Can Indian Economy Avert Crash Landing in 2011?

[I FLY HIGH]

What you are talking about is a completely different scenario.

Inflation is India is basically due to 2 commodities. First is food, and the second is oil. The other inflation data is well within the 4-6% range. And that is the ideal inflation rate for a growing economy.

It is fine if the inflation rates go up for a little time. Economy is hurt more if there is no inflation. Our inflation rate went into negative a couple of years back, and govt had to take tough measure to make it increase again.

It is only due to the boom in economy again after the recession that is triggering an increase in inflation. Once food demand/supply problem is solved, which according to predictions should be solved by Mid 2011, we will start to see the overall inflation rate under 7%

I think if you could control the inflation without increasing the intrest rates and only by strict demand and supply (which is not possible in case of oil prices ) it would be perfect , we wish you goodluck , we will keep on following the trends of inflation and CA in India.

 

[NSG_BlackCats]

Well I am not an economic expert but I always felt on any given day I would chose inflation over deflation. When an economy grows at a rapid pace there is bound to be some inflation. In case of India the inflation in between 4-6 % is not alarming. We have a higher inflation rate recently due to high food prices. RBI is monitoring it, but it is not reducing the liquidity in market as it will hamper growth.

In the days of recession we managed to grow at a decent pace of more than 6%. Now the job market is booming again. Hiring is going on at a rapid pace.

If big US audit firms are the only masters in finance then big US banks would not have collapsed. We have surprised many in the World and we will keep on surprising them. The most important thing is our growth does not depend upon exports. The reason behind our growth is our internal consumption and firm sector. We have a very healthy foreign exchange reserve. So basic of our economy is strong. Whenever there is a need to fine tune it GOI and RBI will do that.

So no worries. Let the world witness and the so called experts keep on predicting.

 

[Storm Force]

Good thing about Inflation IT ACTUALLY ENHANCES YOUR GDP FIGS.

eg. If GDP grows by 9% as expected next year and we get Inflationat 9% as well India will add 18% to its current GDP ie a massive $270 billion in 12 months.

 

[Hutchroy]

There is nothing self sufficient about Pakistan. these days

Massive external debt around $50 billion or 35% of total GDP.

Reliance on grant aid and IMF loans and financial aid packages from good will arab friends.

YES YOUR RIGHT INDIAN ECONOMY IS ABOUT TO COLLAPSE WITH ITS $300 BILLION BANK ACCOUNT to disappear over nite and its $1.4 trillion GDP to shrink by next year.

Happy New Year all PDF members TROLLS included.

And now for further doom and gloom for the Poor India as compared to Rich Pakistan :

According to The Economist India - The world in figures : The World In 2011

The world in figures: Countries: India | The Economist

INDIA :

GDP: $1,832bn - (PPP: $4,508bn), GDP per head: $1,520 (PPP: $3,750)

The world in figures: Countries: Pakistan | The Economist

PAKISTAN :

GDP: $188bn (PPP: $487bn), GDP per head: $992 (PPP: $2,570)

P. S. Please let the TROLLS have their moment of glory including our Esteemed Member Col. Riaz Haq

 

[mikkix]

IMF warns Pakistan to "cut" its budget deficit: Report

ISLAMABAD: The International Monetary Fund (IMF) on Friday issued Pakistan a stern warning to take steps to cut its spiraling budget deficit, a Pakistani government official told the The Wall Street Journal.
The IMF warned the government of the state of the nation’s economy in an official letter to the government urging immediate fiscal belt-tightening measures.
The IMF withheld $3.5 billion in 2010 from its total $11.3 billion loan package for Pakistan in a bid to make Pakistan take action.
The loan support was supposed to end on December 31 but the IMF extended the loan this week by nine months to give the country more time to implement reforms.
Pakistan had requested the IMF to extend the bailout programme which was secured in November 2008 for a period of 25 months to avoid defaults on international payments. The extension would allow the country a chance to deliver on three previously unmet conditions.

Common Pakistan, leave India, Concentrate to ours...
Don't do women works; doosron ki burayon ko chodo apni burayon ko dekho..

 

[RiazHaq]

I sincerely wish a very happy, prosperous and peaceful 2011 to all my readers and fellow members here.

As to the situation in Pakistan, the people of the South Asian nation have continued to demonstrate great courage and remarkable resilience in the face of multiple serious crises bedeviling them. I salute them and wish them the very best for 2011.

In addition to the blossoming of arts and literature, Pakistan's main stock market ended 2010 with a 28 percent annual gain, easily surpassing Mumbai Sensex's 17 perecent gain for 2010.


If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in the Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

Read more at

Haq's Musings: Pakistan Shares Exceed BRIC Gains in 2010

Haq's Musings: Pakistan's Year 2010: The Other Story

 

[RiazHaq]

And now for further doom and gloom for the Poor India as compared to Rich Pakistan :

According to The Economist India - The world in figures : The World In 2011

The world in figures: Countries: India | The Economist

INDIA :

GDP: $1,832bn - (PPP: $4,508bn), GDP per head: $1,520 (PPP: $3,750)

The world in figures: Countries: Pakistan | The Economist

PAKISTAN :

GDP: $188bn (PPP: $487bn), GDP per head: $992 (PPP: $2,570)

P. S. Please let the TROLLS have their moment of glory including our Esteemed Member Col. Riaz Haq

It's interesting to note that the Economist suddenly decided to increase Pakistan's population to an imaginary new high figure of 190 million...which it then used as denominator to depress Pakistan's per capita GDP to less than $1000.

What a neat trick! I am truly impressed by the "ingenuity" of Indian staff at the Economist!

 

[CaptainJackSparrow]

I sincerely wish a very happy, prosperous and peaceful 2011 to all my readers and fellow members here.

As to the situation in Pakistan, the people of the South Asian nation have continued to demonstrate great courage and remarkable resilience in the face of multiple serious crises bedeviling them. I salute them and wish them the very best for 2011.

In addition to the blossoming of arts and literature, Pakistan's main stock market ended 2010 with a 28 percent annual gain, easily surpassing Mumbai Sensex's 17 perecent gain for 2010.


If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in the Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

Seriously? Are we now going to compare Karachi Stock Exchange with Mumbai Stock Exchange?

Read more at

No thank you. I'm allergic to BS.

 

[mautkimaut]

It's interesting to note that the Economist suddenly decided to increase Pakistan's population to an imaginary new high figure of 190 million...which it then used as denominator to depress Pakistan's per capita GDP to less than $1000.

What a neat trick! I am truly impressed by the "ingenuity" of Indian staff at the Economist!

Even if we bring it to 170 million it will still be 1100 dollars only so still less than India

 

[RiazHaq]

Even if we bring it to 170 million it will still be 1100 dollars only so still less than India

The Economists' figures are not credible!

The Economist puts India's GDP at $1.832 trillion...the highest figures I have seen for 2010 are $1.45 trilllion.

Smilarly it puts India's inflation rate at 5.8%...the actual inflation rate in India is in double digits....wth the latest figures closer to 15%.

So I wouldn't put much interest in the Economist's figure for either India or Pakistan.

The fact is that the per capita GDPs of India ad Pakistan in nominal terms are about the same....hovering close to $1000.

 

[ajpirzada]

Nobel Prize winner Joseph Stiglitz commented that India should take appropriate measures to curb the inflow of short term investments in the form of US dollars. This loosely controlled inflow of US dollars into the Indian market is with the purpose of investing and reaping gains inherited from the prospects of developing countries such as India. Stiglitz stated that since most of the investments are short term in nature, they do not in any manner contribute to the rise in employement rates of the country. Also, since they are can be withdrawn on a short notice, he said that possibility of a sudden withdrawal cannot be discredited. Stiglitz went on to remind that the economic crisis of 1990 was mainly brought on by the unexpected withdrawal of investments by short term investors.

India’s Economic Advisory Council, headed by C. Rangarajan has stated that India can withstand an inflow of investments of up to $7000 crores, judging by the current market standards. There is a prominent rise in the inflow of funds and investments from abroad to the Indian share and debenture market. An investment of $7000 crores can work to null the trade deficit in India amounting to around $5000 crore dollars. The remaining money from foreign investments can be set aside as a reserve, he said. The recent unexpected surge in the flow of investments to India can be traced to the financial bail-out package proclaimed by America.

It has to be noted that many countries including China have obstructed excess inflow of investments into their economy stating that this may lead to a tilt in the economic balance in the country. Currently, with China rising to a superpower status, and India on its heels as a close competitor, it is crucial that the Government of India takes some time out to ponder over the words of the great mind that Joseph Stiglitz is.

Short term Investments: India’s economy all set to crash land? Possible, says Nobel winner Stiglitz

well honestly stigliz has some good advice to offer. any trembling on india's part will give significant lead to china.

u know its all about expectations. only a slight change in expectations can lead to a big fall in economy.

after all there was no such thing as inflation till early last century. only when people started expecting inflation during world wars, this inflation phenomenon became permanent.


but yes, indian economy coming down during 2011 is too much to say. im quite sure MMS will have these issue in mind and corrective measures will be taken before its too late.

 

[Jade]

well honestly stigliz has some good advice to offer. any trembling on india's part will give significant lead to china.

u know its all about expectations. only a slight change in expectations can lead to a big fall in economy.

after all there was no such thing as inflation till early last century. only when people started expecting inflation during world wars, this inflation phenomenon became permanent.


but yes, indian economy coming down during 2011 is too much to say. im quite sure MMS will have these issue in mind and corrective measures will be taken before its too late.

The inflation as on Nov was 7.5. This is by any standards not intolerable

 

[ajpirzada]

The inflation as on Nov was 7.5. This is by any standards not intolerable

i wasnt talking about inflation. it was only used as an example to explain effect of expectations on national economy.

worrying issue is the increasing short term inflows which are not very productive and also create uncertainty.

but yes there is nothing to worry about as suggested by many here. there is enough time to deal with the situation. and who knows, India might end up benefiting from short term investment if world economy doesnt recover or sees double dip recession in 2012 (expected by few).

 

[Jade]

i wasnt talking about inflation. it was only used as an example to explain effect of expectations on national economy.

worrying issue is the increasing short term inflows which are not very productive and also create uncertainty.

but yes there is nothing to worry about as suggested by many here. there is enough time to deal with the situation. and who knows, India might end up benefiting from short term investment if world economy doesnt recover or sees double dip recession in 2012 (expected by few).

It would be inappropriate to judge an economy taking only the quantum of short term inflows. It is natural that larger an economy is larger would be its quantum of short term inflows. A better way to look short term inflows is through taking the forex reserves into account. India with huge reserves is relatively safe

 

[RiazHaq]

India's current account deficit is being increasingly funded by short-term capital inflows (FII) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.

Although the hot money does help to partially fund the growing current account deficits in both India and Pakistan, the net inflow of $515 million of FII in Pakistan is relatively small at 0.3% of its GDP, and it is less likely to impact the economy even if all of it goes away in 2011. In India's case, however, the $27 billion in FII represents a little over 2% of its GDP and its sudden flight out of India is a substantial risk for Indian economy.

http://www.riazhaq.com/2010/12/pakistan-shares-exceed-bric-gains-in.html