India Economy Thread II

[kannan infratech]

Originally Posted by gentem

chidambaram back as FM he done a good job as home minister too.. he could have been given both home ministry and finance

and rbi has cut something yesterday

Why not Home, Finance, PM & President ?

[gentem]

next upa PM is chidambaram.. if rahul is not in mood

[gandhi.rushabh1992]

I'll give up my faith in India the day that Italian pup becomes the PM...

[chennaidesi]

Dont worry no one in TN wants him to be PM because he will stop all TN projects.

[sanjaybm]

Originally Posted by gandhi.rushabh1992

I'll give up my faith in India the day that Italian pup becomes the PM...

Never give up faith.

Pup or mongrel or ape, India has survived worse and will emerge stronger.

Also, let him enter the ministry now - the mistique will fade and he will either sink or swim.

[gandhi.rushabh1992]

Oh, India will survive, it always has. But are we setting our goal at survival only. Why not set a higher goal? One thing is true, if that mongrel (its a better word than pup) becomes our PM, all India can hope for will be survival...

[gentem]

thanks to chidu's able handling of home ministry we havent seen bomb blasts in mumbai/delhi recently.. poor terrorists could not even get bombs so they blasted some pataka fireworks in pune i am sure chidu would have handled both home and finance ministries both together politics apart he is one of the best administrators to govern india, like manmohan of yesteryears

[gandhi.rushabh1992]

I agree, there are some good and competent politicos in UPA (among a crowd of duffers!)

[Vasu]

i have small question, why we fix the rate dollar basis for our Oil and Gold?

[skdubai]

Because that is the world standard on fixing of prices for those commodities. End of the day, we have to import them from the world market in USD

[sanjaybm]

Originally Posted by gandhi.rushabh1992

Oh, India will survive, it always has. But are we setting our goal at survival only. Why not set a higher goal? One thing is true, if that mongrel (its a better word than pup) becomes our PM, all India can hope for will be survival...

Of course a higher goal needs to be set. However, even the Mongrel cannot stop India from progressing. The problem is that there we will take longer to reach our potential.

[Licit Mortal]

If there is one primary factor that keeps our economy challenged, that in my opinion would be import of oil and natural gas. As long as we do not work towards significantly reducing this import, we would never be able to narrow our deficit. No matter how hard we work and how large our economy percentage is, we would always be a deficit economy.

The two possibilities with which we can reduce this is through proper solar policies (tax cuts, incentives, discounts) for every family and through research and development on Thorium and clean energy through coal(Finding an effective way to capture and dispose the emissions from burning coal). It is extremely disheartening to see our coal being exported in illegal ways to other countries, while we haven't been able to make use of our resources for addressing the power(Electricity) situations in our country.

Why cant we construct another 50 large thermal power plants, applying the latest clean technologies available and using our own coal in the next 5 years? Screw the global warming. Does the US or China really care about the global warming? When we do not even have our primary energy needs fulfilled, we cannot act to become a leader in reducing greenhouse gases.

Why are we not progressing fast enough with our thorium research? I believe the people who protest nuclear plants in TN are instigated and antagonized by certain NGOs, who in turn are funded by the very own companies, who are a part of the nuclear deal that has been signed. They do not want India to find effective ways of power generation from Thorium, because once that happens, India would become self sustainable in power generation and energy for atleast the next 100 years.

We need to hasten the process of becoming an electricity surplus nation and once we have become an electricity surplus nation, then we could dream about electric vehicles and electric cook tops in the future, that would completely do away with our oil and natural gas imports.

Without addressing this issue, if we are going to simply increase the number of manufacturing plants in our country, assuming a larger income generation, we are certainly going in the path of self destruction of our economy. This is because the more the manufacturing plants are, the more is the demand for energy, which leads to additional import of oil and natural gas and hence a further widened deficit.

Just my two cents.

cheers

[MeMumbaikar]

btw anybody keep track of the facebook stock?


talk about huge loss for investors.

[sixsigma1978]

Originally Posted by Licit Mortal

Why cant we construct another 50 large thermal power plants, applying the latest clean technologies available and using our own coal in the next 5 years? Screw the global warming. Does the US or China really care about the global warming? When we do not even have our primary energy needs fulfilled, we cannot act to become a leader in reducing greenhouse gases.

They tried that. UMPP's were 4000 MW Power plants dedicated to use the latest super-critical boiler technology- for a change GoI got it right. This was PRECISELY the gung-ho break we needed to at one go : give a massive increase in power production at the same time employing the latest "green" tech for thermal plants.
However, the typical ineptitude and crab mentality of every segment of the Indian chain of command including Coal Ministry, Ministry of Environments and Forests, Environmentalists, Social activists and village level morchas against land acquisition pretty much has put brakes on everything.

Even corruption-wise- this time the government cant be be faulted as they did a transparent open bidding process to shortlist bidders.

In this country - everyone wants power- but with no effort. Somehow, the same people who demand 24x7 power seem to think power can be generated magically out of thin air!!

[desiyogi]

Originally Posted by MeMumbaikar

btw anybody keep track of the facebook stock?


talk about huge loss for investors.

I actually bought 7 stocks of facebook.

But a lot of funds are recommending keeping it on hold for the "long term" 5-10 years as facebook is already among the world's top 5 populated nations in terms of members.
So, online advertising will bring in a lot of revenue.

[MeMumbaikar]

yeah i dont think facebook will simply disappear as they are making a good profit.

40 billion seems to be a good market capitalisation for them.


the problem with internet companies is that they are a bit too susceptible to ups and downs. Look at yahoo.

Hardware and software companies like Microsoft Intel Adobe seem a bit stable. Google too is trying to expand its bases and not rely only on the internet. But even there are dangers as Sony will tell you as will Nintendo....



This is where somebody like Samsung have the advantage over others. They are a conglomerate and have the capacity to protected and not go bust from profits in other sectors.

Dont be surprised if the next big thing in the world are companies like Hyundai Samsung etc giving the Americans and Europeans a run for their money in the defence sector. They certainly do have the engineering base and skills.

[MeMumbaikar]

India's GDP growth may slow to 4.9%: Citi

More economists slashed their economic forecasts for India, with Citigroup and CLSA cutting their outlooks for growth to 5.4 per cent and 5.5 per cent respectively in the fiscal year ending March, with a weak summer monsoon adding to economic headwinds.

Citigroup said a policy gridlock, recent power outages, weaker exports and falling domestic consumption will take a toll on Asia's third-largest economy.

Economist Rohini Malkani said in a note that if drought conditions worsen, growth could fall to 4.9 per cent.

The Reserve Bank of India has already cut its GDP projection to 6.5 per cent for 2012/13 from the earlier estimate of 7.3 per cent.

CLSA said it expected the farm sector to be stagnant compared with an average growth of 3 percent in previous years.

"Unfortunately, the scope for counter-cyclical fiscal and monetary support today is almost non-existent," wrote Rajeev Malik, economist at CLSA.

The RBI has been reiterating concerns over rising food prices alongside a high subsidy bill, which could worsen the fiscal deficit. The summer drought has put a question mark over the government's ability to raise fuel prices.

On Tuesday, Indian rating agency CRISIL slashed its growth forecast to 5.5 percent for the fiscal year ending March, just two months after pruning its projection to 6.5 percent from 7 percent.

It said a weakening euro outlook along with poor rains contributed to the latest cut.

http://profit.ndtv.com/News/Article/...-9-citi-309001

[ssusa]

MUMBAI, India — It is the business version of “he said, she said.”

One of India’s fastest-growing financial exchanges is suing a prominent economist claiming defamation. But Ajay Shah, the economist, says the Multi Commodity Exchange of India is just using legal means to quiet a critic.

The case has raised fresh concerns about colonial-era laws that give significant power to policy makers, companies and individuals to muzzle critics and those they consider offensive.

Unlike libel law in the United States, defamation in India can be treated as either a civil or criminal matter. Those found guilty can be fined and sentenced to up to two years in prison. And such lawsuits can take years to resolve because the Indian courts are backlogged with millions of cases.

“It has become a tool for intimidation,” said Karuna Nundy, a lawyer who has defended defamation cases but is not involved in Mr. Shah’s cases.

The lawsuits follow a long tradition of Indian companies using defamation laws to punish journalists when their reputations have been attacked or to pre-empt attacks.

Article ToolsFacebookTwitterGoogle+E-mailSharePrint.In 1998, Reliance Industries, one of India’s largest conglomerates, obtained a court injunction against the publication of “The Polyester Prince,” a book about the rise of the company’s founder Dhirubhai Ambani. Last year, an education company sued the magazine The Caravan, and secured a court order requiring it to remove an unflattering profile of the firm and its founder, Arindam Chaudhuri, from its Web site.

Mr. Shah and the Multi Commodity Exchange of India, or MCX, are heavyweights in Indian finance.

Mr. Shah, a former consultant to the Finance Ministry, is often asked by the government for advice, and his work is read globally by analysts and policy makers who are interested in the Indian economy. MCX is the nation’s dominant exchange for commodity derivatives, and its founder, Jignesh Shah, no relation, is considered one of the country’s most successful entrepreneurs.

Their complaints go back several years.

In 2009, Mr. Shah, the economist, wrote a column titled “The ‘X’ Factor in Regulation” in The Financial Express newspaper. He argued that the Forward Markets Commission, MCX’s primary regulator, had improperly helped the company by ruling against one of its competitors in a regulatory matter over the cost of trading certain derivative contracts.

“When regulation is weak, this encourages the players who have strengths in fixing the regulatory system to their own advantage,” Mr. Shah wrote in the column.

After it was published, MCX filed suit in Mumbai, arguing that Mr. Shah had implied that the company was doing business in “an illegal and illegitimate manner.” The company added that Mr. Shah had done so to jeopardize MCX’s plans for an initial public offering, which took place early this year.

MCX, in particular, took issue with Mr. Shah’s ties to a rival exchange. The company argued that Mr. Shah was biased since he was a former board member at the National Commodity and Derivatives Exchange, the competitor cited in the article.

MCX added that a firm owned by Mr. Shah’s family sells data to that exchange. Mr. Shah also sits on the board of a company that clears stock trades on National Stock Exchange of India, which is a big shareholder in the National Commodity exchange.

MCX officials declined requests for comment, citing the continuing legal cases. But the exchange has offered its position in legal filings and a newspaper ad.

“He was attempting to give a simple regulatory noncompliance issue by one Exchange a colour of competition,” MCX said in the ad. “Normally academicians do not hold any briefs when they give their views publicly as intellectuals and if they do so, propriety demands that they divulge such facts which Ajay Shah failed to do.”

Mr. Shah countered that the lawsuits were meant to squelch criticism. He acknowledged that a company owned by his family, the Center for Monitoring Indian Economy, provides data to the National Commodity exchange. But he added that it provides data to many players in Indian finance, including the Reserve Bank of India, a frequent target of his criticism.

“The way India works is once a few cases like these are opened, a lot of people are reluctant to write about the issue,” he said, in an interview. “In the future, you will be very, very careful of taking on MCX.”

Both sides have raised the legal stakes since the initial case was filed.

In 2010, Mr. Shah tried to have the case dismissed by higher courts, but they ruled that he must stand trial in Mumbai. Last year, MCX filed two more lawsuits against Mr. Shah. In them, the exchange argued he defamed it by listing it among a group of companies that were dealt with in a tough manner by an Indian securities regulator whom Mr. Shah finds admirable.

MCX filed the cases in Kolhapur, 235 miles south of Mumbai, and Surat, 180 miles north of Mumbai. Mr. Shah argues that those cities were chosen to make it difficult for him to defend himself because he lives in Mumbai. The company, which is also based in Mumbai, has argued the cases were filed in the cities where executives first read and heard Mr. Shah’s comments.

The suits have reignited calls to reform the country’s laws, which date to the 19th century.

The Editors Guild of India has been pushing for an amendment that would classify defamation as only a civil offense. Some free speech specialists have argued that the government and publishers should strengthen quasi-judicial Press Council of India to resolve most complaints against the media, so that few cases end up in courts.

In part, they are pushing to speed up the resolution of disputes. Defamation suits, like most other cases in India, can languish for years. Indian courts have a backlog of 30 million cases, and more than a quarter of them are at least five years old, according to the government.

“By the time the case is resolved in Indian courts, the person or company has already been put through inconvenience,” said Vijayendra Pratap Singh, a partner at one of India’s largest corporate law firms, Amarchand & Mangaldas & Suresh A. Shroff.

Source: http://dealbook.nytimes.com/2012/08/...ef=todayspaper

[Brar]

Great days ahead for India we can utilize Rajan Correctly

IMF official to chief economic advisor of India

Raghuram G Rajan, a former International Monetary Fund (IMF) chief economist who is currently employed as professor at Chicago University, is set to take over as India's new chief economic advisor. The 49-year-old economist had achieved fame for his perceptive warning on the global financial crisis of 2008.

Rajan will replace Kaushik Basu, whose term ended on July 31. Basu will return to Cornell University, so he could don his academic robes once again. He has been on leave from the university since 2009, where he is employed as a professor of economics and the C. Marks professor of International Studies.

Official sources confirmed that the government has cleared Rajan's appointment, and a formal order will be issued shortly. They, however, did not comment on the likely tenure for Rajan or the date on which would assume his new role.

Such assignments usually have a three-year tenure.

Rajan (49), a PhD from the Massachusetts Institute of Technology, has done pioneering work in the areas of banking, corporate finance and economic development. He is taking over at a time when policy makers are grappling for options to reverse the deceleration in India's economy due to the crippling industrial slowdown.

An honorary advisor to Prime Minister Manmohan Singh, he is known for his outspoken views on India's economic management. He had also chaired a high-level committee on financial sector reforms in India.

Rajan is of the view that immediate steps need to be taken on key aspects of second-generation reforms, such as raising the retail prices of fuel, besides deregulating and aligning them with international crude price movements.

Many expect Rajan, who studied at IIT Delhi and IIM Ahmedabad, to help finance minister P Chidambaram guide the country out of its current economic crisis. Rajan is expected to frame policies on the unfinished reforms agenda — most of which Chidambaram had unveiled in his stint as the finance minister in UPA-I between 2004-08.

His recent book, Fault Lines: How Hidden Fractures Still Threaten The World Economy, won the Financial Times Business Book of the Year award in 2010. He had also co-authored a book with Luigi Zingales, titled Saving Capitalism From The Capitalists.

Source

[Gudavalli]

Huge gold import a reason for high current account deficit last year: C Rangarajan

HYDERABAD: India's huge gold imports in the last financial year at USD 60 billion was partially responsible to high current account deficit, Prime Minister's Economic Advisory Council Chairman C Rangarajan has said.

According to Rangarajan, India saw USD 60 billion worth of gold imports last year and the situation partly contributed to high CAD levels.

"Gold imports in the previous year (2010-11) was USD 40 billion. The increase of USD 20 billion is partly attributable to high level of inflation. If you exclude that USD 20 billion, which I considered to be an excess, then the current account deficit would have come to moderate levels (last year)," Rangarajan said.

He was delivering a lecture on the 'Indian Economy: The Way Ahead' at Hyderabad Management Association Foundation Day Lecture here yesterday.

The current account deficit (CAD) was at 30-year record high of 4.2 per cent of the GDP in 2011-12. CAD occurs when country's total imports and transfers are higher than its total exports and transfers. High levels of CAD leads to a slew of problems, including deterioration in the currency, to the economy.

In the first quarter policy statement yesterday, RBI had said one of the reasons for not reducing interest rates was the high fiscal deficit and CAD.

Rangarajan expressed the hope that the CAD will come down this year and capital flows into the country will be adequate to to cover the current account deficit to a large extent.

RBI Governor D Subbarao had also said the current account deficit would improve this fiscal as numbers for the first three months are indicating an improvement.

"It is possible that this year the CAD might be lower than it was last year," he had said.

The Governor had said numbers available for the first quarter show that the non-oil trade deficit has improved, which hints at an improvement in the CAD situation.

According to World Gold Council, gold demand in India was down in the first three months of 2012-13.

Gold imports were impacted by a number of factors such as new tax on gold jewellery, increases in the import duty for gold and weakness and volatility in the rupee.