Indian Economy: News and Discussion
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. But i think it is worth tryingGood news: GDP growth higher than expected
http://www.indianexpress.com/news/good-news-gdp-growth-higher-than-expected/747367/0
Finance Minister Pranab Mukherjee can take credit for ending 2010-11 with a fiscal deficit significantly lower than 5.5 per cent of GDP that his team estimated in the beginning of the year. A higher-than-expected GDP growth rate of 8.6 per cent will give him enough headroom to close the year with a budget deficit of under 5 per cent of GDP. Even as the Finance Ministry's Budget division is putting together the numbers, Mukherjee acknowledged the buoyancy in tax revenues. "The higher-than-anticipated nominal growth in GDP will ensure that our performance on fiscal and revenue deficit targets for the year would be better than the projections in the Budget 2010-11," Mukherjee said.
While the Centre has targeted a fiscal deficit of 5.5 per cent of the GDP in 2010-11, analysts expect it could be as low as 4.85 per cent of the GDP. "Higher-than-expected growth and inflation have pushed up the nominal GDP figures. It is likely to cause a significant downward revision in the fiscal deficit to GDP ratio, which could be as low as 4.85 per cent. But in absolute numbers, the deficit may not be impacted," said Deepali Bhargava, economist at ING Vysya Bank.
D K Joshi, chief economist at rating Good news before Budget: GDP growth higher than expected agency Crisil, said: "The higher growth along with the gains from the 3G spectrum auction will help lower the deficit. We expect the fiscal deficit to be lower at about 5 per cent of the GDP in 2010-11."
Between April and December 2010, the deficit, in absolute numbers, stood at Rs 1,71,249 crore amounting to 44.9 per cent of the full-year target. This came on the back of Rs 1 lakh crore in receipts from 3G spectrum auction as well as a 27 per cent rise in gross tax collections. "In nominal terms, the deficit could go down due to improved tax collections," said N R Bhanumurthy, an economist at National Institute of Public Finance and Policy.
A lower-than-expected fiscal deficit to GDP ratio in 2010-11 would also lead to a revision of the Centre's deficit target for 2011-12, which is pegged at 4.8 per cent of the GDP. "The Budget on February 28 could have a new strategy on deficit," Bhargava said, adding that a lower deficit would also cut down the government's borrowing needs for the financial year starting April 1.
The fiscal deficit may be revised further downwards once the quick estimates of the Central Statistical Organisation are released later next year. Going by the past trend, the current CSO projection for GDP growth may be revised upwards when the quick estimates of national income are released next year. Quick estimates of national income, which come out nearly a year after the end of a fiscal is based on firmer data as well as growth figures of all four quarters. Barring the crisis year of 2008-09, GDP figures have been revised upwards in most years.(See chart) "There could be some upside revision to the CSO estimate of GDP growth of 8.6 per cent later in the year. Our forecast for GDP growth in 2010-11 was 8.7 per cent," said Bhargava.
http://www.indianexpress.com/news/good-news-gdp-growth-higher-than-expected/747367/0
Finance Minister Pranab Mukherjee can take credit for ending 2010-11 with a fiscal deficit significantly lower than 5.5 per cent of GDP that his team estimated in the beginning of the year. A higher-than-expected GDP growth rate of 8.6 per cent will give him enough headroom to close the year with a budget deficit of under 5 per cent of GDP. Even as the Finance Ministry's Budget division is putting together the numbers, Mukherjee acknowledged the buoyancy in tax revenues. "The higher-than-anticipated nominal growth in GDP will ensure that our performance on fiscal and revenue deficit targets for the year would be better than the projections in the Budget 2010-11," Mukherjee said.
While the Centre has targeted a fiscal deficit of 5.5 per cent of the GDP in 2010-11, analysts expect it could be as low as 4.85 per cent of the GDP. "Higher-than-expected growth and inflation have pushed up the nominal GDP figures. It is likely to cause a significant downward revision in the fiscal deficit to GDP ratio, which could be as low as 4.85 per cent. But in absolute numbers, the deficit may not be impacted," said Deepali Bhargava, economist at ING Vysya Bank.
D K Joshi, chief economist at rating Good news before Budget: GDP growth higher than expected agency Crisil, said: "The higher growth along with the gains from the 3G spectrum auction will help lower the deficit. We expect the fiscal deficit to be lower at about 5 per cent of the GDP in 2010-11."
Between April and December 2010, the deficit, in absolute numbers, stood at Rs 1,71,249 crore amounting to 44.9 per cent of the full-year target. This came on the back of Rs 1 lakh crore in receipts from 3G spectrum auction as well as a 27 per cent rise in gross tax collections. "In nominal terms, the deficit could go down due to improved tax collections," said N R Bhanumurthy, an economist at National Institute of Public Finance and Policy.
A lower-than-expected fiscal deficit to GDP ratio in 2010-11 would also lead to a revision of the Centre's deficit target for 2011-12, which is pegged at 4.8 per cent of the GDP. "The Budget on February 28 could have a new strategy on deficit," Bhargava said, adding that a lower deficit would also cut down the government's borrowing needs for the financial year starting April 1.
The fiscal deficit may be revised further downwards once the quick estimates of the Central Statistical Organisation are released later next year. Going by the past trend, the current CSO projection for GDP growth may be revised upwards when the quick estimates of national income are released next year. Quick estimates of national income, which come out nearly a year after the end of a fiscal is based on firmer data as well as growth figures of all four quarters. Barring the crisis year of 2008-09, GDP figures have been revised upwards in most years.(See chart) "There could be some upside revision to the CSO estimate of GDP growth of 8.6 per cent later in the year. Our forecast for GDP growth in 2010-11 was 8.7 per cent," said Bhargava.
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http://www.livemint.com/2011/02/08021623/India-now-on-middle-income-pat.html?atype=tp
* Posted: Tue, Feb 8 2011. 1:00 AM IST
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India now on middle income path
Economy projected to grow by 8.6% in current fiscal; robust growth likely for farm, industry and services sectors
Asit Ranjan Mishra, [email protected]
The Indian economy is projected to expand by 8.6% to a record $1.73 trillion (around Rs.80 trillion) in the current fiscal, according to the Central Statistical Organisation (CSO), sustaining its growth trajectory.
At this level of nominal gross domestic product (GDP), India's per capita income works out to about $1,200, effectively making it a middle-income country. While this will enhance the country's global standing, it will be less eligible for soft loans from multilateral institutions for social sector projects and, hence, make it that much more difficult for the government to generate the desired resources.
The economy's size was $1.4 trillion in 2009-10 and its per capita income estimated at $1,019. The country crossed the per capita threshold of $500 in 1999-2000.
During the current fiscal, the farm sector is expected to see robust growth of 5.4% as against 0.4% a year ago due to a normal monsoon and bumper harvests. Industry and the services sector are expected to hold on to their robust growth at 8.1% and 9.6%, respectively, compared with 8% and 10.05% a year ago.
Analysts believe rising inflation and concerns on governance are posing a risk to this growth trajectory. With private consumption providing the stimulus, analysts believe growth will decelerate in the next fiscal as the effects of the recent round of rate hikes by the Reserve Bank of India (RBI) to tame inflation kick in.
Private consumption, expected to contribute 57.6% to GDP in 2010-11, is projected to grow 8.2% compared with 7.3% a year ago, while government expenditure is expected to grow 2.6% in the current fiscal against 16.4% a year ago.
Overall consumption in the economy is expected to slow to 7.3% in the current fiscal from 8.7% in the previous fiscal due to lower government consumption. While the trend in overall investment is estimated to slow from 13.8% to 8.8%, growth in gross fixed capital formation—a better indicator for analysing current trends— is expected to edge up from 7.3% in the last fiscal to 8.4% in the current one.
However, as Citi India economists Rohini Malkani and Anushka Shah point out in their research note, this masks the sharp deceleration in the second half of the year after RBI started its round of interest rate increases. While the growth was 15% in the first half of 2010-11, it is expected to slow sharply to 1.8% in the second half of the fiscal.
"An 8.6% (growth) is quite encouraging despite all these difficulties. Now the other issue is inflation, trade balance...these are to be addressed," finance minister Pranab Mukherjee said on Monday.
Concerns have been raised, including by Prime Minister Manmohan Singh, over growth momentum being maintained next year. Singh, speaking at the second annual conference of chief secretaries last week, said even though India has weathered the global financial crisis relatively well, "inflation poses a serious threat to the growth momentum".
The stickiness in inflation has forced RBI to revise its year-end inflation estimate to 7% by March this year from its earlier projection of 5.5%, while it continues to tighten monetary policy.
Anticipating fresh interest rate increases by RBI, Malkani and Shah have marginally scaled down their growth projection for the next fiscal to 8.4% from 8.6%.
However, they highlighted the bigger issue as "governance/corruption" and its negative feedback loop on lack of policy progress. "This could be the key surprise factor on the growth front," they said.
Samiran Chakraborty, head of research at Standard Chartered Bank, concurred with the analysis and added that there was a good chance of growth estimate in the current fiscal being scaled down. "The current GDP estimate is an extrapolation of the available data (till November-December) for the full year. Growth in industrial production will come down significantly during the remaining months of the fiscal, which is not captured by this data," he said.
However, a higher-than-anticipated nominal GDP at Rs.78.77 trillion may bring down the fiscal deficit as a percentage of GDP to 4.8%, against the budget target of 5.5%. "We will achieve the fiscal deficit target of the next fiscal in the current fiscal itself due to a revision in nominal GDP," Chakraborty added.
He said reducing the fiscal deficit further in the next fiscal will be a key challenge because there won't be such one-time gains as the spectrum auction that netted Rs.1.06 trillion.
"Expenditure growth might have to be carried out due to political compulsions on account of state elections later this year," Chakraborty pointed out. Elections in key states such as West Bengal, Tamil Nadu, Kerala and Assam are due later this year.
PTI contributed to this story.
* Posted: Tue, Feb 8 2011. 1:00 AM IST
* Published on page 1
* Home
*
India now on middle income path
Economy projected to grow by 8.6% in current fiscal; robust growth likely for farm, industry and services sectors
Asit Ranjan Mishra, [email protected]
The Indian economy is projected to expand by 8.6% to a record $1.73 trillion (around Rs.80 trillion) in the current fiscal, according to the Central Statistical Organisation (CSO), sustaining its growth trajectory.
At this level of nominal gross domestic product (GDP), India's per capita income works out to about $1,200, effectively making it a middle-income country. While this will enhance the country's global standing, it will be less eligible for soft loans from multilateral institutions for social sector projects and, hence, make it that much more difficult for the government to generate the desired resources.
The economy's size was $1.4 trillion in 2009-10 and its per capita income estimated at $1,019. The country crossed the per capita threshold of $500 in 1999-2000.
During the current fiscal, the farm sector is expected to see robust growth of 5.4% as against 0.4% a year ago due to a normal monsoon and bumper harvests. Industry and the services sector are expected to hold on to their robust growth at 8.1% and 9.6%, respectively, compared with 8% and 10.05% a year ago.
Analysts believe rising inflation and concerns on governance are posing a risk to this growth trajectory. With private consumption providing the stimulus, analysts believe growth will decelerate in the next fiscal as the effects of the recent round of rate hikes by the Reserve Bank of India (RBI) to tame inflation kick in.
Private consumption, expected to contribute 57.6% to GDP in 2010-11, is projected to grow 8.2% compared with 7.3% a year ago, while government expenditure is expected to grow 2.6% in the current fiscal against 16.4% a year ago.
Overall consumption in the economy is expected to slow to 7.3% in the current fiscal from 8.7% in the previous fiscal due to lower government consumption. While the trend in overall investment is estimated to slow from 13.8% to 8.8%, growth in gross fixed capital formation—a better indicator for analysing current trends— is expected to edge up from 7.3% in the last fiscal to 8.4% in the current one.
However, as Citi India economists Rohini Malkani and Anushka Shah point out in their research note, this masks the sharp deceleration in the second half of the year after RBI started its round of interest rate increases. While the growth was 15% in the first half of 2010-11, it is expected to slow sharply to 1.8% in the second half of the fiscal.
"An 8.6% (growth) is quite encouraging despite all these difficulties. Now the other issue is inflation, trade balance...these are to be addressed," finance minister Pranab Mukherjee said on Monday.
Concerns have been raised, including by Prime Minister Manmohan Singh, over growth momentum being maintained next year. Singh, speaking at the second annual conference of chief secretaries last week, said even though India has weathered the global financial crisis relatively well, "inflation poses a serious threat to the growth momentum".
The stickiness in inflation has forced RBI to revise its year-end inflation estimate to 7% by March this year from its earlier projection of 5.5%, while it continues to tighten monetary policy.
Anticipating fresh interest rate increases by RBI, Malkani and Shah have marginally scaled down their growth projection for the next fiscal to 8.4% from 8.6%.
However, they highlighted the bigger issue as "governance/corruption" and its negative feedback loop on lack of policy progress. "This could be the key surprise factor on the growth front," they said.
Samiran Chakraborty, head of research at Standard Chartered Bank, concurred with the analysis and added that there was a good chance of growth estimate in the current fiscal being scaled down. "The current GDP estimate is an extrapolation of the available data (till November-December) for the full year. Growth in industrial production will come down significantly during the remaining months of the fiscal, which is not captured by this data," he said.
However, a higher-than-anticipated nominal GDP at Rs.78.77 trillion may bring down the fiscal deficit as a percentage of GDP to 4.8%, against the budget target of 5.5%. "We will achieve the fiscal deficit target of the next fiscal in the current fiscal itself due to a revision in nominal GDP," Chakraborty added.
He said reducing the fiscal deficit further in the next fiscal will be a key challenge because there won't be such one-time gains as the spectrum auction that netted Rs.1.06 trillion.
"Expenditure growth might have to be carried out due to political compulsions on account of state elections later this year," Chakraborty pointed out. Elections in key states such as West Bengal, Tamil Nadu, Kerala and Assam are due later this year.
PTI contributed to this story.
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Foundry units in India struggle to expand
Business Standard Reporter / Chandigarh February 11, 2011, 0:30 IST
Despite India being placed second in the casting production across the world, the foundry units in India are grappling to expand at desired pace.
There are around 5,000-6,000 foundry units in India which are in the business of melting metals and casting into various shapes.
Institute of Indian Foundrymen National President Naresh Garg maintained problems like complex officials procedures which were time consuming, shortage of skilled manpower and dearer electricity tariffs were creating hurdle for the expansion of foundry units in India.
Garg maintained the problems had created a chasm between the available capacity and demand in the domestic market. To fill the gap the industry has to double itself at least every five years.
Also with the Automotive mission 2007-2016 (which aims to make India a global hub for manufacturing and designing automobiles) gathering steam, the foundry unit members feel the supply-demand ratio may further skew in the coming years, if the supply side is not taken care of.
To address the concern of foundry units and encourage entrepreneurs make investment in the foundry units, 59th Indian Foundry Congress is being organised in Chandigarh.
The three-day fair starting from February 11 coupled with IFEX and Cast India Expo exhibitions aims to sensitise entrepreneurs, policy makers and all those who matter to work in unison for this goal.
Naresh Garg added, the theme of the congress was resurgence India.
"The congress would cover an array of subjects including modern foundry technology, equipments, processes, management, quality engineering. India has reached the second spot in the world rank of casting production."
Garg maintained, the 59th Congress would attract 1,300 registered delegates and over 5,000 visitors. There would be over 250 exhibitors with major participation from Germany, Italy, Japan, China and Taiwan.
http://www.business-standard.com/india/news/foundry-units-in-india-struggle-to-expand/424761/
Business Standard Reporter / Chandigarh February 11, 2011, 0:30 IST
Despite India being placed second in the casting production across the world, the foundry units in India are grappling to expand at desired pace.
There are around 5,000-6,000 foundry units in India which are in the business of melting metals and casting into various shapes.
Institute of Indian Foundrymen National President Naresh Garg maintained problems like complex officials procedures which were time consuming, shortage of skilled manpower and dearer electricity tariffs were creating hurdle for the expansion of foundry units in India.
Garg maintained the problems had created a chasm between the available capacity and demand in the domestic market. To fill the gap the industry has to double itself at least every five years.
Also with the Automotive mission 2007-2016 (which aims to make India a global hub for manufacturing and designing automobiles) gathering steam, the foundry unit members feel the supply-demand ratio may further skew in the coming years, if the supply side is not taken care of.
To address the concern of foundry units and encourage entrepreneurs make investment in the foundry units, 59th Indian Foundry Congress is being organised in Chandigarh.
The three-day fair starting from February 11 coupled with IFEX and Cast India Expo exhibitions aims to sensitise entrepreneurs, policy makers and all those who matter to work in unison for this goal.
Naresh Garg added, the theme of the congress was resurgence India.
"The congress would cover an array of subjects including modern foundry technology, equipments, processes, management, quality engineering. India has reached the second spot in the world rank of casting production."
Garg maintained, the 59th Congress would attract 1,300 registered delegates and over 5,000 visitors. There would be over 250 exhibitors with major participation from Germany, Italy, Japan, China and Taiwan.
http://www.business-standard.com/india/news/foundry-units-in-india-struggle-to-expand/424761/
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India hopes to have 5 crore more bank accounts by March 2012
10 Feb, 2011, 09.32PM IST,IANS
NEW DELHI: The government aims to bring in 73,000 villages under the banking net that will lead to over five crore new bank accounts in rural areas by March next year, Finance Minister Pranab Mukherjee said Thursday.
"We intend to cover at least 73,000 new habitations which have population of over 2,000 and we will open at least five crore new accounts by March 2012," Mukherjee said at a function here.
He said all the villages having a population of over 2,000 will be brought under the banking network by the end of next financial year.
The minister pointed out that only 38 percent of the total 85,300 bank branches in India were in rural areas. Only 40 percent of Indians have access to banking facilities.
"Though the total number of bank branches have increased from 8,700 at the time of nationalisation in 1969 to 85,300 now, rural areas have only 32,000 branches," said Mukherjee, adding that the government had directed all public sector banks to increase their presence in rural areas.
Congress president Sonia Gandhi Thursday launched a financial inclusion campaign called "Swabhimaan". The campaign is aimed at encouraging people in rural areas to open bank accounts and use banking facilities.
"It is one of the first campaigns to make targeted and concerted efforts to ensure ease of access of organised financial system for the common people," Gandhi said after launching the campaign.
She expressed concern over the low banking network in rural areas.
"Though India has one of the largest banking networks in the world, it is a matter of great concern that only 40 percent of our people have access to banking services.
"This revolutionary campaign seeks to correct that imbalance by establishing a new medium to ensure greater availability of full spectrum of financial services and organised banking to all our citizens regardless of which part of the country they may reside," Gandhi added.
http://economictimes.indiatimes.com...ccounts-by-march-2012/articleshow/7470323.cms
10 Feb, 2011, 09.32PM IST,IANS
NEW DELHI: The government aims to bring in 73,000 villages under the banking net that will lead to over five crore new bank accounts in rural areas by March next year, Finance Minister Pranab Mukherjee said Thursday.
"We intend to cover at least 73,000 new habitations which have population of over 2,000 and we will open at least five crore new accounts by March 2012," Mukherjee said at a function here.
He said all the villages having a population of over 2,000 will be brought under the banking network by the end of next financial year.
The minister pointed out that only 38 percent of the total 85,300 bank branches in India were in rural areas. Only 40 percent of Indians have access to banking facilities.
"Though the total number of bank branches have increased from 8,700 at the time of nationalisation in 1969 to 85,300 now, rural areas have only 32,000 branches," said Mukherjee, adding that the government had directed all public sector banks to increase their presence in rural areas.
Congress president Sonia Gandhi Thursday launched a financial inclusion campaign called "Swabhimaan". The campaign is aimed at encouraging people in rural areas to open bank accounts and use banking facilities.
"It is one of the first campaigns to make targeted and concerted efforts to ensure ease of access of organised financial system for the common people," Gandhi said after launching the campaign.
She expressed concern over the low banking network in rural areas.
"Though India has one of the largest banking networks in the world, it is a matter of great concern that only 40 percent of our people have access to banking services.
"This revolutionary campaign seeks to correct that imbalance by establishing a new medium to ensure greater availability of full spectrum of financial services and organised banking to all our citizens regardless of which part of the country they may reside," Gandhi added.
http://economictimes.indiatimes.com...ccounts-by-march-2012/articleshow/7470323.cms
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India in sweet fiscal spot
Global investors have expressed worries about India's high inflation, wide current account deficit and rising corruption. But India's fiscal performance this year has been a big positive surprise. The April-December data have revealed a fiscal deficit that is just 44.8% of the corresponding figure last year. Against the budgeted 5.5% of GDP, the actual fiscal deficit may well fall well below 5.0% in 2010-11 , thanks to the remarkable rise in nominal GDP and unanticipated rise in government receipts, both tax and non-tax . The fiscal deficit level could dip further, to something close to 4% next year. So flush with funds is the government that it has drained bank liquidity, and so the RBI has been put in the embarrassing position of having to inject ever more liquidity into financial markets even as it tries to curb inflation. After telecom spectrum sales fetched a whopping . 1,05,000 crore, the resultant high government balances with the RBI were thought to be a temporary blip, which would be reversed as the government spent its windfall. But booming tax revenues have meant that, despite additional demands for grants and higher oil under-recoveries , the government's coffers remain pretty full. The primary deficit — the fiscal deficit less interest payments — has dropped to 0.3% of GDP.
The spectrum bonanza took government non-tax revenue in April-December to 130% of the annual budgeted sum. But tax revenue boomed, too: it was up 27% against the budgeted 17.9%. In April-December , Plan spending and revenue spending were 67% and 73.1%, respectively , of the annual budgeted amount, while revenue was 85.6% of the target. This suggests that spending is more or less on track, while revenue has vastly exceeded expectations . This may herald a structural shift to a higher tax/ GDP ratio, which may cross 12% of GDP this year and set a new record. This augurs well for the future. No doubt, there remain fiscal dangers like a huge rise in oil prices, and financial panic if the march to democracy in the Arab world turns chaotic in the short run. Indian populist measures have the potential to swallow up the revenue boom. Nevertheless, India is currently in a sweet fiscal spot. The lesson is that rapid growth can mitigate, if not cure, a thousand ills. The point is to sustain that growth.
http://economictimes.indiatimes.com...-in-sweet-fiscal-spot/articleshow/7457754.cms
Global investors have expressed worries about India's high inflation, wide current account deficit and rising corruption. But India's fiscal performance this year has been a big positive surprise. The April-December data have revealed a fiscal deficit that is just 44.8% of the corresponding figure last year. Against the budgeted 5.5% of GDP, the actual fiscal deficit may well fall well below 5.0% in 2010-11 , thanks to the remarkable rise in nominal GDP and unanticipated rise in government receipts, both tax and non-tax . The fiscal deficit level could dip further, to something close to 4% next year. So flush with funds is the government that it has drained bank liquidity, and so the RBI has been put in the embarrassing position of having to inject ever more liquidity into financial markets even as it tries to curb inflation. After telecom spectrum sales fetched a whopping . 1,05,000 crore, the resultant high government balances with the RBI were thought to be a temporary blip, which would be reversed as the government spent its windfall. But booming tax revenues have meant that, despite additional demands for grants and higher oil under-recoveries , the government's coffers remain pretty full. The primary deficit — the fiscal deficit less interest payments — has dropped to 0.3% of GDP.
The spectrum bonanza took government non-tax revenue in April-December to 130% of the annual budgeted sum. But tax revenue boomed, too: it was up 27% against the budgeted 17.9%. In April-December , Plan spending and revenue spending were 67% and 73.1%, respectively , of the annual budgeted amount, while revenue was 85.6% of the target. This suggests that spending is more or less on track, while revenue has vastly exceeded expectations . This may herald a structural shift to a higher tax/ GDP ratio, which may cross 12% of GDP this year and set a new record. This augurs well for the future. No doubt, there remain fiscal dangers like a huge rise in oil prices, and financial panic if the march to democracy in the Arab world turns chaotic in the short run. Indian populist measures have the potential to swallow up the revenue boom. Nevertheless, India is currently in a sweet fiscal spot. The lesson is that rapid growth can mitigate, if not cure, a thousand ills. The point is to sustain that growth.
http://economictimes.indiatimes.com...-in-sweet-fiscal-spot/articleshow/7457754.cms
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Stock markets in downhill mode
Ominously, emerging markets as a class seem to have suddenly fallen out of favour with global investors
The latest downtrend in stock prices is attributed to large selling by foreign institutional investors. They are flocking back to the developed markets, especially the U.S. given the serious problems about perceptions of India, it is going to take a while before they return.
Why are the stock markets suddenly losing their sheen? Are they in one of the defining moments in which they will fall quite sharply before rallying back, if at all? Sharp swings in share prices are by no means uncommon but the precipitous drops of the type seen last in January 2008 when the market valuations plunged by an amazing two-thirds are, of course, rare and more relevantly difficult to predict.
To answer the questions, one has to look at the peaks and troughs of stock prices over a fairly recent period. The week ended February 4 was especially noteworthy. After recording some marginal gains from the middle of the week, the indices recorded heavy losses on the close of the week. Sensex lost 441 points (about 2.5 per cent) to close just above 18000. Nifty fell below the psychologically significant 5400-mark. To view over a slightly longer period, the markets started rising strongly in August, 2010, to peak at 21005 on November 5. The fall by 3,000 points (14.28 per cent) since then until February 4 is significant. What is worse is that seemed to presage the worse things to come.
The gloomy forecasts seemed to come true sooner than anticipated. Stock prices dropped sharply on Tuesday last. Sensex traded below 18000 and Nifty around 5350 in the forenoon session. The fall in stock prices continued into the following week (February 7 to 11).
A sense of deep pessimism has permeated the markets. All of a sudden, uncertainty seems to have engulfed the markets. Barely two weeks before the presentation of the Union budget, the downward movement of stock prices has acquired a distinct, negative connotation of its own. Will the two major worries of the government — inflation and the burgeoning current account deficit — invite strong fiscal measures in addition to what the Reserve Bank of India has been doing?
There is no doubt at all that inflation and the current account deficit (expected to be around 3.7 per cent of the GDP) are the major concerns. But they have been so for quite some time. The reasons why stock markets latched on to the bad news all of a sudden ignoring the good ones need to be looked at from the totality of circumstances.
India's growth story has by no means derailed. According to the Central Statistical Organisation's advance estimates for 2010-11, the GDP growth will be at a respectable 8.6 per cent. This is below the upper-end of the government's expectations of between 8.5 and 8.75 per cent but slightly above the RBI's 8.5 per cent.
In each of the first two quarters of this year, the economy has grown by 8.9 per cent. Hence, the estimate of 8.6 per cent for the whole year suggests a slowdown in the third and fourth quarters. Besides, when final figures come, a deceleration in manufacturing during the second half of the year will be seen. During the first two quarters, manufacturing grew by 13 per cent and 9.8 per cent, respectively. Such a performance is unlikely to continue during the rest of this year. However, the CSO' estimate of manufacturing growth during the whole year at 8.8 per cent is the same as what was achieved last year.
Inflation and the widening current account deficit are the major macro economic concerns. But India faces even greater problems of perceptions — corruption and in governance especially.
The India story may be substantially on track but the reasons why the stock markets apparently do not think so is to be seen in the actions of global investors, especially the foreign institutional investors (FIIs), who have come to occupy such an important place in the Indian markets. Their large investments are for short-term and often volatile but they are considered necessary to bridge the current account deficit. There is an obvious preference for the more stable FDI (foreign direct investment) but it has been going down this year as reported by the RBI at the time of the last review.
The fall in equities in the past few weeks is mainly attributed to large scale selling of stocks by FIIs. According to official figures, they sold Rs.9,339-crore worth of stocks this year up to February 4. It is likely that they share the concerns of domestic investors, with inflation and the widening current account deficit topping the lists. As pointed out, such concerns have weighed with investors in the past too but in the aggregate they were positive on India. (This was seen by the steady rise in stock prices.)
However, at the present juncture, FIIs are pulling out but do not seem to be coming back soon. Ominously, emerging markets as a class seem to have suddenly fallen out of favour with global investors. There could be many reasons: turmoil in Egypt, rising inflation and specific to India fiscal deficit, co-existing with current account deficit. In just one week (ended February 4), investors took out $7 billion, with the biggest outflows coming from China, India and Indonesia. There have been only two occasions in the past — March 2007 and January 2008 — when the volume of outflows was more than the $7-billion. In March, 2007, the investors returned fairly soon. But the exit in January, 2008, was hardly a retreat. Many emerging markets, including India, took a long time to find the bottom after losing over 60 per cent of their valuations. What is worse is the Indian markets are underperforming when compared with other emerging markets. The developed markets are now attracting investors on the basis of a better than expected performance in the latter part of 2010, especially the U.S.
C. R. L. NARASIMHAAN
http://www.hindu.com/biz/2011/02/14/stories/2011021452601800.htm
Ominously, emerging markets as a class seem to have suddenly fallen out of favour with global investors
The latest downtrend in stock prices is attributed to large selling by foreign institutional investors. They are flocking back to the developed markets, especially the U.S. given the serious problems about perceptions of India, it is going to take a while before they return.
Why are the stock markets suddenly losing their sheen? Are they in one of the defining moments in which they will fall quite sharply before rallying back, if at all? Sharp swings in share prices are by no means uncommon but the precipitous drops of the type seen last in January 2008 when the market valuations plunged by an amazing two-thirds are, of course, rare and more relevantly difficult to predict.
To answer the questions, one has to look at the peaks and troughs of stock prices over a fairly recent period. The week ended February 4 was especially noteworthy. After recording some marginal gains from the middle of the week, the indices recorded heavy losses on the close of the week. Sensex lost 441 points (about 2.5 per cent) to close just above 18000. Nifty fell below the psychologically significant 5400-mark. To view over a slightly longer period, the markets started rising strongly in August, 2010, to peak at 21005 on November 5. The fall by 3,000 points (14.28 per cent) since then until February 4 is significant. What is worse is that seemed to presage the worse things to come.
The gloomy forecasts seemed to come true sooner than anticipated. Stock prices dropped sharply on Tuesday last. Sensex traded below 18000 and Nifty around 5350 in the forenoon session. The fall in stock prices continued into the following week (February 7 to 11).
A sense of deep pessimism has permeated the markets. All of a sudden, uncertainty seems to have engulfed the markets. Barely two weeks before the presentation of the Union budget, the downward movement of stock prices has acquired a distinct, negative connotation of its own. Will the two major worries of the government — inflation and the burgeoning current account deficit — invite strong fiscal measures in addition to what the Reserve Bank of India has been doing?
There is no doubt at all that inflation and the current account deficit (expected to be around 3.7 per cent of the GDP) are the major concerns. But they have been so for quite some time. The reasons why stock markets latched on to the bad news all of a sudden ignoring the good ones need to be looked at from the totality of circumstances.
India's growth story has by no means derailed. According to the Central Statistical Organisation's advance estimates for 2010-11, the GDP growth will be at a respectable 8.6 per cent. This is below the upper-end of the government's expectations of between 8.5 and 8.75 per cent but slightly above the RBI's 8.5 per cent.
In each of the first two quarters of this year, the economy has grown by 8.9 per cent. Hence, the estimate of 8.6 per cent for the whole year suggests a slowdown in the third and fourth quarters. Besides, when final figures come, a deceleration in manufacturing during the second half of the year will be seen. During the first two quarters, manufacturing grew by 13 per cent and 9.8 per cent, respectively. Such a performance is unlikely to continue during the rest of this year. However, the CSO' estimate of manufacturing growth during the whole year at 8.8 per cent is the same as what was achieved last year.
Inflation and the widening current account deficit are the major macro economic concerns. But India faces even greater problems of perceptions — corruption and in governance especially.
The India story may be substantially on track but the reasons why the stock markets apparently do not think so is to be seen in the actions of global investors, especially the foreign institutional investors (FIIs), who have come to occupy such an important place in the Indian markets. Their large investments are for short-term and often volatile but they are considered necessary to bridge the current account deficit. There is an obvious preference for the more stable FDI (foreign direct investment) but it has been going down this year as reported by the RBI at the time of the last review.
The fall in equities in the past few weeks is mainly attributed to large scale selling of stocks by FIIs. According to official figures, they sold Rs.9,339-crore worth of stocks this year up to February 4. It is likely that they share the concerns of domestic investors, with inflation and the widening current account deficit topping the lists. As pointed out, such concerns have weighed with investors in the past too but in the aggregate they were positive on India. (This was seen by the steady rise in stock prices.)
However, at the present juncture, FIIs are pulling out but do not seem to be coming back soon. Ominously, emerging markets as a class seem to have suddenly fallen out of favour with global investors. There could be many reasons: turmoil in Egypt, rising inflation and specific to India fiscal deficit, co-existing with current account deficit. In just one week (ended February 4), investors took out $7 billion, with the biggest outflows coming from China, India and Indonesia. There have been only two occasions in the past — March 2007 and January 2008 — when the volume of outflows was more than the $7-billion. In March, 2007, the investors returned fairly soon. But the exit in January, 2008, was hardly a retreat. Many emerging markets, including India, took a long time to find the bottom after losing over 60 per cent of their valuations. What is worse is the Indian markets are underperforming when compared with other emerging markets. The developed markets are now attracting investors on the basis of a better than expected performance in the latter part of 2010, especially the U.S.
C. R. L. NARASIMHAAN
http://www.hindu.com/biz/2011/02/14/stories/2011021452601800.htm
Pintu
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http://www.livemint.com/2011/02/15192038/EPFO-says-no-to-investment-in.html
EPFO says no to investment in equity in absence of guarantee
EPFO maintains about Rs3,00,000 crore corpus with a subcriber base of 4.71 crore
PTI
New Delhi: The retirement fund manager EPFO trustees on Tuesday decided not to invest a portion of Rs5,00,000 crore funds in the stock market in view of Finance Ministry's refusal to provide any guarantee on returns and safety of such investments.
"We don't want to invest in equities. No futher decision has been taken on this and same status (of not investing PF money in stock market) would prevail," labour minister Mallikarjun Kharge said.
He was speaking to reporters after the meeting of the Central Board of Trustees, the highest policy making body of Employees' Provident Fund Organisation (EPFO).
"We did not get any guarantee from Finance Ministry on such investment in stock market," Kharge said, adding there has been no change in EPFO's stance.
EPFO maintains about Rs3,00,000 crore corpus with a subcriber base of 4.71 crore whereas the provident fund trust managing their employees money themselves manage funds to the tune of around Rs2,00,000 crore.
Earlier in September last year, the CBT has decided not to invest a portion of EPFO funds in stock markets in view of volatile nature of the equities market and sought guarantee of Finance Ministry on such investments.
In a letter to the Finance Ministry, the Labour Ministry had said that EPFO can invest part of provident fund corpus in the stock market provided the Finance Ministry guarantees safety of the workers' money.
"... if the investment in the capital market is so good, then there should be no problem for the government to provide a guarantee regarding the safety of the workers' capital funds and a reasonable rate of return on the capital," labour secretary P C Chaturvedi had said in a letter to the then Finance Secretary Ashok Chawla.
Replying to this, Finance Ministry had categorically said, "There is no question of government providing the sovereign guarantee to any provident fund...government gives no guarantee of safety of returns to any provident fund."
About ensuring speedy settlement of claims and transfer of accounts, the minister said, "the trustees have decided to complete the digitalisation of records of all subcribers' accounts by the first week of next month."
EPFO has digitalised data in its 116 offices. The remaining four offices are in final stages of completing the computerisation process.
Kharge also confirmed that board decided to resume investments in LIC Housing Finance which EPFO had stopped in September last after surfacing of a scam in the home loan company.
- Economy and Politics
EPFO says no to investment in equity in absence of guarantee
EPFO maintains about Rs3,00,000 crore corpus with a subcriber base of 4.71 crore
PTI
New Delhi: The retirement fund manager EPFO trustees on Tuesday decided not to invest a portion of Rs5,00,000 crore funds in the stock market in view of Finance Ministry's refusal to provide any guarantee on returns and safety of such investments.
"We don't want to invest in equities. No futher decision has been taken on this and same status (of not investing PF money in stock market) would prevail," labour minister Mallikarjun Kharge said.
He was speaking to reporters after the meeting of the Central Board of Trustees, the highest policy making body of Employees' Provident Fund Organisation (EPFO).
"We did not get any guarantee from Finance Ministry on such investment in stock market," Kharge said, adding there has been no change in EPFO's stance.
EPFO maintains about Rs3,00,000 crore corpus with a subcriber base of 4.71 crore whereas the provident fund trust managing their employees money themselves manage funds to the tune of around Rs2,00,000 crore.
Earlier in September last year, the CBT has decided not to invest a portion of EPFO funds in stock markets in view of volatile nature of the equities market and sought guarantee of Finance Ministry on such investments.
In a letter to the Finance Ministry, the Labour Ministry had said that EPFO can invest part of provident fund corpus in the stock market provided the Finance Ministry guarantees safety of the workers' money.
"... if the investment in the capital market is so good, then there should be no problem for the government to provide a guarantee regarding the safety of the workers' capital funds and a reasonable rate of return on the capital," labour secretary P C Chaturvedi had said in a letter to the then Finance Secretary Ashok Chawla.
Replying to this, Finance Ministry had categorically said, "There is no question of government providing the sovereign guarantee to any provident fund...government gives no guarantee of safety of returns to any provident fund."
About ensuring speedy settlement of claims and transfer of accounts, the minister said, "the trustees have decided to complete the digitalisation of records of all subcribers' accounts by the first week of next month."
EPFO has digitalised data in its 116 offices. The remaining four offices are in final stages of completing the computerisation process.
Kharge also confirmed that board decided to resume investments in LIC Housing Finance which EPFO had stopped in September last after surfacing of a scam in the home loan company.
Pintu
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http://economictimes.indiatimes.com...est-in-2010-11-kharge/articleshow/7502275.cms
15 Feb, 2011, 05.37PM IST,PTI
EPFO subscribers likely to get 9.5% interest in 2010-11: Kharge
NEW DELHI: About 4.71 crore EPFO subscribers are likely to get one per cent increase in interest to 9.5 per cent on their deposits for 2010-11 with Labour Minister Mallikarjun Kharge today expressing hope the Finance Ministry will shortly give its concurrence to the proposal.
"I hope that after we answered all clarifications, they (Finance Ministry) will approve it (9.5 per cent interest rate for 2010-11)," he said.
Kharge was speaking to reporters after a meeting of the Central Board of Trustees (CBT), the apex policy making body of the Employees' Provident Fund Organisation (EPFO).
"As far as 9.5 per cent interest (2010-11) is concerned, the Finance Ministry had sought some clarifications. Those clarifications have been sent by Labour Secretary to the Finance Ministry," he added.
Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Kharge said, there was "no tussle between the two ministries over giving 9.5 per cent interest rate."
"These are just consultations between the two ministries. They had certain queries and when we satisfy them. They will definitely approve it," Labour Secretary P C Chaturvedi later explained.
Although CBT, which is headed by labour minister, had decided to give a higher return of 9.5 per cent on provident fund deposits for 2010-11, the Finance Ministry had expressed its opposition to the move.
Following discovery of Rs 1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5 per cent for its 4.71 crore subscribers from 8.5 per cent which is being paid by EPFO since 2005-06.
The decision, however, did not find favour with the Finance Ministry which argued that there was no real surplus.
It said the surplus shown by the EPFO arose because all subscribers' accounts were not updated.
In a recent letter of January 29, the Labour Ministry argued the EPFO is not asking for any government support for the extra returns to the salaried workers. It is their money which has earned returns.
The Finance Ministry's objections were based on a report by Comptroller and Auditor General which suggested that there was no surplus with the EFFO's interest suspense account.
The Finance Ministry has to give concurrence to the rate of return decided by CBT and notify allowing tax exemption on the entire such earnings on PF deposits.
15 Feb, 2011, 05.37PM IST,PTI
EPFO subscribers likely to get 9.5% interest in 2010-11: Kharge
NEW DELHI: About 4.71 crore EPFO subscribers are likely to get one per cent increase in interest to 9.5 per cent on their deposits for 2010-11 with Labour Minister Mallikarjun Kharge today expressing hope the Finance Ministry will shortly give its concurrence to the proposal.
"I hope that after we answered all clarifications, they (Finance Ministry) will approve it (9.5 per cent interest rate for 2010-11)," he said.
Kharge was speaking to reporters after a meeting of the Central Board of Trustees (CBT), the apex policy making body of the Employees' Provident Fund Organisation (EPFO).
"As far as 9.5 per cent interest (2010-11) is concerned, the Finance Ministry had sought some clarifications. Those clarifications have been sent by Labour Secretary to the Finance Ministry," he added.
Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Kharge said, there was "no tussle between the two ministries over giving 9.5 per cent interest rate."
"These are just consultations between the two ministries. They had certain queries and when we satisfy them. They will definitely approve it," Labour Secretary P C Chaturvedi later explained.
Although CBT, which is headed by labour minister, had decided to give a higher return of 9.5 per cent on provident fund deposits for 2010-11, the Finance Ministry had expressed its opposition to the move.
Following discovery of Rs 1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5 per cent for its 4.71 crore subscribers from 8.5 per cent which is being paid by EPFO since 2005-06.
The decision, however, did not find favour with the Finance Ministry which argued that there was no real surplus.
It said the surplus shown by the EPFO arose because all subscribers' accounts were not updated.
In a recent letter of January 29, the Labour Ministry argued the EPFO is not asking for any government support for the extra returns to the salaried workers. It is their money which has earned returns.
The Finance Ministry's objections were based on a report by Comptroller and Auditor General which suggested that there was no surplus with the EFFO's interest suspense account.
The Finance Ministry has to give concurrence to the rate of return decided by CBT and notify allowing tax exemption on the entire such earnings on PF deposits.
Oracle
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India back on pre-recession growth trend: World Bank
Washington: The Indian economy seems to be back to the growth trend before the global financial crisis with particularly strong GDP growth over the first half of the 2010-11 fiscal, but the inflation is worrying, the World Bank has said.
The Reserve Bank of India (RBI) is likely to continue its policy of cautious rate hikes in an uncertain environment, the World Bank said in the second of its semi-annual series of India Updates released Tuesday.
The signals are not clear whether core inflation is caused by more general demand pressures, which would best be addressed with more aggressive policy tightening, or by second round effects of earlier food and commodity price shocks, for which the current monetary policy stance is likely to be adequate, it said.
The December 2010 Update notes that India's agricultural sector bounced back strongly after the 2010 monsoon brought normal levels of rainfall, and the industrial sector registered double-digit growth for three consecutive quarters.
Inflation came down to 7.5 percent in November but then accelerated again to 8.4 percent in December because of a renewed food supply shock, it said.
The current account deficit in the 2009-10 fiscal year was the largest ever in dollar terms and the monthly deficit widened further during the first half of the 2010-11 financial year, but the trend then reversed with import growth slowing and export growth accelerating in September-December 2010.
With the significant inflation differential between India and its trading partners, the rupee's real effective exchange rate (REER) strengthened, the update said.
On the fiscal side, massive windfall revenue from wireless spectrum auctions and buoyant tax revenue are likely to be offset by two supplementary spending bills. Monetary policy tightening continued with increases in policy rates, it said.
Looking forward, the GDP growth looks set to regain the pre-crisis trend of around 8.5-9 percent in this financial year and the next (2011-12).
Assuming that the December resurgence in food inflation is temporary, overall wholesale price inflation is likely to decelerate to seven percent by end of March 2011 and further during the coming fiscal year, although uncertainty over international commodity prices persists, it said.
The widening trade deficit during the first half of the year could result in a current account deficit around 3.5 percent of GDP in the 2010-11 fiscal year, although the recent decline in the trade deficit augurs well for the coming year. Capital inflows are expected to cover this gap in the current year, the update said.
The RBI is likely to continue its policy of cautious rate hikes in a highly uncertain environment. While inflation has become more broad based, capacity utilisation, industrial production, import, and credit indicators do not point to overheating, the update said.
The signals are therefore not clear whether core inflation is caused by more general demand pressures, which would best be addressed with more aggressive policy tightening, or by second round effects of earlier food and commodity price shocks, for which the current monetary policy stance is likely to be adequate, the bank said.
(Arun Kumar can be contacted at [email protected])
Source
Washington: The Indian economy seems to be back to the growth trend before the global financial crisis with particularly strong GDP growth over the first half of the 2010-11 fiscal, but the inflation is worrying, the World Bank has said.
The Reserve Bank of India (RBI) is likely to continue its policy of cautious rate hikes in an uncertain environment, the World Bank said in the second of its semi-annual series of India Updates released Tuesday.
The signals are not clear whether core inflation is caused by more general demand pressures, which would best be addressed with more aggressive policy tightening, or by second round effects of earlier food and commodity price shocks, for which the current monetary policy stance is likely to be adequate, it said.
The December 2010 Update notes that India's agricultural sector bounced back strongly after the 2010 monsoon brought normal levels of rainfall, and the industrial sector registered double-digit growth for three consecutive quarters.
Inflation came down to 7.5 percent in November but then accelerated again to 8.4 percent in December because of a renewed food supply shock, it said.
The current account deficit in the 2009-10 fiscal year was the largest ever in dollar terms and the monthly deficit widened further during the first half of the 2010-11 financial year, but the trend then reversed with import growth slowing and export growth accelerating in September-December 2010.
With the significant inflation differential between India and its trading partners, the rupee's real effective exchange rate (REER) strengthened, the update said.
On the fiscal side, massive windfall revenue from wireless spectrum auctions and buoyant tax revenue are likely to be offset by two supplementary spending bills. Monetary policy tightening continued with increases in policy rates, it said.
Looking forward, the GDP growth looks set to regain the pre-crisis trend of around 8.5-9 percent in this financial year and the next (2011-12).
Assuming that the December resurgence in food inflation is temporary, overall wholesale price inflation is likely to decelerate to seven percent by end of March 2011 and further during the coming fiscal year, although uncertainty over international commodity prices persists, it said.
The widening trade deficit during the first half of the year could result in a current account deficit around 3.5 percent of GDP in the 2010-11 fiscal year, although the recent decline in the trade deficit augurs well for the coming year. Capital inflows are expected to cover this gap in the current year, the update said.
The RBI is likely to continue its policy of cautious rate hikes in a highly uncertain environment. While inflation has become more broad based, capacity utilisation, industrial production, import, and credit indicators do not point to overheating, the update said.
The signals are therefore not clear whether core inflation is caused by more general demand pressures, which would best be addressed with more aggressive policy tightening, or by second round effects of earlier food and commodity price shocks, for which the current monetary policy stance is likely to be adequate, the bank said.
(Arun Kumar can be contacted at [email protected])
Source
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Here's one reason why Gujarat is NOT da bomb in India:
Investment destination Gujarat tops labour unrest chart
25/02/2011
New Delhi: Gujarat witnessed the highest number of strikes and other forms of labour unrest in recent times on account of various financial and disciplinary issues, the Economic Survey said on Friday. The Survey said total man-days lost due to labour unrest in India has drastically declined by over 81 per cent, hence indicating an improvement of worker-management relationship across industries.
"The maximum incidences were recorded in the state of Gujarat. Wage and allowance, bonus, personnel, indiscipline and violence, and financial stringency were the major reasons for these strikes and lockouts," the Survey for 2010-11 said.
Gujarat, under its Chief Minister Narendra Modi, has been trying to project the state as an investment-friendly destination. Earlier this year, Modi had claimed the state was able to attract investments to the tune of Rs. 20.83 lakh crore in the two-day long 'Vibrant Gujarat Summit' held in January.
The Survey pointed out that there existed widespread variations among different states and union territories regarding industry-wise incidences of strikes, lockouts and other forms of labour unrests.
On the overall improvement of the labour relations, the survey said: "Due to constant endeavour of the industrial relations machineries of both the centre and states, the industrial relations climate has generally remained peaceful and cordial.
The number of incidences of strikes and lockouts has exhibited a declining trend over the past few years." Quoting the Labour Bureau's provisional data, the Survey said the total number of strikes and lockouts have declined to 99 in 2010 from 349 in 2009.
"Correspondingly, the total number of man-days lost has also declined from 9,169,037 in 2009 to 1,699,826 in 2010," it added.
http://news.in.msn.com/national/article.aspx?cp-documentid=4966421
Investment destination Gujarat tops labour unrest chart
25/02/2011
New Delhi: Gujarat witnessed the highest number of strikes and other forms of labour unrest in recent times on account of various financial and disciplinary issues, the Economic Survey said on Friday. The Survey said total man-days lost due to labour unrest in India has drastically declined by over 81 per cent, hence indicating an improvement of worker-management relationship across industries.
"The maximum incidences were recorded in the state of Gujarat. Wage and allowance, bonus, personnel, indiscipline and violence, and financial stringency were the major reasons for these strikes and lockouts," the Survey for 2010-11 said.
Gujarat, under its Chief Minister Narendra Modi, has been trying to project the state as an investment-friendly destination. Earlier this year, Modi had claimed the state was able to attract investments to the tune of Rs. 20.83 lakh crore in the two-day long 'Vibrant Gujarat Summit' held in January.
The Survey pointed out that there existed widespread variations among different states and union territories regarding industry-wise incidences of strikes, lockouts and other forms of labour unrests.
On the overall improvement of the labour relations, the survey said: "Due to constant endeavour of the industrial relations machineries of both the centre and states, the industrial relations climate has generally remained peaceful and cordial.
The number of incidences of strikes and lockouts has exhibited a declining trend over the past few years." Quoting the Labour Bureau's provisional data, the Survey said the total number of strikes and lockouts have declined to 99 in 2010 from 349 in 2009.
"Correspondingly, the total number of man-days lost has also declined from 9,169,037 in 2009 to 1,699,826 in 2010," it added.
http://news.in.msn.com/national/article.aspx?cp-documentid=4966421
Last edited:
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Here's something to watch out for. We're now losing a 'tap' for 'brain-drain' to New Zealand:
http://thelinkpaper.ca/?p=4672
http://thelinkpaper.ca/?p=4672
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Can India's 2011 budget overcome soaring prices?
By Neil Heathcote
Editor, India Business Report
Prime Minister Manmohan Singh says he is
aiming for 10% growth in GDP this year
It's been 20 years since Prime Minister Manmohan Singh, then finance minister, unveiled the budget that launched India's opening up to the global economy.
That budget also paved the way for India's current heady growth.
However inflation is now becoming a problem - food prices have been rising rapidly - and India's reform programme appears to be drifting
Will the 2011 budget mark a return to form?
Petrol prices have gone up on an almost monthly basis since the government decided to deregulate them last year. Those at the bottom of the economic ladder are hardest hit.
Food prices are still over 11%.
The problem for the government is that much of the inflation comes from factors beyond its control.
To tackle rising prices, the Reserve Bank of India has increased interest rates. That in turn has spooked investors, who worry that the country's soaring growth may slow. The prime minister says he's still aiming for 10% growth this year.
But foreign direct investment has tumbled - down 22% in 2010 over the previous year.
And so far, higher rates show little sign of taming rising prices.
Creating growth
So what can the government do in the current budget?
President Pratibha Patil opened the latest session of parliament last week and flagged up the government's interest in tackling inflation, creating jobs and fighting corruption.
It knows that there are plenty of bottlenecks in the system, which prevent the economy reaching that target of double-digit growth.
"I think the economy has been growing despite the lack of reforms," says Crisil chief economist Dharmakirti Joshi.
"But you can't take growth for granted. It's fairly well understood that infrastructure bottlenecks etc, they're really holding the economy back."
Many of India's roads are congested, and the railways need more investment.
The government wants to spend $1 trillion over the next five years upgrading infrastructure, which has been overloaded by the economy's rapid growth. It's hoping that the private sector will come up with a lot of the money.
However if the financial sector is to furnish those funds, further change is necessary to help it develop.
Politically unpopular
Reforms of banking and the insurance sector have been languishing on the back burner; they might now get the go-ahead.
Retail reform, too, has long been talked about. Foreign supermarket chains have the expertise to modernise the shipment of food from farms to shops. That could bring down prices.
But it remains politically unpopular with the country's tens of thousands of small shopkeepers. Several states go to the polls later this year, making the government acutely aware of voters' concerns.
It may decide to increase the aid it gives to poor rural farmers.
The government also wants to encourage industry to create jobs for migrant labourers. Only by industrialising faster can the country achieve its ambitions for growth.
"In today's world, you have to be fairly competitive," says Joshi.
"If you want to promote your manufacturing sector without physical infrastructure, without some of these labour reforms, it'll be very hard to compete with other economies."
Unprecedented wealth
But economists are divided over whether they government has lost its appetite for reforms that may be politically unpopular.
Structural changes are needed to lay the foundations of the next phase of India's growth. In the meantime, its industries are booming, unprecedented wealth is being created and millions of people are being lifted out of poverty.
The cities are teaming with luxury stores, new restaurants and coffees shops for the growing and burgeoning middle classes.
Those unpopular reforms, the government may decide, can always wait for another day.
http://www.bbc.co.uk/news/business-12591720
By Neil Heathcote
Editor, India Business Report
Prime Minister Manmohan Singh says he is
aiming for 10% growth in GDP this year
It's been 20 years since Prime Minister Manmohan Singh, then finance minister, unveiled the budget that launched India's opening up to the global economy.
That budget also paved the way for India's current heady growth.
However inflation is now becoming a problem - food prices have been rising rapidly - and India's reform programme appears to be drifting
Will the 2011 budget mark a return to form?
Petrol prices have gone up on an almost monthly basis since the government decided to deregulate them last year. Those at the bottom of the economic ladder are hardest hit.
Food prices are still over 11%.
The problem for the government is that much of the inflation comes from factors beyond its control.
To tackle rising prices, the Reserve Bank of India has increased interest rates. That in turn has spooked investors, who worry that the country's soaring growth may slow. The prime minister says he's still aiming for 10% growth this year.
But foreign direct investment has tumbled - down 22% in 2010 over the previous year.
And so far, higher rates show little sign of taming rising prices.
Creating growth
So what can the government do in the current budget?
President Pratibha Patil opened the latest session of parliament last week and flagged up the government's interest in tackling inflation, creating jobs and fighting corruption.
It knows that there are plenty of bottlenecks in the system, which prevent the economy reaching that target of double-digit growth.
"I think the economy has been growing despite the lack of reforms," says Crisil chief economist Dharmakirti Joshi.
"But you can't take growth for granted. It's fairly well understood that infrastructure bottlenecks etc, they're really holding the economy back."
Many of India's roads are congested, and the railways need more investment.
The government wants to spend $1 trillion over the next five years upgrading infrastructure, which has been overloaded by the economy's rapid growth. It's hoping that the private sector will come up with a lot of the money.
However if the financial sector is to furnish those funds, further change is necessary to help it develop.
Politically unpopular
Reforms of banking and the insurance sector have been languishing on the back burner; they might now get the go-ahead.
Retail reform, too, has long been talked about. Foreign supermarket chains have the expertise to modernise the shipment of food from farms to shops. That could bring down prices.
But it remains politically unpopular with the country's tens of thousands of small shopkeepers. Several states go to the polls later this year, making the government acutely aware of voters' concerns.
It may decide to increase the aid it gives to poor rural farmers.
The government also wants to encourage industry to create jobs for migrant labourers. Only by industrialising faster can the country achieve its ambitions for growth.
"In today's world, you have to be fairly competitive," says Joshi.
"If you want to promote your manufacturing sector without physical infrastructure, without some of these labour reforms, it'll be very hard to compete with other economies."
Unprecedented wealth
But economists are divided over whether they government has lost its appetite for reforms that may be politically unpopular.
Structural changes are needed to lay the foundations of the next phase of India's growth. In the meantime, its industries are booming, unprecedented wealth is being created and millions of people are being lifted out of poverty.
The cities are teaming with luxury stores, new restaurants and coffees shops for the growing and burgeoning middle classes.
Those unpopular reforms, the government may decide, can always wait for another day.
http://www.bbc.co.uk/news/business-12591720
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