<!--QuoteBegin-Naresh+Feb 10 2005, 05:43 PM-->QUOTE(Naresh @ Feb 10 2005, 05:43 PM)<!--QuoteEBegin--> ...... as I store such "moaning and groaning" on disk.
<b>India beats Korea in FII inflows</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->According to data sourced from stock exchanges in Korea and Taiwan, since January â05, FIIs have injected just over $1bn in Korean and $947m in Taiwanese shares. During the same period, Indian equities received $1.1bn, reveals Securities and Exchange Board of India (Sebi) data. The high inflow assumes significance as Indian equities have been underperforming since January â05.
The Morgan Stanley Capital International (MSCI) Emerging Markets index rose 2.5% year-to-date (YTD). In comparison, the <b>MSCI India index remained flat at .526%. The MSCI Korea index rose 7% while MSCI Taiwan fell 1.9%.</b>
At the same time, Indiaâs weightage in the benchmark emerging market indices, managed by agencies like MSCI and Londonâs FTSE, is a fraction of Korea and Taiwan put together. Weightages are determined by agencies based on factors like pace of reforms, growth rate of an economy and so on. <b>While Korea and Taiwan together account for around 35% of the emerging market indices, India accounts for only 6%.</b>
As a result, Korea and Taiwan have remained the biggest recipients of FII money. It was only in â04 that India managed to receive the second highest FII inflow at over $8.5bn. Brokers say international funds are allocating more money to India than that recommended by these benchmark indices.
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<b>S&P sets sights on India with bid for credit agency </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->MUMBAI, India Standard & Poor's Rating Services said Tuesday that it planned to buy control of CRISIL, India's biggest credit assessor. CRISIL shares soared.
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The New York-based company will make an open offer to purchase as many as 3.53 million shares from CRISIL shareholders at 680 rupees each, it said in a statement. The offer is worth 2.4 billion rupees, or $54.8 million. If the offer is accepted for a minimum level of 2.64 million shares, Standard & Poor's will own 51 percent of the company.
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INDIAN FOREIGN EXCHANGE RESERVES AS ON 28-01-2005 : US DOLLARS 129.720 BILLION â AN INCREASE OF USD 291 MILLION - OVER THE PREVIOUS WEEKâS RESERVES
INDIAN FOREIGN EXCHANGE RESERVES AS ON 04-01-2005 : US DOLLARS 128.914 BILLION â A DECREASE OF USD 806 MILLION - OVER THE PREVIOUS WEEKâS RESERVES
INDIAN FOREIGN EXCHANGE RESERVES AS ON 11-02-2005 : US DOLLARS USD 129.980 BILLION â AN INCREASE OF USD 1.066 BILLION - OVER THE PREVIOUS WEEKâS RESERVES
Actually, it is not clear why such a fluctuation. Is dollar value or Oil payment??
28-01-2005 : US DOLLARS 129.720 BILLION
11-02-2005 : US DOLLARS USD 129.980 BILLION
+ 260 millions
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>BMW scouts for India plant to drive Asia sales</b>
SINGAPORE - German luxury car maker BMW may build a car plant in India, a market it views as undeveloped, to help it hit an Asian sales target of 150,000 cars within three years, its chief executive said on Wednesday.
The Munich-based firm, battling DaimlerChrysler's Mercedes-Benz to be the world's top maker of premium cars, <b>forecast group sales in Asia to grow 10-15 percent this year</b>.
<b>BMW, whose stable also includes the Mini and Rolls-Royce brands, said it sold 95,500 cars in Asia last year, around 8 percent of its total sales</b>. It aims to raise that to 150,000 by 2008, BMW Chief Executive Helmut Panke said.
Panke, speaking to reporters on a two-day trip to Singapore, said a BMW team of experts was in India to scout for possible locations for car production. <b>BMW sold only 122 imported cars in India last year from outlets in Bangalore, New Dehli and Bombay.</b>
"There's no decision yet and we have no specific time frame. Perhaps we'll enter a joint venture similar to the one in China," Panke said.
He insisted that <b>China, BMW's second-biggest market in Asia by sales after Japan</b>, would see above average long-term growth and dismissed last year's 15 percent drop in mainland group sales as a one-off.
"We will grow in China (in 2005 from 2004)," he said, adding it was "not important if it's 5 or 6 or 8 percent" sales growth.
.....<!--QuoteEnd--><!--QuoteEEnd-->
Stocks could show some weakness next week as earnings season winds down, while inflation and interest-rate worries stoke investors'''' concerns about future profits. Oil prices around $48 a barrel could also keep up the pressure on the markets, strategists said. On Monday, U.S. financial markets will be closed for the Presidents Day holiday.
The country's foreign exchange reserves grew by $ 1,066 million during the week ending February 11, 2005, taking the total reserves to $ 1,29,980 million.
The country's foreign exchange had fallen sharply during the weekended February four by $ 806 million to $ 1,28,914 million largely due to revaluation of international currencies. Foreign currency assets during this period rose by $ 1,070 million to $ 1,24,177 million, according to Reserve Bank of India's weekly statistical supplement release here today.
Gold remained static at $ 4,390 million while Special Drawing Rights rose by $ 5 million to reach the $ 10 million mark, it said. India's Reserve Tranche Position (RTP) with International Monetary Fund (IMF) decreased by $ 9 million to reach $ 1,403 million, it added.
Loans and advances to State Governments rose by Rs 350 crore to Rs 1,103 crore while that to Central government showed a nil balance. During the fortnight ending February 4, aggregate deposits with the banks grew by Rs 11,768 crore (0.7 per cent) to Rs 16,73,341 crore, the RBI said. Food credit during this fortnight rose by Rs 1,520 crore to Rs 42,948 crore, while non-food credit grew by Rs 8,289 crore to Rs 10,07,801 crore, the central bank added<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-Mudy+Feb 20 2005, 01:17 AM-->QUOTE(Mudy @ Feb 20 2005, 01:17 AM)<!--QuoteEBegin--> INDIAN FOREIGN EXCHANGE RESERVES AS ON 28-01-2005 : US DOLLARS 129.720 BILLION â AN INCREASE OF USD 291 MILLION - OVER THE PREVIOUS WEEKâS RESERVES
INDIAN FOREIGN EXCHANGE RESERVES AS ON 04-01-2005 : US DOLLARS 128.914 BILLION â A DECREASE OF USD 806 MILLION - OVER THE PREVIOUS WEEKâS RESERVES
INDIAN FOREIGN EXCHANGE RESERVES AS ON 11-02-2005 : US DOLLARS USD 129.980 BILLION â AN INCREASE OF USD 1.066 BILLION - OVER THE PREVIOUS WEEKâS RESERVES
Actually, it is not clear why such a fluctuation. Is dollar value or Oil payment??
28-01-2005 : US DOLLARS 129.720 BILLION
11-02-2005 : US DOLLARS USD 129.980 BILLION
+ 260 millions <!--QuoteEnd--><!--QuoteEEnd-->
Mudy.
As I see it the reasons for the "swing" in India's Forex Reserves is a combination of the US Dollar Rate vis-Ã -vis the Basket of Currencies as well as the costs of the Oil Imports.
However one of our âEconomic Gurusâ should be requested to give us a better picture.
Commies will be delighted. <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> <b>India must deregulate if it wants higher growth: govt survey</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->NEW DELHI (AFP) - India needs to ease foreign investment caps, relax rigid labour laws and cut duties to international levels if it is to hit even the lower end of its 7.0-8.0 percent long-term growth target, the government said.
"Growth performance during 2003-04 and 2004-05 indicates a possible ratcheting up of the trend rate of growth of the economy from around 6.0 percent to 7.0 percent a year," the government said in an annual survey submitted to parliament before the national budget Monday.
The forecast is a long way from the anaemic 2.0-3.0 percent performance, dubbed the "Hindu rate of growth,"<i> [Congress+commie rate of growth]</i> seen in the 1970s and 1980s before India moved to liberalise its economy in 1991<!--QuoteEnd--><!--QuoteEEnd-->
<b>India Needs to Raise Revenue to Cut Deficit, Government Says</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Feb. 25 (Bloomberg) -- India must boost revenue by taxing more services, improving compliance and reducing exemptions to cut borrowing and spur growth in Asia's fourth-largest economy, the government said in a report three days before the budget.
Cutting the budget deficit ``critically hinges upon the success in raising the tax-gross domestic product ratio,'' the Economic Survey, prepared by officials advising Finance Minister P. Chidambaram, said. Chidambaram presents his budget for the fiscal year starting April 1 on Feb. 28.
India needs to increase revenue to pare the country's $31 billion fiscal deficit and fulfill a pledge to spend $150 billion in the next decade to upgrade roads, power lines and other infrastructure. The projects are designed to develop an economy where 800 million people live on less than $2 a day and help India vie with neighboring China for overseas investment.
<b>``Higher tax revenues have to be realized not through increasing tax rates, but through innovative changes in policies, procedures, laws and dispute settlement mechanisms,''</b> the report said.
Increasing revenue from India's 10 percent service tax may help Chidambaram reduce the fiscal deficit to 4.1 percent of gross domestic product in the year starting April 1, a nine-year low, from 4.4 percent this fiscal year, according to the median forecast of seven economists surveyed by Bloomberg.
India has scope to raise taxes. Total tax revenue, including levies on income, imports and sales, amounts to less than 10 percent of GDP. In China, the figure is 20 percent, and among the members of the Organization for Economic Cooperation and Development it averaged 37 percent in 2001. Only 33 million of India's 400 million workers pay tax.
Service Tax
Chidambaram is targeting service companies because the tax they pay is low.
Tax revenue from services, which account for more than half of the $580 bilion economy, will come to 141.5 billion rupees ($3.2 billion) in the year ending March 31, the Indian government forecast in July. By contrast, the excise tax on manufacturers, which account for less than a quarter of GDP, will total 1.09 trillion rupees.
``<b>The tax base needs to be widened through increase in the share of services in tax revenues</b>, removal of exemptions that don't conform to the established principles of tax policy and an enforcement mechanism that is non-discretionary, transparent and effective,'' the survey said.
By law, India has to erase its $17 billion revenue deficit by March 2009, meaning it can only borrow for investment purposes thereafter. The government must cut its fiscal deficit, a measure of total borrowing, by 0.3 percentage points a year.
Debt
A lower deficit may help India win a higher debt rating, paring borrowing costs and spurring foreign investment. <b>The central government uses a quarter of its $109 billion budget to pay interest on its debt, estimated at 20 trillion rupees as of March 31, or almost two thirds of GDP.</b>
Standard and Poor's in 2002 reduced its rating on <b>India's local currency debt to BB+, the highest non-investment grade</b>, citing concerns about the deficit, which reached 6.2 percent of GDP by March that year. Moody's Investors Service has maintained its Ba2 rating, two levels below investment grade, since 1998.
``Further efforts are needed to tackle the problem of downward rigidity of lending rates,'' the report said. India's benchmark 10-year bond yields 6.5 percent, Asia' second-highest after the Philippines. U.S. government debt of similar maturity pays 4.3 percent.
Acknowledging there is limited scope to cut spending, the report said there is a need to contain ``unproductive'' spending and ``transform the outlays into better outcomes.''
Subsidies
Subsidies, which account for almost a tenth of India's budget, need to be targeted ``sharply at the poor, it said.
India also needs to continue with pension reforms and maintain a ``benign interest regime'' by cutting borrowing, the report said.
Inflation has slowed to a nine-month low of 5 percent as energy costs subsided and food prices fell. The average inflation rate in the 52-week period as of Jan. 22 was 6.5 percent compared with 5.5 percent as of Jan. 24, 2004, the report said.
<b>``There is a downward trend of prices particularly for the agro-based products during January-March every year due to seasonality of prices,</b>'' the document said. ``The current year is no exception to this general trend.''
India needs to continue its policy of not fixing a rate target for the rupee against the U.S. dollar and allowing market forces to determine the exchange rate, the document said.
<b>The rupee has gained 3.5 percent against the U.S. dollar in the past 12 months.</b>
India should ease international trade and investment curbs to contain the strengthening of the rupee, the document said.
``Further liberalization of the external sector is also likely to counter some of the upward pressure on the exchange rate of the rupee,'' the report said
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<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>India to turn JC Penneyâs 2nd largest sourcing base </b>
OUR CORPORATE BUREAU
Posted online: Thursday, February 24, 2005 at 0000 hours IST
NEW DELHI, FEB 23: Global retail major JC Penney sees India as the second largest sourcing base after China. The $18 billion retail major currently sources from India 15-17% of its total global requirement of about $4 billion (as compared to 55-65% from China). Sourcing from India is expected to increase considerably in the near future.
According to JC Penney Purchasing Corp, India, country manager Adil Raza, the global retailer in the recent past has consolidated its sourcing base from 90 countries to 18 countries. It now plans to follow the same consolidation sourcing strategy in the Asian region by possibly shifting its focus for sourcing from regional markets such as Nepal and Mauritius to India. Mr Raza was speaking at the 7th KSA Retail Summit being held in the Capital.
The retail major has had a presence in India for the past 15 years as JC Penney Purchasing Corp, India, and sources products like home textiles, glassware, and clothing from here.
Among the other global retail majors who are sourcing from India is Walmart, which is believed to be sourcing products worth $600 million currently.<!--QuoteEnd--><!--QuoteEEnd-->
<b>India can learn much from China's breakneck economic expansion. But it has valuable lessons for China, too, argues Simon Long (interviewed here)</b>
HOME to nearly two-fifths of humanity, two neighbouring countries, India and China, are two of the world's fastest-growing economies. The world is taking notice. In December, a report by America's National Intelligence Council likened their emergence in the early 21st century to the rise of Germany in the 19th and America in the 20th, with âimpacts potentially as dramaticâ.
Comparisons between the two are inevitable. Both are poor, largely agricultural, countries that have made great strides in reducing poverty, especially since embarking on radical, liberalising economic reform. But India and China, always very different civilisations, have followed very different paths to growth. Under reform, they have converged somewhat in the past two decades, but will remain distinctive.
Take the way the two countries reacted to the recent deaths of two reformist leaders. India's P.V. Narasimha Rao, who died in December, was prime minister of India in 1991, when his government rescued the country from financial crisis and launched India's economic reforms. He served until 1996, but was later convicted of corruption. Although he won an appeal, the taint never quite left his name. His death, however, was marked by a state funeral and seven days of official mourning. The media vigorously debated his legacy.
When Zhao Ziyang, a former Chinese prime minister and head of the Communist Party, died three weeks later, he got just a couple of lines from the official news agency. He had been out of favour since siding with student protesters in Beijing's Tiananmen Square against hardliners in his own party in 1989. Dissidents were prevented from attending his funeral. It took two weeks to negotiate an official obituary. His successors, nervous that his memory might evoke the bloody suppression of the protests, did their best to erase it.
<b>That India is an open society and China is not is one of the most glaring differences between the two. Some people in both countries are tempted to use it to explain another: that China's economy has grown much faster. This survey will argue that this view is simplistic and misleading.
Some of the main reasons for China's better performance have nothing to do with the political system. When China started its reforms, in 1978, it was poorer than India. Part of the gap now is due simply to that earlier start. But also, unreformed China seems to have done a more impressive job than India did in educating and providing health care for its poor. Reforms benefited from what economists call âgood human capitalâ, and from a bulge in the working-age population that India itself is now experiencing.
In terms of integration into the global economy, the Chinese reforms have gone much further than India's have, and reaped bigger rewards. But India and China still face similar challenges. When George Fernandes, an Indian opposition politician who was defence minister in the previous government, visited China in 2003, he asked China's prime minister, Wen Jiabao, to list his economic priorities. The answersâunemployment, regional disparities and the enduring poverty of farmersâapplied just as much to India. Mr Fernandes, once known as a critic of China, concluded: âWe are both sailing in the same boat.â</b>
The two countries have much else in common. Both have massive populations with correspondingly massive needs for resources, especially land, water and energy. Both need to find ways of stemming environmental decay. Both suffer under-reported HIV infection rates. Both face potentially destabilising external disputes: China with America over Taiwan, India with Pakistan over Kashmir.
<b>Both, moreover, have each other: as model or as warning, and as so far largely unexploited economic opportunity. This survey will argue that there are lessons India can draw from China's experience, but that the âChinese modelâ need not mean anything resembling its political authoritarianism. In that respect, India has much to teach China.
India is often portrayed as an elephant: big, lumbering and slow off the mark. Now investment-bank reports are beginning to talk of it as a new Asian âtigerâ. If that is what it wants to be, it makes sense for it to study China: the tiger in front is Chinese.</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Matei Mihalca: FDI is not the solutionÂ
MIHALCA ON CHINA
Matei Mihalca / New Delhi March 07, 2005
Yasheng Huangâs book, Selling China: Foreign Direct Investment during the Reform Era, is an important work whose message has not yet percolated into the collective consciousness.
Huang, a professor at Harvard Business School, has a different take on foreign direct investment (FDI), which China has been remarkably successful at attracting: the country is the worldâs second FDI destination in the world, to the tune of US$61bn in 2004. FDI, Huang says, is not all good. The implications are profound.
The reasons for Chinaâs high levels of FDI are popularly described as abundant opportunities, not least low-cost labour. Huang asks whether FDI is the most natural way to take advantage of these opportunities.
Wouldnât sourcing from China enable outsiders to take advantage of Chinaâs opportunities just as well as, or better than, an equity investment? Indeed, why is FDI so high even in traditional Chinese industries, where foreigners have little expertise? And why are even Chinaâs backward inland provinces receiving high levels of FDI?
Even assuming that some FDI is domestic Chinese money looking for tax benefits and greater security as FDI, we are still left with a puzzle. (Huang estimates that such âround-tripâ FDI stood at a maximum of 25 per cent in the early 1990s, and the proportion is probably much lower now.)
Most sources of Chinaâs FDI are small and medium-sized foreign companies, not the Motorolas of the world. This is true even of investors from the non-Chinese world. We may assume that investors of this size bring little technology, organisational know-how, or other advantages to China, yet here they are.
If foreigners see opportunities in China, it should be natural that locals see them, too. In other words, the ratio of FDI to domestic capital formation should stay somewhat constant. Chinaâs puzzle is that the ratio has shifted over time in favour of FDI, as if the opportunities are there more for one group of investors than for the other.
Tax benefits are usually said to provide a bias in favour of foreign investors, and may account for domestic investors engaging in FDI round-tripping schemes. But Huang shows that any favouritism shown towards foreign investors at the expense of domestic investors pales in the face of favouritism shown towards state companies.
The real issue is not domestic vs foreign investment, he argues, but a reluctance to support the growth of the domestic private sector. Better to welcome FDI than allow the growth of an indigenous entrepreneurial class that might challenge the political status quo.
FDI has continued to pour into China even as the country is not short of capital. This, Huang argues, is a most strange phenomenon. Chinaâs FDI/capital formation ratio increased in the 1990s even as its savings rate increased, as well. China has liquidity but it is not channelled to the right places.
The failing is therefore an institutional one. In effect, FDI has acted as a reason for the delay in reform. India, with about half of Chinaâs savings rate and a fraction of its FDI levels, has achieved comparable levels of economic growth. This, Huang argues, points to serious internal distortions in the use of capital in China.
Equity is a very expensive thing to sell, and China, given its economic fundamentals and the attention of the world, should be a sellerâs market. Allowing foreign investors to dominate a large portion of the Chinese economy can only be explained as the result of domestic economic weakness on a corporate level.
The lack of interest on the part of Chinaâs financial system towards supporting private enterprise is one important reason for this weakness. This has changed somewhat since Huangâs book was writtenâprivate companies are now more likely to receive bank loans than before, for example.
But a pecking order of firms with respect to access to capitalâwhat Huang dubs âideological discriminationââstill exists. The fragmentation of Chinaâs industrial landscape is another reason of weakness.
China is not one large market, with economies of scale, but a collection of small regional markets, kept small by local protectionism or favouritism, as the case may be. Huang makes the important point that foreign capital is more mobile within China than domestic capital.
Even Chinaâs largest firms are small by world standards (not to mention the fact that many are incorporated offshore). Hope, Chinaâs largest private group, is about 10 times smaller than Tata Sons. Kelon, Chinaâs largest refrigerator maker, is about the same size of Turkeyâs Koc, despite a market that is nine times larger.
Companies that manage to sell across a heterogeneous domestic market are well prepared to compete globally. In contrast, companies that do not manage to break across intra-national barriers are less likely to succeed internationally. This is an important lesson as China aims to build multinationals.
In a case study, Huang looks at the recent history of Shanghai Automotive Industrial Corporation (SAIC) and finds that the foreign equity ratios in its many joint ventures increased in the 1990s versus the 1980s although the supply of FDI grew several-fold while SAIC itself was very profitable. Why did SAIC increasingly accommodate foreign investors?
SAIC, while one of Chinaâs more successful industrial groups, is state-owned. Implicit in its willingness to accept increasingly high foreign equity ratios is a growing weakness in SAICâs bargaining position.
In contrast, Huang finds that where private enterprise has flourished, FDI levels have also been comparatively low. Huangâs thesis, therefore, is not only about foreign capital and Chinaâs private sector, but also about the state sector: how it has failed despite being endowed with superior resources, technology, and human capital.
The title of Huangâs book, Selling China, suggests Chinaâs embrace of FDI is the outcome of a policy choice, driven by the feat that an embrace of the private sector would unleash changes that would ultimately challenge the existing power structure.
FDI is a more acceptable alternative: foreigners do not harbour political ambitions. Other reasons may relate to cultural factors. That foreign capital in China is better able to transcend domestic barriers and more accepted relative to local private capital may be due to its very outsider status, for example.
âForeign-nessâ may carry intrinsic as well as institutional advantages. âThe single greatest advantage of a foreign firm is that it is foreign,â Huang writes.
What has happened in China, then, is a de facto, whether explicit or implicit, active or passive, privatisation to foreigners, which has been more politically palatable than a privatisation to domestic economic players. It is also a short-term, expensive solution.
The danger is that this âforeign privatisationâ will lead to a nationalistic backlash. While the âcommanding heightsâ of Chinaâs economy still include high-profile assets such as banks, telecom companies, and airlines, the levels of foreign ownership in the Chinese economy as a whole are very high.
In the garment industry, 63 per cent of companies are foreign-owned. In leather and related products, the number stands at 64 per cent. In furniture, 54 per cent.
Huang suggests that, in the final analysis, politics still matters in China todayâmore so, for now, than economics. Yes, Deng Xiaoping did say that the cat could be black or white as long as it caught mice.
Yes, private entrepreneurs are now welcome into the Communist Party, and many of them have joined. They are also being allowed into previously restricted sectors.
Private property has received some constitutional protection. Yet these steps should naturally culminate in a wholehearted embrace of, and support for, private property. Such a shift, when it happens, would be more important than continuing to attract FDI at the current rate.<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--> NEW DELHI: Go the MIT way, the HRD ministry has told the Indian Institutes of Technology (IITs). They have been asked to expand base, without restricting themselves to just engineering courses any longer.
This would mean introduction of courses in economics and business administration, in addition to strengthening and diversifying existing programmes in linguistics and pure sciences. <!--QuoteEnd--><!--QuoteEEnd-->
--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo-->