Indian Economy - News & Updates - Archive

[nitesh]

South Korea, India strike free trade deal -Seoul | Reuters

SEOUL, Sept 26 (Reuters) - South Korea and India have reached a free trade deal that could boost their $11 billion annual trade by as much as a third and sharply raise South Korean auto part makers' share of one of the world's fastest-growing markets.

South Korea's trade ministry said on Friday that the two countries had concluded 2-½ years of talks with an agreement to open up their markets and plan to put it into effect next year.

The deal has to be ratified by both countries' legislatures.

South Korea has free trade deals in place with Chile and Singapore and is awaiting ratification of a trade deal with the United States that it signed in June last year.

"India is negotiating free trade deals with Japan, the EU and China, and by reaching a deal ahead of them, we expect to be effective in winning a greater market share," the ministry said in a statement.

A study by the state-run Korea Institute for International Economic Policy said the pact could boost annual two-way trade by $3.3 billion and South Korea's GDP by 1.3 trillion won ($1.1 billion).

South Korea's main exports to India are automotive parts, petroleum products, synthetic resins and mobile phones. Its largest import from India is naphtha, representing more than half of imports from India in 2007. (Reporting by Jack Kim; editing by Jonathan Hopfner)

 

[Neo]

Indians lead world in millionaires growth​

MUMBAI, Sept 26: India is minting new millionaires at a faster pace than anywhere else in the world, buoyed by a fast-growing economy, according to a new study.There were an estimated 123,000 millionaires in India at the end of 2007 — 22.7 per cent more than in the previous 12 months, said the Asia-Pacific Wealth Report, compiled by US investment bank Merrill Lynch and consultants Capgemini.

“Despite dislocations in developed markets, the number of high net worth individuals in India grew at a faster rate than the global average,” said Pradeep Dokania, head of Global Wealth Management for DSP Merrill Lynch.

“Domestic demand and Asia’s appetite for commodities continue to drive wealth accumulation in India,” he said.

China was the second in the millionaire stakes.

It had a millionaire population growth of 20.3 per cent in the same period followed by South Korea with 18.9 per cent.

The figures, released late on Thursday, assessed the wealth of so-called “high net-worth individuals” (HNWIs) as people with more than one million dollars in net assets — excluding primary residences.

“In 2007, the standout markets in the Asia-Pacific region were China and India, with the number of wealthy individuals, and their overall level of wealth, growing at a faster rate than the global averages,” the report said.

India’s economy grew by nine per cent in the financial year to March 2008 while China’s economy expanded by 11.9pc last year, well ahead of other industrialised countries who are feeling the effects of global market turmoil.

But growth is expected to slow this year in both countries, albeit to still strong rates.

In India, the country’s economy, which has drawn billions of dollars in foreign investment, has been losing steam as the central bank has aggressively raised interest rates to curb inflation now at 13-year highs.

Economic growth for the first quarter ending June slowed to 7.9 per cent, the weakest in three-and-a-half years.

India’s stock markets grew by 47.1 per cent in 2007, but the benchmark Sensex is down more than 33 per cent this year.

China meanwhile has seen growth slow to 10.1 per cent in the second quarter of this year.

Still India’s millionaire wealth trails behind China and Japan, the study shows, despite Indian tycoons like Mukesh and Anil Ambani who regularly feature on the Forbes magazine billionaire list.

India’s millionaires have a combined wealth of 440 billion dollars, compared with 2.12 trillion dollars in China and 3.8 trillion dollars in Japan.

China and Japan account for 62.4 per cent of Asia’s millionaire wealth, while India’s share is just 4.6 per cent.

But the report added: “Although the number of emerging-HNWIs in China and India is still relatively small, we expect that within 10 years” it will surpass the mature markets.” As the impact of the US economic slowdown resounds across Asia, most of today’s millionaires are likely to turn from equities and towards fixed-income securities that offer less volatile returns, the report said in its 2009 outlook.—AFP

 

[Marshal]

India will be first in Asia to reboundhttp://sify.com/finance/fullstory.php?id=14765810

Thursday, 25 September , 2008, 09:21

India's domestically driven economy will be among the first in Asia to rebound, in mid-2009, but the run-up to that will be a "white knuckle ride" during which it will be vulnerable to the 'liquidity destruction' induced by the global credit crunch, according to CLSA Asia-Pacific Markets economists.

Weak economy, strong currency

"India is currently in the midst of a cyclical downturn, which is being led by the consumer sector but is broad-based," observes economist Sharmila Whelan.

That downturn will run its full course without any early relief, but India will be Asia's early mover in terms of moving into the next business cycle because unlike the other economies, it is not export-driven. "We believe the worst will be over by mid-2009."

‘India can sustain over 8% growth rate’

While that's the good news, it's not all rosy. "The bad news," says head of economic research Eric Fishwick, "is that until that recovery starts, India will prove surprisingly vulnerable to continued credit crunch and risk-aversion because it runs a current account deficit and needs to continually attract savings." India, he adds, also has a weak fiscal position and fiscal implementation problems; it also has a "relatively overextended domestic credit cycle". Lending has run ahead of GDP for five consecutive years, so there is likely to be more "balance-sheet strain" there than anywhere else.

More India business stories

In Whelan's estimation, inflation is unlikely to peak soon or start coming down rapidly. "I expect inflation to peak in the fourth quarter of this year; it will still be running at 12% at the end of this year, and at about 8.5% at the end of the fiscal year." Beyond that, she expects it to come off steadily, with help from declining global commodity prices, to about 5.6% next fiscal.

This also means that interest rates won't fall off quickly. "I'm looking for the first rate cut in the second quarter of next year, and I won't be surprised to see another rate rise in the interim."

Although the RBI had been aggressively raising interest rates since 2004 to combat inflation, it was actually "behind the curve," says Whelan. "All of last year, the RBI was struggling to mop up excess liquidity, and money supply (M3) accelerated." The problem, was that the RBI was overwhelmed by capital inflows.

Had it not been for the money inflows in 2006-07, however, the Indian economy would have rolled over 18 months earlier than it did, agues Fishwick. Going forward, "I'm particularly worried about the Indian rupee, which will remain under pressure, and test Rs 49/dollar." That's because the RBI's balance balance-sheet has grown at 25-26% y-o-y, which points to "a very loose monetary stances" - notwithstanding all those rate hikes.

India's economic rebound, when it does happen, will be investment-led, and consumption growth effect will kick in after a lag, says Whelan. "The initial recovery from a trough starts when profit margins and profit growth recovers. At this stage, companies start investing retained earnings to upgrade existing capacity." Indian corporate, she adds, are well-positioned to finance investments.

In the second stage of the investment-led cycle, "what you need to see is the return of risk appetite." A more bullish outlook will lead companies to leverage up."

More India business stories

An additional factor that will inspire the Indian recovery is the government's $500 billion infrastructure spending plan. Even factoring in delays and other hurdles, this spending will reinforce the investment cycle, reckons Whelan. She is projecting 7.3% GDP growth for FY 2008 and 6.5% next year.

 

[Neo]

India seen as third largest rubber consumer by 2020 ​

Sunday, September 28, 2008

MUMBAI: India is likely to surpass Japan to become the world’s third largest rubber consumer by 2020 driven by rising demand from the auto sector, but steady

production may force more imports, said a senior industry official. At present, India is the fourth largest consumer with a global market share of 5 per cent.

Total consumption by 2020 is likely to be more than double to 2.2 million tonnes from about 900,000 tonnes estimated in 2008/09, said Hidde Smit, secretary general of International Rubber Study Group, an intergovernmental organisation.

However, production is expected to increase only 37 per cent to 1.2 million tonnes during the period, he said on the sidelines of an industry conference.

“Non-availability of land and delay in re-plantation is likely to affect the production,” Smit said.

In India, high rubber prices are enticing growers to milk ageing plants and delay replanting, threatening to reduce yields by half in the long run.

Prices of the most traded RSS-4 (ribbed smoked sheets) rose about 38 per cent to touch a record high of 142 rupees per kg during Apr-Aug period, according to the Rubber Board data.

The board plans to replant 33,500 hectares by 2012, but has been able to cover only 5,000 hectares in the last year.

Rubber plants generally take seven years to be ready for tapping and have a life of about 30 years after which the yield starts reducing, making replanting necessary.

More automakers are making India their export hub and demand from the tyre sector is likely to grow substantially, increasing the gap between supply and demand, Smit said.

Tyre makers consume about 60 per cent of the total output.

China and the US are likely to retain their positions as the largest and second largest consumers respectively, he said.

 

[nitesh]

IBM opens cloud-computing center in India - CIOL News Reports

IBM opens cloud-computing center in India
The center will help enterprises looking to transform their data center for service delivery as well as startup businesses
Thursday, September 25, 2008

BANGALORE, INDIA: IBM unveiled a cloud-computing center in Bengaluru. The center will give enterprise customers including mid-market, universities and government bodies in India immediate access to the resources they need to pilot cloud infrastructures and applications.


The center in Bengaluru joins other new cloud computing centers in Korea, Vietnam and Brazil that have been announced recently. These centers will cater to an increasing demand in emerging markets such as India for Internet-based new computing models and skills.

IBM cloud computing centers host computing activities for clients or provide access to expertise and infrastructures for clients to design and deploy their own cloud environments.

This computing model allows businesses and consumers alike to remotely access a vast computing resource that can be tapped on-demand to deliver next-generation services that consumers demand, like online medical records or mobile stock portfolio management.

It also improves energy efficiency because of its principle as a shared infrastructure, and allows organizations to better track information, pay for what they use and access more computing, storage, services or applications on demand.

IBM is already collaborating with partners, government and academia in other emerging countries to facilitate innovation supported by a cloud infrastructure. In India, clients such as mid-market vendors, academic institutions, telecommunications companies and government bodies will be able to access the center for the resources they need to pilot cloud infrastructures and applications, and deliver new services to their customers.

Said Prof Sanjay G Dhande, Director, IIT Kanpur, "Cloud computing enables server centric virtualization which helps IT ecosystem to achieve smaller footprint, efficient resource utilization and server consolidation. Enterprises are looking at alternate ways to support their dramatically increasing computing needs, one that will allow for massive scalability while providing an energy efficient and resilient infrastructure. Technology collaboration between IIT Kanpur and IBM India will drive new developments in computing to support academic advancement and economic development in India."

Dr Ponani Gopalakrishnan, VP, India Software Lab, said, "In emerging markets like India, hundreds of millions of people are opening their first bank accounts, getting their first cell phones, using their first credit cards and accessing e-government services for the first time. The convergence of personally empowering technologies into the hands of the consumer is fundamentally changing consumer behavior and expectations. Cloud computing offers an answer for many of these needs and allows an organization to further reduce costs through improved utilization, reduced administration and infrastructure costs, and faster deployment cycles."

One of the prime agendas for the center in India will be to help enterprises looking to transform their data center for service delivery as well as startup businesses or organizations that do not have—or cannot afford to build—an entirely new infrastructure.

There will be a special focus on the fast growing communications industry including content providers, Internet service providers and telecom companies. Clients in India will be able to leverage the cloud-computing infrastructure to run Proof of Concepts, get help to design their own cloud infrastructures and have access to experts who can help them deploy their own cloud infrastructures behind their firewalls.

Cloud computing also presents an intelligent deployment mechanism for governments to build services to help citizens and this center will closely work with the government agencies to develop frameworks to demonstrate use of cloud in e-governance projects

 

[Neo]

Indian 2008-09 growth forecast edges lower​

MUMBAI: India’s economy is expected to grow at is slowest pace in four years in the fiscal year to March 2009, as tighter monetary policy reins in inflation and global financial turmoil weigh, a quarterly Reuters poll shows.

The median forecast of 10 analysts polled last week showed growth in the current fiscal year would be 7.5 percent, little changed from a forecast of 7.6 percent in the previous poll in July. But the forecast is lower than the central bank’s prediction of close to 8 percent. It would be the slowest growth since 2004/05, when Asia’s third-largest economy grew 7.5 percent. Growth has averaged 8.8 percent over the past five fiscal years, and has been at or above 9 percent for the past three. “The accelerated pace of monetary tightening has clearly had some bearing on the pace of growth,” said Shubhada Rao, chief economist at Yes Bank.

The central bank raised its key lending rate three times in June and July, taking it to a seven-year high of 9 percent, as inflation surged into double digits. reuters

 

[Neo]

India says stock market ‘sound’​

NEW DELHI: India sought to reassure investors Tuesday its stock market was ‘sound’ despite worries the US-led financial crisis could intensify following rejection of a massive bailout for Wall Street banks.

Indian shares were trading higher on Tuesday on bargain-hunting but the nation’s stock market has plunged by about 38 percent this year, led by risk-averse overseas funds selling Indian shares. “There is nothing to worry about the Indian market,” finance minister Palaniappan Chidambaram told reporters in New Delhi following the surprise defeat of a $700 billion rescue of the US financial system.

“The Indian market is a sound, attractive and well regulated market,” he said. “We’re suffering the consequences of turbulence around the world.” The Congress-led government was monitoring events “round-the-clock,” the minister said, adding “regulations in place are adequate. But if the regulations have to be tweaked, we will do so.”

However he voiced concern about the rejection of the bailout package by the US House of Representatives and expressed hope that US legislators would still pass it within the next couple of days.

“It’s agreed by everyone a bailout is necessary. How the US Congress will reconcile the views of two major political parities, it’s not for me to comment.”

However, “we will be greatly helped if a bailout package is quickly approved by the US Congress,” he said. afp

 

[nitesh]

Current account deficit widens to $10.72 bn

The country’s current account deficit widened to $10.72 billion during the first quarter of 2008-09 compared with $6.3 billion during April-June last year as higher oil prices pushed up the import bill and resulted in a higher trade deficit.

The current account deficit was estimated at $1.04 billion in January-March. In addition, the surplus on capital account shrunk to $12.96 billion in April-June this year from $17.50 billion in the corresponding period last year due to stock market volatility and lower capital inflows.

Net capital inflows fell 23.70 per cent to $13.2 billion during the first quarter this year as foreign institutional investors (FIIs) withdrew $5.18 billion from the country during the first quarter.

However, net foreign direct investment (FDI) inflows rose over three-and-a-half times to $10.12 billion compared with $2.66 billion during the first quarter of 2007-08.

As a result of higher current account deficit and a smaller capital account surplus, the balance of payments (BoP) surplus in the April-June quarter was estimated at $2.24 billion, compared to $11.20 billion during the corresponding period last year, according to the latest data released by the Reserve Bank of India on Tuesday.

During January-March 2007-08, it was estimated at $24.99 billion.

The current account deficit widened as the trade deficit, which rose from $20.70 billion during April-June 2007 to $31.54 billion during the first quarter this year, more than offset the gains made on invisibles comprising software export earnings, earnings from non-software services and private transfers including remittances.

The increase in invisible receipts was driven by private transfers along with the steady growth in software services exports, travel and transportation. The remittances from Indians working overseas rose nearly 54 per cent to $12 billion against $7.8 billion last year. Software exports rose 20.59 per cent to $10.66 billion during April-June this year, compared with $8.84 billion in the corresponding period last year.

Non-software services, however, saw a 6.87 per cent rise in receipts to $5.91 billion in April-June this year, as against $5.53 billion in the same period last year.

The invisible payments slowed down during the period due to moderation in payments relating to a number of business and professional services. Due to the surge in international crude oil prices followed by rising freight rates, transportation payments went up by 33.1 per cent against 24.8 per cent in the corresponding period last year.

India’s external debt at the end of June 2008 rose to $221.3 billion, up by $584 million from March 2008.

The net accretion to the foreign exchange reserves excluding valuation change stood at $2.2 billion on BoP basis in the first quarter on account of capital outflows. The forex reserves rose $2.4 billion during the first quarter of 2008-09 as against an increase of $14.2 billion in the corresponding period last year.

Analysts such as Rajeev Malik of Macquarie Securities expect the current deficit to widen this year. “The bigger challenge will be for capital inflows, especially in the current global backdrop, and we expect a significant shrinkage in the overall surplus on the balance of payments,” he said

 

[nitesh]

India`s exports up by 26.9% in August: Report

New Delhi, Oct 01: India's exports increased by 26.9 per cent in August, while the import bill soared by 51.2 per cent leaving a trade deficit of 13.94 billion dollar for the month.

Exports grew to 16 billion dollar in August from 12.61 billion dollar, while imports rose to 29.94 billion dollar from 19.8 billion dollar in the same period last year.

The trade deficit widened to 13.94 billion dollar in August from 7.19 billion dollar a year-ago, according to official figures released here today.

India's crude oil import bill shot up by 76.7 per cent to 10.96 billion dollar from 6.2 billion dollar in August 2007.

For the April-August 2008 period, exports showed a growth of 35.1 per cent to 81.22 billion dollar. Imports rose by 37.7 per cent to 130.36 billion dollar in the first five months of the fiscal.

Consequently, the deficit in this period stood at 49.13 billion dollar.

Bureau Report

Zee News - Exports up by 26.9% in August

 

[Flintlock]

India's Inflation Rate Slows to 11.99%, 13-Week Low (Update1)

By Cherian Thomas

Oct. 3 (Bloomberg) -- India's inflation slowed more than expected to a 13-week low, giving the central bank room to keep interest rates unchanged when it meets at the end of the month.

Wholesale prices rose 11.99 percent in the week to Sept. 20 from a year earlier after gaining 12.14 percent in the previous week, the commerce ministry said in a statement in New Delhi today. Economists expected a 12.12 percent increase.

Reserve Bank of India Governor Duvvuri Subbarao is under pressure to boost money supply as a local stock sell-off triggered by the global credit crunch has drained funds from the banking system, increasing borrowing costs. Subbarao is unlikely to yield as inflation is still double the central bank's target.

``Inflation is still at elevated levels,'' said N. R. Bhanumurthy, an economist at Institute of Economic Growth in New Delhi. ``Cuts in interest rates will come, but just not yet.''

The wholesale price index fell because of a decline in the prices of farm products such as cereals, fruits and vegetables. The index of primary articles, that includes food items, dropped 0.2 percent, while the indices of manufactured and fuel were unchanged in the week to Sept. 20, today's report said.

The central bank has raised the cash reserve ratio, or the proportion of deposits that lenders maintain with it as reserves, by 400 basis points to 9 percent since December 2006 to contain inflation. The bank will release its next monetary policy statement in Mumbai on Oct. 24.

Financial Meltdown

The rate at which Indian banks lend to each other climbed to an 18-month high of 17.5 percent on Oct. 1 as investors hoarded cash amid concern the U.S. financial meltdown could tip the global economy into recession. Indian banks borrowed an average 413 billion rupees a day from the central bank in September, almost twice the amount in August, further indicating a shortage of funds in the banking system.

The rupee fell as the credit-market turmoil in the U.S. prompted overseas funds to pull out money from Indian stocks. Overseas investors have pulled out a record $9.22 billion since January, pushing the key stock index down by 37 percent.

The rupee declined 16 percent this year and is the second- worst performer among the ten most-active Asian currencies excluding the yen.

The yield on the benchmark 10-year bonds dropped 30 basis points this week to 8.3 percent in Mumbai. The rupee fell 1.5 percent this week to 47.085 per dollar, the lowest since June 2003. Inflation data came after the markets closed.

Credit Shortage

Indian companies including Alok Industries Ltd., Jaiprakash Associates Ltd. and Balrampur Chini Mills Ltd. had called for a cut in the cash reserve ratio to ease the credit shortage.

The Reserve Bank in September announced measures to boost the supply of dollars in the market and curb exchange-rate swings. The central bank said it will sell dollars and raise rates on locally-held foreign-currency deposits.

Central banks from Australia to Japan pumped cash into their money markets and promised to take more steps to alleviate a credit shortage after the collapse of some of the biggest banks on Wall Street, including Lehman Brothers Holdings Inc. The U.S. Senate this week approved a $700 billion financial- rescue package for the nation's lenders.

Asia's central banks have already started to cut interest rates to spur growth. Taiwan reduced borrowing costs on Sept. 25, joining China, Australia and New Zealand in easing borrowing costs this month.

To contact the reporter on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net
Last Updated: October 3, 2008 09:00 EDT

 

[Flintlock]

'India to overtake China as financial power after 2015'
3 Oct, 2008, 1730 hrs IST, PTI
ZURICH: India will overtake China as a financial power after 2015 as its institutions can weather recession easily, a former union minister said
here.

Speaking at a seminar on 'The Indian Economy and the China Factor' at the Swiss-India Chamber of Commerce here, Former Union Commerce Minister and Janata Party chief Subrahmanian Swamy said that India will "overtake" China after 2015.

"India, because its institutions will weather the crisis more easily," he said referring to the "1977 East Asia crisis".

Swamy said that investing in an Indian business is a costly affair owing to poor infrastructure and corruption.

"But Indians now have demonstrated capacity to produce the highest quality products as proved by the global awards that it won for quality in IT software and automobile ancillary industry," he said.

Swamy noted that poor infrastructure and corruption are drawbacks that can be rectified by decisive government action.

For example, he said, Indians hold about Rs 6.5 lakh crores (USD 1.5 trillion) in Swiss banks alone which can be recovered by issuing an ordinance to nationalise all Indian citizens' accounts in Swiss banks.

"The Swiss government, by the new post-Marcos legislation would then be obliged to hand over the accounts to the Indian government," he added.

'India to overtake China as financial power after 2015'- Indicators-Economy-News-The Economic Times

 

[nitesh]

Flint isn't this number is less

he said, Indians hold about Rs 6.5 lakh crores (USD 1.5 trillion)

it must be more. But right thing said

 

[Marshal]

Flint isn't this number is less


it must be more. But right thing said

I think 6.5 lakh crore is = to $150bn USD
the report says $1.5trillion USD which is clearly not possible......$1.5trillion is more than our GDP

 

[nitesh]

I think 6.5 lakh crore is = to $150bn USD
the report says $1.5trillion USD which is clearly not possible......$1.5trillion is more than our GDP

Well not going to number crunching. But the point raised is good by mr. swamy

 

[Neo]

Reliance Industries eyeing diesel exports to Pakistan​

Calcutta News.Net
Friday 3rd October, 2008 (IANS)

The Mukesh Ambani-headed Reliance Industries (RIL) is interested in exporting diesel to Pakistan if restrictions are removed, a senior company official said here Friday.

In his address at the India Energy conference, P. Raghavendran, RIL's president (refineries business), described Pakistan as a 'natural market' for its petroleum products from its refineries.

'We would like to go there once restrictions are removed,' he said, describing it as a 'win-win situation' for both India and Pakistan.

Later, when told diesel had recently been removed from the negative list by the Pakistan government, Raghavendran said: 'If it was so, we will certainly be interested in exporting our products.'

Pakistan imports about seven to eight million tonnes of diesel, most of it from Kuwait.

Indian Oil Corp had first mooted exports to Pakistan three years ago. RIL had also started talks with the Pakistan government, but it had not moved forward as Pakistan had continued with its ban on import of diesel from India.

In July, Pakistan introduced a more liberal trade policy for India, bringing 136 items, including diesel, into the positive list.