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And a meteorite could hit a Pakistani Nuclear facility resulting in a uncontrolled explosion turning half of Pakistan into a radioactive wasteland.. meh

could's and may's dont define economics.. Similarly a big oil field discovery in India can throw your assumptions out and make India a CA positive country in span of years..

So lets stick to current numbers without assuming hypothetical occurances that support your line of thought..

So coming back to those, do you find 9 months worth of Imports coverage good, or Bad..??

considering Pakistan's coverage if just about 5 months and China's is just over 2 years...

Meteorite hits are very rare events. Oil shocks are not rare. IN fact, the probability of oil shocks remains high given the dwindling oil reserves and demand spikes from China.

And the hot money exodus is a common occurrence....that's why it's called hot money. And India is awash in hot money right now which has created an asset bubble.

Read the following:

Hot money is flowing, but rest of India story has gone cold | Firstpost
 
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Yes, it's possible.

But the biggest challenge India faces to lay claim to "superpower" status is to reduce the abject poverty and high levels of hunger and extremely poor hygiene of world's largest population of poor, hungry and illiterate people who call India home.

It's a really uphill battle.

If 200 million hungry Indians have to be fed at about Rs 20 per day including provision of clean drinking water then you need Rs 400 crore a day. That works out to Rs 1,46,000 crores per annum or 2.5% of the GDP! There is no way that this money can be produced unless India cuts down drastically on all frivolous expenditure including space probes, defense and
Commonwealth Games like events. India needs to raise a similar amount to invest in health and public sanitation. There is a very long way to go.

Haq's Musings: 63 Years After Independence, India Remains Home to World's Largest Population of Poor, Hungry and Illiterates

we have our problems but at least we are fixing them we have a long way to go and we will reach it there by 2050 America did not become a superpower until the 1900's India is not even 100 years old yet yet by 2050 we will be a superpower
 
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In whose interest? The paranoid fear of inflation has forced the government to obey the RBI’s diktat


IT HAS been apparent to every businessman for more than a year that the spurt of growth that India experienced in 2009-10 is over. The only exceptions are the ‘policy entrepreneurs’ who serve the Indian government. Till as recently as a month ago, when the GDP data for the first quarter of 2011- 12 showed that the growth rate had slipped to 7.7 percent, Finance Minister Pranab Mukherjee was stoutly maintaining that India would nonetheless achieve 9 percent growth this year, and the Reserve Bank of India was saying that the economy would still grow at close to ‘the trend rate’ of 8 percent.

It finally took a foreign journalist to burst their bubble. James Lamont of the Financial Times reported that several economists had begun to voice fears that India could return to a ‘Hindu’ rate of growth. “Far from being in a pole position among emerging markets,” he wrote, “India trails in terms of attracting foreign capital and beating inflation. Senior executives complain bitterly about Delhi’s painfully slow or inconsistent decision-making. Many local companies are focussing their investments on Africa or Latin America.” Similarly, a senior executive of a Singaporebased investment company expressed his shock at finding that when he asked senior executives of Indian firms where his company could invest in India, they sought his advice instead on where they could invest in east Asia. The official growth figures were misleading, and the real rate of growth, in their opinion, was not more than 5 percent.

The hard data support this conclusion. According to the latest estimates, industrial growth has fallen from 9.7 percent in April-July 2010 to 5.8 percent this year. The decline in manufacturing has been even more steep, from 10.5 to 6 percent.

Sectoral growth rates are even more revealing. Growth in the capital goods sector fell from 23.1 percent in April-July 2010 to 7.6 percent this year. Growth in the production of intermediate goods, which is considered the most reliable indicator of future production, fell from 10.1 percent to 0.8 percent. If one looks closely at the data, one sees a pattern of recession spreading from the most interest rate sensitive industries outwards to the less sensitive ones. The real estate sector went into an absolute decline in the last quarter of 2010-11. Car sales have also slumped.

Surveys of industry’s future intentions are uniformly pessimistic. The purchase managers’ index has fallen continuously for five months and is close to 50 percent, which indicates zero growth. A massive postponement of investment is taking place: the latest survey of investment intentions by the Centre for Monitoring Indian Economy shows that these have declined by 55 percent over what they were a year ago.

The RBI is trying to fight inflation by killing demand for raw material and oil in India

The cause of this decline is only too well known: it is the 12 successive increases in inter-bank interest rates that have sucked vast quantities of money out of the credit market and pushed the base interest rate for borrowers up by 3 percent in the past 17 months. The irrefutable truth is that the RBI’s interest rate policy has killed off the huge surge of growth that the government’s fiscal stimulus packages of 2008 and ’09 had set off. If the decline in industrial growth has not been even more sharp, it is only because hundreds of companies have shifted their borrowing to foreign money markets where the rates, even after hedging, are a third of what they would have had to pay in India. The evidence is in the part of the RBI database that it chooses to ignore: the monthly table of external commercial borrowings of Indian companies. These have doubled from an average of $1.53 billion between August-November 2010, to $3.18 billion a month between December 2010 and July 2011. Over half of this money has been raised by a handful of companies investing in power, telecom, offshore oil development and steel — all highly capital-intensive industries with long gestation periods

This is not news to the government. So why is it acquiescing so tamely to the dictates of the RBI? The answer is its paranoid fear of inflation. The RBI governor has only had to say that curbing credit is necessary to bring down inflation, for the pundits in Delhi to fold their tents and slink away. What is less easy to discern is why it is allowing the RBI to continue having its way when it is as obvious as the nose on one’s face that the RBI has utterly failed to make any dent whatever on inflation.

Nor is this a new development. Public memory is short, so most of today’s critics date the RBI’s obsession with inflation to April 2010 when it made its first of 12 successive increases in repo rates to jack up lending rates and physically limit the supply of credit in the economy. But the RBI’s obsession with inflation can be traced back almost five years to a warning given by the then RBI governor, Y Venugopal Reddy, in December 2006 that inflation had crossed the safe limit of 5 percent and the economy was overheating. Weeks later, the RBI had announced the first of seven quarterly belt-tightening measures that took more than Rs 1 lakh crore out of the money market, raised the prime lending rate by more than 2 percent and chopped entire categories of buyers out of the credit market. Did it lower inflation? Judge for yourself: In 2006-07, when Reddy hit the pause button, inflation — measured by the wholesale price index — was just 3.5 percent. In 2007-08, despite four more hikes in interest rates, inflation nearly quadrupled to 12.1 percent.

The reason was obvious: Even in 2006, prices were rising not because too much money was chasing too few goods, but because of supply shortages that were pushing up the cost of food products and raw materials. This began in 2006-07, when primary product prices rose by 8.6 percent, accelerated in 2007-08 and then abruptly fell with the onset of global recession in late 2008. Inflation had stayed low in 2006- 07 because the government did not pass on the rise in fuel prices to the consumers. It quadrupled in 2007-08, when the government abandoned this effort and allowed prices to reflect the true rise in the cost of inputs. Inflation disappeared in 2008-09 because of a 35 percent fall in global commodity prices and a 70 percent fall in the price of crude oil. The RBI’s policies affected neither the rise nor the fall in the inflation rate by even one jot.

The same cost-push, supply-side factors are behind the inflation that returned in late 2009. Oil and raw material prices have risen because of shortages caused by soaring demand in China. But the RBI is trying to fight it by killing demand in India. Inflation has refused to budge and stayed close to 10 percent.

How does the RBI justify such rank folly? Like his predecessor, the current RBI governor, D Subbarao, has justified the rate hikes as necessary to curb “inflationary expectations”. But what are they? How does one know that such expectations have arisen and, more importantly, when they have been suppressed? The RBI has not identified a single yardstick by which to do so. Instead it has invited its opponents to prove a negative — that inflationary expectations do not exist. Proving a negative is logically impossible. The RBI is trumpeting this absurd proposal because it cannot admit the enormity of the damage it has done. Instead, it has questioned the reliability of the Central Statistical Organisation’s data on industrial slowdown, and the decline in employment in the unorganised sector revealed by the labour ministry.

The finance ministry too has chimed in by pointing to increases in advance tax receipts as proof that industrial production is not falling. But no amount of fiddling by Nero is stopping Rome from burning. The Sensex has continued its crawl downwards and is now below 16,000. Dussehra and the approach of Diwali have not given it even a flicker of temporary life. The prices of shares not included in the Sensex, and those of mid and small capitalisation companies have sunk. One result is that companies that issued convertible debentures abroad are now unable to redeem their pledge of conversion and are asking for a rescheduling of the conversion. India is, in short, facing its first ever private debt default.

Finally, one can only have the most unstinting praise for the RBI’s sense of timing. In 2008, it made the last of its interest rate hikes in the teeth of financial meltdown, only a month before the onset of global recession. This time round, it made its last rate hike in July in the teeth of a far more serious financial crisis in the US and the Eurozone and accelerated the flight of institutional investors from the Indian stock market. The resulting 10 percent drop in the value of the rupee against the dollar has changed what was to have been cheap credit into some of the most expensive credit in the world. And that is, literally only half of the story. For dollar debt accounts for only 54 percent of the total; 23 percent has been incurred in yen, pound and euro, all of which have appreciated sharply against the dollar. If the loss of confidence in India is not reversed, some of our largest and most respected companies will soon be in trouble.

Prem Shankar Jha is a senior journalist.
premjha@airtelmail.in

Tehelka - India's Independent Weekly News Magazine
 
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Rupee down by 43 paise vs dollar in early trade:

Mumbai, Oct 20 (PTI) The Indian rupee was down by 43 paise to Rs 49.58 per US dollar in early trade today on fresh dollar demand from banks and importers and a weak trend in the domestic equity market.

The rupee resumed lower at Rs 49.25/26 per dollar on the Interbank Foreign Exchange, as against its previous close of Rs 49.15/16 per dollar, and dropped further to Rs 49.58 per dollar before quoting at Rs 49.53/54 per dollar at 1030 hours.
Forex dealers said fresh dollar demand from banks, importers and oil refiners and a lower opening in the domestic stock market mainly put pressure on the rupee.

Meanwhile, world oil prices were mixed in Asian trade in a market clouded by concerns over the struggling US economy and discord over a rescue plan for troubled euro zone nations. In morning trade, New York's main contract, light sweet crude for November delivery, was down by 8 cents at USD 86.03 a barrel.

The Bombay Stock Exchange benchmark Sensex was down by 279.90 points, or 1.64 per cent, at 16,805.44 at 1015 hours. PTI
 
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Rupee down 27 paise at fresh 28-month low against dollar:

Mumbai, Oct 21 (PTI) The Indian rupee plummeted by 27 paise to a fresh 28-month low of Rs 50.07 per US dollar in early trade on the Interbank Foreign Exchange today as the American currency firmed up against its Asian rivals amid a lower opening in the domestic equity market.

Dealers attributed the rupee's fall to a level last seen in May, 2009, to the dollar strengthening against other Asian currencies overseas and a lower opening in the equity market.

They said strong demand from importers and some banks also put pressure on the Indian rupee.

Yesterday, the rupee had plunged by 65 paise to close at a nearly 28-month low of Rs 49.80/81 against the American currency.

Meanwhile, the Bombay Stock Exchange benchmark Sensex was down by 44.49 points, or 0.26 per cent, at 16,892.40 in opening trade today. PTI
 
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India to grow faster than China in 2013: E&Y

New Delhi: Bolstered by industrialisation, India is projected to grow at a faster clip than neighbouring China with a 9% economic expansion in 2013, says a report by global consultancy firm Ernst & Young​.

It cautioned, however, that India needs to tackle rising inflation and said the country’s growth this year would be 7.2%, much lower than 8.2% recorded last year.

India’s growth rate would rise to 8% next year, according to the report released on Monday.

“The forecast pegs India’s real GDP growth rate to be the highest among all the Rapid Growth Markets (RGMs) starting in CY 2013, when the economy is expected to growth 9.5%, followed by China at 9%,” it said.

In 2014, India is expected to see an expansion of 9% while Chinese would see a growth of 8.6%.

The RGMs forecast focuses on 25 nations -- including India, China, Brazil and Russia -- that display strong growth potential and are, or could be, strategically important for business.

India and China would be able to better withstand a likely slowdown mainly on account of large size of their domestic markets as well as from beneficial effects of lower oil and commodity prices, E&Y said.

It pointed out that even though the overall outlook for India is positive, the country would need to address rising inflation.

Headline inflation, which has been hovering above the 9% mark since December 2010, stood at 9.72% in September.

“... provided India’s inflation does start to fall back by the end of this year and the US and EU economies do not slip back into recession, the soft patch for Indian growth should be relatively short-lived,” the report noted.


E&Y said that once inflation is in check and interest rates are no longer rising, consumers would be more willing to spend. This would support a general improvement in business environment, resulting in steady acceleration in growth next year.

“India enjoys an advantage in its high savings and investment rates, currently a third of the GDP; relatively low GDP per capita on purchasing power parity giving significant potential for growth and continuing industrialisation and urbanisation,” the report said.

E&Y India’s partner & India markets leader Farokh Balsara noted that India’s consumption-led economy continues to make the country a highly attractive investment destination in the short to medium term.

India to grow faster than China in 2013: E&Y - Economy and Politics - livemint.com
 
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India’s Inflation Challenge Is ‘Significant,’ RBI Says

India’s challenge to contain inflation “remains significant” and the weakening of the rupee has emerged as a “new source” for price pressures, the central bank said, signaling the need for higher interest rates.
“The baseline inflation path still remains sticky and broadly unchanged from earlier projections,” the Reserve Bank of India said in a report before its rate-setting meeting tomorrow in Mumbai. “This has made policy choices more complex. Some sacrifice of growth is inevitable in the current milieu of high inflation.”
Inflation in India has exceeded 9 percent since December even after record rate increases starting March, 2010. India’s monetary stance contrasts with emerging nations from Brazil to Russia, which have reduced borrowing costs to shield their economies from Europe’s debt crisis and a faltering U.S. recovery.

“The RBI doesn’t have the comfort as compared to other nations given the acute inflationary pressures India is facing,” said Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc. “Though there are risks to growth, the RBI will prefer to tighten rates in its fight against inflation.”

BRIC Inflation

Sahay is among the 18 of 28 economists in a Bloomberg News survey who expect the Reserve Bank to boost its repurchase rate by a quarter of a percentage point to 8.5 percent tomorrow. The rest expect no change.
The RBI is scheduled to release its monetary-policy announcement at 11 a.m. in Mumbai tomorrow.
Benchmark 10-year government bonds were little changed today. The yield on the 7.80 percent note due April 2021 held at 8.82 percent, a three-year high, in Mumbai, according to data compiled by Bloomberg. The BSE India Sensitive Index gained 0.9 percent and the rupee strengthened 0.4 percent to 49.83 against the dollar.

India’s main inflation gauge measured by wholesale prices was 9.72 percent in September. By comparison, consumer prices rose 7.3 percent in Brazil, 6.1 percent in China and 7.2 percent in Russia among the BRIC nations.

Rupee Slump

The depreciation of the rupee has emerged as a “new source of price pressures,” the report said. India’s imports account for 22 percent of the economy and a decline in the rupee increases the risk of imported inflation, the report said.
India’s rupee has weakened 10.3 percent against the dollar this year as investors sold stocks in emerging markets because of risks to global growth, making the currency the worst performer in Asia.
Even so, the central bank said that the fall in the rupee is in line with other emerging-market currencies and “with falling global commodity prices partly offset by rupee depreciation, the risks to inflation projections are now balanced.”
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than 75 percent of the population lives on less than $2 a day.

Policy Direction

Reserve Bank Governor Duvvuri Subbarao said Oct. 12 that inflation must cool before India’s central bank can start easing monetary policy.
The governor in July predicted inflation to ease to 7 percent by March 31. He forecast India’s economy will expand about 8 percent in the fiscal year through March from 8.5 percent in the previous year.
Subbarao has boosted the central bank’s benchmark rate by 350 basis points in 12 moves since mid-March 2010, the fastest round of increases since the central bank was established in 1935, Bloomberg data show.
That’s curbing consumer demand. Sales at companies including Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, fell 1.8 percent in September, the third straight monthly decline, the Society of Indian Automobile Manufacturers said Oct. 10.
India’s industrial production rose less than expected in August, according to the Central Statistical Office. Output at factories, utilities and mines increased 4.1 percent from a year earlier, slower than the 4.7 percent median of 20 estimates in a Bloomberg News survey.

Growth Forecast

India’s economy may expand 7.6 percent in the fiscal year through March 31, according to a survey compiled by the central bank of forecasts from agencies including the International Monetary Fund and the Asian Development Bank, the report showed. The survey in July projected growth of 7.9 percent.
Inflation may average 8.8 percent in the financial year, the survey said, compared with its previous estimate of 8.6 percent.
“The challenge at this juncture is to contain inflationary pressures, while factoring in the lags in monetary transmission, which are long and variable and therefore difficult to assess,” the central bank said.
The central bank said India’s “fiscal policy space” may be constrained if inflation stays elevated. On current assessment, India is unlikely to meet its budget-deficit target for the year through March, the central bank said.
Finance MinisterPranab Mukherjee aims to narrow the budget deficit to a four-year low of 4.6 percent of gross domestic product by March 31.
“Inflation is a much bigger problem in India than in other nations,” Indranil Sen Gupta, a Mumbai-based economist at Bank of America Merrill Lynch, said before the report. “While growth has started easing, there is no meltdown yet. On balance, the RBI will tilt toward controlling inflation and raise rates.”

India
 
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