Thread: Indian Economy

India's External Debt Rises to $125.2 Billion for Fiscal Year
Monday September 11, 2006

NEW DELHI (AP) -- India's external debt rose to US$125.2 billion (euro98.5 billion) through the past fiscal year ended in March, but the borrowings remain well within limits, the government said Monday.
The Finance Ministry said India added US$2 billion (euro1.6 billion) in net foreign loans through the fiscal year that ended in March.

Surging exports and increased capital inflows have helped in slowing India's debt accumulation in recent years, the ministry said.

Also, India's external debt position compares well with other indebted countries, it said.

India's external debt comprises 15.8 percent of the gross domestic product, sharply down from 38.7 percent in 1991-92, when the country faced a balance of payment crisis and was bailed out by the International Monetary Fund.

http://biz.yahoo.com/ap/060911/india...debt.html?.v=1

China, India drive growth

ASHWINI PRASAD
Tuesday, September 12, 2006

THE Asian Development Bank report released last week said faster growth is projected in the Pacific region, now at 3.3 per cent for 2006.

It said this reflected upward revisions for the two largest economies Fiji and Papua New Guinea.

It said in a statement that ADB raises developing Asia 2006 growth forecast to 7.7 per cent before easing to 7.1 per cent in 2007.

While launching the Asian Development Outlook 2006 (ADO), ADB chief economist Ifzal Ali said developing Asia's rapid growth was underpinned by strong performances by the People's Republic of China and India, which together accounted for more than 50 per cent of regional GDP.

"The region should take advantage of this strength to act in three areas that could undermine growth if not addressed the need to complete the adjustment to high oil prices, the need to pick up the pace of fiscal consolidation, and the need to stimulate investment," he said.

The ADO update is a supplement to ADB's annual flagship publication.

It said the 7.7 per cent forecast for 2006 represents a 0.5 per cent point increase from April forecast.

For 2007, ADO update forecasts growth of 7.1 per cent for developing Asia, up marginally from the 7.0 per cent forecast in April.

It said the easing from 2006 growth was anticipated based on expected slower demand from industrial countries and continuing high oil prices.

Growth in South Asia in 2006 is projected at 7.5 per cent, up from 7.3 per cent forecast in April while in South East Asia the forecast has been downgraded marginally to 5.4 per cent from 5.5 per cent in April.

My intention is to ensure 8 per cent economic growth: Chidambaram

K. T. Jagannathan

"Ready to tolerate even dissent if it did not come in the way of growth''

# Calls for building India into a knowledge society
# Fiscal package for hardware industry in a week

MARAIMALAI NAGAR: Union Finance Minster P. Chidambaram, on Sunday asserted that he was willing to tolerate any debate and, perhaps, even dissent as long as it did not come in the way of the targeted eight per cent growth of the Indian economy.

Addressing a function got up by SPEL Semiconductor Limited to launch leadless moulded packages at Maraimalai Nagar, Mr. Chidambaram said, ``it is my intention to ensure that India grows at eight per cent.'' He made this remark specifically addressing the overseas visitors in the audience. ``Any dissent that comes in the way would be brushed aside,'' he made it very clear. The Finance Minister asserted that India could grow at more than eight per cent.

Emphasising that none would part with R&D (research and development) for nothing, he called for building India into a knowledge society. ``How long can India remain as a knowledge-borrowing society?'' he asked. It was time India became a ``knowledge-inventing, knowledge-producing and knowledge-sharing society,'' he added.

In this context, he pointed to the success achieved by Indians living elsewhere in the world. A climate could be created in India as well for the Indians living abroad to return and achieve success, he added.

While lauding SPEL Semiconductor for setting up the only cutting-edge technology facility for IC (integrated chip) assembly and testing in India, Mr. Chidambaram said the competition was not far away and that it was just some kilometres away (pointing to a new unit coming up in the vicinity). ``Competition is not measured by distance but quality,'' he added.

The Finance Minister said he would live up to his promise made in his budget speech on incentive package for the hardware industry. ``My intention is to keep the promise,'' he said. A fiscal package for the hardware industry would be out in a few weeks from now. He expressed the optimism that the hardware industry in India would reach the position that software had scaled now. It took 15 years for the software industry to do this. This should happen in a much shorter time frame in the hardware industry, he said.

Mr. Chidambaram said IC assembly and testing were only initial technology steps in the chain of hardware production.

``We must set up fabrication units. We must manufacture chips,'' he said.

Ar Rm Arun, Vice-Chairman, SPEL Semiconductor, said the company had drawn up a $286 million five-year investment plan. This would also see the company expand its product portfolio and set up a Special Economic Zone. This would see the company's IC volume increase from 185 million now to 5,575 million in five years.

Addressing a press conference earlier, Mr. Arun said the SPEL had initiated necessary action to develop the SEZ.

The unused portion of the land at its Maraimalai Nagar facility would be transferred to the proposed SEZ, he said.

SA aims for $12bn trade with India by 2010
Reuters


NEW DELHI - SA wants to treble two-way trade with India to $12bn by 2010, Deputy President Phumzile Mlambo-Ngcuka said today as she invited Indian firms to invest in the African nation’s infrastructure and IT sectors.

India’s exports to SA grew by 58% to $1,55bn in the fiscal year to March, while imports were up by 11,44% to $2,45bn, government data shows.

The two-way trade between the two countries amounted to $4bn during 2005/06.

"I ask businessmen to set a target of $12bn by 2010," Mlambo-Ngcuka said at a business conference.

India is already negotiating a preferential trade agreement with member nations of the South African Customs Union (SACU)

- a regional trade block comprising of SA, Botswana, Lesotho, Namibia and Swaziland.

Mlambo-Ngcuka urged Indian firms to forge joint ventures with South African firms, especially in the infrastructure sector and also in food processing, IT, hospitality and textiles.

"We will require $55 billion investments in infrastructure in the next 3-to-5 years," she said, outlining SA’s plans to boost economic growth to 6% annually from 2010 onwards from the present target of 4,5%.

One of India’s leading Indian business houses, Tata group, is already eyeing major investments in SA.

Tata Motors is stepping up production at its bus building facility in SA, while Tata Steel plans to build a ferrochrome smelter there and is looking for coal mines.

India exports farm, dairy products, chemicals, medicines, textiles, electronic goods and vehicle parts to SA and imports mainly pearls, precious stones, iron and steel.

Arise the Indian Phoenix
By Sean Kelleher, Special to Gulf News

As Phoenix's go this recovery was as good as they get, that's the view of Prakash Idnani, president and head of research at Mumbai's Padmakshi stockbrokers.

Worth listening to as he predicted the correction in this space before the May downturn.

"Overall", for those who don't get to the end of this piece, "the recovery is a proxy for the Indian economy", says Prakash.

Pretty much summing up the current mood in Mumbai which seems to be one of unfettered confidence in the future of the Indian economy. But what seems to make this recovery exciting is that, whilst the confidence in the economy was bound (at some time) to turn the Sensex around, nobody thought the turn-around would be so quick.

A recovery from around 10,200-ish in May, to 11,820 (and rising) on September 7, reflects a gain getting towards 17 per cent. It was a gain that seems to have taken even the staunchest Sensex supporters by surprise.

Back in May/June there was a genuine fear that the market would be spooked by a U-turn from foreign investors whom Prakash values at about 50 per cent of the market. This U-turn, it was feared, could be exacerbated by higher interest rates in the US and climbing oil prices.

Fitting his specs with hindsight, Prakash is more comfortable with a retrospective analysis that defines the correction as "a speculators' crash".

The speculators had seen the height of the Sensex climb, and took the New-tonian view that whatever goes up must come down, so they betted on the market coming down. "Speculative elements including heavy leveraging and derivatives were chiefly responsible," says Prakash.

More good news

This takes us to the heart of why Prakash feels this Phoenix is better than others: his point is that there is still lots of good news left in the Indian economy. The fundamentals are strong, indeed they were never really as weak as the market correction would seem to have suggested. It was wrong to shoot the bird down in the first place; relieved we should be that it has now arisen!

Prakash calls a number of items to the jury's attention to make the point. Item 1: The fact that India has the fastest growing GDP in the democratic world. Manmohan Singh, the Prime Minister, is targeting 10 per cent growth, whilst he is probably short of this, the touted figures of around eight per cent is still high.

Item 2: GDP, according to Prakash is becoming more robust. He describes the three main props to the economy under the headings: industry, services and agriculture. "India remains the back office of the world," says Prakash, and whilst greater global competition is evident, in absolute terms, India's service industry is still growing.

More jubilantly, Prakash points to the even more dramatic recent surge of the industrial sector, "it means that the economy is running on two engines".

Item 3: Corporate profits. This is the ultimate barometer of how well an economy is running. Prakash estimates that 90 per cent of corporates are outperforming market expectations. To him this is a huge endorsement to the strength of the economy because "the market is a hard task master, continually pushing corporates to sustain performance growth", which they are clearly doing.

Item 4: Unprecedented levels of liquidity in private equity, venture capital and real estate funds. These sources are likely to provide the market with greater depth in the near future through IPOs and other market entries. "These guys are flush with funds and are hungry for projects", says Prakash, implying that successful medium-sized ventures will not struggle for capital. Implying also that India will not always be about Tata and Reliance and the rest of the old brigade.

It all seems to imply that India will always be going up in my lifetime? I asked Prakash. "Actually, I think the market is due for a correction perhaps 600 to 800 points," he says, surprising me a bit amidst all the other positives.

"However, whatever the dip, rises of over 15 per cent to 20 per cent over two years should be expected. In other words, in this environment dips are opportunities. At every dip, investors should be advised to buy," Prakash adds in restoring the confidence.

To underline that confidence, Prakash concludes with a flurry, "There is no better asset available in the world than Indian equities. Whoever you are, you should be holding some Indian equities".

Checking his confidence level with a query, "What about Chinese equities?" I am shot down by a flurry, "India has many edges over China, including: greater transparency; a legal framework that has credibility on the world stage; a high level of corporate governance; and a beneficial tax regime".

The writer is managing director of Mondial (Dubai) LLC.