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'Chindia' rising: Not your same old, golly-gee Asian superpowers
MARCUS GEE
May 30, 2007

If you want to know how the rise of Asia's new economic superpowers is changing the world, take a look at a new book called Chindia: How China and India are Revolutionizing Global Business. It's a collection of articles by journalists at BusinessWeek, nicely stitched together by the magazine's former Asia correspondent Peter Engardio.

It's easy to be too golly-gee about Asia's spectacular rise, but when you read some of the facts in this book you can't help but keep exclaiming "golly," "gee" quite a bit. For instance did you know that:

Some experts estimate that there are more information technology engineers in the Indian IT Mecca of Bangalore (about 150,000) than in Silicon Valley (120,000)

China is already the world's biggest cellphone market, with more than 350 million subscribers, and that is expected to hit 600 million by 2009.

That same year, the number of Chinese with broadband Internet access should surpass the number in the U.S.

China and India produce half a million new engineers and scientists a year, compared with 70,000 in the U.S.

In 2008, the value of goods exported by China is expected to pass $1-trillion (U.S.) a year.

We have never witnessed anything quite like what is happening in India and China. As this book notes, the world has seen other countries take off in breathtaking fashion: Japan in the 1950s and 1960s, South Korea, Hong Kong and the other Tiger economies of the Far East in the 1960s and 1970s. But none had the demographic heft - the pure numbers of people - to change so much for so many industries around the world.

You have to look back to the emergence of a young, vibrant U.S. in the 19th-century to find a parallel to the rise of "Chindia" today. But as BusinessWeek points out, even that remarkable rise can't really compare with the phenomenon of China and India. "Never has the world seen the simultaneous, sustained takeoffs of two nations that together account for one-third of the planet's population."

For the past 20 years, India's economy has been growing at an average of 6 per cent a year, China's an amazing 9.5 per cent (11.1 per cent in the most recent quarter). If things continue at that rate, China could overtake the U.S. as the world's biggest economy in 40 years and India could surpass Germany as the world's No. 3 economy in 30 years. By mid-century, India and China combined could account for half of global output.

Of course, things could easily go off the tracks. Chindia's authors are careful to point out the risks and liabilities that both countries have. China has a brittle, undemocratic political system and rising levels of open, often violent, unrest. Its growth has been fuelled partly by massive government investment, some of it wasteful and poorly directed. Its banking system is inefficient, with bad-loan levels of up to 20 per cent. Its stock exchanges often seem more like casinos than modern capital markets.

India, for its part, suffers from crumbling airports, highways and ports, an enormous, stifling bureaucracy and horrendous (though improving) levels of poverty and illiteracy, to say nothing of religious tensions and the enduring shame of the caste system.

Despite their dazzling growth rates, India and China started from such a low base that, put together, they still produce just 6 per cent of world output. On the other hand, their growth is blinding. During the Industrial Revolution, Britain and the U.S. doubled real per capita incomes in 50 years. China is doing it every nine.

Whatever challenges they face, the dynamism and optimism of these two giants seems unquenchable. "What makes the two giants especially powerful is that they complement each other's strengths," Chindia's authors remark. China is a manufacturing powerhouse, India specializes in software, design, services and precision industry.

That makes for a world-beating combination. But it doesn't mean the rest of us lose out. The Economist magazine predicted last year that, largely because of exploding growth in places like India and China, "the first decade of the 21st century could see the fastest growth in average world income in the whole of history."

Golly. Gee.

mgee@globeandmail.com

 

[Bushroda]

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[Bushroda]

India's notorious slum up for sale
Paul Peachey
Wed, 30 May 2007

One of Asia's most notorious slums went up for sale on Wednesday in a $2.3-billion project to raze thousands of ramshackle homes and create one of the world's hottest building sites.

The ****** and cramped 535-acre Dharavi slum stands on prime building land in Mumbai, parts of which have some of the world's most expensive real estate, and has long been an embarrassment to promoting India's economic capital as a global financial centre.

Newspaper advertisements were published in 20 countries Wednesday offering "the opportunity of the millennium" for five major developers to take part in the long-delayed and controversial project in one of Asia's largest slums.

Some 57 000 families — about 300 000 people — will be moved into free but tiny one-bedroom homes in the area and swathes of land will be cleared for business and high-rise flats bounding some of the city's wealthiest parts.

"Throughout the world slum dwellers are regarded as pests," said architect Mukesh Mehta, who has championed the project for a decade.

"With this, the government of Maharashtra (the state that includes Mumbai) regards them as important human resources and assets.

"You can expect a very beautiful suburb that hopefully other people from around the world will want to emulate."

The project has been fiercely condemned by the slum-dwellers, who have created a vibrant self-sufficient economy of potteries, tanneries and other industry among the warren of narrow lanes.

At one side of the slum, women stuff mattresses and vans ferry goods to market while potters work on open roofs creating clay figures for sale.

Environmental groups say such industries at Dharavi provide an object lesson in recycling.

But city planners say the tanneries and workshops pollute Mumbai's already ****** waterways and the project includes environmentally-friendly workshops.

Still, small businessmen are furious at the "imposed" scheme and say some will be squeezed from areas covering several thousand square metres of floor space into flats of just 21 square metres.

Only those registered on voter rolls in 1995 will be eligible for free homes.

Groups representing slum dwellers claim that about 300 000 people will be left with nowhere to go — driving them into new slums.

They also point to the woeful record of the authorities in previous schemes to re-house slum dwellers in the city.

"All the concessions have been for the developers and builders, none at all for the people," said A. Jockin, president of Slum Dwellers International.

"They are not concerned with people development. Now the struggle will start. People will be on the streets."

New schools, colleges, health clinics, a sports complex and a golf driving range are all slated to be part of the redevelopment due for completion within seven years, according to Mehta.

For every square foot provided for rehabilitation, builders will be entitled to 1.33 square feet for sale making it a lucrative opportunity in the peninsula city where space is scarce.

"It's been mind-boggling. Everyone and their cousin want to participate in this scheme," Mehta said.

Dharavi's notoriety as one of Asia's largest slums has made it an unlikely destination for Bollywood movie makers, Britain's Prince Charles, foreign politicians and slum tourists seeking out the problems of modern India.

Dharavi has also symbolised the political failure to adequately house a population swollen by migrants trying to make a living in India's most prosperous city.

More than half of Mumbai's nearly 18 million population, by official count, live in slums, according to Mehta.

The slum, once a marsh and rubbish tip, has stood in its current form for about 60 years with the third generation of families running businesses from workshops and yards.

Compared with many of the city's flimsy wood and tarpaulin slums built alongside roads and the airport, its long-term status has seen many permanent concrete structures built and amenities installed.

But critics say pollution, waste and disease are major hazards in the unsanitary conditions while the "informal" system operating the slum is controlled by gangs.

Asia accounts for some 60 percent of the total global slum population of 924 million in 2001, according to a UN report in 2003.

It reported that in South Asia the rapid growth of urban populations outstripped the ability of cities to cope.

 

[Bushroda]

Indian summer heats up the Yorks economy

http://imageshack.us

LEARNING CUSTOMS: Yorkshire Forward's chairman Terry Hodgkinson welcomed Bollywood to the region in 2006

As an event it will be over in just four days. But businesses across Yorkshire hope that the International Indian Film Academy Awards will not only provide a short-term financial boost but leave a long-lasting economic legacy for the region. Business Editor Nigel Scott reports
IT was an aircraft hangar like no other – and it was the place where Yorkshire's dream of an Indian summer became reality.

The setting was Dubai and the giant space had been transformed into an arena for the 2006 International Indian Film Academy Awards.

It was there, in the midst of a glittering Bollywood spectacular, that the big secret was revealed – in 2007 the event would be brought to God's Own County.

Since the first IIFA awards ceremony was held in the Millennium Dome, London in 2000, the awards have been hosted in Dubai, Singapore, Johannesburg, the Genting Highlands in Malaysia and Amsterdam.

Those who had fought Yorkshire's corner for 2007 are celebrating the region's success in the firm belief that, beyond all the glitz and glamour, this year's event will bring a lasting economic legacy for the region.

The IIFA Weekend may last for just four days but the region's powerbrokers believe that the business benefits could well help to shape Yorkshire's economic prosperity for generations to come.

Nobody has been a more fervent supporter of the event than Wakefield businessman, Terry Hodgkinson.

The chairman of Leeds-based regional development agency Yorkshire Forward nailed his colours firmly to the mast when he, and the agency of which he is the figurehead, pledged £2.5m of funding in partnership with Yorkshire Tourist Board to make the Bollywood dream come true.

He says the 12 months since Yorkshire was given the green light to host the event has "flown by," but he is adamant that the region is about to witness "something spectacular."

Mr Hodgkinson told the YEP: "I know that there are still those in the region who question why Yorkshire Forward became so involved in bringing an awards event to the region.

Stronger

"But by looking at the event as more than just a glittering red carpet affair, I believe it is easy to understand our motivation and the benefits the awards will bring to our region."

Of the 270,000 businesses currently operating in the Yorkshire and Humber region, only 5,000 are involved in international trade.

Yorkshire Forward's view is that if the region wants to achieve its goal of being a truly global player, it needs to improve significantly on that statistic – and that forging stronger links with a country that is the second-fastest growing economy on the planet is a "no-brainer."

As Mr Hodgkinson explains: "Bringing the IIFA weekend to Yorkshire and Humber will not only attract thousands of Indian film lovers from across the globe, who will stay in our hotels, eat in our restaurants and visit our attractions – it will also showcase our region to millions more who watch the awards worldwide."

From the business perspective, the Global Business Forum on Thursday June 7 will be a highlight of the four day event – bringing the leaders of some of the biggest businesses in India to the region to find out more about the investment potential of Yorkshire.

Hundreds of high-powered business leaders from around the globe are expected to converge on Leeds on the first day of the Bollywood 'Oscars' for an event expected to produce deals worth billions of pounds.

Organisers say hot topics and likely ventures to come out of the Global Business Forum include direct flights between Yorkshire and India and potential investment from an Indian hotelier to set up a five-star hotel in or near Leeds, besides new Yorkshire base for an Indian film production company.

The event, at the Royal Armouries, Leeds, will be led by the Federation of Indian Chambers of Commerce and Industry (FICCI) and will see two Indian ministers touch down in Leeds along with 300 guests from across the UK, Europe, the Middle East and South Africa and around 100 more from India.

Yorkshire businesses will be able to find out more about the opportunities for trading with India.

Regional chambers of commerce are already planning trade missions to India to pick up on new prospects and business leads and, by bringing some of India's leading film directors to the region, it is hoped that Yorkshire will become the set for future Bollywood blockbusters.

A highlight of the forum will be guest speaker Sir Martin Sorrell, chairman of the world's largest advertising agency WPP.

Other key speakers include Lord Karan Bilimoria, chairman of the Indo British Partnership Network and chief executive of Cobra Beer, and Indian Government Union Minister, Mr Praful Patel.

Kamalesh Sharma, the High Commissioner of India, and Sir Michael Anthony Arthur, the British High Commissioner to India, will also be present.

The awards are put together each year by event management company Wizcraft.

Its boss, Mr Sabbas Joseph, said of the business potential of the event: "We believe by bringing the business community to Yorkshire it will generate a large quantity of investment into the region which we believe will be of tremendous value."

Tourism-related businesses are expected to be a major beneficiary – hence the key role played by the Yorkshire Tourist board as a major driver of the region's Bollywood bid.

Pioneering

Its no-nonsense chairman, Yorkshire businesswoman Judith Donovan, is in no doubt that a lasting economic legacy can be secured.

"It's a four-day event, giving a four weeks buzz and a four-year business legacy," is her take.

It has been estimated that £10m will be added to the region's economy from tourism alone over the four days – and Ms Donovan believes that figure will increase to £20m per year over two years.

About 28,000 people are expected to travel to the region from India, Europe, the US and South-East Asia over the four days.

Mr Sabbas Joseph believes Yorkshire – with its multi-cultural communities – has all the right ingredients for hosting the event.

He said: "We could have given the bid to anyone. But when we looked at the Yorkshire bid, we saw passion, commitment and a sense of direction and cultural thinking."

Leeds Metropolitan University has launched a pioneering new partnership with IIFA, which it believes will strengthen educational, business, arts and sporting links with India and offer Leeds Met scholarships to winners of global competitions.

Two academic chairs, the IIFA Chair for Global Cinema and an India Chair celebrating 60 years of Indian independence will be established, and it is intended that the partnership will also provide numerous opportunities for students to get involved with Indian Cinema, raising the profile of Leeds Met's Northern Film School.

A formal partnership agreement was signed by international film star and global ambassador for the IIFA, Amitabh Bachchan, and the director of student-centred change management at Leeds Met, Joy Kumar.

Leeds Met students and staff are playing an active role in the planning and delivery of the IIFA Weekend in Yorkshire, including the charity cricket match at Headingley Carnegie Stadium where a host of Indian stars will compete in front of an anticipated crowd of 18,000.

Professor Simon Lee, Vice-Chancellor of Leeds Met, said: "We have many students from India and we would like our whole university to become better students of India.

"We will give what we can to this special partnership and we know we have much to learn. From the inspirational heritage of the struggle for Indian independence through to the grace and artistry of the contemporary Indian film industry, this partnership will take us all beyond boundaries."

Hundreds of high-powered business leaders from around the globe are expected to converge on Leeds on the first day of the Bollywood 'Oscars' for an event expected to produce deals worth billions of pounds.

Organisers say hot topics and likely ventures to come out of the Global Business Forum include direct flights between Yorkshire and India and potential investment from an Indian hotelier to set up a five-star hotel in or near Leeds, besides new Yorkshire base for an Indian film production company.

The event, at the Royal Armouries, Leeds, will be led by the Federation of Indian Chambers of Commerce and Industry (FICCI) and will see two Indian ministers touch down in Leeds along with 300 guests from across the UK, Europe, the Middle East and South Africa and around 100 more from India.

Yorkshire businesses will be able to find out more about the opportunities for trading with India.

Regional chambers of commerce are already planning trade missions to India to pick up on new prospects and business leads and, by bringing some of India's leading film directors to the region, it is hoped that Yorkshire will become the set for future Bollywood blockbusters.

A highlight of the forum will be guest speaker Sir Martin Sorrell, chairman of the world's largest advertising agency WPP.

Other key speakers include Lord Karan Bilimoria, chairman of the Indo British Partnership Network and chief executive of Cobra Beer, and Indian Government Union Minister, Mr Praful Patel.

Kamalesh Sharma, the High Commissioner of India, and Sir Michael Anthony Arthur, the British High Commissioner to India, will also be present.

The awards are put together each year by event management company Wizcraft.

Its boss, Mr Sabbas Joseph, said of the business potential of the event: "We believe by bringing the business community to Yorkshire it will generate a large quantity of investment into the region which we believe will be of tremendous value."

Tourism-related businesses are expected to be a major beneficiary – hence the key role played by the Yorkshire Tourist board as a major driver of the region's Bollywood bid.

Pioneering

Its no-nonsense chairman, Yorkshire businesswoman Judith Donovan, is in no doubt that a lasting economic legacy can be secured.

"It's a four-day event, giving a four weeks buzz and a four-year business legacy," is her take.

It has been estimated that £10m will be added to the region's economy from tourism alone over the four days – and Ms Donovan believes that figure will increase to £20m per year over two years.

About 28,000 people are expected to travel to the region from India, Europe, the US and South-East Asia over the four days.

Mr Sabbas Joseph believes Yorkshire – with its multi-cultural communities – has all the right ingredients for hosting the event.

He said: "We could have given the bid to anyone.

But when we looked at the Yorkshire bid, we saw passion, commitment and a sense of direction and cultural thinking."

Leeds Metropolitan University has launched a pioneering new partnership with IIFA, which it believes will strengthen educational, business, arts and sporting links with India and offer Leeds Met scholarships to winners of global competitions.

Two academic chairs, the IIFA Chair for Global Cinema and an India Chair celebrating 60 years of Indian independence will be established, and it is intended that the partnership will also provide numerous opportunities for students to get involved with Indian Cinema, raising the profile of Leeds Met's Northern Film School.

A formal partnership agreement was signed by international film star and global ambassador for the IIFA, Amitabh Bachchan, and the director of student-centred change management at Leeds Met, Joy Kumar.

Leeds Met students and staff are playing an active role in the planning and delivery of the IIFA Weekend in Yorkshire, including the charity cricket match at Headingley Carnegie Stadium where a host of Indian stars will compete in front of an anticipated crowd of 18,000.

Professor Simon Lee, Vice-Chancellor of Leeds Met, said: "We have many students from India and we would like our whole university to become better students of India.

"We will give what we can to this special partnership and we know we have much to learn. From the inspirational heritage of the struggle for Indian independence through to the grace and artistry of the contemporary Indian film industry, this partnership will take us all beyond boundaries."

 

[Bushroda]

Squeezing China and India into the G8 tent
Hamish Mcrae


THERE is, in case you have not yet noticed, another G8 summit coming up in Germany. You will notice, if only because substantial protests are being planned, that "Smash G8" placards have been written, that wire barricades are being erected and that police are primed.
Let's hope that the protesters heed Angela Merkel's call to avoid violence, but put it this way: the swanky Baltic resort of Heiligendamm, with its sumptuous hotels and naturist beach, would not be a great place for a quiet getaway next week.

The razzmatazz, as so often, obscures the substance which is that the world economy is experiencing a global boom, and more than this, a boom that is more widely dispersed than any previous one in human history.

It is a boom that is rewriting the world's economic power book.

As a result, the G8 the United States, Japan, Germany, Britain, France, Italy, Canada and Russia no longer represent the world's most buoyant economies.

Power is shifting towards the Asian giants of China and India, both of which are growing far faster than any G8 member, even Russia; and to the energy exporters of the Middle East; and to some extent to Latin America. Yes, we that is "we" the West are still important in the sense that we have the position of incumbency. But we become a little less important with every passing year.

When these economic summits were started by president Valery Giscard d'Estaing at the chateau of Rambouillet near Paris in November 1975, the six countries that took part (Canada and Russia joined later) could think of themselves as making the world's key economic decisions.

They declared that they were "determined to overcome high unemployment, continuing inflation and serious energy problems", and you could at least acknowledge that it was within their authority to have a stab at these.

Now they make similar declarations, though with the balance swung away from unemployment and towards poverty in Africa and concerns about the environment.

But the outcomes are not really within their control, even if they could agree on the policies, which they can't.

What the "non-G8" world thinks and does is ultimately going to be more important.

That first economic summit was 32 years ago. Barring some global catastrophe that does not bear thinking about, in another 32 years' time, in 2039, China will be on the brink of passing the US to become the world's largest economy. India will be indubitably the world's third largest.

So if one is considering the policies that might best contain global warming in, say, 2050, the decisions by China and India over the next 30 years will be the key ones determining the outcome.

So why aren't they in the G8 tent?

In one sense they are, in that they attend these meetings as observers, as do a number of other key countries including Brazil, South Africa, and Mexico. But they have made it clear that they are just that they are not participating.

Thus India's Environment Minister, Pradipto Ghosh, said last week that India would reject proposals put forward at the G8 to limit greenhouse gas emissions. "Legally mandated measures for reducing greenhouse gas emissions are likely to have significant adverse impacts on gross domestic product growth of developing countries, including India," he said. "This in turn will have serious implications for our poverty alleviation programs ... this is not the path we wish to pursue."

As for China, it is already the world's third-largest trading nation and its President, Hu Jintao, will be in Heiligendamm. But the Chinese have made it clear that they have not been asked to become a full member of the summit club and have pointedly said that since they have not been asked, they cannot give any answer as to whether they would like to join or not.

Indeed you could make a strong case that it is not in China's self-interest to become too close to the G8. It would have not much to gain and a certain amount to lose. It can, after all, play its global role on its own.

Take investment in Africa, one of the G8's priorities. I saw a statistic last week that China's fund for investment in infrastructure in sub-Saharan Africa was nearly three times the size of the one agreed by the G8.

China needs the US and the European markets to sell its goods. It also needs international investment. But these can be secured by bilateral agreement.

For example, if the price of market access to the US is allowing its currency to appreciate against the dollar as Congress demands, then it will gradually do so. The yuan is still officially pegged to the dollar but minor adjustments to its bands have allowed it to rise by 7 per cent over the past two years.

China is also profoundly concerned about both the short-term impact of pollution on public health, as well as the long-term implications of climate change on its economy.

It has a number of pioneering projects aimed at slowing the growth of carbon emissions. But it is not going to be told what to do by Merkel.

There are a string of issues on the agenda at Heiligendamm but at their head is the one of the environment.

At some stage the world will need to negotiate a new Kyoto agreement on carbon emissions and clearly countries such as China, India and Brazil will need to be party to this.

The present agreement, which is deeply unsatisfactory since it only covers the developed world, formally ends in 2012. It is in everyone's medium-term self-interest that is should be replaced with something more universal.

It is in the interest of the new industrial giants because they are likely to suffer most from climate change. It is in the interest of the present developed world because it will be hard to sustain ever-tougher environmental measures if the effect of these is massively outweighed by increased emissions from the new developed world.

So the geo-political bedrock for a deal is there. The market, too, will help a bit. Higher energy prices support conservation and a switch to cleaner technologies. But the lead has to come as much from the East as the West.

The headlines next week are going to be about the fissure between the positions of the US and the European Union. Already the angry exchanges about the wording of the final communique are being leaked. Of course getting the US onside matters and it may be that we have to wait another 18months for a new administration before much will move. We should however beware: a change in administration may change the rhetoric but not the actual policy.

But rows between the US and Europe have a curiously antique feel to them. This is still the world of Rambouillet, when China was still four years from the start of its market reforms, India some 17 years from its economic take-off, and the USSR had another 15 years to live.

We need to have all the elephants in the big tent and we need to pay attention to their views, their culture and their values.

- The Independent

 

[Bushroda]

India`s new power action plan
By Kushal Jeena May 30, 2007, 21:05 GMT

NEW DELHI, India (UPI) -- India is preparing a new action plan to eliminate the country`s power shortage by 2012 and to create additional power generation capacity.

Prime Minister Manmohan Singh unveiled Tuesday the plan to revitalize the ailing power sector at a daylong conference of the chief ministers of the India`s 34 states.

The plan calls for the states to launch a campaign to end power theft, a major reason for the power shortage. Special courts are planned to deal with the issue.

The plan also calls for the setting up of a professionally managed national power project management board to look into all issues relating to this sector. The board, which is to be headed by Power Secretary Anil Razdan, has been assigned the task of keeping track of all small, medium and large power projects commissioned during the 11th plan period. The board, a nodal body for the power sector, would also assist federal and state utilities in ensuring that project implementation targets are met for each project.

The conference recommended that the government set up a subcommittee to work out the financial aspects of adding to India`s power capacity generation.

'The Electricity Act provides for the constitution of special courts for speedy disposal of cases of power theft,' Singh said. 'These courts should be made working as early as possible.

'The center would at the same time provide financial help for upgrading transmission and distribution system.'

Singh said as losses come down to agreed-upon levels, the government would reward the states that perform.

'For this purpose, the accelerated power development and reforms program is being revised and contours of this revised scheme would be announced in next two months,' Singh said.

In its 11th five-year plan that began in April and runs until 2012, India said it planned to add more than three times the power capacity added in the 10th plan.

'These ambitions are laudable. What we require is to have an effective project implementation and monitoring structure in place,' Power Minister Sushil Kumar Shinde said at the conference.

India`s total capacity stands at 130,000 megawatts, but for its economy to grow at its current pace at least 200,000 MW will be needed by 2012.

The conference also adopted a resolution aimed at setting up a standing group of state power ministers that would meet once every three months to review the sector`s activities.

The ministers asked the federal government to grant the states leeway on the schedule for reforms in the power sector without having to adhere to the deadline set by the Electricity Act of 2003. They argued that clubbing well-performing state electricity boards with poorly performing ones and directing them to usher in certain reforms was not a positive approach.

In 1991, the year it opened up its economy for foreign investment, India announced reforms in its government-controlled power sector to encourage competition and seek private participation in each sub-element of the sector.

Notwithstanding these initiatives, most state electricity boards continued to make large financial losses because of an unsustainable level of aggregate technical and commercial losses. The dues that the state electricity boards had to pay to the state-run power companies crossed $3.5 billion.

These dues still are major hurdles to the reform process and the government has been unable to resolve the issue, as the state electricity boards cite their poor financial health as the main reason they can`t pay dues.

The government settled on one condition: State-owned power companies would now supply power to the state electricity boards on an immediate-payment basis and the dues recovery would be made in parts.

'The power shortage continues to remain a persistent problem. The inability to expand generating capacity, strengthen transmission networks and improve distribution systems reflects the financial sickness of the SEBs,' said R.V. Shahi, a power expert and former power secretary.

He said state electricity boards have neither the resources to invest nor the credibility to attract the private sector. The large aggregated transmission and commercial losses are partly an outcome of neglect in transmission and distribution over the years.

Experts in the Indian power sector see privatization of distribution as an alternative solution to reducing aggregated transmission and commercial losses. But India`s experience with privatizing the power distribution systems in Orissa and Delhi states raised many questions.

Now, the government has decided to privatize the power distribution system in a transparent manner based on authentic baseline data and through a genuine round of competitive bidding, where it is politically feasible.

On the recommendations of the conference, the Power Ministry said it would revise the accelerated power development and reforms program to encourage the participation of the domestic and global power sectors and to achieve the target of eliminating the power shortages in next five years.

 

[Neo]

Market capitalisation crosses $1 trillion mark

MUMBAI: A sharply rising rupee to a near decade high against the dollar and record share prices has resulted in India’s stock market joining an elite club with a capitalisation of more than one trillion dollars. India joined a list of fourteen countries with trillion dollar stock markets as companies report steady double digit earnings and manufacturing and services fuel growth that likely reached a record 9.2 per cent in the year to March. According to the most recent data from the Mumbai stock exchange, total market capitalisation of Indian stocks hit 40,811bn rupees (1.005 trillion dollars, 748.8 billion euro) on Tuesday. The benchmark 30-share Sensex index was trading at 14,477.99 on Wednesday, not far from its intraday record of 14,723.88 set on February 9.

http://www.thenews.com.pk/daily_detail.asp?id=58397

 

[Neo]

India’s economy grows at record 9.4 percent

NEW DELHI: India's economy grew faster-than-expected at a record 9.4 percent pace in the year to March, beating a government forecast of 9.2 percent Thursday and raising hopes of more foreign investment.

The record-breaking performance was driven by upward revisions to manufacturing and services output in previous quarters and a jump in overseas investment, the central statistical organisation said.

In the previous fiscal year, India's economy grew 9.0 percent.

Analysts had forecast that strong industrial growth and a boom in services such as outsourcing would lift growth to as high as 9.4 percent despite a series of interest rate hikes in the fiscal fourth quarter to tame inflation.

The government said the economy grew 9.1 percent in the three months to March and that the previous three quarters of the fiscal year had been revised upwards as new data became available.

http://www.thenews.com.pk/updates.asp?id=23458

 

[Neo]

Thursday, May 31, 2007

India scraps 1 million tonnes wheat tender

NEW DELHI: India has decided not to buy wheat against its one million tonne import tender, as prices quoted by trading firms were high, a government official said on Wednesday.

“We are not going to buy because of high prices,” the official, who did not want to be named, told Reuters. India’s State Trading Corp, which floated the tender, had received seven bids from international trading firms at between $265.50 and $296 per tonne — about a fifth more than what India paid last year.

The state-run firm negotiated with international trading firms Glencore and Toepfer to bring down the lowest price offered to $263 per tonne for 300,000 tonnes of wheat, traders and one official said. The proposal has been shot down by the food ministry, the government official said.

On Tuesday, the official said India aimed to buy 11 million tonnes wheat from domestic farmers this year against 9.2 million tonnes purchased last year. India needs 12 million tonnes wheat annually to run its public distribution system for the poor.

The country grows only one wheat crop in a year, mainly in northern states of Punjab, Haryana, and Uttar Pradesh and central state of Madhya Pradesh.

India is likely to produce 73.7 million tonnes wheat in 2007, against 69.48 million tonnes last year. Sowing is done in the winter months of November and December, and harvest begins in late March and early April.

http://www.dailytimes.com.pk/default.asp?page=2007\05\31\story_31-5-2007_pg5_17

 

[Bushroda]

India growth second fastest in 60 years
By Jo Johnson in New Delhi
Published: May 31 2007 10:23 | Last updated: May 31 2007 11:28

India enjoyed its second-fastest year of growth since independence last financial year, according to government statistics released this afternoon showing the economy expanded by 9.4 per cent in the 12 months to March 2007.

The full year figures were revised up from the government’s ‘advance estimate’ of 9.2 per cent, issued in February, largely on account of sizeable upward adjustments to growth rates in the first half of the year.

Growth in the first quarter of last year was revised up by nearly an entire percentage point to 9.6 per cent, from 8.8 per cent, and then accelerated further in the second quarter, covering July-September, to 10.2 per cent, from 9.2 per cent.

Growth in the last quarter of the financial year (January-March 2007) came in lower than expected at 9.1 per cent, but nonetheless was more rapid than that seen in the previous quarter, suggesting tighter monetary policy had yet to have much impact.

India has only grown faster than this in one year since the series began in 1950/1, according to Robert Prior-Wandesforde, an economist at HSBC. In 1998/99, growth surged to 10.5 per cent before falling back in the early years of this decade.

The central bank has raised its main lending rate five times in the past year and increased banks’ cash reserve requirements three times since December, to slow down loan growth and help rein in prices.

Even though inflation is now coming down, most economists believe that the economy is continuing to grow well above its long-term sustainable rate and that further tightening of monetary policy and of banking reserve ratios lies ahead.

“We would be surprised if today’s release was not met fairly promptly by a further 50bp rise in the Cash Reserve Ratio, which currently stands at 6.5 per cent,” noted Mr Wandesforde, adding that such a move could be the last for a few months.

Copyright The Financial Times Limited 2007

 

[Bushroda]

GE banks on Indian economy's growth
By Heather Timmons Published: June 1, 2007
INTERNATIONAL HERALD TRIBUNE

NEW DELHI: Pressure to slim General Electric's corporate portfolio at home has not stopped Jeffrey Immelt's aggressive plans for expanding in emerging markets.

On Thursday, Immelt, GE's chairman and chief executive, told executives here that India has "never offered us more potential than it does today."

GE plans to participate in the country's "massive focus" on energy, he said, and will create a fund for infrastructure that could reach $1 billion.

"This is the era of the developing world and of emerging markets," Immelt said.

As the U.S. economy cools, GE and other large multinational companies are shifting their focus to faster-growth parts of the world.

Immelt's latest trip to India comes as the country's economy hit a high. Figures released on Thursday showed that India's gross domestic product grew by 9.4 percent in the year ended in March.

Indian officials say they expect growth to continue above 9 percent this year.

"If we can grow at the same pace as the Indian economy, we can be a great company," Immelt said.

Last year, GE executives said that they planned to make India a major market and that revenue from India would more than quadruple, to $8 billion by 2010. Assets in India will also reach $8 billion by 2010, the company said.

Immelt said Thursday that those goals were in sight: Revenue in India in 2007 should be $3 billion, out of $175 billion at GE, and by 2008 should reach $4 billion. GE should "blow right through" the target of $8 billion in Indian assets by 2010, he said.

This year, GE will earn more revenue outside of the United States than in it. GE said in April that first-quarter profit rose 2 percent, in part because of a focus on selling goods and consumer services in Asia and the Middle East. Revenue in developing markets was up 14 percent in the quarter.

Some analysts, notably Jeffrey Sprague of Citigroup, have suggested that GE spin off units, including NBC Universal and GE Money, to streamline the company and improve its stock performance.

Immelt did not address asset sales on Thursday. Instead, he said GE would continue to focus on several "macro themes," including emerging markets.

A worldwide demand for infrastructure is "a stunning long-term trend," Immelt said, and could require $4 trillion in overall global investment over the next eight years. Other macro themes include environmental technologies and opportunities created by changing demographics, like the rapidly growing need for health care.

The visit by Immelt comes as U.S. and Indian officials are in the last stages of negotiating a deal to share civilian nuclear technology. The plan has been stalled several times, although an agreement could be struck this weekend when Nicholas Burns, a U.S. under secretary of state, comes to New Delhi for fresh talks.

Nuclear plant manufacturers, including GE and Westinghouse, are expected to be the chief beneficiaries of any deal, and GE has been lobbying both governments to agree to the plan.

Immelt said he intended "ultimately to be a participant in the nuclear industry here."

GE's presence in India dates back more than a century, and Immelt's predecessor, Jack Welch, is largely credited with promoting India as an outsourcing center. GE Money is one of India's largest credit card lenders through a partnership with the State Bank of India.

 

[Bushroda]

India economy closes gap on China
POSTED: 5:33 a.m. EDT, May 31, 2007
CNN.com

NEW DELHI, India (Reuters) -- India's economy expanded 9.1 percent in the January-March quarter, the government said Thursday, lifted by robust growth in manfacturing and trade.

That brought growth for the full fiscal year through March to 9.4 percent, the strongest in 18 years.

The government had earlier predicted gross domestic product, or GDP, to grow 9.2 percent in the fiscal year ended March, but the estimates released Monday were higher because of a faster-than-expected expansion in the manufacturing sector, which grew 12.3 percent from a year ago.

Growth in services also accelerated to 11 percent in 2006-07 from 9.8 percent a year earlier, while agriculture remained a drag on the broader economy, growing just 2.7 percent compared with 6 percent a year ago.

The latest GDP estimates bring India close to the torrid growth pace of the Chinese economy that grew 10.7 percent in 2006.

 

[SMC]

^^ How's that exactly closing gap? If you're talking about growth pace, then yes, but in terms of overall economy, the gap increases actually.

 

[Bushroda]

^^ How's that exactly closing gap? If you're talking about growth pace, then yes, but in terms of overall economy, the gap increases actually.

Closing the gap in GDP growth rate.. While few years back there was a clear 3-3.5% difference. It has now been reduced to 1%. India's GDP growth rate is at 9.5% & China is at 10.5%

The last para sums it all

The latest GDP estimates bring India close to the torrid growth pace of the Chinese economy that grew 10.7 percent in 2006.

 

[Bushroda]

More reporting on India's record Growth Story

India Growth Hottest in 18 Years
Ruth David, 06.01.07, 1:45 PM ET
FORBES

India’s economy clocked a growth rate of 9.4% for fiscal year 2007, its highest in 18 years and one powered by increased productivity in manufacturing.

Gross domestic product growth for the January-March quarter was at 9.1%, with the manufacturing sector recording a growth of 12.3% from a corresponding period last year. The services sector grew 10.6% over fiscal 2005-06. But agriculture and related fields, which account for the livelihoods of about 60% of the population, saw low numbers, clocking a growth of 2.7%.

“The Indian economy has shifted to a higher growth trajectory,” Finance Minister P. Chidamnaram told reporters in New Delhi. “High growth generates its own momentum. With high growth comes high savings and high investment which, in turn, reinforce growth itself…The time has come to shed lingering doubts about the sustainability of high growth.”

Chidambaram also mentioned inflation, which was at a high of 6.7% in January but has now been reduced to 5.06% on sustained monetary tightening by the central bank. “High growth leads to high demand which puts pressure on prices until supplies catch up,” he said.

Figures from the government’s Central Statistical Organization also showed that per-capita income grew by 8.4% in the last fiscal year. Savings and investments as a proportion of the GDP grew by 1.4% each from last year’s levels of 32.4% and 33.8% respectively.

This year’s GDP growth numbers come on the heels of 9% growth rates last year and 7.5% the year before that. When asked whether such growth rates were sustainable in the coming years, Chidambaram said: “We have capacity to grow at the same high rate of growth, but whether objective conditions will be able to deliver a growth rate higher than 9.4%, I can’t say. The aim is to keep the growth rate at a level higher than 9%.”

The business lobby Confederation of Indian Industry called the growth unprecedented, but pointed out that GDP growth numbers for the corresponding quarter in fiscal 2005-06 were at 10%. “We hope this (growth rates of 9.1% this quarter) is not indicative of any slowdown resulting out of actions taken to curb inflation during this period,” CII said in a statement.

“CII’s own projection for GDP growth in the fiscal year 08 is 9.2% with services growth pegged at 11.2%, industry at 9.4% and agriculture at 3.0%,” the release said.

India yr to March GDP grows faster-than-expected 9.4 pct
ABCmoney.co.uk
Published : Thu, 31 May 2007 09:12

NEW DELHI (XFN-ASIA) - India's economy expanded by a faster-than-expected 9.4 pct in the year ended March 2007, beating the government's forecast of 9.2 pct, the Central Statistical Organization (CSO) said.

This compares with the previous fiscal year's economic growth of 9.0 pct.

The CSO said the increase was driven by upward revisions to manufacturing and services output in previous quarters and a jump in overseas investment.

Analysts had forecast that strong industrial growth and a boom in services such as outsourcing would lift growth to as as high as 9.4 pct despite a series of interest rate hikes in the fourth quarter to tame inflation.

In the quarter to March, the economy grew 9.1 pct.

India's central bank has forecast 8.5 pct growth this year while India's finance minister has said he thinks the economy could expand 9 pct.

The Reserve Bank of India has already raised short-term lending rates twice in 2007 to 7.75 pct -- the highest level in more than four years to bring inflation down from levels well above 6 pct for wholesale prices.

Inflation has since dipped to 5.27 pct, according to the latest weekly wholesale price index.

But price rises are still above the government target of 4.0 to 4.5 pct this calendar year, prompting speculation that the central bank's tightening stance since 2004 may continue, according to analysts.

afp/net

India posts 20-year high GDP at 9.4 per cent in 2006-07
Monsters and Critics, UK
May 31, 2007, 10:11 GMT

New Delhi - Meeting surging consumer demand, India's economy, one of the fastest growing in the world, grew by 9.4 per cent in 2006-07, recording its highest growth in the last 20 years, according to a government report issued Thursday.

India's GDP grew by 9.4 per cent in 2006-07 against 9 per cent in the previous year, said the report by the Central Statistical Organisation (CSO) of the Ministry of Statistics and Programme Implementation.

In the first half of the year the economy clocked 9.1 per cent growth as against 10 per cent in same period in the last fiscal year, but dipped in the third quarter to a lower-than-expected 8.6 per cent, hit by weak farm growth due to poor monsoon rains in 2006.

However, strong industrial growth and a boom in services such as outsourced work for companies abroad have led analysts to predict a strong rebound in the fourth quarter of 2007-08 for a full-year gain of as high as 9.4 per cent.

This growth, analysts say, will ride on the middle class in India, which earns from 4,545 dollars to 23,000 dollars a year, and has tripled to 300 million in the past 20 years, according to the National Council for Applied Economic Research.

Foreign capital investment is also pushing the economy forward, with companies planning to tap the domestic capital market to raise over 12 billion dollars, which will lift the cumulative market capitalisation at Indian bourses by over 100 billion dollars, said the CSO report.

But there has been concern that a series of recent tight monetary measures by the country's central Reserve Bank of India (RBI), which raised short-term lending rates twice in 2007 to 7.75 per cent - the highest in more than four years - would act as a brake.

The central bank's moves were aimed at slowing demand for goods such as cement, steel and basic food items that have soared even as consumers spend on cars, houses, telephones and other goods and services.

Appropriating these domestic spending and financial trends, J P Morgan has pegged GDP growth of 8 per cent for 2007-08.

The RBI's monetary maneuvers seem to have worked as inflation has slipped to 5.27 per cent, according to the latest weekly wholesale price index, compared to more than six percent last month, and India's Finance Minister P Chidambaram has pledged to cut it further.

Despite corrective monetary measures, the industrial growth has already been reported up 11.3 per cent for the year, up from 8.2 per cent a year ago, indicating that the economy remains on track despite the rate hikes.

But one of the fallouts of a tight monetary policy has been a stronger rupee, which recorded a near decade high of 40.1 rupees against the dollar in April, making Indian services and goods more expensive - affecting exports and the trade balance.

India’s economy growing at record speed
AsiaNews.it

Annual growth rate averages 9.4 per cent to March, highest since 1989. Government now has to tackle inflation. Middle class is estimated at 300 million.

http://imageshack.us
New Delhi (AsiaNews/Agencies) – India’s economy expanded at an annual rate of 9.4 per cent to March, the biggest gain since 1989, the Central Statistical Organisation reported yesterday. Like the economy, the country’s middle class has also grown and now is almost the size of the population of the United States.

In the first quarter of this year, the economy grew 9.1 per cent, higher than the average quarterly pace of 8.8 per cent of the past two years and, among the world’s leading economies, second only to China’s growth rate.

This has stoked demand for manufactured and farm goods and pushed inflation to a two-year high in January, which is affecting disproportionately food prices and the poorer segments of the population.

The Reserve Bank of India raised its key rate seven times in the past 18 months to its highest level in five years to tame price gains and loan growth. This helped ease inflation to an eight-month low of 5.27 per cent in the second week of last month.

For experts this should help prepare the economy for a soft landing. But it still “should expand at about 8 per cent or more,” said Navneet Munot, a fund manager at Birla Sun Life Asset Management, a leading asset management company.

One consequence has been that car sales in the past two months have grown at a slower pace. Almost 75 per cent of cars sold in India are financed by commercial banks. And yet manufacturing gained 12.4 per cent in the last quarter of 2006.

The Indian rupee has gained 8 per cent against the US dollar since January 1, slowing down the pace of growth of exports, which rose 8.8 per cent in March, a third of what it was over the past year.

But everyone agrees that disposable middle class incomes and consumption levels are rising.

A study by the McKinsey Global Institute paints in fact a rosy picture for India. Its new report released in May predicts that India's much-touted middle class has finally taken wings and will soon embark on a consumption spree that could reshape global consumer markets.

India’s income level should triple over the next 20 years, lifting 291 million Indians out of poverty to create a 583-million-strong middle-class population by 2025.

Adjusted for inflation, the average per capita annual income of a typical middle-class Indian family was about $800 in the early 1990s. A family that could afford a balanced diet each day, send the children to school and, say, buy a small refrigerator was considered middle-class in India. Now that is likely to change.

The largest Indian spending category at present remains food, beverages and tobacco (FB&T), followed by transportation and housing.

India becomes trillion dollar economy
FreshPlaza, Netherlands

Propelled by growth in services and manufacturing sectors, coupled with an appreciating rupee, India's economy has swelled to a trillion dollar - making it only the 12th nation to reach this milestone.

According to government data released today, the country's economy at market prices stood at Rs 41,25,724 crore at the end of fiscal 2006-07 -- which equals nearly 1,010 billion dollars at the current foreign exchange rate of the rupee.
The rupee was trading at 40.72 to a dollar today, up from yesterday's close of 40.86/87.

However, the rupee's level at the end of last fiscal was near 43 against the greenback, which puts the GDP in dollar terms at 957 billion dollars. While at factor cost the economy expanded by 9.4 per cent to Rs 37,43,472 crore, at market prices the growth translated to over 15 per cent.

The economy's trillion dollar milestone comes just three days after the Indian stocks' combined value crossed this level. The market capitalisation as of March end was 805.2 billion dollars.

India becoming a trillion dollar economy also augurs well for the country's stock market, as a Credit Suisse report said that stock markets in eight out of ten countries had risen in the one year after their economies first crossed this mark.

Companies have lined up plans to tap the capital market to raise over Rs 50,000 crore (around 12 billion dollar), which would lift the cumulative market capitalisation at Indian bourses by over 100 billion dollars.

Only the US, Japan, Germany, China, UK, France, Italy, Spain, Canada, Brazil and Russia have breached the trillion- dollar GDP level in the past, according to Credit Suisse.

India's economy explodes
FIN24, SouthAfrica
31/05/2007 20:57

New Delhi - India's economy expanded by a faster-than- expected 9.4% in the year ended March, official data showed on Thursday, beating a government forecast of 9.2%.

The country's central statistical organisation said the gains were led by services. In the previous fiscal year, India's economy grew 9.0%.

Analysts had forecast that strong industrial growth and a boom in services such as outsourcing would lift growth to as as high as 9.4% despite a series of interest rate hikes in the fourth quarter to tame inflation.

India economy can grow 10% - ADB
FIN24, SouthAfrica
10/03/2006 19:38

New Delhi - India's economy could achieve growth of 10% if the government keeps up reforms and improves the nation's rickety infrastructure, the Asian Development Bank (ADB) said on Friday.
Asia's third-largest economy is growing now at around 8%.

"8% growth is sustainable in the coming five years or more," ADB president Haruhiko Kuroda said, according to the Press Trust of India.

"If infrastructure is improved and economic reforms are continued, the rate of growth can be accelerated to 9-10%," he told reporters in the Indian capital.

The bank president was in India to hold talks with officials and discuss preparations for the ADB's annual meeting in May to be held in the Indian southern high-tech city of Hyderabad.

The Philippines-based multilateral institution said it planned to step up lending to India because of its high growth prospects and increasing funding needs.

Kuroda said the bank's assistance to India would total around $2.25bn in 2006, which would rise to $2.45bn next year and increase to $2.65bn in 2008.

In September, the ADB had announced it was ready to raise its lending to India to more than $6.5bn over the next three years.

The Indian government has said it is aiming for 10% growth in the next few years.

But experts say that the country's potholed roads, congested ports and frequent power outages are major hurdles to achieving double-digit growth.

Double-digit growth is seen as vital to boost the fortunes of the around 300 million people in India who live below the poverty line.

India grows faster-than-expected 9.4%
CHANNELNEWSASIA, Singapore
Posted: 31 May 2007 1451 hrs

NEW DELHI: India's economy expanded by a faster-than-expected 9.4 percent in the year ended March, official data showed on Thursday, beating a government forecast of 9.2 percent.

The country's central statistical organisation said the gains were led by services. In the previous fiscal year, India's economy grew 9.0 percent.

Analysts had forecast that strong industrial growth and a boom in services such as outsourcing would lift growth to as high as 9.4 percent despite a series of interest rate hikes in the fourth quarter to tame inflation.

The government said that the economy rose 9.1 percent in the fourth quarter and that the previous three quarters had been revised upwards as new data became available.

The benchmark 30-share Sensex index was up 131.61 points, or 0.91 percent to 14,452.91 in noon trade after the data was announced, not far from its intraday record of 14,723.88 set on February 9.

The rupee, which has gained almost nine percent against the dollar this year was quoted at 40.73 to the dollar, slightly weaker than Wednesday's close.

The record growth in India is well behind Asian economic rival China which saw its economy expand by 10.7 percent in 2006.

But central banks' in both billion-plus population nations have warned of overheating in the economies and taken steps to tame demand.

In India, analysts have predicted a dip in growth this year linked to tight monetary policy and government directives to banks to be cautious on loans, especially for housing and construction to dim demand for commodities such as cement and steel.

"JP Morgan forecasts GDP (gross domestic product) growth of eight percent for 2007-08," said Rajeev Malik, a Singapore-based Asia economist with JP Morgan Chase Bank.

India's central bank has forecast 8.5 percent growth this year while India's finance minister has said he thinks the economy could expand nine percent.

The Reserve Bank of India has already raised short-term lending rates twice in 2007 to 7.75 percent – the highest in more than four years to bring inflation down from levels well above six percent for wholesale prices.

Inflation has dipped to 5.27 percent, according to the latest weekly wholesale price index.

But price rises are still above government aims of 4.0 to 4.5 percent this calendar year, prompting speculation that the central bank's tightening stance since 2004 may continue, according to analysts.

- AFP/so

Economy growing at fastest rate in 18 years
Toronto Star, Canada
Jun 01, 2007 04:30 AM

India's economic growth accelerated in the latest quarter as manufacturers such as Hero Honda Motors Ltd. lifted production to meet surging consumer demand.

South Asia's largest economy expanded 9.1 per cent in the three months to March 31 from a year earlier, up from a revised 8.7 per cent in the previous quarter, the Central Statistical Organization said in New Delhi. Economists expected a 9.5 per cent gain.

Companies are increasing output in India at the quickest pace in a decade to meet soaring demand from a growing middle class. However, economists think growth may start to slow after the central bank raised interest rates to a five-year high to curb inflation.