Indian Economy: Growth -3

[shameem007]

naxalite ideology is the politic of the hungry ones.

whit a food aid program for the poor ,also the naxalite problem will be solved.

[roosevelt92]

Nice posting, your posting is very informative, thanks man, Keep it up!

[roosevelt92]

sorry to say but until the corruption will not over we can't get the good business in any industry ...

[sumishi]

[size="3"][url="http://www.thehindu.com/business/Economy/article2478936.ece"]Pranab warns of currency war[/url]: The Hindu, September 23, 2011



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Finance Minister Pranab Mukherjee on Thursday warned the international community that there is danger of a currency war if the ongoing economic crisis deepens.



Such a currency war can be avoided through dialogue and not through competitive devaluations, Mr. Mukherjee stressed at a crowded press conference of Finance Ministers of BRICS nations Brazil, Russia, India, China and South Africa at the headquarters of the International Monetary Fund here.



“Yes, if the crisis deepens further and there is greater volatility in financial flows, there is an increased risk of this (currency war) happening,” Mr. Mukherjee said in response to a question.



“But our view is that if such tensions arise, it should be eased through the dialogue and not through competitive devaluations,” he said.



Mr. Mukherjee pointed out the currencies used in BRICS countries should be widely appreciated and should be taken into account while determining the ingredients of special drawing rights (SDR) maintained by the IMF, as these nations’ contributions to global output and the economy is increasingly substantially.



“But we are not suggesting right now, because there are many other factors which ought to be taken into account, including free convertibility and other things which are not uniform, but the importance of these currencies has increased,” Mr. Mukherjee said in response to a question.

[/size][/indent]

[sumishi]

[size="3"][url="http://www.thehindu.com/opinion/columns/Chandrasekhar/article2342127.ece"]The debt danger for India[/url]: The Hindu, August 10, 2011

-- C. P. Chandrasekhar



[/size][indent][size="3"]

The Indian government’s response to the market collapse that followed the U.S. debt standoff and subsequent Standard and Poor’s downgrade was predictable. While acknowledging that India was impacted, the effort was to play down the likely intensity of that impact. “Our institutions are strong and [we] are prepared to address any concern that may arise on account of the present situation,” Finance Minister Pranab Mukherjee reportedly stated. He also promised that the government “will fast track the implementation of the pending reforms and keep a close eye on international developments.”



That response misses the point. The problem is not that India is not adequately reformed, but that past reforms have resulted in its integration through flows of finance with global capital. This makes the perceptions and behaviour of global capital, whether stimulated by India’s fundamentals or not, of importance to the country. And unlike China, a lot of the reserves that insure the country against adverse global responses are not earned through current account surpluses, but are drawn from what foreign investors have delivered in the past. Keeping legacy capital satisfied is crucial for stability.



Put simply, independent of whether there would be a global slowdown that would impact India, the country is exposed and vulnerable to global financial uncertainty. So even when some of its fundamentals are ostensibly strong it is liable to be hit by weak investor sentiment. India is vulnerable because international finance may assess its so-called fundamentals very differently from the way they are assessed by the government.



Consider the issue that now captures financial market attention: public debt. The experience in Greece, Spain, Portugal and elsewhere suggests that finance capital is increasingly “intolerant” of what is perceived as excessive public debt. In some instances this may be understandable. International financial investors are substantially exposed to government bonds in some of those countries, and their governments seem increasingly incapable of meeting their debt service commitments. Sovereign default threatens investor solvency. What is not understandable is the austerity that finance demands in those countries. It not only triggers protest and social disruption. It also results in contraction of employment and incomes, and undermines the ability of governments to garner the revenues needed to pull themselves out of the crisis.



Trapped in its own ideological quagmire, finance now seems to have lost its bearings. The cause for concern about public debt in a particular context has been extended to an unthinking abhorrence of all debt. The standoff over public debt in the US was not because the US government was over-indebted relative to its GDP. There are many other OECD countries from Greece to Germany that have a higher public debt to GDP ratio than the US. And even to the extent that debt has risen sharply in recent times in the US, it is largely the result of the failure of finance. The huge stimulus and bail-out package adopted by the US government to deal with the crisis delivered by irresponsible financial agents in 2008 took the net public debt to GDP ratio in the U.S. from 42.6 in 2007 to 72.4 per cent in 2011.



Financial interests benefited from that package and also bought into that debt using the near-interest free liquidity provided by the Federal Reserve. In the process they increased their exposure to sovereign debt in the US and elsewhere. But now that they are overcome by fears of sovereign default, they want a “correction”. So even in the U.S. they have not merely backed the irresponsible Republican refusal to accept a routine hike in the debt ceiling cap, but have through discredited rating agency Standard & Poor’s delivered an irresponsible first time downgrade of U.S. debt. That has been enough to trigger the turmoil in world markets.



It is in that background that we should view reports of S&P’s statement that fiscal capacities in Asian emerging markets, including India, have shrunk relative to 2008. This, it has argued, would mean that in the event of a second global slowdown: “The implications for sovereign creditworthiness in Asia-Pacific would likely be more negative than previously experienced, and a larger number of negative ratings actions would follow.”



This is more of a threat than an analysis. But if a wrong downgrade can make a difference to US markets and interest rates, so can it for India’s. The real difficulty is one that emerges from an analysis by Cornell economist Easwar Prasad in the Financial Times. That analysis suggests that though India’s gross public debt to GDP ratio declined from 75.8 per cent to 66.2 per cent between 2007 and 2011, it still is among the highest in the region. India’s 66.2 per cent level compares with Malaysia’s 55.1, Pakistan’s 54.1, Philippines’ 47, Thailand’s 43.7, Indonesia’s 25.4 and China’s 16.5.



So if S&P needs a target to declare that some governments in the Asia-Pacific are excessively indebted, then India is in the firing line. It is no doubt true that a number of factors make Indian public debt less of a problem than in many other contexts. To start with, much of public debt in India is denominated in Indian rupees and is owed to resident agents and therefore is unlikely to be adversely affected by uncertainty in international debt and currency markets. Secondly, within the country public debt is largely held by the banking system dominated by public sector banks. They are subject to government influence and are unlikely to respond to developments in ways that make bond prices and yields extremely volatile. Given these circumstances, public debt is not a potential trigger for a crisis and in any case should not worry private financial interests.



But that is unlikely to satisfy the likes of S&P. India has been a favoured target of foreign finance. And if it does not satisfy its requirements, it can fall out of favour. In its search for new investment targets, global finance has viewed with interest debt markets in countries like India. And in any debt market, what better instrument than relatively risk-free government securities. So, anything that muddies that potential market would disturb finance capital. India may be put on alert and even downgraded. The fact that, at the moment, publicly owned banks largely hold government paper is inadequate insurance.



Besides, there are other reasons why international finance would resent excessive debt-financed spending by governments. One is that given the monetarist mindset that characterises finance, such autonomous debt-financed public expenditure is seen as potentially inflationary. Since inflation erodes the real value of financial assets, it is anathema and, therefore, so is deficit-financed spending. The other is that when rising debt increases the interest burden in the budget and restricts the manoeuvrability of the government, it may push for a reduction interest rates. Private financial interests do not favour such intervention in financial markets. They, therefore, seek to address the problem at its source.



For reasons such as these, international finance is strongly opposed to the build up of public debt as a result of large and rising fiscal deficits. It is no doubt true that even if institutions like S&P flag India’s public debt as excessive, it may not lead to a fall in bond prices and an immediate rise in interest rates. But, it may signal, however erroneously, the overall unreliability of Indian markets and encourage the exit of financial investors from markets other than debt. This perhaps partly explains the current volatility in the equity market.



The issue is not whether India is directly coupled with global bond markets. It is whether India is financially integrated enough for any adverse assessment by sections of international finance to destabilise its markets. That much India’s reform has indeed achieved. So when irresponsible ratings by a rogue agency create instability, the response should not be a pledge to undertake further “reform”. Rather, it should be to rethink which facets of reform have increased India’s vulnerability and how.

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[Guest]

Manmohan is borrowing and buying stuff and not making. Plus allowing states to borrow from International market. States like UP, WB, AP will bring down rest of India. These states are doing nothing to fix fiscal situation, These states are paying state salaries from borrowed money, revenue is less than spending.

[sumishi]

[size="3"][url="http://economictimes.indiatimes.com/features/financial-times/how-will-the-euro-zone-crisis-impact-india/articleshow/10284983.cms"]Euro zone crisis behind market volatility[/url] : ET, 9 Oct, 2011



[/size][indent][size="3"]

The markets are swaying to the ripple effect of developments across the globe. The domestic economy, growth and inflation numbers are struggling to cope with the consequences of wars, turmoil and economic crisis of nations miles away.



After the American subprime crisis that began with the bursting of the US housing bubble, the Euro zone crisis is the next big cause of concern for global economies. The US subprime mortgage crisis saw rise in sub-prime mortgage defaults and foreclosures. This resulted in a decline in securities backed by mortgages . The current Euro zone crisis threatens to impact economies of even nations with a robust domestic growth.



The severe debt crisis in Euro zone nations could spill over, affecting the financial health of developed economies and impeding the economic recovery of developing nations. The soaring international oil price has added fuel to the fire.



How will the Euro zone crisis impact India?



Capital flows into the economy and exports are likely to take a beating. Foreign institutional investor (FII) investment pattern is marked with high volatility. A sudden surge in investment pattern is as detrimental as an unannounced withdrawal. A surge in FII investments will lead to increased inflationary pressures and building of an asset bubble that could burst anytime.



India is grappling with high inflation and the central bank has raised the key interest rates a dozen times in the past year and a half. Now, the possibility of Greek debt default affecting the European banking and financial sectors is very real. The crisis is expected to spill over to the other European nations that otherwise appear economically stable.



While Greece has embarked on austerity measures, the bailout package from the European Union and IMF funds is expected to help it navigate out of its crisis. However, a rapidly shrinking Greek economy needs a fresh lease of life. But if Greece is only the beginning, then the Euro zone crisis could avalanche into larger trouble.



The quantum of impact of Euro zone crisis on markets here is yet to be measured. A slump in domestic industrial growth, unaddressed agricultural woes, rising interest rates and escalating fuel costs have compounded the global factors. A series of scandals emerging from under the carpet have diluted the faith of foreign investors.



The market volatility has compounded with the concerns of small investors. Sectors across the board including auto, oil and gas, metal, FMCG and healthcare took a beating. Concerns are the current European financial crisis will curb economic growth. The risk associated with otherwise favorite sectors such as banking has increased.



Investors have to study global trends before investing in the unpredictable stock markets today. Have a long-term perspective when taking investment decisions.

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[rhytha]

Needs a special mention.



[size="5"]An Indian Inventor Disrupts The Period Industry[/size]



When Arunachalam Muruganantham decided he was going to do something about the fact that women in India can’t afford sanitary napkins, he went the extra mile: He wore his own for a week to figure out the best design.

72

786

437





When Arunachalam Muruganantham hit a wall in his research on creating a sanitary napkin for poor women, he decided to do what most men typically wouldn’t dream of. He wore one himself--for a whole week. Fashioning his own menstruating uterus by filling a bladder with goat’s blood, Muruganantham went about his life while wearing women’s underwear, occasionally squeezing the contraption to test out his latest iteration. It resulted in endless derision and almost destroyed his family. But no one is laughing at him anymore, as the sanitary napkin-making machine he went on to create is transforming the lives of rural women across India.



Right now, 88% of women in India resort to using dirty rags, newspapers, dried leaves, and even ashes during their periods, because they just can’t afford sanitary napkins, according to "Sanitation protection: Every Women’s Health Right," a study by AC Nielsen. Typically, girls who attain puberty in rural areas either miss school for a couple of days a month or simply drop out altogether. Muruganantham’s investigation into the matter began when he questioned his wife about why she was trying to furtively slip away with a rag. She responded by saying that buying sanitary napkins meant no milk for the family.

“”

I thought, 'Why couldn’t I create a low-cost napkin for my wife?'



"When I saw these sanitary napkins, I thought 'Why couldn’t I create a low cost napkin for [my wife]?'" says Muruganantham. That thought kick-started a journey that led to him being called a psycho, a pervert, and even had him accused of dabbling in black magic.



He first tried to get his wife and sisters to test his hand-crafted napkins, but they refused. He tried to get female medical students to wear them and fill out feedback sheets, but no woman wanted to talk to a man about such a taboo topic. His wife, thinking his project was all an excuse to meet younger women, left him. After repeated unsuccessful research attempts, including wearing panties with his do-it-yourself uterus, he eventually hit upon the idea of distributing free napkins to the students and collecting the used ones for study. That was the last straw for his mother. When she encountered a storeroom full of bloody sanitary napkins, she left too.



Analyzing branded napkins at laboratories led to Muruganantham’s first breakthrough. "I found out that these napkins were made of cellulose derived from the bark of a tree," he said. A high school dropout, he taught himself English and pretended to be a millionaire to get U.S. manufacturers to send him samples of their raw material.

“”

He taught himself English and pretended to be a millionaire to get U.S. manufacturers to send him samples of their raw material.



Demystifying the napkin was only the first step. Once he knew how to make them, he discovered that the machine necessary to convert the pine wood fiber into cellulose cost more than half a million U.S. dollars. It’s one of the reasons why only multinational giants such as Johnson & Johnson and Procter & Gamble have dominated the sanitary napkin making industry in India.



It took Muruganantham a little over four years to create a simpler version of the machine, but he eventually found a solution. Powered by electricity and foot pedals, the machine de-fibers the cellulose, compresses it into napkin form, seals it with non-woven fabrics, and finally sterilizes it with ultraviolet light. He can now make 1,000 napkins a day, which retail for about $.25 for a package of eight.

“”

My vision is to make India a 100% napkin-using country.



Though he’s won numerous awards (and won his wife back) he doesn’t sell his product commercially. "It’s a service," he says. His company, Jayaashree Industries, helps rural women buy one of the $2,500 machines through NGOs, government loans, and rural self-help groups. "My vision is to make India a 100% napkin-using country," said Muruganantham at the INK conference in Jaipur. "We can create 1 million employment opportunities for rural women and expand the model to other developing nations." Today, there are about 600 machines deployed in 23 states across India and in a few countries abroad.



The machine and business model help create a win-win situation. A rural woman can be taught to make napkins on it in three hours. Running one of the machines employs four women in total, which creates income for rural women. Customers now have access to cheap sanitary napkins and can order customized napkins of varying thicknesses for their individual needs.



It is not an easy path, though. "Lack of awareness is the major reason, next to the apathy of NGO’s," says Sumathi Dharmalingam, a housewife who runs a napkin-making business based around the machine. According to her, rural women are clueless as to how to use them, think twice about spending even the small amount of money to buy a packet, and sadly have a devil-may-care attitude about their health. "When I caution them that they might have to have their uterus removed because of reproductive infections, they just say, 'So what? How long are we going to live anyway?'"





http://www.fastcoexist.com/1679008/an-in...d-industry

[rhytha]

Needs a special mention.



[size="5"]An Indian Inventor Disrupts The Period Industry[/size]



When Arunachalam Muruganantham decided he was going to do something about the fact that women in India can’t afford sanitary napkins, he went the extra mile: He wore his own for a week to figure out the best design.

72

786

437





When Arunachalam Muruganantham hit a wall in his research on creating a sanitary napkin for poor women, he decided to do what most men typically wouldn’t dream of. He wore one himself--for a whole week. Fashioning his own menstruating uterus by filling a bladder with goat’s blood, Muruganantham went about his life while wearing women’s underwear, occasionally squeezing the contraption to test out his latest iteration. It resulted in endless derision and almost destroyed his family. But no one is laughing at him anymore, as the sanitary napkin-making machine he went on to create is transforming the lives of rural women across India.



Right now, 88% of women in India resort to using dirty rags, newspapers, dried leaves, and even ashes during their periods, because they just can’t afford sanitary napkins, according to "Sanitation protection: Every Women’s Health Right," a study by AC Nielsen. Typically, girls who attain puberty in rural areas either miss school for a couple of days a month or simply drop out altogether. Muruganantham’s investigation into the matter began when he questioned his wife about why she was trying to furtively slip away with a rag. She responded by saying that buying sanitary napkins meant no milk for the family.

“”

I thought, 'Why couldn’t I create a low-cost napkin for my wife?'



"When I saw these sanitary napkins, I thought 'Why couldn’t I create a low cost napkin for [my wife]?'" says Muruganantham. That thought kick-started a journey that led to him being called a psycho, a pervert, and even had him accused of dabbling in black magic.



He first tried to get his wife and sisters to test his hand-crafted napkins, but they refused. He tried to get female medical students to wear them and fill out feedback sheets, but no woman wanted to talk to a man about such a taboo topic. His wife, thinking his project was all an excuse to meet younger women, left him. After repeated unsuccessful research attempts, including wearing panties with his do-it-yourself uterus, he eventually hit upon the idea of distributing free napkins to the students and collecting the used ones for study. That was the last straw for his mother. When she encountered a storeroom full of bloody sanitary napkins, she left too.



Analyzing branded napkins at laboratories led to Muruganantham’s first breakthrough. "I found out that these napkins were made of cellulose derived from the bark of a tree," he said. A high school dropout, he taught himself English and pretended to be a millionaire to get U.S. manufacturers to send him samples of their raw material.

“”

He taught himself English and pretended to be a millionaire to get U.S. manufacturers to send him samples of their raw material.



Demystifying the napkin was only the first step. Once he knew how to make them, he discovered that the machine necessary to convert the pine wood fiber into cellulose cost more than half a million U.S. dollars. It’s one of the reasons why only multinational giants such as Johnson & Johnson and Procter & Gamble have dominated the sanitary napkin making industry in India.



It took Muruganantham a little over four years to create a simpler version of the machine, but he eventually found a solution. Powered by electricity and foot pedals, the machine de-fibers the cellulose, compresses it into napkin form, seals it with non-woven fabrics, and finally sterilizes it with ultraviolet light. He can now make 1,000 napkins a day, which retail for about $.25 for a package of eight.

“”

My vision is to make India a 100% napkin-using country.



Though he’s won numerous awards (and won his wife back) he doesn’t sell his product commercially. "It’s a service," he says. His company, Jayaashree Industries, helps rural women buy one of the $2,500 machines through NGOs, government loans, and rural self-help groups. "My vision is to make India a 100% napkin-using country," said Muruganantham at the INK conference in Jaipur. "We can create 1 million employment opportunities for rural women and expand the model to other developing nations." Today, there are about 600 machines deployed in 23 states across India and in a few countries abroad.



The machine and business model help create a win-win situation. A rural woman can be taught to make napkins on it in three hours. Running one of the machines employs four women in total, which creates income for rural women. Customers now have access to cheap sanitary napkins and can order customized napkins of varying thicknesses for their individual needs.



It is not an easy path, though. "Lack of awareness is the major reason, next to the apathy of NGO’s," says Sumathi Dharmalingam, a housewife who runs a napkin-making business based around the machine. According to her, rural women are clueless as to how to use them, think twice about spending even the small amount of money to buy a packet, and sadly have a devil-may-care attitude about their health. "When I caution them that they might have to have their uterus removed because of reproductive infections, they just say, 'So what? How long are we going to live anyway?'"





http://www.fastcoexist.com/1679008/an-in...d-industry

[ravish]

The rate of economic growth in India has slowed down this year. According to experts it will be around 6% at the end of the current financial year. There are several reasons for this slowing down. It would be incorrect to attribute it entirely to the present recession of the major economies of the world. It is only one of the factors attributing to this slow down.

During the second UPA no major reform has been introduced with success. Whenever, any attempt has been made by the Government it has not only faced opposition from the opposition parties but also from its own constituents like the Tirnamool Congress, DMK and others. As a result of these oppositions , it has not been possible to introduce ant major reform in the economy.

On the other hand , the Government to maintain its popularity has introduced several populist measures and has increased the various subsidies . This has resulted in eating up the vital resources. Consequently, the infrastructural development has also slowed down. Almost every new economic measure has been opposed and now its ill effects are becoming visible.

It is high time that all major political parties should come to an understanding on vital economic issues and allow the government to introduce certain hare’s measures. Some of these measures will be imposing additional financial burden on certain sections of the public but that is inevitable if the downward trend needs to be stopped.

The time has come when politically hard decisions like reduction in subsidy on certain items needs to be introduced. If resources are not generated at the earliest, many of the developmental and infrastructural work will remain unfinished.

[rhytha]

[size="3"]Barefoot - The other side of life[/size]



[size="3"]Can anyone really live on Rs. 26 a day, the income of the officially poor in rural India? Two youngsters try it out.[/size]



Late last year, two young men decided to live a month of their lives on the income of an average poor Indian. One of them, Tushar, the son of a police officer in Haryana, studied at the University of Pennsylvania and worked for three years as an investment banker in the US and Singapore. The other, Matt, migrated as a teenager to the States with his parents, and studied in MIT. Both decided at different points to return to India, joined the UID Project in Bengaluru, came to share a flat, and became close friends. [media]http://www.thehindu.com/multimedia/dynamic/00920/12sm_matt_tushar_jp_920726e.jpg[/media]



The idea suddenly struck them one day. Both had returned to India in the vague hope that they could be of use to their country. But they knew the people of this land so little. Tushar suggested one evening — “Let us try to understand an ‘average Indian', by living on an ‘average income'.” His friend Matt was immediately captured by the idea. They began a journey which would change them forever.



To begin with, what was the average income of an Indian? They calculated that India's Mean National Income was Rs. 4,500 a month, or Rs. 150 a day. Globally people spend about a third of their incomes on rent. Excluding rent, they decided to spend Rs. 100 each a day. They realised that this did not make them poor, only average. Seventy-five per cent Indians live on less than this average.



The young men moved into the tiny apartment of their domestic help, much to her bemusement. What changed for them was that they spent a large part of their day planning and organising their food. Eating out was out of the question; even dhabas were too expensive. Milk and yoghurt were expensive and therefore used sparingly, meat was out of bounds, as were processed food like bread. No ghee or butter, only a little refined oil. Both are passionate cooks with healthy appetites. They found soy nuggets a wonder food — affordable and high on proteins, and worked on many recipes. Parle G biscuits again were cheap: 25 paise for 27 calories! They innovated a dessert of fried banana on biscuits. It was their treat each day.



Restricted life



Living on Rs.100 made the circle of their life much smaller. They found that they could not afford to travel by bus more than five km in a day. If they needed to go further, they could only walk. They could afford electricity only five or six hours a day, therefore sparingly used lights and fans. They needed also to charge their mobiles and computers. One Lifebuoy soap cut into two. They passed by shops, gazing at things they could not buy. They could not afford the movies, and hoped they would not fall ill.



However, the bigger challenge remained. Could they live on Rs. 32, the official poverty line, which had become controversial after India's Planning Commission informed the Supreme Court that this was the poverty line for cities (for villages it was even lower, at Rs. 26 per person per day)?



Harrowing experience



For this, they decided to go to Matt's ancestral village Karucachal in Kerala, and live on Rs. 26. They ate parboiled rice, a tuber and banana and drank black tea: a balanced diet was impossible on the Rs. 18 a day which their briefly adopted ‘poverty' permitted. They found themselves thinking of food the whole day. They walked long distances, and saved money even on soap to wash their clothes. They could not afford communication, by mobile and internet. It would have been a disaster if they fell ill. For the two 26-year-olds, the experience of ‘official poverty' was harrowing.



Yet, when their experiment ended with Deepavali, they wrote to their friends: “Wish we could tell you that we are happy to have our ‘normal' lives back. Wish we could say that our sumptuous celebratory feast two nights ago was as satisfying as we had been hoping for throughout our experiment. It probably was one of the best meals we've ever had, packed with massive amounts of love from our hosts. However, each bite was a sad reminder of the harsh reality that there are 400 million people in our country for whom such a meal will remain a dream for quite some time. That we can move on to our comfortable life, but they remain in the battlefield of survival — a life of tough choices and tall constraints. A life where freedom means little and hunger is plenty...



Plenty of questions



It disturbs us to spend money on most of the things that we now consider excesses. Do we really need that hair product or that branded cologne? Is dining out at expensive restaurants necessary for a happy weekend? At a larger level, do we deserve all the riches we have around us? Is it just plain luck that we were born into circumstances that allowed us to build a life of comfort? What makes the other half any less deserving of many of these material possessions, (which many of us consider essential) or, more importantly, tools for self-development (education) or self-preservation (healthcare)?



We don't know the answers to these questions. But we do know the feeling of guilt that is with us now. Guilt that is compounded by the love and generosity we got from people who live on the other side, despite their tough lives. We may have treated them as strangers all our lives, but they surely didn't treat us as that way...”



So what did these two friends learn from their brief encounter with poverty? That hunger can make you angry. That a food law which guarantees adequate nutrition to all is essential. That poverty does not allow you to realise even modest dreams. And above all — in Matt's words — that empathy is essential for democracy.



http://www.thehindu.com/opinion/columns/...882340.ece

[Guest]

[url="http://finance.yahoo.com/news/china-surpass-india-top-gold-111805638.html"]China to surpass India as top gold maket in 2012[/url]

In a statement Thursday, the World Gold Council's Managing Director Marcus Grubb said if current trends hold it's likely China will "emerge as the largest gold market in the world for the first time." Separately, Nomura analysts said India's gold demand was set to dampen further as inflation pressures moderate in coming quarters.

[Guest]

India problem is massive inflation, which is encouraged by Indian Government. There policy is more inflation, more tax collection and expansion of Indian Government. By doing this, they are destroying backbone of majority population.

[Guest]

[url="http://finance.yahoo.com/news/p-cuts-india-outlook-negative-074839947.html"]S&P cuts India outlook; investment rating in peril[/url]

The negative outlook jeopardizes India's long-term rating of BBB-, the lowest investment grade rating, and sent Indian bonds, stocks and the rupee lower.



India has no sovereign global bond issues, but a downgrade would increase borrowing costs for local companies and make it harder to refinance debt, and may have a further chilling effect on foreign investor confidence in the country in general.



"The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting," S&P credit analyst Takahira Ogawa said in a note.



The high cost of oil along with soaring gold imports drove India's current account deficit to its widest in eight years in the 2011/12 fiscal year which ended in March, according to government forecasts, or 4 percent of gross domestic product (GDP), up from 2.6 percent in the previous fiscal year.



Meanwhile, India's fiscal deficit swelled to about 5.9 percent of GDP in the fiscal year that ended in March, far above the government's 4.6 percent target.

Many economists believe New Delhi will have a tough time hitting its target of cutting the deficit this fiscal year to 5.1 percent of GDP, given a hefty subsidy burden and a weakened government that has failed to push through significant reforms.

[osman]

[quote name='Mudy' date='25 April 2012 - 07:52 PM' timestamp='1335363245' post='114735']

[url="http://finance.yahoo.com/news/p-cuts-india-outlook-negative-074839947.html"]S&P cuts India outlook; investment rating in peril[/url]

[/quote]

Well the problem is MMS and Sonia. Sonia wanted social sector reforms during her first term. She was probably motivated by the social security in Italy and Europe. MMS being the economist that he is was keen to follow orders. Let's be very benevolent to these two characters and assume that dole outs are not in any way shape or form connected to buying votes even if it means a broken India.



The rural employment guarantee act was the result.The major drive in the rest of the world is reduction in governmental spending and government as a whole. This has been the direction of reforms. The economic rational is that private capital is selective and maximizes return on investment and government capital leads to false allocation of funds. The ghost cities and miles of fast train networks in China are a case in point. The Indian experiment on rural employment guarantee act was one such colossal blunder.



The obvious reaction from everyone in a country like India is it's political suicide to oppose this measure or it's morally wrong to question such a measure. It's political suicide in the short term but people don't think long term in politics where public memory is fickle. The rural employment guarantee act guarantees pay for work at least for x number of days in a year. The economic activity moves to where the labor is present close to the villages. The government of India builds it's ghost cities and miles of fast trains using local labor except it's not really cities being built or super fast train networks. This stops migration of labor to the economic areas in need of labor.This increases the cost of labor for everyone including farms, infrastructure and industries.



The second issue from the economic perspective is the distribution of government taxes through this program leads to availability of cash which chases the most basic essential of life for the people who receive it. They don't value gold as much as grain. However the grain production in India hasn't increased with the increased affluence and cost of grain and food production has gone up as a side effect of these social sector measures. The market system for distribution of food ensures the food prices move north. The distribution of food has not changed and the people who were the target of these social sector schemes still do not receive food. They can't afford it. Those who could afford it earlier still do but pay more for their food consumption. The poor work for hours and still go hungry. The only real effect is inflation.



China builds ghost cities and high speed rail networks, at least some of which will some day be used. India builds it's invisible ghost cities and high speed rail networks which will never be used to increase the GDP. It most certainly will make the poor remain poor and forever indebted to the Congress. A brilliant scheme. It's not economically sound to question an economist of the stature of MMS.

[Guest]

A brilliant scheme. It's not economically sound to question an economist of the stature of MMS.

IMF MMS, agenda is imposing socialism in India. He is keeping inflation high so that government will keep on collecting higher tax and poor will remain poor, Babus/bureaucrats can survive for ever. To keep his big Government, he is able to finance through inflation. All these Sonia Programs are side show and UP election gave her "boo" on side show.

Just returned from India, low interest rate will hit elderly middle class and high inflation is hitting poor and lower middle class, slowly, middle class will move into lower middle class. Only privilege class, that are politicians, Babus and government contractors are enjoying slow destruction of IMF-MMS policies.

[Guest]

[url="http://in.reuters.com/article/2012/06/08/india-investment-exits-idINDEE85708Y20120608"]India frustrations send some foreign firms packing[/url]

Regulatory uncertainty and policy gridlock have battered foreign corporate sentiment towards India, adding to a dramatic slowdown in economic growth and exacerbating a widening current account deficit that has knocked the rupee to record lows.

[priyarawat229]

More recently Indian economy has grown very vast with the foreign investment. India is serving major new fields and in some sectors leading indisputably. India is providing business and services to various other major economies.

[ramana]

Didnt find a thread on Agriculture.



Hindu Business Line:



No Longer US grain market



Some thing happened with collapse of FSU.

No longer Uncle Sam’s grain market

TEJINDER NARANG



The price of wheat is determined by Black Sea region countries, and corn by Argentina, Brazil and Ukraine.



The views of analysts that world grain prices are bearish simply because they are declining in the US’ Chicago Board of Trade (CBOT) may not be entirely true.



Price movements in the Black Sea region have been quite the opposite of what transpired on futures exchanges. US leadership in agro trade is on the decline and other origins are asserting themselves. This is borne out by some recent developments.



WHEAT DYNAMICS



US share in world wheat trade has declined to 20 per cent from 30-35 per cent in 1990-2008. In recent times, the Black Sea nations of Russia, Ukraine and Kazakhstan have been the largest single bloc of wheat exporters of about 35 million tonnes (mts) while the US share is around 28-30 mts out of the world’s total volume of 140 mts.



Egypt, the world’s largest wheat buyer (10-12 mts per annum) is heavily dependent upon Black Sea Wheat (BSW), as are other nations in Africa and West Asia. The Far-East gets its wheat from Australia. Since 2011, Indian wheat export of about 5-6 mts has been competing with Black Sea and Australian wheat.



US futures exchanges, CBOT and the Kansas Board of Trade (KBOT), are no longer “reliable” platforms of price discovery. The high speculative interest of hedge funds in futures trades distorts evaluations. The price trends (bullish or bearish) indicated by these exchanges are disregarded by other origins.



During the last quarter of 2013, the values of US’ Hard Red Winter (HRW-12 per cent protein) wheat, which is comparable to Indian wheat and tracked by KBOT, plummeted by $45/mt ($290 fob), while Black Sea quotes climbed up by $45/mt from $250 to $295.



From India’s export perspective, Black Sea values are more relevant than what is happening in the US or its future exchanges. Moreover, Indian fob export price has to be compared with the landed cost (CIF) of the nearest origin — the Black Sea or Australia.



The US is the world’s largest producer of corn — about 350 mts. It had a share of 60 per cent share in world coarse grains in 2000-08 but that is now down to 40 per cent.



Recently, China “rejected” about 600,000 tonnes of US corn on GMO-related aberrations, though China requires about 5 mts maize this year.



The US or its sellers cannot muster the courage to drag China to international arbitration or the WTO for destabilising the market for fear of jeopardising future business.



After all, China imports 65 mts of soya bean, mostly from the US.



Discarded corn cargoes are finally offloaded in Japan, South Korea, Indonesia and elsewhere at a discount. Perhaps to firm up CBOT prices, the US Department of Agriculture underplayed corn yield in its monthly report dated January 10, 2014. :eek: :eek: :eek:



Corn exports from Argentina, Brazil and Ukraine of 20 mts each acted as a dampener on US prices. It is this trio that determines world’s maize prices, rather than the CBOT.



The irony is that the US has supported higher GMO corn production in these very South American countries from whom they are facing the heat. India’s corn exports, too, are calibrated on the basis of this trio, and not the US.



RICE TRENDS



The US was never a frontrunner in rice trade, whereas India is. Surprisingly, the US and Pakistan are on the same footing on rice production and exports. Both produce about 6-7 mts of rice each, and export about 3-3.5 mts. This is in contrast to India’s export of 10-11 mts (25 per cent of world trade) and about 7-8 mts each by Thailand and Vietnam. Global rice trade is expected to reach 40 mts for the first time, from about 38 mts, because of China’s additional demand, to be serviced mainly by Vietnam.



Three factors are responsible for Indian supremacy in rice trade — the populist but unfriendly Thai trading policies, the demand pull of basmati rice from Iran, and the switching of Sub-Saharan consumers from traditional foods (cassava and millet) to rice, which is viewed as a ‘fast’ food because of its shorter preparation time. The expansion in African price-sensitive markets has been supplied largely by India and Vietnam.



Rice trade is linked to the processing of paddy, packaging, and blending rather than bulk shipments. It is labour-intensive. The participation of the US in the rice trade in a big way is difficult.



Lower world prices of wheat and corn do not spell good news for Indian exports. However, basmati rice export — which is growing — is a high value addition item. Non-basmati rice export will depend upon Thailand’s ability to sustain its financial and economic mismanagement. The influence of the US here is marginal.



(The author is a grains trade analyst.)

This is a big shift in grain markets and has geo-political ramifications.