Indian Economy - News & Discussion 27 May 2012

[Austin]

I think that is the plan. For Indians to sell their gold. Global bullion banks are running out of gold. Heck even US Fed refused German govt. to see their own (German) gold stored at Fed Reserve. I think its not there and so do many. I really hope, Indians are not forced to sell their gold.

[/quote]

I read they just showed the Germans just one Vault of the 7 or 8 they had and that too when German insisted to see their gold which was earlier denied.

Its better not to store your gold with UD Fed or else where but to keep it within your nation because the first thing US would do in case of crises is they would block you from taking back your own gold.

I read the German were promised they would get back their Gold by 2021 something.

[Austin]

How does Indian Currency Swapping with friendly nation would prop up Indian Rupee , Say if we swap our currency with BRIC nation say with Brazil , Russia and China equally how will it help Rupee not slide down further ?

[vina]

How does Indian Currency Swapping with friendly nation would prop up Indian Rupee , Say if we swap our currency with BRIC nation say with Brazil , Russia and China equally how will it help Rupee not slide down further

You basically bypass USD! That is how. So the dollar demand goes down. It makes sense to do it with major partners (dont think we have much trade with Brazil).

Today, trade with anyone else goes via dollars (if you want JPY, the dealer basically gives you a quote that is dollar neutral to him and has to do the buying and selling via dollars in the background to convert INR into JPY), and dollar is the proxy for all the underlying trades.

With currency swap, For eg, since UAE is one of our major partners, we have a currency swap with them (the Dirham is pegged to the USD), the India UAE trade can be directly traded upto the agreed level with Rupees and Dirhams exchanged directly, so reducing the dollar intermediary route (which will involve dollar buying and selling) .

[Sachin]

With currency swap, For eg, since UAE is one of our major partners, we have a currency swap with them

Sorry to digress. But I have heard that one of the primary reasons for US to target Saddam was that Iraq had plans to accept Euros as well for selling petroleum crude. That would have reduced the clout of US $ a bit, and naturally Saddam suddenly became the biggest terrorist around.

[Lilo]

Now we should grow crawling back to Iran and ask them to renew their offer for crude supply in rupee terms or barter system.

This is what happens when a state fails to differentiate its strategic partners from its enemies based on some tactically brilliant options dangled by the massa.

[member_20317]

panduranghari ji,

can you provide a link for the German Gold not being allowed to inspect. I do not track almost anything outside of India. But this I may need to understand.

.............................

Now we should grow crawling back to Iran and ask them to renew their offer for crude supply in rupee terms or barter system.

This is what happens when a state fails to differentiate its strategic partners from its enemies based on some tactically brilliant options dangled by the massa.

Somebody was going to give us 6000 keyroar. Hope he can get us more keyroar.


..............................



To say that this is the best time to buy and take ownership, can at best be a personal investment proposal but that will have little bearing on how the people overall do. Esp. in times when people, rich or small are going to feel the pinch. Its not like the rich Indian folk are going to be able to take x percentage of leverage and buy up the onerous assets and save the day for India. Broadly this serves only to take the focus off the collective existence and enable 'separate peace' for some folk.

Such a half measure also usually comes with typical western drivel like:

1) how can 'PSU disinvestments', 'land acquisitions by foreigners' or 'FDI of difficult terms/times', be called selling of family silver - do these guys even realize the shallowness of this argument when measured against the principles or values based on which these arguments are forwarded. Concepts like 'public policy' are never very far from any form of collective investments. And this is besides the standard funded out of tax money stand.

2) lets open up the economy and sign FTAs and let the market find its own way and we must do this to increase our efficiency - If a polity cannot ensure a sane response in good times how the hell will it decide right in difficult times? Its a standard BRF quote 'Jo chennab mein ___ wo newyork mein ___'. What I fail to understand is how is that not applicable to time. Why restricted it only to places?

3) lets bury the past and look forward - Duh, unfortunately the balance sheets still remain important and that structure is all based on historical cost. Unfortunately also during the good times these exact arguments are used to feed crazy valuations and promises. And this whole system is basically developed in the labs of the west. Indians were merely doing jugaad all along. How can a problem of habits ever be addressed by mark to market and talking the markets up.

4) This will yield good results in the future for our exports - Yup. That is an argument. Lets just burn the house to warm our coffee.

[habal]

It's a very serious issue, and all the fence-sitters are going to be targeted one-by-one. India as an old fence-sitter will be targeted both economically & militarily. All this udharikaran, bazaarikaran, nijikaran crowd won't know what hit them once they start schemes like currency swap & sidelining dollar.

[vina]

Sorry to digress. But I have heard that one of the primary reasons for US to target Saddam was that Iraq had plans to accept Euros as well for selling petroleum crude. That would have reduced the clout of US $ a bit, and naturally Saddam suddenly became the biggest terrorist around.

With UAE,(and nearly all the Gulf currencies),which are pegged to the USD, that is not a problem. In fact, we should have a currency swap agreement with the US. Currently FED has agreements with Australia, Canada, Brazil,Denmark, UK/Bank of England, ECB, S.Korea, Mexico, NZ, Norway, Singapore, Sweden and Switzerland. Singing a swap agreement for something like $60B USD will significantly calm the markets (as we can access USD at the Fed Funding rate) and give a lot of ammo to the RBI to take on Forex speculation if needed in an emergency.

China has with lots of countries including Brazil, Indonesia etc. Note, the Chinese currency too is pegged to the USD, just like the UAE's

So I do think we should have the swaps with US and UAE and ECB to begin with and maybe Japan as well. China could be problematic for "Strategic" reasons.

What prevents us from doing it will be the commies hollering about US "Imperialism" and surrendering to Imperialism if we do it.

[panduranghari]

^^^^

[Sri]

How does Indian Currency Swapping with friendly nation would prop up Indian Rupee , Say if we swap our currency with BRIC nation say with Brazil , Russia and China equally how will it help Rupee not slide down further ?

Question is what can Brazil Russia and Chna buy with those rupees?

[panduranghari]

panduranghari ji,

can you provide a link for the German Gold not being allowed to inspect. I do not track almost anything outside of India. But this I may need to understand.

[member_20317]

How does Indian Currency Swapping with friendly nation would prop up Indian Rupee , Say if we swap our currency with BRIC nation say with Brazil , Russia and China equally how will it help Rupee not slide down further ?

Question is what can Brazil Russia and Chna buy with those rupees?

American Tungsten in high sea sales. Supplied from Hamburg port by germans.

panduranghari ji that was really funny. Thanks for the subsequent link too.

[Pratyush]

approvals by the govt mean nothing. most are just "in principle" approvals SUBJECT to all other clearances incl the dreaded environmental clearance.
NAC has given express orders to that ministry to stop any project that employs more than 5 people in a hut because that is capitalist exploitation of the tribals and minorities.

Would be funny, if it did not have such tragic consequences.

[vina]

Question is what can Brazil Russia and Chna buy with those rupees?

Oh, Brazil, we dont have much trade. China is our 2nd largest trading partner, Russia we buy arms. With China, it can work.

All folks here forget that we DID have a currency swap with the old Soviet Union, we had a Ruble/Rupee swap (all communist countries had it and it was 1:1 I think with the Soviets) allowing us to buy Russian arms in Rupees.

After the Soviet Union collapsed, the Russians demanded payment in USD and the residual balance that they had with them was paid off in USD over a period of time I think. It is no accident we had a currency crisis in 1991. It was just 1 year after the Soviet Union collapsed (along with the loss of the Rupee-Ruble swap) , and the Gulf War that Saddam Hussein's invasion of Kuwait triggered the oil shock that brought the country to it's knees.

So yeah, this crisis too is an opportunity, we reform only under crisis. So if Chidambaram can do reforms NOW because he has to, in the long run, it is good.

[Pratyush]

Considering the Re is in a free fall. Can the GOI try to make the purchases in INr rather then the USD. What would the challenges for then and how it can be manages.

I am thinking if we were making our purchases in INR, the fall against the USd would not effect us.

If i have come across as an economic and intl trade novice with my above post. It is because I am.

[vina]

Some write up about the Rupee Ruble agreement with a "scam" angle.
Rupee Ruble Scam

[panduranghari]

China has with lots of countries including Brazil, Indonesia etc. Note, the Chinese currency too is pegged to the USD, just like the UAE's

Vina Ji,
the important question we all should ask what is US$ pegged to?

Its not gold.

Its pegged to the belief that US will maintain its promises. Yeah the same way they reneged on the promises in 1945 and 1971. Yeah but this time its different the hard money socialist crowd (the gold standard supporters) keep saying. Of course its different only the understanding of the problem is flawed.

The negative GOFO rates makes people believe that is the case as the gold lease rates havent spiked. I will say , just wait. Onlee.

[Atri]

The only saving grace is, if India goes down, many many other countries will follow suit. Western Europe and US wont be far behind.

People should buy gold.. I mean, no need to tell this to Indian people. The cyprus gold was perhaps "freed" to answer this crisis. but indians jumped at this opportunity and bought a huge chunk of that gold. If Indic gold is freed, most of it will find its way back in Indian households..

what I am worried about is gold from temples like Padmanabha swamy, Tirupati, Kashi, etc..

[habal]

It seems some foreign banks operating in India are playing in 'Non Deliverable Forward' market

If capital controls are strong, developments in these NDF markets should not affect prices in onshore spot markets. But financial liberalisation dilutes those controls. There is now evidence from many emerging markets that prices in the ‘offshore’ NDF markets affect ‘onshore’ dollar prices.

..

The transmission mechanism is not clear, but it could be the involvement of domestic banks in these markets because, though “onshore financial institutions are not allowed to transact in the NDF markets”, “since domestic banking entities are allowed specific open position and gap limits for their foreign exchange exposures, there is scope for domestic entities to participate in the NDF markets to take advantage of any arbitrage.” Besides that, foreign banks and corporate entities with an international presence can participate in the NDF market. Liberalisation has only increased the intensity of such linkages between onshore and offshore markets.

In sum, a series of changes that have occurred since financial liberalisation began have increased India’s exposure to the adverse effects of currency speculation. Given the nature of these changes there is little that the RBI and the government can do about such speculation, despite the claim that: “While introducing currency futures, the Reserve Bank and the Securities and Exchange Board of India (SEBI) had put in place various safeguard mechanisms to monitor positions, prices and volumes in real time so as to control excessive speculation.”

http://www.thehindu.com/opinion/columns ... 065026.ece

In any case, there is nothing whatsoever the RBI and the SEBI can do to curb speculation in the NDF market that is outside its jurisdiction.

from an older article

http://www.moneycontrol.com/news/rupee/ ... 03814.html

That is not all but only the main factor. At the same time, some large institutions swing into action to make some quick bucks using the prevailing negative sentiment. Here comes the play of non-deliverable forward market. This can happen with any pair of currencies viz. USD-INR, USD-GBP, USD-Euro, Euro-INR and so on.

Last week, INR dropped 3 percent against the greenback. Amidst the freefalling on the back of weak economic parameters, some investors also took the advantage of arbitrage between NDF and domestic markets. They were buying dollars at below 59.90/USD level and selling in the overseas market. The three-month NDF was quoting around 60.80-60.90/USD, three currency traders told moneycontrol.com.

"NDF factor is not the prime reason behind the rupee depreciation but adding to the woes," said a senior currency expert from a bank. He did not wish to be named.

"Due to NDF arbitrage, we are suffering. No bank is allowed in NDF unless its registered office is outside India. Mostly big corporate institutions are seen earning quick money using this tool. They place orders through foreign banks. However, they will not do it below 15-20 paisa margin," he said.(& now in Aug 2013, they have margins above 100 paise everyday)

NDF arbitrage and its practitioners

An oil and gas major and some big diamond merchants are engaged in this arbitrage practice, said traders adding that it is not illegal. NDF arbitrage practice is nothing new.

However, many-a-times it increases market volatility when accomplished with higher degree. RBI intervenes to check any high volatility.

NDF punters

There are generally three types of parties: banks which trade with genuine requirements, institutions having legal access both in domestic as well as NDF market and NDF punters, who does not have direct access to India currency market.


The origin of NDF punters is a bit suspicious and not widely tracked. Sensing the market sentiment, they take position in the NDF market. This in turn, helps raising or decline the exchange rate. Back home, some institutions consequently, find widening difference between NDF and domestic forward market. They immediately act.

However, on maturity of forward contract, investors need to make the delivery by buying/selling from domestic spot market. This impacts the spot exchange rate.

What is NDF market?

It is an offshore currency forward market wherein delivery of contracts does not take place on maturity. Hence, the term is “non-deliverable”. For example, an investor books a three-month USD-Rupee contract at 62. Suppose, rupee moves to 63 against the USD after three months. Then, s/he has to buy dollar similar to contract size by selling rupee to close the contract on maturity.

However, in NDF market, one will not do the same but only settle it with the difference amount, be it profit or loss. In the illustration mentioned above, it will be a profit (63-620 = 1).

Need for NDF

Indian rupee is fully convertible on current account while it is only partially convertible on capital account. This justifies the need of NDF market. In simple, term, capital account denotes long term money like foreign direct investment (FDI). Current account is short-term in nature.

+

Iyer (India) replies to SuchindranathAiyerS
28 Jun, 2013 01:23 PM
The recent sharp fall in the rupee had NOTHING to do with your "fundamentals" - ask any forex trader in Mumbai, and they'll tell you it was entirely manipulation and institutional speculation on NDFs. It had NOTHING to do with the CAD, overspending, populist schemes, or policy hindrances, all of which DO exist and had been factored in at 55-56. In fact, it was the speculative fall in the rupee that led to the panic flight away from the Indian bond markets and some FII unwinding in equities as well (at over 10,000 crores in June, the highest since 2008 according to ET). Such sharp erosion in the value of the currency bode ill for imported inflation and investor confidence, especially if it is purely speculative on overseas bourses, taking advantage of loopholes in NDF trades. The only complaint I have with the RBI action against it is that it came so late. They should IMMEDIATELY have put an end to it, instead of blaming red herrings like gold imports and CAD (which do have an effect). Even according to Raghuram Rajan (and Kaushik Basu before him) fair value of the rupee to the dollar is 55. According to me, it is 50. That's just how it is - you better deal with it.

[member_20317]

Ok for the records,

the thing is the moment you say its 'non-deliverable' you should call it 'speculation'. Forwards are not speculation. They are merely derivatives of the Cash market. The cash market is made of actual needs of the economy or at least it is supposed to.

What is in effect happening is that a promise to act in future, given by a phorener is more believable then the reality of the market in India. This only an arbitrage between an Indian Derivative Market that is a legal market and a Foreign Speculative Casino which is legal beyond the jurisdiction of the Indian authorities. You give an opportunity and somebody will arbitrage. If not legally then illegally.

The caveat that must be given with the above statement is that presently only the professional traders are doing this in ways that they I guess understand will be legal.

The point is ........ well hell no point. I just wish I could do something.

BTW happy Janamashthami.

[Lilo]

Briturd rag - The Dekhonomonist is spamming inbox with promotional offers

Latest offer is 55% off with a hidesign handbag costing 5k thrown in (why the phuk I was placed in handbag category I don't know)

Seems the market for luxuries is really taking a beating and all evil yindoos have relapsed into their oldhabit of being penny pinchers of pre 90s .
A welcome development onlee.

Time for a buy indian be Indian eshtyle campaign.
Let the opposition party of India take note of this .

[Sanku]

Almost 2-3 years back, I had mooted a barter trade with Russia (call it under any name, such as currency swap, direct exchange of Rubles and Ruppess, account to be settled at end of the year) whatever.

The resident UPA pasand dekho-no-monists on the forum were too busy mocking me to understand the point.

Funny how currency swap is all the craze now.

[gakakkad]

A currency swap deal with India can only work if it imports a lot (merchandise/service) from India . or its currency is appreciating creating trouble for its exporters..

I don't think that leaves too many options for us.

[Austin]

Today, trade with anyone else goes via dollars (if you want JPY, the dealer basically gives you a quote that is dollar neutral to him and has to do the buying and selling via dollars in the background to convert INR into JPY), and dollar is the proxy for all the underlying trades.

With currency swap, For eg, since UAE is one of our major partners, we have a currency swap with them (the Dirham is pegged to the USD), the India UAE trade can be directly traded upto the agreed level with Rupees and Dirhams exchanged directly, so reducing the dollar intermediary route (which will involve dollar buying and selling) .

So Currency Swap is for Intra Trading currency between two trading countries , With China it will work as they are our 2nd largest trading partner after US.

With Russia you can trade for LNG with Rupee

Ofcourse assuming these nations were willing to do a currency swap , With Rupee falling and not sure how deep the fall might be even friendlier country would be cautious.

Better to do a Brazil like thing they allocated $60 Billion to support their currency for a year , Since we have Forex reserves of $280 billion we may do the same.

[Lilo]

Almost 2-3 years back, I had mooted a barter trade with Russia (call it under any name, such as currency swap, direct exchange of Rubles and Ruppess, account to be settled at end of the year) whatever.

The resident UPA pasand dekho-no-monists on the forum were too busy mocking me to understand the point.

Funny how currency swap is all the craze now.

So Currency Swap is for Intra Trading currency between two trading countries , With China it will work as they are our 2nd largest trading partner after US.

With Russia you can trade for LNG with Rupee

Ofcourse assuming these nations were willing to do a currency swap , With Rupee falling and not sure how deep the fall might be even friendlier country would be cautious.

And I mooted something similar with China (5 months back onlee ) to take advantage of their manufacturing glut.

CS ji,
My proposition had nothing to do about dependence or independence from China

India needs a LOT of infrastructure (Maunmohan ji has pegged it at 1 trillion USD requirement in the next 5 years) on Roads, Electricity generation capacity , communication and fiber lines, storage and distribution facilities and what not.

Much of the equipment needed to achieve above is being manufactured in China at the present .
Indian capacity for manufacturing such "capital equipment" is comparatively insufficient or in some cases non existent (as in comm equipment) . Therefore even though we have BHEL and BEML, due to lack of sufficient capacity, we have been importing super critical turbines , earth movers etc from china all along.

Now China happens to be facing a huge glut in its warehouses and over capacity in its factories - so it is a very good time to purchase "capital equipment" from china using our own money . As China currently has a big surplus in their trade with us, we cannot pay them back in Renmibi , therefore only INR is left as an option (assuming that dollah option is somehow off the table).
Yes , in effect if such a scenario comes to pass , China's investing in INR is equivalent to investing in GOI bonds.
But that will be beneficial for them too because we are helping them tide over their current glut till they manage to restructure and rationalize their factory capacity (which iam sure they will manage to do in time) . When the cycle gets back to an upturn - China anyway has the option to retain its built up INR reserves or pay it back to us when we again start exporting cheaper grades of Iron ore , Food stuffs , Pharma (or whatever we are exporting to them at that time).

Why all this trouble?
its because trade in dollah is getting costly for India and risky for China (it has been this way for a while now) . And such gestures (if they come to pass - a big IF) will be good CBMs in our economic relationship.

Lets see what happens to dollah denominated trade in the meantime .

http://forums.bharat-rakshak.com/viewto ... 4#p1426224

[panduranghari]

People should buy gold.. I mean, no need to tell this to Indian people. The cyprus gold was perhaps "freed" to answer this crisis. but indians jumped at this opportunity and bought a huge chunk of that gold. If Indic gold is freed, most of it will find its way back in Indian households..

what I am worried about is gold from temples like Padmanabha swamy, Tirupati, Kashi, etc..

Me too. I really hope Supreme court prevents any interference and this gold remains untouched. But I fear it. As Dharmiks do not control anything presently, the 'sone ki chidiya' analogy and all the baggage associated with it makes me fear even more.

About buying gold, fortunately Indians love gold.

One



Equals

One



How read it here

[RamaY]

The falling rupee yields several discussions. One thread I have witnessed in desi media is the plight of Indian students going abroad. Everyday some channel or the other seems to bring this once a day. Sometimes articles are written on this topic too. I find it fascinating that this topic has garnered this much attention. Frankly, this problem, which is a problem for a few, should be at the bottom of the totem pole.

SwamyG garu, this is a controlled demolition of middle-class India by Congress. They are using whatever resources left in their control to shield (or at least give that feeling) their vote banks using NREGA and FSB, while letting the system collapse under the feet of all opposing groups - upper/middle class etc.,

This is a deliberate move by INC to achieve whatever goals they have in mind. There is no other explanation for the conscious inaction by INC for past 4 years.

This is the Shakti Atriji talked about in NM thread.

In a way the so-called NEW-India is being harassed and is "facilitated" for migration. The objective is to usurp Indian resources while giving the poor India a sense of security. Every questioning voice is shunted out of India to foreign shores, which is in firm control of others.

[RamaY]

How does Indian Currency Swapping with friendly nation would prop up Indian Rupee , Say if we swap our currency with BRIC nation say with Brazil , Russia and China equally how will it help Rupee not slide down further

You basically bypass USD! That is how. So the dollar demand goes down. It makes sense to do it with major partners (dont think we have much trade with Brazil).

Today, trade with anyone else goes via dollars (if you want JPY, the dealer basically gives you a quote that is dollar neutral to him and has to do the buying and selling via dollars in the background to convert INR into JPY), and dollar is the proxy for all the underlying trades.

With currency swap, For eg, since UAE is one of our major partners, we have a currency swap with them (the Dirham is pegged to the USD), the India UAE trade can be directly traded upto the agreed level with Rupees and Dirhams exchanged directly, so reducing the dollar intermediary route (which will involve dollar buying and selling) .

Vina ji,

Somewhere I posted India's trade with other BRIC members. It is hardly $100B and 75% of it is with China alone. So any such accommodation by other BRICS is unlikely for these nations have stronger trade relationships with USA.

Such moves will enter into geopolitical realm and will be inimical to Indian interests.

[RamaY]

what I am worried about is gold from temples like Padmanabha swamy, Tirupati, Kashi, etc..

There is a rumor doing rounds that a well known jewelers owned by YSJ in AP is funded by Tirupati gold.

[Austin]

Adi Godrej in an interview on NDTV stated that RBI should defend the rupee and not allow it to free fall , he stated that RBI defence of rupee has always been too little and too late.

So why is RBI not defending the rupee when we have a huge forex of $280 billion , Brazil is doing the same by putting in $60 Billion for a year to defend its Real.

Why is RBI not putting in similar measure to defend the Rupee , Brazil Real has fallen by 8 % and Rupee down by 16 % so isnt it high time RBI defend the Rupee in a massive way rather then sit tight and do nothing ?

[satya]

Adi Godrej in an interview on NDTV stated that RBI should defend the rupee and not allow it to free fall , he stated that RBI defence of rupee has always been too little and too late.

So why is RBI not defending the rupee when we have a huge forex of $280 billion , Brazil is doing the same by putting in $60 Billion for a year to defend its Real.

Why is RBI not putting in similar measure to defend the Rupee , Brazil Real has fallen by 8 % and Rupee down by 16 % so isnt it high time RBI defend the Rupee in a massive way rather then sit tight and do nothing ?

Why do you want to attract the London whales when we are barely able to fend off small fishes ? Intervention works only & only if you 'own' the NDF market for start . Only Aunty & Unkil & PRC have that sort of ownership .

[Austin]

Why do you want to attract the London whales when we are barely able to fend off small fishes ? Intervention works only & only if you 'own' the NDF market for start . Only Aunty & Unkil & PRC have that sort of ownership .

Can you put that in simple easy to understand English since I am no financial garu.

[harbans]

The economic wall is crumbling..but just wait a bit if you thought this is it and it can't be worse. The Land Acquisition bill is about to hit real bad..someone is gonna get hurt..i tell you. And yes in DNA there was this story (wait if you have a pouch, bag..keep it near and handy) some South Asian Aman type suggesting India and Pakistan have a common currency. Everything possible is being done to damage and hurt this country..meanwhile China and Pakistan are eyes gleaming at falling prey hovering all over the borders..time we look at our Malabar coast too. Maldives has a good chance to grab some malabari territory with this UPA set up too. Myanmar is going great on land grab..i mentioned it years back..Pranab was the friggin worst choice one can get as FM. I am beyond feeling disappointed at the jerks that have got us to this pass..and they are not exclusive to the INC..

[ramana]

He knows his fishes.
What he is saying is the markets are not under India's control and hence defending the rupee will exhaust the reserves in no time.
Essentially no foreigner past investment is viable. All has been washed out. Need to watch NYSE to see how the India based funds are doing.

LINK

Companies such as Whirlpool of India say they can’t plan more than a couple of months, as a fast-falling rupee currency drives up the cost of imports, forcing them to raise prices even as consumer spending crumbles.

The timing is particularly tough for consumer companies that were counting on India's September-to-December holiday season to spur sales. India's consumers, whose spending helped see the country through the global financial crisis in 2008, are closing their wallets, squeezing companies from carmakers to shampoo sellers.

Companies that import finished goods or raw materials are the worst hit as they scramble to hold onto margins while balancing the need to raise prices without deterring buyers.

“We are now planning for a month or three months at best, unlike six months or a year earlier,” said Shantanu Dasgupta, vice-president for corporate affairs and strategy at Whirlpool of India, the local arm of Whirlpool Corp, the world's largest home appliance maker.

The rupee has tumbled 17 per cent so far this year and hit an all-time low of 66.30 against the dollar on Tuesday, resisting a spate of interventions by the Reserve Bank of India (RBI) and the government as investor fears about emerging markets deepened in anticipation of reduced US monetary stimulus.

“A week back in our office we were working at (a rupee exchange rate of) 62 and now it's at 64 and looks like soon it will fall more and hit 67. How can a business operate when the currency is on a free-fall?” H S Bhatia, head of the enterprise business at television maker Videocon Industries, said in an August 21 interview.

The currency sell-off has since intensified, compounding difficulties for Videocon. The collapsing rupee pushes up prices of goods, adding to inflation on top of meagre urban salary hikes and an economy growing at its slowest in a decade.

Videocon imports raw materials and is planning to raise prices by about four-five per cent in the coming days, its second increase in two months.

The currency blow is landing just as consumer companies look toward a boost from their strongest annual sales period, which starts in September with Ganesh Chaturthi, when the god of luck and prosperity is welcomed into Hindu homes, followed by the Diwali festival and then Christmas.

India’s total consumption expenditure, which includes private and government spending, grew 3.3 per cent in January-March from 9.3 per cent in the same period a year earlier, according to government estimates. Total consumption expenditure as a share of the country’s gross domestic product fell to 65.9 per cent in the fourth quarter of 2012-13 from 72.1 per cent in the first quarter of the same fiscal year.

Shoppers are not only cutting back on big-ticket purchases such as refrigerators, TVs or expensive branded apparel but even staples including soaps, ketchup and cosmetics.

A survey in June by the Associated Chambers of Commerce and Industry found monthly bills for the middle class had jumped 15 to 20 per cent in a month across major cities, as the falling rupee drove up prices of petroleum products and edible oil. A paper in August by the same group found that even deep-pocketed consumers were cutting back, with five-star hotels and fine dining restaurants registering a decline of 20 per cent in sales in the past three months after prices of imported food ingredients and spirits rose.

Makers of consumer goods like shampoos and soaps, popular defensive plays in weak economic times, are also feeling the pinch, with market leader Hindustan Unilever posting lower sales volumes in the June period for a fifth quarter.

Recall PC was substituting for Home Minster when he was out of action.


So where is UPA butter for guns model now?

[SaiK]

what I am worried about is gold from temples like Padmanabha swamy, Tirupati, Kashi, etc..

There is a rumor doing rounds that a well known jewelers owned by YSJ in AP is funded by Tirupati gold.

you should be happy that our old gen had better brains than current gen. we have been victims of traitors creating havoc on the motherland in addition to the invasion-aries. without which, you would not have seen the gold and statues around the temples.

had it be known earlier, it would be either in some firang land museum or with some auctioneer.

[Vayutuvan]

The bigger problem though is that the GOI seems bent on tokenism, when we are so dependent on foreign firms (and consequently imports) for everything from heavy engineering items, to telecom equipment and even industrial grade IT hardware.

Oh, the situation is much worse. We got quotes for modular furniture for our newly opened Software center in India and we finally settled on a quote that is importing Chinese maal. Almost all quotes are with Chinese imports. Are there no Indian manufacturers of even such a low-tech stuff? What use is all that gold if it can't get jobs - mind you I am not talking about high-tech ones - for literate young people in low to medium level manufacturing?

[Suraj]

Certain sectors are reserved for small scale industries, with barriers towards large corporations setting shop domestically - though paradoxically no barriers on imports. Wouldn't be surprised if woodworking/furniture is still among them. The industrial sector is rife with such distortions that hamstring anyone from scaling up low tech manufacturing.

[Philip]

Why furniture? My auditor yesterday showed me his desk top Ganesha,"made in China" as an example! The UPA regime has mortgaged the nation to foreign interests and has abdicated its responsibility.A century of sacrifice of the Freedom Struggle has been destroyed in just this one year.We would be better off inviting the British Raj back to rule,establish law and order and handle the economy than under this despicable lot.

When we have such a massive BOP chasm with China or any other nation where other than energy supplies are the reason,we should impose heavy duties so that Indian industry can compete.The current crisis is because under the UPA,we have savaged Indian industry,Indian agriculture and the result is a hollow shell of an economy,where unless we immediately slow down unneccessary imports of goods that we already make/made here ,our forex reserves will be wiped out even before the next hustings.the moment elections are announced,with the expected throwing out of this disreputable and despicable regime,the Rupee will gain.

Our eco warriors will have to start from basics and imagine that we are a nation of 1.2B and other than energy,need to produce and consume a max. of home-built goods and services.In defence we laud the holy grail of "indigenisation",but what about other capital and consumer goods ? Doesn't "indigenisation" hold good there too?.One fundamental is now also being eroded,with food imports,sending the "green revolution" into history.We have allowed GM crops to enter both through the front door and back door and Indian farmers will be slaves of western seed suppliers.If rural folk are not employed and merely given an NREGA dole,now with the FSB landing on top of a miserable PDS,the economy of the nation is well and truly sunk.Expect the Rupee to compete with the Lankan Rupee as the sub-continent's weakest currency in the near future.

This sick joke has gone on for too long.The Opposition is also doing b*gger all.Both Right and Left.Merely pontificating on television.They should be on the streets demanding the resignation of the govt.,as has happened in other nations.

[Cosmo_R]

.............

So where is UPA butter for guns model now?

It's the gutter model. Sadly.

[vera_k]

some South Asian Aman type suggesting India and Pakistan have a common currency

Should start with Bangladesh. Since India's currency is depreciating while Bangladesh's is appreciating, those will converge first. But states like West Bengal and Bihar will oppose this quite strongly, since they will lose exclusive claim to bailouts.