Indian Economy-News & Updates

[grey boy 2]

Business Line : Industry & Economy / Economy : S&P cuts India 2012 growth forecast to 5.5%

New Delhi/Mumbai, Sept 24:

Rating agency Standard and Poor’s has lowered the growth forecast for India to 5.5 per cent this year. This is almost one percentage point lower than the previous forecast.

However, the Economic Advisory Council to the Prime Minister (PMEAC) has refuted this projection. Its Chairman C. Rangarajan expects the economy to grow 6.7 per cent this fiscal.

According to S&P, the triple effect of a slowdown in China, ongoing troubles in the Euro Zone, and weak recovery in the US has prompted it to lower its economic growth forecast for Asia-Pacific.

Talking specifically about India, it said, “The lack of monsoon rains has affected India, for which agriculture still forms a substantial part of the economy.” Interestingly, the report has not noted reduction in the monsoon shortfall. Latest monsoon data show that deficit has come down to 5 per cent.

The report highlights infrastructural problems. “The more cautious investor sentiment globally has seen potential investors become more critical of India’s policy and infrastructure shortcomings. The latter was recently highlighted by the power outage in early August that affected 20 of India’s 28 States.”

According to S&P credit analyst Andrew Palmer, “Any worsening of the economic conditions in the Euro Zone will increase contagion risk for Asia-Pacific, given the region’s, particularly the open economies, sensitivity to capital flows and trade.”

S&P has also lowered the base forecasts of 2012 real GDP growth by about half a percentage point for some countries including China, Japan, Korea, Singapore and Taiwan.

Earlier this month, Morgan Stanley had lowered India’s growth forecast to 5.1 per cent for the current fiscal from its earlier estimate of 5.8 per cent; HSBC scaled down its prediction to 5.7 per cent from 6.2 per cent; and Standard Chartered to 5.4 per cent from 6.2 per cent projected earlier.

Shishir.Sinha@thehindu.co.in

 

[grey boy 2]

Will India’s fiscal deficit be worse than Greece’s this year? - Livemint

Vivek Bhardwaj/Mint

The chart speaks for itself; the International Monetary Fund (IMF) certainly believes that India’s overall fiscal deficit (including the deficit of its states) as a percentage of gross domestic product (GDP) will be much higher than that of Greece, Portugal, Spain or Ireland this year.

The forecast is probably based on the assumption that the austerity programmes currently being imposed on Europe’s southern periphery will work. This year, according to the IMF estimates made in its fiscal monitor update released on Monday, India’s fiscal deficit, at 8.9% of GDP, will be the second highest among the major advanced and emerging markets, behind Japan’s. In 2013, IMF expects Japan’s fiscal balance to improve, while it doesn’t believe there will be much progress in India. The upshot: India will be No. 1 among all major world economies on this benchmark.

Even Ireland, which had a massive fiscal deficit at 31.2% of its GDP in 2009, will have a lower deficit than India this year. It’s also interesting to note that the US had a higher fiscal deficit than Greece in 2011 and IMF expects both the US and the UK to have higher fiscal deficits as a percentage of GDP than most of the southern European nations. Clearly, the common currency is responsible for the predicament in which the European periphery finds itself. Indeed, Italy’s fiscal deficit in 2011 was a low 3.9% of GDP, so the problem is not just a fiscal one.

What are the reasons for IMF’s pessimistic views about India’s ability to trim its deficit? According to the fiscal monitor update: “In India, overall deficits for 2012–13 were revised upward to almost 9% of GDP, more than 0.5 percentage point higher than in the April 2012 fiscal monitor, mainly due to higher fuel subsidies and revenue shortfalls. A determined reduction in costly subsidies would be a strong signal of a credible fiscal turnaround. It would also allow relaxation of financial restrictions, spurring private investment and growth.”
Of course, India’s ability to claim the dubious distinction of being numero uno in the fiscal deficit league will depend very much on whether countries such as Greece and Spain will swallow the bitter fiscal medicine being forced down their throats. That is by no means certain and the IMF update concedes that “the situation in Greece remains fluid”.

The update points out that despite the high deficit, India’s debt-to-GDP ratio, at an estimated 68% of GDP this year, is much lower than Greece’s 162.6%, or Japan’s 234.5%. But one reason for this is India’s high inflation, which bloats its nominal GDP. As Monday’s update of IMF’s Global Financial Stability Report warns, “India is a rising concern, with the rupee recently weakening to new record lows, as the need to finance large fiscal and current account deficits is pressuring markets, though financial restrictions have facilitated the financing of the fiscal deficit.”
We welcome your comments at marktomarket@livemint.com

 

[monilisa]

India likely to miss 2012-13 deficit target, borrow more


26, Sept


India will likely borrow an additional 500 billion rupees ($9.34 billion) for the year ending in March and miss its fiscal deficit target, a Reuters poll showed, raising doubt about the fiscal discipline of a country whose credit ratings are under threat.

That is because the government is unlikely to cut spending, especially as it heads to general elections in 2014, while the economy has slowed to a three-year low, denting tax revenues. reuters

Daily Times

 

[IndoCarib]

Moody's maintains stable outlook on India

(Reuters) - Moody's will retain its 'stable' outlook on India, expecting economic growth to improve on the back of consumer demand, although the country is still constrained by its fiscal deficit, an analyst at the ratings agency said on Wednesday.

The views stand in contrast with Standard & Poor's and Fitch Ratings, both of which cut their outlook on India to "negative" this year, citing concerns about the pace of reforms and the government's fiscal deficit among some of the key factors.

Moody's maintains stable outlook on India | Reuters

 

[Agent_47]

 

[Abingdonboy]

This also means India is well protected from any external finacial shocks.

 

[Bhai Zakir]

India is the largest base to export compact cars to Europe: Nissan

Nissan India is currently exporting Made-in-India cars to 77 countries

Japanese auto major Nissan Motor Company plans to launch 10 new models in India by 2015-16, including the low-cost Datsun brand as part of its ambitious strategy to grab 8% market share in the fiercely competitive Indian market. The vice-president for Africa, Middle East and India, Toru Hasegawa tells Chanchal Pal Chauhan that India is key to its global growth strategy where emerging market will garner around 60% of its volumes globally by 2016. Excerpts:

Where does India stand in Nissan's global growth strategy?

As part of our global Nissan Power 88 Plan, we will be launching 51 new products globally and we will have 10 new models for India by FY16, and introduce two new models every year including our low-cost Datsun brand. India is at the core of our global growth strategy as part of the BRIC markets. Emerging markets will play an important role in meeting our global target with sales expected to grow to 60% from the current 40%. We will be considering all segments like hatchback, sedan or utility vehicles for the Indian market, but special focus will be on the price-sensitive affordable small car segment.

What kind of volumes or market share you plan to have in India?

India has been steadily growing as a volume market for Nissan. From 33,000 cars sold in FY12, we intend to double domestic sales this year and aim to clock one-lakh volume by the next fiscal, when we expect the local market to be in the size of 4-million units. The low penetration of cars in India of just 20 units/1,000 habitants gives super opportunity for us to grow here.

Nissan has shifted its manufacturing base from Europe to India for Micra/March hatchback. Going forward what's the export strategy from India?

India is the largest base to export compact cars to Europe.

We have started exporting Sunny sedan to Middle East and are looking at potential overseas markets for made-in-India cars. We are currently exporting to 77 countries and would enhance the volumes as we gradually introduce new products in various segments. We launched our new multi-utility vehicle Evalia today ( on Thuesday).

We will look to expanding our export potential from India as we increase our portfolio.

What are the expansion plans for India. Are your looking for another facility in the bulging local market and export commitments?

We have made an investment of 4,500 crore over a period of 7 years with our French partner Renault to have 4-lakh-car capacity. Besides our locally-produced models Micra & Sunny, which marked Nissan's foray into the mass market, we plan to bring MPVs and small cars to target a larger chunk of customers. We intend to bring various models targeting different segments and modes for Indian customers. Some of these would be regular class of vehicles like SUVs, or we would enhance our presence with Datsun brand. We haven't decided on any specific expansion plans but are carefully looking at opportunities for growth.


Ten vehicles lined up for India launch by 2015-16, says Nissan Vice President - The Economic Times

 

[IndoCarib]

India engg R&D to reach $45 billion: Nasscom

Indian offshore engineering research and development (ER&D) services market is expected to reach USD 37-45 billion by 2020 and create over one million jobs, software industry body Nasscom said today.

India engg R&D to reach $45 billion: Nasscom - PTI

 

[IndoCarib]

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Indian loans: pointing to a turnaround?

On Thursday, State Bank of India and HDFC bank agreed to loan Tata Steel and Hindalco Industries around $6.6bn and $1.9bn, respectively – a development that may suggest the Indian economy, after a rough 18 months, is in for a turnaround.

Two big loans don’t make an Indian summer – but greater access to loans would help smaller businesses a great deal. The SME Rating Agency of India has noted that greater access to liquidity from banks – sometimes at the lowest interest rates in the last decade – has caused Indian SME ratings to improve over the past couple months.

That should drive down non-performing assets that have been cluttering up banks’ balance sheets – as the FT has reported, NPAs from all points are dragging down the banking sector – which would be a good sign for the Indian economy.

Indian loans: pointing to a turnaround? | beyondbrics

 

[Icecreamcart]

The Economist has an updated interactive chart of India's GDP/Population by region for 2012. Check it out.

India in figures - an interactive guide: Does size matter? | The Economist

Also, a special report on India.

Aim higher | The Economist

PICK YOUR WAY through the narrow alleys of a south Delhi slum to the dark, low-ceilinged home of a fortune-teller with a green parrot. For a bundle of rupees he sets the bird to work, picking from a selection of cards. The man glances at one and lets his conjectures fly.

India will soon be the world’s greatest power. An assassination looms. He sees an elderly leader’s death and a dynastic marriage. There will be political turmoil in the next two years, but strength will follow. Sporting triumphs lie ahead and riches will fall upon Indians.

It is a razzle-dazzle prediction for a sixth of the world’s population. Yet his analysis of India’s prospects may not be so far off the mark. And its underlying optimism reflects the attitude of many ordinary Indians, who have much to feel pleased about.

 

[Icewolf]

Chandrababu Naidu completely forgot the agricultural sector. He got crazy with IT and infrastructure. Maharashtra apart from some cities is a major agricultural region, dont forget that. Unless we rachet up our per hectare yield, we would be sorry in the future. Agricultural growth is just managing around 2-3%, which is pitiable compared to our industrial growth of 11-12%.

Indias industrial growth is about 1% not 11-12%

 

[anarchy 99]

Will India’s fiscal deficit be worse than Greece’s this year? - Livemint

WOW, staggering debts, jim rogers recently said Indian debt is 90% of GDP. I guess he knows that the Indian regime is keeping some liabilities off the balance sheets to hide just like Greece is hiding their debts.

Republic of Debt!

 

[anarchy 99]

Will India’s fiscal deficit be worse than Greece’s this year? - Livemint

WOW, staggering debts, jim rogers recently said Indian debt is 90% of GDP. I guess he knows that the Indian regime is keeping some liabilities off the balance sheets to hide just like Greece is hiding their debts.

Republic of Debt!

 

[anarchy 99]

India likely to miss 2012-13 deficit target, borrow more


26, Sept


India will likely borrow an additional 500 billion rupees ($9.34 billion) for the year ending in March and miss its fiscal deficit target, a Reuters poll showed, raising doubt about the fiscal discipline of a country whose credit ratings are under threat.

That is because the government is unlikely to cut spending, especially as it heads to general elections in 2014, while the economy has slowed to a three-year low, denting tax revenues. reuters

Daily Times

Indian debt could be actually worse than Greece. Indian growth miracle is over. Even jim rogers said.

 

[Shardul.....the lion]

Rupee zooms 36 paise to near 5-month high of 52.66 against dollar

The rupee gained 36 paise to trade at nearly five-month high of 52.66 against the dollar in early trade on Friday on continued selling of the American currency by exporters and banks.

Forex dealers said besides persistent dollar selling by exporters and banks, dollar's weakness against the euro amid a strong opening in the domestic equity market kept rupee strong.

Meanwhile, the BSE benchmark index Sensex recovered sharply by 181.41 points, or 0.98 per cent, to 18,760.91.

Euro rose against the dollar overseas as worries about the euro-zone eased after Spain unveiled economic reforms and budget plans that are expected to pave the way for a bailout.

The rupee had gained 49 paise on Thursday to close at over 4-1/2-month high of 53.02 against the dollar on heavy selling of the American currency by exporters and some banks.

Rupee zooms 36 paise to near 5-month high of 52.66 against dollar - Business Today