Thread: Indian Economy

Should we blame the pessimism in the socialist era?
Forget the older generations and focus on the youngsters, they'll change the political course and the future of the country.

Well we all hope so, the young people are vastly different in terms of being agressive and big spenders, risk takers, they want to live the nice life etc...

But i dont know if they care about politics to be honest. I hope to be proven wrong, if there is something we need in this country, that is for young people to play a more proactive role and improve this country.
(well i am not too old myself-late twenties, are you not 40 Neo ji? you are old enough to be my uncle)


In terms of this rural plan for job guarantees, i dont understand how the govt will keep up with the national average wage that keeps on increasing. Considering our huge rural population 60%!!!!!!!!, how the heck will they be able to maintain this budget????

|And what does that do to the pay commission that sets wages? Will they be more reluctant to increase wages in the civil service? If they do, will they not change the minimum wage?

I know it sounds confusing and i cant explain it that well, essentially its a question of money and we just dont have it to sustain such a plan. You have to remember that there is the rural development plan, the urban renewal plan, subsidies, debt repayments, education spending increases... to factor in. Even with VAT and income tax and a tax to gdp ratio of 10% (the aim of the govt), i dont see where they will get all that money without hurting the debt situation. Then the GOI talks about bringing down the deficit to 4.5% of gdp (yearly)... how???? Unless i forgot a major source of revenue, and if someone knows, please do correct me, where is that money comming from? Right now they are starting small, a few areas, in two years, millions more will be included, a year after that, everyone who wants a job anywhere in the country, that is insane but that is just my opinion.

Wipro bags $300 mn of $15 bn GM contract

Wipro Technologies has won a $300-million, five-year software services contract from General Motors.

General Motors on Tuesday announced a major information technology systems outsourcing contract, which could total $15 billion over five years, to global software and system integrators. Wipro, EDS, IBM, Hewlett-Packard and Cap Gemini have figured among the winners.

Said Sudip Banerjee, president, Enterprise Systems Group, Wipro Technologies, “Wipro has won four of the 43 orders given out by GM. While it has won one on its own, the other three are in partnership with EDS. Wipro will start work on these contracts in the second quarter of 2007-08 and revenue from the project is expected to start flowing from the end of that quarter.”

Wipro already works on many other projects of GM. In the last four quarters, Wipro did business of around $30 million with GM.

Wipro employs close to 500 people for GM’s order management and global supply chain project and with the fresh contract, the staff strength is expected to be scaled up to 1,000 people over an 18-month period.

Wipro will be involved in development, maintenance and testing of middleware systems as GM is attempting to globalise its IT systems and develop standardised work processes. Wipro, in partnership with EDS, will also be involved in the Onstar project of GM, a vehicle tracking system.

The decision by GM to outsource ends two years of hectic negotiations with global software system integrators. The company’s 10-year contract with EDS ends by June 2006.

GM, as a part of its overall strategy to re-source its processes, is outsourcing a broad range of work, including computing operations, for automotive product development, manufacturing and supply chain as well as for its financial services.

Asia-Pacific packaged software market may touch $13.4 b this year: IDC

New Delhi , Feb. 3

AMID sustained price pressure, increasingly integrated selling strategies and continuing market consolidation, the packaged software market in the Asia-Pacific region is expected to grow by 11.1 per cent this year to touch $13.4 billion.

"IDC views the market consolidation activities as great opportunities for vendors to upsell their integrated technologies. We also expect vendors to make greater efforts to improve their penetration rates by reaching the corporate boardroom in order to better persuade the criticality of IT investment within business operations," Mr Wilvin Chee, Director, Asia-Pacific Software Research at IDC, said.

Commenting on the expected trends in the marketplace, it said that expanding open source activities would enhance development of solutions in a variety of devices beyond the current scope of commercial or conventional form factors such as desktops or portable PCs.

"Most countries are expected to experience annual growth ranging from 8.1 per cent to 11.6 per cent in their local packaged software market. The traditionally mature countries including Singapore, Australia, Hong Kong and Taiwan will see slightly lower growths ranging between 6.2 per cent and 7.9 per cent. The twin-country growth engines, India and China, are set to achieve an annual growth of 20.3 per cent and 17.2 per cent respectively," it added.

IDC projected that the vast industry applications market (more than $1 billion by 2006 in the region alone) would draw the attention of global vendors who would pursue the acquisition of successful local vendors to establish firmer footprints in the region. "IDC expected the content management applications market to be a `hot button' due to the expansion of information management and said this market is likely to grow at 14.4 per cent.

"Identity and access management is expected to experience the highest growth in the security software market. Underpinning this growth (19.8 per cent) will be the increased concerns around large-scale identity thefts, data control and compliance issues, and the business plus legal consequences that may ensue following unauthorised access of data," it pointed out.

According to IDC, the corporate users would continue to influence vendors' product packaging.

Software exports seen at $22 b

Abu Dhabi , Feb. 3

EXPORTS of computer software and services are likely to post a 29-per cent growth and seen close to $22.27 billion in the current fiscal, owing to the inroads made by Indian companies in financial services outsourcing.

Mr Kamal Vachani, Regional Director of Electronics & Computer Software Export Promotion Council, said in a statement here that the estimate of $22.27 billion was in line with the projections.

The computer software and services exports recorded a growth of around 27.29 per cent during April-December 2005, to touch $15.79 billion. One can forecast the software and services growth to surpass 30 per cent, he added.

Inroads made in financial services outsourcing, after resolving issues such as data protection had contributed to the growth, Mr Vachani said.

Against the backdrop of positive projections, Indiasoft 2006, the country's largest IT networking event, will be held in Chennai on February 20-21.

`Unwired Bangalore' by 2008?

Bangalore , Feb. 3

SILICON Valley recently announced a `Smart Valley' project to go wireless. Can its desi equivalent be far behind?

The southern IT hub plans to unleash its own master cyberstroke - `Unwired Bangalore', starting this year.

Imagine checking your mail from the laptop while sitting unplugged in a park, hotel, home terrace, or virtually anywhere. All this should be possible by 2008, when Bangaloreans will have broadband connectivity at virtually any corner of the city. The Department of IT & BT calls this the ultimate step towards transforming the city as the IT destination.

The Government will not invest in the three-phase `Unwired Bangalore' project but will act as a facilitator to bring service providers together. "We have issued an expression of interest and hope to see the results in six months' time," Mr M.K. Shankaralinge Gowda, IT & BT Secretary, Karnataka Government, told Business Line.

By end of 2006, a fairly substantial part of Bangalore will be unwired, said Mr Kailashnathan, Managing Director, Microsense, a WiFi service provider that has interest in the project. Government offices, Electronics City and scores of IT parks will be the first to go wireless, he added. Bangaloreans can then expect to enjoy 25 MBps wireless access to the Internet from their WiFi-enabled mobiles and laptops. WiFi is a wireless data transfer technology based on IEEE 802.11b standard.

Bangalore currently has around 100 WiFi hotspots in cyber cafés, hotels, airport and other places.

In the first phase slated to be ready by the end of 2006, these will be expanded and overlapped to give the city a complete coverage of WiFi hotspots.

In 2007, the infrastructure will be upgraded steadily to 802.11a, g, and n, which offer incrementally improved data throughput rates.

A wireless mesh network that will combine the characteristics of cellular networks with WiFi may also be proposed, according to the EoI.

The best is yet to come: a wireless fabric that seamlessly connects the hotspots. This will use a metropolitan access network technology, WiMAX (Worldwide Interoperability for Microwave Access) for backhaul connectivity.

WiMAX is based on IEEE 802.16, has a range of 50 km and offers bandwidths from 500 kbps - 2 MBps (scalable in theory to 70 MBps!)

Sensex at 10,000

Time will tell if we are seeing a paradigm shift

The Bombay Stock Exchange (BSE) Sensex crossed the coveted 10,000 mark today, with a massive 260-point leap that suddenly reversed recent uncertainty and scepticism about Indian stock valuations. The run -up to 10,000 has been widely anticipated and, in many ways, Monday offered the perfect setting—most Asian markets closed higher, with the Nikkei registering a five-year peak and it sent Indian bears rushing to square short positions. Also, two of India’s largest mutual funds are flush with a kitty of just under Rs 5,000 crore targeted at investment in blue-chip index scrips, providing a good opportunity for a spot of front running.

Yet, the very magnitude of Monday’s run-up was a tad unconvincing, which is probably why investors themselves were rather less euphoric than TV reporters, who celebrated the new benchmark togged in Sensex 10,000 T-shirts. India’s most popular index finally closed the day just shy of the new record, albeit at a record high of 9,980. The Nifty closed 60 points higher, at 3,000. Although all 30 Sensex stocks registered gains today, it was ICICI Bank, Reliance, Infosys and ONGC that led the bull herd. Reliance’s presence in this quartet is rather surprising, given the fresh outbreak of animosity over the weekend, which threatens to blow into another ugly corporate war. It may be recalled that the Reliance scrip began to gallop northwards only when the Ambani siblings finalised a de-merger agreement. Another sobering fact is that the biggest Sensex constituents, Reliance and SBI, have reported a slowdown in their growth rate.

The movement of these heavyweight stocks leads to the suspicion that Indian stock indices have now reached a point where they are easy to manipulate by concerted action of large traders because long-term players have turned cautious and short-term speculators are groping for direction. February is traditionally the month when long-term investors turn cautious, but the market is more volatile and prices are buffeted by media speculation about how the finance minister will tax various industries. Further, news on the economic policy front is rather discouraging and price-earning multiples of Indian companies, at around 14, are no longer cheap, based on future earnings estimates. That is probably why so many leading analysts remain edgy about the new benchmark, that promises to push the Indian capital market into a higher orbit. Only time will tell whether we are indeed witnessing a paradigm shift that will be sustainable through continued corporate growth and economic reform.

Economy booms, GDP to grow 8.1%

NEW DELHI, FEB 7: The Central Statistical Organisation on Tuesday projected the economy would grow 8.1% in 2005-06 on record gains in manufacturing and financial services. This is higher than the 7.5% GDP growth achieved last fiscal and the Reserve Bank of India’s estimates of 7.5-8% made in January end.

At 8.1% for the three years ending 2006-07, it is also the fastest growth recorded in any three-year period to date. The last time the economy grew at over 7% a year was during 1994-95 to 1996-97, when the growth averaged 7.5%.

According to CSO estimates, manufacturing was set to grow 9.4% this fiscal compared to 8.1% in 2004-05. Growth in financing, real estate and business services in 2005-06 is estimated to reach 9.5%, while community, social and personal services is forecast at 7.9%.

The agricultural sector is projected to expand a more modest 2.3% in the fiscal, compared to a near flat 0.7% growth registered last fiscal. Agriculture accounts for 25% of the country’s GDP. Normal rains in July-September have boosted farm output, fuelling higher demand for goods and services.

The CSO had last month updated the base year for GDP to 1999-2000 from 1993-94 and revised up its 2004-05 growth rate to 7.5% from 6.9%. India is one of the fastest growing of the world’s top 10 economies. It, however, lags heavyweight China, which grew 9.9% in 2005.

Prime Minister Manmohan Singh had on February 1 said the economy was capable of expanding as much as 10% a year in the next four years if efficiency improved. The GDP growth in the first half of the fiscal was also 8.1%.

100 companies form billion $ M-cap band

MUMBAI, FEB 7: About 28 more companies have been added to the list of companies having market capitalisation (M-cap) of billion dollar or roughly Rs 4,400 crore and above in the Sensex journey from 9,000 points to 10,000 points. India's billion-dollar club now has 100 companies.

Sensex, for the first time in its history, closed above 10,000-crore mark on Tuesday after it gained 1.02% to at 10,082 points. Sensex had closed at 9067.28 points on December 9, 2005, the first time above 9,000-mark. There were 72 companies that had billion-dollar M-cap then.

The new entrants to M-cap club include ABB, Aditya Birla Nuvo, Ashok Leyland, Asian Paints, Bajaj Hindusthan, Bharat Earth Movers, Colgate-Palmolive (India) Ltd, Crompton Greaves, Engineers India Ltd, Jaiprakash Associates, Jaybharat Textiles & Real estate Ltd, Jindal Steel & Power, Petronet LNG Ltd, Punj Lloyd Ltd, Syndicate Bank, Tata Chemicals, Tata Tea, Ultratech Cemco Ltd, United Phosporus, Videocon Leasing & Industrial Finance and Wockhardt Ltd among others.

The stock prices of all these companies have appreciated strongly backed by good quarterly performance and overall market rally. However, some companies have also dropped out from the billion-dollar club and the list includes Great Eastern Shipping Company Ltd, HCL Infosystems Ltd HMT Ltd and National Mineral development Corporation Ltd.

The increase in number of companies having M-cap of billion-dollar augurs well for attracting foreign institutional investors (FII). "FIIs look for companies that have billion dollar M-cap, as it gives them an easy opportunity to enter and exit these stocks.

IN one of those articles it talks about agriculture accoun ting for around a quarter of total gdp, this is false and a quick link to the RBI website will proove it. Agriculture accounts for around 18.6-19% of total output.

Over the last 3 years, gdp growth has been as follows

2003-2004- 8.5%
2004-2005-7.5%
2005-2006-8% (estimate)

Originally Posted by Sameer

IN one of those articles it talks about agriculture accoun ting for around a quarter of total gdp, this is false and a quick link to the RBI website will proove it. Agriculture accounts for around 18.6-19% of total output.

Over the last 3 years, gdp growth has been as follows

2003-2004- 8.5%
2004-2005-7.5%
2005-2006-8% (estimate)

agriculture once accounted 25% of our GDP. The share has gradually come down with low growth rate in agriculture and high rate in services.

There is an interesting figure in that article, 70 million Indians earn 18000 or more USD a year, in PPP terms that would be somewhere in the range of 50000~ roughly per annum. This is not middle class in India of course, this is upper middle and up...
http://news.bbc.co.uk/2/hi/business/4662642.stm
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Last Updated: Wednesday, 8 February 2006, 00:25 GMT

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Countdown to India's retail revolution
By Toby Poston
BBC News business reporter


The economy is growing by 8% a year, its stock market rose by nearly 40% in 2005 and foreign investors are flooding in.


There are about nine million small grocery shops in India

Whichever way you measure it, business in India is booming.

And as the economy grows, so does India's middle class.

It is estimated that 70 million Indians in a population of about 1 billion now earn a salary of $18,000 a year, a figure that is set to rise to 140 million by 2011.

Many of these people are looking for more choice in where to spend their new-found wealth.

Protectionist

The Indian retail sector is now worth about $250bn (£140bn) a year, but it is heavily underdeveloped. Well over 95% of the market is made up of small, uncomputerised family-run stores.

Now there are finally signs that the Indian government is dropping its traditionally protectionist stance and opening up its retail market to greater overseas investment.

Last month it eased restrictions on foreign investment, allowing overseas retailers to own 51% of outlets as long as they sell only single-brand goods.

For the first time, chains like McDonalds, Marks & Spencer, Body Shop and Ikea can, if they want to, open and control their own operations in India.

Previously, many of them had gone down the path of working with franchise partners, a policy followed by M&S which supplies clothes to eight "Planet Sports" stores.

They look like M&S stores on the inside, but they are owned by local retailers, and the UK retailer has no plans for that to change.

"This is now our policy for overseas expansion," said a spokeswoman.

"We rely on franchisees who know their local market, it's working very well in India."

Stiff opposition

But allowing in the big multi-brand, international retail groups like Wal-Mart, Tesco and Carrefour was considered a step too far, says Kamal Nath, India's Minister of Commerce and Industry.

"We have announced a partial opening of our retail market, to single-brand retailers," Kamal Nath told BBC News.

"But beyond that, we need to find a model that doesn't displace our existing retailers."

The Indian government has been conducting an impact analysis of how the introduction of supermarket chains like Tesco and Carrefour would hit its retail sector.

Further retail reforms are likely to be opposed by the Communist Party, a key ally of the Congress Party-led government.


Kamal Nath is worried about Indian shopkeepers

Many politicians still feel they have a duty to protect the livelihoods of the small shopkeepers they represent.

But the government does realise that foreign investment is badly needed to provide the infrastructure - the warehousing, distribution and processing operations - that are needed to upgrade India's chaotic retail industry.

An estimated 50% of the country's fruit and vegetables rot by the roadside before they reach market.

New jobs

It's a challenge that some of India's own industrial conglomerates are taking up.

Last January, Reliance Industries said it was investing $5bn in creating a chain of hypermarkets and back-end retail services.

Its plans called for the creation of a whole new supply chain, with new stores, cold storage facilities, food processing units and contract farming.

It will initially launch pilot projects in three Indian states before potentially rolling the strategy out to 500 Indian towns and cities.

The investment could create up to 400,000 jobs, it believes.

Elsewhere, consumer goods group ITC has set up its "e-Choupal" scheme to try and improve the productivity of farmers that supply its food processing operations.

It has built internet kiosks in rural villages to help give farmers access to the latest information on things like the weather, current market prices and what foods are in demand.


Foreign investment could help boost India's agricultural output

"India's greatest need is to take the benefit of retailing to the doorstep of the farmer," ITC chairman YC Deveshwar says.

"There is such potential if we can invest in greater food processing. India has the most irrigated farm land in the world."

Tentative steps

So while Indian businesses forge ahead with their own plans to take a big share of Indian consumers' spending, and the Indian government slowly refines its retail roadmap, where does that leave supermarket giants such as America's Wal-Mart, Germany's Metro and Britain's Tesco?

For years, their plans for domination of the Indian retail scene have been sitting gathering dust.

German store group Metro has made tentative steps, via its chain of wholesale cash & carry centres in cities like Bangalore.

About 90% of the goods it offers come from local producers and suppliers, which could give it a head-start if the rules on selling to individual shoppers are relaxed in the future.

Tesco and Wal-Mart also have a limited presence in India.


German retailer Metro has opened cash & carry stores in India

But they are not selling anything to anyone: Wal-Mart's 80 staff in India are there to look after the retail behemoth's purchasing in the region.

Even so, it has been lobbying the Indian government to allow it to open an office in Bangalore where it could research the Indian retail market and the possibilities for developing its operations there in the future.

Bangalore is also home to Tesco's Indian outpost, an office which looks after some of its back-office finance operations.

It says it has no firm plans for the region - it will not open up a wholesale operation like Metro - but admits it is watching for any further relaxation of retail regulations.

Inevitable

Most Indian business experts think it will not have to wait long.

"The recent move was just the first step," says Dr Mohan Kaul, chairman of the Commonwealth Business Council.

"Maybe this time next year there will be a further announcement.

"It's inevitable, there is no way that an open market for retailing will be stopped."



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The Indian government has authorised the country's first micro-processors and silicon chips manufacturing facility for the IT industry.

The $3bn project will be based in the southern city of Hyderabad and is expected to create 10,000 new jobs.

The project is important for India, as despite being a leading global player in the IT sector, it has to import key components of computer hardware.

Experts say that by 2015, India's IT sector will be worth $22.6bn.

'Fab City'

It was a close race between the country's two leading hi-tech cities - Hyderabad and what is known as India's Silicon capital, Bangalore.



As part of the $3bn project, 20 micro-processor and silicon chip manufacturing units for the IT industry will be set up, the Andhra Pradesh chief minister, YS Rajasekhara Reddy, told reporters.

He said that the new project, called Fab City, would be developed on a 1,200 acres area near Hyderabad and would be a public-private partnership project.

Mr Vinod Agarwal, the chief of Sem India, the main promoter of thes project, said the money would be invested in the project in two phases.

Sem India is a consortium of US-based non-resident Indians who have secured a licence from US giant, Advanced Micro Devices Inc., to manufacture microprocessors and chips.

The project is significant for the country because so far, the country does not have any such facility and has been largely dependent on imports of key components of computer hardware.

The project will help India become self-sufficient in manufacturing electronic goods such as mobile phones, high-end TVs, DVDs and telephones.

Mr Agarwal said India had a potential for tremendous growth in the area of micro-processors and computer chips.

India could attract only 10 per cent of the addressable market for globally sourced IT and IT enabled services sector, Nasscom President Kiran Karnik said on Thursday.

Predicting enough headroom for every player and a continuing growth in the coming years, he said the global addressable market was about $300 billion while Indian IT sector revenues would reach $36 billion by the end of March 2006.

"There exist a huge potential in the global market. In IT sector, our revenues would touch $36 billion by FY06, but the total global market is more than $300 billion... And in the BPO sector, we could attract only one-twelfth of the global market," Karnik told reporters in Mumbai after releasing the IT trade body's strategic review for the year 2006.

The sector would register a double digit growth and touch $60 billion mark in the next four years, he added.

Stating the sector was growing consistently, Karnik said the he was not expecting much changes in the coming Budget as far as the IT sector is concerned.

"I don't expect much changes for the IT sector...It is growing consistently at a stable pace...And the country still the leading investment destination," he added.

According to Nasscom estimates, the IT and ITeS sector would register 28 per cent growth in the current financial year which accounts for 4.8 per cent of the gross domestic product of the country.