Deepening Economic Doubts in India

[IndoCarib]

Here you go anarchy. Keep some tissues while you read this

India’s Sensex Climbs to 14-Month High on Flows, Reform Optimism

India’s (SENSEX) benchmark stock index rose to a 14-month high as foreign funds increased their holdings of domestic equities amid optimism the government will undertake measures to bolster growth.

The BSE India Sensitive Index, or Sensex, rose 0.3 percent to 18,823.91, the highest close since July 2011. Tata Motors Ltd. (TTMT), owner of Jaguar Land Rover, Infosys Ltd. (INFO) and Jindal Steel & Power Ltd. (JSP) gained at least 2 percent. The market is closed tomorrow for a public holiday.
India

India's manufacturing growth was steady in Sep - Rediff.com Business

India's manufacturing sector "held steady" in the month of September supported by faster output growth and rising export orders, an HSBC survey said.

The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production -- stood at 52.8 in September, same as in August.

The September reading of HSBC PMI points to a significant improvement in health of the manufacturing space as the sector witnessed the weakest growth rate in nine months in August.

 

[anarchy 99]

(Reuters) - India is on the edge of a "fiscal precipice" and should urgently slash fuel, food and fertilizer subsidies to curb a budget deficit that could hit 6.1 percent of gross domestic product this fiscal year, a government panel warned.

The panel's report, published on Friday, will feed worries about the state of Asia's third-largest economy, where growth has slowed sharply and a large deficit caused by a ballooning subsidy bill has sparked fears of a rating downgrade.

"We cannot overemphasize the need and urgency of fiscal consolidation. Growth is faltering and inflation seems to be embedded. The external payment situation is flashing red lights," the panel said.

The report recommended phasing out subsidies on diesel and cooking gas, and reducing subsidies on food, kerosene and fertilizer. It also recommended stepping up sales in state-owned companies, slashing factory gate duties in order to stimulate growth and overhauling the country's Byzantine tax system.

The proposed subsidy cuts, if implemented, would likely spark a massive political backlash and put the ruling Congress party's re-election bid in 2014 in doubt. The government said in a statement that a certain level of subsidies was necessary and unavoidable in a poor country like India.

Analysts doubted the measures would be implemented in full.

"It's difficult to implement most of these measures over the next six months because it may not be politically palatable," said Shubhada Rao, chief economist at Yes Bank in Mumbai.

The report comes after Prime Minister Manmohan Singh unveiled a series of big-ticket reforms on September 14 seen as key to reviving sluggish economic growth. It provided a sobering reminder of the challenges still facing the government.

Singh, in a rare televised address last Friday, warned his countrymen that "money does not grow on trees" on the same day that his biggest ally quit the government in protest against the reforms, which included opening up the country's retail sector to foreign supermarkets.

Failing to tackle the deficit means India could potentially face a worse situation than the balance-of-payments crisis in 1991, when the country was bailed out by the International Monetary Fund (IMF), the report said.

INDIA ON FISCAL PRECIPICE

The three-member panel, headed by former finance secretary Vijay Kelkar, had been tasked by the government to recommend ways of improving government finances. It delivered its report to the finance ministry earlier this month.

"The Indian economy is presently poised on the edge of a fiscal precipice, making corrective measures aimed at speedy fiscal consolidation an imperative necessity if serious adverse consequences stemming from this situation are to be averted in an efficient and timely manner," it said.

The report was released on the same day as at least one of the key pressure points on the Indian economy eased after data showed the current account deficit shrank from an all-time high in the April-June quarter.

The data helped turn India's balance of payments to surplus after a worrying slide towards dangerous territory, but a big reason for the improvement on the external front was falling imports due to the domestic economy's weakness.

India's economy slowed to 5.5 percent growth in the April-June quarter, the lowest level in nearly three years and far below the country's expectations of near double digit growth.

Markets expect the government to overshoot its fiscal deficit target for the financial year ending March 2013 - seeing it at 5.8 percent of GDP from a budgeted 5.1 percent. The fiscal deficit in April-August rose to 65.7 percent of the full-year target, government data showed on Friday.

The panel, whose recommendations are not binding, warned that failing to curb subsidies would see a flight of foreign capital and a potential credit rating downgrade.

But, slashing subsidies is a political minefield in a country with hundreds of millions of poor. The government has won back-to-back elections on higher social welfare spending.

"The government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable," Arvind Mayaram, a senior finance ministry official, said in a statement after the report was released.



Economy teeters at fiscal precipice - Kelkar panel | Reuters


the indian debt based ponzi scheme is coming to an end.
jim rogers was 100% correct.
indian debt is already at 90% of gdp like jim rogers said.

india is economically and financially finished, thats what happens when your a debtor nation.

yet delusional indian fanboys in here expect india to be a shupa powah

dream on...

 

[IndoCarib]

(Reuters) - India is on the edge of a "fiscal precipice" and should urgently slash fuel, food and fertilizer subsidies to curb a budget deficit that could hit 6.1 percent of gross domestic product this fiscal year, a government panel warned.

The panel's report, published on Friday, will feed worries about the state of Asia's third-largest economy, where growth has slowed sharply and a large deficit caused by a ballooning subsidy bill has sparked fears of a rating downgrade.

"We cannot overemphasize the need and urgency of fiscal consolidation. Growth is faltering and inflation seems to be embedded. The external payment situation is flashing red lights," the panel said.

The report recommended phasing out subsidies on diesel and cooking gas, and reducing subsidies on food, kerosene and fertilizer. It also recommended stepping up sales in state-owned companies, slashing factory gate duties in order to stimulate growth and overhauling the country's Byzantine tax system.

The proposed subsidy cuts, if implemented, would likely spark a massive political backlash and put the ruling Congress party's re-election bid in 2014 in doubt. The government said in a statement that a certain level of subsidies was necessary and unavoidable in a poor country like India.

Analysts doubted the measures would be implemented in full.

"It's difficult to implement most of these measures over the next six months because it may not be politically palatable," said Shubhada Rao, chief economist at Yes Bank in Mumbai.

The report comes after Prime Minister Manmohan Singh unveiled a series of big-ticket reforms on September 14 seen as key to reviving sluggish economic growth. It provided a sobering reminder of the challenges still facing the government.

Singh, in a rare televised address last Friday, warned his countrymen that "money does not grow on trees" on the same day that his biggest ally quit the government in protest against the reforms, which included opening up the country's retail sector to foreign supermarkets.

Failing to tackle the deficit means India could potentially face a worse situation than the balance-of-payments crisis in 1991, when the country was bailed out by the International Monetary Fund (IMF), the report said.

INDIA ON FISCAL PRECIPICE

The three-member panel, headed by former finance secretary Vijay Kelkar, had been tasked by the government to recommend ways of improving government finances. It delivered its report to the finance ministry earlier this month.

"The Indian economy is presently poised on the edge of a fiscal precipice, making corrective measures aimed at speedy fiscal consolidation an imperative necessity if serious adverse consequences stemming from this situation are to be averted in an efficient and timely manner," it said.

The report was released on the same day as at least one of the key pressure points on the Indian economy eased after data showed the current account deficit shrank from an all-time high in the April-June quarter.

The data helped turn India's balance of payments to surplus after a worrying slide towards dangerous territory, but a big reason for the improvement on the external front was falling imports due to the domestic economy's weakness.

India's economy slowed to 5.5 percent growth in the April-June quarter, the lowest level in nearly three years and far below the country's expectations of near double digit growth.

Markets expect the government to overshoot its fiscal deficit target for the financial year ending March 2013 - seeing it at 5.8 percent of GDP from a budgeted 5.1 percent. The fiscal deficit in April-August rose to 65.7 percent of the full-year target, government data showed on Friday.

The panel, whose recommendations are not binding, warned that failing to curb subsidies would see a flight of foreign capital and a potential credit rating downgrade.

But, slashing subsidies is a political minefield in a country with hundreds of millions of poor. The government has won back-to-back elections on higher social welfare spending.

"The government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable," Arvind Mayaram, a senior finance ministry official, said in a statement after the report was released.



Economy teeters at fiscal precipice - Kelkar panel | Reuters


the indian debt based ponzi scheme is coming to an end.
jim rogers was 100% correct.
indian debt is already at 90% of gdp like jim rogers said.

india is economically and financially finished, thats what happens when your a debtor nation.

yet delusional indian fanboys in here expect india to be a shupa powah

dream on...

Some more tear jerkers for you ! Wipe on !

Stable PMI hints India's GDP growth has bottomed out: Nomura

Stable PMI hints Indias GDP growth has bottomed out: Nomura - NDTVProfit.com

http://www.defence.pk/forums/curren...t-over-indian-economy-nomura.html#post3458359