Showing posts with label GDP. Show all posts
Showing posts with label GDP. Show all posts

Saturday, April 27, 2013

B&E Indicators

Agriculture needs serious consideration

Considering the falling contribution of agriculture sector to the country’s GDP, the government initiated measures to push formal lending to marginal and small farmers (who would have otherwise depended on microfinance), starting 2008. While these measures did cause agricultural lending to rise in the initial three years, in 2011 it fell. Over the past three years it is the private sector that has shown higher growth in lending as compared to public sector banks.

Risk factor plays a crucial role in agri-lending

During the past three years, asset quality under agriculture lending has deteriorated at a faster pace than overall asset quality. Apart from various other factors, agriculture credit waiver schemes have contributed in a big way to the rise of NPAs. Experts believe that the waivers are motivating farmers not to clear their debt. Hence, a need to develop a robust credit culture in the sector is felt strongly.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles
 
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Tuesday, March 12, 2013

French Toast to India’s Defence

While Sarkozy and his Aides may claim that The Much Awaited India Visit is more of a Leisure Trip than the Usual Strategic Trip of Premiers, One cannot refute France’s Hawk-Like Attempt to do an Obamanomics as far as Business is Concerned. And India Should Support That, Anyway!

There is a lot in common between US President Barack Obama and the French President Nicolas Sarkozy as far as their state visit to India is concerned. Both of them are apparently at their career’s ebb. While Obama is struggling with approval rating below 50%, and has suffered a major set back in the mid-term election, the case of French premier is no different. Sarkozy’s current popularity rating is at a record low (as per Ifop opinion polls for Journal da Dimanche, Sarkozy has equalled his predecessor Jacques Chirac for the most unpopular president since 1958) and if the latest reports are any indicator, then he is currently embroiled in a potentially career ending corruption scandal. All these after having pushed through the pension reform in the teeth of furious street opposition – much akin to his American counterpart who managed to push through his signature healthcare bill ObamaCare. And of course, both Obama and Sarkozy are dear friends. By design or by default, India happens to be their soul searching destination amidst all the trying circumstances back home. ‘Soul-searching destination’ only for the layman; the fact is that in a hyper-competitive and economically integrated world, neither the US nor France would like to miss out on opportunities of profiting that India has to offer – a whopping $112 billion (India’s budget for military procurement) over the next 6 years.

The economic environments prevailing in both the countries make the respective state visit to India all the more important. The national debt of France is projected to be equal to 84.2% of its GDP (the French GDP is approximately $2.55 trillion) and its industrial production is already in the negative terrain, unemployment is currently pegged at 9.8% – these statistic coupled with the fact that Sarkozy would like to get himself re-elected in 2012 and be in command of the Élysée Palace (much like Barack Obama would like to remain in total control of the White House post 2012 presidential elections) make it all the more imperative for the unpopular Sarkozy to attempt to re-brand his government. What better an opportunity than India (Chindia, if we’re permitted – as per Chinese President Hu Jintao’s recent visit to France wherein contracts worth $20 billion were signed, it is but apparent that both the countries have buried the hatchet and have definitely patched up their erstwhile strained relations) which aims to increase its defence budget from 2% to 3% of GDP, and thereby grab a pie of this huge investment and present it to the almost moribund French industrial sector.

Read  more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Friday, February 08, 2013

EURO: IMPACT OF SOVEREIGN DEBT CRISIS

The ongoing sovereign debt crisis has revealed major cracks in the foundation of the euro. Though EU has suggested an amicable solution, it’s definitely not going to work. B&E gets questions answered by the European Central Bank and other experts by Manish K Pandey

It’s not as if the EU, or Jean-Claude Trichet don’t realise this. In fact, with regards to fiscal policies, ECB has already called for decisive actions by governments to achieve a lasting and credible consolidation of public finances. Jean-Claude Trichet, President, ECB, mentions, “Of course, it also calls for responsible attitudes as regards the three major areas, namely fiscal policies, which are a national responsibility, structural reforms, which are also very largely a national responsibility, and, although this is an oversimplification, the appropriate monitoring of unit labour costs.”

When Economic and Monetary Union (EMU) of EU adopted euro as its sole legal tender on January 1, 1999 the major mistake that it made was that although it integrated currencies of several Euro Zone members, it left their fiscal policies completely uncoordinated. No doubt, there was that convergence criteria which specified that a country could become a member only if its fiscal deficit was less than 3% of its GDP and its public debt was less than 60% of GDP. Seems all fine, but once you entered the EU, it seemed you could throw caution and these rules blithely to the wind – Spain, Portugal and Greece being keynote examples.

In fact, this exact issue was one major reason that forced UK to stay away from the euro. The country had even warned the EU off a colossal mess in the future, were the EU to continue not enforcing the debt/deficit requirement post membership of the nations.

Today, the situation has worsened such that the European Commission is now even proposing to centrally reinforce economic governance in the EU, which means that the member states will have to submit their national budgets to the EU for approval. No doubt, this, to some level can fix the problem. But the fact is that this quite simplistic diktat doesn’t even stand a chance – given the deep egotistic behaviour that member states, led by stalwart France, have shown very evidently in the past, which proves that they would never be ready to surrender their so called national sovereignty. It’s not only the fact that the moment a nation loses control over fiscal decision making, it ceases being a standalone nation, but also about the fact that even if national heads agree to this ‘solution’ (they won’t, but still, if), the taxpayers would throw it out to the dogs.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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Tuesday, December 04, 2012

Where the hell?

Tell us please, where is recession?

On the eve of February 2009, we can’t help but wonder where the hell [or, ‘in heavens’, for those light listeners] is the damn recession we were told to watch out for like crazy by the US, in specific, by the National Bureau of Economic Research [NBER]! The NBER is, according to their own words, “the nation’s leading nonprofit economic research organization; sixteen of the 31 American Nobel Prize winners in Economics and six of the past Chairmen of the President’s Council of Economic Advisers have been researchers at the NBER.” The NBER claims they are “dedicated to promoting a greater understanding of how the economy works.” Allow us to exemplify how well they’ve worked towards the same in the past few quarters.

Before you decide we’re insensible, allow us to clarify. Is the world under a slowdown? Yes. But a recession? Umm... We stuck to the standard seat-of-the-pants thumb rule used by economists for defining recession, which states that a recession ‘happens’ when there persists two quarters running of negative growth [in real GDP] from the previous quarterly figure.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.

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Tuesday, November 06, 2012

Madhya Pradesh CM is trying to win on the development plank

ANIL PANDE says that the Madhya Pradesh CM is trying to win on the development plank. But his critics say that the strategy, if not inclusive, can prove to be worthless

To boost foreign investment, the CM organised a 2-day summit for global investors last year, where 102 MOUs were signed. Under these, foreign capital will flow in areas like power, IT, , food processing, education and health. As many as 550 investors from various countries participated in the summit. Although skeptics have expressed reservation on these proposed projects, works on 38 of them has begun.

Experts believe that if all these projects are implemented, Madhya Pradesh will break into the league of 5 most developed states in the next five years. Already, the state is pegged to become the ‘power capital’. Similarly, there are lofty plans to make the state an educational hub. New investments will boost per capita income in real terms and GDP. In fact, experts believe that the state’s revenue receipts will increase by 250%.

The sector that will benefit the most is power generation. Reliance Energy has inked a deal of Rs.50,000 crore. Jayant Mallaiya, Minister for Industries, believes that power generation is the key to development. He explains, “Our primary aim is to make Madhya Pradesh self-dependent in power. In fact, we believe that in the coming years, we will have surplus power with us. It will also boost the state’s economic development.”

Nevertheless, there is another face of development. Compared to power and food processing sectors, investments are meagre in agriculture. Most of the benefits from investments are likely to be wrested by the upper classes. Sunil, a noted social activist, says: “Foreign Capital will lead to destruction and not construction. Fertile land is being sold to industrialists at throwaway prices.” But CM Chauhan thinks otherwise. He assures that the benefits will trickle down to all classes. He adds, “The only way to eradicate poverty and bring prosperity is through investments. The agriculture sector is heavily burdened and it will be illogical to increase it any further. We need revenues. We are for balanced development. We will give equal priority to agriculture and manufacturing.”


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
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Monday, June 06, 2011

GDP growth seen at 8.2 per cent year/year

The economy is expected to have grown 8.5 per cent in fiscal year 2010/11 that ended in March, just below the 8.6 per cent estimated by the government, and up from 8 per cent a year earlier, the poll showed.

Forecasts for the full fiscal year growth ranged between 8.0 per cent and 8.7 per cent.

FACTORS TO WATCH

Industrial output grew an annual 7.3 per cent in March, smashing forecasts on the back of a revival in capital goods production.

Services sector gained momentum in April, with strong growth in new business orders, a HSBC survey showed early this month. Manufacturing sector maintained its strong rate of expansion in April, helped by higher output and employment, the latest purchasing managers' index ( PMI )) data showed.

While both input and output price indexes fell from the highs seen in March, they remained way above the 50 mark as soaring fuel and raw material prices drove up costs and fed into output prices, a clear indication that high inflation was here to stay.

Inflation eased to 8.66 per cent in April, but upward revisions to past readings and the prospect of higher energy prices will keep pressure on the RBI to raise interest rates in June and maintain its hawkish stance. The Reserve Bank of India (RBI), which has been one of the most aggressive of major central banks in tightening policy, early this month raised rates by a higher-than-forecast 50 basis points and said it was willing to sacrifice a bit of growth to tame inflation.

The RBI has raised its policy rate nine times by a total of 250 basis points since March 2010.

Most economists in a recent poll expect the RBI to raise rates by at least another 75 basis points in 2011.

Monsoon rains, which are vital for boosting farm production and rural incomes in the nation of more than 1.2 billion people, have been forecast to be normal in 2011.

MARKET IMPACT

Bond dealers said a March-quarter GDP growth number of around 8.1-8.3 per cent will have little market impact.

However, they said a number below 8 percent could push yields down by 4 to 5 basis points as the market has been heavily sold in recent sessions, while a number above 8.5 per cent could push up yields by 2 to 3 basis points.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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