Indian Economy: News and Discussion

[Indx TechStyle]

Gujarat is India's growth engine: USIBC

GIFT is being developed as a global financial and IT services hub, a first of its kind in India, designed to be at or above par with globally benchmarked financial centers.

WASHINGTON: Gearing up to participate in the next years Vibrant Gujarat Summit as a partner country, the US India Business Council has termed Gujarat as India's "growth engine".

"The state of Gujarat is one of the leading states in India for industries and is recognised as India's growth engine," USIBC president Mukesh Aghi yesterday said in an interaction with a delegation of senior official and business leaders from Gujarat.

"Vibrant Gujarat Summit is one of the most notable efforts in India's attempts to place itself as the topmost investment destination," he said, adding that USIBC is delighted to partner with the Vibrant Gujarat Summit.

Aghi said the summit is also timely as it will be held during a critical phase of the GST roll-out.

Led by Bharat Lal, Resident Commissioner of Gujarat, the Gujarat delegation concluded its multi-city roadshow in the US.
The multi-city industry roundtables aim to provide an opportunity for the delegation to present Gujarat as the leading investment destination in India.

USIBC organised industry receptions and roundtables in Houston, Chicago,New York, Washington DC and Menlo Park, providing an opportunity for the delegation to meet over 100 top US companies across industries, including healthcare, food and agriculture, defence, logistics and infrastructure.

Some of the companies in attendance during the roadshow included MasterCard, UST Global, JP Morgan, Thompson Reuter, Abbott, Aemetis, Lockheed Martin, Cisco and Welspun.

As part of the roadshow, the Council also hosted a roundtable with Ajay Pandey, the Managing Director and Chief Executive Officer of the Gujarat International Finance Tec-City (GIFT).

GIFT is being developed as a global financial and IT services hub, a first of its kind in India, designed to be at or above par with globally benchmarked financial centers.

Pandey discussed the International Financial Services Centre in GIFT and the benefits to the entities setting up operations in these cities that include the Minimum Alternative Tax, reduced from 18.5 per cent to nine per cent, the Security Transaction Tax (STT), Commodity Transaction Tax (CTT) and Long Term Capital Gains (LTCG) waived off, a media release said.

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India's Q1 current account to be in surplus: Citigroup

The country's current account is likely to be in surplus in the first quarter of this financial year, says a Citigroup report.

According to the global financial services major, trade deficit is stabilising at lower levels, and incorporating August trade data, the trends are pointing to a "broadly balanced" current account scenario.

"Following a moderate current account deficit of $.4 billion or (-) 0.1 per cent of GDP in January-March quarter, we expect current account to come in at a surplus of $2 billion or 0.4 per cent of GDP in April-June quarter," Citigroup said in a research note.

India's trade deficit stood at $7.7 billion in August, almost unchanged in the last three months and significantly below the average monthly trade deficit of $9.9 billion last fiscal.

Imports contracted by 14 per cent year-on-year to $29.2 billion in August, while exports were down only 0.3 per cent year-on-year to $21.5 billion.

The report further noted that "incorporating August trade data, the trends are pointing to a broadly balanced current account in the second quarter of this fiscal year (July-September) as well".

India's gold imports stayed subdued at $1.1 billion (down 77 per cent year-on-year) in August similar to the trend seen in last 7 months. Besides, import of base metals, ores and minerals also recorded double-digit declines in August.

Moreover, among key trading partners, export to the US (largest export destination for India) fell by 1.1 per cent year-on-year in April-July period while imports from China (largest exporter to India) fell by 7.4 per cent year-on-year in the same period.

"This could introduce downside risks to our 2016-17 current account deficit estimate of 0.9 per cent of GDP especially if crude price remains soft in the second half," Citigroup said.

As of exports fall arrest, they will rise slowly.
So, with a balanced (neither low, nor high) inflation and a trade surplus, we can expect a stronger Ruppee, somewhat like China managed to appreciate Yuan.

Though, our nominal GDP growth will become damn high with Ruppee Appreciation, our PPP GDP growth may be significantly lower (correct me if I'm wrong), which would reduce the gap between GDPs in Nominal and PPP.

So, a fast economic development may be there but living standards or people may not be as high as GDP growth will be.

 

[Indx TechStyle]

It’s a freeway for new private banks in India
Armed with a suite of products, technology and aggression, they are snatching retail depositors from public sector banks and corporate borrowers from foreign banks.

Photo: Pradeep Gaur/Mint

India’s private banks, particularly those that started in the mid-1990s and later, after the Reserve Bank of India (RBI) opened up the sector, have never had it so good. Many public sector banks (PSBs), struggling with bad loans, have started ceding market share both in deposits as well as credit to rivals in the private sector. A few large foreign banks too have halted loan expansion in the past couple of years for fear of piling up bad assets. The new private banks are reaping the benefits.

It’s fairly well known that the bad loans of PSBs have been growing at a much faster pace than at private sector banks; the amount of money that they need to set aside to cover the risk of default on their impaired assets too has grown sharply. So I decided to take a look at the business growth in the past three years of all listed Indian banks and some of the large foreign banks. The data, covering 16 listed private banks and 24 each of PSBs and foreign banks, has been collated by Mint’s research bureau. In fiscal year 2016, deposit portfolios of five PSBs have shrunk. They are Bank of India, Bank of Baroda, Indian Overseas Bank, Uco Bank and Vijaya Bank. In the previous year, United Bank of India’s deposit base had eroded. Overall, the PSBs’ deposits rose just about 4% in fiscal 2016, after growing 9.4% in 2015. Both the figures are below the deposit growth of the entire banking industry—9.7% in 2016 and 12.1% in 2015. The decline started in 2015. Before that, in 2014, PSBs’ deposits grew more than 15% against the industry’s growth rate of 14.6%.

In contrast, the private banks’ deposits in 2016 grew 19.2%—double the industry growth rate. HDFC Bank Ltd’s deposit portfolio grew by over 21% and ICICI Bank Ltd close to 17%. The private banks have been steadily growing at the expense of the PSBs. In 2014, their deposit growth had been 14.5% and the next year, 15.4%.

In past three years, foreign banks too have slowed expansion of their liability (deposit) base. From around 24.5% in 2014, the growth rate dropped to 15.4% in 2015 and 13.3% in 2016—still above the industry average. Both Hongkong and Shanghai Banking Corp. (HSBC) as well as Standard Chartered Plc. in India expanded their deposit portfolios by just around 3% each last year. As a result of this, PSBs’ market share in deposits dropped sharply from 77.7% in 2014 to 74.2% in 2016, 3.5 percentage points. During this period, private banks gained close to 3 percentage points, from 18.4% to 21.3%, even as foreign banks’ share remained almost the same, a little over 4%.

The data on advances also reveals the vulnerability of the PSBs. Nine of the 14 PSBs reported a decline in their loan portfolio and, for two of them (Uco Bank and Indian Overseas Bank), it has been consecutive years of decline in loans. Both Bank of India and Bank of Baroda have shrunk their loan portfolios along with deposits. Overall, their loan growth in 2016 was 2.4% against the industry average 12.2%. In 2015, it was 7.2%, again lower than the industry average, 10.7%. In 2014, however, growth was faster—14.58% against the industry’s growth of 13.4%.

Their private peers’ loan growth has been far higher. HDFC Bank’s loan growth in 2016 was 27.1%, that of IndusInd Bank Ltd 28.5%, and Axis Bank Ltd 20.5%. Yes Bank Ltd too has grown its deposit and loan books at over 20%. Kotak Mahindra Bank Ltd’s growth has been more spectacular but that has been on account of the merger of ING Vysya Bank Ltd with it. Private banks’ loan books have been growing steadily over the past three years—from close to 18% in 2014 to 18.3% in 2015 and 22.2% in 2016.

Among foreign banks, Standard Chartered’s loan book shrank in 2016 for the second consecutive year while Citibank NA’s growth was just 1%. As a group, foreign banks’ loan growth has been steady in past three years—11.6% in 2014, 12.5% in 2015 and 13% in 2016. Despite the difficulties faced by Standard Chartered, HSBC as well as DBS Bank Ltd in terms of the quality of assets, overall foreign banks have been holding their ground because of the higher growth of relatively smaller banks—the likes of Mizuho Corporate Bank Ltd and BNP Paribas.

While foreign banks’ share of advances rose marginally in the past three years, from 3.3% to 3.5%, domestic private banks have gained around 3.5 percentage points in market share of advances, from 15.6% to close to 19%, and PSBs’ share dropped by an identical margin, from close to 60% to 55.35% during this time.

The phenomenal growth in bad assets has killed the profitability of PSBs. As a group, collectively they announced a loss of Rs18,088 crore in 2016 against a Rs35,638 crore profit in the previous year, which was less than 2014’s Rs36,393 crore. The only PSB which has been showing steady growth in its profit for the past five years is a State Bank of India associate—State Bank of Bikaner and Jaipur. The foreign banks too have recorded a close 14.9% drop in net profit in 2016 after more than 28% growth in 2015. Domestic private banks, however, continue to show growth in profits, albeit low. Collectively, their net profits grew around 6.5% in 2016 after expanding 15.7% and 17.4%, respectively, in 2015 and 2014.

Time is fast running out for most PSBs and it’s almost a freeway for some of the new private banks. Armed with a suite of products, technology and aggression, they are snatching retail depositors from PSBs and corporate borrowers from the foreign banks. The only exception is State Bank of India. The nation’s largest lender is fighting hard even as most of its peers in the public sector are in a mood of abject surrender.

 

[Indx TechStyle]

India's prospects over next 20-30 years look good: Jamie Dimon, Chairman, JP Morgan

"My first trip to India with JP Morgan was in 2004-05 when we were a smaller company. We covered 20 Indian companies in terms of research and we had 100 employees," he says.

Jamie Dimon as the chairman of JPMorgan is probably the only Wall Street chief to have weathered the Global Financial Crisis and guided his bank to the top rank. He doesn't mince words, be it the Fed's stance on interest rates, or policy makers who come up with strict rules that curb businesses. In an interview with ET, Dimon speaks his mind on issues ranging from the US elections to interest rates to China to the Indian economy. Edited excerpts:

Has India's image changed afterNarendra Modi became Prime Minister?
I think so, and for the positive. You are the fastestgrowing country on the planet today and you are making changes. Politics is hard, but he is a successful and a strong leader and your foreign direct investment has doubled in the last four-five years.

India is a bright spot, but some would say that there is excessive self-congratulation. What is your view?
India is definitely a bright spot, it's not overdone. It is growing at 7%-plus, the deficit has gone down quite a bit, and the government has made changes which are conducive to future growth. All countries have economic cycles but it is quite a positive sign. I am not interested when people refer to a quarter or this year because the way I look at a country is what are its prospects over the next 20-30 years, and India's are good.

What convinced you about India's promise?
My first trip to India with JP Morgan was in 2004-05 when we were a smaller company. We covered 20 Indian companies in terms of research and we had 100 employees. Now we provide research on 120 companies and we distribute this globally. We continue to invest in our business here; and in the future, we will have 30,000 people in JP Morgan's Global Service Centre, which supports the firm globally in areas such as technology, security, programming and research. The GSC covers a whole gamut of services and it's still growing.

What about the Indian economy itself?
What you should also keep in mind is that you have a lot of successful companies in India. What makes these companies stand out is that they grew independently and weren't championed by the government.They grew because they are good at what they do in terms of offering their services around the world. If you compare this to other markets and countries, it took a lot of government support to have the companies they have now.

ALSO READ: Not an exaggeration to call India sole bright spot: JPMorgan Chairman Jamie Dimon

A lot of foreign banks in India are shrinking, but you are one of the few to have opened new branches...
We always take a long-term view on each market. We are not a fair-weather friend.We are here during the good times and the bad times and we want the Indian people and the Indian government to say that they are better off with JP Morgan being here and that they view JP Morgan as a consistent friend. There have been ups and downs since I have been coming here, but I don't worry about those ups and downs because we have our eye on the long term. We grow with countries as they grow and with companies as they grow. Our lending here is $2 billion and we have an asset-management arm investing $9 billion in India across asset classes and this will double or even triple over the next 15-20 years.

With regard to government and Reserve Bank of India policies on foreign banks, are there issues to be addressed?
It took us a long time to get our new branches, so I applaud Kalpana Morparia, our CEO for India. I think foreign investors should be able to hold more than 4.99% of an Indian bank. However, since JP Morgan is not moving into the retail business in India it's not a huge complaint. For the most part JP Morgan doesn't feel a lot of restrictions as it conducts business here.

If you had an opportunity to buy a large Indian private sector bank, which one would that be?
Remember our retail business is only in the US and it's very, very hard to compete in a business like retail in any other country. I couldn't open 100 branches here and be good at it. Local companies like ICICI Bank would eat us for breakfast just like it would be very hard for them to open retail over there. We are instead focused on the institutional business and helping large companies and governments.We help bank countries and companies around the world. For example, we just raised $3 billion in the sovereign bond market in a single day.

How do you look at the political leadership in various countries you invest vis-a-vis India?
India as you know has a very complicated political system. Ten years ago the thought that a Prime Minister would get a simple majority was beyond imagination.But I don't want to just compare India with other emerging market countries -look at Italy, they have had 50-60 Prime Ministers in the last 60 years. These things occur when democracies are set up. In America, we have a two-party system and the American constitution is a piece of brilliance but they did not know when they set it up we would just have a twoparty system. It just so happens that our electorate pushed towards the two-party system because it's a very good way to govern. If you have too many parties, it is very hard to achieve things that need to get done with regards to education, roads, hospitals and businesses. Politics is very hard in many different countries.

You are among the few from the world of finance who wants the Fed to raise interest rates. The markets warn against such a move. Why?
The market doesn't say anything. The market is just a bunch of people buying and selling every single day and countries don't have to have the same interest rates. If America is growing and America's unemployment is low, then it should have a monetary policy that is good for America; and if America is growing that's good for you too. Whether rates are 3% or 1%, growing should be more important to you than our interest rates. But interest rate movements affect financial markets...

The normalization of interest rates is a good thing, but 25 basis points in itself is irrelevant and everyone knows it. In the old days, rates going up was considered tightening, and when they tightened they took money out of the system. Today, they are just raising rates by dictating returns on reserves so I am not sure it's quite the same thing as tightening. They are not actually taking money out of the system. I think the riskier thing is using extraordinary monetary policy when you in fact don't need it. America has 4.9% unemployment, we have added 15 million jobs since the Great Recession. Household wages are going up, it's seen a 5% leap. We have a lot of good news and I don't see these potholes that will derail America. I don't think it would have mattered that much if they had raised the rates in September. I would have raised it.

What's your view on negative interest rates?
I personally don't like them and I am not sure they are going to work. It doesn't seem as if it has worked. Some very smart people think it has worked a little bit but it's like pushing string at its point. If you are a company, I cannot make you spend more money because rates are lower. I don't know of any business that has said they are going to build a new plant because rates are low. And savers have to save more money. I am not sure consumers spend more if you have low rates. You know this phenomenon in airplanes that the air flows one way and when it goes to high speed it flows the other way -that might be monetary policy.So I am not sure if zero works.

You have said you won't buy 10-year US treasuries...

I wouldn't and I have been right since I have said that.

So is that an indication of a bubble in this asset class?

I am always very careful. I look at probabilities. I think there is a high probability of people saying it's too low. Again we have added 15 million jobs, wages are going up, inflation is going up, there are no potholes and housing is in short supply. If you look at the buyers of 10-year bonds since QE (quantitative easing) started - it's the US government, the Chinese government, other governments, US banks, because there is a change in regulatory policy, and the so-called risk-off buyers who get scared and jump into 10-year. The first three have disappeared already. But when things get good, eventually there won't be people who are going to jump into a 10-year as a risk haven. The US treasury curve is not a real market unlike the credit curve of the world where you freely buy and sell and I think there is a quite high probability that it will go up more than what people think and it will be more volatile than what people think.

If someone Googles you, the first thing that pops up is your statement that you would like to be President.

I would love to be the President of United States and I think I would be good at it but it's too late and it is too hard.

You are younger than both Hillary and Trump by a long shot.. .
OK yes, but most of these people have been in politics their whole life. They have come up through their respective parties and they have got the support of their parties. Michael Bloomberg would have been a fabulous President but he thought he wouldn't get the Democrats or the Republicans to support him and he didn't want to run as an independent because you can't win as an independent. So, yes I would have loved it but it's too late. But what is more important is that whoever is President, if they do right things America will boom.

And which one would you prefer of the two?
I can't comment on that and I have no interest in whether they call themselves Democrat or Republican, but it's important that they do the right things. We get into this debate in America that Democrats want infrastructure to create jobs. In some respects they are right we need better infrastructure. You have a new airport in Delhi and if you go to some of our airports you will find that they are surprisingly bad. But the Republicans are also right in the idea that they don't want to tax Americans more, have that money go to Washington and watch it being misspent. There are examples where building a hospital costs $2 billion when the government does it, but would cost $350 million if a private enterprise does the same. They are both right. We need good infrastructure with property built and delivered on time at the right price. We should have more tunnels and bridges for example. If you see New York City, the traffic is similar to Delhi. I don't think we have built a tunnel or a new bridge in 50 years. Infrastructure should be planned out for the long term, yet it gets bogged down in politics.

What about human resources, talent and immigration?
We need immigration reform in the United States that is respectful to the people who have earned the right to become citizens. We need better education because it creates more jobs especially when it's done in partnership with local business. Germany is a good example, where 95% of the kids who go to a vocational school walk out with a job because their training was in conjunction with some local business.The companies say they will help train the students and they get a job.

What about the resistance to open trade and taxation issues?
We need to reform our corporate tax.It's a disaster. And we really need to get the TPP (Trans Pacific Partnership) done. All these things are great for Americans but somehow the political debate is made to reflect that they are bad. I know that some people get hurt by trade but there are ways to fix that.We call for trade assistance, which is if you can demonstrate you were hurt by trade then we will help you find another job. Trade is very good for the country, it's very good for the GDP, it's good for wages but it doesn't mean it's always good for every business. So we should have trade assistance, which is about relocation, re-education and training.

But the classical model that trade is good, more openness is good, seems to be under threat...
It's under threat because we have failed to educate a lot of people about the benefits and we have failed to acknowledge the negatives. I would say it's been great for the world. It has lifted 2 billion people out of poverty and in the next 20 years it's going to be another 2 billion people. So don't tell me it's bad for the world. Does that mean it was good for everyone in America? No it was not. That's why I go back to trade assistance.

And there's a raging debate about rising income inequality...
I think it is also true that wages haven't been going up enough for people in the lower paid jobs. And there is less certainty around their jobs and we should do something about that. Now you can blame me as the CEO of a big bank but that's not going to fix the problem --we help grow economies.What will fix the problems are the right policies that will introduce training, jobs and relocation. I always tell the Republicans that they should start their conversation by saying that we are going to take care of our sick, our old and our poor. We just want to do it intelligently. We need a better conversation and hopefully that will happen.

The opinion on China ranges from extraordinarily bullish to the opposite.What's your view?
China has done an extraordinary job with their country. The leadership is very bright, they acknowledge issues such as corruption, their inefficient state-owned enterprises, the need for market reforms, the need to build more technology. They make a lot of right moves in order to lift their people. It will be OK.

You spoke about how JP Morgan uses technology to offer better services and also how it has become a mini police state. Can you explain? Ok so these are two different things.We are the largest bank in the United States of America and of course we use technology to move money around the world. Why I referred to a police station was about internal controls and cyber security. The only way you can combat cyber security is to use very strict hardline rules about the production of software, the testing of software, and who has access to your systems, the monitoring of everything that takes place out there. So we monitor everything internally. If things go wrong, we close it down.

So what keeps you awake at night?
Cyber security is one of them. We spend approximately $600 million on cyber security every year.
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India’s external debt rises to $486 billion
In contrast, short-term external debt declined by 2.5% from $84.7 billion at end-March 2015.

India’s external debt at the end of March 2016 stood at $485.6 billion, up 2.2 per cent from over its level at over end-March 2015, largely driven by the increase in long-term external debt, particularly NRI deposits, the Centre government said announced on Monday.

Long-term debt

“At end-March 2016, long-term external debt was $402.2 billion, showing an increase of 3.3 per cent over the level of 2015 (end-March),” according to a government report. “Long-term external debt accounted for 82.8 per cent of total external debt at end-March 2016 as compared to 82.0 per cent at end-March 2015.”

In contrast, short-term external debt declined by 2.5 per cent from $84.7 billion at end-March 2015 to $83.4 billion at end-March 2016.

“This was mainly due to the decline in trade related credits,” the report added. “The share of short-term external debt in total external debt declined from 18.0 per cent at end-March 2015 to 17.2 per cent at end-March 2016.”

Of total external debt, the government’s share stood at 18.9 per cent or $93.4 billion at end-March 2016 compared to 18.8 per cent ($89.7 billion) at March 2015. “India’s external debt has remained within manageable limits in 2015-16 as indicated by the increase in foreign exchange reserves to debt ratio to 74.2 per cent, the external debt-GDP ratio of 23.7 per cent and fall in short term debt to 17.2 per cent,” the report said.

 

[Indx TechStyle]

India to clock 8 percent growth over next few years: S&P

Representative image
HIGHLIGHTS

• S&P Global Ratings has projected India to clock a growth of 8 per cent over the next few years.
• S&P said India's structural reform agenda has maintained strong momentum and should propel growth higher.

NEW DELHI: Backed by broadening of domestic consumption base, S&P Global Ratings on Monday projected India to clock a "steroid-free" growth of 8 per cent over the next few years.

In its 'APAC Economic Snapshots--September 2016' report, S&P said India's structural reform agenda has maintained strong momentum and should propel growth higher.

"For India, we are still forecasting GDP growth at about 8 per cent over the next few years. Moreover, this is relatively high quality, "steroid-free" growth backed by a broadening consumption base," S&P said.

Country's structural reform agenda has maintained strong momentum, most recently with the GST passage, and should propel growth higher, it added.

"Inflation remains a risk, given the large weights on food, fuel, and other volatile items in the Reserve Bank of India's target basket," S&P said.

The latest gross domestic production (GDP) figures showed that India's growth slowed to 7.1 per cent in the April-June quarter, from 7.9 per cent in January-March period.

Reserve Bank has also said the near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 per cent in 2016-17.

 

[sukhish]

the base year of India economic growth was changed two years ago, I'am not sure if the real rate of growth is 7.2% now. I think most probably the GOI (MODI) is lying on this one. the way the new calculation is done, only MODI can understand it. it does not make much sense to whole lot of people. Also the employment situation is pretty pathetic, it does not feel like the same 9% growth we had some years ago. it just does not.

 

[Indx TechStyle]

the base year of India economic growth was changed two years ago, I'am not sure if the real rate of growth is 7.2% now. I think most probably the GOI (MODI) is lying on this one. the way the new calculation is done, only MODI can understand it. it does not make much sense to whole lot of people. Also the employment situation is pretty pathetic,

GDP is calculated at 2011-12 MER along with finding out undocumented (Indian people hide their in income you know) and method.
And this method will be errorless given narrowing gap between Exports and imports, if it turns into surplus in some 9 years, our nominal GDP growth could grow double at the rate of that in PPP two deplete the huge gap of 3.77 times.
Or I mean ruppee needs to be appreciated by 3.77 times.
This was the same method adopted by China for appreciation of Yuan.

For jobs, still a lot of jobs are vacate, skilled labour is main issue.

it does not feel like the same 9% growth we had some years ago. it just does not.

Living in America, I wonder how would you feel about our growth.:biggrin2:
Anyway, it does feel much better than the economic recession which we suffered just few years ago.

 

[Indx TechStyle]

11.8% growth in foreign tourist arrivals in August 2016

MUMBAI: There has been an 11.8% growth in Foreign Tourist Arrivals (FTAs) in August 2016 over the same period in 2015. Bangladesh accounts for highest share of tourist arrivals followed by USA and UK in August 2016. Rs.12, 903 crore Foreign Exchange earned through tourism in August 2016.

The Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) on the basis of Nationality-wise, Port-wise data received from Bureau of Immigration (BOI) and Foreign Exchange Earnings (FEEs) from tourism on the basis of data available from Reserve Bank of India. The following are the important highlights regarding FTAs and FEEs from tourism during the month of August, 2016.

Foreign Tourist Arrivals (FTAs):

FTAs during the Month of August, 2016 were 6.70 lakh as compared to FTAs of 5.99 lakh during the month of August, 2015 and 5.76 lakh in August, 2014. There has been a growth of 11.8% in August, 2016 over August, 2015.

FTAs during the period January- August,, 2016 were 55.92 lakh with a growth of 10.2% as compared to the FTAs of 50.73 lakh with a growth of 4.6% in January- August, 2015 over January- August, 2014.

The Percentage share of Foreign Tourist Arrivals (FTAs) in India during August, 2016 among the top 15 source countries was highest from Bangladesh (16.61%) followed by USA (12.59%), UK (10.57%), Sri Lanka (5.92%), Malaysia (3.41%), China (2.77%), Japan (2.75%), Canada (2.63%), Germany (2.57%),France (2.54%),Australia (2.40%), Oman (2.19%), Nepal (1.95%), Singapore (1.91%) and UAE (1.68%).

The Percentage share of Foreign Tourist Arrivals (FTAs) in India during August 2016 among the top 15 ports was highest at Delhi Airport (28.38%) followed by Mumbai Airport (17.32%), Chennai Airport (10.17%), Haridaspur Land check post (9.10%), Bengaluru Airport (6.83%), Cochin Airport (5.08%), Hyderabad Airport (3.98%),Kolkata Airport (3.93%), Gede Rail (2.05%), Trivandrum Airport (1.72%), Ahmadabad Airport (1.68%),Tiruchirapalli Airport (1.64%), Ghojadanga land check post (1.07%), Amritsar (1.05%) and Attari-Wagh (1.05%).

 

[Indx TechStyle]

India's rating upgrade in 2 years if reforms tangible: Moody's

Moody's Investors Service had in April 2015 revised India's outlook to positive from stable and said it could upgrade rating in 12-18 months.

NEW DELHI: A day ahead of its interaction with government officials, international rating agency Moody's Investors Service said it could upgrade India's rating in one-two years if it is convinced that reforms are "tangible".

The New York City-headquartered rating agency, which has 'Baa3' rating with positive outlook on India, said evidence of policymakers working towards faster fiscal consolidation, reducing the debt-GDP ratio and addressing infrastructure and monsoon volatility challenges will determine an upgrade.

"We have a positive outlook on India. On balance, the risk is on the upside. We are continuously monitoring the rating. We see pressure building up in one-two years and any tangible change could bring about a change in rating,"Marie Diron, senior vice president of Moody's Sovereign Group told the media on Tuesday.

Moody's listed six measures on the list of pending reforms — land acquisition bill, labour law, significant infrastructure investment, tangible benefit from Make in India initiative, tax administration and public sector bank reforms.

Diron said weak financial health of PSBs continues to pose contingent liability risk and muted private sector investment constrained India's ratings, with external sector vulnerability and geopolitical risks posing additional pressure.

Moody's Investors Service had in April 2015 revised India's outlook to positive from stable and said depending on progress on reforms it could upgrade rating in 12-18 months. Asked if policies are moving in the direction as envisaged by Moody's for an upgrade, Diron said, "We have seen progress in implementation of reforms. What we did not anticipate is the weakness of private investment."

She further said, "Reforms have been slow and gradual and we are waiting for that confidence that reforms will be tangible and able to change investor confidence, and corporates start seeing improvement in business environment."

Terming passage of GST Bill and the bankruptcy law, the move towards the fiscal deficit range and inflation-targeting monetary policy as "credit positive," Diron said increased policy transparency and credibility display institutional strength in the economy even as corruption persists in some sectors.

"Moody's expects continuity in monetary policy, which is a credit positive," she said. The agency said in the near term challenging budget targets could lead to significant spending cuts late in the year, especially since fiscal deficit till July had touched 74% of the year's budget target.

According to the agency, while bad asset recognition is a first step in banking reform, the measure does not strengthen the resilience of banks and therefore does not reduce the contingent liability risks for the sovereign.

The agency estimated that fiscal costs of equity injections in public sector banks are manageable, although larger than currently budgeted and will add to the challenge of meeting fiscal targets. At a joint Moody's-ICRA sovereign and macroeconomy briefing in Delhi, ICRA senior economist Aditi Nayar said economic growth will pick up in 2016-17 to 7.9% from 7.6% in the previous fiscal.

In the near term, Moody's expects private investment to remain weak since companies in investment-intensive sectors are burdened by elevated debt levels. Moreover, the economy will stay vulnerable to fluctuations in monsoon. In general, infrastructure gaps will continue to constrain investment and the rise in foreign direct investment will not make up for muted domestic investment, the agency cautioned.

In terms of monetary policy framework, the government has notified a consumer price index (CPI) inflation target of 4%, within a tolerance band of plus minus 2% until March 2021. "Such a scenario would help to anchor inflationary expectations. In addition, a favourable base effect as well as improved crop sowing dynamics will ensure CPI inflation stays within this tolerance band in the near term," ICRA said.

 

[Akshay_Fenix]

Moody's listed six measures on the list of pending reforms —

land acquisition bill - Entire opposition against it

labour law - stupid CPI controls this sector

significant infrastructure investment - NDA is light years ahead of UPA(10 years of rule) in this sector.

tangible benefit from Make in India initiative - awaiting for results (begging before foreign nations to invest - done)

tax administration - Done (GST)

public sector bank reforms - pending

 

[Indx TechStyle]

Prime minister Narendra Modi’s government has also decided to advanc the date for presenting the union budget —traditionally done at the end of February—by a month.

The government wants to get all legislative approvals for the annual spending and tax proposals before the new financial year begins in April.

“(The) exact date of budget 2017 presentation would be decided keeping (the) calendar of state assembly elections in mind,” Jaitley said.

http://defenceforumindia.com/forum/threads/indian-railways-news.6540/page-23#post-1205358

 

[Indx TechStyle]

Monsoon to keep India's diesel exports near 3-year highs

A man pedals his cycle rickshaw during monsoon rains in New Delhi, India August 31, 2016.
REUTERS/CATHAL MCNAUGHTON/FILES

India's diesel exports are expected to hover near a three-year high in September, as monsoon rains reduce the need to use the fuel in irrigation pumps, according to traders and refinery sources.

Reflecting this trend, state-owned Indian Oil Corp exported diesel for the first time in more than five years and the ramp-up of a new refinery could also temporarily keep exports high after the monsoon draws to a close this month.

The increase in shipments from the world's no. 3 oil consumer has driven the profit margin for refining diesel in Asia to a seasonal six-year low.

India is expected to ship out similar volumes in September compared with August, when it exported 2.85 million tonnes, according to traders. Last month's volume was the highest since September, 2013, when India shipped out 3.371 million tonnes, government data showed.

"Diesel demand has not been that good during this monsoon season and has generally been flattish," a source at an Indian-refiner said.

 

[Indx TechStyle]

Who Knew This? Markets Work - India's Pulse Crop Up 57%

 

[Indx TechStyle]

Tripura assembly ratifies GST Bill

AGARTALA: Tripura assembly on Monday unanimously ratified the Constitutional Amendment Bill on Goods and Services Tax (GST).

State finance minister Bhanulal Saha moved a resolution to ratify the Constitution (122 Amendment) Bill, 2014, which was passed without any opposition.

No legislators from Left Front, Trinamool Congress (TMC) or Indian National Congress raised any question on the GST Bill.

President Pranab Mukherjee gave assent to the Constitution Amendment Bill on GST on September 8 after it was passed in the both Houses of Parliament and was ratified by requisite number of state assemblies.

 

[Indx TechStyle]

Junaid Ahmed named World's Bank's director in India

Junaid Ahmad has replaced Onno Ruhl who completed his four-year term. (Reuters image)

NEW DELHI: Junaid Ahmad has taken over as the World Bank's new country director for India, replacing Onno Ruhl who completed his four-year term.

Ahmad, a Bangladeshi national, was formerly the Chief of Staff to World Bank Group President Jim Yong Kim.

In making the appointment, Kim said, "I'm very pleased to announce Junaid Ahmad as World Bank's new Country Director for India. India's recent growth and development has been one of the most significant achievements of our time. With historic changes unfolding and new opportunities emerging, Junaid will bring to this key position strategic leadership along with considerable experience of working in both India and South Asia to support this transformation."

Annette Dixon, World Bank Vice-President for South Asia added: "Junaid's strong experience in the critical areas of water, urbanization, and social development will ensure that the Bank's future strategy for India is formulated and implemented in line with the country's own development goals."

An economist by training, Ahmad brings with him broad development experience. After joining the World Bank in 1991 as a Young Professional, he worked on infrastructure development in Africa and Eastern Europe. He has since held several management positions, leading the Bank's program in diverse regions including Africa, the Middle East and North Africa, as well as in India and South Asia.

Based in New Delhi between 2000 and 2005, Ahmad played a leading role across a number of sectors, both in India and the region. He led the Bank's Water and Sanitation Program for South Asia before being appointed to head its social development portfolio. Following this, he steered the Bank's broader urban development program in India and South Asia. During this period Ahmad worked in the areas of infrastructure finance, dealing with the challenges of urbanization and city management, delivering services in federal systems, as well as on issues concerning local government reforms.

Prior to joining the President's office, Ahmad was a Senior Director at the World Bank, where he led the Bank's global engagement in the water sector. He was one of the first to be selected to this post through a global competition. Ahmad moved to this position after holding charge of sustainable development for the Bank's Middle East and North Africa (MENA) Region, where his work covered a broad array of sectors, ranging from agriculture, to the environment, to infrastructure.

Ahmad holds a PhD in Applied Economics from Stanford University, a Masters in Public Administration from Harvard University, and a BA in Economics from Brown University.

 

[Indx TechStyle]

China must worry about jobs as firms move production to India

BEIJING: As China's telecom firm Huawei starts manufacturing in India, official media here has raised the red flag, warning that Beijing needs to worry about job cuts due to shifting of production bases as economic rivalry increases between India and the world's second largest economy.

"China needs to worry about effect of industrial transfer to India on production chain," an article in the state-run Global Times said today.

"As Chinese manufacturers show an increasing interest in setting up assembly lines in India, the economic competition between the two countries is likely to enter a new stage as India and China vie to expand their industry chains," it said.

Huawei "joining a wave of smartphone vendors establishing production facilities in the promising mobile market" would result in job cuts if mobile manufacturing shifted to India.

"In recent years, countless Chinese companies have been included into the production chain for smartphone vendors. It is difficult to accurately determine how many Chinese workers are involved in the production chain, but what is clear is that all those workers face potential job cuts if smartphone vendors transfer the whole industrial chain of mobile production from China to India," it said.

"Frankly speaking, China can't afford that. The country has to ensure its competitiveness in production chains at a time when India is becoming a new processing base for manufacturers. This will require Chinese local suppliers to maintain technological advantage through continuous innovation," it said.

Another article in the same daily said as Chinese investments are on the raise, China's firms must understand Indian company and labours laws before investing.

"India's relatively stable political environment, sustained economic growth momentum, huge population dividend and cheap labour costs have attracted numerous international investors," it said.

Referring to survey by 2014 Japan Bank for International Cooperation (JBIC) which ranked India to be the most preferred destination for future investment, it said China's direct investment to India soared last year to USD 870 million, six times than in 2014.

"However, India was not among the 13 countries which received direct investment from China exceeding one billion in 2015 and China's investment in India only accounted for 2.2 per cent of the total USD 39.3 billion foreign direct investment received by India in 2015," it said.

"With increasingly more Chinese firms and investors casting their eyes to India, it is urgent to rationally assess the political and economic risks of investing in India," it added.

 

[Indx TechStyle]

Global competitiveness index: India jumps 16 ranks for second time, second most competitive BRICS economy
WEF ranking: "India's competitiveness has improved across the board, in particular in goods market efficiency, business sophistication, and innovation".
BY: EXPRESS WEB DESK | NEW DELHI |Published On:September 28, 2016 11:33 AM

India has jumped 16 ranks to settle at the 39th spot on the global competitiveness index prepared by the World Economic Forum, that lists 138 countries. This is the second year in a row that India has jumped 16 spots. In the year 2015-16, India was ranked at the 55th place. The WEF ranking comes in as a major boost for Prime Minister Narendra Modi, given his repeated push for economic reforms in the country.

India’s “competitiveness has improved across the board, in particular in goods market efficiency, business sophistication, and innovation”.

“Thanks to improved monetary and fiscal policies as well as lower oil prices, the Indian economy has stabilised and now boasts of the highest growth among G20 countries,” the WEF’s Global Competitiveness Report 2016-17 stated.

India is also the second most competitive country among BRICS nations. “China, on 28, remains top among the BRICS grouping although another surge by India – which climbs 16 places to 39 – means there is now less of a gap between it and its peers. With both Russia and South Africa moving up two places to 43 and 47, respectively, only Brazil is declining, falling six places to 81,” WEF said in its report.

 

[Akshay_Fenix]

https://twitter.com/AkbaruddinIndia/status/780976153595039744
From 71 in 2014 to 39 in 2016

http://reports.weforum.org/global-competitiveness-report-2014-2015/rankings/

 

[Indx TechStyle]

In its quest for numero uno status in India's etail war, Flipkart is transforming itself from within

In January 2016, Binny Bansal is named CEO heading all units.
Saikiran Krishnamurthy was at Mumbai airport on Monday after a warehouse inspection ahead of Flipkart’s flagship sales event when a security guard noticed his T-Shirt and asked if he worked at the company. “Travelling across the country before the sales event in a Flipkart T-Shirt, you feel like Amitabh Bachchan,” said Krishnamurthy, head of Flipkart’s logistics unit Ekart.

The former McKinsey consultant replied ‘yes,’ and asked the guard in Hindi if he had bought anything from Flipkart before and what he planned to buy this year. The guard replied he had bought a power-bank and a Bluetooth headset in the past, and for this year his eye was set on a mobile phone. “Do you have an SBI card? You can get an additional 10% discount then,” Krishnamurthy advised him. “Yes I do and I will definitely buy the mobile phone,” the guard replied.

Saikiran Krishnamurthy promptly informed the other Krishnamurthy at Flipkart—Kalyan, the head of the company’s commerce and advertisement platform— the he had potentially sold one of several million mobile phones India’s largest online marketplace plans to sell during its ‘Big Billion Days’ sales event scheduled for October 2-6.

Krishnamurthy’s pitch to the security guard falls right in the target zone ofBinny Bansal. The Flipkart chief executive’s primary obsession is to sell high-value products even to customers at the bottom of the pyramid by making these purchases easier on their pockets and implementing tough quality measures to win their trust. It’s his main strategy to revive sales growth.

The biggest problem for Flipkart, still the poster boy of Indian online retail, is not fundraising, management changes or the ever aggressive Amazon, but has to do with the more fundamental issue of sales growth.

Flipkart’s gross merchandise value, or GMV, a proxy for gross sales, has inched back to $4.5 billion-$5 billion in recent months but had been stagnant at $3.5 billion-$4 billion for most of the past yearand-half. The recent growth was driven by exclusive smartphone partnerships with Motorola, Reliance Jio, Apple, Lenovo and Xiaomi—some of which it lost earlier this year to Amazon. Growth in fashion sales from its Myntra unit and the recently acquired Jabong also helped.

Affordability has become Flipkart’s big bet to revive sales. It is doing this through initiatives such as low-interest monthly payments, stringent quality checks through Flipkart Assured, exclusive partnerships, exchange programme on smartphones, and sales of its own brands or products. Flipkart has also abandoned its focus on GMV and switched to customer loyalty as a measure of its progress.

Whether these bets will revive sales is to be seen. “If the pie gets bigger then market share will not matter,” said Kartik Hosanagar, professor at The Wharton School. “For Flipkart to excel, they will have to come up with something new. But history suggests that is super hard.”

A senior Flipkart executive conceded this was somewhat true. “We were just randomly burning money… we haven’t really innovated in the last 18 months,” this executive said, asking not to be identified.

Amazon India, the domestic arm of the world’s largest online retailer, has been closing in on Flipkart, the gap in gross sales between the two narrowing to 15-20%. Amazon CEO Jeff Bezos in June announced his decision to increase investments into the India unit to $5 billion from $2 billion. For Amazon, India has become a must-win market after losing China to Alibaba. Its aggressive spending, coupled with the slowing in India’s ecommerce market, has allowed Amazon to snatch some market share and customers from Flipkart and Snapdeal.

Performance during the festival sales will be critical for Flipkart to maintain its lead over Amazon and maintain its contested $15.2-billion valuation. Mutual fund shareholders have marked down Flipkart’s valuation to $9 billion, but the company still attracts some of the world’s biggest retailers.

Chinese ecommerce giant Alibaba held investment talks with Flipkart earlier this year and America’s Walmart is in discussions for an equity partnership.

UNDOING MISTAKES
Till last year, Flipkart’s market leadership was undisputed as the industry was growing. Its innovations such as the option for payment or cash on delivery, flash sales of smartphones, and heavy discounting financed with $3.2 billion of funding helped open up India’s online retail market between 2010 and 2014.

But some key moves in 2014-2015 misfired for Flipkart. One major mistake, according to some experts, was its decision to move to a marketplace model from its inventory-led model, emulating Alibaba. The other was the company’s plan to become a mobile-app only platform, with all discounts during the flagship sales event in 2015 moved to the app. Some high-profile hires such as that of former Google executive Punit Soni, who launched the now-discarded social shopping feature Ping, also didn’t work out.

Flipkart reversed these decisions this year after Binny took over as CEO from cofounder Sachin Bansal in January. But these mistakes gave Amazon India the opening it was looking for, allowing it to overtake Flipkart in desktop traffic in December. “Ping was a good-to-have but selection is a must-have,” said another senior Flipkart executive. Flipkart offers about 40 million products to select from, about half of Amazon India’s 80 million.

In his first six months at the job, Binny cut down the company’s cash burn rate by 40%, oversaw three management reshuffles, ramped up the advertisement unit’s revenue and monetized the company’s logistics infrastructure. He also bought PhonePe, a startup founded by former Flipkart executives, to build a payments platform.

ENTER KALYAN
But as Binny focused on fixing internal issues and setting up the basic building blocks, Amazon gained more market share. There were fears that while Flipkart focused on winning the battle of driving internal operational efficiencies, it was losing the war with Amazon.

That’s when, in June, Flipkart brought back Kalyan Krishnamurthy, who was a managing director at its largest shareholder Tiger Global, to lead its commerce and advertising business.

Krishnamurthy, who had worked at Flipkart between 2013 and 2014, has been key in bringing back aggression within the firm to fight Amazon. He is leading the charge for the ‘Big Billion Days’ event.

One of Krishnamurthy’s first moves was to ramp up the company’s digital marketing budget. He has been instrumental in Flipkart getting back its edge in smartphone sales, which account for at least half of the company’s online commerce sales.

“Kalyan is very result-oriented. When he sets targets, he expects managers to either promise meeting them 100%... Even an 80% probability doesn’t work with him,” a Flipkart employee said. “We call him ‘The Closer’ since he has directly led all top business tie-ups for Flipkart and brought us back even stronger.”

Flipkart has started making deeper cuts to reduce cash burn. In May, it deferred the joining dates of IIM graduates and in July began laying off around 700 employees. The company’s culture has significantly changed as it gets into a street-fight mode to take on Amazon. At a recent meeting, Binny Bansal drilled it down telling employees that Flipkart was not a place for the light-hearted anymore.

AFFORDABILITY PUSH
With its push on affordability, Flipkart is trying to align itself with the reality of the consumption economy in India, seen as very different from that of China. India’s Urban Middle, defined as those earning about $11,000 (Rs 7 lakh) a year, was estimated at about 27 million people, as compared to China’s 157 million, between 2002 and 2012, according to a Goldman Sachs report. “Most of the new generation of India’s youth will first fall into Urban Mass, a cohort that is 129 million people today, earning over $3,200 on average.

The expansion of Urban Mass, both in size and income level, will be the key driver of India’s consumption story in the coming 5-10 years,” Goldman Sachs said.

While Flipkart’s aim is to grow the market with affordability initiatives that can nullify any threat of it losing market share, its past innovations, both CoD and flash sales, have been adopted and executed well by rival Amazon India.

The first senior executive mentioned above said that if Flipkart was the one growing the market and its gross sales difference with Amazon was about 10%, the company wouldn’t be bothered by it. “But if they are growing the market and we are not then I will be worried.”

He added: “Overall, Amazon is spending 3-4 times of Flipkart. Even after spending this much, there is no market growth.”

Amazon India is not as worried about growing the market. “At this point of time, we are very focused on figuring out how to add selection, add sellers and deliver things fast and reliably at scale,” country manager Amit Agarwal said in an interview this month. “These three elements have a disproportionate impact on how customers will adopt than many other innovations, in my opinion.”

WHAT’S NEXT?
Going forward, Flipkart is looking to build its two other business—payments and logistics. Flipkart has started converting digital wallets users across its platforms to PhonePe, to which its transfers payments for returns.

PhonePe has been built on the new government-backed payments platform, Unified Payments Interface, and is chasing an aggressive target of 10-12 million users by the end of this year.

Digital payments, which is expected to reach $500 billion by 2020, according to a Google-BCG study, is seen as a bigger market than online retail, which is expected to reach $60-100 billion by 2020, according to various reports.


TOP GUNS: The key men who run Flipkart

“This is a long-term strategic bet for us, and we believe PhonePe could become as big as Flipkart one day,” Binny Bansal told ET in July. He has started spending more time with the unit after Kalyan Krishnamurthy took charge of the commerce business. As for Flipkart’s logistics unit, a potential investment from Wal-Mart could bring Ekart back in focus as the two companies look to leverage the US retailer’s global supply chain to take on Amazon India and potentially Alibaba when it begins operations in the country.

An investment by Wal-Mart, even for a minority stake, will also ease pressure on Flipkart to find exit options for its investors. “A primary investment in Flipkart will be followed by partial exits by some investors, which are likely to happen at a discount to the new valuation,” said an investor in Flipkart, indicating how a strategic investor such as Wal-Mart could build a meaningful minority stake.

As Flipkart enters its main sales season this year, some executives are saying the company has got its mojo back. Maintaining this will be critical, reckon experts, as the company looks to close a fresh financing round by early next year.

“If (Flipkart) becomes number two, it will be very difficult for them to raise money as they are still burning a lot of capital,” said Hosanagar. “As long as they are the market leader there is money to be raised in such a large market.”

For Flipkart, 2016 has been an eventful year. A timeline:

January
► Binny Bansal is named CEO heading all units and Sachin Bansal is elevated to Executive Chairman to focus on lobbying and fundraising

► Binny begins monetizing logistics unit Ekart’s excess capacity, starts pilots with Madura Garments, Shopclues, Paytm. Infuses $100 million in the unit

February
► Flipkart’s commerce platform head and Myntra founder Mukesh Bansal and chief business officer Ankit Nagori quit

► Flipkart holds talks with Alibaba for potential stake sale

► Flipkart’s valuation is marked down 27% by Morgan Stanley, pegging it to be worth $11 billion, down from $15.2 billion

March
► Acquires PhonePe for push into payments business using UPI, to invest $100 million in the business

April
► Begins working closely with top 100 sellers to improve customer experience

► Chief product officer Punit Soni quits

May
► Starts aggressive push to monetize advertisement revenue, launches brand stores and consumerfacing courier service under Ekart

► Binny Bansal says to abandon GMV to focus on net promoter score, a measure of customer loyalty as main metric

► Flipkart decision to defer the joining dates of IIM graduates to December raises a storm; company offers students Rs 1.5 lakh compensation

June
► Tiger Global executive Kalyan Krishnamurthy returns to Flipkart as category management head

► Flipkart starts talks with Wal-Mart for stake sale

July
► Starts laying off about 700 employees

August
► Flipkart re-launches desktop website with new design

► Launches F-Assured product quality check and fast shipments to win customers

► Sachin Bansal says in a townhall that he was replaced as CEO because of performance issues

► In Flipkart’s third major restructuring, Krishnamurthy becomes head of commerce and advertisement units

September
► Company crosses milestone of 100 million registered users

► Announces ‘Big Billion Days’ sale from October 2 to October 6; signs up Apple for sale of iPhone 7