Indian Economy - News & Updates - Archive

[nitesh]

Bloomberg.com: India & Pakistan

India Exports Fall a Second Month, Adding Pressure to Cut Rates

Jan. 1 (Bloomberg) -- India’s exports fell for the second straight month, adding pressure on the central bank to cut interest rates and support growth in Asia’s third-largest economy.

The Reserve Bank of India, which has reversed four years of monetary tightening in the past three months, has room to slash rates further after a report today showed inflation slowed to a 10-month low.

Lower borrowing costs will spur consumer demand among the nation’s 1.2 billion people and compensate for falling orders from recession-hit U.S. and Europe, India’s biggest markets. India became vulnerable to slowdowns and financial crises in other countries after it started to open its economy in 1991.

“The negative news on the external side intensifies pressure on the Reserve Bank to cut rates to stoke domestic demand,” said Prasanna Ananthasubramaniam, an analyst at ICICI Securities Ltd. in Mumbai.

Overseas shipments dropped 9.9 percent to $11.5 billion from a year earlier after contracting 12.1 percent in October, the first decline in seven years, the government said in New Delhi today.

Demand for made-in-Asia goods has slumped amid the deepening global economic slowdown. China’s exports in November fell 2.2 percent, the first decline in seven years. Singapore’s exports posted the biggest contraction in more than six years in the same month.

“My difficulties are increasing as export orders are slowing due to the recession in Europe,” said Heung Soo Lheem, managing director of the Indian unit at Hyundai Motor Co., South Korea’s largest automaker. “We need strong support from the government to keep our plants in good shape.”

Spending Plan

The government, which unveiled excise duty cuts and a 200 billion-rupee ($4 billion) spending plan last month to boost consumption, will announce more steps to help exporters, Trade Minister Kamal Nath said Dec. 11.

The central bank in November extended the period for subsidized pre-shipment credit to nine months from six months and increased the export refinance limit for commercial banks.

Still, Palaniappan Chidambaram, who was moved to the home ministry from finance after the Mumbai terrorist attacks in November, says India will focus on boosting local consumer spending, accounting for 60 percent of the nation’s $1.2 trillion economy, to make up for waning global demand.

“Overseas demand for goods will remain muted as there are no signs of growth revival in the U.S. and Europe,” said Shubhada Rao, an economist with Yes Bank Ltd. in Mumbai. “Companies can turn to the domestic market to offset the loss from foreign sales.”

Borrowing Costs

Measures to spur the economy began on Oct. 6 when Reserve Bank of India Governor Duvvuri Subbarao cut the amount of money lenders need to set aside with the central bank. On Oct. 20, he presided over the first rate reduction in four years. India’s repurchase rate is 6.5 percent, down from 9 percent set in July.

There is “considerable scope” to reduce borrowing costs, the finance ministry said last week, after a drop in commodity prices cooled inflation from a 16-year-high of 12.91 percent in August.

Benchmark wholesale prices rose 6.38 percent in the week to Dec. 20 from a year earlier after gaining 6.61 percent the previous week, the commerce ministry said in New Delhi today. Economists expected an increase of 6.41 percent.

Inflation may slow to 5 percent by the end of March, Arvind Virmani, the finance ministry’s top economist, said last week.

“The decline in inflation gives the Reserve Bank comfort to lower borrowing costs,” said Indranil Pan, chief economist at Mumbai-based Kotak Mahindra Bank Ltd. “The economy needs to be nursed back into good health and, therefore, we need rate cuts.”

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.
Last Updated: January 1, 2009 06:13 EST

 

[nitesh]

India always does well in adversity: Nandan Nilekani- Corporate Dossier-Features-The Economic Times

India always does well in adversity: Nandan Nilekani
2 Jan 2009, 0528 hrs IST,

The end of this — quite eventful — year comes on a rather quiet and sombre note. The widespread expectations of a ‘global downturn’ are becoming reality, as exports fall world-wide , and governments tamp down on growth forecasts . The fireworks for the New Year will be muted, and everyone is cutting costs.

The catch-word for the coming year, however, appears to be ‘hope’ . An election that the world watched turned on it. Are there things India can hope to achieve, in the throes of a slowdown? Doing well in adversity after all, is what this country does best — Indian economists and policy makers alike often say to me that India is lethargic except in crisis.

Now, the kind of crisis that enables reform — as it did in 1991, 1997, and 2001 — is here. As our growth numbers come down, our national mood is shifting. Easy solutions are no longer possible for governments anxious about reelection — money is tighter, and giveaways are difficult when funds are scarce. As industry growth slows, the government is also finding that solutions for unemployment can no longer be addressed simply through job guarantees.

And as work becomes scarcer for new job seekers especially in rural and semi-urban India, migration will put more pressure on our cities and urban development . We will also not have the economic buoyancy that has so far, got us past massive inefficiencies (or the complete lack) of infrastructure.

The silver lining to the slowdown is thus the possibility that our policy makers and legislators will become more receptive to better ideas. This gives us an opportunity to push through more effective and long-term policies.

In fact, a slowdown makes such policies even more urgent. In a time of scarcity, the need for well-connected markets for example , cannot be over-emphasised , in order to make hard-tofind opportunities accessible across distances and state borders .

This means that spending on infrastructure has to be sped up rather than slowed down. Emphasising a well-regulated Public Private Partnership (PPP) model across our infrastructure projects can help the government drive road and rail-building and port upgrades in a time of budget constraints.

The state will also have to ease up on red tape restricting entry for new businesses, and convoluted taxes for companies already struggling with cash flows and revenue growth. Rather than bringing in new sops for specific industries, the government should use the opportunity to push through the remaining Tax reforms and the Goods and Services Tax (GST).

Efficiency will be the byword in a tough year. We will have to address the chaos of our cities, and implement the reforms to improve urban governance and responsiveness , and reduce the massive inefficiencies that urban citizens face when it comes to transportation, doing business, and in dealing with local bureaucracies.

The slowdown also puts a renewed emphasis on social security , which is an opportunity to push more effective policies forward. The Indian government has passed the NCEUS bill, but we will have to go further to ensure that our social security solutions remain viable and well-funded — bringing in some levels of contribution on the part of the employed.

As the dark clouds gather, we cannot ignore those who stand the most exposed — we have to look closer at the welfare of our unorganised workers, in a way that goes
beyond providing token pension protections. These workers are our economy’s most exploited, without key protections when it comes to job security and health care.

Their ability to find and keep jobs will only worsen as the economy weakens. Across factories, textile firms, these workers — who are 90% of our workforce — are the first to be laid off. We have to take a tough look at our labour laws in the coming year, which rigorously protect the few — the unionised workers — at the expense of the many.

The entrepreneur and venture capitalist Vinod Khosla likes to say that ‘a crisis is a terrible thing to waste’ . As our conventional growth options see a lull, entrepreneurs and policy makers alike have a chance to innovate towards new sources of revenue and GDP growth. Alternative energy for instance, remains immensely promising.

While oil prices have come down, in part due to slowing global growth, this industry holds large rewards in coming years for first-movers and innovators in energy crops, solar technologies, and wind and hydroelectric power. The massive inefficiencies and losses in our energy distribution networks should also encourage us to look at radical new solutions – such as decentralising our energy grid and making it ‘smart’ , while tapping into a variety of distributed, alternative energy sources.

The Indian government has been especially worried about the impact of the slowdown on an already weakened agricultural sector, and they’ve announced schemes such as subsidies towards short-term loans to tide farmers over.

But these are timid steps in the face of an agricultural crisis that is at its heart, an environmental problem. The dismal health of our agriculture sector is tied in water scarcities and the absence of irrigation that has deeply constrained our farmers, and soil depletion that is worsening crop yields.

But addressing this means that we will have to radically alter our environmental approach – by bringing our natural resources into our economy, and pricing them. Anyone using up these resources would have to pay a cost for it – whether that means dumping pollutants into rivers, or drawing water.

What ought to give us courage here is that the benefits from this would be massive, and would disproportionately go to the people closest to the environment, who now live in a state of exploitation – the tribals who live in our forests, and the farmers who have to bear the brunt of water pollution and soil losses.

Over the last half decade, we had an extended honeymoon in growth, exports and productivity. There were plenty of predictions this time last year that India might even touch ten percent growth rates. The disappointment now is palpable. These tough times will put India’s reputation as an emerging power to the test. But this offers us the ultimate upside: the chance to remove all doubt about the Indian economy’s resilience.

 

[Neo]

India unveils second economic stimulus plan ​

Saturday, January 03, 2009

NEW DELHI: India on Friday eased foreign borrowing by domestic firms and permitted additional liquidity for the non-banking sector to boost flagging growth in Asia’s third-largest economy.

The second economic stimulus package in less than a month came as India forecast growth of seven per cent for the year to March 2009, but economists say it could be as low as 6.8 per cent this year and 5.5 per cent the following year.

The package also allowed state administrations to borrow up to 300 billion rupees ($6.2 billion) to meet additional expenditure and fund infrastructure projects.

The package raised the ceiling for foreign investments in India from six billion dollars to $15 billion, national planning official Montek Singh Aluwalia told a news conference.

But he warned against expecting any immediate economic turnaround.

“The latest assessment we have is that we should be willing to see growth rates decline in the coming year and an average growth rate of seven per cent would be quite a good performance,” he said.

India’s industrial output shrank for the first time in 15 years by 0.4 per cent in October, after expanding by 12.2 per cent in the same month a year earlier. India’s central bank meanwhile slashed its two key short-term interest rates.

The Reserve Bank of India (RBI) reduced its repo rate, the short term rate at which it lends to commercial banks, by 100 basis points to 5.5 per cent.

It also slashed the reverse repo rate, the rate at which it borrows overnight, to four per cent.

It also unveiled a cut in the cash reserve ratio, the proportion of deposits domestic banks have to keep with the RBI, by 50 basis points to five per cent from January 17.

“These measures will make the new year happier,” Aluwalia said. Experts said the easing of the rates was likely to inject around $4.1 billion into the domestic banking system. The rate cuts were the fourth by the bank in less than three months.

India’s economy has been hit by the global recession and confidence has been undermined further by attacks in the financial capital Mumbai that left 172 people dead, including nine gunmen, in November last year.

 

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India's inflation Eases For Eighth Consecutive Week

India's inflation rate eased for the eighth straight week to 6.38% for the week ended December 20, compared to 6.61% in the preceding week, according to data published by the Ministry of Commerce and Industry. The inflation rate now more than halved from August's peak of 12.91%. The figure was 3.74% during the corresponding week of the previous year.

Inflation, based on the wholesale price index, dropped mainly due to drop in the prices of fruits and vegetables, edible oils and some manufactured products, which will induce the Reserve Bank of India to announce further cuts in key rates to stimulate the country's flagging economy.

The final estimate of inflation for the week ended October 25 last year, remained unaltered at 10.72%.

The main index for primary articles declined by 0.2% due to lower prices of chromites, steatite, tea, gram, fruits and vegetables and cottonseed. However, the prices of barites, fire clay, jowar, asbestos, raw silk and raw rubber moved up.

The annual rate of inflation for 'Primary Articles' was 12.07% for the week ended December 20, compared to 12.15% in the previous week. It was 4.08% a year ago. On the other hand, the annual rate of inflation for 'Food Articles' was 10.52% for the week, compared to 10.46% in the preceding week. It was 2.14% as on December 1, last year.

The index representing fuel, power, light and lubricants, declined by 0.5% on account of a dip in the prices of aviation turbine fuel, bitumen, light diesel oil and furnace oil.

The index of Manufactured Products declined by 0.1%. Among the manufactured products, prices of plates and strips, basic pig iron and foundry pig iron, other iron steel and MS bars and rounds, zinc, zinc ingots, salt, imported edible oil and rice bran oil dropped, whereas those of gur, newspaper, caustic soda and oil cakes increased.

Bankers said that with inflation on the decline, Reserve Bank of India might cut interest rates anytime. Prime Minister Manmohan Singh, who met RBI Governor, D. Subbarao, on Monday, urged the apex bank to consider further cut in rates.

Presently, CRR is 5.5%, while repo and reserve repo rates are 6.5% and 5% respectively. A one-percentage point cut in CRR would bring this rate below 5% for the first time since September 2004. The RBI has been increasing its key rates since 2004. The first major rate cut, since then, was on October 11 last year, when the apex bank reduced the CRR by 250 basis points.

The government, including the finance ministry, favors another round of rate cuts, especially when inflation is well within control. Planning Commission deputy Chairman, Montek Singh Ahluwalia, earlier hinted that there was scope for monetary action in the changed circumstances.

Union Minister for Petroleum and Natural Gas, Murli Deora also hinted a further cut in petroleum prices this month to rein in inflation.

According to Ashish Parthasarathy, Deputy Head of treasury, HDFC Bank, a 0.5% to 1% cut in reverse repo rate is expected anytime. K.C. Kalia, Executive Director of Vijaya Bank, expressed a similar view, due to slowdown in different sectors.

The wholesale price index is watched more closely than the consumer price index (CPI), as it includes more products and is published weekly.

Source

 

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International - Weeks after Mumbai attacks, British MPs back Gujarat investments

Less than three weeks after the Mumbai terror attacks, the political establishment here is seeking to strengthen Britain’s business ties with Gujarat - the source of one the largest Indian-origin communities in the country.

As many as 67 British MPs have signed an Early Day Motion (EDM) in a rare show of solidarity celebrating the Vibrant Gujarat campaign.

The EDM was moved by Barry Gardiner, chairman of the all party parliamentary group on UK-India trade and investment relations, whose Brent North constituency in Northwest London comprises up to 50,000 Britons of Indian origin.

The motion "celebrates Britain’s role as the largest foreign direct investor into the State of Gujarat, birthplace of Mahatma Gandhi; and welcomes the Festival of Vibrant Gujarat linking commerce and culture as a focus of community harmony for all the people of Gujarat".

The motion not only has strong cross-party support but also the backing of leading British politicians such as Mike Gapes, chairman of the Parliamentary Select Committee for Foreign Affairs; Andrew Dismore, chairman of the Joint Committee on Human Rights; Stephen Pound, former chairman of Labour Friends of India; and Jeremy Corbyn, a prominent human rights campaigner in the British parliament.

The EDM has already drawn the support of 67 MPs since being moved Friday - a number larger than those garnered by motions of solidarity after the Mumbai blasts.

The Vibrant Gujarat Investors’ Summit, slated to be held Jan 12-13, 2009, aims to attract further investments into a state that is already among the favourite emerging market destinations for foreign investors.

The event will showcase business opportunities in a range of sectors in Gujarat, including gas, oil, power, information technology, infrastructure, shipbuilding, tourism, chemicals and petrochemicals, biotechnology, food and agri-business, auto-engineering and urban development.

Source

 

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New Year brings 2.5L jobs

There is a good news for job seekers, with the companies planning to hire more than 2,50,000 new employees over the next months — making the new year a welcome change from the gloom of 2008 in the job market.

While the proposed over 2.5 lakh hiring is mostly for the financial services industry, the industry experts believe that the overall job market scenario is also set for a recovery in the second half of the year. Topping the list of the companies planning to hire big include public sector banking giants like State Bank of India and Punjab National Bank as well as insurance firms such as Anil Ambani group’s Reliance Life, SBI Life, Metlife, Max New York Life.

Even some BPOs and healthcare firms like ACS and Accentia are planning to hire thousands of people in the coming days. The proposed hirings include more than one lakh of full- time employees and about 1.5 lakh in the part-time positions with the insurance companies. Among other sectors, manufacturing and export-oriented businesses are, however, likely to continue to witness some pressure in the next few months, after huge job losses seen during 2008.

Source

 

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'Tea export to Pakistan remains steady despite strained ties'

Kolkata: Undeterred by the recent strained relationship with Pakistan, the Tea Board of India expects to export 11,000 tonnes of tea to that country this year, a top official said here Thursday.

"We expect that the export to Pakistan will be decent this fiscal. There is no problem yet with tea trading though official visits are stopped," Basudeb Banerjee, chairman of the board, told reporters.
The total tea export to Pakistan last year was in the tune of 5,000 tonnes.

Ruling out any impact of the global economic meltdown on the tea industry, Banerjee said: "Demand for tea won't be affected due to the slowdown. Rather, tea consumption rises during recession as people shift from other costly beverages to tea."

Talking about the export in the current fiscal (2008-09), Banerjee said: "Our export this year will be more than what we did last fiscal."

Last fiscal, India exported 189,000 tonnes and this year it expects to achieve 195,000-200,000 tonnes against a target of 205,000 tonnes, he said.

Source

 

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PM announces stimulus package for science

Braving cold and fears of bomb blasts, over 3000 Indian and foreign scientists have gathered in picturesque town of Shillong for the annual session of the Indian Science Congress.

In the 96-year-old history of the annual event, this is the first time it is being held in a northeastern state.

Prime Minister Manmohan Singh, while inaugurating the event, announced a new stimulus package for science that promises to triple the funding.

Within days of the Guwahati bomb blasts and within weeks of the dastardly attacks on Mumbai, in show of immense resilience, more than 3000 of the top Indian scientists gathered on a very chilly morning in Shillong to participate in the mega science event.

The scientists were happy as the Prime Minister announced a new stimulus package for science by promising a tripling of the budget for science, not withstanding the economic slowdown.

"This marks a historic turning point for Indian science. I have promised and I stand by that promise that we double the investment in science from one per cent of national income to two per cent of national income," said Singh.

"We have widened the higher education base of the country by investing in the creation of 30 new central universities, five new Indian Institutes of Science Education and Research, eight new Indian Institutes of Technology and 20 new Indian Institutes of Information Technology. We have also established the Indian Institute of Space Science and Technology at Thiruvananthapuram in Kerala. The Department of Atomic Energy has taken the initiative to set up the National Institute of Science Education and Research in Bhubaneshwar to nurture world-class scientists," he added.

Other big announcements at the science meet included a new Rs 20 crore Security Technology Initiative to thwart terrorism. A new institute to study and use stem cells is to come up at Bangalore. The Prime Minister also urged the Indian scientists to do much more as the country needs to develop faster becoming a truly knowledge society.

"India lags behind not just developed western nations, but also the newly industrialised economies of Asia," said Singh.

Indian scientists have said they are ready to take up the challenge. Indian science seems to be having a dream run - a good past year with the highly successful maiden mission to the moon, Chandrayaan-1 and the culmination of the Indo-US nuclear deal. Now with this tripling of the science budget, the onus really is on Indian scientists to undertake quality research.

Source

US documentary extols superiority of Indian education system

 

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26/11: Buying opportunity, not economic disaster

Has the terrorist attack on Mumbai wrecked the economy and led to a flight of foreign institutional investors (FIIs), as was feared after 26/11? Not at all. Foreign portfolio investors have adopted Nathan Rothschild's maxim that the best time to buy shares is when blood runs in the streets.

On November 28, in the middle of the Mumbai gunfight, they bought $159 million net of Indian stocks and bonds (their purchases of bonds greatly exceeded sales of equities). And, in December, they bought a net $433.5 million of equities and $155.4 million of bonds, making a total dollar inflow of $589 million. So, FIIs are treating the Mumbai attack as a buying opportunity, not a tragedy that dents global business confidence. They remember that the 9/11 attack was horrific, but that this very horror made it an excellent time to buy equities. They are following the same principle in India.

This is especially striking since in earlier months, from the start of 2008 to 26/11, FIIs had pulled a massive $13.5 billion out of Indian markets, sending the Sensex crashing from a peak of 21,000 to 9,027 on November 26, just before the terror attack. Pessimists feared that the Mumbai attack would lead to further outflows. Surprise, surprise, dollars flowed in instead.

Markets were closed next day, but re-opened on November 28. Most people feared disaster on that day, but after a bad start the Sensex actually gained 66 points, ending up at 9093. By the end of December it climbed further to 9,647, and then crossed 10,000 a few days later. If indeed the attack aimed to hit stock markets and foreign confidence in India, it failed dismally.

The attack had a short-term impact on tourism and hotels. But long-term flows of foreign direct and portfolio investment are unlikely to be affected. The long-term India story remains unchanged—terrorism is part of that story, and investors understand the risks.

India has been subject to Islamic terrorist attacks for two decades, and major Indian cities witnessed a series of bomb blasts in 2008. The Mumbai attack was notable for providing reality TV for 60 hours rather than for high casualties — 250 were killed in the Bombay serial blasts of 1993 and 174 on July 7, 2006. Indeed, 3,500 people die falling off Mumbai trains every year. Every death is a tragedy, but 26/11 was not exceptionally tragic in numbers.

Maoists have been waging insurrection in many states, and Maoist incidents have been reported from 157 of India's 600 districts. Many of these are in central India, which is rich in mineral ores. This has hobbled some mining and steel projects. Such risks are, however, already factored into the calculus of investors. Hong Kong-based Political & Economic Risk Consultancy Ltd had already assessed India as the riskiest of 14 Asian countries. The risk would have been seen as higher only if investors thought that India and Pakistan would go to war. That, however, is not going to happen.

The US has pressured Pakistan to crack down on militants, though not nearly as hard as India would like. After the UN strictures, the Pakistani establishment will rein in the wildest groups, not out of love for India but simply to avoid further diplomatic embarrassment. That is positive news for India's economy.

This does not mean, of course, that 26/11 has had no adverse impact at all on the Indian economy. Tourists galore have cancelled bookings and hotel occupancy is down. However, tourism is not among the top Indian industries. The global recession was already taking its toll before the Mumbai attack, and tourist cancellations will worsen the situation. But foreign exchange earnings from tourism, at around $10 billion per year, are barely 1% of India's GDP. They are less than a quarter of the $42 billion of remittances to India by overseas Indians.

While tourist hotspots will suffer, the Indian economy as a whole will shrug this aside. Indian economists are far more worried about the impact of the global recession than of the Mumbai attack. As the saying goes, when you are fighting the alligators in a swamp, you do not worry about the mosquitoes.

Source

 

[nitesh]

more to support the above post

'Rates to fall by up to 5% in 6 months'- Indicators-Economy-News-The Economic Times

'Rates to fall by up to 5% in 6 months'
5 Jan 2009, 0240 hrs IST, AGENCIES

MUMBAI: Interest rates are set to fall by up to five percentage points in the next six months as inflation is moving towards zero level, a situation that will make India a low-cost economy and a winner globally, ICICI Bank CEO and MD KV Kamath said.

“All I can say is that there will be four-to-five percentage points correction in interest rates from where it is today...This correction, I think, will be by July...This is where the rates are heading in six months from now,” he added.

Crystal-gazing the economy for 2009, ICICI Bank chief said, “I think that interest rates would head towards single-digit levels from the quarter starting July.” Mr Kamath, however, declined to comment on what the lending rate of ICICI Bank, in particular, would be by that time. ICICI Bank’s PLR currently stands at over 16%. Apart from the price line moving southward, the trend of declining rates for bank deposits and falling rates of bonds in the Indian market would help banks bring down the cost of credit to the industry.

“The speed with which, say for example, bulk (deposits) have repriced themselves at 2-2.5 percentage points in a span of just two weeks, gives me comfort to say what probably is going to happen,” he noted.

The bond prices have started correcting themselves and are going towards the 4% mark, he said, adding that these had already come to 5.5% from 8.5%.

“Secondly, banks are repricing their own deposits lower...Deposit rates are going down by 100-150 basis points or so...Inflation is also coming towards zero,” he said, while forecasting that the bulk deposit rates in India would stabilise at 8-8.5% from a peak of 12.5% till recently.

Currently, banks are offering up to 10% interest on fixed-deposits by retail customers while institutional and corporate customers’ bulk deposits are higher in value and get a special higher rate from the competing banks.
“Interestingly, we are heading towards deflation that is very clear, or rather we are heading towards a very low level of inflation. Let me put it appropriately that this also means that bond prices have started correcting themselves.

“Along with the bond price correction, we are seeing very rapid correction starting to happen in banks’ pricing of debt. On the deposit side, it has just started. So we are not seeing it fully passed on to the customers,” Mr Kamath said.

“I would expect that 3-6 months from now, we will see banks’ deposit books repriced downwards, translating into lower cost from customers...The full repricing is expected to be completed by November, but a significant impact of it would start surfacing by July,” he added.

Asked if banks would start the process of swapping the costlier debts taken by the industry till the middle of this fiscal when the credit was being given for rates of even over 20%, Mr Kamath said there was a comfort level for the corporate world, because the average debt-equity ratio was 1.5:1 as against 3:1 that was prevailing in the mid-1990s.

However, the underlying fear for the industry relates to payments getting delayed because of the slowdown and that is an issue that the banking industry should look at, he said. The banks would not be willing to stretch the working capital limit to that level as they are limited by the norms relating to a debt turning into non-performing assets if payments are delayed beyond permissible period.

“If the working capital issue is not resolved, we have a problem with corporates...The problem is going to be that banks may not be willing to lend if the company appears to be impaired,” he said.

Recalling that banks have been allowed by RBI to restructure corporate loans, he said banks should do it properly to give a helping hand to corporates. Asked about the kind of restructuring ICICI Bank was willing to take, he said, “In our case, because of our history, we are not a major working capital lender. So, this I would say, is not significant in our context...Public sector lenders are the major players.”

However, the industry would reap major benefits from oil prices sliding from a peak of over $147 to $37 or so in a matter of months, while other commodities have also corrected by around 60%, Mr Kamath noted.

 

[nitesh]

India Today - India's most widely read magazine.

Govt to inject Rs 100,000 cr to prevent recession: Cong
IANS
New Delhi, January 5, 2009

The Congress party on Monday said the government has decided to inject Rs 100,000 crore in association with the private sector in the Indian economy to stimulate internal demand to insulate it from the effects of global recession.

"In the next 100 days, the United Progressive Alliance (UPA) government has decided to inject Rs. 1 trillion in the Indian economy to stimulate internal demand to keep it insulated from the world recession. This would be done in association with the private sector," Manish Tewari, Congress spokesperson, told reporters.

Tewari said the decision was taken on the advice of UPA chairperson Sonia Gandhi.

"UPA has taken the decision to provide stimulus to the Indian economy on the advice of Soniaji. This is to increase productivity, control inflation and increase employment opportunities," he said.

Tewari also said the UPA government has been successful in not letting the world recession impact the Indian economy.

"The UPA government has acted as a wall against the world economic recession and hasn't let it impact the Indian economy. We have been able to manage average growth rate of 8.9 per cent during the period of 2004-2009 against 5.8 per cent during the National Democratic Alliance regime (1999-2004)," Tewari said.

 

[Neo]

India outsourcing giant hit by billion-dollar fraud ​

Thursday, January 08, 2009

MUMBAI: The head of one of India’s biggest outsourcing firms, Satyam Computer, resigned on Wednesday amid a scandal over a billion dollar fraud that sent the company stocks into freefall.

Company founder and chairman B Ramalinga Raju admitted the Hyderabad-based software services firm had falsified accounts and assets and inflated its profits over several years.

The company overstated its cash and bank balances to the tune of more than 50 billion rupees (more than a billion dollars) in its September-end balance sheet, “purely on account of inflated profit over a period of several years,” Raju said in a statement.

Satyam shares plummeted 77.69 per cent, or 139.15 rupees, to 39.95 rupees on the Mumbai Stock Exchange on Wednesday, as investors dumped the company. The broader benchmark 30-share Sensex plunged 7.25 per cent to 9,586.88.

Satyam had announced the $1.6 billion buyout of the Maytas infrastructure firm earlier this month, but abruptly reversed its decision after investors rejected the plan.

 

[Neo]

Indian shares plunge 7.25% on Satyam scandal​

MUMBAI: Indian stocks plunged 7.25 percent on Wednesday as investors were hit by a billion-dollar fraud scandal in major software firm Satyam Computer, dealers said. The benchmark 30 share Sensex index fell 749.05 points to 9,586.88, ending a run of four days of gains. Satyam’s founder and chairman B Ramalinga Raju admitted the Hyderabad-based software services firm had falsified accounts and assets and inflated its profits over several years. The company overstated its cash and bank balances to the tune of 50.4 billion rupees ($1.03 billion) in its September-end balance sheet, “purely on account of inflated profit over a period of several years”, Raju said in a statement. Satyam shares plummeted 77.69 percent, or 139.15 rupees, to 39.95 rupees on the Mumbai Stock Exchange on Wednesday, as investors dumped the company. Concerns of a broader long-term impact on other IT companies saw major software stocks fall. India’s earnings announcement season commences with top software exporter Infosys on Jan 13. In Wednesday’s trade, losers led gainers 2,111 to 414 on turnover of 58.17 billion rupees ($1.19 million). The world’s sixth largest steel maker Tata Steel fell 13.1 rupees or 5.31 percent to 233.65, after the company’s sales volume dipped by about 14 percent to 1.07 million tonnes in third quarter December-end, due to the global economic slowdown.

 

[Neo]

Nissan slows project in India ​

Saturday, January 10, 2009

NEW DELHI: Japanese automaker Nissan said on Friday that it had been forced to apply the brakes to several projects in India, including a billion-dollar car plant, due to the current economic climate.

The Renault-Nissan alliance began construction of the plant near the southern city of Chennai in June last year. With an estimated cost of $1.14 billion, the facility was scheduled to begin operations in 2010, with two production lines boasting an eventual capacity of 400,000 cars a year.

“Because of our economy, we will go only with one production line of 200,000 units per year from the first half of 2010,” Shouhei Kimura, the CEO of Nissan Motor India Pvt Ltd, told reporters in New Delhi. “If in one year the economy comes back, we will have 400,000 units by 2011 at full capacity,” Kimura said.

Another project with India’s Bajaj group to produce an ultra-cheap car retailing at around $2,500 has also seen its original launch date of early 2011 delayed by at least one year.

“The project is going on. It is (now) expected in 2012,” Kimura said. After registering double digit growth for several years, car sales in India plunged 20 per cent year-on-year in November 2008.

 

[Zaheerkhan]

Fuel prices to be cut again

MUMBAI: Another reduction in fuel prices is round the corner. In the next few weeks, petrol will be cheaper by Rs 5 a litre, diesel by Rs 3 a
litre, and cooking gas (LPG) by Rs 20-25 a cylinder, Petroleum Minister Murli Deora said on Saturday.

The cuts would bring fuel prices on par with international rates, he added.

This is the second time in as many months that fuel prices have been cut after global crude oil prices began nosediving after reaching a high of $147.27 July 11. The price is currently around around $40 a barrel.

The Indian basket of crude is also currently hovering around the $40-mark per barrel, down from a peak of $132.47 a barrel in July.

LPG prices had not been cut the last time.

Indane, the cooking gas brand from oil marketing firm Indian Oil Corp (IOC), sells at Rs 304.70 in Delhi, Rs 339.60 in Chennai, Rs 349.50 in Mumbai, and Rs 352.05 in Kolkata.

Deora's announcement comes three days after he said the government might announce another cut in fuel prices soon.

The diesel price cut by Rs 3 a litre is unlikely to satisfy agitating truckers, who want a Rs 10 cut per litre.

However, S Venugopal, the general secretary of the All India Motor Transport Congress (AIMTC) that is spearheading the stir, declined to comment, saying AIMTC leaders arrested on Friday had to be released first before he went into issues like price cuts.

The last fuel price cut was Dec 5 after a gap of 22 months to boost the slowing economy, with the cushion coming from the price drop of $100 per barrel in global crude prices.

Oil marketing companies like IOC were allowed to cut prices by Rs 5 a litre for petrol and Rs 2 a litre for diesel.

Fuel prices to be cut again- Indicators-Economy-News-The Economic Times