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Economic Setback After NDA
Inflation goes past 12% for first time in 13 years<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Inflation crossed 12% for the first time in 13 years at 12.1% for the week ended July 26, on the back of costlier food items. <!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>India heading for stagflation </b>
Shivaji Sarkar
RBI's annual policy statement suggests a grim future
Is India heading for stagflation? Reserve Bank Governor YV Reddy says it has never happened in India but his Annual Policy Statement for the current fiscal is not sure of what he is saying. It hints at global stagflation.

The RBI statement is replete with scepticism about the economic scenario. The scepticism is linked to the inflationary tendencies. When the statement was released, inflation was at seven plus percentage. Now it is touching 13 per cent. Coupled with this the last quarter industrial growth has slipped to an alarming three per cent.

The RBI is too scared of "overall uncertainties". It states, "It is useful to recognise the anticipated global slowdown and heightened uncertainties into mounting pressures. Whether the slowdown would have a moderating effect on inflationary pressures or whether the global economy would slip into stagflation is not clear." This does not mean RBI rules the possibility out.

With regard to interaction between global and national economies, RBI sees some revival of protectionism globally. RBI says this makes the assessment of the impact of the global economy on India "extremely difficult".

The RBI indirectly calls for putting a halt to the process of global integration of the economy. In reality, it wants that more protectionist measures should be taken because it's finding difficult to maintain the level of rupee against the US dollar, depreciating since 2006.

Mr Reddy says there is greater inflationary pressure than expected. He says that economic integration and inflation is global. "There are unprecedented dilemmas and response of market not assessed. It is an extraordinary global situation".

In a grim scenario like this the statement is not clear on the sustained growth path. "Growth forecasts have been moderated in the face of the financial turbulence and the anticipated slowdown in the US economy." It simply means that RBI has views that are different from the Finance Ministry<b>. It also means it foresees a slowdown at national level. The RBI is silent on domestic recession but is eloquent about increasing dangers of global recession. </b>

It also expresses concern over the "demand driven economy and supply side pressures." It simply means that the demand for goods -- particularly food and other commodities -- are more than it could be supplied in the market. The prediction is, "Supply side pressures are expected to persist in the coming months with considerable uncertainties surrounding the evolution of key commodity prices and second order effects."

The RBI analysis means that relief to the people is not in sight in the near future. It enlists the reasons as pressures from international food and energy prices as also risks from financial markets -- leading to enhanced vulnerability of the financial system. It apprehends withdrawal of liquidity and that would "impact economies like India".

<b>The rupee's fall against dollar has its impact on the growing trade deficit as exports have become expensive in dollar terms. It is also affecting the BPO sector. The real income has come down. It has translated into lower pay packets and near closure of many smaller BPO units. Even the manufacturing units are not functioning to their capacity, owing to fall in demand. </b>

The situation is likely to turn grimmer as International Monetary Fund's World Economic Outlook forecasts a slowdown in global GDP to 3.7 per cent in 2008 from 4.9 per cent in 2007. It says food price inflation would remain a key-risk to global stability.

In the global foodgrains market, prices of major crops such as corn, soyabean and wheat have increased by 58.2 per cent, 86.3 per cent and 56.5 per cent respectively over a year.

Agriculture has been ignored since 1991 and food production has fallen in India. Coupled with the poor global credit scenario, there are no sunny days in sight in the near future. Any relief is unlikely from the pressures the economy is suffering. At the national level, lack of political will to deal with the situation is complicating the process. As a result, economic growth is likely to be skewed, if not stymied.

-- The writer is a senior economic journalist
Thank you Moron Singh.
<b>India's Economy Probably Expanded at Slowest Pace Since 2005 </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Loan Waiver </b>

In February, Singh wrote off <b>$17 billion of farm loans </b>and this month increased salaries of about 5 million government employees by 21 percent to spur consumer demand.
<b>India Unexpectedly Appoints Subbarao as Bank Governor</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Subbarao, who was an economic adviser to Prime Minister Manmohan Singh before he became the top bureaucrat in the finance ministry, is an engineering graduate from the elite Indian Institute of Technology. He joined the civil service and was later deputed to the World Bank, where he was the lead economist between 1999 and 2004 on issue of public finance in Africa and East Asia.

Subbarao has a masters in Economics from Ohio State University and was a Humphrey Fellow at the Massachussetts Institute of Technology. He holds a doctorate from Andhra University.

India practices Soviet-style price controls, subsidizing oil and ordering cement and steel companies to keep prices unchanged even as costs go up globally.

That complicates monetary policy, because it makes the economy vulnerable to unpredictable price shocks, as happened in June when the government was forced to cut fuel subsidies to protect refiners from going bankrupt after oil prices surged.

India's inflation rate jumped to more than 12 percent from 8.75 percent in three months, forcing Reddy to raise the central bank's key repurchase rate by 125 basis points to 9 percent.

Cumulatively, Reddy has increased the repurchase rate by 300 basis points since October 2004. He also raised the cash reserve ratio, or the proportion of funds that lenders need to set aside as reserves, by 400 basis points to 9 percent, since December 2006 to check money supply from stoking inflation.
One stooge appoints his another buddy
<b>Inflation inches up to 12.14 pc </b>
PTI | New Delhi
Posted online: Sep. 18 , 2008

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Dismissed staff lynch CEO in Gr Noida </b>
Siddheshwar Shukla | Greater Noida
Chaudhary headed Italian co in Udyog Vihar
The fight between the management and dismissed employees of a company in Greater Noida turned into a bloody struggle on Monday afternoon leading to the brutal death of the CEO of the company.   

<b>The dismissed employees allegedly lynched Chief Executive Officer and Managing Director LK Chaudhary of Italian company Cerlikon-Graziano Transmissions India Pvt Ltd in Udyog Vihar of Greater Noida to death</b>. While ex-employees ransacked the premises, the guards too took positions with their guns. More than 40 persons from both sides were injured in the bloody fight.

Chaudhary (40) was rushed to Kailash Hospital in Greater Noida but doctors declared him brought dead. He was presently residing at sector 30 in Noida with his family. The company deals in manufacturing of construction rods, is situated at Udyog Vihar in Greater Noida and the area falls under Bisrakh police station. "A total of 40 injured persons from both sides have been admitted to the hospital in which half a dozen are in the ICU," said Dr Mahesh Sharma, Chairman of Kailash Hospital. Most of the injured are stated to be from the management side.

The cause of the violent reaction dates back to six months when the employees, demanding hike in their salaries and permanent status, staged a sit-in at the gate of the company. The peaceful demonstration turned violent earlier two months back when the employees had vandalised the company, following which over 200 employees were dismissed. Since then these dismissed employees were protesting and on Monday they were called by the management to sort out the issue through a dialogue, it was stated.

"During talks, at around 12.30 pm, the management asked all the dismissed employees to submit in writing that they will never go on rampage nor lodge any movement against the company as a precondition to get their job back but they abruptly refused it. The altercation soon turned into a scuffle and the protesters started beating the officials," said Rajaram, a guard of the company. "They came armed with lathis and rods," added Rajaram.

The police have detained over 150 ex-employees. "We are investigating the matter and the culprits shall be identified at the earliest," said Baburam, SP Greater Noida. The cops have booked 18 ex-employees on the charges of murder and others too are being interrogated. The station officer of Bisrakh police station has been suspended for dereliction of duty.

Choudhary's wife Ratna Chaudhary is inconsolable and even neighboiurs are shocked by his brutal murder. "He was a gentle and humble person. He shifted here seven years back," said Mohan Kumar, a neighbour. Beside his wife, Choudhary is survived by 16-year-old son Keshar. Ratna is a senior lecturer at Delhi University's Kirorimal College Keshar is XI standard student in Modern School at Barakhambha Road, New Delhi. A huge crowd gathered at his A-105 bungalow in sector 30, Noida to mourn the tragic incident.

This is very sad.
The Government is still claiming that the situation may turn for the better by the year end. But few would agree with such gung-ho approach. Says former finance minister Yashwant Sinha, "The blood bath at the stock exchanges and liquidity squeeze have affected the sentiments in a big way. With near 13 per cent inflation and such high rate of EMIs, you don't expect people to give a thumbs up to the Government of the day. The economic crisis will surely be a major poll issue.

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Inflation slips to 11.44 per cent on falling oil prices</b>
PTI | New Delhi
Inflation fell to 11.44 per cent for the week ending October 4 on account of decline in oil prices and manufactured goods, giving some respite to the Government which is battling the impact of the global meltdown.

The inflation was 11.80 per cent a week ago.

The index for fuel prices declined by 1.1 per cent on account of lower prices of naphtha, aviation turbine fuel and furnace oil.<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Economy in free fall</b>
The Pioneer Edit Desk
<b>Nation pays for UPA's mismanagement</b>
The UPA Government is truly in a fix. After claiming economic 'success' and promising an extraordinarily high rate of growth for the past four-and-a-half years, the Congress-led regime has painted itself into a corner and brought the country frightfully close to economic disaster. Obviously, the fundamentals of the national economy, which Finance Minister P Chidambaram claims are "strong", have been weakened to a point where industrial growth has fallen dramatically and agriculture continues to rapidly decline. The stock market, which is seen as an indicator -- although at times erroneously -- of the state of the national economy, has crashed. The flawed policy of trying to beat back inflation by introducing credit squeeze and mopping up liquidity has left virtually every sector battered and bruised. It has definitely not helped ease inflationary pressure; nor has the financial meltdown in the US -- and to a certain extent in Europe -- helped matters. But just as the US Administration chose to ignore the smoke signals before the mightiest of the mighty financial institutions were reduced to ashes, unleashing a chain reaction whose impact is being felt across the globe, the UPA Government elected to believe in its own propaganda while splurging on bogus 'social welfare' schemes, thus displaying amazing profligacy. No less amazing is the fact that the Prime Minister, described as an 'economist' by his admirers, failed to spot the spreading blot -- he was too pre-occupied pushing the nuclear deal to create business opportunities for American firms and jobs for American citizens to bother about Indian firms and their Indian employees. The near-collapse of Jet Airways, which has terminated the services of 1,900 employees, and the pink slips being handed out in the IT and IT-enabled services sector, which showcased India's remarkable economic surge, are only some of the symptoms of the creeping, deadly malaise that threatens the health of every sector of the economy.

Even at this late stage, the Government could possibly halt the decline and avert the emptying of public coffers. There is no percentage in either demanding or expecting a 'bailout' for enterprises whose fortunes have plummeted. Indeed, if the absence of intervention by the Government -- for instance, by way of reducing operational costs, taxes and fuel surcharges -- has exacerbated the problems plaguing the aviation sector, mismanagement and misplaced expansion are to blame for the genesis of the problems. There really is no cause to shed tears for Jet Airways, though it is extremely unfair that its sins should be visited on its employees. But the looming crisis is not only about the turbulence being faced by private airlines and their greedy managements; it is about the entire economy moving from the doldrums into increasingly stormy and uncertain waters. This is largely on account of the gross mismanagement of the national economy ever since the UPA came to power in the summer of 2004 -- since then, it has done everything to squander the advantages it inherited from the NDA Government. Yet, the people who presided over the making of this unmitigated disaster have the gumption to insist that all is fine and there is no need to panic. The Prime Minister and his Finance Minister could try telling this to those who have lost their jobs or are facing job cuts.<!--QuoteEnd--><!--QuoteEEnd-->
<b>Govt mulls policies to counter global crisis</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The government is discussing a number of policy measures to insulate India from the impact of the global financial crisis including further banking reform, <b>industrial de-control, auctioning all loss-making public sector units,  foreign investment in retail, amending labour laws and notifying important pending legislation like the Delhi Rent Control Act</b>...........<!--QuoteEnd--><!--QuoteEEnd-->

All this was proposed and started by Arun Shourie and if I recall UPA even started investigation on all above proposal against Arun Shourie.
What happened ?
<b>Manmohan Singh and P.Chidambaram have a lot to answer for mismanaging the economy, says <i>N.V.Subramanian</i></b>.
People laughed when this thread was first setup. But in four years MMS govt has run up the debt and brought the economy to a standstill leaving no room for any manouvers. When things were rosy they ran up deficits and dream budgets redux. Now there is no more room. They should have saved more money in gold and built up more reserves. Instead they were frittering away the wealth in votebank schemes.
Some people call Manmohan genius <!--emo&Big Grin--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> , well this man had moved healthy economy to incentive care unit. This is all Oxford Marx ideology and Manmohan Singh is torch bearer. It was Narshima Rao's vision and pressure which forced Manmohan to open up economy but fool are always fool and Manmohan Singh end up doing what was wrong with India at first place.
Left/commie always go for free dole. They want to make rest fo India like WB, dead forever.
<b>Govt to pump Rs 50K crore into core projects</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->In a major initiative to pump prime the economy through public expenditure, the government has decided to inject a whopping Rs 50,000 crore (Rs 500 billion) for funding infrastructure projects.
"The plan is to spend Rs 50,000 crore on infrastructure... its specific contours will be announced anytime," Minister of State for Industry Ashwani Kumar told PTI.
When Shame of India got appointed as PM , first thing he did was cancelled or delayed every project started by BJP/NDA government.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Companies that are cutting production</b>
December 18, 2008
Its no longer 'India shining'. Industrial production fell into the negative zone for the first time in 15 years after recording a 12.2 per cent growth a year ago. Industrial output fell by 0.4 per cent in October.

The manufacturing sector fell by 1.2 per cent year-on-year giving the warning signals of an economic slowdown. Consumer goods fell 2.3 per cent year-on-year compared with a 7.6 per cent increase in the first half of the year.

The growth across industry sectors is likely to slow down further. If this trend continues for two quarters, India will officially be in a recession. However, former finance minister (and current home minister) P Chidambaram has said India is nowhere near recession.

<b>Bad news continues. Indian industry is planning production cuts in the range of 10-50 per cent between October 2008 and March 2009.

The sectors which are likely to see production cuts include textiles, metal and metal products, machinery and equipment, leather as well as chemicals, points out a survey by Federation of Indian Chambers of Commerce and Industry (Ficci).</b>

Sectors like textiles, metal and metal products, leather and jewellery could see job cuts in the range of 10-30 per cent.

<b>The automobile sector has been on of the worst hit in the crisis. About 600 auto component manufacturing units in Jamshedpur have shut down operations, while more than 4,000 other units spread across the country are on the verge of closure</b>.

Here's a look at the companies that have shutdown their plants or cut down production target in the wake of the worsening crisis.
I guess the press that wrote that story doesnt belong to India. They are writing like they are inside but their minds are outside. If India is not shining wont their interests be affected? Wont less people avertise and wont that bring down their website?
<!--QuoteBegin-ramana+Dec 18 2008, 04:09 PM-->QUOTE(ramana @ Dec 18 2008, 04:09 PM)<!--QuoteEBegin-->I guess the press that wrote that story doesnt belong to India. They are writing like they are inside but their minds are outside. If India is not shining wont their interests be affected? Wont less people avertise and wont that bring down their website?

Ramana, not if most of their (i.e. press) actual funding is coming from abroad.
<b>RBI worried about fall in optimism, poised to cut rates</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The Reserve Bank of India is expected to cut interest rates at its third quarter review of monetary policy on Tuesday after it said there has been a "significant decline" in business optimism despite comfortable liquidity with commercial banks, which parked nearly Rs <b>2,00,000 crore of excess funds with government securities than a year ago</b>. 'The macroeconomic and monetary developments third quarter review 2008-09', released on Monday by the bank, shows that of the 19 parameters of business indicators, most are expected to worsen. The 'industrial outlook survey' is conducted by RBI every quarter among manufacturing companies in the private sector to judge how they expect their business will shape up in the three-month period.

The RBI review of the economy has pointed out that the median growth rate for GDP as judged by <b>professional forecasters for this fiscal is 6.8%, down from the September 2008 estimate of 7.7%</b>. This is lower than the 'most conservative' 7.1% GDP growth projected by the Prime Minister's Economic Advisory Council on Friday.

Accordingly the professional forecasters' survey has also pegged growth for <b>industry at 4.9% for 2008-09, sharply lower than the earlier projection of 7%</b>. The only signs of optimism are the dip in raw material costs as global commodity prices ease up. A majority of the companies present in the survey said they expect their selling prices to dip. The business expectations indices have slipped by 5.9% for January-March 2009 quarter, worse than the 2.6% for the October-December 2008 quarter over the corresponding quarter a year before.

The other worrying trend is that credit from private and foreign banks have come down sharply. <b>Credit by public sector banks grew by 28.6% as on January 2, 2009, up from 19.8% last year, whereas credit growth of private banks fell to 11.8% as on January 2, 2009 from 24.2% a year ago.</b> Lending growth of <b>foreign banks too halved to 16.9% from 30.7% during the period</b>.

Most bank credit has flown to the petroleum and fertiliser industries, credit to them grew by 101.8% year-on-year by December 2008, as compared with a growth of 11.8% in the corresponding period of the previous year.<b> Excluding credit to these sectors, the growth of non-food credit has been flat at 22.9%, almost the same as last year at 22.1%. As expected, credit for housing and consumer durables has come down sharply, along with that for education loans</b>. The dip has been more pronounced in the last quarter.
<b>Indian Exporters Cut 1 Million Jobs as Foreign Orders Decline </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Jan. 29 (Bloomberg) -- Indian exporters have shed as many as 1 million jobs, more than 15 times a December estimate, amid the most protracted decline in overseas sales in a decade, the commerce ministry said.

“The job losses are very substantial and are likely to be of the order of 700,000 to 1 million, including temporary staff,” Commerce Secretary G.K. Pillai told Bloomberg News in an interview in New Delhi yesterday. Exports fell 1 percent in December and any recovery “is likely only by June,” he said.


“Job losses are going to be substantial,” said Pillai, the top bureaucrat in India’s commerce ministry. “<b>Labor- intensive sectors like gems, jewelry, clothing, textiles and handicrafts are the worst hit.”</b>

Gokaldas Exports Ltd., India’s largest exporter of clothes and controlled by Blackstone Group LP, plans to cut a “few thousands jobs in the next two months,” said Rajendra Hinduja, managing director of the company. The Bangalore-based company employs about 47,000 workers. <!--QuoteEnd--><!--QuoteEEnd-->
Presentation by Kirit Somaiya on Economic Slowdown under UPA

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