First of all, FII's, FDI and Investors didn't moved away. They just didn't invested in FY 11-12 due to Inflation, reducing margin for top companies, lacklustre macro-economic, delay in all project and process.
In early FY11, government thought Inflation will soften and will come around 6% if RBI raises interest rate several time (25-50 bps in every 30-60 days). They did, still Inflation is not down. Historically, Inflation never decreases due to increase in interest rate but growth do decrease. Why government sacrificed 1% GDP growth, I am failed to understand. INR was expected to depreciate due to concern in MENA, PIGS, Eurozone and US. Government could have taken various steps in FY10-11 to execute 50 odd pending project in FDI, Big acquisition, Merger, pledging and IPO & FPO. Even U.S. which is trading at 15 trillion $ debt is not facing the heat compare with India. Why ?? Incompetence, slow process, unreliable future and not taking strong measure in economy. It's all government failure on economic front.
Last edited by Galaxy; 22-11-11 at 05:27 PM.
Devaluation of rupee is good for me. Higher remittance!
Approximately 14-15% higher earnings compared to last year
Trade deficit is the last thing I care. Also non-incremental cost of service means more clients
Only problem I've with RBI is its stupid Paypal policy
Interest rates are raised to control inflation. RBI follows laws passed by parliament and not govt dictat. RBI is like the SC.
India's Trade is increasing, commodity price is stable, Forex reserve is fine. deprecation is more due to domestic economic policies, budget deficit and No hedging.
It is raised depends on domestic economic policy. It's not that simple. How come high interest rate will decrease the international commodity price, transportation expenditure and monsoon related food products ?? Why Inflation is not down after 14 raises ?? Reason is it can't be controlled till certain extent. After June raise was unnecessary. BTW, high rate has damaged 8% profit margin for overall listed top 500 companies and 1% GDP.
RBI always follow Government. Parliament = Government.
Last edited by Galaxy; 22-11-11 at 05:39 PM.
Balancing interest rates has always been a fine art. Inflation is high because the economy is booming . There is no one reason for it. High food prices is a world wide thing and not an India specific issue.
Remit Remit Remit!
This may be small window in devaluation. Same thing happened in Q1 2009. Everybody celebrated over higher earnings & relaxed. They woke up only when Rupee again bounced back in less than 3 months.
Euro will increase your income by 16.5%, Pound by 17% ! And if you are receiving money from UAE then its party time!
Remittance to India is quite good. Currently in FY11-12 will be around 55-60 Bn $ which translates around little over 3% of GDP.
i am surprised the RBI isnt intervening. are they looking at 53-54 levels? 08-09 they limited it to 51-52 and there was heavy intervention.
what is the game plan here?
become exporter then instead of importing things.
Give me an idea and also a product that competes with china.
You know how many garment factories in Peenya Industrial area has shut down? There is no fun in it.
Forget China. Get into IT
Dollar has devalued itself by 20% in last 3yrs. Yuan continuing the same. Can we really afford to appreciate Rupee?
Allowing rupee to slide to 60 combined with Agricultural reforms & FDI in retail would be the best move now.
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