Indian Economy - News & Updates - Archive

[Goodperson]

India bars Pakistani, Chinese, HK firms​

Yes I remember restrictions were imposed for Chinese companies around sensitive installations, But what has this to do with Pakistan. L&T JV did win the contract several contracts are canceled by GOI each year do not read too much into it.

 

[Neo]

Timing is bad, we've just reopened Kashmir trade route.

 

[Neo]

Japan offers India record loan for railway ​

Thursday, October 23, 2008

TOKYO: Japan on Wednesday offered a record $4.5 billion in loans to India to build a major railway as the Asian powers agreed to step up both economic and military ties.

Indian Prime Minister Manmohan Singh and his Japanese counterpart Taro Aso hastened to deny that the cooperation was aimed at countering China, where both leaders head on Thursday for a summit of Asian and European leaders. Under the agreement signed in Tokyo, Japan will provide an initial 450 billion yen ($4.5 billion) in low-interest loans to build the freight railway between New Delhi and Mumbai.

The 1,468-kilometre (912-mile) railway between India’s two largest cities will also include economic sectors around the tracks. It is aimed at improving a creaky infrastructure seen as a key bottleneck holding back India’s economy.

 

[nitesh]

Rupee posts biggest single-day gain since 1998- Forex-Markets-The Economic Times

Rupee posts biggest single-day gain since 1998
4 Nov, 2008, 1813 hrs IST, REUTERS

MUMBAI: The rupee posted its biggest single-day gain in more than a decade on Tuesday, driven by another rise in shares, heavy dollar sales by a large corporate, and the unwinding of long dollar positions by banks.

The partially convertible rupee closed at 47.69/71 per dollar, 2 percent stronger than 48.64/65 at Monday's close. Last week, the rupee had dropped to a record low of 50.29.

It was the biggest single-day gain for the rupee since Jan. 19, 1998, when the rupee had risen 3.6 percent after the central bank had taken a number of steps including a hikes in the cash reserve ratio, repo rate and bank rate.

"There was a lot of dollar supply and no real demand in the market," said Agam Gupta, head of forex trading at Standard Chartered Bank. Dealers said dollar inflows from a large pharmaceutical company also helped the rupee rally.

Shares rose 2.8 percent on Tuesday, a fifth straight gain that took them to their highest close in two weeks, on hopes that cuts in bank lending rates would help credit flow more freely and ease a cash squeeze.

Foreign funds bought nearly $500 million of stocks over Friday and Monday. They have sold a net $12.6 billion worth of Indian shares so far in 2008, helping push the rupee down more than 17 percent.

They bought a record $17.4 billion in 2007, when the rupee rose 12.3 percent. "The unwinding of long dollar positions based on the non-deliverable forward rates resulted in large stops being triggered, which led to the all-round dollar selling," the chief dealer with a state-run bank said.

"Closing below 47.75 looks bullish for the rupee, it may strengthen beyond 47 per dollar if it holds near these levels tomorrow," he added. One-month offshore non-deliverable forward contracts were quoting at 48.02/22 per dollar, weaker than the onshore spot rate, but much stronger from 51-52 levels seen last week, indicating some improvement in rupee sentiment.

 

[nitesh]

http://timesofindia.indiatimes.com/...ion_wont_be_long-term/articleshow/3678981.cms

6 Nov 2008, 0115 hrs IST, Manash Pratim Gohain, TNN

NEW DELHI: ‘‘In the US there is no doubt that there is a recession. But I can't predict whether it will stay there for two or three years. Yes, it will be there for six months. Although it will have some impact on other markets, it won't affect as portrayed by the media or as reacted by other markets and the effect won't be long term,'' said Bill Gates, chairman, Microsoft Corporation on Wednesday.

Gates was addressing the students from IIT and other institutes during the launch of the Microsoft DreamSpark. On Barack Obama being elected as the US president he said: ‘‘There is always a freshness that come along with an election and this won't be any different. The new administration would try out some new processes and tackle global problems like terrorism and global warming in a new way.'' Making a point on how to use technology in the health sector Gates said:‘‘These are exciting times for science. The challenge is to see how science can help the most needy people of the world. We should make sure that technology is available to everyone, more so for the poorest.''

Gates who also made PM on Wednesday added that: ‘‘How to make poor people have access to technology? We have to expose them to these technologies." He also urged the undergraduate students to pursue higher studies saying that opportunities in academics are aplenty.

 

[nitesh]

India sees huge jump in FDI inflows despite global woes- Finance-Economy-News-The Economic Times


India sees huge jump in FDI inflows despite global woes
8 Oct, 2008, 1458 hrs IST, PTI

NEW DELHI: Amidst global financial crisis, India's foreign direct investment saw an impressive jump of 124 per cent in the first five months of the current fiscal, while the FDI flows in August went up by huge 180 per cent.

The country received FDI of 14.6 bn dollar during April-August 2008 against 6.5 bn dollar a year ago.

"This (increase in FDI) must be seen in the context of the global economic situation," Commerce and Industry Minister Kamal Nath told reporters while releasing the FDI data.

He said that the target for the current fiscal would be met despite a difficult financial environment in the world. The FDI target for 2008-09 is 35 bn dollar, while the actual inflows during the previous year were 24.57 bn dollar.

In August alone, India's FDI was 2.32 bn dollar, a rise of 180 per cent over the corresponding month last year.

The manufacturing sector received 5 bn dollar during April-August period, showing a rise of 41 per cent over inflows in the year ago period.

 

[Neo]

Goldman Sachs cuts India growth forecast to below 7pc ​

Tuesday, November 11, 2008

NEW DELHI: Goldman Sachs on Monday cut its growth forecast for India this financial year to below seven per cent and under six per cent next year, blaming the “knock-on” effects of the global financial crisis.

The investment bank said it was lowering its growth forecast for the current year to March 2009 to 6.7 per cent from 7.5 per cent and next year to 5.8 per cent from 7.0 per cent.

Asia’s third-largest economy has grown by at least nine per cent for last few years. “The larger-than-expected shock to the financial sector over the past couple of months, and its knock-on effects on both domestic and external demand are responsible for our lower growth projections,” Goldman Sachs said.

“The gathering financial crisis and credit crunch over the past several weeks has affected India’s financial sector significantly, with both domestic and external liquidity drying up, affecting the financing for corporates, loans for households, and trade credit for exporters,” it said. The forecast came as India readied for the G-20 meeting of the biggest developed and emerging nations beginning on Saturday in Washington to map out strategy to tackle the financial crisis.

The Goldman Sachs estimate was below the Indian government’s forecast of 7.0 to 7.5 per cent growth for the current year and comes as a host of industries from cars to textiles report lower sales. Last weekend, the International Monetary Fund reduced its growth forecast for India for calendar 2009 to 6.3 per cent, 0.6 percentage points lower than its earlier estimate of 6.9 per cent. It shaved its estimate for India’s growth for 2008 by 0.1 percentage point to 7.8 per cent.

“We think the large negative global and domestic financial sector shock will continue to slow activity across the board, in capital expenditure plans, exports growth and consumption demand,” Goldman Sachs said. Neighbouring Asian giant China on Sunday unveiled an economic stimulus plan and said it would adopt a more aggressive fiscal approach in a major policy shift amid a slowdown in economic growth.

 

[Neo]

India eyes tourism to defy global credit crunch​

LONDON, Nov 11: India’s tourism industry can overcome the global financial downturn by tapping into its unspoilt countryside, Indian Tourism Minister Sujit Banerjee said here on Tuesday.

By boosting infrastructure outside of India’s bustling cities, the country can maintain its strong growth as a tourist destination, he said at the World Travel Market, the global tourism industry’s annual fair in London.

“We are very optimistic and we are rebranding our tourism,” Banerjee told AFP.

The number of international tourists visiting India has nearly doubled in the last five years, rising from 2.73 million in 2003 to 5.07 million in 2007, according to official figures.

His ministry expects it to slow due to the credit crunch, but is nonetheless hopeful that its plans to diversify the tourist market can keep visitors coming to India in the long-haul.

“We are promoting what is called responsible tourism and this is a very innovative rural tourism project which positions India’s rural way of life as a unique visitor experience,” said the minister.

“We are going into wellness, cruise, rural, adventure and faith tourism and we are absolutely hopeful that we’ll be able to overcome this problem and have a robust growth rate in tourism.”

In its 2008 global report, the World Travel Market said countries and firms which embraced the consumer trend for sustainable, environmentally-responsible tourism would be best placed to survive the financial downturn.

Figures for the first nine months of 2008 show 3.87 million foreign arrivals in India, an increase of 10.4 per cent on the same period last year.

Leena Nandan, a junior tourism minister from Delhi also at the ExCeL, said the global downturn was being taken seriously.

But she added: “While it would be reasonable to expect this growth may slow down, it is not likely to be completely stopped by the turbulence that is shaking the world economy.

“Overall, there is every reason for the Indian tourism industry to be optimistic.”—AFP

 

[nitesh]

Sharp dip in inflation makes room for rate cuts- Indicators-Economy-News-The Economic Times

NEW DELHI: Inflation dropped sharply to its lowest in nearly six months in early November as prices of metals and fuels fell, and analysts said the unexpectedly low figure gave the Reserve Bank of India (RBI) room to cut rates.

The substantial easing in inflation comes at a time when Indian policy makers are struggling to protect growth and shield the economy from the impact of the global economic slowdown.

India's wholesale price index, the most widely watched inflation measure, rose 8.98 percent in the 12 months to Nov. 1, well below forecasts for a rise of 10.37 percent, data showed on Thursday.

It was the lowest reading since May 24, when the rate was 8.90 percent and well below early August's peak of 12.91 percent.

Analysts said a decline in global commodity prices, robust domestic agricultural output and a fall in demand in a slowing economy helped bring the rate to single-digits well ahead of earlier expectations.

"Taking comfort from the decline in inflation and responding to the worsening demand outlook, we expect the Reserve Bank of India to cut the reverse repo rate by 100 basis points and the repo rate by 150 points by March 2009," said A. Prasanna, an economist at ICICI Securities.

He said inflation was likely to ease to 4.5 percent by March 2009. The repo is the central bank's main lending rate while the reverse repo is the rate at which it absorbs excess cash from the banking system.

Strong evidence that India's $1 trillion economy, Asia's third largest, is slowing has emerged in recent weeks. Factory output has been sharply lower, manufacturers have trimmed output and put expansion plans on hold. Government excise receipts -- factory gate taxes -- contracted in October.

Economists and policy makers expect growth to slow to 7 percent in the current fiscal year to March, from the close to 9 percent seen in the previous three years.


SLEW OF MEASURES

Despite rebounding in September to a just respectable 4.8 percent, analysts have warned annual growth in industrial output, a key indicator, was set for a severe slowdown after the credit crisis paralysed India's money markets in October.

That pushed up firms' interest costs as they battled tough business conditions and shrinking export markets.

Authorities have taken a slew of measures in recent weeks including cutting the repo by 150 basis points to 7.5 percent and lowering banks' reserve requirements to improve liquidity and boost growth.

India's financial markets, which have borne the brunt of the financial crisis in recent months, were closed on Thursday for a national holiday.

The receding threat of inflation will cheer India's Congress Party-led ruling coalition as it gears up for a string of state elections in coming weeks and federal polls by early 2009.

Suresh Tendulkar, a top economic adviser to Prime Minister Manmohan Singh, told Reuters the latest inflation data provided room for the RBI to act on rates.

"My hunch is the Reserve Bank of India will wait for one or two weeks and then take a call," he said.

 

[Neo]

India strikes free trade deal with S Korea ​

Thursday, November 13, 2008

NEW DELHI: India and South Korea have negotiated a free trade agreement that is likely to come into effect next year, a report said.

The agreement, concluded after two-and-a-half years of talks, comes as India has been aggressively courting its Asian neighbours to boost trade. “The deal is done and the agreement will be signed by December,” a senior Commerce Ministry official told reporters late Tuesday in New Delhi, according to the Press Trust of India. “It will go to our cabinet (for approval) while the Koreans would need a nod from their National Assembly,” the unnamed Indian official said, adding the deal was likely to come into effect next year.

South Korea has also been vigorously courting bilateral trade deals to spur its export-driven economy. The India-South Korea agreement would abolish duty barriers for 90pc of goods traded between the two countries, amounting to $11.2bn worth of bilateral commerce, the report said.

 

[Neo]

India’s rich lose 60pc of their fortune as stocks dive: Forbes ​

Saturday, November 15, 2008

MUMBAI: The fortunes of India’s wealthiest have been slashed by more than 60 per cent due to the global financial crisis which has sharply pulled down stock markets, according to a new rich list.

Forbes magazine put Mukesh Ambani, chairman of India’s largest private sector firm Reliance Industries, as the country’s wealthiest man, with a net worth of $20.8 billion after losing $28.2 billion in the past year. He overtakes London-based steel tycoon Lakshmi Mittal who topped the list for the past four years. His net worth was $20.5 billion after dropping $30.5 billion on plunging steel prices. The combined net worth of all 40 individuals on the list fell 60.3 per cent to $139 billion from $351 billion, the magazine said.

Mukesh’s younger brother Anil, who heads Reliance’s telecom, power utilities, and financial services businesses, was third on the list with a total wealth of $12.5 billion after losing $32.5 billion.

“These are painful times for India’s tycoons. The country’s once soaring stock markets fell 48 per cent in the 12 months and the rupee depreciated 24 per cent against the dollar,” Forbes Asia said. All of this conspired to knock 60 per cent off the combined fortunes of the nation’s 40 wealthiest. Their total net worth fell $212 billion, to $139 billion, down from $351 billion a year ago.

The list includes two women. Savitri Jindal, who heads the industrial OP Jindal Group was 12th with a net worth of $2.9 billion, while Indu Jain, chairwoman of media group Bennett, Coleman & Co, was 17th with $1.8 billion. Six of last year’s members had fallen out of the top 40 this year. They include United Breweries chief Vijay Mallya, who also owns premium airline Kingfisher. The magazine gave no figures on Mallya’s wealth. Others were nearly wiped out entirely, the magazine said. India’s wind power entrepreneur Tulsi Tanti and his brothers lost 91 per cent of their fortune, amid reports about problems with Suzlon’s wind blades.

Of the 34 who retained their position, only one increased his wealth.

Malvinder Singh, the chairman of generic drug firm Ranbaxy, jumped from 28th to 13th after he sold his 34 per cent stake in the business to Japan’s pharmaceutical house Daiichi Sankyo. Malvinder and his brother Shivinder added $550 million to their combined wealth. Economists say some of these billionaires could continue to see tough business cycles in coming quarters. Auto, steel and finance companies have been among the hardest hit in the global financial turmoil.

“Export-oriented firms, commodity-driven businesses and software firms with financial clients will face rough times,” said Siddhartha Sanyal, economist with brokerage Edelweiss Securities. R Balakrishnan, executive director at Centrum Broking said “paper wealth for these billionaires will continue to move sharply up or down,” depending on what happens with the world economy.

 

[Neo]

India takes steps to sustain growth​

MUMBAI, Nov 15: The global slowdown is having a bigger than expected impact on India’s economy, the central bank said on Saturday as it took the latest in a series of steps to improve money market liquidity and help exporters.

As world leaders met in Washington to address the worst financial crisis in 80 years, the Reserve Bank of India (RBI) said more domestic steps, including export credit measures, were imperative to sustain growth momentum.

The central bank has already reduced its key lending rate, slashed banks’ cash reserve requirements and cut their bond reserve requirements in the past month to release funds into a banking system strained by the global financial crisis.

“There are indications that the global slowdown is deepening with a larger than originally expected impact on the domestic economy, particularly for the demand conditions in the medium and small industry sector and export-oriented sectors,” it said in a statement posted on its website.

“Particular attention needs to be paid to maintaining the viability of sectors that contribute significantly to employment and exports.” The global credit crisis paralysed India’s money markets last month, prompting the bank to cut its main lending rate by 150 basis points to 7.5 per cent and pump in cash. But firms’ interest costs have risen as they also battle slowing demand and shrinking export markets.

Factory output growth has fallen, manufacturers have put expansion plans on hold, and government receipts from factory gate taxes contracted in October.

“There is definitely a liquidity problem which persists even now and needs to be addressed,” Saugata Bhattacharya, an economist with Axis Bank, said.

“The export sector of the economy is extremely vulnerable as supply of funds is squeezed,” Bhattacharya said.

India’s $1 trillion economy grew at an annual rate of 9 per cent or above in the past three fiscal years, second only to China among major economies.

The central bank forecast last month it would grow 7.5 to 8.0 per cent this fiscal year, which ends in March, but economists say growth is more likely to be about 7 per cent.—Reuters

 

[Neo]

India faces 500,000 textile job losses in five months ​

Saturday, November 22, 2008

NEW DELHI: The Indian textile industry, the country’s second-largest foreign exchange earner, will lose half a million jobs by April 2009 due to the global financial crisis, a government official warned on Friday.

“According to the estimates of the textile ministry, there will be job losses of about 500,000 in the next five months,” Commerce Secretary G K Pillai told reporters in New Delhi. Pillai said the sector, estimated to employ around 38 million workers, was facing a severe crunch because of deepening international financial turmoil.

The sector is India’s single-largest foreign exchange earner and accounts for about eight per cent of its gross domestic product. The sector accounts for 20 per cent of India’s industrial production and more than 30 per cent of the country’s export earnings, according to government figures.

 

[Neo]

India’s forex reserves dip by $5bn ​

Indian rupee has depreciated 26.89 per cent against the US dollar during 2008​

Sunday, November 23, 2008
MUMBAI: India’s foreign exchange reserve fell by $5.01 billion to $246.35 billion during the week-ended Nov 14 as the Reserve Bank of India intervened in the markets to check steep depreciation of the rupee, the Business Standard reported on Saturday. In addition, the dollar has strengthened against most international currencies in recent months. On Nov 14, the rupee had closed at 49.01 against the US dollar, 2.83 per cent lower than the closing level of 47.66 on November 7. During the week, foreign institutional investors were net sellers to the tune of $325 million in the equity markets thereby putting pressure on the rupee.

Repeated intervention by RBI in the foreign exchange market has meant that India’s foreign exchange reserves have dipped by $63.37 billion since the end of March 2008. The reserves are nearly $29 billion lower than the level at the end of December 2007. Forex reserves fell below the $250 billion mark after more than 13 months.

For the week-ended September 28, 2007, India’s foreign exchange reserves were at $247.76 billion. The rupee has depreciated 26.89 per cent against the US dollar during 2008 as foreign institutional investors have been pulling out their investment from India to meet the requirements in their home markets. The rupee closed at 50.02 against the dollar on Friday, compared with 50.15 on Thursday, according to data compiled by Bloomberg. According to the latest RBI Bulletin, the central bank sold $9.65 billion between April and September 2008 to check the Indian currency from weakening. The data comes with a lag of around two months. FIIs have intensified sell off from the second half of September after the financial turmoil became more pronounced. Since Sept 26, the country’s foreign exchange reserves have dropped by over $45 billion.

The heavy intervention by the central bank in the forex markets is also putting pressure on liquidity as RBI sells dollars in the market and sucks out rupee resources. It is cited as one of the major factors affecting domestic liquidity. Reflecting the weakening of the Indian currency against, in rupee terms, foreign exchange reserve rose by Rs10,66,944 crore (Rs10669.44 billion) to Rs12,18,263 crore (Rs12,182.63 billion) during the week-ended Nov 14.

 

[Neo]

Wrong thread