Monday, November 30, 2015

RBI announcement - No major change in Key rates

The Reserve Bank of India (RBI) kept benchmark repo rate unchanged at 6.75 percent.

It has also left CRR and SLR unchanged at 4 percent and 21.5 percent, respectively.

The RBI has also kept economic growth projection unchanged at 7.4 percent for FY16.

The central bank has also kept the reverse repo rate under the LAF unchanged at 5.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75 percent.

Saturday, November 21, 2015

Some Numbers and Major Initiatives

  • AMRIT scheme: This is the initiative to provide chepaer lifesaving drugs. 1st AMRIT outlet at AIIMS for life saving drugs at 50-60% cheaper will cover 202 Cancer, 186 Cardio drugs & 148 types of cardiac implants
  • MUDRA scheme: The drivers of Indian economy, are not big corporates but so called "Unorganized" sector. Small businessmen have to take credit at a very high rate. This scheme is the first initiative to assist. 7. 53 lac people have availed loans of upto 50000 under MUDRA & 10 lac people availed loans of 50k to 5 lacs , approx 20000 Cr under MUDRA
  • India's Current Account Deficit in July 2013 (21,772) ,CAD in July 2015 (6200) Cr 2 BSNL loss in 2013 to profit of 672 cr profit in 2015
  • India won't need coal imports by 2017
  • FDI in India increased by 15% in the first six months of the year to $20.5 billion with services, construction and IT the main recipients

Thursday, November 12, 2015

PM Modi's speech at Guildhall London

A summary of new economic measures taken by India is best explained by this speech by PM. In every foreign visit he showcases what India has to offer.
This speech at Guildhall is a must for any MBA student who would like to update himself.

Thursday, October 29, 2015

Indo African summit and its importance


Despite minimal coverage by English MSM on path breaking Africa Summit, Policy makers believe that this is one of the most important engagements witnessed in decades. 54 heads of state from across Africa attended this India-Africa Forum Summit.
Following are the reasons why it is important:

1. India has extended invitation to all the 54 countries of Africa and it is biggest diplomatic outreach program of India so far. It will be largest gathering of international leaders since Indira Gandhi’s efforts to host NAM Summit in 1983 when 51 leaders from 91 countries have participated.
2. Issues of major focus would be boosting trade, strengthening security cooperation to combat terrorism and extending cooperation on poverty alleviation programs and disease eradication.
3. Realizing the potential of largely untapped resources countries like the US, EU, China and Japan started making huge investments to flag off their enterprises. India is yet to capitalize on its long history and deep social networks. Bilateral trade was a modest $1 billion in 1995 slowly risen to $38 billion in 2008 is now $70 billion. While Indian exports to Africa are increasing at a rate of 23.6% Africa has managed to record trade surplus with India registering a 32.2% increase annually. The top six countries Nigeria, South Africa, Angola, Egypt, Algeria and Morocco makeup for 89% of total Indian imports that include oil, natural gas, ores and Gold and contribute to Africa’s trade surplus. 
4. India imports 15% of its oil from Nigeria. A better relationship will reduce dependency on Middle East. 
5. Note that China’s investment is booming in Africa and its bilateral trade volume has reached $210.2 billion. China knows Africa's significance. It is home to 30 % of all minerals found in the World and as such is a tremendous resource partner. 
6. One positive aspect is that while Beijing’s investment are perceived to be an opportunistic, mercantile exercise espousing traces of racial discrimination. Indian engagement with Africa has been different and its contribution towards capacity building, providing skill enhancement to youth, IT training programs and providing scholarships has been hailed by African community. 

Tuesday, September 29, 2015

Make in India Campaign - FDI in Manufacturing increases

The manufacturing sector in India witnessed a sharp jump of 50 per cent in foreign direct investment (FDI) in the year 2014-15, thereby reflecting the traction received by the government’s ‘Make in India’ initiative.

The manufacturing sector continued to be the largest beneficiary and accounted for 38 per cent of the total FDI received and rose to $9.6 billion.

It is the first time in 3 years that FDI in manufacturing has witnessed an expansion. While it stood at $9.3 billion in 2011-12, it declined in the following two years to $6.5 billion and $6.3 billion in FY13 and FY14, respectively. However, as a result of the government’s push on manufacturing in India and ease of doing business initiative, the FDI in manufacturing has witnessed a boost. 


FDI Inflow improves

India has emerged as the most favoured destination for foreign direct investment (FDI) in 2015 so far, outpacing China and the US, London-based business daily Financial Times (FT) said in a report on Tuesday.
FDI inflows into India during January-June stood at $31 billion, ahead of China’s $28 billion and the US’s $27 billion. 
India also jumped 16 notches to 55 among 140 countries in the World Economic Forum’s Global Competitiveness Index that ranks countries on the basis of parameters such as institutions, macroeconomic environment, education, market size and infrastructure among others.
According to data from FDI Markets, an FT data service, FDI inflow into India grew 47% to $24 billion in 2014.
India’s Foreign Investment Promotion Board, the nodal authority that scrutinises overseas investment proposals, cleared 18 proposals worth about Rs 5,000 crore.

Value of Key Indicators (29 Sept 2015)

(Date of last Change indicated in bracket)

Bank Rate: 7.75 % (29 Sept 2015)

CRR: 4 % (9th Feb 2013)

SLR: 21.5 % (3rd Feb 2015)

Repo Rate: 6.75 % (29 Sept 2015)

Reverse Repo Rate: 5.75 % (29 Sept 2015)

RBI announces Interest Rate Cut

The Reserve Bank of India on Tuesday cut its key policy rate, repo rate, by 50 basis points to 6.75 percent against expectations of a 25 bps cut to spur demand in the economy, which the central bank said is crucial to growth in an environment of multiple global headwinds.

Market experts and analysts reacted to the RBI move with a sense of surprise and elation. They said the move was timely and would go a long way in providing the much-needed boost to the economy and the financial market .. 

Wednesday, September 2, 2015

US and Indian Family systems


  • “Revere your mother and father as God,” mandates Taitriya Upanishad. Bhishma Pitamaha says in Mahabharata, “The father equals ten teachers. But the mother equals ten fathers or perhaps the whole world in importance.”
  • All ancient traditions of the world revere mothers. But what about the modern society? Does it recognise or accept reverence for mothers? Or, for others? Doubtful. 
  • In the US, some 55 per cent of the first, 67 per cent of the second and 74 per cent of third marriages end in divorce.
  • Over 40 per cent of the babies are born to unmarried women, half of them teenagers. And some 60 per cent of men and women are avoiding marriage. The dysfunctional traditional families and its consequence, contract-based socioeconomic order, have orphaned and condemned elders, infirm and unemployed as state-dependents.
  • This is the output of unbridled individualism and its offshoot, modernity. 
  • Yet, many educated Indians think that modernity means just Western dress, English language and urban living.
  • How do the relation-built, duty-based traditional economies and the rights-centric, duty-free modern economies differ? Take just two areas — savings and social security. 
  • See how the microeconomic behaviour affects the macro economy. The family-based Asia accounts for three quarters of global savings. 
  • But the individualist US borrows almost the equal amount from the world. Why? 
  • American families have virtually lost their propensity to save. The families’ share was four-fifths of total US savings in the 1960s and, by the third quarter of 2006, it became minus — yes minus — one fifth, implying that the US families spent 20 per cent more than their current income. 
  • The erosion in family values which undermined family responsibilities and dented the propensity to save, has made the Americans profligate. Some 11 crore US families use 120 credit and debit cards. 
  • Their total borrowings exceed $12 trillion against the current US GDP of $16 trillion. Since 1970, US foreign debt has risen by 160 times, its national debt by 40 times, but its GDP only by 16 times. 
  • As the families disintegrated, the care of parents, elders, infirm and unemployed fell on the State which has virtually nationalised families through social security schemes. The present value of the future social security burden of the US is estimated at over $100 trillions — more than six times the present US GDP.
  • This is seen as dynamiting the US economy. As far back as in 1980s, the US National Bureau of Economic Research had warned that if the government took over traditional family duties through State-organised social security, “serious erosion of family values” was inevitable. (The American Economy in Transition by Martin S Fieldstein p341).
  • The warning, unheeded then, has now come true. This is as much the outcome of modern individualism as of the economics of theories founded on it.
  • In contrast, most Asian families save and save a lot. Because of high savings, social security to the aged, infirm and unemployed is provided by Asian families, not by governments.
  • Alan Greenspan, the former US Federal Reserve chairman, made fun of the Asian nations saying that they save a lot due to insecurity about future, because their governments do not provide social security, while the confident Americans need not and do not save, because the US government provides social safety net. This was before the 2008 meltdown. Greenspan may not dare repeat his words now because, as The New York Times says, half the US families receive state aid.
  • In contrast, Asia’s family saving has privatised social security as families’ moral responsibility.
  • A Brookings Institution economist Barry Bobsworth described the Asian savings as “dynastic”—belonging to future generations, not just the personal savings of the saver. The traditional reverence for parents and elders and the consequent duty and relation-based family life have made savings dynastic, moderated consumption and funded family-provided social security.
  • Forty years after being warned, the US is now desperate that social security be privatised. But that would need recreating traditional families that the current economic theories cannot. The lesson? “Matru Devo Bhava” and “Pitru Devo Bhava” — revering mother and father as Gods — and like social norms build a stable macroeconomic model founded on dynastic savings and moderate consumption and keep social security privatised.
  • Clearly, traditional reverence for parents and elders at the micro level and macroeconomics of dynastic savings and family provided social security are interrelated. When will the Indian socioeconomic discourse internalise this profound truth? 

Thursday, August 20, 2015

Excellent Article on payment Banking

An Outstanding article. Read each line carefully to realize the impact.

Key Points:

1. 11 private partied have been given licenses to set up "payment banks".

2.  The only thing they can't do is lend to common public. Payment banks can only lend to the government. So Payment banks will have zero loan defaults because Governments do not default.

3. Any one with 100 cores in his / her kitty can set up such a bank. There are few other norms (not being a crook / not flouting regulatory norms previously etc.)

4. So the number of such banks is likely to increase.

5. Who all have got licenses:  Aditya Birla Group, Reliance Industries, Airtel, Vodafone, the National Securities Depository (which holds almost all of India’s stocks in demat form, and provides the backbone for a tax information network), PayTM, Tech Mahindra, and Sun Pharma’s Dilip Shanghvi

6. Why is this a big deal for customers??

a) Payment banks will have greater penetration and can reach upto remotest customer. These banks will rely on technology to reach payment services to all customers, using mobiles as the vehicle of banking. The mobile phone will become the virtual ATM and small-payments cheque-book.

b) Competition will increase. banks will vie for deposits. Above-limit ATM transactions, additional cheque-books, big money transfers, maintenance of minimum balances, or draft issuance fees: all these will either wither away or get reduced.

c) Payment banks may offer higher savings bank rates of 5-7 percent (to get more deposits).

d) Social welfare and subsidy schemes will have a much better reach through these banks.  The difference between State Bank and Airtel is simply this: both have over 200 million customers, but Airtel can go where State Bank cannot with a branch.

e) Increased mobile banking will create conditions for cash-less banking. This means, over time, the mobile will perform the same role as credit and debit cards, obviating the need for too many cash payments. Black Money will be reduced.

Friday, August 14, 2015

Wholesale Inflation lowest in decade

Wholesale inflation fell at a faster-than-expected annual rate of 4.05 per cent in July, their ninth straight decline and their lowest in at least a decade, mainly driven by weak food and fuel prices.

The wholesale food prices fell 1.16 per cent year-on-year, while fuel prices fell 12.81 per cent from a year ago.

Wednesday, August 12, 2015

Retail inflation hits 2-yr low

The fall in retail inflation to 3.78 % in July, a two-year low, has come in the backdrop of substantial decline in food inflation, which fell to 2.89 percent from 5.7 percent in the preceding month. Even more surprising is the negative growth shown in vegetable prices.

Tuesday, August 11, 2015

Monday, August 3, 2015

RBI Keeps Rates Unchanged

The Reserve Bank of India (RBI) held its policy rate (Repo Rate) unchanged at 7.25 percent. 
The central bank has reduced the policy rate by a total 75 basis points since January, when it embarked on an easing cycle.

Monday, July 27, 2015

Summary of Points made by Sh. Shashi Tharoor, MP in his Oxford speech

  1. When Britishers came to India, India's share in world economy was 23 %. By the time they had left the same share had gone down to below 4 %. 
  2. British rise in those 200 years was financed by the loot committed in India. 
  3. Local industry / artisan-ship were systematically broken down by breaking machinery / killing skilled force / imposing heavy duties on imports. 
  4.  Then all raw material was sent from India to England. Ans finished product was sent back. So by 1900 India was England's biggest cash cow, biggest purchaser of finished goods  
  5. Between 15 and 29 million Indians died in British induced famines. In Bengal famine, alone, around 4 million people died, because Winston Churchill refused to provide food for them Instead sending food to the troops.   
  6. Nothing could be far from saying that British did whatever they did for benefit of Indians.
  7. (1/6)th of all British forces that fought were Indians. 54000 Indians lost their lives in that war. 64000 were wounded. 
  8. Indian tax payers had to cough up a 100 million pounds, in those days, India supplied 70 million rounds of ammunitions, 600, 000 rifles, 42 million garments were sent out of India and 1.3 million Indian personnel served in this war. India had to supply 173,000 animals. 170 million tonnes of supplies. Total value of what was taken out of India at that time, in today's time, value is 8 billion pounds. 
  9. Situation was even worse in 2nd world war.
  10. There is an amazing misconception about Railways and Roads. British constructed those for their own self interest and not for India's welfare.  
  11. Finally the seeds of ethnic and religious violence were a direct result of British Politics.   

Indian Economy is not same as American Economy - Insight by Sh. Gurumurthy.

Around 10 crore Americans have 120 crore Credit cards. They owe around 3 Trillion US$ . This has destroyed US economy.

Excessive exposure to stock market and a deliberate policy of reduced interest rates has exposed Americans to the vagaries of stock market. In 1983 the Interest rates were 23 % and around 6 % US families had exposure to stocks. By 1990, Federal Reserve had steadily brought down the interest rates to 8 % and as there well lesser returns from savings, the exposure of an American in stock market steadily increased. By 2001, IR were cut down to 1 % and by this time more than 55 % of families were investing in stocks.

By 2003 60 % of pension / retirement fund got invested in stock market. A total of 16 trillion $ was invested in stock market.

When stock market tanked, these funds, that were meant for "bad/ sad" days also tanked.

Now come to 3 countries:

1. In India less than 2 % of population has invested in stock market. India has a tradition to save.

2. In Japan The interest rates are extremely low (for a 5 year deposit rates are around 0.8 %), even then Japanese do not invest in stock market. They prefer savings. Infact for less than one year interest rates are - 1 % i.e. people actually pay banks to keep their money. Only 6 % Japanese invest in stock market.

3. In Germany only 7 % households are exposed to stock markets.

Now due to this note that a crisis in stock market is a National Crisis in US, But it is not like that in India, Japan or Germany. In US Perversion of Economics has been brought about by perversion of sociology (family values declining/  family as a unit vanishing).

Sunday, June 14, 2015

Greece Crisis - Development

Greece talks collapse after IMF walk out -End game on Friday when Euro Foreign ministers meet for final decision.

Monday, June 1, 2015

Value of Key Indicators (as on 2nd June 2015)

(Date of last Change indicated in bracket)

Bank Rate: 9 % (28th Jan 2014)

CRR: 4 % (9th Feb 2013)

SLR: 21.5 % (3rd Feb 2015)

Repo Rate: 7.25 % (2nd June 2015)

Reverse Repo Rate: 6.25 % (2nd June 2015)

RBI cuts Repo Rate by 25 basis points

RBI cuts the repo rate by 25 basis points to 7.25 per cent. The move was widely anticipated.

Tuesday's repo rate cut is the third reduction in interest rates this year.

Meanwhile, the cash reserve ratio, which is the amount of money banks have to keep with the RBI, was left unchanged at 4 per cent. The statuary liquidity ratio, another key reserve requirement, was left unchanged at 21.5 per cent.

Wednesday, May 27, 2015

Prof. Vaidyanthan's ideas - 3. India Unincorporated

Indian academic discourse tends to copy American terminologies verbatim.

In US out of total businesses 80 % is due to big corporates. The remaining, i.e. small businesses are therefore called residual.

However in our country the share of so called "residual" or "unorganized" sector is more than 70 %.

India's is the only country where more than 50 % is called "residual" or derisively called "Unorganized Sector".

The so called "Unorganized sector" contributes more than 60 % of India's GDP.

Also note that two major passions of Indians: Bollywood and Cricket both are considered to be "unorganized".

Government bodies and archaic regulatory bodies are "Organized"

Let us talk a bit about so called "Organized sector" or India Incorporated.

There are around 7.8 - 8 lakh companies that together contribute around 15 % of our GDP. Out of these only 8000 are listed in stock market. out of these 8000, more than 50 % did not even have a single transaction.

So much for media obsession with stock market.

for all practical purpose, only 150-200 companies are active on share market and their contribution to economy is not more than 5-6 % to India's GDP.

Two major problems that affect India's UnInc (New name given by Prof. Vaidyanathan):

1. Lack of cheap credit
2. Harassment due to archaic laws.

Credit requirement:
The small shopkeepers / Juice vendors etc: Their requirement is primarily that of working capital. It may be noted that this segment has a requirement of around 12 Lakh crores annually, out of which 10 lakh crores is required as credit. The default rate is extremely negligible in these cases.

Since no banks / institutional mechanism exist to give credit to this large segment, they are forced to take credit at as high as 0.5 % interest per day that works out to  15 % per month, which is huge.  

Some if they are lucky get credit from Chit-funds or moneylenders at extremely high rate of 3-4 %, which also amounts to a very high interest rate of 36-48 %.

Tuesday, May 26, 2015

Services Sector - Not only IT

This is another common wrong perception that most of us have.

Service sector is not only IT.

In fact Restaurants, Truck Operators, Retail shops make 80 % of services sector.

This group is wrongly called "unorganized" sector.

(Thoughts of Prof. Vaidyanathan)

Increased Share of Derivatives - An insight into US crisis

Derivatives became a popular instrument by 1986-87. Derivatives do not represent any real wealth.

Steadily investments in these derivatives went on increasing. Derivative total turnover was 1 billion $ or so in 1977.

Steadily there was huge investment in these derivatives. At the peak of economic crisis in US in 2007, the investment was to the tune of 3.7 trillion $ a day. Total unsettled derivatives at the peak crisis were to the tune of 596 trillion $.

The actual transactions represented by these derivatives were only 15 trillion $.

These derivatives represented no real wealth, no real worth, no real income, no real wages.

 These were main reason of sudden collapse of US financial market.

(Taken from speech of Shri Gurumurthy)

India - Regaining its status or emerging economy?

It is fashionable to use the term "Developing" or "Emerging" economies for India and China. As if they were never developed in the first place or as if they are "emerging" from eternal doom.

Factual status is that India and China are simply regaining their original status in world economy.

Some facts from the study of Brazilian economist Paul Bairoch:

1. In 1750 China contributed 33 % of world's GDP and India contributed 25 % of world's GDP. At that time UK contributed only 1.8 % and USA 0.1 %.

2. As India slipped to colonization its share towards world's GDP continuously declined:

 - By 1800 India's share in world's GDP dropped down to 20 %
 - By 1830 ...............................................dropped down to 17 %
 - By 1880 ...............................................dropped down to  8 %
 - By 1900 ...............................................dropped down to 1.7 % (less than 2 %)

In less than 150 years India's economy collapsed.

By 1900 China contributed only 6 % of world's GDP.

US and UK that contributed less than 2 % of world's GDP in 1750,  contributed 41 %  by 1900.

3. When this study of Paul Bairoch came out, there was a huge outcry. A prominent western economist Angus Madison was asked to research this fact since 1 AD.

4. Madison's initial article refuted Bairoch's study but eventually corroborated his study. His study showcased the following:

1 AD: India at 34 % was the biggest contributor to world GDP. China was next.
1000 AD: India 28 %. China next.
1400 AD: India at first position. China next.
1500 AD: India at first position. China next
1600 AD: China at first position. India next.
1700 AD: India regained. China next
1750 AD: China at first position. India next.

Madison's study broke the myth about Western work ethics and established that colonization and exploitation was largely responsible for crash of Asian economies and rise of western economies.

(These ideas are taken from lecture of Shri Gurumurthy and my Guru Prof. Vaidyanathan)

Friday, May 15, 2015

An interesting insight on Production approach taken by various countries

Ever thought about Production / Operations approach taken by various countries??
Are goods really "produced" in China?
An excellent video by an ex-Harvard Economics Professor. (Dont restrict yourself because of his political views. This video is quite insightful)

Thursday, May 14, 2015

Prof. Vaidyanathan's Ideas - 2. Importance of FII + FDI

In India 94 % of investment is due to domestic savings. So much for the disproportionate attention given to FIIs and FDIs that only contribute less than 7 %. By the way in India less than 1 % of this savings goes to share market, So much for the obsession with share market.
Also note that out of 94 % domestic savings, more than 85 %- 90 % is contributed by household savings.

Prof. Vaidyanathan's Ideas - 1. Not a Global Financial Crisis

1. It is wrong to say that it is a "Global Financial Crisis". It is a European crisis or an Anglo-Saxon crisis.

2. In 1990s, so called G-7 contributed to 52 % of Global GDP, whereas emerging economies (China, India, Brazil, Indonesia etc.) contributed only 34 %.

3. By 2012, situation reversed. Now so called "Emerging Economies" contribute to 62 % of Global GDP and G-7 only contributes 52 %.

4. In next 8-10 years this share of G-7 will come down further to 25 %.

5. This reduced share is what is the "CRISIS" is all about.

6. So this is not at all a crisis for us. It is a crisis for so called first world countries.

Some points on why this has happened and the answer lies in sociological issues rather than financial or economic issues:

1. In West savings are very less. Household savings are less than 1 % . Culture of credit is increasing.

[In India 94 % of investment is due to domestic savings. So much for the disproportionate attention given to FIIs and FDIs that only contribute less than 7 %. By the way in India less than 1 % of this savings goes to share market, So much for the obsession with share market. Also note that out of 94 % domestic savings more than 85 % is household savings.]

2. Disintegration of Family Structure. Nuclear Family becoming proton families (single parent families):

52 % of kids are born out of wedlock.

In Blacks and Latinos this percentage is as high as 80 % .

This single parent culture was initially favored by Open Market supporters.

Joint family --> 8 members watch may be two TVs.

Nuclear Family each having 2 members (say) --> 4 TVs will be purchased.

So Market would prefer smaller families.

However this break down of family had an effect on society. The discipline of Father was not there. Kids were roaming. No focus on studies. School dropout rate increasing.

Unemployment rates became very high. Total lack of skills. youth was unemployable.

State had to support unemployed persons --> an increasing burden.

3. Decline in Population: Europe during First World war had a share of 25 % of world's population. This share has already come down to 10 %. This is going to go down further to a low as 1 %.
This means that earning population that will pay taxes is going down.

In short the so called Global Financial Crisis is going to continue.

Mergers and Acquisitions among Startups


Inflation in general cools down - WPI also reduces

Wholesale price index (WPI)-based inflation for April fell to a new low of -2.65 percent, the sixth successive month of deflating prices.

Given the weakness in industrial output and downtrend in inflation, expectations of a rate cut by the RBI at its June meet have risen. 

Tuesday, May 12, 2015

Cabinet clears 5% disinvestment in NTPC, 10% in IOC

Cabinet Committee of Economic Affairs (CCEA) approved 5 percent divestment on  NTPC and 10 percent stake sale in  Indian Oil.

Earlier this year, the government divested 5 percent stake in  REC through the offer for sale route, mopping Rs 1,550 crore. It was subscribed 5.53 times with retail participation at 902 percent, finance minister Arun Jaitley said in a tweet. 

In Budget 2015-16, FM has set divestment target at Rs 69,500 crore. This step is likely to fetch Rs. 8500 crores.

Index of Industrial Production Falls

The Index of Industrial Production (IIP) has fallen to a five month low of 2.1 percent as against 5 per cent registered in February.

What is IIP?

The index of industrial production (IIP) data, gauges the economic activities of the country. The fall in this index shows that demand has slackened, mainly due to falling consumption demand and moderation in electricity generation.

another reason could be absence of fresh investments.

Consumer Inflation cools down

Consumer Inflation in April cools to 4 month low of 4.87 % from 5.20 % a month ago.

Tuesday, April 14, 2015

Values of Key Indicators - as on 15th April 2015

(Date of last Change indicated in bracket)

Bank Rate: 9 % (28th Jan 2014)

CRR: 4 % (9th Feb 2013)

SLR: 21.5 % (3rd Feb 2015)

Repo Rate: 7.50 % (4th Mar 2015)

Reverse Repo Rate: 6.50 % (4th Mar 2015)

Developments in April 2015

15 April : Wholesale inflation slips to -2.33 % in March as against -2.06 % in february.

15 April:  India’s growth is likely to improve from 7.2% in 2014 to 7.5% both in 2015 and 2016 China’s growth is projected to slip from 7.4% in 2014 to 6.8% this year and further down to 6.3% next year.

For the first time since 1999, India will outgrow China and its BRIC peers with a GDP growth of 7.5% in 2015 and 2016 (calendar years) the International Monetary Fund (IMF) projections said.

13 April: India's annual consumer price inflation unexpectedly slowed down to a three-month low of 5.17 per cent in March as food prices moderated.

8th April: Moody's raised India's credit rating outlook to positive from stable, marking a robust endorsement of policy initiatives by the governments. Rival rating agency Fitch was more circumspect, praising the reform initiatives but leaving the outlook unchanged. The three big rating agencies — Standard & Poor's, Moody's and Fitch — have India at the lowest investment grade, just a notch above 'junk' status.

7th April’15: To target 6% CPI inflation by Jan 2016 & 4% by FY18-end. RBI Policy declaration

7th April’15: GDP growth under new methodology: 7.8% in FY16. RBI Policy declaration

2nd April'15: —New Foreign Trade Policy 2015-2020 declared.

 TP2015-20. introduces two new schemes, namely Merchandise Exports from India Scheme (MEIS) for export of specified goods to specified markets and Services Exports from India Scheme (SEIS) for increasing exports of notified services, in place of a plethora of schemes earlier, with different conditions for eligibility and usage.

RBI Proposal on 29 March'15

RBI has proposed to limit exposure of a Bank to a Business Group to 25 % of its capital down from existing 55 %.

Black Money - Comment by Prof. Vaidyanathan

23 March 2015

Today, the broad estimate is that black money that is stashed abroad is around $1.5 trillion - Prof. Vaidyanathan, IIM Bangalore

Mumbai realty developers' debt rises

Overall, listed Mumbai developers are battling higher inventory levels. They have unsold under-construction area worth Rs 53,400 crore, a Kotak report said, adding developers have Rs 36,800 crore in coming launches, almost half of these from south-central Mumbai.

Developers are not able to sell assets faster and cash flow improvement is not happening as the real estate sector is yet to recover.


RBI step on 4th March' 2015

RBI cut Repo Rate by 25 basis points from 7.75 per cent to 7.50 per cent.

The repo rate was last cut from 8 per cent to 7.75 per cent on January 15.

RBI Governor said that many important and valuable structural reforms are embedded in the Budget which will help improve supply over the medium term.

The RBI move has enthused corporates, which have been clamouring for a rate cut.

RBI step - on 3rd Feb 15

No Change in Interest Rates

SLR reduced by 50 basis points to 21.5 % 

CRR remains unchanged

Current Account Deficit at 1.3 % of GDP for 2014-15

Inflation Target 6 % by Jan 2016.

GDP growth estimate under old base for 2014-15: 5.5 %

GDP growth estimate under old base for 2015-16: 6.5 %

Limit of Foreign Exchange Remittance doubled to USD 250,000 per person annually

RBI Move on 15 Jan

RBI has decreased Repo rate by 25 basis points.

—Rate Cut Indicates Shift in Monetary Policy Stance: Arvind Subramanian

—More Monetary Policy Easing possible – Arvind S.

—Finance Ministry welcomes RBI Rate Cut as Inflation Drops

—UBI cuts base rate after this announcement.

—Bank Nifty hits record high as RBI slashes repo rate; auto, realty stocks rally

—Repo rate now 7.75 %. —Reverse Repo Rate 6.75 %.

January'15 Updates

January 30, 2015
New base year for GDP is 2011-12. GDP growth rate is 6.9 % for 2013-14. (As per earlier base year it was 4.7 %)

January 15, 2015
The rupee soared by 53 paise to trade at nearly two-month high of 61.65 against the dollar

January 15, 2015
RBI cut interest rates by 25 basis points to 7.75 per cent.

January 14, 2015
WPI inflation rises marginally to 0.11% in December from 0 % in Nov’14

December 2014 updates

December 31, 2014
India's fiscal deficit was 5.25 trillion rupees ($83.08 billion) during April-November, or 98.9 percent of the full-year target, government data showed on Wednesday.

December 12, 2014
Reserve Bank Governor Raghuram Rajan today said the current account deficit (CAD), which has widened to USD 10.1 billion or 2.1 per cent of GDP in July- September period, is still at comfortable level although there are risks.

December 3 2014
The Reserve Bank of India (RBI) has retained its growth estimate for 2014-15 at 5.5 per cent

December 3 2014
RBI keeps key policy rates unchanged.

Developments - Sept- Nov' 2014

November 14, 2014
Wholesale Price Index (WPI)-based inflation declined to 1.77% in October, down from 2.38% in September.

November 12, 2014
Consumer inflation (CPI) fell to a record low of 5.52 per cent in October, dragged down by sharp drops in food and oil prices.

October 27, 2014
CAD down from 4.7 % to 1.7 % of GDP. Foreign exchange reserves up from $270 Bn to $315 Bn

14th October 2014
The Wholesale Price Index (WPI)-based inflation dipped to a 59-month low of 2.38% in September 2014 from 3.74% in August 2014.

30th September 2014
Q4 FY15 GDP growth projected at 5.6%, FY16 GDP growth projected at 6.3%

30th September 2014
Keeps key policy rates, CRR, SLR unchanged. RBI keeps repo rate unchanged at 8%, reverse repo rate stays at 7%

29th September 2014
RBI governor Raghuram Rajan unlikely to cut rates in September 30 monetary policy

15th September 2014
India is the 4th largest smartphone market globally after China, US & Brazil with 111 mn users (GSMA)

Hello All

Hello All.

I will use this blog to post latest updates on economy - primarily Indian, but will also try to post latest International developments also.