Pakistan Leads South Asia in Innovation Efficiency

[foxbat]

Do you have any data to support your contention that there are more IT jobs than ITES-BPO jobs in India?

all you need to do is to pick up the employee headcount of top 10 Software companies and top 10 BPO companies in India and you will get the difference..

 

[RiazHaq]

Prey tell on how does current account balance is linked to IMF loans and aid? loans and aid are linked to Forex reserves for sure.. but current account balance ???

Please learn what current account balance means!

It's just an account of foreign inflows and outflows in reserve currencies like the US dollar or European Euro.

It makes no distinctions in terms of FDI or FII dollars or export earnings dollars or dollar-denominated remittances or aid and loans etc.

Talking about CAD, India is in a precarious position of having to fund more and more of its deficits by short-term inflows like the FII rather than the long-term inflows like the FDI.

India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billion in 2010) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.

Haq's Musings: Indian Economy: Hard or Soft Landing in 2011?

 

[RiazHaq]

all you need to do is to pick up the employee headcount of top 10 Software companies and top 10 BPO companies in India and you will get the difference..

Please share the data if you have it and it's so obvious to you.

 

[ramu]

India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billion in 2010) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.

Update yourself with the latest NEWS.

At $4.66 billion, FDI in May second highest in 11 years

NEW DELHI: Foreign direct investment (FDI) into the country more than doubled in May from year ago, touching $4.66 billion against $2.21 billion in May last year.

This is the second highest monthly FDI inflow since 2000. The rebound follows a dismal 2010-11 fiscal in which FDI dropped 25% to $ 19.4 billion.

Foreign investors have shied away from India in the last year even as growth remained robust at above eight percent, amid mounting governance concerns and a decline in overall investment sentiment.

"The recent trend of a dip in foreign direct investment inflows appears to have been reversed in the current financial year, where a significant upward trend is evident," the industry ministry said in a statement on Monday.

The FDI is likely to spurt as a number of acquisition have been cleared against which inflows will come soon. The proposed tie up between BP and Reliance and Vodafone buying share of Essar could alone result in an inflow of approximately $ 12 billion.

Major deals like Cairn -Vedanta are also expected to give an impetus to FDI into the country. "There is a likelihood of another 'surprising' spurt in the coming months with many projects are due for clearance under FIPB. FDIs tend to have a bunching effect under private equity," said Abheek Barua, chief economist at HDFC Bank .

Combined inflow over April and May through FDI has jumped 77% to $7.79 billion, the data showed.

Economists say that continued inflows could be a big positive as the stock market has not been able to attract FII inflows.

The FDI could help in paying for the current account deficit (CAD) at the end of the year. The CAD is expected to be in the range of 2.5-3% of GDP for FY12.

According to data released by Grant Thornton India, 27 more deals were signed in May this year over last year worth $5.4 billion as compared with $1.8 billion May 2010.

The deals include mergers and acquisitions, qualified institutional placements and private equity deals. These include the acquisition by Mundra Port of Abbot Point worth $1.96 billion, Religare-Fortis deal amongst others.

The decline in FDI in the last year had become a cause for concern, as most of the emerging nations had been able to attract huge amounts of FDI inflows. In response the government has simplified a number of procedures and also tried to consolidate the FDI policy.

At $4.66 billion, FDI in May second highest in 11 years - The Economic Times

 

[ramu]

The FDI could help in paying for the current account deficit (CAD) at the end of the year. The CAD is expected to be in the range of 2.5-3% of GDP for FY12.

And how is the above so alarming in your opinion ?

 

[foxbat]

Please share the data if you have it and it's so obvious to you.

Google it up dude... Just from top of my hat.. The BPO industry was approx USD 12-14 billion or so in 2008-9 with the complete ITES (IT and BPO) industry being close to USD 70 billion

 

[foxbat]

Please learn what current account balance means!

It's just an account of foreign inflows and outflows in reserve currencies like the US dollar or European Euro.

It makes no distinctions in terms of FDI or FII dollars or export earnings dollars or dollar-denominated remittances or aid and loans etc.

Talking about CAD, India is in a precarious position of having to fund more and more of its deficits by short-term inflows like the FII rather than the long-term inflows like the FDI.

India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billion in 2010) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.

Haq's Musings: Indian Economy: Hard or Soft Landing in 2011?

Thanks for the quick capsule on trade economics

btw, just wondering how come India's Forex reserves are continuously increasing despite all the doomsday predictions..

 

[kawaraj]

WOT is keeping pakistan's economy running. It gets much needed foreign exchange from US aid. It is interest of pakistan to keep WOT go on.
WOT in afghanistan ends next year, AID also dries up soon. I wonder how pakistan is going manage?

that's quite poisonous opinion. you still want WOT to drag down our economy? that's a day dream.

Pakistan is a more efficient country. without WOT, Pakistan will just stand in front of India in your IT service industry. this is a globalization world, investors from around the world will jump in to cash the opportunity offered by a fresh and more efficient Pakistan IT industry.

Don't, think your IT service is something of substances, call centers, program testing, easy cheap labor job, no need much training.

 

[Hunzaghazi]

Pakistan has great potential but the corrupt buerocracy is preventing its Parvaz into the league of developed nations.

 

[RiazHaq]

Google it up dude... Just from top of my hat.. The BPO industry was approx USD 12-14 billion or so in 2008-9 with the complete ITES (IT and BPO) industry being close to USD 70 billion

It's your home work to find out the number of jobs in each category rather than just the revenue.

BPO is the home of the ultra cheap cyber coolies while India's IT shops are just body shops supplying cheap code coolies for outsourced IT services rather than any real original sw products.

 

[RiazHaq]

Thanks for the quick capsule on trade economics

btw, just wondering how come India's Forex reserves are continuously increasing despite all the doomsday predictions..

58% of India's forex reserves are made up of hot money that can leave without a warning.

Mumbai: The ratio of volatile capital flows—defined to include cumulative portfolio inflows and short-term debt—to the country’s forex reserves increased to 58.1% in March 2010 compared to last year’s 47.9%.

Hot money rises to 58% of forex reserves

 

[ramu]

^^^ and did you forget to read the rest of the article ?


The country’s foreign currency assets are invested in multi-currency, multi-asset portfolios as per the existing norms which are similar to the best international practices followed in this regard. At end of March 2010, out of the total foreign currency assets of $ 254.7 billion, $ 132.1 billion was invested in securities, $ 117.5 billion was deposited with other central banks, BIS and the International Monetary Funds (IMF) and $ 5.1 billion was placed with the External Asset Managers (EAMs).

 

[RiazHaq]

The FDI could help in paying for the current account deficit (CAD) at the end of the year. The CAD is expected to be in the range of 2.5-3% of GDP for FY12.

And how is the above so alarming in your opinion ?

Have long-term foreign investors stopped buying the India story? For a country that has successfully retained the mantle of being one of the most sought after emerging market destinations for some years now, recent trends throw up some worrying signals.

Foreign direct investment (FDI) — money that goes into real projects and companies rather than just to the stock markets — has started tapering down. Inflows have shown a declining trend through almost the whole of 2010-11, and the recently-released Department of Industrial Policy and Promotion (DIPP) figures show a dramatic fall of 28% from the year before — a drop of $11 billion (nearly Rs 50,000 crore).

Hot money is flowing, but rest of India story has gone cold | Firstpost

 

[RiazHaq]

^^^ and did you forget to read the rest of the article ?


The country’s foreign currency assets are invested in multi-currency, multi-asset portfolios as per the existing norms which are similar to the best international practices followed in this regard. At end of March 2010, out of the total foreign currency assets of $ 254.7 billion, $ 132.1 billion was invested in securities, $ 117.5 billion was deposited with other central banks, BIS and the International Monetary Funds (IMF) and $ 5.1 billion was placed with the External Asset Managers (EAMs).

Where it came from is the issue, not where it's invested. It's hot money via portfolio investments that can flee quickly if the stock market bubble bursts in Bombay.

 

[foxbat]

58% of India's forex reserves are made up of hot money that can leave without a warning.

Mumbai: The ratio of volatile capital flows—defined to include cumulative portfolio inflows and short-term debt—to the country’s forex reserves increased to 58.1% in March 2010 compared to last year’s 47.9%.

Hot money rises to 58% of forex reserves

Sir.. Read the news again.. Its does not talk of the reserves being made up of hot money but the ratio of volatile inflows to the forex reserves. There is a ton of difference there..

On the other hand, when you talk of Pakistan's forex reserves (after all Pakistan is doing better than India on Current Account balance ), this is what some of the financial gurus from Pakistan and other countries have to say...

"When you say record-high forex reserves, you have to be realistic as well, as out of the reserves nearly $8 billion is the amount we have borrowed from IMF (International Monetary Fund) and then there are other foreign loans, so we can say around 55 percent of the reserves are Pakistan's, the rest is on loans," said Khalid Iqbal Siddiqui, director at Invest and Finance Securities Ltd.

“If one were to take the IMF reserves out of the equation, it (Pakistan’s foreign exchange reserves position) is not that solid,” said Rune Stroem, Country Director of Asian Development Bank to Pakistan last week.

However analysts said it is important to note that the value of exports has gone up due to a rise in cotton prices but not the quantity. Once cotton prices decrease that may lead to a decrease in exports as well. The narrowing of the trade deficit is “mainly due to transitional reasons,” according to the central bank. “Another factor to worry about is the increase in international oil prices which comes with a lag to Pakistan,” said Asif Qureshi, director at Invisor Securities Ltd. The other factor that has supported the rise in foreign exchange reserves is remittances from overseas Pakistanis.

Remittances by Pakistanis overseas increased by 22.37 percent to over $8 billion in the first nine months of the 2010/11 fiscal year, and in March a record $1.05 billion was received, according to data from the State Bank of Pakistan.
But money from the diaspora is fickle and mysterious.
“Why on earth would remittances grow by 23 or 24 percent? What is happening around the world?” asked Ashfaque Hasan Khan, Director General at NUST Business School in Islamabad, in regards to the global slowdown in economic activity.
Stroem from ADB said, “remittances are some of the more fascinating things in Pakistan, none of us really understand the whole picture on remittances.” The more worrying factor for analysts is that repayments to the IMF start from 2012, which would put pressure on the foreign exchange reserves.
“This is something the Ministry of Finance is very concerned about and working out in terms of not having the foreign exchange reserves position of Pakistan weaken ... as it would move the exchange rate around quite a bit.” Pakistan is a heavily indebted country, with its external debt amounting to about $58 billion and domestic debt 6 trillion rupees ($70 billion). Its debt-to-GDP ratio is around 61 percent, breaching the limits of fiscal responsibility.

Pakistan’s forex reserves sustainability a cause of concern | Pakistan | News | Newspaper | Daily | English | Online