Indian rupee slumps as S&P warns of junk status downgrade

[metro]

Throw this Pranab Mukherjee into trash can and give Finance portfolio to either Manmohan Singh or Montek Singh Ahluwalia.. Political parties need to come together too.. Then only we can expect immediate reversal..

Aalowalia..? seriously..? That same SOB who said anyone earning more than 32 rs a day would not be counted poor ..

 

[Sashan]

these are good suggestions in political field and reform front.

GOI now need some urgent provisional remedies in case of a financial crisis.

I am waiting to see whether S&P warning will wake up the government from the slumber but again I could see the two centers of govt. power - Manmohan is saying S&P is only restating what the govt. always knew - he is on the same page as S&P but Pranab is rejecting S&P warning and he enjoys the support of Sonia.

 

[Bhim]

Congress is gone..
A weak centre with unfaithful alliances, Mamta,Mulayam and every possible trash.
Now can BJP form a govt with out trash is the real question? Till then Indian progress will be a roller coaster type.

 

[Sashan]

Congress is gone..
A weak centre with unfaithful alliances, Mamta,Mulayam and every possible trash.
Now can BJP form a govt with out trash is the real question? Till then Indian progress will be a roller coaster type.

Mate - you are spot on.

 

[INDIC]

Indian rupees seems stable today.

 

[Jade]

S&P's India analysis not objective: Ashwani Kumar

Blasting Standard and Poor's (S&P) for threatening to downgrade India's credit rating to below-investment grade, minister of state for planning Ashwani Kumar has said the global rating agency is not objective in its analysis and not fair to the country.

Given India's strong


economic fundamentals, it "raises serious doubts on the objectivity" of S&P ratings, said Kumar, who is visiting the US as part of the Indian delegation for the US-India Strategic Dialogue.
"I personally think that an S&P rating is not being fair to India," Kumar said.

"I am appalled by the findings of Standard and Poor's and am certainly disappointed that S&P has chosen to club India with some of the countries with which there can be no reasonable comparisons," he said.

India is a USD 1 trillion economy, widely expected by independent experts to have the potential to become the third largest economy surpassing Japan by 2030, he said.

Ashwani said India has grown in the last several years at around 8 % and even in difficult circumstances, as per the IMF report it is likely to grow at 7% this year.

On Monday, S&P cited economic slowdown and political roadblocks to policy-making to warn that India could be the first BRIC (Brazil, Russia, India, China) nation to lose investment-grade rating.

Kumar cited macro-economic fundamentals -- high domestic savings rates, high investment rates, demographic dividends and a burgeoning middle class with high purchasing power -- as positives that India has, saying that investors would not find S&P assessment reasonable.

"...with various flagship programmes of the government, empowering poorest of the poor, economically and educationally and with our commitment to skill up 500 million people by 2020 there is no way that investors would find the S&P projected ratings as reasonable," he added.

Kumar said the government has already stated that S&P has not disclosed fully the basis of its assessment.

The minister said, "We wanted to be heard, we have gone on record to say that on an overall basis, we hope to be able to achieve on average close to eight % growth in GDP terms between 2012 and 2017 the Five Year Plan period."

"The largest number of people anywhere in the world in the productive age group is in India. We have a robust financial system in place and 22 % of our GDP is accounted for by services and exports, which means that we are integrated into the global economy," Kumar said.

He also cited strong institutions of liberal democracy, rule of law and a transparent and independent system of conflict resolution as India's strengths.

"So all of these factors taken together raise serious doubts on the objectivity of the S&P ratings," Kumar said.

Later, addressing the US India Business Council, the minister said while India would not remain totally insulated from the global economic slowdown, the fundamentals of Indian economy remained sound.

The economy will continue to expand, propelled by a large urban and growing middle class, he said, adding that by 2020 India's landscape will undergo a vast transformation.

The large Indian middle class will have strong purchasing power, and almost 70% of India's GDP will be contributed to by urban India and about 40% of India’s population will live in cities, he said.

Kumar expressed confidence that India would grow at 7% in the current fiscal and, if the international economic situation does not deteriorate, then an average growth rate of 8.5% was possible in the next five years.

S&P's India analysis not objective: Ashwani Kumar - Hindustan Times

 

[kkacer]

India Crisis this year?

 

[Awesome]

i Guess Non Residents must be rushing IN every exchange in DUBAI For remittence

Yes they are and thats what I don't get with the increase in remittances, shouldn't the economy be getting a boost?

I had an Indian instructor, a dude my age so we got chatting a lot, and he'd tell me his get rich quick schemes, hes like I'm sending all my income to India and waiting for the Rupee to bounce and then I would make a killing on the improved exchange rate.

This was some months ago and the slump is continuing.

So I don't know what is really happening, India's economic crash does not make sense, at least why now, why didn't this happen before since most reasons they cite were there for quite sometime.

 

[lem34]

I had an Indian instructor, a dude my age so we got chatting a lot, and he'd tell me his get rich quick schemes, hes like I'm sending all my income to India and waiting for the Rupee to bounce and then I would make a killing on the improved exchange rate.

This was some months ago and the slump is continuing.

.

It is this reason that they have a saying in the LSE "the first cut is the sweetest"

 

[Awesome]

1. Get rid of the two centers of governmental power - prime minister and Sonia - PM wants reforms quickly but Sonia is warped in vote bank politics and the old congress socialist mindset.

What action do you count as socialist? They have been cutting on subsidies to the general public.

2. Coalition politics - Get rid of Mamata mainly - she stalled FDI in retail, railway tickets price rise

But India's at a stage where its dependence on FDI should be reduced and it should be surviving on its exports. Remember the net sum an investor takes away from their investment is larger than what they put in. Unless of course the investment is junk.

3. Corruption pressure - government is spending all its energy in battling the corruption charges - so the decision making has come to a standstill

Is corruption any more or less than what it used to be during India's hay days? This could be the point, but I haven't heard of Manmohan Singh having super fat foreign bank accounts.

4. Failure for land acquisition reforms and other reforms due to the governmental paralysis

I don't know what that means. Explain.

What is needed is a strong leadership at this point and that is where MMS is failing. I had reservations for Modi till now but more and more I feel Modi is needed.

Add reputation loss to your current losses if you go that route. 2002 was 10 years ago, if NM becomes PM, you know that little tidbit would be mentioned everywhere NM goes.

 

[lem34]

What are the key factors that can bring such a drastic shift? The mere speculation of Junk Status will ensure it reaches the stage of junk status, its a pretty damning statement.

One thing I'm hearing over and over that India has shifted from its liberal economic policy making - what does that really mean? It's not allowing foreign investors to open shop in India?

I think the financial markets do not resemble the organic economic structure of a country. Lets say that a company signs a very profitable contract. Even though the benefits of the contract may be 2 years into the future the share price rises immediately. The collective psychology of what people think also effects this. When the company benefits in two years the share price may start going down because lets say that the company does not make as much profits as first envisaged.

So this leads to extreme pendulum swings further pushed by the heard instinct.

Maybe when people were talking it up things were not as good as people made it out to be. And now the pendulum swings the other way maybe things are not as bad but the effect is more dramatic. I hope I am making sense

 

[Chinese-Dragon]

What action do you count as socialist? They have been cutting on subsidies to the general public.

Ironically, India seems to be even more socialist than we are, with all their state handouts.

 

[Chinese-Dragon]

But India's at a stage where its dependence on FDI should be reduced and it should be surviving on its exports.

In theory, yes. However India has not developed their exports enough to gain a real trade surplus, in fact their trade deficit has been getting worse and worse.

As a consequence, India now really needs those foreign inflows, in order to help them finance their massive fiscal/budget/trade deficits.

Which makes the downgrade from S&P even more devastating, with the warning of further downgrades to come only making it worse.

 

[SinoChallenger]

Waiting for the magic # 60

 

[Koovie]

Ironically, India seems to be even more socialist than we are, with all their state handouts.

ragarding the economy, we are

Yes they are and thats what I don't get with the increase in remittances, shouldn't the economy be getting a boost?

I had an Indian instructor, a dude my age so we got chatting a lot, and he'd tell me his get rich quick schemes, hes like I'm sending all my income to India and waiting for the Rupee to bounce and then I would make a killing on the improved exchange rate.

This was some months ago and the slump is continuing.

So I don't know what is really happening, India's economic crash does not make sense, at least why now, why didn't this happen before since most reasons they cite were there for quite sometime.

crash ?! its a slowdown due to internal as well as external factors