Thread: Indian Economy

pS for rupee to dollar conversion you need to find the reer of 1999-2000 not current exchange rate and also not at factor cost but market price at constant 1999-2000 prices and this has not yet been released. Hence I cant do it.

I would also like to remind everyone that 1999-2000 prices are still outdated considering the fact that this is 2006 and much has changed in India over the last 6 years. These prices do not take into account the updates seeen in the automative sector, biotech, IT, the aviation industry boom etc. The year 1999-2000 was also a year when manufacturing saw a major slow down, this can have a small but worthwhile effect at underpinning gdp. However it is not feasible for the CSO to constantly update price levels and latest global constant prices norms are at 1999-2000, hence the CSO followed suit.

IN retrospect this upward revision on the gdp growth itself sounds a bit crazy, that is a huge revision from 6.9% growth, we must wait for some more details as to why the CSO felt that last year's growth was undercounted by so much.

These French suckers are at it again, they already scutteled a Pharma deal sometime back and now this....
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DAVOS/PARIS: The hostile reactions of the French and Luxembourg governments to the bid by Mittal Steel to buy out European consortium Arcelor has exposed the double standards practised by European Union politicians and governments.

On Friday, Thierry Breton, the French finance minister, was preaching at the World Economic Forum (WEF) on how France was an entirely open market and how it would welcome investments by industries and companies from all over the world, including Asia. Barely a few hours later, Breton was singing an entirely different tune, saying that he was worried by the bid by Mittal Steel, the world's largest steel maker.

On Monday, when Mittal - the chairman and CEO of Mittal Steel and the world's richest Indian - made the formality of calling on Breton, the latter said that Mittal did not have any action plan for Arcelor and that he had failed to show that there were cultural compatibilities between the two giants. Breton also said that he was not in favour of hostile bids being launched by companies without any previous discussions.

Just through these statements, the hypocrisy stands out. Breton had little to say when over the last four months, Arcelor had been in a hostile bid for a Canadian steel maker Dofasco. Even the huge cultural differences between Arcelor and its prey were not enough to get Breton to intervene, but now that Arcelor is the prey of a predatory action, Breton was quick to jump to its defence.

For his part, Arcelor chief executive Guy Dolle was quick to realise that he had little armour to protect Arcelor from the Mittal attack. So he turned to practically anyone who could or would listen to him. His first choice was the workers' unions saying that a merger could lead to thousands of job losses.

The trade unions immediately took up his defence saying that if Mittal were allowed to buy Arcelor it would lead to thousands of job losses.

The politicians in Europe - especially France and Luxembourg - were quick to join the issue and French government officials began saying the bid would have to be examined in great detail to ensure that competition is not compromised in the region and that the workers' rights are protected.

With barely 10 percent of the global steel market and very little overlap in the markets where they are strong - Arcelor in West Europe, while Mittal is in 16 countries in East Europe, North America, South Africa and Asia - there is little reason for authorities of Europe to begin getting concerned about the impact of the acquisition.

The European Commission's silence on the affair is a clear indication that Brussels does not see a tremendous threat in this case and that the Commission is also not very happy about politicians interfering in the free market.

But the EC's silence does not stop the politicians, trade unions and even the media in Europe from attacking the bid. Even some companies that depend on steel - like carmakers - have expressed themselves against the deal, even though they have absolutely no locus standi in the matter.

It is only the financial industry that has come out strongly in favour of the deal. Ever since the deal was announced, Arcelor shares have jumped by over 30 percent, while Mittal Steel has gone up by nearly 10 percent. Several other steel makers have also seen their shares rise.

The financial analysts say that the politicians, the governments and even labour unions should stay out of the controversy and let the markets, or at least Arcelor shareholders, decide if they find the Mittal offer attractive enough.

"For many years, Arcelor shares had been moving directionless and the company was grossly undervalued by the stock markets. Mittal, by contrast, enjoys a much higher market capitalisation. Now, Arcelor shareholders have to thank Mittal for the bid since it has helped increase the market capitalisation by over 30 percent," says an analyst in Paris.

The battle is expected to continue for some weeks and Mittal may very well walk off with Arcelor despite all the huffing and puffing. But whatever the outcome, the affair has once again exposed how European Union countries tend to adapt a special set of practices for themselves

http://timesofindia.indiatimes.com/a...ow/1394565.cms

France and the EU are passe and I for one am glad about that. THEIR socialist like policies are the reasons why their idiotic welfare states are almost bankrupt and unemployment runs at close to 10% with low gdp growth forcasted for the next decade. tsk tsk tsk, let them weap and huff and puff.

The American economy is pre-eminent - but we cannot afford to be complacent. In a dynamic world economy, we are seeing new competitors like China and India."



This is what Bush said yesterday in his state of the union address. This is the first time a president has mentioned India in such an address. The world is waking up to the Asian century, dont worry Jay, what is France?

FM signals growth ahead, pegs GDP at 7.5%

TIMES NEWS NETWORK[ WEDNESDAY, FEBRUARY 01, 2006 12:02:41 AM]
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DELHI: Finance Minister P Chidambaram on Tuesday said the economy will achieve at least 7.5% growth rate in GDP in the current fiscal, and indicated that it could be higher. He claimed the successively high growth rates showed Indians have now accepted the mantra of hard work and efficiency as the road to growth and prosperity.

“I am confident that ’05-06 will be a better year than ’04-05,” the finance minister said. He was commenting on the latest GDP figures for ’04-05, released by the Central Statistical Organisation today.

The quick estimates of national income show the economy grew by 7.5% in ’04-05, better than the advance estimate of 6.9%, mainly due to the change in base year to 1999-00 from 1993-94. “All this means we have a more difficult task to perform in ’05-06,” the minister noted.

He acknowledged that rising international oil prices was a problem; “It’s shadow will continue to hang on us,” he said. The minister said the government had an obligation to maintain price stability, which ruled out making the consumers bear the full burden of the rising oil prices.

Elaborating on the prospects for the current year, he said inflation for the current year will be contained within 5 to 5.5%, but added it was desirable to reduce it further. He also hinted that the budget numbers will improve because of the high growth in the current year.

“All this is possible because of prudent fiscal policies, and splendid inflation control by the RBI in its monetary policy, allied with increase in efficiency in implementation of projects and expenditure,” he said.

To sustain this growth rate, more investment was urgently required in roads, air and sea ports and railways, he said, and asked the trade unions “to also show a sense of urgency” on their implementation.

Revised GDP for 2004-05 at 7.5%

PTI[ TUESDAY, JANUARY 31, 2006 05:31:34 PM]
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NEW DELHI: The economic growth for 2004-05 was revised upwards to 7.5 per cent as against the earlier estimate of 6.9 per cent.

The quick estimate of Central Statistical Organisation released here today said the revision was necessary due to the change in base year to 1999-2000 from 1993-94.

The GDP growth rate of 7.5 per cent during 2004-05 was, however, lower than 8.5 per cent growth registered in 2003-04, the quick estimates said.

The GDP at factor cost at constant prices with base year 1999-2000 is estimated at Rs 23,93,671 crore during 2004-05 compared to Rs 22,26,041 crore a year ago, registering a growth of 7.5 per cent.

Economy grew 7.5% in 2004-5

Our Economy Bureau / New Delhi February 01, 2006



India’s economy grew at a healthy 7.5 per cent during the fiscal 2004-05 despite 0.7 per cent growth in agriculture.

Though the revised gross domestic product (GDP) for 2004-05 is higher than the earlier estimate of 6.9 per cent, it is lower than the GDP growth rate of 8.5 per cent for the fiscal 2003-04.

The revised GDP figures were released by the Central Statistical Organisation today on the basis of a new series of National Account Statistics with 1999-2000 as the revised base year, in place of the previous base year of 1993-94.

Finance Minister P Chidambaram said growth of 7.5 per cent during 2004-05 on the base of 8.5 per cent GDP growth the previous year was commendable, particularly since the agriculture sector had registered only 0.7 per cent growth due to a bad monsoon.

“Growth, I believe, is the best antidote to poverty. I am confident and hopeful that growth in 2005-06 will be better than 2004-05 and is likely to be close to 7.5 per cent in the second year of the UPA government also,” Chidambaram told reporters.

The minister said growth in the agriculture sector was expected to be better in 2005-06 on account of a good monsoon.

“The rabi crop promises to be good,” he said, but added that oil prices continued to be a cause for concern.

“There is an obligation on the government to maintain price stability and keep inflation under control. The inflation rate of 5-5.5 per cent, in my view, should also be brought down, but this is critically dependent on oil prices,” he said.

The data also clearly indicated that issues in the infrastructure sector, particularly power, roads, airports, ports and railways, had to be addressed with a heightened sense of urgency. He said the GDP figures also confirmed his belief that people were saving more.

The gross domestic savings at current prices during 2004-05 constituted 29.1 per cent of the GDP, against 28.9 per cent the previous year, he pointed out, adding that savings were expected to be even higher in 2005-06.

He added that even the gross capital formation at current prices had increased to 30.1 per cent in 2004-05 against 27.2 per cent the previous year indicating greater capital investment.

In respect of the household sector, savings in the form of financial and physical assets had gone up to Rs 3,20,777 crore and Rs 3,66,302 crore respectively in 2004-05 from Rs 3,16,444 crore and Rs. 3,32,190 crore respectively in 2003-04.

Savings of the private sector had gone up to Rs 1,50,947 crore in 2004-05 from Rs 1,20,852 crore in 2003-04. Savings of the public sector showed an increase from Rs 28,026 crore in 2003-04 to Rs 69,390 crore in 2004-05.

Commenting on the surge in the Sensex, Chidambaram said there was no asset bubble anywhere and the government was monitoring the situation.

“We are looking carefully at the Price Earnings ratios. The Securities and Exchange Board of India and the capital market division is watching it carefully,” he added.
http://www.businessstandard.com/comm...&autono=213660

Gem & jewellery exports surge to $17 b in 2005

THE gem and jewellery industry has once again beaten market expectations despite the difficult global market conditions and severe pressure on margins.

According to the performance figures announced by the Gem and Jewellery Export Promotion Council (GJEPC) of India, the industry posted a robust 14.81 per cent growth in total exports.

During the calendar year 2005, total exports of the gems and jewellery sector in the country grew to $17 billion (Rs 74,407 crore) from $14.8 billion (Rs 67,099 crore) in January - December 2004.

Mr Bakul R. Mehta, Chairman, GJEPC, said, "The industry has shown tremendous resilience to surpass its export targets under an extremely competitive environment. The coming years are going to be an acid test for the industry and we expect the Government to continue its support to enable us to compete with China and other global markets on equal grounds."

The growth in the sector was primarily driven by the cut and polished diamonds segment, which registered a growth of 19.29 per cent in value terms and 9.74 per cent in volume terms.

The export sales of cut and polished diamonds grew to $12.3 billion during January - December 2005 ($10.3 billion), while total volume grew to 487 lakh carats (443 lakh carats). Exports of coloured gemstones grew by 15.03 per cent to $222 million and the gold jewellery exports remained at $3,765 million.

The US, Hong Kong and the UAE were the top exporting markets for the Indian gem and jewellery sector followed by Singapore and Belgium accounting for nearly 80 per cent of total exports.

On the import front, total imports of gem and jewellery grew by 31.99 per cent to $13.86 billion for the Jan-Dec 2005 period($10.50 billion).

Indian Oil Corp heads for Dubai

NEW DELHI, FEB 1: Indian Oil Corporation (IOC) has decided to set up a wholly-owned subsidiary in Dubai for expanding its overseas operations.

Given the tax benefits available in Dubai, IOC may also route its big-ticket investments for acquiring refining and exploration and production (E&P) assets abroad through this subsidiary.

IOC chairman and managing director Sarthak Behuria confirmed the move but refused to share finer details at this stage. A senior company official, however, told FE, “IOC certainly has bigger investment plans for its Dubai subsidiary in the years to come.

It may be a slow going initially, but investments through this subsidiary will be on a much larger scale compared to our existing subsidiaries in Sri Lanka and Mauritius, which are catering mostly to the local markets there.”

in oil-rich Saudi Arabia through this new subsidiary. Besides IOC, ONGC has already made an offer to Saudi Aramco for entering into a long term strategic deal.

Private sector major, Reliance Industries Limited (RIL) is also understood to have chalked out plans to invest close to $8 billion in Saudi Arabia’s refining and marketing sector. When asked by FE in Davos, RIL CMD Mukesh Ambani did not deny the move.

The Indian government has launched one of the country's most ambitious efforts to tackle rural poverty.
Under the National Rural Guarantee Scheme one member from each of India's 60 million rural households is guaranteed 100 days of work each year.

They will receive a minimum wage of 60 rupees ($1.35) or an unemployment allowance if there is no work.

More than a third of India's population of more than one billion people lives on less than $1 a day.

The first phase of the programme will cover 200 of the country's poorest and least developed districts.

The BBC's Navdip Dhariwal, who is in southern Andhra Pradesh state, says this is a demonstration of the government's resolve in bringing a new deal to rural India.

Hundreds of thousands of villagers have been lining up in all 200 districts hoping to benefit from the scheme.

The main focus of the scheme is the poorest of the poor

Prime Minister Manmohan Singh


Waiting in hope
In pictures: Rural jobs plan

Prime Minister Manmohan Singh launched the scheme in a village in the drought-prone Anantapur district of Andhra Pradesh by handing out job cards to five villagers.

"We must tirelessly work to ensure that the benefit of the scheme reaches needy people," the Press Trust of India quotes him as saying.

"The main focus of the scheme is the poorest of the poor."

The president of the governing Congress Party, Sonia Gandhi, was also present and described the programme as "an important and a revolutionary step".

But she added: " Howsoever noble a scheme is... it will be of no use if it's not implemented with transparency and accountability."

The Congress Party swept to power in 2004 after it pledged to improve the conditions of India's poor.

Critics

The programme will be extended to the entire country over the next four years and is being seen as an important effort to curb the migration of villagers to India's overcrowded cities.


The Congress campaign used the scheme in election campaigns

Analysts say this is the most ambitious pro-poor scheme launched by an Indian government, in a country where nearly 70% of the population lives in villages.

"It is the biggest social security net ever provided in India," the country's Rural Development Minister, Raghuvansh Prasad Singh, told the BBC.

People employed by the scheme will work on projects such as building roads, improving rural infrastructure, constructing canals or working on water conservation schemes.

The government says special priority will be given to women.

However, critics say the scheme is too expensive and question whether the government has the funds for a programme expected to cost anywhere between $5bn-25bn.

They say rather than paying for unskilled manual labour, the government should invest in improving rural infrastructure - especially in health care and education.

Others say there is little transparency, which may lead to red tape and corruption.

http://news.bbc.co.uk/1/hi/world/south_asia/4671328.stm

This rural job scheme sounds so nice, I fear all it will do is cause a huge budget deficit. Why does the Govt always have to look at socialist solutions?

The bureaucracy is so corrupt and inefficient, I really wonder how much money will trickle down to the poor who really do need jobs.

Why not be more sensible, relax labor laws and allow private players, especially in the manufacturing sector to hire more workers which will be higher than the minumum wage offered in this govt scheme (100 days only).

Originally Posted by Sameer

This rural job scheme sounds so nice, I fear all it will do is cause a huge budget deficit. Why does the Govt always have to look at socialist solutions?

The bureaucracy is so corrupt and inefficient, I really wonder how much money will trickle down to the poor who really do need jobs.

Why not be more sensible, relax labor laws and allow private players, especially in the manufacturing sector to hire more workers which will be higher than the minumum wage offered in this govt scheme (100 days only).

Exactly, you read my mind!

Neo, due to the fact that most educated people in the middle class and up do not vote due to this unpatriotic "we cant change corrupt system" mentality, idiots and crooks are easily able to run for office and get elected. Only a leftist idiot would think that this scheme could work. Manmohun ji never liked this scheme but his Kangress Masters and the left have this wet dream about providing jobs for all via the govt so that their votebanking abilities are increased.

Until the Indian mentality changes from passive to active civic duty, I am afraid that 1/3 of our politicians will be certified crooks and the other 2/3 plain idiots. It is to the credit of privatization that millions of jobs have been created and the economy has been able to grow so fast but since when did that matter in India...

It surprises me!
Average Indian I run into turns out to be a patriot, a nationalist (in a good sense) and yet there's no interest in national politics!
Ofcourse i'm talking about the Indians living abroad.