Indian Economy-News & Updates

[SpArK]

[/COLOR]UK-India relations blossom in 2011; bilateral trade crossed the 13 billion-pound mark


LONDON: India and the UK took forward their "special and unique" relationship in 2011 by consolidating cooperation in fields like counter-terrorism, defence and trade and identified ways to further develop their closer and stronger partnership.

The bilateral trade crossed the 13 billion-pound mark and the investment from Britain to India also increased substantially.

During the year, the investment from Britain to India was "20 times more than the previous year", a spokesman of the Indian House here said, without elaborating.

The year also witnessed several Ministerial-level visits both from India to the UK and vice versa.

Finance Minister Pranab Mukherjee, External Affairs Minister S M Krishna, Urban Development Minister Kamal Nath and Heavy Industry and Public Enterprises Minister Praful Patel visited the UK, while from Britain Defence Secretary Liam Fox was among those who travelled to India.

Krishna met British Secretary of State William Hague here on June 30 and discussed ways to further develop a closer and stronger partnership with the UK.

The then Foreign Secretary Nirupama Rao also met Permanent Under Secretary in the British Foreign Office Simon Fraser and discussed a wide range of foreign policy matters like Afghanistan, Middle East, UNSC reform, counter-terrorism and climate change.

India and the UK share a special and unique relationship, bound by shared values and ties, including the ideals of democracy, the rule of law, inclusiveness and pluralism, an official statement issued after the meeting had said.

Finance Minister Mukherjee, who spoke at the Fourth Ministerial Level India-UK Economic and Financial Dialogue here on July 25, said the Dialogue, established in 2005, had contributed successfully towards strengthening bilateral relationship.

The two countries also agreed to work towards signing a Memorandum of Understanding which will enhance cooperation and deepen engagement between them in the areas like capacity building, land economics, heritage management, sustainable master planning and transport planning.

The decision was taken during a visit of Minister of Urban Development Kamal Nath to London on October 14.

 

[sachin@india]

Food inflation plunges to 4-year low of 1.81% for the week ended December 10

NEW DELHI: NEW DELHI: Food inflation fell sharply to a near four-year low of 1.81 per cent for the week ended December 10 as prices of essential items like vegetables, onion, potato and wheat declined. This is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26 per cent.

Food inflation, as measured by Wholesale Price Index (WPI), was 4.35 per cent in the previous week. It had stood at 13.22 per cent in the corresponding week of 2010. According to the official data released today, onion became cheaper by 49.38 per cent year-on-year during the week under review, while potato prices were down by 34.39 per cent. Prices of wheat also fell by 4.21 per cent.

Overall, vegetables became cheaper by 26.37 per cent. Experts feel the sharp fall in food inflation numbers, which was in double-digit till the first week of November, comes as a big relief to both the government and the Reserve Bank who have been battling high prices for over two years.

However, other food products grew more expensive on an annual basis, led by protein-based items. Pulses became 14.22 per cent costlier during the week under review, while milk grew dearer by 11.19 per cent and eggs, meat and fish by 9.25 per cent.

Fruits also became 8.89 per cent more expensive on an annual basis, while cereal prices were up by 1.68 per cent. Inflation in the overall primary articles category stood at 3.78 per cent during the week ended December 10, as against 5.48 per cent in the previous week. Primary articles have over 20 per cent weight in the wholesale price index.

 

[illusion8]

States, Centre spurring economy: Fitch

New Delhi: The economy is likely to grow by 7.5 per cent in 2012-13 and public finances of various state governments are likely to see consolidation during the next fiscal, ratings agency Fitch said today.

"Fitch expects Indian economic growth to rebound to 7.5 per cent in FY-13 from 7 per cent in FY12 ... the Indian economy is expected to perform better than the developed economies," Fitch Ratings said in its '2012 Outlook: Indian Subnationals'.

According to Fitch, after a period of pause in reforms the government has again taken up initiatives on special economic zones and increasing foreign participation in the government and corporate debt market and these are likely to have a positive impact.

The agency had earlier revised downward its growth projection for the Indian economy in 2011-12 to 7 per cent, from 7.5 per cent earlier, on account of sustained inflation, the global slowdown and high domestic interest rates.

The Indian economy had expanded by 8.5 per cent in 2010-11.

It said that though growth will rebound in 2012-13, the economic performance in the states will vary.

"States with better infrastructure and growth-oriented policies are likely to grow faster and will improve their fiscal performance. The smaller states, especially the special category states, will depend on the federal government for revenue and their performance will mirror the federal government's," it said.

It said that "the reform-oriented economic growth" in the next financial year will help states to achieve faster fiscal consolidation.

"The expected improvement in economic growth will result in further fiscal consolidation," the report said.

According to Fitch, the gross fiscal deficit of the state governments is likely to be 2.2 per cent in 2011-12 as against 2.6 per cent in the last year.

"An improvement in deficit quality, with a faster improvement in the current balance is highly likely. However, due to specific structural issues for each state, the extent of improvement will vary.

"Faster growing and better fiscally administered states will lower their deficits more quickly than the laggard states," it said.

The agency, however, said that the two key reform bills in taxation -- the Direct Tax Code (DTC) and the Goods and Services Tax (GST) -- are likely to miss their rescheduled date of implementation of April 1, 2012.

"Fitch expects that all issues will be sorted out in FY-13. The implementation of the DTC and GST would be credit positive for India and its subnationals," it said.

 

[Roybot]

Japan to enter dollar swap agreement with India | Reuters

(Reuters) - The Japanese government is considering a dollar swap arrangement with India to provide emergency liquidity in case the European debt crisis reaches emerging economies, the Nikkei business newspaper said on Sunday.

The agreement would set the total swap arrangement at $10 billion, or 780 billion yen, the Nikkei said.

Both countries are looking to sign off on the arrangement next Wednesday, when leaders meet at a bilateral summit, the paper said.

The currency swaps are expected to support the Indian rupee as it continues to weaken against the greenback and Europe's sovereign debt crisis hits India's exports.

The dollar-swap arrangement with India would follow a similar agreement with South Korea in October.

 

[Polemos]

China keen to invest in Odisha - The Times of India

China keen to invest in Odisha

BHUBANESWAR: China's ambassador in India Zhang Yan on Saturday said several Chinese investors were keen to invest in Odisha.

Speaking at a programme on Indo-China trade relations and allied matters here, Yan said as of now there are very few Chinese companies doing business in Odisha, including in the power sector and telecom. But given Odisha's vast minerals resources, fertilizers, sugar, paper industry, steel and cement; there is huge opportunity of cooperation, mutually beneficial to both China and Odisha, he said.

Yan said he was impressed with Odisha because "it is a land of rich cultural heritage and full of promises." Yan said China will stick to its policy of peaceful development, which should be seen as an opportunity by other countries rather than a threat.

Rajya Sabha member Pyarimohan Mohapatra was also present in the meeting organised by Utkal Chamber of Commerce and Industry.

 

[luckych]

R&D hiring in India expected to grow by up to 20% in 2012

As global companies are shifting their research and development base to India to become cost effective and raising their R&D spend, experts believe that hiring in the segment will grow by up to 20 per cent over last year.

"Total global spending on R&D is anticipated to increase 3.6 per cent. With this, the momentum in the hiring has gone up. With India becoming a destination of choice due to its cost competitiveness, hiring by multinational companies is at an all-time high. There is a talent war for engineers and technical professionals," Elixir Consulting Executive Director Kanika Vaswani told PTI.

The focus for R&D centres in India has gone up this year and expected to grow between 12-13 per cent in 2012, she said.

The country is an emerging destination for auto R&D and companies like Renault- Nissan, Maruti Suzuki, Honda have set up their centres from 2011 and this year, this not only gave rise to hiring but also led to attrition in the established R&D companies due to these new entrants, she pointed out.

Besides, pharmaceuticals and auto R&D that has been hiring steadily, other segments like defence have recently increased hiring, recruitment has recently seen a spurt and is rapidly growing hiring in the defence sector, she said.

Talking about pay packages, she said, in R&D hiring, pharma and defence are the better-paying sectors.

Echoing the view, Executive Search Firm Symbiosis Management Consultants CEO Vinay Grover said R&D is witnessing large investments not only from MNCs but also from domestic players as well.

"India, positioned as a land with plenty of talent pool at a low cost, has gained the attention of MNCs. In domestic companies, pharma and automobile have realised that in their ambition to globalise their operations, they have no recourse but to spend on R&D," he said.

Despite the lull in job opportunities, the hiring in R&D is on an upward trajectory and is expected to increase by 15-20 per cent in 2012, he added.

This positive trend in R&D hiring started picking up in 2010 and peaked in 2011, and is expected to continue through 2012, he said.

"The hiring is on at all levels -- junior, middle and senior. There are lot of positions available at level of technology manager and program manager that can go to the level of director," he said adding that IT and health care are among the highest paying sectors.

Planman Consulting Director Deepak Kaistha said organisations in India are realising the value of a strong internal research centre to back them with ideas that could be turned into reality. "Hiring has touched its peak in FY11 and is expected to grow another 20 per cent next year," he added.

Many organisations are also providing funds to the upcoming PhD students and offer such programmes for employees in collaboration with top-notch institutes to attract talent, he said.

FMCG sectors are showing great potential and plan to hire more R&D techies next year, he said adding that Japanese firms aim to work closely with Indian Universities and collaborate with companies to make hiring a smoother process.

When it comes to salaries, he said, IT and FMCG sectors offer the highest packages and R&D hiring is mainly happening at a higher grade levels. Executive search firm GlobalHunt director Sunil Goel said that for the last few years, there has been lot of focus on real R&D and companies are trying to innovate world class product and technologies.

He, however, feels that market conditions may not be that great in 2012 and hiring in the sector will remain steady.

 

[Polemos]

Infra growth bounces back to 6.8 % in November

Stellar show by cement, electricity and refinery sectors

In a development that is bound to bring cheers to the government and industry, industrial growth in key infrastructure areas bounced back to 6.8 per cent in November after touching a five-year low of 0.3 per cent in October.

The positive news from the industrial production side could help in turning around the state of negativity that has surrounded the economic growth and its parameters in the last few months.

The turnaround in industrial production has been possible due to stellar growth in cement, electricity and refinery product segments, the eight infrastructure sectors, which have weightage of 38 per cent in the overall Index of Industrial Production (IIP).

However, due to lagging performance in the previous months, the April-November growth of core industries stood at 4.6 per cent as against 5.6 per cent in the same period last fiscal, according to the data released here on Tuesday. Except for crude oil, natural gas and fertilizers, all other segments registered a healthy growth in November.

The maximum growth was witnessed in cement, which expanded by 16.6 per cent, while there was a contraction of 4.3 per cent in the same period last fiscal.

Electricity and steel output grew by 14.1 per cent and 5.1 per cent against 3.5 per cent and 7.6 per cent, respectively, in the same month last year. Coal and petroleum refinery products growth went up by 4.9 per cent and 11.2 per cent during the month under reference.

However, crude oil and natural gas output contracted by 5.6 per cent and 10.1 per cent from a positive growth of 17 per cent and 5.5 per cent, year-on-year, respectively.

The core sector, in October, registered a dismal growth of 0.3 per cent. This slowdown in the industry output was evident from the Gross Domestic Product (GDP) figures. The economic growth stood at 6.9 per cent (the lowest in the past nine quarters) during the July-September quarter. The economic growth in the first half of the current fiscal slowed down to 7.3 per cent from 8.6 per cent in the year ago period.


http://www.thehindu.com/business/Industry/article2749790.ece

 

[IndMaster]

Dec. 28 (Bloomberg) -- Indian stocks dropped for the second day before a report this week that may show the nation’s current-account deficit widened to a record.

“If the deficit widens it has negative repercussions on growth, credit ratings and the rupee,” said Kislay Kanth, head of research at MAPE Securities Pvt. “There’s no clarity on how the government will manage its deficit. And that will impact investor sentiment.”

India’s current-account gap reached an unprecedented $18 billion in the three months ended Sept. 30, according to the median estimate of seven economists surveyed by Bloomberg before a Reserve Bank of India report due on Dec. 30.

The Sensex has slumped 23 percent in 2011, heading for its second-worst annual loss in more than three decades, on concern a weakening rupee and record interest-rate increases will worsen the effects of the European sovereign-debt crisis on corporate earnings.

Indian Stocks Decline on Forecast Deficit to Widen to Record - Businessweek

 

[EAsian]

too sad that rupee may collapse again.

 

[IndoCarib]

@IndMaster

Worry about current account deficit of your own country, US which is at 118 billion $ (If you are really an American)

 

[breeze]

NEW DELHI: Even though India performed better than most emerging economies despite the global economic slowdown and the Eurozone crisis, 2011 for it was largely marked by a phenomenon which no country desires -- slowing growth with high inflation.

Along with this, a spate of interest rate hikes, rising cost of raw material, successive weakening of the rupee and a perception of policy paralysis among stakeholders made 2011 a year that India would like to put behind.

"Overall the outlook has been quite negative. There was some negativism at the beginning of the year and it started worsening in the past six-seven months," Anis Chakravarty, director with global consultancy Deloitte Haskins and Sells, told IANS.

Some industries were particularly affected by the downturn, notably aviation, mining, automobiles, construction and manufacturing, which led to retarded growth in India's gross domestic product (GDP).

In the first quarter of this fiscal, the growth declined to 7.7 percent, compared to 7.8 percent in the January-March quarter, and 8.3 percent in the previous three-month period. The growth slumped further to 6.9 percent in July-September.

"I don't think we are going to achieve even 7.5 percent during the current fiscal year. Considering the recent slump in industrial production, we feel growth might even fall below seven percent," Chakravarty said, adding factory output is unlikely to improve soon.

In fact, after a slower growth in the April-September period, industrial output slipped into the negative territory, falling by 5.1 percent in October, according to the latest data. The performance of the capital goods sector was most disappointing, contracted 25 percent.


Slow growth with high Inflation: How Indian economy fared in 2011 - The Economic Times

I guess this is what happens when you neglect the health of your economy to throw billions and billions of dollars into foreign weapons.

 

[Aramsogo]

All Economies slowed.

Perhaps reading the title again would help. Slow Growth AND...

 

[Chinese-Dragon]

India was raising its own expectations too high... by constantly boasting about beng able to achieve sustained double-digit growth.

India has always failed to reach its targets, whether it is growth, FDI, inflation, etc.

India's GDP Growth Slows to 6.9% - WSJ.com

This is well below the 9% growth the government was aiming for at the start of the year but deteriorating economic conditions have forced authorities to scale back their expectations.

As you see above, earlier this year, the Indian government was boasting about 9% growth. Now look what is happening.

 

[Starblazer]

Maybe this is responsible for the string of riots in India this year, high even for India. If this continues the situation might escalate even more next year. The global recession is hitting India harder than I expected.

 

[harshad]

if people consider 7% growth bad then i think something is really wrong,its a slow down with the risk of recession comming back in the west it will pickup pretty soon