Indian Economy: News and Discussion (Jan 1 2010)

vina · Post by **vina** » 21 Jan 2011 10:16

The mark up for any food item from farmer to end retailer be it walmart in US/mom and pop store in India always is atleast 150%.

Dont go by what the big stores say about "margins". These margins are given after excluding the costs of employee, rent etc.

I am talking from experience about what I pay at a large retailer vs a Mom&Pop. Diaper Rs 556 vs 78X Wet Wipes Rs 135 vs Rs 180 a pack. Washing soap.. Rs 155 vs Rs 185 for a 1kg pack. Just do the math on what the mom & pop makes when he buys from Metro and sells it at his store ! There is no funny math here and I am not reading off management commentary.

joshvajohn · Post by **joshvajohn** » 21 Jan 2011 19:23

'India can bring back its trillions'
http://www.timesnow.tv/India-can-bring- ... 363220.cms

'Confiscate black money in Swiss accounts'
http://www.indiablooms.com/NewsDetailsP ... 10111s.php

Indian Swiss accounts now proven
http://www.timesnow.tv/Indian-accounts- ... 363184.cms

Prem · Post by **Prem** » 21 Jan 2011 22:56

http://www.equitymaster.com/5MinWrapUp/ ... t-problems
Is only one man responsible for India's current problems?

When Manmohan Singh was re-elected to the post of the Prime Minister two years ago, the nation's response was euphoric. Stock markets on that day zoomed. And with the Congress party getting such a thumping majority, Indians were relieved. The hope was that with more stability at the centre and less pandering to coalition parties, the Congress would be able to get down to some serious business and undertake the much needed reforms. Sadly, so far that has not been the case. Rather than tough reforms, what we have been witness to is a slew of corruption and scandals, rising food prices and inflation, bloated government deficits and ever increasing subsidies. Not much seems to have been done on the oldest ills afflicting India either; notably its crumbling infrastructure and crippling poverty. Part of the blame has been laid on Manmohan Singh's inability to get the government cracking. The Prime Minister is highly respected for his credentials and impeccable integrity. But his indecision on various important matters could prove to be his undoing in the future. This is despite the weak opposition which is beset by its own set of problems. Decisions on issues such as raising caps on foreign investment in pension and insurance sectors to paring down food, energy and fertiliser subsidies, remain as unsolved as ever. The Prime Minister's major cabinet reshuffle this week does not seem to have enthused anyone either. In fact, it has only displayed his unwillingness to let some nonperforming ministers go.
There is one thing that Manmohan Singh can bank on. That is of the Indian economy growing at a brisk pace inspite of the government's ineffectual policies. What the Prime Minister needs to do is step on the gas and rework some of his magic that had led to India's liberalization in the early 1990s. Of course, that is easier said than done. But a firm leadership and serious reforms will go a long way in improving India's economic health in the future. Do you think one should blame only the PM for the problems India is currently facing? Let us know or post comments on our Facebook page.

Prem · Post by **Prem** » 21 Jan 2011 23:00

RI expects to sign $15b in deals with India
http://www.thejakartapost.com/news/2011 ... india.html

Indonesia expects to sign business contracts and an investment commitment worth more than US$ 15 billion from the Indian government and companies during the visit of President Susilo Bambang Yudhoyono to the country next week.Coordinating Economics Minister Hatta Rajasa said Thursday that there would be more than 15 agreements and contracts for signing during Yudhoyono’s visit to the Indian capital from Monday to Wednesday next week.
“Among the deals are the South Sumatra train projects worth up to $2 billion and other infrastructure projects to grow several regions in the country. We’re targeting a total $15 billion value in potential agreements,” he told reporters at his office in Jakarta.President Susilo Bambang Yudhoyono will visit India at the invitation of Indian President Pratibha Devisingh Patil to further strengthen the two country’s economic cooperation.
“There will be a business gathering between Indonesia and India’s chambers of commerce, and India’s president will also give a speech there,” he added.Industry Ministry Mohamad Suleman Hidayat said that the business-to-business contracts would cover a number of infrastructure and power plant projects, while the government-to-government agreements would cover cooperation in the development of fertilizer and petrochemical plants.“Through the government-to-government agreement, Indonesia’s Industry Ministry and India’s Chemicals and Fertilizers Ministry plan to establish a coal gasification-based fertilizer industry,” he said, adding that the project could be worth around $1 billion.Hidayat added that there would also be a $1 billion government business deal on iron sand between the Industry Ministry and India’s Primax. “There will be a business gathering between Indonesia and India’s chambers of commerce, and India’s president will also give a speech there,”“The deal will be for the processing of iron sand into titanium and uranium, so that the country’s industries will no longer need to export raw materials.”

Both countries are members of BRICI (Brazil, Russia, India, China, Indonesia) five major emerging markets that are expected to control the world’s economy by 2050. “To achieve faster economic growth, both India and Indonesia will need to boost infrastructure projects. Therefore, these deals will help the two countries achieve their targets,” Hidayat said.

Abhijeet · Post by **Abhijeet** » 22 Jan 2011 01:09

vina wrote:I am talking from experience about what I pay at a large retailer vs a Mom&Pop. Diaper Rs 556 vs 78X Wet Wipes Rs 135 vs Rs 180 a pack. Washing soap.. Rs 155 vs Rs 185 for a 1kg pack. Just do the math on what the mom & pop makes when he buys from Metro and sells it at his store ! There is no funny math here and I am not reading off management commentary.

I find it incredible that stores like Metro are allowed to exist in India specifically for the purpose of allowing small retailers to sell goods at artificially inflated prices. The small retailer has to do none of the legwork of actually procuring the goods from the producer. He simply walks into a cash and carry, buys items like a normal shopper, then turns around and sells the same goods in his store at an artificially higher price. And the government actually wants this to be the case! Stunning.

Now, small retailers are conveniently located close to many shoppers who perhaps would not be able to travel to a Metro, so they add some value. But the rational solution is to simply allow anyone to buy goods at a Metro, with bulk discounts. Then people who are ok with traveling to the Metro store can pay the lower prices, and people who don't want to do the travel pay the higher price for convenience.

But in India, we are forced to buy goods at artificially high prices just so these small retailers can survive. I strongly protest the forced diversion of my hard earned rupees into the pockets of people who are adding so little value!

Could there be a better example of why the retail industry in India needs a good solid shake-up?

SwamyG · Post by **SwamyG** » 22 Jan 2011 01:53

vina wrote: I am talking from experience about what I pay at a large retailer vs a Mom&Pop. Diaper Rs 556 vs 78X Wet Wipes Rs 135 vs Rs 180 a pack. Washing soap.. Rs 155 vs Rs 185 for a 1kg pack. Just do the math on what the mom & pop makes when he buys from Metro and sells it at his store ! There is no funny math here and I am not reading off management commentary.

That is your side of the story onlee. If the mom & pop are having so rosy and sunny life, maybe you ought to let Reliance and Walmart know about the profits they are missing.

Prem · Post by **Prem** » 22 Jan 2011 04:02

Donald Trump must have follwed this NEWS

http://www.dnaindia.com/money/report_ro ... ld_1492937
Rolls-Royce says India sales up 7-fold

Rolls-Royce sold more than 70 cars in India in 2010 and expects the number to grow in 2011 on the back of a strong economy and increasing purchasing power of customers.“India has grown seven-fold since last year,” said Brenda Pek, general manager, South and East Asia Pacific, Rolls-Royce Motor Cars.In December 2009, the company had previewed its Ghost model, priced between Rs2.5 crore and Rs3 crore. Its flagship car, the legendary Phantom, is priced around Rs4.5 crore.“Almost 80% of Ghost buyers are new to the brand, and we are seeing more lady owners,” said Pek.Filmstar Sanjay Dutt had gifted one to his wife Manyata two months back.Rolls Royce currently has two dealers — in Mumbai and Delhi each.In 2010, we witnessed demand from Tier II cities in the north and south of India,” Pek said. “Our Indian customers appreciate Ghost as an everyday car which they can use to drive themselves as well as be chauffeured in,” said Pek

Ambar · Post by **Ambar** » 22 Jan 2011 07:26

Prem wrote:Donald Trump must have follwed this NEWS

http://www.dnaindia.com/money/report_ro ... ld_1492937
Rolls-Royce says India sales up 7-fold
Rolls-Royce sold more than 70 cars in India in 2010 and expects the number to grow in 2011 on the back of a strong economy

It is amazing how far we've come in just 15 years! I remember when MBIL (Mercedes Benz India Ltd) first started their operations in 1996, they were selling less than 60 cars/ year. They had just 2 models E220 and E250D on offer,both priced around 22 lakhs. Their sales remained well below 100 cars / year for many years. A close relative used to work as a floor manager at BR Motors, Bangalore - the only MB dealership in Karnataka. BR Motors shut its door down in early 2000s thanks to poor sales and was later bought over by Sundaram.

Fast forward 10 years and we have 70 Rolls Royce cars being sold in India every year,each priced at 30-40 million rupees! Rolls Royce sold 2200 cars in 2010, and India consumed 5% of their global sales!MBIL sold almost 6000 cars in India in 2010 - 100 fold increase compared to 1996. Hope the good times will continue forever..

vina · Post by **vina** » 22 Jan 2011 12:19

Fast forward 10 years and we have 70 Rolls Royce cars being sold in India every year,each priced at 30-40 million rupees! Rolls Royce sold 2200 cars in 2010, and India consumed 5% of their global sales!MBIL sold almost 6000 cars in India in 2010 - 100 fold increase compared to 1996. Hope the good times will continue forever..

Well, there is a new Jaguar-Land Rover showroom that has opened at the foot of the Jayadeva over pass , just a block away from the house of the Gowda Princeling and 'Umble Farmer's "vaaris" . There are a couple of Jaguar sedans and coupes and Land Rovers on display. Very convenient I suppose for the Princeling to amble across and pick up a couple of XKR coupes and Discovery to add to his collection of Maserati and Porsches. Same is true for the other JP Nagar/Jayanaga fat cats.

vina · Post by **vina** » 22 Jan 2011 12:22

Abhijeet wrote:I find it incredible that stores like Metro are allowed to exist in India specifically for the purpose of allowing small retailers to sell goods at artificially inflated prices.

Oh, it is fantastic that Metro et al have opened up. Before that there was an additional layer of wholesalers/stockists and other dudes like commission agents, who faced severe competition from Metro and had to slash prices.

In the absence of metro, the total markup from producer to consumer would be even higher (another 15 to 20% more easily). The worst were "commission" agents, who just used to direct "demand" to "supply" and usually never held any inventory whatsoever and used to skim off some 10% as mark up.

shyam · Post by **shyam** » 23 Jan 2011 02:12

Do Reliance/Big Bazar beat or match Metro?

Vipul · Post by **Vipul** » 24 Jan 2011 04:17

Case for a national gold bank.

India owns over 18,000 tonnes of above ground gold stocks worth around $800 billion, almost 11 per cent of the global stock, according to the World Gold Council (WGC) estimates.

This is equivalent to nearly half an ounce of gold ownership per capita, a figure which is significantly below consumption in Western markets, representing scope for more growth, says a WGC research paper ‘India: Heart of Gold'.

In 2009, total domestic gold demand reached $19 billion, or Rs 97,400 crore, which accounts for 15 per cent of the global market, according to the WGC.

While Indian consumers continue to stock gold despite rising prices, when it comes to total gold reserves India ranks 11th in the world with 557.7 tonnes. Above ground gold stock is different from the total gold reserves.

Over the past 10 years, the value of gold demand in India has increased at an average rate of 13 per cent a year, outpacing the country's real GDP, inflation and population growth by 6 per cent, 8 per cent and 12 per cent, respectively.

The country at present has one of the highest savings rates in the world, estimated at around 30 per cent of total income, of which, 10 per cent is already invested in gold.

In this backdrop, the setting up of a national gold bank (NGB) assumes importance. Such a bank, if set up, can gradually pave the way to have stock of surplus gold in the economy in one place.

Over a period, the bank can have a say in controlling the volatility of gold prices in the domestic market, in particular, and can also act as a regulator of bullion market which is fast expanding, with international linkages.

The bank can engage in the purchase and sale of the yellow metal and act as a trustee/pledgee for banks/institutions having gold surplus, and also keep gold for safe custody or raise funds against the precious metal to meet their liquidity constraints.

As it is, the rate of deposit growth of commercial banks has been on the decline for the past few months and the investments in gold and real assets have been on the increase.

Generally, Indians have a weakness for gold and the demand for gold is price insensitive. It is all the more so when the real rate of interest on deposits has been negative or insignificant compared to the rise in gold price

The banking system has been facing liquidity problem off and on and raising funds from the market poses a series of difficulties. Funds are becoming a major constraint to develop infrastructure. It is time for banks to find alternative sources of funds to continue to be vibrant in business and provide the well-needed support system for economic growth. One way to attract deposits is to encash the idle gold. In this context, the revival of the gold deposit scheme (introduced in 1999) has to be seriously considered. According to WGC, India's annual gold consumption is around 800 tonnes and gold reserves could be around 25,000-30,000 tonnes.

The banks should be encouraged to accept gold as deposits and create fixed deposits linked to gold keeping very good margin. To start with, for instance, for pure gold worth Rs 50,000, the banks can create a fixed deposit for Rs 25,000 for a minimum period of three years and give an interest rate of, say 3 or 4 per cent a year. The banks can keep this gold as trustees. The investor earns interest on the idle gold while also securing his holdings under the custody of the bank.

For the banks, they get gold as deposits and they should be in a position to raise funds against the security of gold. The borrowing power of the banks increases in the market and they will have required resources to expand credit portfolio.

The banks should be given exemption from SLR for these deposits against the gold, as there is no additional liquidity created and the liabilities are fully backed by the gold they hold. However, the borrowings that these banks subsequently make against the gold can attract SLR and the advances they create can attract usual capital adequacy norms.

The advantages of setting up a National Gold Bank are many. The bank can make bulk purchases from the open market including the international market and act as a store house of gold for banks and institutions. The banks and institutions holding gold can sell it to the National Gold Bank or raise funds by pledging it. This will bring down banks' borrowings from the RBI. The National Gold Bank can have a refinance arrangement with the Reserve Bank of India till such time it stabilises its operations. Money market operations can be better regulated and the black money component may gradually come down if the gold held in the country is brought under regulated market.

Over a period, when the gold bank's operations get fully stabilised, the influence of gold in the market becomes predictable and circulation of hard cash and black money gets reduced, then framing of monetary policy and transmission of signals to financial markets by the Reserve Bank will prove to be easy.

For the banks, such an arrangement provides opportunities to expand their business in terms of deposits, borrowings and loans.

For the economy, benefits out of a gold bank are tremendous. The idle gold turns into cash to expand economic activities particularly the infrastructure and the gold and financial markets widen. It facilitates minimising generation of black money as the gold becomes a declared asset with the banks.

Once a large quantum of gold comes under the custody of the gold bank, Government's fiscal policy and fiscal deficit can hope to have a totally different scenario than what is today. The image of the economy in the international market will improve. It will be a win-win situation for banks, investors, the economy, and the Government.

Virupaksha · Post by **Virupaksha** » 24 Jan 2011 04:27

India shouldnt touch these kinds of proposals with a barge pole.

Another proposal from the license raj era. Why should individual banks be forced to trade this scamming bank?

shyam · Post by **shyam** » 24 Jan 2011 07:48

Who is behind this bank proposal?

shynee · Post by **shynee** » 24 Jan 2011 08:09

A pointless reshuffle

Tavleen Singh

Rarely have I felt as sorry for the Prime Minister as I did last week when he supposedly reshuffled his Cabinet. I use the word ‘supposedly’ because it was an exercise so pointless that we would not have missed it if it had not happened. And, yet to effect these few meaningless changes we saw the Prime Minister trot off to 10 Janpath for long hours of consultations with the woman who is our real prime minister. It is important to remember when we wring our hands over Dr Manmohan Singh’s timidity that he has a boss and that Sonia Gandhi has the most enviable political job in the world. She has immense power without any accountability. Everything that goes wrong is blamed on poor old Dr Manmohan Singh who after a long and illustrious career in government will now end up being remembered as the man who failed to improve governance at a time when India needs it more than anything else.

We have a booming economy despite the insidious return of a licence raj. We have a middle-class that is bigger than the population of most countries and half of all Indians are under the age of 25. If we had a semblance of modern governance, we could overtake our old rival China in less than two decades. The Prime Minister knows all this but ever since he started his second term he appears to have decided to do nothing to improve the wretched lot of the vast majority of Indians who are poor, illiterate and living in sub-human conditions only because of bad governance.

Infrastructure, urbanisation and agriculture are other areas that need an entirely new approach. If we do not invest heavily in building new roads, ports and railway services, we will continue to lag hopelessly behind China and most of Southeast Asia. If our cities continue to develop into vast slums (Mumbai and Bangalore are already halfway there) the best healthcare in the world will not prevent the spread of preventable diseases. This is without taking into account the increasing numbers that are moving from villages to urban centres. The social unrest that is inevitable requires a piece in itself as does agriculture reform.

What is the point in talking of these things though when we are not at all sure if we are being governed by people we elected or by people appointed by Soniaji to her privy council. Since the last general election we have seen the National Advisory Council take more decisions than the Government of India. It is to Soniaji’s private Cabinet that we owe almost every major policy decision taken in the past two years. This is why it is probably a waste of time criticising the Prime Minister’s feeble attempts to stir the dead roots of his government with a reshuffle.

Extraordinary as it sounds, the Government of India has for the first time in Indian parliamentary history become irrelevant to India. We can only hope that the NAC recognises quickly that it needs to go beyond poverty alleviation programmes to matters of real governance. It could be our only hope.

Neshant · Post by **Neshant** » 24 Jan 2011 09:50

ravi_ku wrote:India shouldnt touch these kinds of proposals with a barge pole.

Another proposal from the license raj era. Why should individual banks be forced to trade this scamming bank?

The purpose of owning gold is to keep the govt and banking crooks out of your pocket.

Handing off your gold to con-men at some bank to play paper games is a silly idea. You'll never see that gold when you need it most.

Theo_Fidel · Post by **Theo_Fidel** » 25 Jan 2011 12:32

Does this mean a deficit reduction, ergo an inflation reduction.

http://www.bloomberg.com/news/2011-01-2 ... mates.html

India’s Tax Collections May Be 4.9% More Than Budget Estimates

India’s tax collections in the year ending March 31 may exceed Finance Minister Pranab Mukherjee’s estimates by 4.9 percent as economic expansion close to 9 percent fuels revenue growth.

The government may receive as much as 7.84 trillion rupees ($172 billion) in taxes in the financial year, Revenue Secretary Sunil Mitra said in New Delhi today, surpassing an earlier target of 7.47 trillion rupees. Receipts from direct taxes may outperform budget estimates by more than 4 percent, he said.

Net direct tax collection for the nine months ended December rose almost 20 percent to 2.99 trillion rupees, while indirect tax receipts increased 43 percent to 2.4 trillion rupees, according to the finance ministry.

Theo_Fidel · Post by **Theo_Fidel** » 25 Jan 2011 12:38

Right to script..

Wasn't there some folks complaining about how primitive and unproductive Indian agriculture is.. ..take that you..

Just to give you some comparison, in the US Midwest the cheapest onion, the Georgia yellow is now retailing for $1.69 before tax per pound. You can get a 3 pound bad for $3.99. Or about Rs 180 per kg in India. This is actually quite cheap for the US. Due to the high cost of storage and shipping I have never seen the price drop below $0.89 per pound or About Rs 100 per kg. Got to love the price stability though right.

http://www.indiainfoline.com/Markets/Ne ... 5063029202

Onion prices crash...Farmers want export ban lifted

At Lasalgaon, India's largest wholesale onion market in Nashik, prices of the bulb suddenly crashed from last week's Rs. 35 to Rs. 40 a kilo to, Rs. 13 to Rs. 15 a kilo on Monday.

Common man in India can now enjoy their onions without shedding any tears over its exorbitant prices as the humble bulbs have become cheaper.

At Lasalgaon, India's largest wholesale onion market in Nashik, prices of the bulb suddenly crashed from last week's Rs. 35 to Rs. 40 a kilo to, Rs. 13 to Rs. 15 a kilo on Monday.

Prices of the bulb fell by about Rs. 1,000 to Rs. 1,500 per quintal. The Lasalgaon Agriculture Produce Market Committee (APMC) wholesale market opened yesterday with onions fetching around Rs. 2,000 to Rs. 2,400 per quintal.

Dileep · Post by **Dileep** » 25 Jan 2011 14:42

I had posted some time ago that I know a surefire way to reduce the price of any commodity. I just buy them!

Now you know the reason for the downward trend of gold this month. :devil:

Ambar · Post by **Ambar** » 25 Jan 2011 15:08

Theo_Fidel wrote:Right to script..

Wasn't there some folks complaining about how primitive and unproductive Indian agriculture is.. ..take that you..

Just to give you some comparison, in the US Midwest the cheapest onion, the Georgia yellow is now retailing for $1.69 before tax per pound. You can get a 3 pound bad for $3.99. Or about Rs 180 per kg in India. This is actually quite cheap for the US. Due to the high cost of storage and shipping I have never seen the price drop below $0.89 per pound or About Rs 100 per kg. Got to love the price stability though right.

http://www.indiainfoline.com/Markets/Ne ... 5063029202

Onion prices crash...Farmers want export ban lifted

I get 5 lb bags at the local Korean market for around 3.50$ + tax. I guess it comes to around 77 Rs. And this has been the price atleast from the past 5-6 years. Yes, lately the price of several dry food commodities have been surging but vegetables,meat and fruits are still well within the reach of common man here. Can we say the same about India? Why do a == with TFTA prices when we have a per capita GDP that is almost 1/40th of yankee land?

From what i've heard, the retail prices of Onions are still hovering about 35 to 40 Rs in southern India. Hopefully the end consumers will benefit from the drop in price. Unfortunately the ban on rice exports did not bring its prices down to 12 Rs/kilo as it was in 06, and i doubt it if export ban or lift on ban will do much difference to onions as greedy retailers and middlemen will ensure the prices remains high.

Vikas · Post by **Vikas** » 25 Jan 2011 18:51

^^ Todays onion price is Rs. 40 at local Reliance fresh. Where do these price crash and crying farmers happen ?

Vipul · Post by **Vipul** » 26 Jan 2011 02:20

India with $1,000 per capita income ready for growth marathon.

ramana · Post by **ramana** » 26 Jan 2011 03:27

Theo,
Isn't this (onion proce effect) the bull whip effect in an Indian way?

Theo_Fidel · Post by **Theo_Fidel** » 26 Jan 2011 05:01

As I said earlier this production is coming with no relation to the price. You could consider it as a supply side (Indian

) Bull whip maybe. Not a demand side one.

The majority of Indias onion harvest apparently happens 3 times a year. Around July, Around October and Around February/March pretty much like clockwork. These harvests typically cover the next 4 months. So even if the price of onion was Rs 5 the March harvest is coming any way.

This year Octobers harvest was damaged. So the shortage till now. The crop coming now would be planted the same irrespective of price.

Singha · Post by **Singha** » 26 Jan 2011 06:40

passing by the bangalore railway station yesterday, could see small trucks carrying away sacks of very good quality clean-skinned onion. hopefully prices will come down similarly here.

Theo_Fidel · Post by **Theo_Fidel** » 26 Jan 2011 09:13

http://timesofindia.indiatimes.com/city ... 363889.cms

Onions hit Rs 4 mark in Nashik

svinayak · Post by **svinayak** » 28 Jan 2011 02:50

Emerging nations fed up with West lecturing: Premji
Press Trust of India, January 27, 2011 (Davos)

In a harsh criticism of the US 'restrictive' policies, the chairman of India-based Wipro, Azim Premji, told the gathering of global CEOs that the emerging economies are "more than fed up" of being lectured by the west to open their economies without any reciprocity.

"I think they (emerging economies) are fed up of being needled for opening their economies," Premji said at the annual meeting of the World Economic Forum.

He particularly expressed his disappointment with the US seeking more market for its goods in the developing economies, while putting restrictions on its import of services. The liberalisation of goods and services was being treated differently.

When asked whether the Asian economies are "fed up by the lecturing" by the west, the chairman of India's third largest software exporter said: "more than fed up".

"People don't seem to equate, liberalise both products and services. If you are talking about global trade -- it is products and services. You cannot have one standards of opening up economy for emerging countries to products and contrary (for the others) particularly the US, which has put all sorts of restrictions on services. This cannot be one way traffic," Premji said.

The Indian IT industry, which gets $50 billion of its revenue from the global outsourcing, mainly from the US is peeved at a string of restrictions by the American authorities for service imports.

These include hiking the visa fee for professionals. On the contrary, India has given deals worth $10 billion to the US which will create jobs for 50,000 Americans. Services are of key interest to India, as they provide about 55 per cent of its Gross Domestic Product.

Read more at: http://profit.ndtv.com/news/show/emergi ... -138109?cp

Nihat · Post by **Nihat** » 29 Jan 2011 13:54

un-regulated FII magic

Investors lose Rs 11,000,000,000,000 in stocks since Diwali

Vipul · Post by **Vipul** » 31 Jan 2011 20:55

Indians get richer: Per capita income at Rs 46,492.

Per capita income of Indians grew by 14.5% to Rs 46,492 in 2009-10 from Rs 40,605 in the year-ago period, as per the revised data released by the government today. The new per capita income figure estimates on current market prices is over Rs 2,000 more than the previous estimate of Rs 44,345 calculated by the Central Statistical Organisation (CSO).

Per capita income means earnings of each Indian if the national income is evenly divided among the country's population at 117 crore. However, the increase in per capita income was only about 6% in 2009-10 if it is calculated on the prices of 2004-05 prices, which is a better way of comparison and broadly factors inflation.

Per capita income (at 2004-05 prices) stood at Rs 33,731 in FY10 against Rs 31,801 in the previous year, the latest data on national income said.

The size of the economy at current prices rose to Rs 61, 33,230 crore in the last fiscal, up 16.1% over Rs 52, 82,086 crore in FY'09.

Based on 2004-05 prices, the Indian economy expanded by 8% during the fiscal ended March 2010. This is higher than 6.8% growth in fiscal 2008-09.

The country's population increased to 117 crore at the end of March 2010, from 115.4 crore in fiscal 2008-09.

Theo_Fidel · Post by **Theo_Fidel** » 31 Jan 2011 21:51

Guaranteed 1% GDP growth right here!

http://online.wsj.com/article/SB1000142 ... 49474.html

India Approves Posco's Proposed Plant With Conditions

In Posco's case too, the good news has come with one significant rider. Mr. Ramesh has held back the use of more than 2,000 acres of land, almost half the total project area, pending assurances from the provincial government that tribal people don't live there or need to be compensated for loss of home and livelihoods.

Mr. Ramesh said the environmental clearance will have 28 conditions related to controlling pollution at the site, maintaining a 25% green area around the project and spending 2% of annual net profit from the plant on social welfare in the areas surrounding the site.

He added that the approval for the project was restricted to the first phase of building a four million tons a year plant with a 400 megawatt power plant and a captive port to haul raw materials and finished goods. As the company scales up the plant to 12 million tons a year, every subsequent stage would need a new set of clearances.

Posco spokesman Chung Jae-woong declined to comment on the clearance with conditions attached. "We will announce our official stance soon," he said.

Suraj · Post by **Suraj** » 31 Jan 2011 22:09

Finally! Great news to start the week

Hopefully the Arcelor-Mittal Jharkhand plant will get its clearance next.

nachiket · Post by **nachiket** » 01 Feb 2011 00:49

I'm no economy guru, but from that report, it seems Jairam Ramesh has made it his life's mission to increase red tape and bureaucratic hurdles, which are a hallmark of the Environment Ministry by 400% before he is kicked out.

Ambar · Post by **Ambar** » 01 Feb 2011 00:55

Vipul wrote:Indians get richer: Per capita income at Rs 46,492.

Per capita income of Indians grew by 14.5% to Rs 46,492 in 2009-10 from Rs 40,605 i.

Inflation adjusted it not mean much. Infact, inflation adjusted the GDP growth in China and India might not really be in double digits as they claim..

Suraj · Post by **Suraj** » 01 Feb 2011 01:16

All reported GDP growth rates are real GDP growth rates, i.e. are inflation adjusted. Nominal GDP growth rates in the case of both India and China are higher - in the mid teens.

Theo_Fidel · Post by **Theo_Fidel** » 01 Feb 2011 02:05

Pretty good showing.

ManuJ · Post by **ManuJ** » 01 Feb 2011 02:49

nachiket wrote:I'm no economy guru, but from that report, it seems Jairam Ramesh has made it his life's mission to increase red tape and bureaucratic hurdles, which are a hallmark of the Environment Ministry by 400% before he is kicked out.

The other side of the coin is that most private companies have treated environmental clearance as mere formality, and their environment impact report is a complete white-wash. In such a scenario, a minister serious about the environment and his job is bound to make life difficult for them. Corporations need to learn to have empathy for the environment, and to plan seriously about mitigating the environment impact their projects would have.

Ambar · Post by **Ambar** » 01 Feb 2011 03:36

Suraj wrote:All reported GDP growth rates are real GDP growth rates, i.e. are inflation adjusted. Nominal GDP growth rates in the case of both India and China are higher - in the mid teens.

GoI says CPI is at 9+%, China says their CPI is below 5% - these are understated thanks hedonic adjustments and dropping volatile commodities. In China's case their stated inflation is pure fiction.Overall inflation in both countries is much much higher than what's suggested by government indicators and the rate of GDP growth might well be much lower than what's being claimed.

arunsrinivasan · Post by **arunsrinivasan** » 01 Feb 2011 07:19

Deleted

amit · Post by **amit** » 01 Feb 2011 11:02

ManuJ wrote:
I'm no economy guru, but from that report, it seems Jairam Ramesh has made it his life's mission to increase red tape and bureaucratic hurdles, which are a hallmark of the Environment Ministry by 400% before he is kicked out.
The other side of the coin is that most private companies have treated environmental clearance as mere formality, and their environment impact report is a complete white-wash. In such a scenario, a minister serious about the environment and his job is bound to make life difficult for them. Corporations need to learn to have empathy for the environment, and to plan seriously about mitigating the environment impact their projects would have.

While it does seem that Jairam Ramesh has been a bit over zealous with his environmentalist tag, I suppose over the long term it may help overall growth if we keep an eye on the environment. There are two interesting posts in the China thread which discussed the environmental impact of the growth at all cost approach taken by China. I'm x-posting here as they are very relevant to India's experience.

Acharya wrote:http://www.nakedcapitalism.com/2011/01/ ... tated.html
What if China’s GDP is Seriously Overstated?
Michael Pettis has released one of his carefully reasoned posts, this one on the dark art of guesstimating what China’s GDP really is, given the notorious unreliability of its official data.

The strength of Pettis’ approach sometimes works to his advantage. He does a great job in breaking down his arguments to clear, easy to understand, step-by-step reasoning. That tends to make his posts pretty long. In this case, that meant that the part I though was most provocative came towards the end, when impatient readers might have figured they had gotten the drift of his gist and moved on.

In this one, he starts with the last GDP release, and in particular, the implications the fact that its alarmingly high investment rate continues to increase at a stunning clip. But he then turns to the rather tiresome debate as to when China’s economy will overtake that of the US, and discusses the possibility that the GDP figures touted now could well be overstated by a considerable degree:

What if China’s GDP numbers seriously overstate the true value of China’s economy?

There are at least two very good reasons to believe that they might. The first is environmental degradation. To understand why, it is worth remembering that if an individual earns $100, but in so doing destroys $100 worth of his own assets, then a strict accounting would say that he earned nothing.

The same is true with the environment…For example here is an article that came out four months ago on Bloomberg:

China, the world’s worst polluter, needs to spend at least 2 percent of gross domestic product a year — 680 billion yuan at 2009 figures — to clean up 30 years of industrial waste, said He Ping, chairman of the Washington-based International Fund for China’s Environment. Mun Sing Ho, a senior economist at Dale W. Jorgenson Associates and a visiting scholar at Harvard University in Cambridge, Massachusetts, put the range at 2 percent to 4 percent of GDP.

Failure to spend that much — equivalent to the annual GDP of Vietnam — may cost the Chinese economy half as much again in blighted crops, health costs and pollution-related expenses, He said: “The cleanup can’t catch up with the speed of pollution” if spending is less.

This article suggests that a significant portion of Chinese growth came with a destruction of value that should have been deducted from that growth. After all, if you create net $100 of chemicals, but in so doing you pollute a nearby river to the extent that future economic production associated with the river is reduced by $100 (there will be less fishing, perhaps, or less agricultural production, or less usable water, or more health care costs), then the net value you created is 0, not $100, although of course you as the polluter might earn $100 today while the rest of the country loses $100 over the future.

There is no objective way to figure out how much of Chinese GDP growth should be reversed because of environmental degradation (and in this China is simply an extreme case – most countries to a lesser extent have this problem), but there is no question that the number is big, and the result is that we overestimate China’s GDP growth today and will underestimate GDP growth tomorrow. In other words environmental degradation simply causes us to take future growth and count it today.

i bet anyone by 2020 chinese aviation industry will give US&EU duopoly a run for thei money.”

I’ve seen no improvement in the quality of Chinese fasteners in the last 20 years – they break at the slightest provocation (i.e. the use of a non-Chinese tool. Chinese tools will of course break before Chinese fasteners). Given that tens of thousands of fasteners are required to fashion an aircraft, and Chinese aircraft will undoubtedly be made with Chinese fasteners, how reliable do you think these Chinese aircraft will be? How long before a plane falls out of the sky because a 1 Yuan bolt broke? Who would be dumb enough to fly in a Chinese plane? I can’t imagine doing so myself. “Made in China” is synonymous with “Made of Shi+”. I would not bet on that changing by 2020.

And:

shynee wrote:The Choking of China - and the World by Johann Hari

I'm posting some excerpts from Shynee's link as they are relevant examples of the problems environmental degradation is bringing to China and thus holds important lessons for India:

So Watts stands in the village in Guandong province where the world’s old motherboards – yours and mine – are sent to die. There, children pick through the old computers, breaking down every reusable part, like they were the globe’s intestine. But the children sicken with lead poisoning, and develop brain damage, cancer, and kidney failure. Even when the kids get to sit in a classroom, they have to wear masks, to protect them from the mountains of garbage.

So he goes to meet the environmental activists who are trying to stop this poisoning of their children, and watches as – terrified – they are carried away to prison. (Imagine if Al Gore had been imprisoned for exposing Love Canal, and was still in solitary, and you get the idea.)

So he ventures out on a ship with an international band of scientists to save the last Yangtze dolphin – an animal that was swimming though China’s rivers 10 million years before the first human, and was a common sight not long ago. But gradually he realises he is too late. They are all dead. He says: “Man had wiped out his first dolphin? The end of a species after twenty million years felt terrifyingly momentous. This was not just a piece of news. It was even more than history. It was an event on a geological timescale.”

So he watches as the globe warms and China’s deserts stretch further and deeper with each passing year. So he stands and stares as the Himalayan glaciers – where most of Asia’s great rivers begin – melt and die, with two thirds on course to vanish by 2050.

China has 87,000 mighty steel and concrete dams, directing the nation’s water-supplies along largely man-made routes. The nation will clear away millions of human beings if they are in the way of taming nature in this way. It’s at the centre of the new China’s sense of itself: the current President, Hu Jintao, is a trained hydroengineer. It’s hard not to feel a flicker of awe: they have taken on the oldest rivers and unimaginably vast torrents of water, and for a moment, they seem to have won.

But not for long. By 1980, 2796 dams had failed, with combined death toll of 240,000 people. After the construction of the Three Gorges dam, it soon began to trigger landslides and deadly waves. The rivers feeding it were not able to flush out garbage – so the water became carcinogenic and threatened people in 186 cities. But the most startling effect followed the Zipingpu dam – which may well have caused the Sichuan earthquake.

When the plans were first unveiled to build the Zipingpu dam on an ancient faultline, many scientists warned it was a bad idea. True, the faultline had been dormant for millions of years. But, as Watts puts it: “Each time it filled and emptied, more than 300 million tons of water rose and fell. It was like a giant jumping up and down on a cracked surface. Several leading scientists speculated that the result was a reservoir-induced earthquake.” Less than two years after reservoir first filled, the Sichuan earthquake struck, killing around 68,000 people. Discussion of this question was suppressed in China. But many distinguished scientists have argued that the country’s worst recent “natural” disaster wasn’t natural as all, but a direct result of government policy.

ArmenT · Post by **ArmenT** » 01 Feb 2011 11:10

Now this is shocking news folks:
China gets Gujarat cotton cheaper than TN mills

Code: Select all

Approx. charge to move one container (150 bales) from Gujarat
    Destination         Cost (Rs.)
====================	==========
Tamil Nadu (Road)	    90,000
Tamil Nadu (Ship)       82,750
China                   22,500
Indonesia               27,250
Pakistan                27,250
Bangladesh              63,500
Turkey                  81,500

Why the extra price, you ask?

"Even if you add the cost of getting cotton to the ports at Rs 12,500 and port handling charge of Rs 12,000 for shipments to China, it still works out cheaper," said Mr Anand Poppat, Vice-President of Saurashtra Ginners Association. "By road, sending cotton to Tamil Nadu costs as much as Rs 90,000 for the same quantity," he said.

"Truckers demand higher rates since the roads are bad. Mills in South India can get cotton cheaper from North Africa than Gujarat," said Mr D.K. Nair, Secretary-General of Confederation of Indian Textiles Industry.

"Most of the mills in Tamil Nadu are getting cotton through the Shipping Corporation of India vessels. The corporation works out the cost based on road transport rates," said Mr Manickam Ramaswamy, Managing Director of Loyal Textiles. "The problem is that shipping within our ports can be done only by Indian-owned companies. The Cabotage law prohibits shipping from Indian port to another by vessels of foreign firms," he said.
...
....
"If a foreign vessel is allowed to carry cotton from Gujarat to say Tuticorin, I can get the consignment shipped for $200-300 (Rs 10,000-13,600)," said Mr Ramaswamy.

This really sucks that Indian trade is being held up by Indian shipping laws and SCI monopoly. Note that it costs more to ship to TN than to Turkey.