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 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 »
If you’re an emerging market and there’s a geoeconomic grouping you’re looking for, you’ve got a few to choose from. In Asia there is Asean - ten countries in search of common ground. In Latin America there is Mercosur - five countries in search of common tariffs. And from the Atlantic west to the Black Sea there is Asia-Pacific Economic Co-operation – four adjectives in search of a noun.
But none of these has the distinction of having been a marketing campaign by Goldman Sachs got out of control. The Brics nations, apparently noticing a small clearing in the densely-thicketed field of international relations, seized on the designation to set up their own diplomatic process. The sixth leaders’ summit will take place next week in Fortaleza, Brazil, with the host nation hopefully performing better than at its other major international gathering.
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 »
Two out of the four BRIC economies of Brazil, Russia, India and China face severe labour shortages as soon as 2020.
“Many emerging markets are reaching the final phase of their demographic peak,” say the authors of a report by Boston Consulting Group which quantifies the extent of potential labour shortages and surpluses globally over the next 16 years.
The danger of a declining work force is well recognised in China, which is already suffering the impact of the one-child-per-family policy, in effect since 1979. BCG estimates that China’s surplus of about 65m workers in 2020 could turn into a shortage of up to 24.5m people by 2030. Recent proposals to ease the one-child policy, if implemented, would have only a limited impact, since children born now would not enter the workforce until after 2030. 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 »
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 »
By Michael Power of Investec Asset Management
MSCI has moved in mysterious ways, its wonders to perform… and again left Chinese stocks out of its global benchmark indices. At the same time, we learn that, after three years in index limbo, it will not add South Korea and Taiwan to the family of developed markets. These decisions have happened despite the fact that all three nations are among the world’s top 25 economies: China at number 2, Korea at 15 and Taiwan at 25. 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 »
Even before the Bharatiya Janata Party (BJP) published its election manifesto and before India’s new prime minister, Narendra Modi, set out his plans for the country, there was something different about the winning campaign.
The 63 year-old candidate revolutionised electioneering in India which, until then, had relied on billboards, handouts and door-to-door appeals. Suddenly, a leading politician was active on social media, reaching out to the diaspora through Google Hangout sessions and reaching the far corners of the country with video links and holograms (pictured). Now, Modi plans to change his administration in much the same way. Continue reading »
The young assistants in the tiny store by the FT Mumbai bureau are exemplary shopkeepers. They have everything for those who ask – including imported chocolate for the homesick – even if it’s hidden in some dusty corner. They’ll deliver the odd item to your door and allow you to pay later if you don’t have cash. Sometimes they offer you the latest cricket score at no extra cost.
The great Indian bazaar has come under threat from organised retail and online shopping in recent years. But how might Narendra Modi, India’s new pro-business prime minister, shake up the retail industry while trying to spur manufacturing, consumer spending and overall economic expansion? Continue reading »