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The Indian Economy (Page 21)

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Posted: 28 September 2008 at 11:53pm | IP Logged

Mob killing threatens India's business appeal

The last moments of Lalit Kishore Chaudhary, chief executive of a multinational auto parts company in India, were filled with terror. On Monday, the quiet and dedicated 47-year-old businessman was hunted through Graziano Trasmissioni India's plant on the outskirts of Delhi by an angry mob.

A wave of foreign interest identified big savings in tapping Indian engineering skills. It's affected India's image of opening up to foreign capital, India's labour relations, striking a blow to a sector at the forefront of the country's foreign investment drive.
A torrent of disapproval has poured from prominent Indian business associations and people, including Nandan Nilekani, chairman of Infosys. Graziano is not a high- profile company per Jayant Bhuyam, deputy director general of the Confederation of India.
Kamal Nath, the commerce and industry minister and India's trade negotiator, swiftly set about setting the record straight, describing the violence as a stray occurrence, Mr Nath said it was completely at variance with the Indian culture and tradition of peace. Rome issued a warning to the government of Uttar Pradesh state, which is led by Mayawati, India's most powerful low-caste leader. India's attraction for the global car industry is strong. Analysts estimate that sourcing parts from India offers a 50 per cent saving for European carmakers.

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Posted: 30 September 2008 at 8:45am | IP Logged
Cram-School Capital
Hoping to boost his chances of getting into a top college, Rohit Agarwal quit his high school and left home.The 16-year-old moved from the far northeast corner of India in June, with two suitcases and a shoulder bag. He took a two-hour flight and a six-hour train ride to the dusty town of Kota, India's cram-school capital.

More than 40,000 students show up in the arid state of Rajasthan every year, looking to attend one of the 100-plus coaching schools here. These intensive programs, which are separate from regular high school, prepare students for college-entrance exams. In Kota, most of the schools focus on the prestigious Indian Institutes of Technology.

 

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More than 40,000 students show up in Kota every year looking to attend one of its 100-plus coaching schools. At left, students at a Bansal Classes school.

The seven IITs nationwide are statistically tougher to get into than Harvard or Cambridge. While around 310,000 students took the entrance exam this April, only the top 8,600 were accepted. A whopping one-third of those winners in the current academic year passed through Kota's cramming regimen.

"If we stayed at home, we just wouldn't be able to study enough," says Mr. Agarwal as he takes a break from lessons. "If you don't study hard, you won't get admission." Today, he starts studying at 7 a.m., works on practice problems until noon. After lunch, he goes to class, where he gets the answers to the problems, gets home around 8 p.m. and does homework until midnight.

Kota has become a cram-industry boom town as more Indians seek to send their children to college and economic expansion has far outstripped the increase in college placements, making the competition fiercer.  Students study full-time for two years just for one entrance exam, mostly for the IITs but also for other universities and colleges. The rigor has become part of its selling point: As Kota's reputation for success has spread, more young hopefuls have flocked to the city.

%5bVinod%20Kumar%20Bansal%5d

Vinod Kumar Bansal

"At first, around eight of us studied around my dining-room table. Then I added a few stools to make it 12, then I added a foot to each side of the table," says Vinod Kumar Bansal, who is credited with starting the cram-school craze when he began tutoring students in the 1980s. He went on to found Bansal Classes, the city's first cram school, called "coaching institutes" here. It all started because Mr. Bansal grew ill. He was working in a chemicals factory when he started having trouble climbing steps; he later discovered he had muscular dystrophy, a hereditary muscle disease for which there is no cure. "My plan was to become a chief engineer of the plant or a general manager but things went in a different direction," he says.

A few of his early students got into an IIT and word spread. Parents in Kota, and then beyond, started asking for his help. In 1991, he started a school, Bansal Classes. He initiated an entrance exam for his own school to identify the brightest prospects for IIT success. He developed an intensive study system that bombards students with test questions for nine hours a day for two years. They only teach what is on the IIT exams -- mathematics, physics and chemistry.

Now, Bansal Classes' 17,000 students study six days a week. One Sunday a month, they have a six-hour test which is set up just like the IIT exam. After two years, students have taken the mock test more than 20 times. The course of classes costs up to $1,500 a year, a hefty price for many Indian families. But the payoff can be huge: An IIT degree vaults a graduate into the global elite. Graduates include Vinod Khosla, co-founder of Sun Microsystems Inc., and Arun Sarin, former chief executive of Vodafone Group PLC, the U.K.-based phone company. More than 1,500 Bansal Classes students got into IIT in the academic year that started in July.

Last year, Bansal Classes opened a new, bigger campus that is in better condition than some IITs and is fully wheelchair accessible for Mr. Bansal, who still teaches up to five classes a day. Girls represent 13% of the students, a percentage that is climbing. They wear light-blue polo shirts that say, "Bansalite today, IITian tomorrow." The boys have no uniforms. The Bansal campus is strangely quiet. Teachers say there are rarely disciplinary problems, except for the occasional student sneaking into a class to repeat it, and a bit of graffiti. Even that is aspirational: The writing on one metal bench says, "Bansalites rock, IIT rocks, Lyf after IIT rox."

Mr. Bansal, 58, says he is now worth more than $20 million. His mobility has declined to the point where he can barely lift a pen. But he says being in a wheelchair 12 hours a day means he has more time to think of challenging questions for students. "Teaching is my breakfast, lunch and dinner," he says. IIT officials have no official opinion on the cram schools. However, some public and private schools have complained that they are losing their brightest students to such programs.

While some parents complain that the coaching classes give students an unfair advantage and an unbalanced education, Bansal teachers say their students aren't taught enough in regular schooling, so cram courses are needed to help them get into the IITs.The success of Bansal Classes spawned dozens of imitators, many of them started by Mr. Bansal's former employees. Some even teach students how to ace the entrance exam to get into Bansal Classes.

Cramming has been the salvation of Kota, an industrial center in the 1970s that then fell on hard times. In the past three years, new malls, restaurants, hotels, Internet cafes and clothing stores began to spring up to serve the 16- and 17-year-old cram kids. Many homeowners have added second and third floors to rent out to students.Balwan Diwani, manager of Milan Cycle, a bike shop in Kota, says bicycle sales have surged to more than 2,000 a year from fewer than 200 five years ago. Mamta Bansal, no relation to the school founder, quit her job as a maid to start a service to deliver boxed lunches and dinners to 30 students as they study. "We try to make what their mothers would cook for them," she says. "I have had to learn how to make dishes from Gujarat, the Punjab and southern India."

Local schools also have benefited: Cram students have to attend regular classes so they can pass their high-school exams and graduate. Some high schools have early morning classes so cram students can finish early and move on to cramming."There used to be a lot of hooliganism and goons," says Pradeep Singh Gour, director of the Lawrence and Mayo Public School in Kota. "Now the entire city is like a university campus."

Mr. Agarwal, the student from the northeast, says that if he gets into IIT, he would like to study aeronautical engineering and eventually work at the National Aeronautics and Space Administration in the U.S. One of his cousins used his IIT degree to get a high-paying job working for Merrill Lynch & Co. in Tokyo.He got average scores on recent practice exams, though, which he knows will not be good enough. "IITs seats are limited but boys trying to get in are unlimited," he says.

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Posted: 01 October 2008 at 10:31pm | IP Logged

Senate Approves Nuclear-Energy Pact

WASHINGTON -- The U.S. Senate passed a landmark nuclear pact with India on Wednesday night, opening the door for U.S. energy companies to enter India's fast-growing market.

%5bnuclear%20pact%20with%20India%5d President Bush met with Indian Prime Minister Manmohan Singh in the Oval Office last week, ahead of the U.S. Senate's passage of a key nuclear-energy deal that will open the Indian market to U.S. companies.

The agreement, which now only needs the signature of President Bush, will require India to allow international inspections of its nuclear facilities. The Bush administration has made the deal a top priority. Senate voted 86-13 to approve the treaty, in a vote. President Bush issued a statement congratulating the Senate for passing the bill, and said he looked forward to signing it into law saying this legislation will strengthen global nuclear nonproliferation efforts, protect the environment, create jobs, and assist India in meeting its growing energy needs in a responsible manner.

India's power-generation capacity is lagging far behind the country's expanding energy needs. The economy has grown an average of 8.7% each year over the past five years. That trend, combined with rising incomes, has lifted electricity demand by 9% a year. Other countries have expressed interest in getting into the Indian market, and France concluded its own civilian-nuclear deal with India on Tuesday. For U.S. companies, the deal will open a multibillion-dollar market for the sale of everything from power-transmission equipment to airplanes. Suppliers of technology and equipment, including General Electric Co. and Westinghouse Electric Co., a unit of Toshiba Corp., hope to benefit from India's nuclear-power plans. General Electric built nuclear power plants in India in the 1960s and is interested in building new reactors there, as well as providing fuel and other services for new and existing reactors. General Electric said it has had "limited" discussions with Indian officials about the country's energy plans.

Westinghouse Electric, based outside Pittsburgh, plans to build up to eight reactors in India for $5 billion to $7 billion each. It stepped up meetings with government and industry officials in India this year in anticipation of an agreement. Boeing Co. and Lockheed Martin Corp. have bid to sell 126 fighter jets to the Indian government, in a deal valued at $8 billion to $10 billion. The White House and State Department held last-minute negotiations over the past two weeks with key members of Congress to get the deal completed before the president leaves office. The House of Representatives approved the treaty, which was three years in the making, on Saturday.

The U.S. has sought to curb the spread of nuclear technologies globally. It has also tried to strengthen ties with India, which it sees as a potential counterweight to China. Indian Prime Minister Manmohan Singh has staked his government's survival on the deal, which he argues is crucial for India's energy needs. Sen. Chris Dodd, a Democrat from Connecticut, urged colleagues in the Senate to approve the deal, saying to have a good strong relationship with this country in this century will be of critical importance to our safety as a nation and to the safety of mankind.

Democratic Sen. Byron Dorgan of North Dakota, however, raised concerns that Mr. Bush failed to set sufficient safeguards against India testing nuclear weapons. Sen. Dorgan said the agreement hadn't received adequate consideration by Congress and that it rewarded India for what he described as the nation's defiance of international nonproliferation principles. Mr. Bush and Mr. Singh met in Washington last week, when the two sides first hoped the agreement would be sealed. Speaking to reporters in the Oval Office then, Mr. Bush said the deal had  taken a lot of work on both our parts.
 
 

 

 

 

 

 



Edited by jagdu - 03 October 2008 at 10:50am
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Posted: 03 October 2008 at 10:56am | IP Logged
The Indian IT outsourcing companies are going to see a hit to earnings from the sagging global economy. While still generally bullish on the sector, cut estimates are seen this morning for Satyam (SAY), Wipro (WIT), Patni (PTI), Infosys (INFY), Tata Consultancy and Cognizant (CTSH).
Six factors affecting revised view of the sector:
"Uncertainty" in the banking and financial services industry.
Potential slowdown in Europe and in other industries.
Poor visibility for demand.
Difficulty of raising prices in a touch economy.
Appreciation of the dollar against the pound and the Euro, which could soften reported revenue growth from Europe.
All of that is partially offset by depreciation of the rupee against the dollar, which could benefit operating margins, though with some gains neutralized by hedging losses.
No change any ratings, cut  targets on Infosys to $43, from $58. For Tata, target drops to 873 rupees from 1,242. Target on Cognizant drops to $34, from $45.
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Posted: 04 October 2008 at 5:55pm | IP Logged

Rice Arrives in India Amid Nuclear Deal 

U.S. Secretary of State Condoleezza Rice arrived in the Indian capital Saturday to commemorate, but not sign, a historic deal that opens up U.S. nuclear trade with the country.

A signing ceremony that had been scheduled was dropped because, according to U.S. officials, a series of administrative steps have yet to be taken in Washington following Senate approval of authorizing legislation on Wednesday. Ms. Rice was meeting in New Delhi with top government officials, including Prime Minister Manmohan Singh, External Affairs Minister Pranab Mukherjee and political opposition leaders. Speaking to reporters aboard her plane en route from Washington, Ms. Rice said she expects the civil nuclear cooperation agreement will trigger an across-the-board expansion of American-Indian relations.

Ms. Rice said only administrative, not substantive, matters were delaying the signing of the agreement. President George W. Bush has yet to sign the authorizing legislation, and once he does he is required to certify that the agreement with India is consistent with U.S. obligations under the Nuclear Non-Proliferation Treaty, designed to limit the spread of nuclear weapons. He must also certify that it is U.S. policy to cooperate with international efforts to further restrict transfers of technology related to uranium enrichment and the reprocessing of spent nuclear fuel.

The agreement on civil nuclear cooperation allows American businesses to begin selling nuclear fuel, technology and reactors to India in exchange for safeguards and U.N. inspections at India's civilian, but not military, nuclear plants. Critics in India argue the constraints compromise their country's right to conduct nuclear bomb tests.

Even without a signing ceremony during her visit, Ms. Rice saidshe's going to draw a line under this  deal one way or another because it's time to put the historic agreement  to say that that's done and move on to what else we can do to strengthen and broaden the relationship.

The Bush administration considers the deal a crowning achievement of the president's second term in office. It could however,turn out to be the last major diplomatic achievement of a presidency.  In the onboard interview Ms. Rice stressed that she saw the importance of her visit to New Delhi as focusing on the future, rather than celebrating the completion of the civil nuclear agreement.

She said this is a relationship that has now a firm foundation to reach its full potential, adding itt removes for India a barrier to full integration on a whole range of technologies and opens the way for closer U.S.-India cooperation in other areas such as defense, agriculture and education. India built its nuclear bombs outside the Nuclear Non-Proliferation Treaty, which it refuses to sign. It has faced a nuclear trade ban since its first atomic test in 1974; its most recent nuclear test blast was in 1998.

Throughout the Cold War, relations between India and the U.S. were chilly. In the past decade, however, ties have grown closer in a range of areas, including trade, energy and security. The U.S. is now India's largest trading partner. U.S. opponents of the nuclear agreement say lawmakers rushed consideration of a complicated deal that could spark a nuclear arms race in Asia. The extra nuclear fuel the measure allows India to purchase, critics say, could boost India's nuclear bomb stockpile by freeing up its domestic fuel for weapons.

Increasingly, India figures into U.S. strategic interests in other ways, including its long standoff with neighboring Pakistan. The Pakistani government has focused so much on what it perceives as an Indian threat that it has limited its security efforts against militants along its border with Afghanistan.

 

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Posted: 06 October 2008 at 5:11pm | IP Logged

Tata Motors Abandons Controversial Site
Tata's decision underlines a thorny issue for manufacturing investors in India: poor local communities sometimes backed by political or environmental activists are often suspicious of industrial projects planned for their regions, despite promise of job creation and stimulation of local economies.
Although it has invested more than $300 million in W. Bengal, Tata said it has decided to relocate production. The state was expected to generate almost 20000 jobs. Portestors were demanding that more than 300 acres be returned to farmers who were forced out by the state government. W. Bengal says that of the 13000 families whose land was acquired for the car factory, just 1000 accounting for about 15% of the total project area refused to accept the compensation.

Tata motors inability to save it's project despite the governments backing as well as it's own reputation as one of the most powerful and socially responsible companies in India shows how set some rural dwellers and politicians are against changes being triggered by India's rapid growth.
as India's economy has expanded more than 8% a year recently, local governments and businesses are increasingly asking rural dwellers to make way for new industrial complexes.
India cranks out small cars for export
India is becoming a small car manufacturing hub for some of the world's biggest auto makers.
Annual passenger car exports from India have jumped 5 fold in the last 5 years. Industry analysts predict exports over the next 3 years will surge nearly 300% to more than 1/2 a million vehicles a year.
India's home grown auto innovation Tata Motors $2500 Nano minica has attracted global attention.
In lat September, India's biggest car exporter Hyundai added a midnight shift at it's southern India plant to boost production 40% and meet booming demand.
India has everything, the local market, the quality and the companies.
Nissan's capacity is going here to 200000 units anually the next 3 years.
India is relativey a small player in auto exports, shipping 200000 cars in 2007.
HOnda Motor Co. built a new plant in India in late September. It has not decided to make India a major export hub. Politics can also derail big plans in India.
Local consumers were purchasing only about 300000 cars a year.Hyundai started producing cheap subcompats at a new plant with a capacity of about 100000 units a year at $6000, and the Hyundai Santro fit the bill. That is why exports become not just a viable option, but a neccessary option for anyone that wants to remain competitive in the Indian market. By 2004 Hyundai was India's biggest car exporter, selling 70000 India made cars a year overseas to more than 70 countries. The company has boosted production in India to 500000 cars this year and plans to raise that to almost 650000 next year. It plans to export, and is also studying the US market as a possible target for India made cars.
Previously India was not taken into account by car companies but now has become a focus.


Edited by jagdu - 06 October 2008 at 5:27pm
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Posted: 07 October 2008 at 4:56pm | IP Logged
India Cuts Its Cash Reserve Ratio
Temporary move is meant to add liquidity to banks
The Cash Reserve would be lowered by 1/2 of a % point to 8.5% effective Saturday.
Liquidity in the banking system has dried up, with short term money market rates spiking to more than 16% as companies made quarterly tax payments and the central bank intervened to sell dollars to prop up the rupee. The call rate is normally 6% in times of ample liquidity.
The cash reserve ratio cut will infuse about 200 billion rupees ($4.27 billion) into the banking system. This is the 1st cash reserve ratio cut since June 2003.
The market should react positively to the news and we can see the yield on the benchmark 10 yer note falling to 10-15 basis points in early trade Tuesday. Call rates, which had shot up to 18 month highs also are expected to cool down on the liquidity injection. The move would ease overnight liquidity a bit and bring some stability to short term rates which should settle at lower levels.
The confidence has to come back into the system and this move will infuse a degree of trust back into the market.
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Posted: 09 October 2008 at 12:11pm | IP Logged
In India, Global Financial Crisis Hits Home Front
Falling Residential Property Sales Highlight the Economy's Vulnerability, as Middle-Class Buyers Putting on Brakes
In this climate, and during a big festival season, some develpers are anxiously dangling inducements before would be buyers from free parking and jewellery vouchers to a new BMW for the purchase of a luxury flat selling for some $600000. Yet, even free cars are not driving up sales.
Developers are borrowing at the rate of 20-25% according to analysts.
Property prices in India could fall by 25-30% over the next couple of years.
India's benchmark stock market index, the Sensex ended Wednesday down dropped 3.1% to 11328.36 in Wednesday's trading, it's lowest close in more than 2 years. The Bombay Stock Exchange's realty index is down some 70% since its peak in mid January

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