Indian Economy: News and Discussion

shade

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More indirect gibs coming for exporters through RoDTEP scheme.
I thought all these schemes were removed because of khauf-e-WTO.
 

Cruise missile

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More indirect gibs coming for exporters through RoDTEP scheme.
I thought all these schemes were removed because of khauf-e-WTO.
There are only few people in top who give useful advice to govt whereas most of the system is still rotten and awaiting reforms since independence.
 

ezsasa

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Any idea if a country takes loan, does that $ amount gets added to forex reserves?
or is it something only pak type economies do.
 

Haldilal

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Any idea if a country takes loan, does that $ amount gets added to forex reserves?
or is it something only pak type economies do.
Ya'll Nibbiars Through various channels, the amount and structure of public debt can have a significant influence on a central bank’s foreign exchange reserve management. On the one hand, the issuance of foreign currency-denominated debt can boost international reserves. On the other hand, repayment of public foreign currency debt not only reduces the level of foreign exchange reserves but can cause transient problems in liquidity management. Furthermore, the dynamics of public debt influences not only reserve accumulation but may affect the central bank’s reserve adequacy targets, as an increased level of foreign debt can push up the reserves, requirement, depending mainly on the maturity structure of public assets held by non-residents.

The actual level of reserves may also set in motion forces that interact with public debt. Inadequate foreign exchange reserves would call for an increase in foreign currency debt or would lead to changes in market perception about the sustainability of the debt. Such changes would affect the fiscal deficit not only directly through interest costs, but indirectly through the central bank’s profit and loss. The cost to the central bank of sterilising excess liquidity in the domestic money market is likely to increase, given that there is a significant spread between the cost of sterilisation and the yield on foreign exchange reserves.
 

Haldilal

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The Foreign Institutional Investors.

Ya'll Nibbiars FII inflows have been returning to EMs of late and India has been one of the recipients with net monthly inflows to India turning positive since June after strong outflows from March to May. In line, India has been piling up its FX reserves as buffer, without which the INR would have appreciated further. While further accumulation would depend on the strength of the USD contingent on ongoing fiscal spending by the US government, path of Covid-19 and associated global economic recovery and foreign inflows, the higher cushion provides stability to INR and credibility with foreign investors.

Figure 1: India’s increase in FX reserves has been one of the highest among EM peers.

Figure1.png


In this context, And look at India’s external debt profile, the adequacy of its foreign reserves, how all this has changed in the last 15 years and various scenarios of reserve drawdown. Thrn explore this through a series of charts.

Figure 2: India's external debt has reduced from 24.2% of GDP in FY14 to 19.5% in FY20.
Figure2.png


Figure 3: India's external debt growth has been mostly benign since late 2014, moving either closely or quite below June 2016 to June 2018 the growth in nominal GDP.
Figure3.png


Figure 4: Seen differently, flow of external debt has slowed considerably. It fell by 61% during FY16-FY20 vs. FY11-FY15.
Figure4.png


To further understand the dynamics of the slowdown in external debt, And need to understand how the long-term and short-term categories, and its constituents, moved over the years.

Figure 5: Looking at the split of long-term external debt by borrower/sector, the total flow during FY16-FY20 fell very sharply from FY11-FY15 for the financial sector to 36 Billion Dollats from 89 Billion dollars and the non-financial private sector to 8 billion Dollars from 48 Billion Dollars These two accounted for 68% of the long-term external debt outstanding in FY20. However, there was a revival in long-term external debt raised in FY20, led by the non-financial sector.
Figure5.png


Then now break down the same long-term external debt into the two main categories.

Figure 6: The two main categories of long term external debt, commercial borrowing and NRI deposit, slowed. The former is in line with lower borrowing by the non-financial private sector seen above, while the latter was due to both lower oil prices from late-2014 to 2017 and the reversal of additional NRI deposits raised during the 2013 taper tantrum.
Figure6.png


Unsurprisingly, short-term external debt which is primarily trade related 95% of the total is closely linked to the world export cycle. World export growth had contracted in 2015 and 2016 quite sharply in 2015, after which it rebounded in 2017 as the global economy witnessed a synchronised pickup in growth.

Figure 7: Short-term external debt flow also stayed weak all through FY14-FY17, but increased in FY18.
Figure7.png


Then now look at the currency profile of India’s external debt.

Figure 8: Rupee denominated external debt share increased from 22% in FY14 to 36% in FY19, while USD-denominated debt fell from 61% to 51% during the same period. However, this trend reversed in FY20 as the share of rupee-denominated debt fell by 4ppts and that of USD-denominated debt increased by 3ppts. The reason for this - lower global interest rates, view of a weaker USD ahead, offsetting higher revenues in USD, etc. - is not entirely clear.
Figure8 (1).png


Figure 9: Consequent to the reduction in external debt, India’s external debt service ratio (defined as the ratio of external debt principal and interest payments to BoP current receipts) has slowed from its recent peak in FY16. The slight pickup in FY20 is in line with the revival of long-term external debt seen above.
Figure9 (1).png


Then also analyze how the adequacy of India’s foreign reserves, to cover short-term external debt and imports of goods and services, have moved.

Figure 10: India’s share of short-term external debt in FX reserves increased sharply from FY08 and doubled in FY13 as borrowing increased and reserves stayed low. This has gradually moderated thereafter as overall debt flow was lower and accretion of reserves much higher. The import coverage ratio has improved from a low of 6.0 in FY13 to 9.5 in FY20 and 10.6 in July 2020. It could further rise if import demand stays subdued, ceteris paribus.
Figure10.png


Source: CEIC, Department of Economic Affairs, IMF, IDFC MF Research.

Note: 1 . Import coverage ratio is defined as the number of months of imports of goods and services covered by FX reserves.
2 . ST is ‘Short-Term’.
 
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Haldilal

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Ya'll Nibbiars

Figure 11: India’s foreign reserves have also stayed well above the IMF’s reserve adequacy measure and improved further in FY20.
Figure11.png

Source: CEIC, IMF, IDFC MF Research. Note: IMF Assessing Reserve Adequacy ARA metric is derived using weights to cover exports potential loss of export income and liquidity stress on banks,broad money risk of resident capital flight, short term debt debt roll-over risk and other liabilities risk of non-resident debt and equity capital flight. The weights differ based on the exchange rate regime fixed or float of an economy. For India, given it has a floating exchange rate regime, it uses a weight of 5% for exports, 5% for broad money, 30% for short-term debt and 15% for other liabilities.

Finally, Then observe how the various metrics of adequacy of India’s foreign reserves would look under different scenarios of a drawdown in reserves. This is not to suggest any potential drawdown but is essentially a stress-test of the cushion available in the event of a capital flight.

Figure 12: India’s various measures of reserve adequacy look quite comfortable at this juncture. Even when we model for various levels of drawdown (assuming all other variables remain constant), the measures don’t turn alarming. For reference, India's FX reserves were down by USD 66bn from end-May 2008 to end-January 2009 during the GFC (a fall by 21%)
Figure12.png


Source: CEIC, IMF, IDFC MF Research. Note:

1 . Short-term debt is based on residual maturity.
2 . IMF ARA is IMF Assessing Reserve Adequacy metric.
3 . For the latest actual situation, import and current account numbers are taken as at end-March 2020 while FX reserves are taken as at end-July 2020.
4 . In all the scenarios, we assume any FX intervention in sterilised and therefore does not impact money supply. Thus, the IMF ARA metric which has broad money in its calculation does not change.

SUMMARY:

India’s external debt addition has reduced in the last 5-6 years, with growth being close to or below nominal GDP growth. This slowdown has been led by both the financial and non-financial private sectors in the long-term segment. In line, both external commercial borrowings and NRI deposits have slowed. Short-term debt flow, mostly trade-related, picked up in 2017 as world exports rebounded but has been flat thereafter. In terms of currency denomination, we see the increase in rupee-denominated debt since FY15 reversed partially in FY20. All this means the external debt service ratio has been improving but increased marginally in FY20 due to the rebound in long-term debt.

Adequacy of India’s foreign reserves has increased since FY13, not just owing to lower debt but also due to the aggressive addition to its reserves, and remain comfortable at the moment. Under various stress scenarios of drawdown of reserves, we see the adequacy does not fall drastically. This is indeed India’s silver lining in the current domestic and global economic backdrop.

In a follow-up note, Then will compare some of these external account parameters (external debt, reserve adequacy, IIP, etc.) for India vs. its EM peers. We would also look at how their foreign reserves were managed and currencies fared during the GFC and taper tantrum.
 
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shade

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A single line in this article states that this plant will make casings for iPhone, i.e the "body" or chassis of the phone.
 

shade

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ICEA dalals want more gibs specifically for PCB manufacturing.
However the biggest problem with PCB manufacturing is not funding, but water supply, electricity and above all effluent disposal, since fabricating PCB needs special acids which etch the desired pattern by removing unwanted copper, so ofc the resulting acid + copper mix may be dangerous, unsafe and polluting.
Which necessitates proper disposal, otherwise water bodies get polluted, or harami EcoF*g (((NGOs))) or NGT interference in plant set up or operations.

We do have domestic PCB manufactures, but I doubt they can produce PCBs of large amounts of layers( 8-15 ) at cost/scale/quality/time metrics that global electronics industry requires.




In case anyone doesn't trust sheikh chilli "osints" on twitter

 

ezsasa

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..................................................................
I’ll bet that if we dig out the raw footage of that analyst interview, the context of his statements would be different.

on one hand their report says micro max managed to launch a product during the pandemic and expanding a manufacturing line took just two weeks, and the analyst is taking about job losses making it different for manufacturing. Contradictory statements.
 

HariPrasad-1

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I’ll bet that if we dig out the raw footage of that analyst interview, the context of his statements would be different.

on one hand their report says micro max managed to launch a product during the pandemic and expanding a manufacturing line took just two weeks, and the analyst is taking about job losses making it different for manufacturing. Contradictory statements.
this is the time we should be very aggressive in protecting national interest. We should not tolerate any conspiracy in our country which harm our nation or national interest or interest of Indian company or Indian citizens. By pursuing aggressive nationalism and national interest, we have everything to gain and nothing to loose.
 

shade

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I’ll bet that if we dig out the raw footage of that analyst interview, the context of his statements would be different.

on one hand their report says micro max managed to launch a product during the pandemic and expanding a manufacturing line took just two weeks, and the analyst is taking about job losses making it different for manufacturing. Contradictory statements.
It is a miracle any Western publication has anything remotely positive to say about India.
 

ezsasa

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this is the time we should be very aggressive in protecting national interest. We should not tolerate any conspiracy in our country which harm our nation or national interest or interest of Indian company or Indian citizens. By pursuing aggressive nationalism and national interest, we have everything to gain and nothing to loose.
unfortunately there is no we here. Donno about Hindi news channels, but I am yet to see even one news report in national channels on how micromax managed to launch a new product during a pandemic.

Indian news media does not consider themselves part of the solutions related to India’s economic growth, as far as they are concerned it is the responsibility of the govt, and they are happy to take in only ad revenues from the companies.
 

shade

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unfortunately there is no we here. Donno about Hindi news channels, but I am yet to see even one news report in national channels on how micromax managed to launch a new product during a pandemic.

Indian news media does not consider themselves part of the solutions related to India’s economic growth, as far as they are concerned it is the responsibility of the govt, and they are happy to take in only ad revenues from the companies.
Their "function" as per the Constitution etc. is to be a (((check and balance))) against govt power.
In effect this means that they have to oppose everything the govt does for bogus reasons, and add mirch masala while reporting said govt doings, either for TRP, because of $$$ by the opposition, or $$$ by phoren organizations.

Thing with "Free" Media and Religion is, if the state doesn't control them, someone else will.

If there is a need for news reports and documentaries or news segments on India's industry or manufacturing companies, a state owned media outlet like DD has to be restructured and be ordered to make such programming part of it's content.

(((Private media organizations))) will only do what brings them most profit, or will report in favor of who pays them the most.
 

ezsasa

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Their "function" as per the Constitution etc. is to be a (((check and balance))) against govt power
where in constitution is it written that their function is to be a check and balance “against” the govt?

key word being “against”.
 

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Israeli startup UBQ will recycle waste into Indian car parts

The UBQ Materials plant operates the first technology of its kind in the world that manages to turn all types of waste – including food scraps and plants, various plastics, cartons, coronavirus masks and even dirty diapers – into useful raw materials, called thermoplastics, to create surfaces, trash cans, shopping carts, pipes, 3D printing material and many other products.

 

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