By Akshay Mathur, Gateway House: Indian Council on Global Relations
The New Development Bank launched this week in Brazil by the leaders of the Brics countries – Brazil, Russia, India, China and South Africa – is to boost infrastructure and sustainable development projects through loans, guarantees, credits and equity investments.
But the bank’s establishment also enhances another key geoeconomic ambition of the Brics: to conduct more trade in local currencies, thereby diluting the dominance of the US dollar. Already, there is plenty of evidence to underscore the vitality of this ambition. Continue reading »
As the monsoon rains lash down on the streets of Mumbai, traffic has slowed to a crawl. Just last week, India’s trademark black and yellow taxis would speed down Marine Drive, the city’s seaside boulevard, but now the road is clogged as a jumble of jalopies and private cars trundle past potholes brimming with water.
Just the opposite is true of India’s car market: sales have started to accelerate. In the month of June, total car sales jumped 14.76 per cent year-on-year to 160,232 units, according to data from the Society of Indian Automobile Manufacturers (SIAM) published earlier this month.
While the evidence is too fragmented to make a compelling case for a sustainable upturn in car sales, some analysts are optimistic. The thumping triumph of Narendra Modi, prime minister, in May’s national election – which has also sparked an impressive stock market rally – may be helping to infuse consumers with a sense of wellbeing, analysts said. Continue reading »
By Manjeet Kripalani, Indian Council on Global Relations
When Narendra Modi, prime minister, meets the leaders of the BRICS nations in Fortaleza in Brazil this week, the main topic of discussion will be the mandate of the BRICS development bank – and its location.
Shanghai, and more recently Delhi and Johannesburg have thrown their names into the ring of cities vying to host the bank’s headquarters. But China is a closed state and has ambitions to dominate BRICS. Johannesburg is too small, a fledgling in the world of finance.
The most appropriate and natural choice for locating the bank is Mumbai. There are several reasons why. Continue reading »
By Nishesh Dalal, KPMG India
With the new Indian leadership focused on accelerating economic growth and with business confidence at a high, some of niche industries are set to receive the much needed impetus to propel growth. One such industrial segment that is gradually enhancing its growth potential is the huge but relatively unheralded dairy sector.
India is the world’s largest milk producer in the world, accounting for over 17 per cent of total production. The Indian dairy market is estimated to be worth $10bn in annual sales, employs over 90m people and provides an important source of nutrition. Continue reading »
Arun Jaitley, India’s finance minister, unveiled a maiden budget on Thursday which failed to excite stock market investors but made several pledges for reform which – if they are implemented – may coax future efficiencies out of an economy burdened by red-tape, corruption and opacity.
The budget outlined plans to raise foreign investment limits in defence and insurance, overhaul India’s US$43bn subsidy regime, and simplify its archaic tax system to make it more transparent and bolster revenue growth. That, the government expects, will help raise growth from last year’s level of about 4.6 per cent.
However, investors did not get the “big bang” reforms that many were expecting, sending the benchmark Nifty equities index down 0.2 per cent in the day to 7,567.75. Nevertheless, there was much in Jaitley’s budget to suggest optimism. Continue reading »
By Sanjeev Prasad, Kotak Institutional Equities
India’s budget – to be unveiled on Thursday – is seen as potentially the most revealing indication so far of the priorities and policies of the new administration of Narendra Modi, the prime minister.
There are high expectations among citizens, industry and investors on what the new budget for the 2015 financial year – which started in March this year – will hold. However, in the short term it may be pragmatism rather than vision that wins the day, given India’s weak fiscal position and economic growth.
Looking toward the medium term, policy announcements in several areas including fiscal consolidation, housing, inflation management and investment (including foreign direct investment and manufacturing) are more likely
Continue reading »
By Sunil Sanghai of HSBC
The days of hot and smart money are over. An increasing number of long-term foreign investors are betting heavily on a bright future for India. They were already doing so before the decisive election result in May and we expect this momentum to grow and grow.
Around this time last year, India’s economy seemed to be in a state of flux. The rupee was at an all-time low, inflation was stubbornly high and the equity market was shackled. Foreign institutional investors often looked confused, sucking hot money out of the markets one day only to pour it back the next. Continue reading »
Many Indian customs are surprising to outsiders – standing to sing the national anthem before any screening at any cinema, for example, or the halwa ceremony that precedes the unveiling of the national budget. The gelatinous, ghee-based dessert was prepared in New Delhi and distributed this week among government employees who have begun printing the most significant document of India’s economic year and will be isolated from their families and other outsiders until it is unveiled on July 10. A little ‘sweet dish’ is the least the government can offer the 100 officials involved in putting the budget together.
That may, however, be one of the only sugary sweet elements in the government’s first budget since Narendra Modi, India’s new prime minister, was voted in with a strong mandate – leaving him with no excuse not to fulfil his campaign promises of reviving growth and embarking on fiscal consolidation. Continue reading »
India’s richest man, Mukesh Ambani, is used to dealing with troublesome allegations – the anti-corruption Aam Aadmi Party (AAP) has certainly provided him with lots of practice in the last few months.
But accusations from the Comptroller and Auditor General (CAG) over Reliance Industries’ telecoms business do sound a red alert, given that the sector is just recovering from a scandal over 2G spectrum allocations from 2008. Continue reading »
As Narendra Modi, India’s new prime minister, grapples with slowing growth, weak output and rising inflation, he will pay particular attention to one company whose performance has a bearing on all those issues: Coal India, the public sector behemoth that mines 80 per cent of the country’s coal.
That in itself presents a big challenge. For Coal India is not performing well. It has missed production targets in five of the last eight months and output has grown at less than 2 per cent annually over the past four years. Continue reading »
As the pro-business Narendra Modi comes to power in New Delhi with a powerful popular mandate, investors are hoping for an economic turnaround and some hard-hitting policy reforms.
So there was plenty of interest when the Reserve Bank of India (RBI), the central bank, released its half-yearly financial stability report late on Thursday. Its conclusions are not all rosy for Asia’s third largest economy. Continue reading »
The inaugural budget of Prime Minister Narendra Modi – scheduled for next month – is set to be scrutinised for signals on policy priorities to revive Asia’s third largest economy.
A series of moves in recent days are yielding clues as to Modi’s evolving agenda and the possible content of the budget. Here are some potentially revealing tea leaves. Continue reading »
All eyes are on China’s Alibaba, the e-commerce behemoth, and its planned US listing – not least from neighbouring India.
Senior management at Snapdeal, the online marketplace backed by eBay, are watching the initial public offering (IPO) closely as they mull a similar listing themselves. Co-founder, Kunal Bahl, told beyondbrics that the company could launch an IPO in 18 to 24 months’ time. Continue reading »
At the Bharat Forge factory in Pune, vast hangars are filled with huge machines heating and shaping metal. But there are very few workers around – perhaps a good thing given the sweltering heat.
A population of over 1.2bn supposedly gives India a ‘demographic dividend’ but at the country’s biggest manufacturer and exporter of automotive components, the talk is of a shift to high tech manufacturing rather than labour intensive processes. Continue reading »
The violence in Iraq has put the nation’s oil exports at risk, prompting a rise in global oil prices.
For India, which relies on imports for over 75 per cent of its oil and gas needs, that could spell trouble – especially as a new government takes over in New Delhi, eager to control India’s fiscal and current account deficits while maintaining popular support. Continue reading »