Indian Economy - News & Discussion 27 May 2012

[Garooda]

I quit smoking day before (for real). I'm not associated with any brands...anymore...for now. Hope I can keep it that way.

[disha]

some pockets of entreprenuership exists only in TN and Guj

Everyone is smoking their own brand of pisko beedis in this thread.

Bade - Are you still trollin' me?

Smoke what you want, there is difference between "traders" and "entreprenuer" and try setting up an industry outside of the "service" or "agro" or "chemical" or "textile" or "IT-Vity-Biotech" industry in any part of India. Just tell me how can you have 10 ft. nuts and bolts!

Till you have not tried, do not even bother to troll me. And no I am not talking about some pappu-jhappu Rs. 1 Cr. type of investment. Try setting up a Rs. 10 Cr or Rs. 100 Cr. "plant" that actually produces something of quality for everyday manufacturing in any part of India. And no, do not get associated with Tatas or Birlas or Kirloskars or Siemens or reliance.

Heck - try it in Kerala first. Then Bengal. Then Bihar. Then Orissa. Then UP. Then Assam. Then AP. Then Karnataka (outside of Bengalooru).

If have not, first go back and answer what are the parameters that make a women empowered.

There are very few - extremely few pockets where Industry of any worthwile is existing in India. Check out the growth in manufacturing in the last decade (or two) (or three or four - my experience goes as far back as 3.5) and tell me in which sectors it has grown and where it has grown. And how it has grown.

[saip]

Why are Indian banks sitting on customer's monies? I gave a check to my nephew and it got cleared at my US bank almost immediately but my nephew was told it will take another two weeks before he gets the money. They said something about cooling off period imposed by RBI. Is this true or the banks just making it up?

Last month when I sent a wire transfer to China the bank gave me a note which said China is one of the countries known to the bank for not releasing the funds immediately and advised me to contact the bank if funds did not reach the intended transferee in two weeks. Out of curiosity I enquired about India and sure enough it was also there.

[Bade]

Disha, tell me what path breaking stuff has come out of TN and Guj first. if you exclude Reliance Petro empire or the various MNC setups in TN in manufacturing. Tell me about the native Indian entrepreneurs with 100 crore+ turn overs from these two of your favorite states.

As for women empowerment Guj has just started what was done elsewhere a few decades ago. Can you even name a Kiran Mazumdar (random name) equivalent from Guj ?

[Prem Kumar]

X-posting on the RBI request to temples about how much gold they have to the economy gurus here:

Can we look at this crisis as an opportunity?

What if the temples agree to give their gold to the GOI for safekeeping. In exchange for a complete disengagement of the GOI from ALL temple management across the country. Zero GOI influence on temples for perpetuity. The temple boards/trustees decide how best to organize themselves and their finances, whether to consolidate or not etc etc

In addition, demand the following:

a) The gold given to the GOI can be demanded anytime by the temples after a certain cutoff date. GOI to return gold pound-for-pound with zero questions asked and zero delays. Supreme Court to be the guarantor of the promise

b) Gold to be chemically tested before transfer and before the return transfer for purity & to prevent bait-and-switch

c) GOI to give rupee equivalent of gold value at today's rate plus an annual interest till the gold is returned

d) No-loss guarantee. When the temples demand their gold back, they pay the going rate of gold at that date (or) the rate on the date at which they bailed out the GOI, whichever is lower. No taxes on the profit that the temples make

Any problems with this approach?

[RamaY]

^ Answered to your post in NM thread.

This is economy thread and kindly do not bring religion or politics into this. Asking for temple funds is a political decision that want to bring religion into governance. TIA.

[JwalaMukhi]

http://www.nytimes.com/2013/09/05/busin ... d=all&_r=0

Vinod Vanigota, a Mumbai wholesaler of imported computer hard drives, said sales dropped by a quarter in the last two weeks. The rupee, India’s currency, has been so volatile in recent days that he began revising his price lists every half-hour.

Business activity at Chip Com Traders, where he is the managing director and co-owner, has slowed so sharply that trucking companies plead for business. “One of the companies called today and said, ‘Don’t you have a parcel of any sort for us to deliver today?’ ” Mr. Vanigota said.

The economic decline has laid bare chronic problems, little remarked upon during the recent boom. An antiquated infrastructure, a sclerotic job market, exorbitant real estate costs and bloated state-owned enterprises never allowed manufacturing, especially manufacturing for export, to grow strong.

India’s government is now bracing the country for a swift increase in the price of diesel fuel and other imported necessities priced in dollars. Diesel is the lifeblood of the Indian economy, from the trucks that crawl along the country’s jammed, potholed roads to the backyard generators that struggle to compensate for the high-cost yet unreliable electricity grid.

The root of the problem is India’s failure to create a vibrant industrial base with the strength to export. As Western buyers scour Asia for alternatives to increasingly expensive Chinese factories, India and its enfeebled manufacturing sector are mostly ignored.

[KrishnaK]

Unless he can prevent money-market manipulation by speculators, there is nothing to arrest all of rupee

There we go. Straight from the JNU/CPI-M playbook. Why is the rupee falling ? Why it must be "manipulators" of course!

Conspiracy onleeeee, everywhere you seeeee
syria to the red sea, geopolitics to rupeeee
conspiracy onleeee....

[vina]

Disha, tell me what path breaking stuff has come out of TN and Guj first. if you exclude Reliance Petro empire or the various MNC setups in TN in manufacturing. Tell me about the native Indian entrepreneurs with 100 crore+ turn overs from these two of your favorite states.

Quite a huge list. TVS, Murugappa, Amalgamations, Sanmar, TTK, Orchid Chem (a first gen venture) and lots of others, from just Madras alone. In addition, there are lots of others from Coimbatore as well, in addition to a sprinkling in places like Tuticorin and Trichy etc.

Gujarat will fill a couple of pages. Essar (they were based out of TN earlier), Adani are pretty big, but there will be literally 100s in the 100+ cr range.

As for women empowerment Guj has just started what was done elsewhere a few decades ago. Can you even name a Kiran Mazumdar (random name) equivalent from Guj ?

Ah. Bade Mian fas gaye! Kiran Mazumdar IS Gujarati (brought up in Bangalore, but her parents were very liberal, dad was a brewmaster in UB and sent her to Australia back then for higher studies.. A gujju making beer is itself a big thing !) , if your argument was about Gujarati women somehow being less upwardly mobile because of social conditions .

[svinayak]

http://www.nytimes.com/2013/09/05/busin ... d=all&_r=0
The root of the problem is India’s failure to create a vibrant industrial base with the strength to export. As Western buyers scour Asia for alternatives to increasingly expensive Chinese factories, India and its enfeebled manufacturing sector are mostly ignored.

False comparison. PRC is a military govt running a capitalist economy.

India had seemed tantalizingly close to embarking on the same dash for economic growth that has lifted hundreds of millions of people out of poverty in China and across East Asia. - Media created false image

Poor infrastructure has also driven up costs for industrial real estate in India, which are high compared with China’s. Just in the last five years, China has opened 5,800 miles of high-speed rail routes and 400,000 miles of highways of two or more lanes. That has allowed tens of thousands of factories to move to smaller towns in the interior with much lower land costs.

India has been unable to open up its interior the same way, building half as many miles of highways over the same period and no high-speed rail routes. At the same time, rent control and other land regulations make it extremely difficult to tear down and replace even the most dilapidated buildings.

[svinayak]

India’s Central Bank Chief May Have a Short Honeymoon

Again another comparison with Fed Reserve when there is nothing in common.

Mr. Rajan, 50, took charge on Wednesday of the Reserve Bank of India, which has tried and failed to stop the steep decline of the rupee against the dollar. India’s chronic inflation is almost certain to move higher in the coming months, given the country’s heavy dependence on imported oil priced in dollars. The stock market is plunging as economic activity slows by the day.

Yet unlike Ben S. Bernanke, chairman of the Federal Reserve, Mr. Rajan has very little political independence in his new job. Some of the biggest problems bedeviling the Indian economy are beyond his control, like the trade and government budget deficits and the crippling shortage of roads and other infrastructure.

[Bade]

vina mian, that is why I inserted "path breaking" stuff among these visionaries. Something in the TATA mold when nothing was there. Or in present times it has to be like Silicon valley and other big names very common in America for each sector of industry. Frankly none stands out from your list either. Yes, they are successful businesses but not something new not done already elsewhere. So they are like traders who knew where to invest wisely, IMO.

Even if she were a Gujju but grew up elsewhere, what has that got to do with wimmens empowerment in Gujarat ?

[Arjun]

vina mian, that is why I inserted "path breaking" stuff among these visionaries. Something in the TATA mold when nothing was there. Or in present times it has to be like Silicon valley and other big names very common in America for each sector of industry. Frankly none stands out from your list either. Yes, they are successful businesses but not something new not done already elsewhere. So they are like traders who knew where to invest wisely, IMO.

Even if she were a Gujju but grew up elsewhere, what has that got to do with wimmens empowerment in Gujarat ?

Bade - seriously you are descending to the ridiculous out here. Tatas themselves are from Gujarat...If you mean businessmen starting businesses not existed earlier in India but existing in the West, obviously there must have been a pioneer in India in every such case. Dalal Street was pioneered by Gujjus and is still largely controlled by them. The Ambanis pioneered large scale petrochem business in the private sector and now rule the roost in India. Obviously every business in India would have a pioneer from somewhere and the likelihood if him / her being from one of entrepreneurial communities is higher.

If you mean businesses which are pioneering on a global basis and not targeting bottom of pyramid - the likelihood of a market in India for such businesses would be low. Starting up in the US would make more sense - which many, many Indians including Gujaratis have very succesfully done.

[Bade]

Go back to Disha's original statement to trace the origins, rather than butt in with arguments that I never questioned. Everyone knows that there are more businessmen from Gujurati and Marwari backgrounds. No one questioned that. What was questioned was the statement that it is limited to people from GJ and TN.

[Prem Kumar]

--self deleted--

[Arjun]

Everyone knows that there are more businessmen from Gujurati and Marwari backgrounds. No one questioned that. What was questioned was the statement that it is limited to people from GJ and TN.

If that is the sole point you had questioned, why would I have responded to you ? I am responding to this post of yours where you have questioned why there is no pioneering business from Gujarat...

that is why I inserted "path breaking" stuff among these visionaries. Something in the TATA mold when nothing was there. Or in present times it has to be like Silicon valley and other big names very common in America for each sector of industry. Frankly none stands out from your list either. Yes, they are successful businesses but not something new not done already elsewhere. So they are like traders who knew where to invest wisely, IMO.

[Bade]

OK, I take your answer to that as lack of market. For new areas there always is a lack of market, no ? The western businesses seem to be able always to create a market for new products. Why not Indian businesses then? Well, I think I know what your answer will be. Probably it always lies in govt policy. I am not sure if that excuse can hold for ever. It has become a chicken and egg problem. Lack of innovation is more like it, as this issue is not limited to businesses alone. If you look even at academics it is the same cause. Lack of innovation or even a fear of doing it.

[Suraj]

I've been looking at steel production data in 2011, 2012 and so far in 2013. India continues to retain its position as the 4th largest steelmaker behind PRC, Japan and US, in that order. Here's the data in million tonnes, with 2013 data until July:

Code: Select all

Country 2011 2012 2013
PRC     683  708  455
Japan   108  107  64
USA     86   89   51
India   72   77   46

Capacity addition is behind schedule. Had the likes of POSCO and ArcelorMittal started coming onstream by now as scheduled, we'd have easily been competing with Japan's numbers around now. Instead, iron and steel is a substantial component of the import bill.

Electricity is the only core sector component showing continued growth of >5%, and even that comes at substantial cost as posted earlier, since a lot of the power equipment is imported at huge cost.

[brihaspati]

vina mian, that is why I inserted "path breaking" stuff among these visionaries. Something in the TATA mold when nothing was there. Or in present times it has to be like Silicon valley and other big names very common in America for each sector of industry. Frankly none stands out from your list either. Yes, they are successful businesses but not something new not done already elsewhere. So they are like traders who knew where to invest wisely, IMO.

Even if she were a Gujju but grew up elsewhere, what has that got to do with wimmens empowerment in Gujarat ?

I am just curious : when founding, what was Tata's innovation? What was so pathbreaking - tech/product - etc that had not been done before elsewhere for example most of such innovations in that domain as in Carnegies in US?

[brihaspati]

Electricity is the only core sector component showing continued growth of >5%, and even that comes at substantial cost as posted earlier, since a lot of the power equipment is imported at huge cost.

Isnt a substantial portion coming from China and I would expect it to be substandard over long range performance thereby increasing costs. Competitive bidding should penalize poor performance for future shortlisting and if possible include in contract for successful bids.

[Bade]

Good question, and the only reason I put TATA in there was as it was done in the not so business friendly times. Brit policy definitely was not to groom Indian businesses. If TATA could survive then, what excuse does Indian business houses have now even if policy push from GoI is not favorable.

I agree very little innovation from Indian industry houses in general.

[Arjun]

OK, I take your answer to that as lack of market. For new areas there always is a lack of market, no ? The western businesses seem to be able always to create a market for new products. Why not Indian businesses then? Well, I think I know what your answer will be. Probably it always lies in govt policy. I am not sure if that excuse can hold for ever. It has become a chicken and egg problem. Lack of innovation is more like it, as this issue is not limited to businesses alone. If you look even at academics it is the same cause. Lack of innovation or even a fear of doing it.

Bade,

Let me attempt to answer your question 'holistically' , since it is a good one.

1. If you specifically take innovation targeting the 'bottom the pyramid', there is a whole lot going on in India and there is a long history of such innovation. In fact, most folks worldwide would tell you that India is THE global center and hot-bed for such activity.

2. For high-end B2B innovation (targeting the corporate or enterprise market) - the best way is for Indian businesses to start competing at the lower end on price (which is what the Indian outsourcers did and still do). Consistently do that over a couple of decades - and these firms would become the largest ones in their space. Having done that - it would then become easier to buy up Western innovation firms and also to sell high-end innovation to Western corporates based on the relationships and track-record already built up. This is what China has done in hardware. India is on track to this in services....within the next decade Indian firms will dominate the list of global IT consulting firms and within 15 - 20 years they will be associated with innovation to the same extent as the Western leaders.

3. If we are talking manufacturing for enterprise customers that is the exact same path as above, except that unlike services it needs more capital and more of enabling policies from the government...but unfortunately here India has missed the bus completely which China gratefully took over. This is one area where government intervention and leadership with vision for large scale high-end manufacturing can make a difference.

4. If we are talking innovation directed at individual consumers (B2C) say in areas like technology, internet, pharma and medical technology - the primary issue is not of market but of capital. There needs to be a large number of bets in the $30 - 50 Million range, and out of every 10 such bets 1 or 2 might work out. The US has a strong risk capital infrastructure in place....Indian appetite for taking risk needs to get much higher and simultaneously the government needs to liberalize the financial system to ensure that there is a much larger pool of Indian money in private equity that give backing for such ventures. There is no problem of culture as such - once there are a few successes that are visible everyone else will follow that path. The key is somehow get those initial successes in place.

5. Coming to academic innovation, here there is neither an issue of capital nor of customers. India is in any case set to be among the Top 5 research nations by 2020 or so...but it can do better. There needs to be a strong sense right from the top that India needs to be among the best in research, and incentives for the director position in each 'institute of excellence' needs to be set appropriately. Once the incentives, rewards and punishments are set - everything else will follow as a matter of course. But the directive and vision needs to come from the very top.

[habal]

So again, why has rupee fallen maximum in past one month alone. Why was not the fall gradual and linear ?

Lots of things in life and in financial markets are not gradual and linear. There has been a major event that happened, which is Bernanke opened his mouth and talked about tapering, which in all probability is happening in another 2 weeks. That is the trigger for capital to flow out and you see the fall in the rupee to real effective exchange rates and as usual in panics a big overshoot.

And in addition to that, the growth differential between India and Germany is now something like 1.25% this quarter, so it is a lot more attractive for funds to go to developed markets.

tapering started in 2008, and peaked in 2011. These 'triggers' are all questionable.

[Theo_Fidel]

People are forgetting the big daddy of entrepreneurs. Maharashtra. IIRC Maharashtra is bigger than TN & GJ put together. Every state has its own entrepreneurship field it specializes in. Despite the climate for some reason SoKo & Japan folks find TN folks very easy and congenial to get along with. Tonnes of investment have followed them.

The entrepreneur dead zone unfortunately stretches through the BIMARU and allied states. Has a single industrial group come from UP or MP or Chattisgarh. Other than CPSU's these areas are a complete wasteland. They continue to act as a drag on our growth.

[Arjun]

People are forgetting the big daddy of entrepreneurs. Maharashtra. IIRC Maharashtra is bigger than TN & GJ put together. Every state has its own entrepreneurship field it specializes in. Despite the climate for some reason SoKo & Japan folks find TN folks very easy and congenial to get along with. Tonnes of investment have followed them.

The entrepreneur dead zone unfortunately stretches through the BIMARU and allied states. Has a single industrial group come from UP or MP or Chattisgarh. Other than CPSU's these areas are a complete wasteland. They continue to act as a drag on our growth.

There may be a large number of entrepreneurial businesses registered in Bombay / Maharashtra - but most are controlled by the known entrepreneurial communities - Gujaratis, Marwaris, Sindhis, Parsis....

As for TN, I am not sure the statistics bear out TN as being particularly entrepreneurial. There is far more entrepreneurial activity from AP and KA than from TN in the South alone.

[Theo_Fidel]

I just got another little nugget of information. All the high efficiency steam turbines in the 50-100MW range for the Concentrating solar plants were all apparently imported from Germany. I'm scratching my head over this one.

[vina]

People are forgetting the big daddy of entrepreneurs. Maharashtra. IIRC Maharashtra is bigger than TN & GJ put together. .

Very little of that in MH is owned by Marathis. The entrepreneurs in MH largely tend to be Gujarati (Parsis included), Marwaris and others.

[member_27444]

Was working for a while in Tallahassee FL last couple of months.
Mayuri restaurant owned by guiltis
Indian groceries store owned by guiltis
When asked from where they get vegetables , I thought it would be local that is Fl
The lady at the counter said from GA wher we have own farm oh OK
Went to texaco gas station on the way to airport said hi to the guy looked at my Amyrao card
Asked you guilti I said yes and no guilty
Asked how's the business said vey lucrative

Thought ah where there is will there is enterprise budding

........
Not shocking at all AEG, Siemens , Alstom, ( originally GEC of England) ABB Swiss with strong German heritage

[vina]

I am just curious : when founding, what was Tata's innovation? What was so pathbreaking - tech/product - etc that had not been done before elsewhere for example most of such innovations in that domain as in Carnegies in US?

Andrew Carnegie invented NOTHING . His innovation was in setting up large gigantic steel plants and playing the consolidation game brilliantly. ie. He did YumBeeYea giri brilliantly. That was his innovation.

Jamshedji Tata was India's Carnegie. He replicated exactly what was in Pittsburgh, in Jamshedpur . ie, steel plants at the confluence of two rivers so that there is water always (1920s steel plants needed continuous supply of water), proximity to raw materials (coal and iron ore) and proximity to giant markets. What is true for Pittsburgh-New York in 1920 is exactly true for Jamshedpur- Calcutta in 1920 !

In fact, the Chief Engineer who put up the TISCO plant was the best steel maker the world knew at that time, whom Jamsehdji personally went and met at Pittsburgh and brought him to India.

[member_27444]

What about Kirloskars just to name one many more like that

Carnage was a ruthless exploiter while he endowed many philanthropic institutions
He was Scrooge when it came to paying his worker at that time no OSHA

He was a monopolist and greatly benefitted with railroad expansion to the west

[vina]

Or in present times it has to be like Silicon valley and other big names very common in America for each sector of industry. Frankly none stands out from your list either. Yes, they are successful businesses but not something new not done already elsewhere.

Ok. By that token, what have Japan, South Korea and now China have done that did not exist elsewhere and by your standards are nothing but "traders" who invested wisely ?

Even if she were a Gujju but grew up elsewhere, what has that got to do with wimmens empowerment in Gujarat ?

You are talking ethnic Gujjus here. So it is obviously pertinent. You would expect an Mallu growing up in Gujarat to have similar norms at home than what her kindred folk back in Kerala would have, wouldn't you.

[Bade]

Vina-mian, no I was not talking of ethnic Gujarati folks from everywhere. Though some cultural traits might carry through even after migration to another place, there can be subtle differences that come with local influences. Again it depends on the conservativeness of the groups. Anyway it was not central to the topic of entrepreneurs, except the question was raised on women's empowerment.

Japan was accused till recently of pulling far below its weight in even the fundamental sciences. It can gladly say those days are over. SK I am not sure. PRC is a case in progress, they have made more strides than us though even in the fundamental sciences and applied sciences too of recent.

[Theo_Fidel]

Vina saar,
Who cares where the folks are from. Seems like and old urban legend kinda way of thinking. They only prospered in Maharashtra, no. That makes it a state that cultivates entrepreneurs. It remains the big daddy of India in this regard.

[Arjun]

Vina saar,
Who cares where the folks are from. Seems like and old urban legend kinda way of thinking. They only prospered in Maharashtra, no. That makes it a state that cultivates entrepreneurs. It remains the big daddy of India in this regard.

No, most of India's entrepreneurial communities have prospered wherever they have migrated to - both within India and globally.

If you want to slice geographically rather than by community - city-wise makes more sense. Mumbai, Delhi, Bangalore and Hyderabad top all entrepreneurial rankings in India. Generally speaking Mumbai and Delhi tend to be the top 2, followed by the the other 2.

Delhi benefits from being the primary entrepreneurial hub in the North, while the South is more dispersed.

[member_27444]

Delhi doles out permits and licenses as well.
Proximity to power helps helps but in Delhi there is always power shortage I wonder why?
Some say power grab, but I discount that as omissions and commissions

[Muppalla]

CEO confidence survey: Almost three fourths back Narendra Modi; less than 10% want Rahul Gandhi as PM

BJP is yet to formally anoint Narendra Modi as its prime ministerial candidate, but an overwhelming chunk of the country's top business leaders is convinced he's the best man for the job.

Almost three-fourths of 100 honchos polled in the 'ET CEO Confidence Survey' want Modi as PM. Rahul Gandhi is way behind — just 7% back him. India Inc's leaders are sending two clear and separate messages — one on national leadership and another on politics. The first is this: After a long policy drought, CEOs are impatient for strong leadership, intent, decisions and action.

Modi, they seem to think, has more to show than Gandhi on all these counts. But India Inc's big vote for Modi, this survey also suggests, is not necessarily an endorsement of his politics, but only a thumbs-up for his leadership. While 74% believe Modi will be a better PM than Gandhi, 58% are fine with either a Congress or BJP government as long as it's stable. And that's the second message: leadership and stability matter more than party colours.

[Arjun]

CEO confidence survey: Almost three fourths back Narendra Modi; less than 10% want Rahul Gandhi as PM

BJP is yet to formally anoint Narendra Modi as its prime ministerial candidate, but an overwhelming chunk of the country's top business leaders is convinced he's the best man for the job.

Almost three-fourths of 100 honchos polled in the 'ET CEO Confidence Survey' want Modi as PM. Rahul Gandhi is way behind — just 7% back him. India Inc's leaders are sending two clear and separate messages — one on national leadership and another on politics. The first is this: After a long policy drought, CEOs are impatient for strong leadership, intent, decisions and action.

Modi, they seem to think, has more to show than Gandhi on all these counts. But India Inc's big vote for Modi, this survey also suggests, is not necessarily an endorsement of his politics, but only a thumbs-up for his leadership. While 74% believe Modi will be a better PM than Gandhi, 58% are fine with either a Congress or BJP government as long as it's stable. And that's the second message: leadership and stability matter more than party colours.

I am actually quite surprised Modi scores only 75%. My own interaction leads me to believe that the bulk of Indian business leaders are completely and totally tired of the mismanagement of the past few years, and want effective leadership which is what Modi represents. My own admittedly rather unscientific estimate would put the percentage for Modi at much higher.

But this 58% support for either government as long as it is stable seems to me to be a concession to their own short-term profit motives. I would much rather that business and industry took a stronger stance against dynastic politics.

[panduranghari]

Rest of his speech is more like a financial engineer in wall street and not RBI governor.

Raghuram Rajan seems like an WB/IMF guy without the overbearing burden of tight political oversight like MMS or Montek Singh Ahluwalia or Chidambaram ? Unless he can prevent money-market manipulation by speculators, there is nothing to arrest all of rupee. For eg, each time the Rupee falls to the dollar, it does so more than 30 paise. Now 25 paise seems to be the minimum margin acceptable to speculators to make their bets, and it so does happen magically that every time rupee depreciates, it does so by heavy margins indicating heavy speculator play. This has to be stopped because Dollar itself being a weak currency, artificially propped up through various tactical exigencies will take down other currencies with it, unless steep walls are created around the Indian rupee. Theoritically there is no limit to which rupee can fall because of these prevailing external conditions.

Agreed. He will send Indian gold overseas. Thats given. I wonder how he was chosen? Was there no one else?

[Austin]

Interview with the Prime Minister's top economic adviser C Rangarajan

The worst may now be over for the rupee and it could stabilise at the current 65 to 66 a dollar level, the Prime Minister's top economic adviser C Rangarajan has told NDTV.

Worst may be over for the rupee: Rangarajan

Here is what Dr Rangarajan told NDTV on the rupee:

Question: At what levels will the rupee stabilise?

Answer: At what levels it is very difficult to say, but I believe at the present level the rupee is well corrected. Now what is the word corrected mean, we can only at it in terms of a base year and see whether the exchange rate of the rupee has been adjusted for inflation differential between India and other countries. If you take 2004-2005 as the base, the calculations made clearly indicate that somewhere about 62-63/$ it is well corrected therefore anything beyond that is result of whereas other forces operating in the system. I believe that rupee can stabilise and even strengthen from the current position as capital flows come in. So we are on the road to stabilisation.

Question: Is the worst over for the rupee?

Answer: I think so. In some sense the value of the rupee in the foreign exchange markets is not only determined by our own actions by also what is happening in the rest of the world, over which we have no control. If the Syrian crisis takes a serious turn, I do not know what impact will it have, capital flows can be affected. But barring these, I see stabilisation happening. It can stabilise around the current level and if capital flows come in it can further strengthen.

[panduranghari]

The long running inflation in India has everything to do with our lack of capital. We don't make enough of anything ergo inflation.

^^^Please explain how? That analysis is shocking. I have never encountered this equation explaining inflation. The more I think about it, the more it sounds wrong.