Indian Economy - News & Discussion 27 May 2012

[amit]

Do you really think PC/Theo/Amit do not know the basics and do not have access to the info I produced? Then why do they think the way they think? It is because they think "certain" way.

So Rama,

It all boils down to a way of thinking and in your view that way of thinking has to be your way or the highway - er in this case that means one who does no think as you do are either EJs or Dhimmis? That's interesting because that shows a lack of tolerance to other views that stems from an equal lack of confidence in self professed views, IMVHO of course.

But I wonder do you think the craving for gold is just a Hindu affliction? I mean there are millions of non-Hindu Indians around (unfortunately). I thought they had just the same craving for gold since it's cultural and not religious, am I wrong?

As regards your economic logic, I guess it says a lot that you consider RBI and other central banks buying pure gold ingots (24 carats) the same as some "middle class DOO", as somebody said, buying a 21 carat (allegedly) piece of gold jewellery from some jewellery shop.

You showed a fancy chart that you say works out to 9 per cent rate of return. Jolly good for you. But did you try to find out what purity of gold that chart is talking about? Also whether it was talking about pure gold trading or gold jewellery trading? You may be surprised but such distinctions matter.

I don't think you understand the difference between 24 carat gold bars and biscuits and 21 carat gold jewellery that the vast majority of Indians buy when they want to make an "investment" in gold.

Suraj talks about "transaction overheads and costs". What that means in simple terms in that when you pay XXXX amount of money for a piece of jewellery a certain percentage - usually arounf 5-6 per cent but at times even 10 per cent - is paid as "making charge". This amount of money is lost forever. And then the moment you walk out of the shop 15-25 per cent of the weight of the jewellery is going to be deducted when you try to sell it again. That works out to anything between 25-35 per cent depreciation from the value of money used to buy that piece of jewellery. All that needs to be factored in when you try to do a RoI on gold as an investment tool when you are buying 21 carat gold jewellery. How many middle class families realise that? Have you calculated the kind of returns you would need to get 9 per cent RoI after factoring in the depreciation? Is the value of gold (not just price in rupee terms) going up by that kind of percentage?

Sure inflation eats into the value of currency but that also holds true when you sell the gold. In monetary terms you may get a whole lot more but in intrinsic value, how much more is it worth than the amount you paid when you bought that piece of jewellery and that too after you deduct the costs I mentioned? Can you explain that to me please? And no even if I don't agree with your explanation don't worry, I won't call you a Hindu fundamentalist in the same manner you called me a Dhimmi and Theo an EJ. Deal?

The folks who actually use gold as an investment tool buy 24 carat gold and my point, which I repeated over multiple post, is that the mango Indian middle class does not have access or ability to buy and hoard 24 carat gold bars or biscuits and so they go and buy jewellery which does not give them a good return.

Just because you think there is no good investment options available in these times of high inflation does not make gold the right choice, IMO. Two wrongs don't make one right.

There I've just done it again - I've spoken like a true Dhimmi. Now waiting to be corrected by the self righteous. Jai Hind!

[RamaY]

Amit,

It is the dhimmi in you that saw social ill in the gold consumption by Indian public.

Why are you so worried about the purity of the gold, color of the gold and making charges; when the consumer is happy to pay for it? As one pays a 3x-30x premium for a luxury car, the gold consumer too is paying making charges, lower Ct and so on so s/he can consume gold as an ornament, status symbol or religious symbol.

If you want to know why Indians invest in gold, that too in a 22ct ornaments, please go ask your grandparents or parents. They will explain you what is real wealth in life.

"Just because you think there is no good investment options available in these times of high inflation does not make gold the right choice, IMO. Two wrongs don't make one right."

It is not what I think, it is what the consumer thinks matters. I presented data that proves that the consumer is right for past 20years.

Suraj thinks that trend may not work in future, then the consumer will make an appropriate decision. Even then the consumer has a right to throw his money in the sewer, if s/he prefers.

Other than making the dhimmi "social ill" comment and claiming gold-investment as inefficient, which I proved wrong, what is your contribution to this debate?

Coming to the efficient use of capital, why is it the responsibility of individual citizenry, when the Govt, RBI, Banking system, Corporations are there? You guys caught on Indian society because that is your dhimmi nature.

[arnab]

I think some folks are a bit confused here about the concepts of 'consumption' and 'investment'. High end consumer electronics or luxury cars are 'consumption' items (even though your friend may say - 'I invested in a 60 inch LED 3D smart TV'). Nobody really expects these items to appreciate over time or even maintain their value.

Same with 22 carat jewellery (which constitutes most of the gold based 'investment' of indian families). Once you try to sell them you discover the extent of depreciation built into the transaction by the store for the 'impurity' costs and the general spreads that stores maintain between buying and selling gold ornaments, you find that the inflation adjusted ROI is actually at par (or below) any of the other forms of index linked investments in the market.

Having said that, I do not support this talk about banning gold imports, simply because it should be about consumer choices. If the indian consumer feels more comfortable about holding gold (ornaments) as a supposedly store of value, it is his (her) decision and his (her) cross (trishul) to bear

[vera_k]

Gold is also a tax advantaged investment. In that, TDS is not deducted every year, and the only tax payable is long term capital gains. This goes a long way towards defraying the transaction costs.

[arnab]

Gold is also a tax advantaged investment. In that, TDS is not deducted every year, and the only tax payable is long term capital gains. This goes a long way towards defraying the transaction costs.

Correct me if I'm wrong - aren't mutual funds similarly tax advantaged? And you don't have the additional worry about the gold store cheating you on the weight of the gold?

[vera_k]

Yes, on the tax. In fact, there is no long term capital gains tax payable as well. But mutual funds in India have high transaction cost as well as recurring fees annually.

[Yayavar]

Suraj talks about "transaction overheads and costs". What that means in simple terms in that when you pay XXXX amount of money for a piece of jewellery a certain percentage - usually arounf 5-6 per cent but at times even 10 per cent - is paid as "making charge". This amount of money is lost forever. And then the moment you walk out of the shop 15-25 per cent of the weight of the jewellery is going to be deducted when you try to sell it again.

Why is the 15-25% of weight to be deducted?

[amit]

Why is the 15-25% of weight to be deducted?

[/quote]

I think you need to ask the jewellery stores why. Alternatively see Arnab's post where he's explained the hidden but built in cost of acquiring gold jewellery as a form of investment.

[amit]

It is the dhimmi in you that saw social ill in the gold consumption by Indian public.

Aha Rama but you don't understand. I'd rather be dhimmi than be an ignoramus sprouting self-righteous nonsense. What to do we are like that onlee.

More seriously where did I say I see gold consumption by Indian public (I'm thankful you have dropped your Hindu stance and included the broader Indian public) as a "social ill"? I think in your agenda driven posting you are mixing up facts. I said gold (jewellery) is a horrid investment option; it takes a pretty convoluted mind to equate that with "social ill"?

Why are you so worried about the purity of the gold, color of the gold and making charges; when the consumer is happy to pay for it? As one pays a 3x-30x premium for a luxury car, the gold consumer too is paying making charges, lower Ct and so on so s/he can consume gold as an ornament, status symbol or religious symbol.

I think we were talking about the "middle class DOO's" fascination with gold. I didn't know that the same customer group also buys luxury cars. Wow the UPA government must have done some good over the past 10 years or so to put so much money in the hands of the middle class ( )!

More seriously as Arnab said you are confusing "consumption" with "investment".

If you want to know why Indians invest in gold, that too in a 22ct ornaments, please go ask your grandparents or parents.

Oh yes I've done that and from a social/emotional perspective I can understand and support the compulsion that Indian families have in buying gold jewellery. However, as far as my understanding goes we were discussion the more dispassionate subject of gold jewellery as an investment option in these times of high inflation. And when you are discussing that you have to factor in the overhead costs. That what I did.

On the other hand you present a chart which discusses gold as an investment option with 24 carat gold bars and then say hey since you can get 9 per cent return there then you should get the same when you buy 22 carat (sorry for that 21 carat in my previous post, that was a typo, my apologies) gold jewellery! Woa!

They will explain you what is real wealth in life.

Boss you would do well to spare others of such homilies. When I want such spiritual education (and I do often) I go to my mother's Guru Dev. He has no pretensions and what he says comes from deep spiritual understanding. And that is why I can understand pretentious bulls**t from a mile away.

It is not what I think, it is what the consumer thinks matters. I presented data that proves that the consumer is right for past 20years.

First things first. You did not present data showing that the consumer has been right fro the past 20 years. Like I explained several times you cannot take RoI from pure investment in 24 carat gold and ascribe the same values to 22 carat gold jewellery. If you don't understand this simple factoid then there's really not much left to discuss.

As regards what the consumer thinks. You are right the consumer will do what he thinks is the best. However, that doesn't necessarily make the decision right. It's like saying that since I choose to be chain smoker, it must be OK for my body health wise.

Other than making the dhimmi "social ill" comment and claiming gold-investment as inefficient, which I proved wrong, what is your contribution to this debate?

And just what exactly is your contribution to the debate, apart from name calling and abusing other posters? I'm sure there's a great continuum or big picture that connects all your posts. Unfortunately it's not visible to ordinary posters.

Coming to the efficient use of capital, why is it the responsibility of individual citizenry, when the Govt, RBI, Banking system, Corporations are there? You guys caught on Indian society because that is your dhimmi nature.

Again another typical case of misunderstanding or misconstruing what others are saying. Nobody said its the responsibility of the individual citizens. It is the responsibility of the government and in this respect the current UPA government has made a hash out of things, though I personally think the present budget at least is a bit better than the previous ones in as much it at least makes a commitment to cut the budget deficit to 4.8 per cent. (Achieving that is another matter altogether).

You know calling others dhimmi or EJs at a drop of a hat is similar to Hakim jis "Open fly, torn shirt" argument. I leave you figure out why.

[amit]

Suraj,

Before you intervene in this stupid name calling contest initiated by RamaY, please note that I'm not going to respond any more. There's no point as dialogue and exchange of opinions are no longer possible and I've explained by position.

[Yagnasri]

1. Have gold as currency. 100% gold backed and with GOI mints issuring coins. Make one gram say 1000 units (which makes is near to three rupees of today) and issue notes.

2. With draw all present notes in one or two months by first withdrawing 500/- and 1000/- notes with little or no time and banks demending KYC on the people who are depositing these notes. Most of the black money is gone with that.

3. 1% wealth tax on all landed property with no except to the agricultural land. Let the tax colleted on agriland be given to respective panchayath in full. Otherwise no exception for any land, buildings, facotries. PSU units inclduing railways. Only GOI and states shall have excemption. Even religions properties which are not in Governament control shall be taxed. Those in Governament control like endoment department shall be paid by the governament or it shall let go the control and then tax it. Actual palces of worship like temples, chuches, masids can be excepted with strict controls that none shall be rented even in part. Within a coulple of years entire national debt will be written of with this.

4. Increase income tax limit to 5,00,000/- as the people are already paying wealth tax.

With these 4 steps we will bring all the gold into productive use, kill speculative real estate and tax properties accumilated by rich, and rationalize direct tax structure. May be mad ideas of mine. I do not know.

[RamaY]

Buying gold is due to the undue importance the yellow metal has in our society. Buying gold is also due to bad investment decisions taken with the mistaken idea that gold is a safe haven investment.

Now

[amit]

^^^^^^
So undue importance is = social ill?

Man Oh man. I do hope you realise how idiotic that sounds. But then I guess an agenda driven poster will clutch at straws.

Now

[Yagnasri]

From times immomorial gold is the currency for almost all the nations. Till Kanyes started this stupidity of paper money it is only gold standered money which ruled the world economies. Entire indian currency cheating by making silver rupees and killing gold based standered currency by brits is part of the loot plan of brits. You can not kill the cultural ideas of people who trust the value of gold more than value of paper money. It is for the GOI and the so called Economics professionals to prove that paper money is worth keeping in the first place. When you make paper money which can be trusted by people not to lose its value then people will save wealth in paper money. otherwise why they should???

Please read Ramaswamy is Indian Banking and Finance written in 1917 about the entire gold standered issue and who brits looted indian wealth by currency manipulation.

By the way who is RBI or any central bank to decide what people shoould consider as wealth???

[RamaY]

A Telugu article on Cash Transfer Scheme and workings of Aadhar cards
http://news.suryaa.com/opinion/edit-page/article-126332

Will post the summary later. If anyone wants to translate, TIA.

[Yayavar]

Why is the 15-25% of weight to be deducted?

I think you need to ask the jewellery stores why. Alternatively see Arnab's post where he's explained the hidden but built in cost of acquiring gold jewellery as a form of investment.[/quote]

Amit thanks. but it is a non-answer - I still dont know. I dont deal in gold and have only bought a gold coin as gift since i was instructed to . Arnab's note is instructive but does not tell about 15-25% deduction. Am interested only because it is something I never knew and wonder if it a direct deduction or you are implying that various costs/fees amounts to it being equiv to 15-25% deduction.

[svinayak]

By the way who is RBI or any central bank to decide what people shoould consider as wealth???

Can you add politicians also in this list and shout out loud

[RoyG]

Another interesting chart.

It also obvious that what is causing problem is the price of gold. It has inflated out of control saddling us with a bigger and bigger bill. Just 6 years back our import bill would have been just $25 Billion for the same amount of gold. Demand and price appear to have decoupled. This can only be called a gold bubble.

Gold reflects the value of the currency. Gold during the 80's bought you the same amount of stuff as it does now. What is happening is inflation. Again you tackle the symptom rather than the problem.

[Prem]

Indian economy expands more than China in February: HSBC
http://economictimes.indiatimes.com/new ... 828156.cms

EW DELHI: India expanded at a faster rate than China in February even as emerging market economies witnessed a moderation in economic growth, an HSBC survey said today. The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell from 53.8 in January to 52.3 in February. This is the lowest figure since August 2012 and indicated a moderation in economic growth in global emerging markets. During February, the HSBC composite index for India, which maps both manufacturing and services sectors, stood at 54.8, whereas for China it was 51.4. An index measure of above 50 indicates expansion. Among the largest economies covered, growth rates slowed in China, India and Brazil in February, but India expanded more than China. "Emerging Market economies continued to expand in February but the pace of growth lost steam. The slowdown appears to be broad-based across manufacturing and services, with BRIC activity moderating after a promising start to the new year," HSBC Chief Economist, Central and Eastern Europe

[Suraj]

First we become the largest rice exporter in 2012. Now we're ramping up wheat exports to handle a production glut. Our dry cargo port capacity is backed up from export volume. It seems really odd that CSO data reporting stagnant agricultural sector growth with the two primary crops with the largest share of agricultural output both had bumper crops.
India to prioritise wheat exports to slash grain mountain

India will prioritise exports from overflowing government wheat stocks over private grain sales, a senior farm ministry official told Reuters, if it goes ahead with extra shipments that could face bottlenecks on railroads and at ports.

India is struggling to rein in a record stockpile of grains as another bumper harvest looms and has already approved 4.5 million tonnes of wheat exports to reduce the risk of crops rotting in the fields.

Government sources said on Tuesday that India could allow an extra 5 million tonnes of wheat exports soon -- more than doubling volumes this year to around a third of the shipments of top exporter the United States.

"Wheat exports are a priority issue as the new harvest is about to begin later in the month," said the farm ministry official, who declined to be named as he was not authorized to speak to the media.

If additional wheat shipments are approved, more Indian supplies could pile pressure on benchmark Chicago wheat prices, which last week fell to an eight-month low on a better outlook for the U.S. crop after last year's drought.

But some industry experts said wheat exports could prove difficult given congestion at ports which are already handling hefty private shipments of grains such as rice and oilmeal.

Industry experts said the government would need to raise the number of ports allowed to handle grains to avoid bottlenecks, while a lengthy tendering process would also be an obstacle.

"It is nearly impossible for the government agencies to export 9.5 million tonnes wheat. Their tendering process is very time consuming. India never exported this much," said a Mumbai-based dealer with a global grains trading firm who declined to be named.

Rice and oilmeal are currently only being exported by private traders. Like wheat, the rice crop has been abundant and India became the world's biggest rice exporter in 2012.

In March, farmers in India will begin to harvest the sixth consecutive wheat crop expected to exceed demand, and when threshing is over in June the government's combined wheat and rice stocks are set to hit 100 million tonnes. That is about a fifth higher than the volume in storage a year ago.

The grain mountain is worth about $30 billion and the nation of 1.2 billion will soon have enough wheat piled up to feed its poor for a year.

[Gus]

reg jewelry gold - there is 'making charges' typically inflated, and is not recovered when you sell.

there is 'wastage' - this is the gold lost in the process of making the jewelry. This is also inflated, if that is charged at 5%, then you are paying for that too, but not getting that 5% gold. This is also not recovered when you sell/pawn etc.

Apart from cash buying, gold schemes are all the rage in TN, where you pay some money every month and at the end of the term, you get to buy gold at a discounted rate and so on..all sorts of schemes are out there to mesmerize your shq and grab your money.

Heck, in kanjipuram, there was a scheme in a temple that if you deposit some regular money X, they will do the yearly puja that costs Y

[Theo_Fidel]

How can folks say 9% interest is not a good return on investment. WPI including fuel and food is 7.6%. Every ram & rahim gold jeweler comes on tv and newspapers and spreads the canard that gold is the best investment there is and everyone laps it up like it is pure truth. It is untruth marketed relentlessly to the folks. I got the shock of my life this time over how relentless the marketing of gold is and how the other side of the story is completely wiped off. It is very much a marketing gimmick not unlike the housing bubble that folks went along with as well. a few years back it was the chit fund insanity, remember how that ended.
------------------

RamaY,

Who thinks this is new and revolutionary tactic is mistaken about that as well. Here is what Arendt said about it in "The origins of Totalitarianism." back in the 1950's. It a good read if very dense. RamaY, strongly recommend you read it.

"One of the great advantages of the totalitarian elites of the twenties and thirties was to turn any statement of fact into a question of motive."

Note she said elites not regimes, this was the true attraction.

[RamaY]

Theo

{deleted}

You want to discuss whether gold is a sound investment option for common public, then do just that. The moment you bring social aspects, you will be given an answer to that too.

{deleted}

[vera_k]

How can folks say 9% interest is not a good return on investment. WPI including fuel and food is 7.6%.

The average consumer deals with CPI, not WPI. Even social security benefits are indexed to CPI, not WPI.

The continuous scams in Indian financial markets may also have something to do with the move to holding gold. Essentially, securities and deposit insurance is weak, and regulators do not move to seize control until GoI itself is duped by the offending party.

[Aditya_V]

The solution is curb Govt spending and defecit and revenue leakage through 2G, coalblocks and not by increasing interest rates.

[RamaY]

Suraj,

Why didn't you delete the moralizing Advise of Theo? Are you being secular?

[Suraj]

Please feel free to report posts where he tells you to go do something, as opposed to just posting his own general opinions (which you clearly violently disagree with). Your post contents were deleted because you continued wagging your finger at him.

You can attack someone's position without attacking the person - as you just did with your laughable accusation at me, which I will not even bother to answer you to. If you cannot debate without making it about the person posting, please keep away from posting - you're being a tiresome, disruptive troll who takes others disagreeable positions personally and attacks them instead of the contents of the post.

[RamaY]

A Telugu article on Cash Transfer Scheme and workings of Aadhar cards
http://news.suryaa.com/opinion/edit-page/article-126332

Will post the summary later. If anyone wants to translate, TIA.

OK Here are key points...

1/ While the Govt reports claim that only 27% of the population is BPL, the Abhijit comittee setup by the planning commission put this number at 80%

2/ The colonial rulers as well as post-independence govts put in place some poverty alliviation programs to give some relief to these sections. But these measures are resulting in increased poverty than solving this problem.

3/ These subsidy programs, over period, became electoral schemes that are meant to keep a good portion of the public to look for govt support instead of leading to fundamental restructuring of the social economy.

4/ The colonial economic powerhouses are supporting such programs so the people do not demand core economic reforms in the country.

5/ The colonial nations first introduced these social security schemes (in early 1900s) which are followed byt he developing world. Later these programs have become a burden on national economies.

6/ Now the colonial economic centers want to divert the funds meant for these social security schemes back in to the hands of market players instead of leaving these funds in non-market sectors.

For example in Civil Supplies model the food/energy sources are collected by the govts and are distributed to BPL public. There is no/little involvement for market forces in this model.

In the new Cash transfer scheme, the money is given directly to BPL families, and from there it enters into market.

Now market forces can access this money so they can make profits on this aspect of economy, which was not possible before.

For example the overall subsidy economy is estimated to be Rs 300,000 crores per year. Now this amount will be added to market revenues unlike before. Assuming a 30% profit/interest/commission rate, the market powers will get additional Rs 100,000 crores as their profit.

Now that FDI is allowed in Retail sector, ~$60B tax money is pumped back into economy so the multinationals can skim at least $20B in profits per year.

7/ In order to sell this idea, a concerted propaganda is started. It is said that all these subsidy programs are riddled by corruption and the govt employees, agents and middlemen are benefiting from this program and not the poor families.

8/ The main goal of this cash transfer scheme is to move the social subsidy programs from Govt realm to market realm.

9/ It is estimated that in the first phase the govt can save Rs 15,000 crore on Gas/Kirosene subsidies. That means the poor indians will end up paying this much amount after discounting the cash transfer they will receive.

10/ in 2011 this cash transfer scheme is experimented in selected districts. Kirosine program is tested in Kotakasim Taluk, Alwar Dist, Rajastan; Gas program is tested in Mysore dist, Ktaka; rice scheme in East Godavari dist in AP etc.,

In jarkhand 18,893 people got bank accounts thru Aadhar card compared to 1,74,000 subsidy beneficieries before. Even then only 4000 people got money deposited in thier accounts.

Alwar dist, Rajasthan people demanded that this cash transfer scheme should be cancelled, after realizing the real affects of this scheme.

11/ In AP when cash transfer scheme beneficieries purchased Kirosene at Rs45/ltr and applied for cash transfer, the got only Rs30/ltr that too after 1year.


12/ Currently ~9 Crore adhaar cards are being prepared per year. It will take 10 years for all Indians to receive their Adhaar cards and get proper checks and back accounts setup on that basis.

One estimate puts the govt savings due to this intentional process delays at Rs 20,00,000 Crores in these 10 years.

The idea is to reduce the subsidy beneficiaries to 10 crore indians using this Adhaar card scheme.

13/ Currently there are 10 crore bank account holders in 1,47,000 bank branches. 110 crore indians do not have bank accounts at this point.

If we assume all indians have Adhaar cards on this day, it will take ~10,00,000 new bank branches which can take nearly 10 years for this infrastructure to get in place.

This issue came up in Alwar Dist, Rajasthan. When they tried to open 25,843 bank accounts based on Adhaar card, they could open only 13,458 accounts in 1 year.

14/ When govt recommended Banks to open 314 new branches in East Godavari dist of Andhra Pradesh, the banks declined the request saying they cannot open new branches without proper income and just for Adhaar and cash transfer schemes.


15/ It is estimated that the consumer prices risen by 35% just based on the rumer of Cash transfers. It is estimated that the consumer prices will increase by 100% once the cash transfer scheme goes live nationwide.

This 100% profits go to market forces, and to FDI in retail.

Suraj: I do not believe in reporting posts, so I am sorry. I will attack the religious/anti-hindu motives of the individuals every time it shows its head. "One of the great advantages of secular dhimmis of contemporary India is to turn any issue into an Indic social ill".

[Suraj]

No problem. You'll earn a warning for your personal attacks going forward.

[RoyG]

(LEAD) S. Korean central bank buys more gold in Feb.
SEOUL, March 6 (Yonhap) -- South Korea's central bank said Wednesday it increased its holding of gold in three months in February in a bid to diversify the portfolio of its foreign exchange reserves worth more than US$320 billion.

The Bank of Korea (BOK) said it bought 20 tons of gold, raising the central bank's gold holdings to 104.4 tons valued at US$4.79 billion as of end-February.

The move marked the BOK's fifth purchase of the yellow metal since July 2011 when the bank bought gold for the first time in 13 years. It also bought gold in November 2011, July and November 2012.

"As the gold purchase aims to diversify the foreign exchange portfolio over the long haul, gold prices' short-term volatility have not been considered," said Lee Jung, the head of the BOK's investment strategy team.

Lee declined to comment on the purchasing prices and future buying plans, citing the possible impact his statements might have on the market.

The BOK's move came as the economic slowdown and quantitative easing by advanced economies make gold attractive as a safe asset.

But its volatile prices are seen as an investment risk, indicated by the recent trend that gold prices fell around 12 percent as of end-February from their record high of near $1,800 per ounce in October 2012.

The BOK estimated that its additional purchase would put South Korea at the 34th spot in the world in terms of gold holdings, up from 36th at the end of 2012.

The central bank has been making efforts to diversify its foreign reserves by reducing the weight of its U.S. dollar-denominated assets. Gold bullion accounted for 1.5 percent of the total reserves as of end-February, up from 1.1 percent the previous month.

Despite the gold purchase, South Korea's foreign reserves declined last month from a record high of $328.91 billion in January, the first fall since May 2012.

The foreign reserves stood at $327.4 billion as of the end of February, down $1.51 billion from the previous month as a strong U.S. dollar drove down the conversion value of non-dollar assets, the BOK said.

Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.

The euro fell 3.2 percent to the dollar last month while the British pound depreciated 4 percent per the greenback, it added.

As of the end of January, South Korea was the world's seventh-largest holder of foreign exchange reserves.

http://english.yonhapnews.co.kr/busines ... 1320F.HTML

[Suraj]

Looks like another year of strong crop production coming up:
India may avoid drought for fourth straight year: expert

India may avoid a drought for a fourth straight year as the El Nino weather system looks unlikely to impact monsoon rains, a leading forecaster said on Thursday, promising yet another bumper grains output in the Asia's third-biggest economy.

El Nino was a factor in India's last severe drought in 2009 when the country had to import sugar, pushing global prices to 30-year highs.

It is associated with warming of the sea's surface in the Pacific Ocean and can cause widespread drought in the Indian sub-continent that results in lower grains output for one of the world's biggest food consumers and producers.

"El Nino is now at a neutral phase and a review about its emergence with associated impact over the Indian sub-continent will be done during the second half of April," D.S. Pai, the lead forecaster of the Indian weather office, told Reuters.

The World Meteorological Organisation will review the chance of El Nino's emergence for this year's monsoon at a regional summit in Kathmandu, where Pai will present the Indian weather office's maiden perspective about the annual summer rains.

"If this year's monsoon is fine, then we can produce another record year of food grain production," Farm Minister Sharad Pawar had said on Wednesday at a conference.

[amit]

It's interesting that in previous years, no drought meant a good crop and that resulted in better growth and lower inflation. The cycle hasn't been repeated over the past few years. I think that's measure of how much of screw up Pranab Da (with blessings from higher up, of course) did during his latest tenure as (Socialist) FM.

Sigh!

[harbans]

Will Oppose FDI till our last breath: BJP

[amit]

Will Oppose FDI till our last breath: BJP

From the above:

Other senior leaders who attended the rally were BJP chief Rajnath Singh, prominent party leader Murli Manohar Joshi, Delhi BJP chief Vijay Goel and Communist Party of India (CPI) leader A B Bardhan.

I'm always amazed at the amount of common ground there is between the right and left in India when it comes to economic liberalisation. This has been so from the time of the Bombay Club in the early 1990s.

Arun Jaitley should be asked, that given the mandi system and the middle man, just how much of "free market" of choice small farmers have when they sell their produce? And did he talk to the small farmers or just to the BJP's support base of mandi thekedars?

I just hope this will not be the signature approach to the economic liberalisation when and if the NDA comes to power in 2014. One thing that gives me hope is Modi's ambivalent stance towards this ridiculous opposition to retail FDI and, of course, GST.

[RoyG]

Will Oppose FDI till our last breath: BJP

FDI or no FDI in retail won't make a big difference.

[amit]

Will Oppose FDI till our last breath: BJP

FDI or no FDI in retail won't make a big difference.

That's a fair enough comment. Market forces will decide the winners and losers. But that begets the question: Why is the BJP getting its chaddis in a twist over it? It's not as if Walmart, Tesco and others are rushing in with the purse strings open.

Sorry in this case they sound as shrill as Mamata Didi.

[Suraj]

The title is terribly misleading. Of course they're opposed to FDI in retail as a polltime compulsion. It's also a good political move on their part to not make the left reflexively against them from an alliance perspective. For all their 'computer chips, not potato chips!' bluster last time around, the NDA were still the ones who forced through greater dissolution of fiscal power to states and raised our savings GDP from the mid 20% upto the 30% level, which enabled an entire decade of 7%+ growth.

[amit]

The title is terribly misleading. Of course they're opposed to FDI in retail as a polltime compulsion. It's also a good political move on their part to not make the left reflexively against them from an alliance perspective. For all their 'computer chips, not potato chips!' bluster last time around, the NDA were still the ones who forced through greater dissolution of fiscal power to states and raised our savings GDP from the mid 20% upto the 30% level, which enabled an entire decade of 7%+ growth.

Suraj,

I agree with the last part of your post about savings and devolution. However, my worry is that polltime compulsions have a nasty habit of becoming political millstones once in power.

The problem as I see it is this: Modi as PM would be best thing to happen to India for a long time. But where is the second tier leadership (mind you I'm talking about this only from the economy management perspective)? More importantly what kind of free hand will Modi have if - as is likely - BJP would be power via a shaky NDA coalition which could include (in fact if numbers are to tally most will likely will have to) include the likes of Mamata Didi who will never stop reminding the BJP of their opposition to FDI in retail and GST.

By it's own FDI (or not) in retail may not be that terribly important but all this adds up to send a signal to potential investors.

Actually I think BJP needs to sit down and think through implications of whatever political stance they take going forward. IMO they need to plan of the scenario that they will come to power in 2014 and tailor their political stance accordingly.

[Suraj]

Amit: Most of the political compulsion stuff reg Modi are best discussed in the Modi thread. But I agree that BJP as a party have a tendency to speak in too many voices and sabotage themselves by appearing rudderless, unless a charismatic and respected leader (ABV before, NaMo now) can provide them a more direct voice.

[amit]

^^^^
Totally agree. However, as you said Modi is a subject best left for the other thread.