Indian Economy-News & Updates

[ramu]

I think, I did not communicate my point clearly... What I said was 3% (if it is recommended) is more of an 'ideal state advisable figure'... It is practically not achievable.. is my concern... and thus my belief that we not not unncesessarily be worried about the number from 3.5% to 5.3%, specially in the next 5 years or so...

Time will tell. Watch this space in one year.

Indeed direct tax collection has been stupendous and it is expected to cintinue, but that is not what made the dent... We were on our way to a figure above 5%... But, the huge swing last year (to below 5% deficit) was predominantly an over-recovery (if you may) on account of 3G spectrum sales (by about $7-8Bn above the expected govt estimate in budget) and the decontrolled prices of Petrol also helped a big way in improving (by rolling out lesser subsidies, some of the related unwanted expenses were avoided) both the fiscal and current account deficits... But that can not be assumed to be the 'trend' as windfall profits like '3G' licensing happen only once in 5 years... and here is my humble submission why I believe in what I said...

You forgot the disinvestment policy of the government. India has far too much capital locked in share holding of the GoI. It should just focus on Infra bonds and other instruments instead of owning 90+ % of PSUs.

To pump out a >8% growth rate, you got to invest in lots of sectors and infrastructure and for that you have to take loans or invite private Capital and in such cases an 8% growth will not lead to a similar jump in tax revenues... Because (a) Infrastructure businesses (even with FDI) take more than 3-4 years to turn positive (let alone paying taxes) - e.g. Delhi Airport will take around 7-10 years to make its first profit (b) The depreciation is higher in the first few years (in cases of new investments into sectors, where govt wants focus) and to add to it, sector specific tax holidays also help postpone the tax earning potential... So, investment is far far greater than return (and thus taxes) in the first 3-4 years... On top of it, the reducing value of dollar makes export less attractive and reduce the inflow of solid direct income (as against FII money, which can vanish over night)

The returns of infrastructure projects are long term and I agree to it. But as long as the Finance minister finds innovative means of taxation, the swell in the coffers is just going to go on and on. The foreign reserves is increasing and so is the investment of GoI in gold.

Another important factor is that the controlled prices of Diesel and LPG are creating a bigger dent (a factor that did not exist for most of the last year due to lower crude prices, which have started increasing again)... Higher commodity (and agri) prices and increasing wages will also hurt EBITDA margins and that will add further pressures... In addition, the massive defence purchases will also have cost escalations that have not been budgeted and that will add to the outflow (as against no new inflows).... And, mind you, all this while the size of GDP is increasing like crazy and there will be no major returns in absolute short term and that 'WILL' push the deficit numbers higher...

Petrol is now deregulated, and diesel will follow suit if not today but in some time. Even if that does not happen, the prices of petrol and diesel are high enough and the GoI will not incur losses on account of subsidising the same.

One very important factor not many have considered is the GoI's policy to deposit money in the bank accounts of the poor instead of providing subsidy. This will in one stroke remove all the middle men (most of them) and the resultant money in the hands of people couple with NREGA will give money to the bottom of the pyramid. This one single factor will rejuvenate the economy by a minimum of a percentage point. Also the black economy that is not accounted for in India is estimated to come up to 500 Billion dollars (conservative estimate). This economy is the buffer to the real economy and this in a way will dampen any sharp growth or fall in real terms by contributing or hiding the figures from the remit of taxation.


What I am trying to imply is that, India is in an 'investment phase' and if you open the corporate histories around the world, you wil see that the 'leverage' or 'loans vs revenue ratios' or what you refer to as 'deficits', always jump up in these phases and are not necessarily bad... The only concern is that lending should not be made to stupid businesses or baseless business plans (like the credit growth phase in US or what we saw sometime back in China real estate market) and if you see the last 2 years, Indian banks have done all they can to ensure that only reliable parties get loans and that is our biggest strength... Our government's growth centric and yet smartly conservative mindset... This is not a political stand I am taking, but only some basic economic realities for a growth economy...

I am not against what you said... I am just saying that some of that is practically not achievable and yet, there is no major reason to loose sleep over it...

As I said, watch this space in a year's time.

 

[ramu]

RBI policy warns of amplified global risks

The Indian central bank declared its second monetary policy for the financial year 2011-12 today. Skyrocketing commodity prices and inflationary pressure forced the RBI to tighten its monetary policy stance once again. The RBI continued its rampage against the persistent inflation by resorting to interest rate hikes for the 10th time in 15 months.

The interest rate at which the RBI lends to (repo rate) banks was raised by 0.25%. Thus the repo rate now stands at 7.5% from 7.25% previously. The rate at which RBI borrows from banks (reverse repo), has been pegged at 1% below the repo rate. Thus, the reverse repo rate has automatically adjusted to stand at 6.5% from 6.25% previously.

The increase in the price of commodities globally was cited as the ‘key risk factor' troubling the RBI. A slowdown in the pace of global growth is as much worrying. Uncertainty about the resolution of the Euro debt crisis has already spooked equity markets several times. Economies have been reeling under the pressure of high crude oil prices as well as other commodities. Now despite slower GDP growth prospects and lower consumption levels, commodity prices are still far from being at comfortable levels. Higher domestic demand, and increased input costs, has led to inflation in emerging economies to consistently be on the rise. Tighter monetary policies in Asian economies, particularly India and China, are yet to yield the desired results.

Is growth slowing down?

Growth in India's Gross Domestic Product (GDP) saw a slowdown to 7.8% in the fourth quarter of the financial year 2010-11 (4QFY11) from 8.3% in the previous quarter. The GDP growth had come in at a higher level of 9.4% in 4QFY10 before the rate hikes started. The RBI's latest round of liquidity tightening therefore begets the question as to whether India is headed towards a recession?

A recession is a period of a temporary decline in economic activity and consumption. Trade and industrial activity see a slowdown. It is usually identified by a fall in GDP for two quarters, back to back.

Interest rate sensitive sectors such as automobiles, housing etc. are witnessing a visible slowdown. Index of Industrial Production (IIP) numbers also saw a decline in April 2011. Credit growth for banks has seen some moderation. As companies deferred their capex plans, credit growth slowed down from 21.3% YoY in March 2011 to 20.6% YoY by early June 2011. However, this is still higher than the RBI's projection of 19% growth for the fiscal. 47 banks raised their base lending rates by 1.5-3% from July 2010-May 2011, in line with the RBI's aggressive stance. Bank funding is a major fuel to the economy. Now, with higher borrowing costs, not only can demand for credit moderate but also have a cascading effect on other growth aspects of the economy like consumption and investment.

Going forward

Inflationary pressure may continue to plague the Indian economy in the near term. While supply of food products may get eased with good monsoon, the non agricultural commodities may remain a cause for concern. Inefficient supply chain and pricing mechanisms may also hurt consumer inflation. This indicates that rising input costs and higher wage levels could be passed on by producers. With little option to rein in price levels that can lead to real growth rates remaining in the negative, the RBI may not stop tweaking its monetary tools whenever necessary. However, the RBI will be looking closely at global developments and try and balance its anti-inflationary stance accordingly. Either way, things do not look too rosy for the economy at this point.

RBI policy warns of amplified global risks - Views on News from Equitymaster

 

[ramu]

GoAir orders 72 new Airbus planes; deal worth $7.2 billion

MUMBAI: Airbus has received an order worth $7.2 billion for 72 planes from Indian carrier GoAir, the latest in a series of Indian airlines scrambling to meet growing demand in Asia's third-largest economy.

The order for A320 planes brings GoAir's total order book with Airbus to $9.6 billion, Managing Director Jeh Wadia told reporters on Thursday.

Indian carriers are growing their fleets as demand booms in India, where an economy growing at nearly 9 per cent is spurring business travel and a burgeoning middle class long accustomed to traveling by rail is now increasingly opting for air.

India's largest private carrier Jet Airways is also expected to place aircraft orders with Airbus at the Paris Air Show later this month, according to media reports.

Earlier this year, budget carrier IndiGo placed a $15.6 billion order with Airbus for 180 planes in what it called the biggest jet order in commercial aviation history.

And in November, rival SpiceJet agreed to buy 30 Nextgen turboprop aircraft from Canada's Bombardier Inc for as much as $915 million.

"In terms of aircraft, we see tremendous potential in India, which has barely six airlines with 350 aircrafts catering to a billion people, compared with China's present 1,100 aircrafts," Wadia said.

India is scrambling to get its airport infrastructure in line with ballooning demand. The country has revamped its ailing airports in three major cities - New Delhi, Bangalore and Hyderabad, but smaller cities still need to be addressed.

GoAir has ordered the "A320neo" planes -- an upgraded version of Airbus' best-selling A320 150-seat workhorse. The deliveries will begin in 2015.

"We are evaluating various fund-raising options (for the deal). It will be a combination of debt and equity," Wadia said.

GoAir flies to 18 destinations across India, with a focus on the busy metro routes of Mumbai, New Delhi and Bangalore. It now plans to focus on smaller cities, Wadia said.

Last month, two sources with direct knowledge of the matter had told Reuters GoAir was planning to raise about $150 million through a public offer to fund its operational expenses, repay debt and buy new planes.

GoAir orders 72 new Airbus planes; deal worth $7.2 billion - The Economic Times

 

[gowthamraj]

What is the current GDP(nominal) of economy



Any idea when it reach 2trillion us dollars

 

[ramu]

What is the current GDP(nominal) of economy



Any idea when it reach 2trillion us dollars

Current nominal GDP is ~ $1.75 Trillion. India's nominal GDP is expected to grow at 14 per cent in 2011-12, to reach Rs 90 lakh crore (Rs 90 trillion). At a dollar exchange rate of Rs 45, this works out to $2 trillion.

However, if inflation is assumed to be 8 per cent and the real growth rate is 8 per cent (projected as 9% by GoI, I am being conservative), the growth rate of 14 per cent may actually understate nominal growth rate by 2 percentage points, which means India's nominal GDP in dollar terms will actually exceed $2 trillion this fiscal!

 

[drunken-monke]

INDIA'S HEALTHCARE INDUSTRY

​

The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent.”
Richard Gerster

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world.
Growth Scenario in 2010
India's pharmaceutical industry is now the third largest in the world in terms of volume. Its rank is 14th in terms of value. Between September 2008 and September 2009, the total turnover of India's pharmaceuticals industry was US$ 21.04 billion. The domestic market was worth US$ 12.26 billion. The Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers reported this. As per a report by IMS Health India, the Indian pharmaceutical market reached US$ 10.04 billion in size in July 2010. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. Pharmaceutical Market Trends 2010
Leading Pharmaceutical Companies
In the domestic market, Cipla retained its leadership position with 5.27 per cent share. Ranbaxy followed next. The highest growth was for Mankind Pharma (37.2%). Other leading companies in the Indian pharma market in 2010 are
· Sun Pharma (25.7%)
· Abbott (25%)
· Zydus Cadila (24.1%)
· Alkem Laboratories (23.3%)
· Pfizer (23.6 %)
· GSK India (19%)
· Piramal Healthcare (18.6 %)
· Lupin (18.8 %)

Future Prospects
The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009. This was stated in a report title "India Pharma 2020: Propelling access and acceptance, realising true potential" by McKinsey & Company. In the same report, it was also mentioned that in an aggressive growth scenario, the pharma market has the further potential to reach US$ 70 billion by 2020

Due to increase in the population of high income group, there is every likelihood that they will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015. Ernst & Young estimated this in a report. The domestic Pharma market is estimated to touch US$ 20 billion by 2015. The healthcare market in India to reach US$ 31.59 billion by 2020. The sale of all types of pharmaceutical drugs and medicines in the country stands at US$ 9.61 billion, which is expected to reach around US$ 19.22 billion by 2012. Thus India would really become a lucrative destination for clinical trials for global giants.

There was another report by RNCOS titled "Booming Pharma Sector in India" in which it was projected that the industry is expected to prosper in the same manner as the pharmaceutical industry. The domestic formulations market will grow at an annual rate of around 17% in 2010-11, owing to increasing middle class population and rapid urbanization.
Characteristics of Indian Pharmaceutical Industry
The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

Regards

 

[SpArK]

INDOlink - India Business News: Indian biotech sector revenue surge to $4 bn

 

[SpArK]

BERNAMA - India Loses US$16 Billion Annually Due To Corruption - Activist

 

[SpArK]

Gujarat to lead India's gas revolution: Report​

Gandhinagar/Ahmedabad: India is on the brink of a natural gas revolution, and Gujarat, with its strategic location, robust infrastructure and booming trade & business will steer the way for the rest of the country, the research firm, Infraline Energy, has said in a report.

The report titled, 'Natural Gas Market in Gujarat: Assessing the Progress and Prospects', cites availability and reach of natural gas to most parts of Gujarat as the major catalyst for overall growth in the state.

Gujarat has access to multiple gas sources, a state-wide gas grid of over 2,000 km, and the presence of a booming city gas distribution business across many cities, the report says.

"Industries, power sector, small & medium enterprises, transport, and households in the state are reaping benefits of natural gas," Infraline Energy says in the report.

The report further says that Gujarat is the most favoured destination for LNG terminals owing to its strategic location. Gujarat houses the country's only two operating LNG terminals, and three new terminals are proposed to come up in the state.

"Various stakeholders, including the government, suppliers, gas consumers and gas pipeline players in the state have chartered the path to a gas-based economy on their own," Infraline says.

The research firm also projects natural gas demand in Gujarat to shoot up from the current levels of 85 million metric standard cubic metre per day (mmscmd).

"The natural gas demand in Gujarat would increase to 122 mmscmd by the year 2015 and to 147 mmscmd by 2020," it says.

The report projects that gas consumption by the power sector in the state would increase from 32 mmscmd in 2012 to 43 mmscmd in 2020, while gas demand by industries is projected to increase from 49 mmscmd to 73 mmscmd.

Gas demand by fertiliser units is projected to remain at 12 mmscmd, while demand for gas for city gas distribution will nearly double from 10 mmscmd in 2012 to 19 mmscmd in 2010.

According to industry experts, Gujarat has the most developed natural gas market in India. It is the largest consumer of gas in the country, accounting for more than 40% of the total gas consumed. In fact, Gujarat is the only state where gas is supplied even to villages. The government plans to link 100 villages and 84 cities with the gas distribution network in FY 2012.

Gujarat to lead India's gas revolution: Report - www.daily.bhaskar.com

 

[RPK]

ET Now: Now Power Grid is going to be providing consultancy services to the Sri Lankan Government for setting up an undersea power transmission line between the two countries, could you tell us more about what this project is, what kind of revenue line can we see actually coming in from this project?

SK Chaturvedi: In fact it is a bit premature to tell about the what income will be generated and what consultancy fee we will be getting. But yes this is now a fact that undersea link will be there between India and Sri Lanka, from Madurai to Anuradhapuram that will be about 1000 MW capacity transmission line. We will also have facility to bring power from Sri Lanka when they are surplus, pre-feasibility reports have been prepared and now a detailed feasibility report, project report is under making. And I hope that very soon this will be clear and this will get a shape for providing another link between India and a neighbouring country.


Power Grid Corp plans to cross 3,000 cr in revenue: CMD - The Economic Times

 

[SpArK]

India, US to fast track investment treaty talks

 

[LURKER]

The Agenda - Broadcast - Indian Democracy, Chinese Autocracy

 

[Zeeshan360]

The Agenda - Broadcast - Indian Democracy, Chinese Autocracy

Awesome debate .
Plz watch it's 50 min video .

Just see the quality of speakers .
Here in india , if one guy doesnt hold the same point of view of the other guy he starts just shouting , abusing , stopping him from speaking

 

[Zeeshan360]

In that debate , a guy called Gordon Chang .
He seems to be an Indian fanboy .
He is just keeping on saying everything againsht China

 

[Zeeshan360]

Gordon Chang OMG .
What a anti-China guy