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Economic crisis in India 2013 | ALL Updates & News

China would be best advised to let India tank.

Plenty of other countries to explore trade with.

But which option would let India tank?

Allowing them to borrow some cash, which will help them in the short run, but cause a massive debt burden (and holding off the necessary reforms), therefore making them more likely to tank in the long run.

Or not allowing them to borrow some cash, which will put them in a panic mode, and force them to reform their economy. Which would make them stronger in the long run.

Also, if we give up trade with India, not only are we cutting ourselves off from a big trade surplus (and causing a big trade deficit to India)... but we are also giving up that leverage over India.

So it's more complicated than it looks. I am more in favor of the "long-game" which involves increased cooperation in the short-run.

Cutting off trade is a short-term view and makes both sides weaker. Instead we want to trade with the surpluses coming to our side, making us stronger in the long-run.
 
China would be best advised to let India tank.

Plenty of other countries to explore trade with.

Well, India is a somewhat important market for the Chinese, so helping out India a little is good for the Chinese. Of course, I'm not asserting that India is so important to China that China has to bail India out. Just a little help would be nice, provided the returns are more attractive than investing elsewhere.
 
OP Has started 6 threads on the same topic and wants to troll us...Let us give him a big hand.
Our Pakistani and Chinese friends here on PDF seem to be getting massive orgasms, cutting and pasting stuff about the Indian economy with a frequency that is beyond belief !! Why don't they concentrate on their own sinking economies instead?

This is getting to be hilarious! And silly! :blah:
 
Our Pakistani and Chinese friends here on PDF seem to be getting massive orgasms, cutting and pasting stuff about the Indian economy with a frequency that is beyond belief !! Why don't they concentrate on their own sinking economies instead?

This is getting to be hilarious! And silly! :blah:

It was the Indian JayAtl who started the multiple thread starting bashing war on this forum, so it's no surprise that the other nationalities on this forum will hit back.

Though our counter-bashing is more effective, because the Indian Rupee really IS collapsing. While the Chinese Yuan is hitting record highs against the US dollar.

Chinese Yuan hits record high against US dollar - Wall Street Journal
 
George Soros is ready for India. When will India open its door for Soros?
 
Not very plausible, but not impossible either. Asking for a Chinese bailout is political suicide, since the elections are only six months away. Just imagine the headlines: India begs her rival China for economic lifeline. Not good for the Congress party. An IMF bailout is similarly unpalatable.

India instead might ask for support from various sovereign wealth funds. Russia and the Gulf States are some good candidates. However, I don't think these entities have the financial firepower individually. Pulling their resources together might do it, but convincing them would be difficult.

India might just have to swallow her pride and go to the Chinese. It just all depends how desperate the economic situation will be in the next six months.

P.S. I wonder if NRIs can help? Maybe India should offer a special class of bonds targeting NRIs. The interest rate on these NRI bonds should be no less than 12 to 15%, seeing that the sovereign bond yields have already spiked to 10%. Furthermore, the returns should be linked to inflation and paid in dollars if necessary so as to guarantee a decent profit for NRIs.

Just my two cents.

Cheers!

India could go to George Soros for support. In return, George Soros can star in the next India superpower 2040 video. (push the superpower status back by 10 years because of current financial malaise.)
 
The Indian government just released a bunch of policies restricting capital outflow. The remittance is now limited to 75k a year.

Also, the rupee is NOT a free floating currency. It is only partially convertible.

When you peg a currency, it really means that, through both market intervention and capital flow restriction, you keep the currency within certain range. Basically, the Indian policy and the Chinese policy are the same in this regard. What keeps the currencies moving are the market force which can be greater than government control.

U.S. bond yields hit two-year high; emerging currencies slide | Reuters

I support the calibrated measures taken by RBI and GoI ... that is use economic measures which make sense, rather than "peg" the currency.

Free markets work best.. provided the markets are deep and liquid. USDINR is now an extremely liquid market. So, no need to directly intervene in the market.

In any case, market has a self-correction mechanism.... exports are already benefitting, and imports are stressed which is good and natural economic consequence.

For YTD market moves:

USDZAR: +18.94%
USDBRL: +16.42%
USDINR: +12.10%
USDIDR: +7.75%
USDRUB: +7.67%

That leaves USDCNY among the BRIICS, which is a pegged currency and non-comparable to freely trading other BRIICS.
 
India rupee hits new low, World Bank says gloom overdone

MUMBAI — India's currency plunged to a new low and shares tumbled on Monday even as the World Bank's chief economist said the country's problems were "overplayed".

Kaushik Basu said India was not in danger of a full-blown economic crisis, despite mounting fears about Asia's third largest economy, which is struggling with a gaping current account deficit that has helped push the rupee to record lows.

"Growth may not have bottomed out. We have further to go (down), but the situation is not as bad as is being captured by the mood and captured in the headlines," Basu said in New Delhi.

Basu, who was a top adviser in the Indian finance ministry until last September, said the situation was sharply different from 1991 when India had to seek a bailout from the International Monetary Fund in what was considered a national humiliation.

"India is nowhere near the 1991 crisis. The gloom is being overplayed," he told a business audience.

"In 1991 we had foreign exchange reserves ultimately for 13 days of imports, we now have enough for seven months."

"There is no comparison. I don't think we are anywhere near that situation. We are a much stronger economy than in 1991."

The partially convertible rupee, Asia's worst-performing major currency this year, fell to 63 to the dollar in trade Monday, past its previous low of 62.03 on August 16, on concerns about the slowing economy.

Shares, which fell nearly four percent on Friday, plunged over two percent before retracing some losses to close down 1.56 percent at 18,307 points.

Nervousness rose over the currency as foreign investors pulled out cash.

Bond yields hit a five-year peak of 9.17 percent, reflecting falling investor appetite for Indian debt as worries about the economy and potential default mount.

Basu said India's economy -- even with 4.8 percent annualized growth in the quarter to March -- was among the world's fastest-growing.


He urged people not to fall into a "spiral of pessimism".

In the long run the crux of India's problems lie with issues such as "governance, bureaucratic efficiency, the business ethos", Basu said.

"The countries that have done well historically... they have managed to clean up their business ethos" so nobody has to pay bribes to get tasks done, he said.

Government also weighs in as a "helpful partner instead of as an obstructionist force -- that is the fundamental thing we need to work on".

Corruption has long been a central issue in India and the Congress-led government has been racked by a string of graft scandals.

Basu urged the central bank to use its reserves to curb turbulence in the rupee. But he said India should "not try to buck the trend of the exchange rate".

"If you deny the laws of the market, you will come to grief," he said.

At Monday's new low the rupee has fallen over 14 percent against the dollar this year, outstripping the yen in its tumble.

Last Wednesday, in the latest of a series of measures to prop up the currency, the central bank spooked investors when it tightened controls on the amount of money Indian firms and individuals can send abroad.

The move has been criticized as a disturbing throwback to the days before the country unleashed its economic liberalization drive in the early 1990s, when Indians' access to foreign exchange was strictly limited.

In the past few weeks policymakers have raised short-term interest rates, announced plans to let state firms raise foreign funds abroad, and curbed gold imports in a bid to narrow the deficit and stabilize the rupee.

Emerging-market currencies have been hit by expectations the United States will roll back massive stimulus measures responsible for huge inflows of foreign investment into developing countries.

India relies on foreign capital to fund its record current account deficit. But since June 1, overseas funds have pulled out $11.58 billion from India's stock and debt markets.

Basu said it might be good for the central bank to "go a bit easy on liquidity for the next nine months", saying India may need a dose of economic stimulus.

"It could create the demand (in the economy) and burst that bubble of pessimism," he said. — AFP

Saudi Gazette - India rupee hits new low, World Bank says gloom overdone
 
India could go to George Soros for support. In return, George Soros can star in the next India superpower 2040 video. (push the superpower status back by 10 years because of current financial malaise.)

LOL! That really cracked me up!

Nah, I think Mr. Soros in all likelihood has been accumulating short positions on the Rupee for a while. I think he's about ready to pounce on the Rupee and break the RBI just as he had broken the BoE.

Why help India when you can make much more money from attacking its currency, right?
 
Rupee falls to new low, extends losses to 64.02 against dollar - The Times of India


MUMBAI: The rupee slumped to a record low in early trade on Tuesday as the currency continued to bear the brunt of a large current account deficit and fears of tapering of the monetary stimulus by the US Federal Reserve on the rise.

The rupee fell to as much as 63.78 to the dollar, breaching its previous low of 63.30 seen on Monday. It had closed at 63.13/14.

Bond yields surged with the 10-year yield surging 15 basis points to 9.38 percent.
 
India could go to George Soros for support. In return, George Soros can star in the next India superpower 2040 video. (push the superpower status back by 10 years because of current financial malaise.)

It would be better if we can discuss without trolling as it would derail the thread.
 
India rupee hits new low, World Bank says gloom overdone

MUMBAI — India's currency plunged to a new low and shares tumbled on Monday even as the World Bank's chief economist said the country's problems were "overplayed".

Kaushik Basu said India was not in danger of a full-blown economic crisis, despite mounting fears about Asia's third largest economy, which is struggling with a gaping current account deficit that has helped push the rupee to record lows.

"Growth may not have bottomed out. We have further to go (down), but the situation is not as bad as is being captured by the mood and captured in the headlines," Basu said in New Delhi.

Basu, who was a top adviser in the Indian finance ministry until last September, said the situation was sharply different from 1991 when India had to seek a bailout from the International Monetary Fund in what was considered a national humiliation.

"India is nowhere near the 1991 crisis. The gloom is being overplayed," he told a business audience.

"In 1991 we had foreign exchange reserves ultimately for 13 days of imports, we now have enough for seven months."

"There is no comparison. I don't think we are anywhere near that situation. We are a much stronger economy than in 1991."

The partially convertible rupee, Asia's worst-performing major currency this year, fell to 63 to the dollar in trade Monday, past its previous low of 62.03 on August 16, on concerns about the slowing economy.

Shares, which fell nearly four percent on Friday, plunged over two percent before retracing some losses to close down 1.56 percent at 18,307 points.

Nervousness rose over the currency as foreign investors pulled out cash.

Bond yields hit a five-year peak of 9.17 percent, reflecting falling investor appetite for Indian debt as worries about the economy and potential default mount.

Basu said India's economy -- even with 4.8 percent annualized growth in the quarter to March -- was among the world's fastest-growing.


He urged people not to fall into a "spiral of pessimism".

In the long run the crux of India's problems lie with issues such as "governance, bureaucratic efficiency, the business ethos", Basu said.

"The countries that have done well historically... they have managed to clean up their business ethos" so nobody has to pay bribes to get tasks done, he said.

Government also weighs in as a "helpful partner instead of as an obstructionist force -- that is the fundamental thing we need to work on".

Corruption has long been a central issue in India and the Congress-led government has been racked by a string of graft scandals.

Basu urged the central bank to use its reserves to curb turbulence in the rupee. But he said India should "not try to buck the trend of the exchange rate".

"If you deny the laws of the market, you will come to grief," he said.

At Monday's new low the rupee has fallen over 14 percent against the dollar this year, outstripping the yen in its tumble.

Last Wednesday, in the latest of a series of measures to prop up the currency, the central bank spooked investors when it tightened controls on the amount of money Indian firms and individuals can send abroad.

The move has been criticized as a disturbing throwback to the days before the country unleashed its economic liberalization drive in the early 1990s, when Indians' access to foreign exchange was strictly limited.

In the past few weeks policymakers have raised short-term interest rates, announced plans to let state firms raise foreign funds abroad, and curbed gold imports in a bid to narrow the deficit and stabilize the rupee.

Emerging-market currencies have been hit by expectations the United States will roll back massive stimulus measures responsible for huge inflows of foreign investment into developing countries.

India relies on foreign capital to fund its record current account deficit. But since June 1, overseas funds have pulled out $11.58 billion from India's stock and debt markets.

Basu said it might be good for the central bank to "go a bit easy on liquidity for the next nine months", saying India may need a dose of economic stimulus.

"It could create the demand (in the economy) and burst that bubble of pessimism," he said. — AFP

Saudi Gazette - India rupee hits new low, World Bank says gloom overdone

Dude, the World Bank didn't say that. It was Kaushik Basu who said it. Mr. Basu is a crackpot economist. In the investment community, he really is a butt of jokes.

Just yesterday, he recommended that India use her forex reserves to defend the Rupee, which is just f.u.c.k.i.n.g insane! Does he not know that India's reserves are simply not large enough for that purpose? It's dangerous to draw down the reserves in this manner when India has only enough for about five months worth of imports.
 
Rupee falls to new low, extends losses to 64.02 against dollar - The Times of India


MUMBAI: The rupee slumped to a record low in early trade on Tuesday as the currency continued to bear the brunt of a large current account deficit and fears of tapering of the monetary stimulus by the US Federal Reserve on the rise.

The rupee fell to as much as 63.78 to the dollar, breaching its previous low of 63.30 seen on Monday. It had closed at 63.13/14.

Bond yields surged with the 10-year yield surging 15 basis points to 9.38 percent.

64 wow...

Wasn't it 61 two days ago?
 
It would be better if we can discuss without trolling as it would derail the thread.

I'm showing the dire straits Indian economy is in. Its sad but India is about to face something similar to the Asian economic crisis of 1998.
 
India's economy is now 1.4 trillion... A week ago it was 1.66 trillion. And a year ago it was 2 trillion plus
 

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