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Economic crisis in India 2013 | ALL Updates & News

Well now it needs to take drastic steps.

Stem the rupee circulation and raid all politicians' bank accounts with force.
 
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Just to compare INR's performance with other Asian currencies, Thai Baht is currently going 2.01 INR to the Great Indian Rupee. LOL just think that in perspective, Thais can afford twice more than your Indians (not taking into account the huge wealth disparity within India unseen in other middle-class economies). My Gawd, there used to be times when I like would spend half of India's GDP in Thailand (ok that's a stretch but I did spend a hell lot).

Going by current downfall of rupee, it's obvious that even the most hideous hookers in Bangkok's Go-Go bars will be out of reach of poor Indian men :laughcry:

I think Indian economists should swallow the painful pill and ditch this freely floating status. Peg your pathetic Indian currency with some first world currency....USD, Euro, Pound, Australian Dollar or even Thai Baht :victory:
 
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and when he does it will be sorrow all over India

It's a serious problem. Here's how it goes, as rupee continues with its infinite plunge, essential imports like Petroleum would cost a hell lot more. That would cause inflation and suddenly raise prices of all essential goods, eggs, milk, vegetables, stationery, cement, construction material you name it. In order to cope with inflation, people will stop spending and start saving more. That would stagnate the retail and services sector, everything from restaurants, bars, cinema would see a slowdown in customer uptake (maybe bars would see better business because people need something to cope with depression of a job loss).

Since noone's spending that much, banks will find it difficult to give loans. So they will be forced to raise interest rates on all home and personal loans.

I'm predicting at least 5-10 years of economic depression for India. Fact remains it's no longer an investor's paradise like it used to be in the past. There's been a lot of flight of capital from India to emerging destinations in APAC.
 
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lolzzzz... welcome to the club ...... When u shale hands with West .... what do u expect ..... :)

Learn like pakistan? .... It is painful but it will have long lasting affect..... :)
 
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lolzzzz... welcome to the club ...... When u shale hands with West .... what do u expect ..... :)

Learn like pakistan? .... It is painful but it will have long lasting affect..... :)

I think all you third world countries in South Asia and the despotic kingdoms of Middle-East, given your common wife-beating misogynistic cultures and medieval attitudes, could work out some arrangement, pool your lot together and form an exclusive economic bloc, trade only among yourselves. You know that thing about birds of the same feather flock together. :woot:That's exactly how each and every member of European Union has learnt to survive in difficult times. The US still does most of its trade with NAFTA (Canada and Mexico). Australia is like the concubine of Japan and United States.
 
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Economy stares at crisis as rupee suffers worst single-day fall of 142 paise - The Times of India


Economy stares at crisis as rupee suffers worst single-day fall of 142 paise

MUMBAI: Policymakers may still be in denial but the Indian economy is clearly staring at a crisis with the rupee on Monday recording its sharpest drop ever in absolute terms to close at 63.13 — 1.42 paise down from its previous close against the dollar.

Economists are now forecasting an exchange rate of 65 in the short-term. The rush of capital out of India, which has triggered the fall, has raised the prospects of inflation, growth falling below 5% and higher interest rates.

The rupee fell nearly 2.25% in a day, making all imports that much more expensive. Along with the rupee, stock prices too crashed on Monday. The BSE sensex fell 291 points to 18,308.

The rupee's fall was the sharpest among all currencies as rising interest rates in the US pushed up the greenback against all emerging currencies. As a result investment funds from the West are pulling money out of emerging markets and back into US treasuries. Besides the rupee, the Indonesian Rupiah touched a four-year low while the South African Rand fell below 1%.

The Reserve Bank of India's fire-fighting measure of keeping rupee funds in short supply to rein in the dollar have not helped much but have caused immense collateral damage. The yield on 10-year government bonds has risen past 9%. This has compelled banks to raise interest rates on deposits and loans. Andhra Bank and Axis Bank have raised lending rates while ICICI Bank and Canara Bank have raised deposit rates. Consumers buy less and businesses pull back on investments as rates rise, thus dragging down growth.

Although the end of the US Fed's monetary stimulus affects emerging markets across the world, India is expected to be the worst hit as it has a large trade deficit, coupled with high inflation and a growth rate that is now expected to slip below 5%. All these are factors that put off foreign investors. Yields on 10-year US treasuries have more than doubled from 1.38% to 2.8% on news that the US Federal Reserve —America's central bank— will bring down its monthly infusion of $85 billion through purchase of US treasuries and mortgages. A recovery in the US economy has prompted the Federal Reserve to bring down efforts to keep interest rates artificially low.
 
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OP Has started 6 threads on the same topic and wants to troll us...Let us give him a big hand.
 
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Last updated: August 19, 2013 7:28 pm

Rupee tumbles as India concerns grow and emerging markets turmoil builds

By Amy Kazmin in New Delhi, Robin Wigglesworth in London, and James Crabtree in Mumbai

Rupee tumbles as India concerns grow and emerging markets turmoil builds - FT.com

The 20 biggest emerging market currencies tumbled against the US dollar on Monday with India’s rupee particularly badly hit amid mounting market turmoil in the developing world.

The rupee slumped to a fresh all-time low against the backdrop of deepening concerns over the government’s economic management. The 2.4 per cent fall to a record 63.2 to the dollar took the currency’s slump against the US dollar this year to 12 per cent.

Monday’s moves in India came alongside grim news from emerging economies and further evidence of how the US Federal Reserve’s plan to end its monetary stimulus has continued to hit stocks, bonds and currencies across the developing world.

Over the past six months, China’s heavily managed renminbi is the only significant emerging market currency to have managed to hold its ground against a resurgent dollar.

Fears over the impact of the Fed’s plans to scale down its bond purchases have been compounded by slowing economic growth and deteriorating fiscal fundamentals in many countries. Investors are particularly concerned by states with current account deficits that have been plugged by inflows of more flighty investor capital, rather than stickier foreign direct investment.

“It’s the current account deficit countries that are in the most trouble,” said Angus Halkett, a bond fund manager at Stone Harbor Investment Partners. “The market is becoming a lot choosier where it puts its money, and some countries are going to find it tough.”

Indonesia provided evidence of that on Monday as its main equities index fell by 5.6 per cent after the country’s central bank reported on Friday that its current account deficit had widened sharply in the second quarter of this year.

New numbers on Monday also showed how the growth equation is changing for emerging economies with Thailand’s economy slipping into a technical recession thanks to weak exports and sluggish domestic demand.

But India remains the biggest concern for many investors with the pessimism there driven by questions about the government’s economic management following its introduction of a number of failed measures to support the currency, some of which appear to have exacerbated the country’s problems.

Only the Brazilian real and the South African rand have recorded bigger declines than the rupee in 2013. India’s benchmark Sensex share index also fell by nearly 2 per cent while 10-year bond yields pushed above 9 per cent:hitwall:, their highest level since the 2008 financial crisis.

The burgeoning crisis in India has also become increasingly political with senior figures from the opposition Hindu nationalist Bharatiya Janata party declaring on Monday that the only way out was for the government to call early elections, now due to be held by May 2014.

“The government seems to have lost control over the economy. Nothing they are doing is helping,” Yashwant Sinha, a former BJP finance minister and party leader, told the Financial Times. “There is a trust deficit, a crisis of confidence that can only be sorted out through the political process.” Calling for new elections would “stabilise the markets”, he said.

The call for an early poll was echoed by some close to the Congress party. Sanjaya Baru, a former adviser to Prime Minister Manmohan Singh, said early elections would remove the sense of drift hanging over the economy.

“People are just watching and waiting. What India needs is to revive investment, but I don’t see that investment revival until a new government is in place,” he said.

Mr Singh, an economist, over the weekend sought to soothe nerves by insisting that India was far from a replaying of the 1991 balance of payments crisis. His supporters argue that, with foreign reserves now able to cover six months of imports versus just two months on the cusp of the 1991 crisis, India is in a much better place than it was then to handle market turmoil.

But analysts said the government response remained insufficient.

Jahangir Aziz, chief Asia economist for JPMorgan, said the government needed to do much more to win over the markets. “They are giving a sense that they don’t have any options left when in reality they do have options and they need to put them on the table,” he said.

The government last week issued capital controls on overseas investments by Indian companies and individuals to staunch currency outflows. But it needed to attract capital, Mr Aziz said, through measures including liberalising restrictive rules that prevent long-term foreign investors from buying Indian government and corporate bonds.

“They have only taken steps to stop money from going out. They have to worry about bringing money in,” he said.
 
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Apparently some Indian global executive on this forum thinks that liberalizing the Indian economy will act as a magic cure for this structural sickness. :woot::lol:
 
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My sources tell me that India is on the verge of asking China for cash support。
 
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My sources tell me that India is on the verge of asking China for cash support。

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!
 
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China would be best advised to let India tank.

Plenty of other countries to explore trade with.
 
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