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The Indian Economy (Page 18)

jagdu IF-Dazzler
jagdu
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Posted: 27 August 2008 at 4:22pm | IP Logged
ONGC buys Imperial

India's ONGC agreed to buy Russia-foused Imperial Energy Corp. for ($2.59billion)1.4billion Pounds in a move to boost oil supplies for India's growing economy at a cash offer that values Imperial shares at punts 12.50. The Indian co. has secured support from Russia's govt and the country's largest oil producer, a support that is crucial for any such deal to succeed and also cooperation between India and Russia in the energy sector has been given an opportunity. India relies on energy imports and invests in oil assets overseas and it's rivalry with other such nations has driven up the price of oil and gas fields around the world.

Mittal's US unit ArcelorMittal may forge strike.

United steelworkers are threatenng a strike against ArcelorMittal, the world's biggest steelmaker that has a 14000 member work force that could push steel prices even higher.
RBI: It's role in The Indian economy. A new governer for RBI

A new RBI governer will soon tackle high inflation in India by a reformed governer appointed by the govt. RBI's role here is to control the movement of currency to control economic development, that is at 12.63%.YV Reddy is it's current governer, his term till Sep.5 and has raised rates by .75%since June. GDP growth has receded to 7/8% down from 9. A new governer will take measures to bring down inflation.

Things it does beyond setting interest rates regulating trade in govt. bonds and currencies it takes conservative measures such as competition and innovation in the financial system. It does not allow sophisticated financial instruments and markets to develop and does not push for privatization of state owned banks, insurance co.s and pension funds, thus gravitating to an appropriate role for itself.



Edited by jagdu - 27 August 2008 at 5:00pm

jagdu IF-Dazzler
jagdu
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Posted: 29 August 2008 at 3:32pm | IP Logged
RBI launches spectacular new product
The central bank ahs cautiously allowed rupee futures for the fear of losing business to offshore financial centers.
CONDITIONS:The volume remains light until the central bank is comfortable. The contracts must be settled in rupees have a maximum maturity of 12 months, the maket is open only to local individuals and institutions as well as foreign firms registered in India, and the size of the contract is small at $1000 each with imposition limits of $5million for clients of banks and $25 million for banks and brokerages.
Benefits of conditions:That will limit the activities of large banks and corporates. Big foreign funds will be kept away that increases volatility. The maturity is shorter than those available on other currencies in other financial centers.
The future trading of the rupee is a step the Indian market will help address the needs of a growing class of smll and midsize companies in India as welll as indivduals who want ot hdge their exposure to the dollar-rupee exchange rate.
Indian co.s have become more outward looking as they acquire foregn co.s and individuals are also buying assets abroad, with the high economic growth for the past 5 years causing many investment banks to set shop in India. The new contract will allow players to take a speculative positon on the rupee.
Offshore players: They use the nondeliverable dollor rupee forward contracts available in Singapore. The Dubai Gold and Commodities exchange recently started a rupee futures contract.
jagdu IF-Dazzler
jagdu
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Posted: 02 September 2008 at 1:18pm | IP Logged
India approves Goldman unit
SEC Board of India has approved a subsidiay of Goldman Sachs group to launch a wholly owned asset management and mutual fund business with a senior management team to spear the operations by chief investment officer Prashant Khemka. He wants to emerge as a world class asset manager in India.
Mamata Banerjee vs. Ratan Tata
India's most closely watched industrial project Tata Motors Nano minicar is interrupted by Mamata banerjee who lants the land purchased by Tata returned to the farmers. The W. Bengal govt. even offered state compensation that the farmers refused. The Trinamool Congress has asked that 400/997 acres be returned and the dispute has become a symbol of the clash between Indian industry's effort ot expand manufacturing and continue India's vibrant growth and those who make their livelihood from the land that is required for factories. It is a scenario that's being played in many parts of the country and Ratan Tata said if disruptions don't tsop he will consider moving the plant. Tata requires 600 acres for the main factory.
Hindu mobs burn 4 churches in Orissa
Over 50 people are dead and 7000 have entered refugee camps . Joseph D'souza, president of the All India christian council maintains a chapter in Orissa in a nation of 1.1 billion people where christians make up roughly 2% of India's population. Gopal Chanda Nanda, DIG Orissa police said that the situation in most affected districts have been brought under control by 4000 dispatched officers.
Duvvari Subbarao RBI governer(59)to continue anti-inflation policies
The finance secratary of AP and secy to PM's economic advisory council and economist at world bank has been appointed for 3 years to control a 12.4% inflation rate above the RBI's inflation comfort zone of 7% for the fiscal year ending Mar.31, 2009.
India's growth hits 3 year low
India's GDP grew 7.9% in the first fiscal quarter compared to 9.2% in the same period last year slowing from 8.8% the previous quarter.India is struggling with the trade-off between inflation and growth for ordinary Indians, most of whom earn less than $2 a day and spend most of their income on food. India's GDP has expanded an average of more than 8.5% an year for the past 5 years.
Tata halts work on Indan auto plant citing protests
The $2500 Nano minicar which has been called the world's least expensive mass produced car on which Tata has already invested more than $350 million has been halted. Tata motors has become one of India's best known companies. This shows India still needs to learn how to reconcile rapid economic expansion with the needs of ordinary citizens who are often displaced or disadvantaged by new mining, industrial or other projects from which they derive little or no direct benefit. India needs to build its industries to create jobs for its population of 1.1 billion, and industrial operations need large tracts of land. Across India, conflicts have erupted over proposed SEZ's, mines and chemical plants. India's govt. has embraced a strategy of industrial growth to create more jobs. Annusal expansion in the agricultural sector is usually closer to 2%. 2/3rds of India's populatiuon lives in rural areas with most rural dwellers earning less than $2 a day.
 


Edited by jagdu - 02 September 2008 at 3:29pm
jagdu IF-Dazzler
jagdu
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Posted: 03 September 2008 at 5:59pm | IP Logged
Tata:Modernization foes in rural areas send message to investors
Tata warned it is suspending construction of its Nano plant and reviewing possible plans to move manufacutring from E. India in the face of violent protests from farmers and politicians. Tatas move, part of India's flagship industrial conglomerate is more plan than threat.            
As India strives to boost manufacturing to supplement sloing growth in its larger services industry, Tata is known as one of Inda's most powerful, yet socially responsible employers and a role model for big international companies interested in operating in India.
Here's an Indian corporation showing that it is not safe even in it's own country. The Nano plant was projected to create close to 20000 jobs. 1000 at Tata itself, 7000 at parts makers and 12000 in business.
Tata will be able ot recover only 10-20% of the investment if they decide to shift to another location. The salt to software Tata group has a huge presence in E. India. Tata tea, Steel, production and all. Kolkota was once the capital of British ruled India.
Soldiers, aid workers scramble in Bihar.
India's larges of relief efforts where 100's and 1000's of people stranded on rooftops, treas and speck sof dry land for more than 2 weeks for 100's of miles in Bihar state ran into a giant lake. The army sent out 5000 soldiers to join in rescue efforts and more than half of the 1.2 million stranded have been rescued.


Edited by jagdu - 03 September 2008 at 6:04pm
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Posted: 04 September 2008 at 12:20pm | IP Logged
Standoff over Tata Plant Appears open to Resolution
Reps of CPI(M) will meet with reps of Trinamool Congress to find a resolution to the standoff that has become an international embarassment to W.Bengal and India as it seeks to attract investment and speed industrialization. So far, the federal govt. has delclined to get involved, but is willing to help resolve the crisis if asked, said Heavy Industries Minister Santosh Mohan Dev.
Inidia's Suzlon does a REpower takeover
Suzon energy ltd.,the worlds 5th largest wind turbine manufacturer by sales, is moving ahead of schedule to consolidate it's takeover. Based in Pune, India in a deal that valued the German co. at $1.7billion, Suzlon has faced concern about it's 2.1 MW trubines. Suzlon said this week it plans to push for a domination agreement to transfer technology out of a target co., and added transerring technology or Mfg. REpower products in India were never the takeover objectives, but mainly to penetrate the European Market and get access to large offshore wind turbines, not for other technology.
YTD share performance of Suzlon: down 41% since January. REpower: up 74%. Repower is seen as a leader in wind turbine technology.
Japan Clothier Eyes India
Fast Retailing Co. said it is considering opening Uniqlo casual clothing stores in India to more than triple its revenue from overseas. Given the large number of people, particularly women, who do not have casual clothes yet, India has a major market potential.
Steelmaker ArcelorMittal SA said it would jointly develop a manganese mine in Sout Africa in a deal valued at $432.5 million.
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Posted: 06 September 2008 at 10:20am | IP Logged

Nuclear Suppliers Group Backs
U.S.-India Atomic-Trade Deal

NSG approved a controversial, U.S.-sponsored nuclear trade agreement with India.

The decision by the Nuclear Suppliers Group permits the sale of civilian nuclear technology and fuel to India, despite the Asian nation's long-standing refusal to sign the Treaty on the Nonproliferation of Nuclear Weapons. The NSG is a club of 45 nations that export nuclear technology and services. The club is dedicated to ensuring that the fruits of civilian nuclear technology are preserved for nations that have signed and adhere to the nonproliferation treaty.

The decision, which amounts to a one-off waiver, didn't come easy. The NSG was originally founded as a reaction to India's test of a nuclear weapon in 1974. Several nations, including Austria, Ireland and New Zealand, wanted assurances that India wouldn't return to nuclear-weapons testing, according to a diplomat familiar with talks taking place in Vienna. Washington had lobbied hard for the deal, arguing that it would solidify a strategic partnership with the world's largest democracy, help the subcontinent meet exploding energy demand and open a nuclear market worth billions of dollars.

Indian officials eagerly endorsed the decision. In a statement, Indian Prime Minister Manmohan Singh called the NSG decision "forward-looking and momentous." He added: "It marks the end of India's decades-long isolation from the nuclear mainstream and of the technology denial regime."

Rice Hails NSG MoveU.S Secretary of State Condoleezza Rice hailed passage at the NSG. "It's a very big step for the [global] non-proliferation framework," she told reporters en route to Algeria from Tunis, Tunisia. This "expands the reach of the non-proliferation regime." Still, America's top diplomat acknowledged that she would "have to see" if both India's parliament and the U.S. Congress will ratify the deal during President George W. Bush's last months in office.A number of Indian political parties have pledged to block the passage of the deal, as it's seen as impinging on New Delhi's independence in pursuing its national security policies. This opposition has only been fed by the release this week of a secret State Department document that said the U.S would cut off nuclear supplies to New Delhi if the Indian government conducted further nuclear weapons tests.

U.S. lawmakers have also indicated that Congress might not have enough time to fully vet and pass the India nuclear agreement before the current legislative session ends this month. This holds out the possibility that the nuclear accord could be passed on to a new U.S. administration and Congress next year.

Wrangling Over Resolution TextThe NSG talks Friday began constructively with delegations split between those that would accept a revised draft of a resolution text, and those that wanted tough language that would permit conditional nuclear exports to India, according to a diplomat familiar with the discussion. Additional changes Friday morning and afternoon brought more delegations on board, but not all, the diplomat said.In the late afternoon the delegates reconvened in an unusual evening session for what they hoped would be one last push to agree on a new revised resolution text, according to a diplomat with knowledge of the discussion.About 8:00 pm the delegations were still far apart and split into smaller working groups, in the hope of later meeting again in full session for a final decision. During the evening, the U.S. intensified its diplomatic effort in a series of phone calls, one diplomat said.

At 2:00 am and still without agreement, the meeting adjourned until 11:00 am when delegates returned to approve a resolution.India, although it isn't a member of the NSG, monitored the talks closely. A high-ranking delegation was just minutes from the meeting hall, according to a diplomat with knowledge of the discussion. Indian officials lobbied intensively for approval of the pact. Indian External Affairs Minister Pranab Mukherjee said India wouldn't spark a new arms race and pledged to uphold a voluntary moratorium on nuclear testing. "India has a long-standing and steadfast commitment to universal, nondiscriminatory and total elimination of nuclear weapons," Mr. Mukherjee said in a statement on the ministry's Web site. Ultimately it was this assurance that clinched the approval, according to a statement by the Austrian foreign ministry at the conclusion of the meeting.

Intrigue Over Secret U.S. Letter

Adding intrigue to the Vienna talks was a secret Bush administration letter released this week by Rep. Howard Berman (D., Calif.), which said Washington has the right to immediately halt nuclear trade with India if it were to conduct an atomic test blast. In his letter Mr. Berman said the U.S. Congress needs time to consider the proposed pact before the U.S. Congress begins its election recess in late September.The deal, if it passes its remaining hurdles, would see the U.S. supply India with nuclear fuel and technology for civilian purposes.
 Last month, the board of governors of the United Nations' atomic watchdog, the International Atomic Energy Agency, unanimously approved an inspections agreement with India that was a key precondition to completing the deal. India's Congress Party, which leads India's coalition government, has made better access to nuclear power through this deal a key focus. Although India's economy is slowing, it is still growing fast, and the nation needs to increase power generation.Some parts of rural India experience 15 hours or more a day of power cuts, and even major towns and cities endure blackouts of several hours a day. The U.S., for its part, sees the nuclear pact as a way to create stronger ties with the giant South Asian nation and provide a counterweight to China's influence in the region.

 

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Bonheur Goldie
Bonheur
Bonheur

Joined: 04 January 2007
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Posted: 08 September 2008 at 7:01am | IP Logged

Jagdu, I haven't been reading these pages for a while but it's great that you've continued to update enthusiastically. I just read your post about RBI issuing a new financial product to keep up with the competiton. I am not much into finance, so thanks for your update. Btw, what would you ask one of the RBI head honchos if you saw him personally. What are your keen concerns about the future state of the Indian economy?

jagdu IF-Dazzler
jagdu
jagdu

Joined: 05 October 2007
Posts: 3135

Posted: 08 September 2008 at 1:29pm | IP Logged
Bon,
Am excited by your questions. Was following the drama in Vienna very closely, and was thrilled that everything went smoothly despite the hurdles that were posed by several countries. It is a huge deal for The Indian Economy. Dana Perino dodged some concerns and said the US will get the deal done. They kept their word. The great news is Bush is after Congress now to finish the game by Sep.26, the end of the Congress's current term.
 
Regarding your questions, I don't post all of my research for the sake of brevity. For example. the contenders were Mr. Rakesh Mohan, 2nd term deputy governer, D. Subbarao, finance secy. at  the dept. of economic affairs and Montek Sing Ahluwalia, deputy chairman of the planning commision. Their portfolios and ideas and what they would bring to the Indian Economy. Like on most occasions, emails to these people do not get responded to asking for comment.
 
A) What would I ask them?
What do you think of making the RBI a fully independent finance ministry?
What do you think of Mumbai's potential to become an international finance center?
For Ahluwalia, he is a minister of state ranking, so techically the moving to the central bank would be a step down.
Mr. Subbaroao is a fellow of MIT. 
 
B)RBI vis-a vis The Indian Economy
The government is determined to stanch inflation before the next elections which must be held by May 2009. It is likely that the next governer would put fighting inflation frond and center and overhauls on the back burner.
The PM and finace minister understand that business-as-usual will not work. Thhe will carry forward the reforms agenda and the RBI governer eill not depart from the script in a major way before the elections.
Given the proximity to a general election, and a potential for a change of government, reform should not be expected soon. It will come, but only gradually.
 
 
 
 
 

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