Monday, March 24, 2008

NRI Remittances

It seems in the calander year 2007, India origin persons send home to India a sum of USD 27 B. This is an average of about USD 4,700 per person abroad.

Read about it .... http://economictime s.indiatimes. com/News/ Economy/Finance/ Indians_abroad_ sent_27_bn_ home_in_2007/ articleshow/ 2885060.cms It is probably the single largest item on the foreign remittance list. Long live 'brain drain' from the developed world. It is also interesting to note that the investment by India companies abroad has also shot up to such above levels.

So that should answer, who is propping up whom. Best wishes.

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Monday, March 17, 2008

Sensex tumbles in US tailspin

18 Mar 2008, 0029 hrs IST,TNN
MUMBAI: The monsoon is still a few months away. But that doesn’t mean a thing to the deluge of bad news which continues to dampen spirits on Dalal Street. Fears of further losses to Indian banks, slowdown in corporate growth and a fast-spreading contagion of turmoil in the global financial markets took a huge toll on Monday. The sensex lost 951 points in its second steepest fall, wiping out Rs 3.2 lakh crore in investor wealth. Since January 10, when the sensex touched its peak of 21,206 points, over Rs 25.1 lakh crore of investor wealth has just vanished. On New Year’s eve, investors, brokers and fund managers were unanimous that the party in the Indian stock markets was here to stay.

Today, they are a confused lot. Now, they can’t agree if it is over or if it’s time to just hang on or start afresh. Says Shankar Sharma, director at Mumbai-based broking firm First Global, "It is a great time to sell." Counters another large domestic broker: "Does anybody have a clue where the market is headed?"

A fund manager for Reliance Capital continues to be optimistic. Indian stocks have become cheap and the market could soon correct upwards, he says. One thing is for sure. Over the next few months, investors will have to go through gut-wrenching uncertainty.

Track your stocks

Sensex provisionally closes down 6.5 pct

Reuters - 04:28 PM
BANGALORE (Reuters) - India's main stock index provisionally fell 6.47 percent on Monday, tailing a global equities rout, with index heavyweights ICICI Bank and Reliance Industries leading the losses. More »


Wednesday, March 12, 2008

Industrial growth dips to 5.3 pc in Jan amid fears of slowdown

--> Industrial growth dips to 5.3 pc in Jan amid fears of slowdown-->
Wed, Mar 12 03:01 PM
New Delhi, Mar 12 (PTI) In what could be construed as the beginning of a slow down, the year 2008 began on an ominous note with the industrial growth dipping to 5.3 per cent in January, less than half of what was recorded in the same month last year.
The slump in industrial growth would force the Reserve Bank (RBI) to cut interest rates during 2008-09 even if it decides to maintain status quo in its annual monetary policy, to be unveiled in April, because of its concerns on inflation, said HDFC Bank Chief Economist Abheek Barua. Industrial growth, as measured by Index of Industrial Production (IIP) slipped mainly on account of poor showing by all sectors of the industry, including manufacturing, electricity and mining, coupled with negative growth in consumer durables output.
The decline in industrial growth, Barua said, "confirms apprehensions of a slow down in economy. The growth in 2008-09 will be close to 8 per cent rather than 8.
5-9 per cent." The economy is projected to grow by 8.
7 per cent in the current fiscal, as per the advance estimates of the Central Statistical Organisation (CSO). While industrial production in January slipped sharply to 5.
3 per cent from 11.6 per cent in the same month last year, the cumulative growth during April-January worked out to be 8.
7 per cent, down from 11.2 per cent, as per the IIP figures released by the government today.
The growth in the manufacturing sector output, which has almost 80 per cent weight in IIP, declined to 5.9 per cent in January, against 12.
3 per cent in the same month last year. PTI.

Thursday, March 6, 2008

the impact of recession in US

Is the Sky Falling?
Since returning to reality from Australia I can't help but notice an uptick in business conversations about how bad things are in the US and how it will affect Canada. Until now, my observation was that those in the financial services businesses were fully immersed in the issue but other business leaders weren't registering direct concerns. I would say that's changed.Yesterday I got a copy of a Merrill Lynch (US) analysis that summarizes their view of how bad things are/might be. Keeping in mind that over-reaction might always be a reality in both good times and bad (maybe it is, I don't know), this analysis is starkly negative.Their view is based on the simple notion that what the US is facing is a credit contraction and that there is little doubt the consumer - up until now the primary engine keeping the US economy afloat - is about to go AWOL. The bottom line impact? As the report says "for global producers who sell $2.3 trillion of goods and services the US, 70% of which is geared to the consumer class, to be forewarned is to be forearmed - find a new customer somewhere else in the world".Here's some of the thinking on what's happening:> boomers have spent their adult years using credit, backed by the unstoppable increases in the value of their homes to live beyond their means> savings have dried up (personal savings rates in the US are close to zero, down from over 10% in 1985)> boomer retirements, which are just around the corner, were to be funded to a very large extent by home equity> with house prices going the wrong way now, financial debt exceeds financial assets for many boomers - this is driving severely contracted spending on everything - from mortgage and other financial obligations (debt) - to home renovations and most other discretionary spending (everything but food)> boomers who can no longer able to count on the value of their homes, will finally start saving for retirement> with foreclosures, late payments and delinquencies soaring, credit providers are upping the hurdles and severely restricting credit that is available to consumers> with more savings and less available credit, the drag on the economy will be intense. The author concludes: "we have identified the very serious economic issues that could make this recession much more problematic than previous post-war setbacks". Maybe the sky is falling.Some numbers from the analysis:> household liabilities absorb over 50% more of after tax personal income than it did 20 years ago - when interest rates were double what they are now> the household debt-service ratio is 14.3% close to a record high> the personal savings rate is .05%, almost a record low> 1/3 of non-traditional mortgages are already in default> 39% of people who bought a home in the US last year now find their mortgage is larger than the value of their home> credit card approval rates have fallen to 32% from 40% a year ago - direct mail solicitations (remember those) to lure new customers are down 16%.One of the things I've heard some say here is that inflation in the US will be a problem because of the rapid and high prices we're seeing in raw materials like oil and wheat.


Monday, March 3, 2008

Sunday, March 2, 2008

Loan Melas

This new Finance Bill FY09 has presented an unthinkable in populist policy … proposing to write off up to rupees 60,000 crores in farmer debts without even a fig leaf of budgetary support. Writing off farmer loans, reminds me of an earlier era.

During PM Indira Gandhi's time, one of her Ministers: Janardhan Poojari, would go about arranging 'loan melaas' and distribute money (actually loans which were to be treated as 'grants'), and garner votes. This was considered a great socialistic move and praised such that 'Indira became synonymous with India'. She outdid her father the great Jawaharlal who abdicated on 'market compensation' for 'land nationalization'. She is remembered for 'prince purses abdication', bank nationalization' and 'collieries nationalization'.

We citizens are still enjoying the fruits of these great deeds. There is no shortage of fools, right from Md. Bin Tuglak's time, who gave away gold coins for copper. These 'gigantic personalities' are revered-reviled, even today. This single proposal being already treated as a given, announced by FM P. Chidambaram, has dealt a body blow to financial prudence.

Now the farmer will always think that a 'loan' after delinquency becomes a 'grant'. In some ways, this has been going on every few years but in small measure. A prudent policy would have been to reduce interest rates to 1% retroactively, grant a five year period to pay off amount thru EMIs, allow fresh loans to be permitted, again at lower rates. After all farm sector has required a boost for the past ten years. Why was this delayed for so long?

The FM could allow 'market' driven economy for farm products, provide supply-delivery chains free of state borders, better seeds and technology free to the marginal farmers, and alos tax the rich farmers who earn more than Rs. 3 lakhs per year. Force the 28 states to fall in line, by denying their farmers the above benefits.

The marginal farmers are bound by laws of economics to remain marginal for perpetuity and thereby be a major burden on society. So most important, encourage thru fiscal measures, marginal farmers to combine with other littoral one's so that their joint holdings reach 100 hectares, which will allow economies of scale. Such cooperatives to be like village panchayats, keep all politicians and boffins out of it.

Dissolve all politically driven farm cooperatives by denying them tax deductions and subsidies of any kind. Such reforms are pragmatic and create permanent traditions, yet our FM has no heart for it for the past five years. Giving a fish instead of teaching how to fish, ensures that the target group remains enmeshed in poverty to be then browbeaten every election year. I am certain this FM will join the other 'gigantic personalities' mentioned before and be revered-reviled for ages to come. Jai Hind.

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