India Economy Thread II

[zhiemi]

India direct tax receipts up 39 pct y/y in June qtr

India's direct tax receipts jumped 38.6 pct in the quarter to June from a year earlier to 573.73 billion rupees ($13.28 billion) riding on robust corporate payments, a finance ministry statement said on Friday.

The finance minister said on Tuesday the government hopes strong revenue growth in the year to March 2009 would help keep the fiscal deficit below its annual target.

But an analyst said the last quarter's figures were a spill-over from high economic growth of the last 2 years, adding expansion in receipts may taper off.

"Going forward, we don't expect this momentum in tax collection will continue. The fiscal deficit is going to be wider at 3-3.5 percent of GDP," said N.R. Bhanumurthy, an economist with the Institute of Economic Growth.

On Friday, the finance ministry said corporate taxes came in 32.7 percent higher at 345.66 billion rupees during the April-June period, while income tax receipts stood at 227.82 billion rupees, 48.8 percent more than a year ago.

Growth in tax collections in June slowed from a scorching 71.3 percent growth in the April-May period as the government made a hefty refund payout of 115.78 billion rupees.

The government expects robust tax revenue in the year to March 2009 to keep the fiscal deficit below a target of 2.5 percent of gross domestic product (GDP) in 2008/09 compared to 2.8 percent of last year.

The cash-strapped government has pledged to spend billions of rupees on populist schemes ahead of elections and has to foot a heft subsidy bills in order to keep fuel and food prices low.

[MachuPichu]

Originally Posted by zhiemi

Price rise confined to a few items: Govt

I doubt this...energy cost increase affects everything from transportation to health care. I am pretty sure that the run away inflation for poor/marginal people (80% of India's population) is at least twice the current inflation, because inflation of inflation tends to be the highest for marginal people. I would be surprised if the inflation wasnt 25%+ for the poor and marginal middle-class. In essence, India's poverty level will increase rather than fall and that will be a tragedy of all sorts.

MP

[MachuPichu]

Originally Posted by speed_DNA

I think our economy is in a good position even the inflation is hitting 11%plus.
Prices are high but inflow of funds are still good enough.
but our media making a outlook that economy is shirinking, that is making a lot of negative wave across the investors and market people,
But our stocks exchanges were rocking when the Oil price run from 30 to 70$
but this time all scared to invest in the market,
Media making a lot of speculation in and around the market, this has to be change for a stable economy.

You cannot use foreign reserve funds to spend in India...it contributes to more inflation. The main worry for the Indian government and corporations should be the credit rating. If that gets cut to below investment grade, all debt will become expensive - pretty much wiping out leveraged businesses (which most Indian businesses are as the IPO market is virtually non-existent in India) and the highly leveraged Indian government. India should have learned from Brazil's energy policy...now it has been pushed to the least attractive position in the BRICs category...talk about not getting off your butt and not planning.

MP

[Suncity]

India's direct tax collections up 38 pc

http://economictimes.indiatimes.com/...ow/3197169.cms

In spite of a slowdown in the growth of both industrial production and merchandise exports, India's direct tax collections rose by as much as 38.61 per cent in the first quarter of the current fiscal, the finance ministry said on Friday.

The direct tax collections, according to an official statement, rose to Rs.573.73 billion during the period against Rs.413.91 billion in the like quarter of the previous fiscal.Among the various components of direct taxes, corporate taxes rose by 32.65 per cent to Rs.345.66 billion, while personal income tax jumped by 48.84 per cent to Rs.227.82 billion.

"The growth in direct taxes has been maintained despite much larger refund payouts at Rs.115.78 billion, as against Rs.73.02 billion during the corresponding period last fiscal," the statement said.

Among the various regions, the Delhi circle saw the direct tax collections grow by 53.57 per cent, while Mumbai saw an increase of 40.19 per cent.

Nagpur with 74 per cent, Kochi with 68 per cent, Bangalore with 47.26 per cent and and Kolkata with 45.30 per cent also registered significant increases in the mop up.

[zhiemi]

Not related to the thread, but anyway...


Indian firms employ over 30k US citizens: Study

Amidst the row in US over outsourcing, a study has said that big corporates like Essar, HCL, Tata, Mahindra and Wipro have generated over 30,000 jobs for Americans in recent years.

Tata Group alone employs 19,000 Americans and has invested over 3 billion dollars, besides operating 16 businesses in US, a report by US-India Business Council (USIBC) and industry body FICCI said.

Indian employers and their American workers contribute billions of dollars to the Federal, state and local treasuries by way of wages, corporate taxes, payroll taxes and income taxes, the study said.

About 12 Indian companies, including Essel-Propack, ITC Kitchens of India, Ranbaxy, Satyam and Wockhardt, are making a sizable impact on US economy, the chamber said.

With a presence in nearly a dozen states like Arizona, Colorado, Florida, Missouri, New York and Texas, Essar's American operations generated more than 110 million dollars in revenues last year and has employed about 7,200 people till now, which would increase to 8,500 by next year.

[Suncity]

Manufacturing jobs added from 1998-2005 in major states:

TOI from economic censuses

[MachuPichu]

Originally Posted by zhiemi

Not related to the thread, but anyway...


Indian firms employ over 30k US citizens: Study

The US has plenty of cheap assets (except Intellectual Property, of course) to sell now...everything from Manhattan real estate to the local 7-11. People with money in India, get your checkbooks ready, if you want to get in on a piece of action before the Europeans and Arabs do. I am especially interested in knowing how Indian IT firms with reasonable amounts of cash will deploy their capital - we've got cheap IT companies here. Of course, the borrowing costs in India are quite high, so it could be tricky to adopt a leveraged position. And your central bank could reintroduce foreign exchange outflow restrictions if the demand for dollar continues to rise. Oil will touch $200 per barrel - no doubt about that anymore as the world discovers that countries have highly exaggerated their reserves position. You'd have to move your manufacturing to the US if you want to make profits. I see Chinese companies shifting some of the work to the US/Mexico/Canada zones and take advantage of NAFTA policies. Will Indian companies do this? Interesting times, arent they?

MP

[ajay_ijn]

Originally Posted by MachuPichu

The US has plenty of cheap assets (except Intellectual Property, of course) to sell now...everything from Manhattan real estate to the local 7-11. People with money in India, get your checkbooks ready, if you want to get in on a piece of action before the Europeans and Arabs do. I am especially interested in knowing how Indian IT firms with reasonable amounts of cash will deploy their capital - we've got cheap IT companies here. Of course, the borrowing costs in India are quite high, so it could be tricky to adopt a leveraged position. And your central bank could reintroduce foreign exchange outflow restrictions if the demand for dollar continues to rise. Oil will touch $200 per barrel - no doubt about that anymore as the world discovers that countries have highly exaggerated their reserves position. You'd have to move your manufacturing to the US if you want to make profits. I see Chinese companies shifting some of the work to the US/Mexico/Canada zones and take advantage of NAFTA policies. Will Indian companies do this? Interesting times, arent they?

MP

But why would anyone want to shift work to US since Man Power Costs are much more compared to China & other developing countries?. Are u considering the transport costs of goods?


anywayz have a look a how Left blocked many economic reforms of India.
http://timesofindia.indiatimes.com/L...ow/3211086.cms
- The Left opposed the UPA government's proposal to hike the Foreign Direct Investment (FDI) cap in telecommunication from 49 percent to 74 per cent. After a year of bitter wrangling, the UPA government went ahead and implemented the proposal even in the teeth of opposition from its allies.

- In insurance and civil aviation, the Left prevented the government from raising the FDI cap.

- The Pension Fund Regulatory Development Authority bill, seeking to put the pension fund in charge of private companies and invest the pension money in stocks, languished because of the Left's refusal to back it in Parliament.

- The UPA government's proposal to sell off shares from Indian banks and allow more foreign banks to operate from here ran aground as the Left refused to back the government's banking reforms.

- The Left demanded a review of the 2003 Electricity Act brought by the then BJP-led National Democratic Alliance (NDA) government even as the UPA government was pushing for its implementation.

- The government was forced to shelve its decision to disinvest 10 per cent share in Bharat Heavy Electrical Ltd (BHEL).

- The Left resisted the government's proposal to bring FDI in the retail sector.

- There was protracted tussle between the government and the Left over allowing private agencies to modernise airports.

- But it was in foreign policy that the Left clashed most vehemently with the government. It wanted the UPA government not to enter into any strategic alliance with the US administration.

- Finally, it was the Manmohan Singh government's resolve to go ahead with the India-US nuclear deal that forced the Left to withdraw support to the government
---------------------------
Now with left gone i hope Congress will implement atleast some reforms before elections.

[MachuPichu]

Originally Posted by ajay_ijn

But why would anyone want to shift work to US since Man Power Costs are much more compared to China & other developing countries?. Are u considering the transport costs of goods?


anywayz have a look a how Left blocked many economic reforms of India.
http://timesofindia.indiatimes.com/L...ow/3211086.cms
- The Left opposed the UPA government's proposal to hike the Foreign Direct Investment (FDI) cap in telecommunication from 49 percent to 74 per cent. After a year of bitter wrangling, the UPA government went ahead and implemented the proposal even in the teeth of opposition from its allies.

- In insurance and civil aviation, the Left prevented the government from raising the FDI cap.

- The Pension Fund Regulatory Development Authority bill, seeking to put the pension fund in charge of private companies and invest the pension money in stocks, languished because of the Left's refusal to back it in Parliament.

- The UPA government's proposal to sell off shares from Indian banks and allow more foreign banks to operate from here ran aground as the Left refused to back the government's banking reforms.

- The Left demanded a review of the 2003 Electricity Act brought by the then BJP-led National Democratic Alliance (NDA) government even as the UPA government was pushing for its implementation.

- The government was forced to shelve its decision to disinvest 10 per cent share in Bharat Heavy Electrical Ltd (BHEL).

- The Left resisted the government's proposal to bring FDI in the retail sector.

- There was protracted tussle between the government and the Left over allowing private agencies to modernise airports.

- But it was in foreign policy that the Left clashed most vehemently with the government. It wanted the UPA government not to enter into any strategic alliance with the US administration.

- Finally, it was the Manmohan Singh government's resolve to go ahead with the India-US nuclear deal that forced the Left to withdraw support to the government
---------------------------
Now with left gone i hope Congress will implement atleast some reforms before elections.

Three or four reasons:

- First and main reason: transportation costs - did you know that the operating margins of several Chinese firms is in the low single digits after Oil shot up? They just are unable to pass on the rising costs to US consumers
- US will force China to let its currency appreciate making it even more unattractive for local Chinese manufacturers
- Democrats possibly in power: slap outsourcing tax, increased import duty etc.
- US consumers purchasing patterns are changing - movement toward less but more sustainable purchases as opposed to impulse purchases; credit crunch is making a lot of people rethink their purchase decisions. More eco-friendly products are on the up, as well.

You want to make any sort of money or see any sort of valuations for your company, you'd want to manufacture eco-friendly products close to the US markets with low transportation costs and take advantage of NAFTA tax rebates. Else, you wont make it anymore.

MP

[Mahratta]

Originally Posted by MachuPichu

- US will force China to let its currency appreciate making it even more unattractive for local Chinese manufacturers

That won't happen, although it would be nice

[MachuPichu]

Originally Posted by ajay_ijn

But why would anyone want to shift work to US since Man Power Costs are much more compared to China & other developing countries?. Are u considering the transport costs of goods?


anywayz have a look a how Left blocked many economic reforms of India.
http://timesofindia.indiatimes.com/L...ow/3211086.cms
- The Left opposed the UPA government's proposal to hike the Foreign Direct Investment (FDI) cap in telecommunication from 49 percent to 74 per cent. After a year of bitter wrangling, the UPA government went ahead and implemented the proposal even in the teeth of opposition from its allies.

- In insurance and civil aviation, the Left prevented the government from raising the FDI cap.

- The Pension Fund Regulatory Development Authority bill, seeking to put the pension fund in charge of private companies and invest the pension money in stocks, languished because of the Left's refusal to back it in Parliament.

- The UPA government's proposal to sell off shares from Indian banks and allow more foreign banks to operate from here ran aground as the Left refused to back the government's banking reforms.

- The Left demanded a review of the 2003 Electricity Act brought by the then BJP-led National Democratic Alliance (NDA) government even as the UPA government was pushing for its implementation.

- The government was forced to shelve its decision to disinvest 10 per cent share in Bharat Heavy Electrical Ltd (BHEL).

- The Left resisted the government's proposal to bring FDI in the retail sector.

- There was protracted tussle between the government and the Left over allowing private agencies to modernise airports.

- But it was in foreign policy that the Left clashed most vehemently with the government. It wanted the UPA government not to enter into any strategic alliance with the US administration.

- Finally, it was the Manmohan Singh government's resolve to go ahead with the India-US nuclear deal that forced the Left to withdraw support to the government
---------------------------
Now with left gone i hope Congress will implement atleast some reforms before elections.

People need to organize better in India...democracy comes at a cost...if the voting public is indifferent to policies, democracy wont work. I see that as a fundamental problem in India:

- lack of world-class public policy institutes and research that can be used to formulate special interest groups and advocacy groups
- organization at local level to vote on policy lines (you need connectivity for this - roads, internet, market places) - an impoverished villager should be able to realize that he or she wouldnt vote for a government that provides free grants/subsidies but for a party that really fields honest candidates and has sound governance policies
- ability to sue and be sued by the government - Indian citizens should have the right to sue government agencies for non-performance.

Right now the BEST solution, in my opinion for India, is to strongly enforce laws that prevent criminalization of politics and allow the citizens to sue the government for non-performance (such as in the US). The latter is a must - nothing like financial penalties to stop people from acting in an irresponsible manner.

MP

[MachuPichu]

Originally Posted by MaitreyaSequeira

That won't happen, although it would be nice

well...then, they need to get ready for some special import duty (we'd have democrats in power now, remember, they are a bit socialistic) unless they open up more to US, European and Japanese exports.

You just need to read up on the WSJ how factories are shutting by the thousands in China due to fuel costs and the managed Yuan appreciation.

Maybe India and Vietnam are next manufacturing destinations, but if these countries have any sense, they wouldnt turn themselves into a low-cost, low-skill destination. There is still a lot of merit in turning into a Japan or a South Korea or a Taiwan rather than a China.

MP

[zhiemi]

FDI inflow triples in FY'08: NCAER

Foreign investments in India almost tripled in FY' 08 than the capital it received during the same period in last fiscal, the National Council of Applied Economic Research (NCAER) said in a recent report.

"In the first nine months of 2007-08, the net capital flows rose to USD 83 billion from USD 30 billion the country received during the corresponding period of the previous year," the report said.

The country maintained the trend of attracting funds that also boosted its forex reserves, it added. "Access to global capital has helped India's macro- economy to see a rapid and steady rise in its forex reserves, post-1991 period," the NCAER report said.

These capital inflows have become a significant force behind total investment spending, the report said.

The flow of funds, in terms of foreign direct investment (FDI) or external commercial borrowing, has also complemented portfolio funds, the report said, adding that between FY' 04 and FY' 08, the reserves rose by more than USD 150 billion.

Foreign funds during the period rose enough to finance the current account deficit, it said.

Besides India, a similar trend has been noticed in all emerging economies, the report said.

"The overall capital flow to these economies has gone up from USD 168 billion in 2003 to USD 605 billion in 2007," the report said.

[zhiemi]

Left withdrawal may fasten reforms: Merrill

The withdrawal of support by communist allies of the Congress-led federal government may result in quicker economic reforms and passage of the nuclear deal, a note by brokerage Merrill Lynch said on Wednesday.

The development is a positive for the market, with quicker reforms likely to come in the form of disinvestments, hike in foreign limits in insurance, and allowing foreign direct investment in retail, Merrill said in a report to clients.

Communist parties, which provided the government with a parliamentary majority for the last four years, ended support to protest a civilian nuclear deal with the United States, setting in motion a likely no-confidence vote in parliament.

The government believes it has enough votes to retain its majority and escape early elections after securing the backing of the regional Samajwadi Party.

Despite the positives in the form of the nuclear pact and early reforms, the market rallies may be short given expectations June quarter earnings will grow the slowest in five years, Merrill said in the report.

The 30 companies in the benchmark BSE index will report an average profit growth of 10.68 per cent in the June quarter, according to Merrill estimates.

[zhiemi]

Economy will bounce back: Chidambaram

Asserting that economy would bounce back, Finance Minister P Chidambaram on Wednesday said "right attitude and patience" could help the country face the problems like soaring inflation.

"Fast growing economies (like India) will face such problems. But the right attitude, patience and grit can help us not only face the problem but also tackle it," he said after laying foundation stone for Indian Bank's new head office in Chennai.

"We came out of crises like the 1997-98 Asian financial crisis and the 1989-90 foreign exchange reserve crisis. Can't we come out of the present situation?" he said.

India had bailed itself out of other crises like the "first oil shock in 1973" and the 24 per cent inflation rate in 1979-80, he said.

"Despite the growing inflation (at 11.63 per cent for the week ended June 14), banks are still issuing loans and education loans alone to the tune of Rs 20,000 crore has been disbursed to 12 lakh students in the country," he said.

He reiterated that the growing rates of crude oil had influenced prices commodities and metals, leading to overall rise and inflation.

"But we can patiently handle the situation using globally accepted economic formulae," Chidambaram said.

Since India was a growing economy, it was a "different ball game" to finance a growth rate of nine per cent against the five per cent a few years back.

"Credit flow and money flow has expanded, as is the case with capital flow from abroad. Sometimes it leads to embarrassments like inflation, but we have to tackle it," the minister said.

[MachuPichu]

Originally Posted by zhiemi

Economy will bounce back: Chidambaram

As long as the real estate is also inflationary and Banks buy into the inflated value of real estate as collateral, people should not have a problem getting loans. I hope they dont go the Asean/HK crisis way where these loans were backed up by inflated collaterals and when the real estate market collapsed, the entire loan and RE market collapsed. Is there a mortgage-backed security market in India? If not, NOW would be a great time to introduce it.

MP

[MachuPichu]

Originally Posted by zhiemi

Economy will bounce back: Chidambaram

This is from a politican..so we can safely discount.

MP

[barrykul]

Folks this bash Chidambaram in Indian Press and elsewhere is completely nonsensical and counter productive. Let us face it, Chidambaram and MMS have steered India towards growth despite the rest of the world lagging behind. Inflation is caused by the Oil thugs who have, without rhyme or reason, taken crude from $11/barrel to $140+/barrel in a short span of time and they continue to give the middle finger to the rest of world. Even Saudi Arabia acknowledges that the price of crude is artificially high. Consequently the price of other goods went up in reaction to transportation charges & the ubiquitous pain at the pump translates to inflation worldwide. The West has tried to blame India and China for the rise of crude oil prices when the % of consumption of both nations is a pittance compared to US, Europe, Japan and others. The Indian economy is mature & resilient to such changes and time will correct the blips soon. So give it a break. India's long term future is bright.

Comrades Prakash Karat and Sitaram Yechuri are vermins, they were part of the governing cabal, but now they wash their hands of, and quite comically deride their own governance by criticizing the performance. What turn coat artiste we have here.

[R2IChennai]

Originally Posted by Suncity

Manufacturing jobs added from 1998-2005 in major states:

TOI from economic censuses

I am very suprised with numbers from Mah and Guj
Guj being petro chemical hug of India and Mah being the biggest industrial infrastructure lagging behind. So do they consider all the jobs created in Auto/petro industries as Service based?

[R2IChennai]

Originally Posted by barrykul

Folks this bash Chidambaram in Indian Press and elsewhere is completely nonsensical and counter productive. Let us face it, Chidambaram and MMS have steered India towards growth despite the rest of the world lagging behind. Inflation is caused by the Oil thugs who have, without rhyme or reason, taken crude from $11/barrel to $140+/barrel in a short span of time and they continue to give the middle finger to the rest of world. Even Saudi Arabia acknowledges that the price of crude is artificially high. Consequently the price of other goods went up in reaction to transportation charges & the ubiquitous pain at the pump translates to inflation worldwide. The West has tried to blame India and China for the rise of crude oil prices when the % of consumption of both nations is a pittance compared to US, Europe, Japan and others. The Indian economy is mature & resilient to such changes and time will correct the blips soon. So give it a break. India's long term future is bright.

Comrades Prakash Karat and Sitaram Yechuri are vermins, they were part of the governing cabal, but now they wash their hands of, and quite comically deride their own governance by criticizing the performance. What turn coat artiste we have here.

Well said, I kind of agree with the 2nd part. not sure about first part though.