providers? Once we understand those details, most of the risks will be solved.

Our Ancestors had a much smaller population to feed and per acre yield wasn't such a pressing issue.

geeth · Post by **geeth** » 28 Mar 2010 11:35

>>>By next crop did you actually mean previous crop? If yes, why do you think seeds from the previous crops are not good quality seeds? If the current crop does not produce good quality seeds, and they end up buying quality seeds from the suppliers and agencies, can't they use seeds from this crop in future? How often would they have to buy seeds?

Most of the seeds available now are hybrids and they have a tendency 'to go back to their roots' - meaning if you use seeds from cultivated paddy, after few crops you find that the grain you get is a mixture of different varieties (reverting back to one of the original seed from which the hybrid was developed) - it is not uniform. the percentage increases after each successive crop and affects the yield.

ShauryaT · Post by **ShauryaT** » 29 Mar 2010 03:05

Original post, in PRC economy thread.

Suraj wrote:The exchange rate policy vs USD pursued by RBI is very different from what PBoC follows. Just because the Rupee happened to appreciate at a time when the Yuan did does not mean that the latter caused the former. The Rupee has gyrated wildly in recent years, first going down to Rs.49/$ , then appreciating to Rs.38.5/$, then falling right back to Rs.50/$, and now back at ~Rs.46/$ . Personally this much volatility is bad at a time when we're trying to promote exports, but RBI tends to prioritize inflation rate over exchange rates. Here are comparative graphs:
USD-INR
USD-CNY

Suraj: Get your point on RBI's/GoI's penchant for fighting inflation, primarily through control of supply of money and other items. However, do not quite get the lower value of the Rupee above the Rs 45 range, given the relative low inflation and higher growth vis-a-vis the $/US economy?

In fact, I was quite surprise the see the rupee take such a serious and seems to be sustained downturn. The CT theory doing rounds is, it was to help the exporters, who were hit negatively in multiple sectors.

Do you expect it go back to the high 30's range, if so, by when?

Virupaksha · Post by **Virupaksha** » 29 Mar 2010 04:34

Shourya,

http://www.tradingeconomics.com/Economi ... Symbol=INR

As the above graph inflation in india hasnt been low. In jan this yr it touched 16 for a short while

Suraj · Post by **Suraj** » 29 Mar 2010 04:51

Comparative inflation is not the sole factor affecting exchange rates. A whole host of factors play a role, including the relative rate of capital inflows into India at any given time. Unlike the Chinese, who run a persistent current account surplus, our foreign exchange reserve gains are driven by FDI/FII/PE/ECB inflows.

Further, the PBoC is allowed to issue market stabilization bonds to mop up liquidity when dollars are exchanged for yuan by exporters. The keeps the exchange rate low and stable, and serves as an inflation control measure. RBI does not have such an authority to issue its own bonds. The FinMin issues them, with a capped limit of how much can be issued in a given year, since they have to pay interest on the bonds out of their revenues.

I don't expect GoI to support a strong Rupee, not when they're simultaneously pursuing the SEZ approach to increasing exports. They may be compelled to let the Rupee appreciate when they need to fight inflation. However, just the volatility in the exchange rate is bad for exporters, since it makes it costly for them to hedge their exchange rate risk.

krisna · Post by **krisna** » 29 Mar 2010 08:20

http://www.business-standard.com/india/ ... 9327&tp=on

Maharashtra's image as a progressive state has taken a beating with recent figures rating it third after Uttar Pradesh and Bihar in terms of people below poverty line.

I thought the reason could be the troubled vidarbha region with lots of farmer suicides.
The answer is

In absolute terms, the population below the poverty line in the state has increased by 12.2 lakh during the same period. This increase was mainly observed in urban areas.

Stan_Savljevic · Post by **Stan_Savljevic** » 29 Mar 2010 14:11

Paging vina

The nation pays for pampered Delhi
http://business.rediff.com/column/2010/ ... -delhi.htm

ashish raval · Post by **ashish raval** » 29 Mar 2010 17:02

^^ OT though, I am fairly inclined to believe that there will be a mumbai/pune-istyle attack on CW games and has a danger of triggering a war between India and pak. As a laymen, I have the feeling that LET/ISI are neck deep developing terror supply chains and sleeper cells in peace time. We need massive reforms and technology injection in internal security apparatus to nab these terror pigs.

RamaY · Post by **RamaY** » 29 Mar 2010 21:18

nachiket wrote:
shyam wrote: BTW, how did our ancestors create seeds for thousands of years without these modern seed providers? Once we understand those details, most of the risks will be solved.
Our Ancestors had a much smaller population to feed and per acre yield wasn't such a pressing issue.

Need not be correct. Our ancestors did not have that much of irrigated land either. The irrigated land and gauranteed ayakat too increased with increased populatin, upto a point.

We can find some data and references on that.

svinayak · Post by **svinayak** » 30 Mar 2010 01:05

RamaY wrote:
BTW, how did our ancestors create seeds for thousands of years without these modern seed providers? Once we understand those details, most of the risks will be solved.
Our Ancestors had a much smaller population to feed and per acre yield wasn't such a pressing issue.
Need not be correct. Our ancestors did not have that much of irrigated land either. The irrigated land and gauranteed ayakat too increased with increased populatin, upto a point.

We can find some data and references on that.

Modern irrigation practice and infrastructure came up from around 1800 in non fertile regions. Before that there was ancient system of irrigation and canal only in fertile regions. The farming area increased during the last 300 years compared to previous 300 years. Most increase happened during the last 60 years with increase in yield also.

Fertile region was more than sufficient for the population till about 1500. Seed variety and fertile area created surplus seeds for generations in India.

SwamyG · Post by **SwamyG** » 30 Mar 2010 02:19

geeth wrote:Most of the seeds available now are hybrids and they have a tendency 'to go back to their roots' - meaning if you use seeds from cultivated paddy, after few crops you find that the grain you get is a mixture of different varieties (reverting back to one of the original seed from which the hybrid was developed) - it is not uniform. the percentage increases after each successive crop and affects the yield.

Aah......, that is very good explanation on what happens behind the scenes. Thanks much.

The next question would be, how can the suppliers create seeds that present the desired qualities uniformly year after year?

Suraj · Post by **Suraj** » 30 Mar 2010 02:22

It's good to see major domestic insurance companies investing in the equity markets. It will bring about major institutional investor holdings of stocks, leading to less market volatility and a decrease in the effect of capital surge/flight driven by short term FII plays:
LIC to invest Rs.75000cr ($16.6 billion) in equities in 2010-11

Life Insurance Corporation of India (LIC), the country’s largest institutional investor, is planning to pump in at least Rs 75,000 crore in equities during the next financial year. This will be 25 per cent higher than the Rs 60,000 crore it invested in the stock markets this year.

Senior company executives said investment in the forthcoming initial public offers and the government’s Rs 40,000-crore disinvestment programme will be key elements of the equity strategy, as the insurer is looking to acquire a sizeable stake in companies of its interest.

During the current financial year, LIC had originally targeted to invest around Rs 50,000 crore in equities but with the markets recovering and investors returning to buy unit-linked insurance plans (Ulips), the target was breached. As a result, the public sector player ended up investing a higher than budgeted amount in equities.

India-Japan sign Rs.10500cr ($2.3 billion) infrastructure loan agreement

India has signed an agreement for Rs 10,500 crore (Yen 215.611 billion) official development assistance (ODA) from Japan. This includes Rs 1,648.36 crore for the second phase of Delhi mass rapid transport system project (DMRTS), Rs 4,422.83 crore for the dedicated rail freight corridor and Rs 2,933 crore for Chennai metro.

Six projects will be covered under the loan, including Sikkim Biodiversity Conservation and Forest Management Project, Kolkata East-West Metro Project (II) and Rengali Irrigation Project (III). “With today’s exchange of notes, the cumulative commitment of ODA from Japan has reached Yen 3116.81 billion (Rs 15,5840 crore). India continues to be the highest recipient of ODA from Japan,” said a finance ministry statement.

The total cost of the Chennai Metro Project, appraised by Japan International Cooperation Agency (JICA) is Yen 378.138 billion, of which the Japanese government has committed Yen 21.751 billion for phase I and Yen 59.851 billion for phase II.

The total cost of phase I of DMRTS project, appraised by JICA, is Yen 274.612 billion and the government of Japan has committed almost 60 per cent amounting to Yen 162.751 billion. The total cost of phase II of DMRTS project is Yen 388.670 billion, of which the Japanese government will provide about 55 per cent.

In the case of the Dedicated Freight Corridor Project, ODA of Yen 92.868 will constitute about 19 per cent of the appraised JICA cost of Yen 498.565 billion for Phase I.

RBI revives FCCB buyback scheme for three months

Indian companies were allowed to buy back FCCBs, both under automatic and approval routes, until December 31, 2009. The scheme was discontinued with effect from January 1.

Both the company concerned and the economy will benefit from the buyback at a time when FCCBs are trading at a discount.

The central bank had allowed the buyback and prepayment of FCCBs soon after the global financial crisis intensified in 2008.

The usual end-of-fiscal year liquidity tightness:
Banks turn net borrowers at RBI's liquidity window

Showing signs of tight liquidity at the end of the financial year, banks turned net borrowers at the Reserve Bank of India’s (RBI’s) liquidity adjustment facility (LAF) on Monday.

For the first time in the current financial year (2009-10), the amount borrowed from the RBI repo window exceeded the amount banks parked at the reverse repo window. While one bank borrowed Rs 900 crore for a day, four banks placed a demand for Rs 445 crore, RBI said in a statement.

Bankers said the strain on resources was due to temporary mismatch in the system and did not reflect shortage of funds. The average amount parked with RBI on a daily basis has been declining significantly since the beginning of the month. The market expects pressure on resources in the remaining two days of the financial year.

“Liquidity has been shrinking and credit growth has been good. Disbursements have picked up significantly, which is why liquidity has shrunk,” said the head of treasury with a Mumbai-based large public sector bank.

Vriksh · Post by **Vriksh** » 30 Mar 2010 04:29

Acharya said...

Modern irrigation practice and infrastructure came up from around 1800 in non fertile regions. Before that there was ancient system of irrigation and canal only in fertile regions. The farming area increased during the last 300 years compared to previous 300 years. Most increase happened during the last 60 years with increase in yield also.

Fertile region was more than sufficient for the population till about 1500. Seed variety and fertile area created surplus seeds for generations in India.

This is actually a fallacy... South Indian irrigation system of tank bunds and ayacuts erys etc precedes 1800. And agricultural productivity of South India often exceeded the best green revolution outputs seen in Punjab etc. Perhaps the canal irrigation system developed in North India far later perhaps post colonially (since the land was already quite productive and population pressures were lower) but not in South India. However a lot of good work by people of yore as exemplified by the temple tanks have now been converted to real estate, water conservation not withstanding in the South now.

Dharampal writes about this as can be seen at the link here

http://www.scribd.com/doc/10932365/Indi ... th-Century

Though I am unable to find a scholarly treatise on the original work detailing productivity studies. However from what I remember from discussions with Dharampal (and the preface to the treatise above mentions it) and folks at PPST the available historical record shows paddy yields of 6-7 tons/ha (without HYV strains mind you) were obtained consistently in Chengalpattu district in Madras presidency and this was not the richest of lands.

BTW for those who want the non colonial version of Indian history please read works by Dharampal.

svinayak · Post by **svinayak** » 30 Mar 2010 04:50

Vriksh wrote:

This is actually a fallacy... South Indian irrigation system of tank bunds and ayacuts erys etc precedes 1800. And agricultural productivity of South India often exceeded the best green revolution outputs seen in Punjab etc.
Dharampal writes about this as can be seen at the link here

http://www.scribd.com/doc/10932365/Indi ... th-Century

BTW for those who want the non colonial version of Indian history please read works by Dharampal.

I am saying the same thing. Indian ancient irrigation was pretty good for the fertile region and South Indian system was created during the VijayaNagar empire.
New system was created with British help who "studied" the ancient irrigation system in South India and other places. They created their own system favouring their own groups such as Punjabis and UP groups to create Zamindari system.

vina · Post by **vina** » 30 Mar 2010 07:16

South Indian system was created during the VijayaNagar empire

It is lot older than that. For eg, just google for Karikal Chola and Kallanai

Singha · Post by **Singha** » 30 Mar 2010 08:08

the vaigai deltaic region although quite lacking in waterflow now, was a agricultural ricebowl during the Chola period.

except for the mongols, who lived by pillaging and pastoralism, all successful empires (settlers) needed agricultural surpluses to free up people for industry and war.
that is why most of them were anchored in fertile river valleys.

Katare · Post by **Katare** » 31 Mar 2010 20:36

February exports surge 34.8% to $16 bn, imports rose 66.1 per cent to $25.06 billion

svinayak · Post by **svinayak** » 31 Mar 2010 20:54

vina wrote:
South Indian system was created during the VijayaNagar empire
It is lot older than that. For eg, just google for Karikal Chola and Kallanai

I agree. Successive kingdoms maintained it

Prem · Post by **Prem** » 01 Apr 2010 00:52

http://www.businessweek.com/news/2010-0 ... -says.html
March 31 (Bloomberg) -- India has a “massive” need for capital to catch China’s growth rate and fully benefit from a global shift in economic power to emerging markets, said Nouriel Roubini, the economist who predicted the financial crisis.“China has been a hare and India a tortoise but growth is accelerating in India,” Roubini said yesterday. “There is a massive need for both human and physical capital.”
Sensex Surges
India’s Sensex index has surged 82 percent in the past year as is set for its fifth straight quarterly gain, the longest expansion since 1994. On March 19, the central bank raised the benchmark reverse repurchase rate by a quarter of a percentage point to 3.5 percent and the repurchase rate by the same amount to 5 percent.India’s stocks will withstand the stimulus withdrawal and extend last year’s rally, the biggest in 18 years, as domestic spending strengthens, John Praveen, the Newark, New Jersey-based chief investment strategist at Prudential International, a unit of Prudential Financial, which oversees $667 billion, said in a March 26 interview.

Theo_Fidel · Post by **Theo_Fidel** » 01 Apr 2010 01:18

vina wrote:It is lot older than that. For eg, just google for Karikal Chola and Kallanai

Actually the oldest is thought to be the other perennial river in TN, the Thamiraparani system.

The Romans called it Taprobane, which was also the original name of Sri Lanka. Even back then the Romans marveled that the irrigation systems provided 3 crops a year. This was completely unknown elsewhere in the world. Even bountiful Egypt had only the single crop.

There are traces of irrigation systems here that date to 7000 BC.

In any case these areas have been irrigated and bountiful for millenia.

Back before the British got here, the most agriculturally productive area was actually Bengal. Grain from Bengal fed much of India.
One of the first things the British did was to destroy the finely balance canal irrigation system here, by simply not maintaining them. They thought the canals were natural features rather than carefully maintain irrigation systems. Something the area has still not recovered from.

The recurring famines that resulted pushed the British to move to the Delhi area where they developed the Punjab irrigation system, permanently weakening Bengal. For years the treasure of India was expended on building the irrigation system here to reward their favored people.

Suraj · Post by **Suraj** » 01 Apr 2010 04:50

L&T first private firm with Rs.1 lakh cr ($22.2 billion) order backlog

Larsen & Toubro (L&T), the largest technology, engineering and construction company in India, has accumulated an order book worth over Rs 1 lakh crore.

The government-owned power equipment maker, Bharat Heavy Electricals Ltd (BHEL), is the only company ahead of L&T in this regard, with an order book of over Rs 1.5 lakh crore, said sources.

The $8.5-billion (Rs 38,300 crore) turnover L&T had reached an order book position of Rs 91,104 crore as on December 31, 2009. Of this, the engineering and construction sector’s contribution was Rs 89,375 crore. It got another lot of orders worth more than Rs 9,000 crore in the past two-three weeks. The current order book position of the construction division alone was close to Rs 60,000 crore, said sources.

FDI consolidated press note released

The government today released the Consolidated FDI Policy framework in an effort to make the country’s foreign direct investment (FDI) norms investor-friendly even as the total FDI inflow for April-February 2009-10 remained lower at $24.68 billion compared to $25.39 billion in the corresponding period last year.

FDI for February grew by 15.4 per cent to $1.72 billion against $1.49 billion in the same month last year. Some of the top few sectors that received large-scale foreign equity inflows in February are services, computer software and hardware, telecommunications and housing and real estate.

The Consolidated FDI Policy Framework seeks to “subsume all the existing 177 Press Notes and will be reviewed after every six months,” Commerce and Industry Minister Anand Sharma said today while releasing the final document — Press Note 2010.

BoP data shows revival in capital inflows

Despite a lower trade gap, the country’s current account deficit widened to $12.03 billion (Rs 55,380 crore) during the third quarter of the current financial year ended December 2009, from $11.67 billion (Rs 52,500 crore) in October-December 2008, mainly due to lower invisibles’ receipts.

However, the deficit was lower than the $12.63 billion (Rs 56,800 crore) recorded in the September 2009 quarter.

The latest balance of payments data, released by the Reserve Bank of India (RBI) today, showed a surplus of $13.8 billion (Rs 62,000 crore) during the third quarter of the current financial year, as against a deficit of $6.21 billion (Rs 28,000 crore) a year earlier. This was mainly on account of portfolio investments. Net foreign direct investment inflows also improved ($3.9 billion versus $0.4 billion). During the third quarter, net external commercial borrowings were, however, lower at $1.5 billion, as against $3.8 billion last year.

With the surplus in the capital account exceeding the current account deficit, there was a net accretion to foreign exchange reserves of $1.8 billion during October-December 2009 compared to a decline of $17.9 billion in the previous year.

A_Gupta · Post by **A_Gupta** » 01 Apr 2010 19:04

http://www.dslprime.com

2009: China up 22M to 104M and huge lead http://bit.ly/bCjVVF
China added three times as many broadband subscriptions in 2009 than the U.S. The 18M subscriber gap is almost as many as the total broadband customers in France or Britain. The ever-invaluable Point-Topic figures show Mexico and India surprise third and fourth. Argentina, Russia and especially Brazil are doing better than many realize, and Vietnam added almost as many subscribers as Italy or Britain.

Highest broadband net adds, 2009

China +22.1M to 104M
USA +7.6M to 85M
Mexico +2.4M to 9.7M
India +2.4M to 8.2M
Germany +2.1M to 25M
Russia +2.0M to 11M

China, India, and Russia all grew by over 20%. The U.S., Germany, France, Spain, Sweden, Belgium, and Italy all grew 7-10%; Britain and Canada were a little lower.

Japan, with 80% fiber availability, has the best built Internet in the world but only grew 3%. The 65% household penetration is comparable to Germany or Spain. Effective prices have gone up substantially in the last few years as the government has allowed NTT fiber to dominate after some of the most vigorous DSL competition in the world early in the decade. Japan has long had the most advanced mobile data devices; I suspect what's going on is that many Japanese are content with mobile. Taiwan's 1% growth rate probably has a similar cause.

RamaY · Post by **RamaY** » 01 Apr 2010 19:44

^^^

That doesn't capture the complete story.

China +22.1M to 104M = 7.7% of 1338 M Population
USA +7.6M to 85M = 27.6% of 307 M Population
Mexico +2.4M to 9.7M = 8.7% of 111 M Population
India +2.4M to 8.2M = 0.7% of 1156 M Population
Germany +2.1M to 25M = 30.48% of 82 M Population
Russia +2.0M to 11M = 7.8% of 140 M Population

So the 2nd largest economy (PPP terms) has reached the internet levels of Russia(8th) and Mexico(12th) largest economies.

India need to find a different way to bring information revolution to its large population and I think it is moving in this direction with models like e-SEVA in Andhra Pradesh.

Theo_Fidel · Post by **Theo_Fidel** » 01 Apr 2010 23:34

http://www.ft.com/cms/s/0/cfb729e2-3d76 ... abdc0.html

Opinion: India’s double digit growth fantasy

There has been no major initiative to reform India’s educational sector, save for increased allocation for the sector during budget exercises, much of which is again siphoned off due to corruption. As a result while India churns out graduates by huge numbers, roughly half of them are unemployable.

Labour reforms are another case in point. Over the years, numerous academic studies and official reports, including the Second National Labour Commission Report (2002), have recommended major reforms of India’s labour laws. The problem is absence of political will. Until that happens, the expansion of decent non-agricultural jobs will condemn many millions to insecure and ill-paid, informal urban employment.

The neglect of the agricultural sector, on which a majority of India’s population depend upon, is also widely known. Lack of capacity building haunts this sector and even more than 60 years after independence, food security remains a concern. A large number of rural population lives under abject poverty at less than $2 per day. In this background, how can India reap the supposedly rich (read young population) demographic dividend is anybody’s guess.

I would say that India’s GDP growth rate can oscillate between 7 to 8 per cent, which still is fantastic by global standards. But, a double digit growth rate? No way.

Finally, a man after my heart, Bengali no less.

Looking at the population charts (the census should give us better data soon.) our Demographic dividend started kicking in a couple of years ago and should continue till 2045, roughly 35 years.

We have many different trajectories in that time. All in today's dollars.

7% average growth over 35 years ~ $14 Trillion GDP.
8% average growth over 35 years ~ $20 Trillion GDP.
9% average growth over 35 years ~ $28 Trillion GDP.
10% average growth over 35 years ~ $40 Trillion GDP.

I think reforming and freeing up these three sectors should easily get us to 9% real growth.

7% would be a waste of our dividend IMHO.

RamaY · Post by **RamaY** » 01 Apr 2010 23:35

Continuing on my alternative-budget scenarios... appreciate criticism and feedback -

Now that the budget is balanced, I recommend an economic-stimulus package that is commensurate of the expected increase in tax-revenues in the stimulus period. Below are my calculations.

Correction - Base year GDP is at conversion rate, not PPP

High-level description of various items.

Civic Infrastructure - Includes National Id project, Police, Courts, Jails, Land Registration, DMV, Computerization of essential services, National Disaster Management Services, Medical Emergency Services etc.,

River Linking Project - Includes nationalization of River systems. Includes necessary water Dams, Canals construction etc.,

Trade Corridors - Development of SIX Freight corridors (~1000 KM each) that go thru
1. Kerala-Maharashtra-Gujarat-Rajasthan-Haryana-Delhi
2. Taminadu-AndhraPradesh-Orrissa,WestBengal
3. Kerala-Karnataka-AP-MadhyaPradesh-Bihar
4. WB-Bihar-UP-Delhi-Punjab
5. Mijoram-Manipur-Nagaland-ArunachalaPradesh
6. ArunachalPradesh-Assam-Meghalaya-Sikkim-WB-Bihar

Each trade corridor consists of
1. Frieght Train Route - 2 Lanes (Existing train routes can be modified for this.
2. Construction of Super-Fast Passenger Train Route
3. 1 KM width-strech along the route as SEZ - One side of it is Frieght Train line and Anotehr Side a 4 Lane highway
4. 1 KM width Green Zone - 500Mt green patch on boths sides of the SEZ strech

Military Industrial Complex - Self Explanatory using public-private partnership model

Urbanization Plan - Atleast 1 town in a parliamentary constituencey is developed to developed nation level infrastructure interms of Roads, Water, Drinage, Schools, Hospitals, Police etc.,

Highter Education & Research - Settinup of 20 new Science and Engg research institutions linked to atleast 1 trade corridor.

National Forests & Fisheries - Identification and recoginition of national forests and establishing green-links between them (these stretches will have elevated highways - so forest life has minimum possible disturbance w.r.t migrations etc) and sustainable Fisheries development in Indian rivers and territorial waters.

Next-Gen Utility Infrastructure - Development of power, oil, gas and fiber-optic grids so that mini/micro power generation units (such as solar/wind power etc) can link-up to the grids.

Mini Water Reservoirs - Construction of atleast five 1TMC level water reservoirs per parliament constituence linked to the River-linking project.

Food Processing Industry - Seeting up Food processing and storage warehouses in each assembly constituency (500x8 = 4000 units)

Primary Healthcare Infrastructure - Primary Healthcare and child-care

Other - All other Items that I did not mention

Theo_Fidel · Post by **Theo_Fidel** » 01 Apr 2010 23:39

http://www.citywire.co.uk/Adviser/-/new ... ?ID=391568

Jupiter’s Vazirani anticipates 25 years of growth in India

Speaking at Citywire’s Wealth Management forum, Vazirani said: ‘The Indian story is about growth. There has been fantastic GDP growth over the past few years. In March 2009 it dipped down to just over 6%. This year we are expecting 7% and 8.5% over the next few years. Much more importantly, in my view this growth is set to continue for at least the next 20 to 25 years.’

Vazirani is particularly encouraged by a significant amount of rural India’s population moving into the middle income bracket. While urban India has a mobile phone penetration of almost 100%, he compares this with just 10% in rural India, concluding that there is ‘a long way to go’ in terms of consumption growth in this area.

India is expensive and it always has been. Why? If you look at the return on equity (ROE) gap, if there is a continual difference between the ROE of Indian companies and others – of course it will be expensive. Why is the ROE in India higher? My view is because of the entrepreneurs running the companies.’

Vazirani highlights how entrepreneurs tend to own between 40% and 50% of their own companies and will only invest their own money if they are sure they will achieve a return.

He explained: ‘This is why every period of growth in India is accompanied by profits growth. We have seen the world over high GDP growth but low profits growth. That is not going to happen in India for the simple reason that it is a private sector economy. Very few companies are focused on top-line growth. They are bottom-line focused with a high ROE, so when you have GDP growth in India, it is profitable GDP growth.

This is the best advertisement any economy can have.

RamaY · Post by **RamaY** » 01 Apr 2010 23:40

Proposed Trade Corridor Routes...

ramana · Post by **ramana** » 02 Apr 2010 00:07

RamaY. Please request another thread for your alternate scenarios. Its getting lost in this thread.

Prem · Post by **Prem** » 02 Apr 2010 00:11

http://www.businessweek.com/news/2010-0 ... month.html

India Manufacturing Expanded in March for 12th Month
April 1 (Bloomberg) -- India’s manufacturing grew for a 12th straight month in March, increasing pressure on the central bank to raise interest rates.The Purchasing Managers’ Index fell to 57.8 last month from 58.5 in February, according to an e-mailed statement from HSBC Holdings Plc and Markit Economics. A reading above 50 indicates a gain in factory production.
The biggest danger to Indian economic growth in the coming months will be an inability to meet demand due to a lack of capacity,” Robert Prior-Wandesforde, an economist at HSBC Holdings Plc in Singapore, said in today’s report. “The central bank has plenty of catching up to do if it is to deal with the rapid escalation of price risks.”He expects Subbarao to raise interest rates by 175 basis points by mid-2011, starting with the next monetary policy announcement on April 20.
Capacity Utilization’The central bank on March 19 cited “increasing capacity utilization” in factories as one of the main factors fanning price gains in the Indian economy. Food-price inflation accelerated to 16.35 percent in the week ended March 20, according to a commerce ministry statement in New Delhi today.India’s industrial output gained 16.7 percent in January from a year earlier, following a 17.6 percent increase in December, which was the biggest jump since at least 1994, according to Bloomberg data.

RamaY · Post by **RamaY** » 02 Apr 2010 00:16

ramana wrote:RamaY. Please request another thread for your alternate scenarios. Its getting lost in this thread.

I would like to take it under burkha

, possible.

I am planning to do a case study on Andhra budget. I will create a thread there and move all my posts.

Thanks

ramana · Post by **ramana** » 02 Apr 2010 00:29

Create the thread and let the admins move the posts. Any missed ones can be reported.

Thanks, ramana

RamaY · Post by **RamaY** » 02 Apr 2010 00:45

Ramanaji

I created a new thread "Alternative Budget Scenarios for India" and copied the posts there (have few more to do).

thanks

geeth · Post by **geeth** » 02 Apr 2010 09:55

>>>The next question would be, how can the suppliers create seeds that present the desired qualities uniformly year after year?

1. They grow paddy in isolated fields, so that chances of cross pollination with other varieties are minimal (this also contributes to adulteration).
2. They use the same technique used to produce the hybrid in the first place, which ordinary farmers doesn't know, or cannot use.

RamaY · Post by **RamaY** » 02 Apr 2010 16:43

I think I copied all my posts and associated discussion to GD.

Admins can delete those posts if needed.

Regards,

Katare · Post by **Katare** » 03 Apr 2010 03:49

PM's view on financial meltdown, regulation, exchange rate, growth etc

PM bats for caution on easing of capital account

Speaking in favour of financial innovations to help corporates hedge against financial risks, Mr Singh said: “I sometimes hear it said that insulation has served us well and we should avoid experimentation and liberalisation. This would be the wrong lesson to be learnt from the crisis. We must not draw the conclusion that financial innovation is not important in our situation.” This assumes significance, since several large corporates have recently asked RBI not to ban the regular foreign currency derivatives. The regulator, which earlier proposed a ban on popular structures like zero-cost derivatives, is giving final touches to the new derivatives guidelines.
"...Growth will occur in an economic environment where India will remain open to the world and Indian companies will operate globally. Management of forex risk would be an important concern in future and the financial system must, therefore, provide our companies with instruments they need to manage these risks at reasonable costs,” he said.

Katare · Post by **Katare** » 03 Apr 2010 03:51

This is twice the FDI we receive...

India top money recipient, remits $55 bn in 2009

Theo_Fidel · Post by **Theo_Fidel** » 03 Apr 2010 08:53

Katare wrote:This is twice the FDI we receive...

India top money recipient, remits $55 bn in 2009

This is not necessarily a good thing, is it.

While it stimulates the economy a bit, it is mostly consumptive and ephemeral, probably leave very little tangible benefits.

We still need investment proper.

An actual investment of $55 Billion with our ICOR of 3.5 will result in new economic income of ~ $20 Billion. Or about 1.5% economic growth.

We are not likely to see this with just remittances.

svinayak · Post by **svinayak** » 03 Apr 2010 11:48

Personal remittances are not going to be similar to institutional investment.

abhishek_sharma · Post by **abhishek_sharma** » 03 Apr 2010 12:39

India visit to boost ties, says Geithner

http://beta.thehindu.com/news/national/ ... 381931.ece

Singha · Post by **Singha** » 03 Apr 2010 18:58

remittances imo are better than FIIs buying indian stock market shares because remittances are generally to family members who either spend it on local goods and services or else put it in PSU/pvt indian banks who lend to business/individuals.

FII stock picking can reverse 180' in a day as we have seen multiple times.

ofcourse best is MNCs investing in physical infra in india, I dont dispute that, but remittances are not bad either. we need both.