Economic crisis in India 2013 | ALL Updates & News

[SarthakGanguly]

Yes, we are finished. Come liberate us. Time to draw the maps again -

India's economy is now 1.4 trillion... A week ago it was 1.66 trillion. And a year ago it was 2 trillion plus

 

[Chinese-Dragon]

India could go to George Soros for support. In return, George Soros can star in the next India superpower 2040 video. (push the superpower status back by 10 years because of current financial malaise.)

Isn't George Soros the "Man who broke the Bank of England" during Britain's currency crisis?

Then I don't think India would want him anywhere near.

Though speculators have already jumped on this issue.

 

[Black Eagle 90]

India economy edges toward crisis as rupee plunges - Aug. 19, 2013

Efforts by Indian authorities to restore investor confidence appear to have backfired.

HONG KONG (CNNMoney)

The rupee is trading at record lows and stocks have lost 10% in a month, even as the Indian government insists the country's faltering economy is not in crisis.

The slide that has rocked Indian markets accelerated Monday, with the rupee hitting a new record low against the dollar. The Mumbai Sensex, the country's benchmark index, dropped 1.6% on Monday and has now lost 10% of its value in the past month.

Investors are worried about India's large current account deficit, which reflects the nation's tendency to import many more goods than it exports and leaves it heavily reliant on foreign capital.

Talk of tighter U.S. monetary policy has seen some investors pull out of emerging markets in recent months.

Prime Minister Manmohan Singh has tried to calm nerves, saying the government has enough foreign reserves to defend the rupee for months.

"There is no question of going back to the 1991 [balance of payment crisis]," Singh told the Press Times of India, referring to an episode that nearly resulted in India defaulting on its debt payments.

But with elevated inflation, a sky-high government deficit and the economy slowing, some are worried that recent government attempts to shore up confidence may have had the opposite effect.

Related story: BRIC markets left in the dust

Policymakers last week unveiled a series of measures designed to support the rupee, including limits on the import of gold, oil and other key commodities.

The government also made a controversial move to restrict the amount of money Indian citizens can take out of the country, and similar restraints were placed on outgoing corporate investment.

The question now is whether the changes will be enough to bolster the rupee and stabilize the economy.

Related story: Dream companies for Asia's grads

Many observers think the government must do more -- and markets seem to agree. The reaction was most violent on Friday, when investors returned from a one-day holiday to push the Sensex down by 4%.

"Authorities are taking a really piecemeal approach, and these measures are having exactly the opposite effect of what was intended," said Anjalika Bardalai, a senior analyst at the Eurasia Group. "The government has given the impression they are in panic mode."

Economists have long argued that India needs to implement structural economic reforms to bring about meaningful progress. Last year, parliament lifted restrictions on foreign direct investment after much debate -- a key step.

But investment dollars have not materialized as international companies seek more details about the new policy and remain wary of a change in the political winds that could reverse the decision.

And with national elections due before May 2014, India's fractious political parties may not be in a mood to cooperate.

"The problem now is that the government is running out of time and running out of options," Bardalai said. "A lot of what happens now with the rupee is beyond the government's control."



First Published: August 19, 2013: 7:30 AM ET

So is it now impossible for IN to gain 6 Akula out of 15 Russians have?

 

[navtrek]

Why Buffett Bailed on India
By Willie Pesek Jul 23, 2013 2:32 AM GMT+0530

India has long been viewed as a value investor’s dream: rapid growth, 1.2 billion people pining for a taste of globalization, and underdeveloped industries ripe for turnarounds. So it surprised few when the genre’s guru, Warren Buffett, placed a bet on the world’s ninth-biggest economy.

What did come as a surprise, though, was last week’s decision by the billionaire’s Berkshire Hathaway Inc. to give up on India’s insurance market after just two years. Adding to the drama, the withdrawal came the same week India unveiled plans to open the economy as never before to foreign-direct investment.

Buffett isn’t alone in voting with his feet. Wal-Mart Stores Inc., ArcelorMittal (MT) SA and Posco are pulling back on investments in India that they had announced with great fanfare. What’s scaring foreigners away? A rampant political dysfunction that has stopped India’s progress cold.

Headwinds from New Delhi are contributing to the slowest growth rates in a decade, a record current-account deficit and a 7.9 percent plunge in the rupee this year. Fiscal neglect has bond traders demanding higher yields for government debt than India wants to pay. But the most devastating no-confidence vote is coming from the big, long-term money India needs to boost its competitiveness. Foreign-direct investment slid about 21 percent last fiscal year, and this one doesn’t look promising.
Biggest Democracy

In theory, no Western executive or investor can ignore the vast potential of Indian consumers, 29 percent of whom are under age 15. India’s geopolitical importance is rising in step with China’s ambitions. U.S. Vice President Joe Biden, visiting New Delhi this week, is hoping to deepen Washington’s bond with a possible bulwark against Beijing’s influence, as well as increase bilateral trade.

The problem is an Indian government that won’t get out of its own way. The long debate over foreign-investment limits says it all. In September 2012, Prime Minister Manmohan Singh’s government passed a law allowing big retailers to open stores directly in India, yet no one has. Reasons are legion: too many prerequisites; constraints on whom goods can be purchased from; a raft of regulations limiting franchise models and factory construction; and the hair-pulling need to negotiate separately with each of India’s 28 states.

India has fallen into a self-destructive pattern of relenting on the big issues, then killing would-be investors with the details. Take the experience of furniture retailer Ikea of Sweden AB, which in January won approval to open outlets in India. Not content with the Swedish icon investing about $2 billion, the government played hardball. It tried to bar Ikea from selling food in its stores; Ikea stood its ground. But the damage was done.

Executives fully expect to have to navigate India’s notoriously bad infrastructure, rigid and often unskilled labor markets, red tape and official corruption. They’re less keen on tripping over the fine print of vaguely written laws and local power brokers with agendas at odds with New Delhi. Headline-making disputes involving household names like Ikea, Wal-Mart and Berkshire don’t help India’s image.

Worse, the uncertainty is breeding a huge trust deficit. On July 17, India moved to open important sectors such as defense, power and telecommunications to foreign investment. It’s being heralded as the nation’s “big bang.” Big fizzle is more like it, as big inflows are likely to continue eluding India.

Any major foreign investor cannot ignore the experience of Vodafone Group Plc, which is still wondering if it will take a multibillion-dollar loss on a deal thanks to tax-policy changes. In 2007, the Newbury, England-based carrier acquired the Indian unit of Hong Kong-based Hutchison Whampoa Ltd. Since then, a retroactive clause placed in the nation’s laws have thrown the deal into chaos, creating a $2.2 billion tax dispute, delaying an initial public offering and further denting India’s reputation.
Squandered Potential

It’s time for the government to stop squandering India’s potential. The lack of transparency and reliability makes it virtually impossible to consider long-term investments there. And even if a foreign executive has faith in the sober-minded Singh, there’s no guarantee his ruling Congress party will be in power after elections next May. The opposition Bharatiya Janata Party, normally a pro-business crowd, has threatened to roll back India’s new investment laws.

What should India do? Pass clear and strong investment laws that will survive the change of government and offer a code of conduct for state leaders. India must strengthen the rule of law as it applies to foreigners so they’ll trust their money is safe. Finally, India must think long-term. Today’s motivation for inviting more foreign money is to narrow the current-account deficit. The goal should be to raise competitiveness, gain fresh knowledge and create better-paying jobs for the future.

Along with politics, India often lets scale get in its way. There’s a sense in New Delhi that India’s sheer size, vast supply of cheap labor and clear potential should have China looking over its shoulder -- that companies should rush there regardless of the political tangle.

Yet India is proving that size doesn’t guarantee its inevitable rise. Only true economic reform, political openness and more proactive leadership will do that -- and get the Buffetts of the world to come to India and stay.

(William Pesek is a Bloomberg View columnist.)

To contact the writer of this article: William Pesek in Tokyo at wpesek@bloomberg.net.

To contact the editor responsible for this article: Nisid Hajari at nhajari@bloomberg.net.

http://www.bloomberg.com/news/2013-07-22/why-buffett-bailed-on-india.html

 

[Icewolf]

Yes, we are finished. Come liberate us. Time to draw the maps again -

It will definetly go back to it's original value if GOI does something instead of making failed schemes!!! Unfortunately it's gonna keep getting worse until GOI stops being a dumbasses... Expect it to hit 75 at the end of this month.

 

[by78]

Rupee falls to new low, extends losses to 64.02 against dollar - The Times of India


MUMBAI: The rupee slumped to a record low in early trade on Tuesday as the currency continued to bear the brunt of a large current account deficit and fears of tapering of the monetary stimulus by the US Federal Reserve on the rise.

The rupee fell to as much as 63.78 to the dollar, breaching its previous low of 63.30 seen on Monday. It had closed at 63.13/14.

Bond yields surged with the 10-year yield surging 15 basis points to 9.38 percent.

This is a free fall. It really is. Wow...

If India doesn't stabilize it at 65, then we could really begin to see a death spiral for the economy.

 

[navtrek]

I'm showing the dire straits Indian economy is in. Its sad but India is about to face something similar to the Asian economic crisis of 1998.

I do agree that our current condition is bad but i think its also hyped up! so lets wait and watch.

 

[Chinese-Dragon]

India's economy is now 1.4 trillion... A week ago it was 1.66 trillion. And a year ago it was 2 trillion plus

It's a bit early to calculate now.

The Indian Rupee is in the middle of a free-fall, it will probably go much lower.

 

[faithfulguy]

Isn't George Soros the "Man who broke the Bank of England" during Britain's currency crisis?

Then I don't think India would want him anywhere near.

Though speculators have already jumped on this issue.

Soros is indeed the man who broke the bank of England. So its advisable for India to beg his mercy before he make it impossible for India to buy all those foreign plane, subs and tanks.

 

[SarthakGanguly]

I am a realist. You are correct. With the disgusting Central Government, these policies are expected. The hopeless situation is a natural result.

It will definetly go back to it's original value if GOI does something instead of making failed schemes!!! Unfortunately it's gonna keep getting worse until GOI stops being a dumbasses... Expect it to hit 75 at the end of this month.

 

[Icewolf]

I am a realist. You are correct. With the disgusting Central Government, these policies are expected. The hopeless situation is a natural result.

Was food bill passed? If it was, there's more bad news for the INR

 

[by78]

Rupee breaks 64 to dollar, Sensex below 18,000 - NDTVProfit.com


Rupee breaks 64 to dollar, Sensex below 18,000

The free fall in the Indian rupee extended to a third straight session on Tuesday. The partially convertible rupee breached the 64 against dollar to hit yet another record low. The rupee fell nearly 1.5 per cent to a low of 64.05 after closing at 63.13 on Monday.

Dealers said continued dollar demand from state-run banks for oil, defence and other interest payments has been pressuring the rupee.

The sharp fall in the rupee hit stock markets with the BSE Sensex falling below the key 18,000 levels for the first time since September 13, 2012. The 50-share Nifty came close to breaching the key 5,300 levels, dropping over 100 points.

The Reserve Bank of India has proven unable to stem the rupee's selloff, despite intervention and curbs on outflows from companies and individuals, which have dented India's stock and bond markets.

The government continues with incremental steps, banning duty-free import of flat-screen televisions. The RBI raised cap on foreign direct investment in asset reconstruction companies.

The currency continued to bear the brunt of a large current account deficit and fears of tapering of the monetary stimulus by the U.S. Federal Reserve on the rise. Bond yields surged with the 10-year yield surging 15 basis points to 9.38 per cent.

Rising yields have pressured banking stocks, which fell over 2 per cent today. Banking stocks have plunged over central bank measures to curb liquidity in the system.

The rupee has fallen more than 13 per cent in spot trading against the U.S. dollar so far this year. Majority of the decline in the rupee has come after the U.S. Federal Reserve hinted in May that it would begin slowing its pace of quantitative easing.


(With inputs from Reuters)

 

[faithfulguy]

Indian rupee reminds me of this song by Tom Petty and the heart breakers.

Tom Petty - Free Fallin' - YouTube

 

[Secur]

64 wow...

Wasn't it 61 two days ago?

What is the cause for this free fall , if I can get a brief idea ?

 

[Secur]

@by78

Please post all these articles on INR in a single unified thread .