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Indian Economy: Growth -3
<!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> http://online.wsj.com/article_email/SB1186...OTUwMTkxWj.html



In India, a Retailer Finds
Key to Success Is Clutter
Consumers Like Noise,
Bins, Mr. Biyani Says;
Narrowing the Aisles

August 8, 2007; Page A1

MUMBAI -- On a tour of one of his supermarkets, Kishore Biyani notes that shopping carts are getting stuck in the narrow aisles, wheat and lentils have spilled onto the floor, black spots cover the onions and it’s difficult to hear above the constant in-store announcements. He grins and congratulates the store manager.

Mr. Biyani, 45 years old, has built a large business and a family fortune on the simple premise that, in India, chaos sells.

Americans and Europeans might like to shop in pristine and quiet stores where products are carefully arranged. But when Mr. Biyani tried that in Western-style supermarkets he opened in India six years ago, too many customers walked down the wide aisles, past neatly stocked shelves and out the door without buying.

Mr. Biyani says he soon figured out what he was doing wrong. Shopping in such a sterile environment didn’t appeal to the lower middle-class shoppers he was targeting. They were more comfortable in the tiny, cramped stores -- often filled with haggling customers -- that typify Indian shopping. Most Indians buy their fresh produce from vendors who keep vegetables under burlap sacks.

So Mr. Biyani redesigned his stores to make them messier, noisier and more cramped. "The shouting, the untidiness, the chaos is part of the design," he says, as he surveys his Mumbai store where he just spent around $50,000 to replace long, wide aisles with narrow, crooked ones: "Making it chaotic is not easy."

Even the dirty, black-spotted onions serve a function. For the average Indian, dusty and dirty produce means fresh from the farm, he says. Indian shoppers also love to bargain. Mr. Biyani doesn’t allow haggling, but having damaged as well as good quality produce in the same box gives customers a chance to choose and think they are getting a better deal. "They should get a sense of victory," he says.

The approach has made Mr. Biyani rich. His company, Pantaloon Retail (India) Ltd., is now India’s largest retailer; it expects to report sales of more than $875 million for the fiscal year ended in June. He and his family own a 42% stake in Pantaloon, valued at about $630 million.

Mr. Biyani is proving that modern retailing, with a bit of spice, can work in a country where traditional markets dominate. On the back of his success -- and rushing to close his head start -- are some of the world’s largest retailers. While few may subscribe to Mr. Biyani’s chaos theory of retail, all will be struggling to find ways to attract the millions of Indian consumers who are shopping at branded chain stores for the first time.

Wal-Mart Joint Venture

Wal-Mart Stores. agreed this week to set up a joint venture with Bharti Enterprises Ltd. -- which runs India’s largest cellular company -- that will open wholesale stores to sell goods to small retailers, manufacturers and farmers in India. Bharti plans to spend $2.5 billion to build a nationwide network of supermarkets and small stores. Wal-Mart has to use this route into India because Indian regulations don’t allow multiple-brand retailers to sell directly to consumers -- but they can run wholesale operations and provide support to Indian retailers. Tesco PLC of the United Kingdom and Carrefour SA of France, are also eyeing India. Petroleum refiner Reliance Industries Ltd., one of India’s largest companies by market value, plans to spend more than $6 billion in the next five years to open thousands of supermarkets.

All are hoping to tap into the rampant consumer spending sweeping India amid fast economic growth. India’s total retail market is about $370 billion a year and will expand more than 55% in the next four years, estimates Technopak Advisors, a New Delhi-based retail consulting firm. It says sales of branded chain stores now represent less than 5% of total retail sales -- but are expected to grow more than five-fold by 2011, accounting for 17% of retail sales.

Many more Indian women are working today and don’t have the time to visit several mom-and-pop stores. "I can’t go to 10 different stores to get 20 different things. I’m a working mother," says Candice D’Souza, a 28-year-old public-relations firm manager, who recently became a convert to Mr. Biyani’s Big Bazaar stores.

Wealthy Indians often employ servants who do most of the shopping. Many of Mr. Biyani’s unique touches are designed to make the household help, rather than their employers, feel comfortable shopping. Indeed, he says that the greatest potential pool of customers for retail chains in India comes not from the wealthy but from those who work for them.

Mr. Biyani divides India’s 1.1 billion people into three types of consumers. "India One," as he calls them, are those with good educations, good jobs, and much disposable income. They also are the target audience for many foreign companies seeking to sell their wares here. Mr. Biyani estimates that such customers comprise about 14% of the total population.

Where he sees the greatest sales potential is among consumers he calls India Two: the drivers, maids, cooks, nannies, farmers and others who serve India One. He estimates that 55% of Indians -- roughly 550 million people -- fall into this category. They are seeing their wages rise and their children frequently pursue further education and careers that will vault them up the social ladder. India Three, he says, is the rest of the nation -- those at, or slightly above, subsistence level, who don’t represent much of a market for modern retailers.

He thinks any retailer that tries to re-create a Western store in India will miss most potential customers. "People like to do what they think works in the West," but India is different, he says.

Mr. Biyani has been studying Indian consumers for more than 20 years. Though many of his innovations are distinctly Indian, he credits icons of U.S. retailing as his inspiration. His copy of Wal-Mart founder Sam Walton’s book "Sam Walton: Made in America" is battered from constant use. From Mr. Walton, Mr. Biyani says he learned how to "rewrite the rules" in retailing. Mr. Walton’s photo hangs on his office wall below Mother Teresa’s. He also has written his own autobiography called, "It Happened in India."

In the 1980s, Mr. Biyani left his family textile business to launch a business selling "stone washed" denim. He started his own line of shirts and trousers at a time when few Indians bought ready-made garments, and later opened clothing stores because he couldn’t get others to carry his products. When he decided to enter the supermarket business in 2001, his friends and executives told him India wasn’t ready. He thought otherwise.

Food Bazaar, Mr. Biyani’s Western-style supermarket, now has 93 outlets in the country. Big Bazaar, which sells household goods and clothes and frequently is housed under the same roof as Food Bazaar, has 65 outlets. Mr. Biyani also has expanded into other businesses, including restaurants, bars, property, mall management, media, a private-equity fund and a bowling alley. All his businesses are loosely gathered under an umbrella company called the Future Group, based in Mumbai.

The Big Bazaar and Food Bazaar stores make up more than 60% of the annual sales of Pantaloon, the main listed company in the group.

Public Market

Both Big Bazaar and Food Bazaar stores seek to invoke the atmosphere of a public market, Mr. Biyani says -- albeit in the air-conditioned malls that are springing up around India. The outlets have floors of gray granite tiling, common in markets and train stations, so newcomers who have never been in a large, modern store feel at home.

Instead of long aisles and tall shelves, the stores cluster products in bins and on low shelves. With long aisles, he says, "the customers never stopped. They kept on walking on and on so we had to create blockages."

The bins let customers handle products from different sides. Decades of shopping from stalls also means that most customers feel more comfortable looking down when they shop, he says. Narrow, winding aisles create small traffic jams that make people stop and look at products. Last month, one of his first stores in Mumbai changed from long, straight aisles to the haphazard cluster design. "Sales are up 30% since the change," Mr. Biyani said, as he struggled to walk through the knots of shoppers at the store.

Indian consumers aren’t used to processed and packaged goods, so the stores sell wheat, rice, lentils and other products out of large buckets. Housewives want to grab handfuls, checking them out for pebbles, quality and smell, he says. Mr. Biyani tells his staff not to tidy up, as he noticed that customers are less likely to check out a product if it is in neat stacks. He scoops up a handful of plastic razors from a pile in a bin. "When it is like this," he says, "it feels like a good deal."

Because he says Indians like to talk and consult and bicker as they buy, the stores have up to three times the number of employees per square foot than a typical Wal-Mart. A few employees walk around the store using megaphones to announce promotions, adding to the din from constant music and commercials playing in the background. Mr. Biyani doesn’t want his stores to be quiet or relaxing. Many of the stores aren’t air-conditioned -- on purpose.

The announcements and ads are done in India’s many local languages to make non-English speakers feel welcome. "We advertise in the language that people dream in," says Mr. Biyani, who is proud he isn’t one of the many business leaders in India who has lived or studied abroad. Though he speaks the language, "I don’t dream in English," he says.

Mr. Biyani’s chaos theory of retailing extends only so far. When it comes to taking in money and making sure there are plenty of goods for customers to peruse, his stores strive to be as efficient as any in the world. They run software from German technology giant SAP AG to find out when a new brand of noodle isn’t selling well in Bangalore or the supply of curds is running low in Kolkata. More than 50,000 items are delivered using just-in-time inventory. And the stores have large numbers of cashiers to ensure that the checkout process is fast.

Not all his efforts to replicate the feel of a market have worked. When thousands lined up in front of each of his Big Bazaar stores for an annual sale in 2005, he had to shut down stores early and call in the police to avoid rioting. In Bangalore, the police forced the management of one Big Bazaar to extend the sale by one day to calm the angry crowd. Now his annual sales run for three days and he uses ropes to control the long lines.

The approach also has its limits. Mr. Biyani’s department stores, called Pantaloon, are aimed at wealthier Indians, who are likely to have either lived or traveled abroad and expect a different shopping experience. There, floors are scrubbed, the air is cool, and every item is carefully arranged on shelves.

As others now roll out their own supermarkets, Mr. Biyani says there is enough business for everyone, but that it will take years for newcomers to catch up with him. He also argues that India doesn’t need foreign mass-market retailers yet and is part of retail-industry associations that support restrictions on foreign investment. He says foreigners might dump products on India to gain market share and ruin Indian retailers before they have a chance to grow. He has voiced concerns about foreign companies taking profits out of India.

In the meantime, he is taking his experiments into what Indian consumers want into a different domain.

Former Milking Shed

Across Mumbai, on the site of a former milking shed, is Orchid City Centre Mall. Mr. Biyani’s Pantaloon Retail owns the mall and manages most of the 20-plus stores inside. It is a petri dish to test new retail formats and adapt them for Indian consumers. It has the Future Group’s own bookstore, electronics, children’s clothing, plus-size clothing, home furnishing and drug stores as well as a video arcade, food court, gym, beauty salon and banquet hall.

While he expects brisk demand for the banquet hall from weddings, he has already figured out that his customers don’t want $1.50 coffee. The gourmet coffee shop has shut down and stands empty while he thinks of something else to put in its place.

The biggest pull in the mall is still the chaotic Big Bazaar and Food Bazaar. He put them on the top floor, to force shoppers to see the rest of the mall when they come to buy rice. It seems to be working. The penthouse grocery store is packed and the mall is crawling with shoppers pushing grocery carts.

"Nobody knows," what will sell until they try, says Mr. Biyani. "We all have to discover by doing."

--Tariq Engineer contributed to this article.

Write to Eric Bellman at eric.bellman@awsj.com

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<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Workplace stress? It can kill you </b>
Rajesh Mahapatra explains why
A sharp rise in lifestyle diseases such as heart problems and strokes, coupled with a lack of adequate preventive health care, threatens India's future growth prospects, a research study says. Experts warn that the country's hugely successful outsourcing industry could be the hardest hit.

Heart diseases, strokes and diabetes are estimated to have wiped $ 9 billion off India's national income in 2005, but the losses could total a staggering $ 200 billion over the next 10 years if corrective action is not taken quickly, according to a study by the Indian Council for Research on International Economic Relations, a New Delhi-based research group.

It said India's rapid economic expansion has boosted corporate profits and employee incomes, but has also sparked a surge in workplace stress and lifestyle diseases that few Indian companies have addressed. Health Minister Anbumani Ramadoss said his biggest concern was the country's information technology industry that has grown rapidly, riding on the outsourcing boom.

Long working hours, night shifts and a sedentary lifestyle make people employed at information technology companies prone to heart disease and diabetes, the report said. There have also been growing reports of mental depression and family discord in the industry.

Infosys Technologies Ltd, India's second-largest software exporter, has a 24-hour hot line for employees suffering from depression to access psychiatrists. "We must have prevented at least 30 deaths from suicide because of this hot line," said Mr Richard Lobo, a director at the Bangalore-based company.

"In Bangalore, psychiatrists say their Saturdays are reserved for marriage counselling for the IT sector," Mr Lobo said. Infosys introduced a work-life balance plan after a 24-year-old employee suffered a heart attack several years ago, Mr Lobo said. But not many companies in the outsourcing industry conduct regular health checks or provide similar support to their employees.

The ICRIER study, <b>which surveyed 81 companies, said they lose approximately 14 per cent of their annual working days due to employee sickness. Less than a third of them provide their staff with preventive health care measures.</b>

Reducing just one health risk increases an employee's on-the-job productivity by nine per cent and cuts absenteeism by two per cent, the study said.

<b>Dr Ravi Kasliwal, a cardiologist at New Delhi's Indraprastha Apollo Hospital, said heart disease is projected to account for 35 per cent of deaths among India's working age population between 2000 and 2030</b>, Dr Kasliwal said, citing data from the WHO. That compares to about 12 per cent in the US, 22 per cent in China and 25 per cent in Russia.

The ICRIER study said corporate initiatives are crucial because of low levels of public health spending and poor insurance coverage. India's per capita health spending of $ 7 is one of the lowest in the world and is a fraction of what the United States spends -- $ 2,548, according to a 2006 WHO report.

[center]<b>INDIA’S FOREIGN EXCHANGE RESERVES INCREASE BY USD 11.871 BILLION OVER PERIOD 21-09-2007 - 28-09-2007 TO USD 247.762 BILLION</b>[/center]

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->

[center]<b><span style='font-size:14pt;line-height:100%'>Handbook of Statistics on Indian Economy : 2006-2007 : Reserve Bank of India</span></b>[/center]

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
Very good article

<b>Rupee rising against $? Not all that much</b>!<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->It is claimed that India has suffered a terrible 20 per cent appreciation from Rs 49 a dollar in June 2002 to Rs 39 a dollar today. It seems obvious to most people that such an INR appreciation is completely inappropriate.

However, we need to look deeper at what was going on. Over the same period, the USD has been losing ground, as part of the adjustments required for narrowing the massive US current account deficit. Going by the US Fed's 'nominal major currencies index,' the USD lost 29.43% over this same period. Going by the 'nominal broad dollar index,' the USD lost 20.43% over this same period.

We in India are so used to running a pegged exchange rate to the USD that we assume that an INR appreciation against the USD is an appreciation. But if the USD is dropping and we try to hang on to a nominal value of the USD, then we are trying to force a depreciation of the INR. The appreciation as seen in the REER is very small (roughly 10%) when compared with that seen in the INR/USD rate.

It is claimed that INR appreciation would have a terrible impact on exports. However, the empirical evidence does not square up.

Suppose we focus on June 2002, when the rupee peaked at Rs 49 to the dollar. In the 63 months that led up to June 2002, exports growth in dollars averaged 6.97%. In the 63 months after this date, exports growth averaged 23.88%. While the REER appreciated after June 2002, monthly exports of merchandise tripled over these five years.

Any simple claims about the impact of exchange rate fluctuations on exports are not compatible with the evidence.


Now the drumbeat is building up about private equity flows and participatory notes. Before policy makers accede to these requests, the track record of the RBI on thinking about economic policy needs to be re-evaluated.

There appears to be a gap between the closed economy worldview and the new India, an India that is highly globalised and has new behavioural patterns. The policy reflexes that used to work in the mid-1990s do not work today.

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Economy may slowdown as industry growth dips </b>
Priti Bajaj | New Delhi
Is the Indian economy heading for a slowdown or is it just that we are crying wolf even before the real danger appears? The present scenario is predicted to be a precursor to the impending gloom by some economists, while others stress it is just a passing phase. <b>Taking a closer look at the country's industrial growth, which has come down to a mere 6.4% in September, the lowest this year, many analysts are forecasting that the growth chart will be taking a dip this fisca</b>l. 

While in August, the industrial growth was a spectacular 10.7%, the persistent rise in rupee, a lending squeeze effected by the<b> Reserve Bank of India (RBI) and an increase in the cost of industrial raw materials together have come down heavily on the booming economy. For some economists, these are early warning signs of an industrial slowdown. </b>

Even as the Government dismisses the speculation that a low Index of Industrial Production (IIP) is indicative of a slowdown setting in Asia's fourth largest economy, the fact remains that India's growth story may get dull if the present downtrend continues. However, there are economists who say that Indian economy may be going through a phase of moderation. According to Shubhada Rao, chief economist, Yes Bank,<b> "We are expecting a moderation, not a slowdown. As such, industrial growth is expected to be 9.5% for the fiscal as compared to 11% last year". </b>Rao held that the investment demands, as represented by capital goods continue to be robust, therefore there is no strong evidence of a slowdown.

Though economists are of the opinion that it is too early to press the panic button, but if we take into consideration the growth numbers in the first half of this year, a declining trend is far too obvious to be just overlooked. According to G Srivatsava, head economic policy at Confederation of Indian Industry (CII), "a major cause of concern has been the decline in growth of IIP for six infrastructure industries in September. Except for electricity, all others have registered a lower growth, which is not a healthy sign at all."

All other sectors including coal, petroleum, petro products, cement and steel have registered decreased growth.

The saving grace remains that there is no decline in the industrial output. As of now, it is only the consumer goods that have shown a decrease in output primarily because of the infrastructure sectors impacting the raw materials, manufacturing, consumer goods and other linkages. Economists say, once a

decline in output is evident in any economy, then there is a definite industrial slowdown, which should be taken care of, well in advance.

The fall in industrial index increases worries that higher interest rate and a stronger currency will be hurting demand in the country. Anshuman Khanna, deputy director, Economic Affairs and Research, Federation of Indian Chambers of Commerce and Industry (FICCI), said, "Of late, a very strong rupee has become the top concern of the exporters with orders drying up.<b>" A rising rupee is being cited as a major concern for the exporters, specially the small ones, who deal with labour-intensive sectors like textiles, leather goods etc, where the margins are very small</b>.

India is faced with stiff competition from neighbouring countries like Sri Lanka, Bangladesh, Pakistan and an appreciating currency does not augur well for exports. <b>"Even though the interest rates play a very important role, yet India should look at exploring and diversifying into other geographies and not dwell on export orders primarily from the US. Currently, 80% billing is done in US dollars which is weakening across the globe,"</b> said Srivatsava.

Adding fuel to the fire is the interest rate which needs to be cut down to the international levels. In today's scenario, there is a huge interest rate differential offering opportunities of arbitrage. Once the domestic interest rate is as low as the international rates, then the inflow from foreign institutional investment (FII) can be moderate, easing the pressure on Rupee, opined Srivatsava. On the domestic front, the interest outgo has gone up for the companies, impacting the net profit.

However, analysts forecast any interest rate cut by the RBI may not happen in the immediate future to spur demand despite low levels of inflations because inflationary expectations are very high due to rising crude and food prices internationally.

Add Oil price, India is not doing anything to balance out oil price in India. In place of soft landing, it will create long term slow down.

[center]<b><span style='font-size:14pt;line-height:100%'>ECONOMIST : THE WORLD IN 2OO8 - Countries The world in figures</span></b>[/center]

<b><span style='font-size:14pt;line-height:100%'>INDIA :</span></b>

GDP growth : 7.9%

GDP : $1.33trn (PPP: $5.31trn)

Inflation : 5.2%

Population : 1.13bn

<b>GDP per head : $1,180 (PPP: $4,720)</b>

<b><span style='color:green'>PAKISTAN :</span></b>

GDP growth : 5.9%

GDP : $157bn (PPP: $492bn)

Inflation : 6.3%

Population : 167.2m

<b>GDP per head : $940 (PPP: $2,940)</b>

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
Nareshji in one of your recent interactions I gathered that the economic condition of Pakistan was far better than that of India. Among other reasons you attributed this to the faster decision making process in that country. After taken note of the figures given by economist we in India should feel some satisfaction on our performance.

It is only some satisfaction, as still poverty is visible all around. About 40 percent of the children are undernourished and same is the case with the women of reproductive age. Health and Education remains a major problem along with employment and housing. I do agree that there has been some improvement on the above aspects in certain parts if the country but in general there is still much more to be done.

<b>Ravish Ji :</b>

Your referring to our interactions - which is on a different Forum - seemingly disregards my opening sentence which states :

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>In my humble opinion</b> Pakistan’s Economic Condition <b>must</b> be better than India as it is much better endowed than India.<!--QuoteEnd--><!--QuoteEEnd-->

You will appreciate what <b>must</b> be is not necessarily what <b>will</b> be. What <b>will</b> be is dependant on the Leadership of the Corporate Entity or Country

One can safely compare the Pakistani Leadership - Armed Forces, Political as well as Bureaucratic - to Colonel Cargill of Joseph Heller’s Catch 22. The following description suits Pakistani Leaders to a <b><span style='font-size:21pt;line-height:100%'>T</span></b> :

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Colonel Cargill was a forceful, ruddy man. Before the war, he had been an alert, hard-hitting, aggressive marketing executive. He was a very bad marketing executive. Colonel Cargill was so bad a marketing executive that his services were much sought after by firms eager to establish losses for tax purposes. Throughout the civilized world, from Battery Park to Fulton Street, he was known as a dependable man for a fast tax write-off. His prices were high, for failure often did not come easily. He had to start at the top and work himself down, and with sympathetic friends in Washington, losing money was no simple matter. It took months of hard work and careful misplanning. A person misplaced, disorganized, miscalculated, overlooked everything and opened every loophole, and just when he thought he had it made, the government gave him a lake or a forest or an oilfield and spoiled everything. Even with such handicaps, Colonel Cargill could be relied on to run the most prosperous enterprise into the ground. He was a self-made man who owed his lack of success to nobody.<!--QuoteEnd--><!--QuoteEEnd-->

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->

<b><span style='color:red'>Economics focus</span></b>

[center]<b><span style='color:blue'>The uncomfortable rise of the rupee</span></b>[/center]

<b>Is India suffocating from too much foreign attention?</b>

[center]<img src='http://www.economist.com/images/20071215/CFN505.gif' border='0' alt='user posted image' />[/center]

INDIA, it is fair to say, is not yet reconciled to the new-found strength of its currency. One poor wretch, pressed against the car window at a Delhi traffic light, tries to change a dollar bill she presumably cadged off a tourist. She wants 50 rupees for it.

Alas, the dollar now fetches less than 40 rupees (see left-hand chart). India's currency has strengthened by about 15% against the greenback in the past year and by over 10%, on an inflation-adjusted, trade-weighted basis, since August 2006. The rupee's rise may be less dramatic than that of the Philippine peso, Brazilian real or Turkish lira. But it is uncomfortable nonetheless.

This vigour is due to a strong inflow of foreign capital, some of it enticed by India's promise, the rest disillusioned by the rich world's financial troubles. The net inflow amounted to almost $45 billion in the year to March, compared with $23.4 billion a year earlier (see right-hand chart).

Street children are not the only ones regretting this influx. India's IT industry, which first advertised India's virtues to the outside world, is now suffering more than most from the avid interest in the rupee. Worst hit, however, are India's labour-intensive manufacturers. Textile exports, for example, fell by 11.7% in the year to April. Kamal Nath, India's minister of commerce and industry, fears that exporters may shed 2m jobs.

The Reserve Bank of India (RBI), the country's central bank, has done its best to resist the appreciation, and, at the same time, contain inflation at home. As any student of macroeconomics knows, central banks struggle to achieve both objectives simultaneously in the face of strong inflows of capital. Printing rupees to buy the incoming dollars keeps the currency cheap but also adds to the money supply, stoking inflation.

To avert this danger, the RBI has tried to claw back the extra money by selling “sterilisation” bonds to banks and raising the reserves they must lock up in its vaults. But this sterilisation effort is hard to maintain. The RBI intermittently pauses for breath, letting go of the rupee. The market, anticipating its exhaustion, only tests it all the harder.

India's currency dilemma is also a deeper philosophical one. Just as the Reserve Bank straddles two objectives, so India is torn between competing visions of its future.

On the one hand, the country envies China its export success. The yuan remains keenly priced and closely shepherded. Why, then, reason many Indians, should their country handicap itself with a stubbornly strong exchange rate.

On the other hand, India has spent at least 15 years tentatively opening its capital account and liberalising its financial markets. It has had particular success in attracting foreign interest in its companies' shares, rather than the bonds or loans that got so many emerging economies into trouble in the past. Why not take advantage of this foreign money to pay for the investment the country so sorely needs? Ila Patnaik and Ajay Shah, of New Delhi's National Institute of Public Finance and Policy, point out that India has long yearned for a sustainable flow of foreign finance to supplement its domestic saving. Indeed, in 2002 its planning commission complained that the country's current-account deficit was less than half the size it had envisaged.

Nonetheless, some fear—and others hope—that the dearer rupee will prompt India to take a step backwards and tighten its controls on capital inflows. The RBI already circumscribes the freedom of firms to raise money abroad, and in October the regulator put a freeze on “participatory notes”, an indirect way for foreigners to play the Indian stockmarket.

Might it go further? In the 1990s Chile threw some “sand in the wheels” of international finance by forcing foreign investors to deposit a fraction of their money directed toward the country in an interest-free account. The encaje, as it was called, remains the most fashionable and widely studied experiment in capital controls. It probably helped to deter short-term investments. But the overall volume of inflows did not slow and Chile's real exchange rate continued to appreciate.

The other Chilean lesson from that period is more orthodox and thus less talked about. The government showed admirable fiscal restraint, which relieved some of the upward pressure on domestic prices, and also left the exchequer with enough money and credibility to cushion the economic downturn when foreign capital eventually turned tail in 1998.

<b>Control freak</b>

Such controls might buy India a temporary respite, but they will hardly convert it into a Chinese export powerhouse. Ms Patnaik thinks India has already gone too far down the road of financial liberalisation to emulate the exchange-rate policies of its bigger neighbour. China can accomplish its feats of reserve accumulation and sterilisation only because the country's banks are so docile and its savers captive. The banks are force-fed sterilisation bills, which yield even less than the central bank earns on its foreign reserves. They nonetheless survive because they rely on a steady supply of deposits from China's savers, who have few other places to put their money.

In India, on the other hand, banks are less compliant and savers are more choosy. If the banks do not offer them an attractive interest rate, they will buy shares, property or jewellery instead. Hence the banks, in turn, will not buy the RBI's sterilisation bonds unless it offers them an adequate return.

The migration of capital from the rich world to the poorer one is a sign of a bleaker season to come in the world's biggest markets. This would, then, seem an inauspicious moment for India to bet its future on export-led growth. If it cannot resist the inflow of foreign capital, it should try instead to make room for it—by observing fiscal restraint—and to make the most of it—by investing it wisely. India may then have an economy worthy of a more expensive rupee; and its children may have better things to do than hang around at traffic lights trying to change a buck.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->

[center]<b><span style='font-size:14pt;line-height:100%'>International Investment Position (IIP) of India as at the end-June 2007</span></b>[/center]

<b>Net I I P….....: US Dollars 062.45 Billion

A. Assets…....: US Dollars 259.73 Billion

B. Liabilities : U S Dollars 322.18 Billion</b>

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<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Boom story has a gloom sight </b>
Priti Bajaj | New Delhi
Reflecting the initial signs of a slowdown, the country's industrial growth plunged to 5.3 per cent in November 2007 as compared to 15.8 per cent in November 2006 primarily due to a slowdown in consumer spending and a sluggish manufacturing sector. 

Voicing concern at the prevailing situation, economists are of the opinion that the Index of Industrial Production (IIP) released last week has taken a<b> hit due to the combined effect of high base effect, a tight monetary policy and rupee appreciation. </b>

It is noteworthy that the decline in the growth rate in November 2007 has pierced all sectors, with manufacturing growing only at the rate of 5.4 per cent in that month against 17.2 per cent in the same month of the preceding year.

The six infrastructure industries -- coal, steel, cement, electricity, crude oil and petroleum refining -- grew 6.0 per cent in April-November, the first eight months of 2007-08, compared with 8.9 per cent in the year earlier period. The six infrastructure industries account for about 27 per cent of the total weight of the IIP.

The slump in the consumer goods sector also continued unabated with growth in consumer durables slipping from 10.1 per cent to negative 4.1 per cent and for consumer non-durables the respective figures were pegged at 14.8 and negative 2.1.

According to Shashank Bhide, research head with National Council of Applied Economic Research (NCAER), "the drop in the growth rate of consumer durables is not much of a surprise but the decline in growth of non-durables is a surprise. One interpretation of this can be that access to credit cost of credit has been affecting consumer demand for durables."

However, Bhide brushed aside any immediate concerns stating that the momentum of economy is keeping the investment growth in tact and as compared to the October numbers the fall in November industrial growth has not been so dramatic.

Sectoral data released by the Government shows that capital goods and intermediate goods recorded growth rates of 24.5 per cent and 7.3 per cent in November 2007 as against 29.4 per cent and 17.9 per cent, respectively, in November 2006. The growth rate in capital goods sector increased to 20.8 per cent in April-November this year as against 17.4 per cent during the corresponding period last year.

During November 2007, growth rate in manufacturing sector, which has a weightage of 79.4 per cent, dropped sharply to 5.4 per cent from 17.2 per cent in November 2006. Reacting to the fall in industrial production and manufacturing by double digit Assocham president Venugopal N Dhoot said this was indicative of the fact that these sectors need sops so that they can get out of stress.

According to Mahesh Vyas, managing director and CEO, Centre for Monitoring Indian Economy (CMIE), "the decline in IIP reflects the effect of hike in interest rates. Right from April 2007, the consumer durables sector growth rate has been going down in line with decline in personal loan disbursal."

Agreeing with other analysts on the issue of investment boom, Vyas stressed that capex monitoring of CMIE of the quarter ended December 2007 showed that 4,89,000 crore worth of fresh investments were announced, indicating that the economy's growth momentum will continue, at least for now.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Economy heads for downslide
Pioneer News Service | New Delhi
<b>The double digit growth dream seems to be over. With sharp decline in manufacturing sector and consumer goods, the Government on Thursday scaled down the growth projection for 2007-2008 to 8.9 per cent.</b>

What has further set the alarm bells ringing is the grim projection of a slowdown by the international rating agencies. Moody's has said the growth target could dip as low as 8 per cent with an upper limit of 8.8 per cent while the world's biggest securities firm Goldman Sachs has projected lower GDP growth forecast at 7.8 per cent from 8 per cent for the year for India.

"Our current assessment for GDP growth rate in 2007-08 is marginally lower than our previous estimates in July 2007. The main difference stems from lower than expected expansion in manufacturing output and lower growth in the output of energy utilities," said a review of the economy for 2007-08, released by the Prime Minister's Economic Advisory Council Chairman C Rangarajan.

The growth scaling down is marginal for an year when the global economic trends were favourable, but with the US economy showing signs of recession, the election year ahead could be more challenging.

Treading on cautious grounds, Finance Minister P Chidambaram said on Thursday that drastic cut in interest rates by the US to avert a recession will affect India, but New Delhi will take steps to counter such an impact.

Without elaborating on measures that the country may initiate to insulate itself from a possible recession in the US, he told industry captains at the CII summit here that "India is not so dependent upon the US as some countries are. "Our exports to the US are significant, but not so significant that we will be gravely affected," the FM said. Responding to a query on the impact of a US slowdown on India, he said: "It will have some impact, of course."

"However, if the US, as a response to the slowdown, cuts interest rates very drastically that will widen the difference between the US interest rate and Indian interest rate and that has consequences like capital flow and faster appreciation of the rupee."

A better-than-expected growth rate in the farm sector has partially offset the lower expansion rate in manufacturing and energy. "<b>The agriculture sector is likely to grow by 3.6 per cent as against the earlier estimate of 2.5 per cent," </b>said Rangarajan. But referring to the growth prospects in 2008-09, he said the sub-prime mortgage crisis in the US and its effect on other European countries would have a bearing on India's growth.

Rangarajan had on Wednesday asked Finance Minister P Chidambaram to adjust indirect taxes on consumer durable goods to spur economy, which is expected to further slow down to 8.5 per cent next year.

Pegging down the growth estimate, Moody's economy.com, a subsidiary of the global credit rating agency, said, " Although fundamentals remain strong and its prospects upbeat after an impressive pace in 2007, the growth in India's domestically-driven economy would moderate in 2008 as domestic demand eases and exports cool."

"<b>Real GDP growth is expected to moderate to 8 per cent in 2008 from an estimated 8.8 per cent in 2007 as tighter monetary conditions dampen demand for credit and take some steam out of consumer spending," </b>Moody's economy.com's Asia Pacific Economics Director Ruth Stroppiana said in an outlook report on India.

India's development hurdles include "poor infrastructure and archaic labour laws", which deter development of the large scale manufacturing needed to boost employment, he said.

On Tuesday,<b> Goldman Sachs had said, "We are revising down our GDP growth forecast to 7.8 per cent from 8 per cent for FY09 due to a larger slowdown in external demand. We estimate that export growth will halve in FY09 to 9.8 per cent from 18.6 per cent due to global slowdown as well as rupee appreciation." </b>

They should increase oil price, so that government had money to pay for other infrastructure project and maintaining Gandhi family.

<b>December exports up 16 pc y/y to $12.3 bn</b>

NEW DELHI: India's exports rose 16 per cent in December from a year earlier to $12.3 billion, a slower rate of annual expansion than in the previous month, government data showed on Friday.

Imports rose an annual 18.1 per cent to $17.7 billion in December. The trade deficit for December was $5.37 billion, compared with $4.36 billion in the same month a year earlier.

The trade deficit was $57.8 billion in the first nine months of the fiscal year that began in April 2007.

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Export target for FY09 around $200 bn
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Bangalore February 08, 2008

The export target for the next fiscal could be fixed around $200 billion, Union Minister for Commerce and Industry Kamal Nath said today.

Speaking on the sidelines of a meeting of exporters organised by the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), Kamal Nath said the exact export target would be announced towards March-end.

"At present, we feel a 20% growth over this fiscal's export target could be realistic," he added. This year's export target has been fixed at $160 billion. However, a rising rupee against the dollar could hit exports to the extent of $10 billion.

In an effort to reduce exporters' exposure to the US market and the European Union, the government is looking for trade opportunities in markets like East Asia and Africa. "The anticipated slowdown in the US will always remain a cause for worry. However, the growth in the domestic market has been satisfactory," he added.

The minister said there has been a strong resistance to the proposals to reduce customs duty across the board. "Consequently, we will address these issues on a nation-specific basis," he added.

For instance, the ASEAN countries could pose a strong challenge to India's agriculture sector. "We are looking at various possibilities. We could consider reducing customs duty on various product ranges of other countries provided they reduce duties on goods imported from India," he said.<!--QuoteEnd--><!--QuoteEEnd-->
Forex reserves zoom $4.4bn to $292.67bn
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Mumbai February 08, 2008

Foreign exchange reserves increased $4.356 billion to $292.672 billion for the week ended February 1, according to data released by the Reserve Bank of India today.

Foreign currency assets were up $3.496 billion to $283.041 billion.

Gold reserves increased $871 million to $9.199 billion. SDRs were unchanged at $9 million.

Reserve Position in the IMF was down $11 million at $423 million.<!--QuoteEnd--><!--QuoteEEnd-->
Farm growth to be better than estimates
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->New Delhi February 8, 2008

Finance Minister P Chidambaram today said growth in the agricultural sector will be higher than the advance estimate of 2.6% for 2007-08.

<b>"The agriculture ministry has reported yesterday that maize and soyabean production will be at an all-time high this year. That is not reflected in the advance estimates. I am confident that the final growth rate of agriculture would be better," he said today.

Speaking at a function organised today by the National Bank for Agriculture and Rural Development, Chidambaram said the government will take all necessary measures for ensuring farm sector growth. "The first charge of our resources is for agriculture so that it grows at 4% or more for the next 10-20 years. Everything can wait, except agriculture," he said.</b>

Chidambaram’s comments came a day after Central Statistical Organisation (CSO) released advance estimates of national income for 2007-08. The estimates pegged agriculture output to grow at 2.6% in 2007-08 as against 3.8% in 2006-07. "We are confident that agricultural growth would be higher than the advance estimates," he said.

<b>Whatever be the external factors, Chidambaram said human intervention and technology would make it possible to achieve and sustain a 4% growth in agriculture.</b>

The CSO estimates indicate a likely slowdown in 2007-8 with gross domestic product (GDP) growth pegged at 8.7% raising concerns over whether the Indian economy can sustain the 9% plus growth seen in the past two years.

The estimate, the first in a sequence of five national income estimates put out by the CSO over two years after the first data is released, suggests that high interest rates have impacted manufacturing and construction and are dampening overall economic growth.<!--QuoteEnd--><!--QuoteEEnd-->
Employment increases in unorganised sector
5 Feb, 2008, 2204 hrs IST, PTI

MUMBAI: The population below poverty line has come down with the rise in workers in unorganised sector, a report submitted by National Commission for Enterprises in the Unorganised Sector said.

In January 2005, the total employment in Indian economy was 457 million, of which the unorganised sector accounted for 395 million, or 86 per cent of total workers, the report submitted by the committee headed by MP Arjun Sen Gupta said.

The total employment increased from 397 million to 457 million between 1999-2000 and 2004-2005. The Commission has estimated that in the organised sector, employment increased by 8.5 million while in the unorganised sector it increased by 8.6 million.

The increased employment in unorganised sector has brought down the percentage of population below poverty line, increasing informalisation of employment in the formal sector, indicated the report.

The report also mentioned about socio-economic plight of workers from unorganised sectors.

Low level of education and poor access to land denies workers access to good jobs in organised sectors.

Commission also found that 40 to 50 per cent of men and 81 to 87 per cent of women workers get wages below the standard minimum wages.

Maharashtra government has organised a workshop at Pune on February 8 based on this report.

"Action programme suggested by the report will be discussed by the state planning board, trade unions and social activists", Executive Chairman of Planning Board Ratnakar Mahajan said.
When drivers draw higher salary than sales executives
8 Feb, 2008, 1700 hrs IST,J Padmapriya, TNN

BANGALORE: A convergence in entry-level blue collar wages and white collar salaries may be happening in some sectors and geographies. In some instances, the lines are blurring with HR trackers finding it difficult to clearly define blue from white.

Cities like Bangalore, New Delhi, Mumbai can actually mean a gold mine for some blue collar jobs. Thanks to the IT and ITES boom and its multiplier effect, an English-speaking driver can take home over Rs 8,000, an amount close to what is made by an entry-level sales professional in many tier I cities.

Entry-level sales professionals may be making around Rs 5,000 to Rs 12,000 depending on the complexity of the products and services they deal with. For instance, a shop floor retail attendant in grocery store Foodworld would be making much less compared to what a similar profile would get in a premium format like Lifestyle. However, retail being a very young sector, the opportunities of earning higher incentives and faster promotions are much brighter, HR trackers say.

So while growing white-collar sectors such as IT/ITES and retail may cry hoarse about talent crunch and finding an employable talent pool, the situation is actually much worse in ground-level jobs in construction and infrastructure. And, finding blue-collar professionals such as crane operators in New Delhi may virtually be impossible , HR trackers say.

Also, there is some blurring of definition between blue and white collar jobs. While peons and floor attendants in retail shop floors may work in an air-conditioned and office environment, their profiles could be a border line case, say HR observers.
<b>South Korea's Mirae launches first Indian fund</b>
7 Feb, 2008, 2147 hrs IST, REUTERS

MUMBAI:Mirae Asset, South Korea's biggest asset manager, on Thursday launched its first Indian fund to join the country's Rs 5.5 trillion fund industry.

Subscription to Mirae Asset India Opportunities Fund will open on February 11, Mirae's India unit chief executive Arindam Ghosh said, adding his firm would launch 14-16 more funds, including a globally invested scheme and a quant fund, in the next 18 months.

"It's a fund that sits between a large diversified equity fund and a thematic fund," Ghosh said, adding the fund will invest in 40-45 stocks and not have any bias towards a particular theme, market capitalisation, style of investment or sectors.

The fund will also take active cash calls and exposure to derivatives to manage risk, he said.

Mirae joins foreign firms such as American International Group, JPMorgan and world's largest publicly traded asset manager BlackRock who are eyeing Indian fund industry which saw assets rise 63 per cent in the last one year.

The Indian fund arm of Morgan Stanley also launched a fund on Thursday, marking plans to expand in India after a gap of about 14 years.

Mirae has started operations from 23 centres and an investment management team of 14 people, Ghosh, a former executive at Fidelity International, said.

The firm appointed Gopal Agrawal, who earlier worked for SBI Funds Management, as equity fund manager and roped in former Tata Asset Management's head of fixed income Murthy Nagarajan to head its fixed income operations in October.

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