Tagged #India

17/05/2014

India Inc Cheers Modi, Says Victory to Revive Growth

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Indian corporate houses and industry associations said on Friday that the Narendra Modi led Bharatiya Janata Party and its allies have won a decisive victory, enough to give the new government a free hand to formulate industry-friendly strategies and bring the country back on a high growth trajectory. 

"The outcome of the General Elections reaffirms India's vibrant and dynamic democracy and would greatly help to revive growth and investor sentiments," said Ajay Shriram, President, of the Confederation of Indian Industry (CII). "The economic reforms agenda can be taken forward with a stable political dispensation and a multidimensional tool-box of policy instruments is required to kick-start growth."

He said that with prudent macroeconomic management, the economy could recover to 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14. "Continued reforms could take GDP growth rate to 8% level in three years," he added.

Although the country's GDP grew at an average of 7.9 per cent between 2004-05 and 2012-2013, when the Congress-led UPA government had been in power, growth tapered to 4.5 per cent in 2012-13, and an estimated 4.9 per cent in 2013-14, as investments dropped, the infrastructure sector came to a standstill and bureaucrats grew wary of taking crucial decisions. The industry is hoping that this gets rectified, and positive sentiments drove the stock markets, taking the Sensex to an all time intra-day high of 25,000 on Friday.

"Congratulations, Shri Modi for your remarkable rise," tweeted Anand Mahindra, Chairman of the Mahindra Group. "India's impatience to rise has put you on top. May you fulfill these great expectations."

Biocon Chairperson Kiran Mazumdar Shaw said that Modi had "outperformed all electoral forecasts, and he will outperform" as India's 14th Prime Minister. "The country is entering a golden era of change," she added.

"We congratulate the winning party and look forward to partnering with the new government," said TV Narendran, Managing Director, India and South East Asia, Tata Steel. "We look forward to clarity on policy going forward and a commitment to strong action that will help the steel and mining industry to play its part with the government in enabling India's overall all - round growth." The mining sector, especially coal, had been passing through a difficult phase, riddled by scams, environmental hurdles and slipping production.

The industry wants a CEO for the country, just as a corporate needs a leader who can deliver. "India needs a CEO as a Prime Minister that Modi represents," said Bundeep Singh Rangar, Chairman of London-based consulting firm IndusView. "Modi has captured the Indian vote by combining charisma and clearly pronounced policies and successfully tapped into an anti-incumbency sentiment."

Capital investment contributes nearly 35 per cent to India's $1.8 trillion economy, but it barely grew in the fiscal year that ended in March as delays in clearances from various ministries and funding issues grounded many major projects.

Rangar said that Indian leaders had targeted $1 trillion in infrastructure investment over five years to close gaps preventing growth in manufacturing but policies still inhibited foreign investment. Growth in Asia's third-largest economy has almost halved to below 5 per cent in the past two years on weak investment and consumer demand, the worst slowdown since the 1980s. India ranked a poor 134 out of 189 countries as a place to invest and start a business.

Read more at: http://indiatoday.intoday.in/story/india-inc-hails-modi-victory-looks-for-bold-reforms/1/362110.html

16/05/2014

New Indian Modi BJP Government to Boost Foreign Investor Sentiment

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IndusView, Friday 16 May 2014 (London): India is about to get a new government with the final vote to be unveiled today, with investors expecting measures for revival of the economy, business-friendly policies and good governance from the new government. 

A number of exit polls are suggesting that the nationalist Bharatiya Janata Party (BJP) leader Narendra Modi, the leader of India's main opposition party, is poised to win a landslide majority a majority of seats as the ruling Congress party concedes a historic defeat. It would be the first time in 30 years that a single party has a clear majority in India.

The rupee rose by eight paise to its 10-month high of 59.96 against the dollar in early trade at the Interbank Foreign Exchange market.

In its election manifesto, the BJP said it would welcome foreign direct investment in all sectors that create local jobs, except for supermarkets, a setback to global chains such as Wal-Mart Stores Inc and Carrefour.

“India needs a Chief Executive Officer as a Prime Minister that Modi represents,” said Bundeep Singh Rangar, Chairman of London-based consulting firm IndusView. “Modi has captured the Indian vote by combining charisma and clearly pronounced policies and successfully tapped into an anti-incumbency sentiment.”

Capital investment contributes nearly 35% to India's $1.8 trillion economy, but it barely grew in the fiscal year that ended in March as delays in clearances from various ministries and funding issues grounded many major projects.

Indian leaders had targeted $1 trillion in infrastructure investment over five years to close gaps preventing growth in manufacturing but policies still inhibited foreign investment.

Growth in Asia's third-largest economy has almost halved to below 5% in the past two years on weak investment and consumer demand, the worst slowdown since the 1980s. India ranked a poor 134 out of 189 countries as a place to invest and start a business.

India's current tax base represents fewer than 35 million, or a dismal 3% of its population. That contrast the size of its middle class estimated to be 250 million people that’s expected to reach 600 million by 2030.

"The more integrated India is into global markets and into the economic architecture of Asia, the more India’s economy will grow and benefit the entire global economic system," said Rangar. “Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.”

India will get tougher on territorial disputes with China and in its old rivalry with Pakistan if opposition leader Narendra Modi becomes the prime minister. Modi, a Hindu nationalist who is the front-runner to win the five-week election starting on April 7, has taken an aggressive tone against the two neighboring nations. On the campaign trail, he has warned Beijing to shed its "mindset of expansionism" and in the past he has railed against Pakistan, an Islamic state, for attacks by Muslim militants in India.

India has fought three wars with Pakistan and had a 1962 border skirmish with China. It came close to a fourth war with Pakistan in 2001 but since then, its foreign policy has been mostly benign.

However, Modi’s supporters counter that he offers a vision of prosperity for India, given that he engineered a remarkable economic renaissance in Gujarat, a program that included billions of dollars in investment by foreign companies and economic growth that exceeded the national rate.

The party has promised to set up a Price Stabilisation Fund to check inflation, ensure fiscal discipline and pursue banking sector reforms to deal with the problem of rising bad loans.

With regard to the agriculture sector, the manifesto promises to create a single 'National Agriculture Market' and increase public investment in the farm sector.

Prime Minister Manmohan Singh has already said he will step down after the elections and the Congress is being led by Rahul Gandhi, the latest member of the influential Nehru-Gandhi dynasty.

The election began on 7 April and has been held in nine phases for security and logistical reasons. With 814 million eligible voters, it is the largest democratic election in history.

 

29/08/2013

Measures Taken To Stem Rupee Fall

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IndusView, Thursday 29 August 2013 (London): The Indian government is taking steps to stem the fall of the rupee, which has lost about 20% of its value this year.

The Indian government has approved infrastructure projects worth $28.4 billion to revive the economy and boost the falling rupee. Finance Minister P Chidambaram said 36 stalled projects in oil, gas, power, road and railways sectors were cleared. The Reserve Bank of India (RBI) also unveiled plans to bolster the currency by lending dollars to state-backed oil groups. The central bank said it would use swap agreements to sell dollars to three companies, Indian Oil, Bharat Petroleum and Hindustan Petroleum, as part of a plan to fund oil imports.

A number of Indian banks have started increasing interest rates on non-resident Indian (NRI) fixed deposits with long-term maturities to attract foreign currency. Federal Bank, Axis Bank and IDBI Bank have joined Karnataka Bank and Dena Bank, who have already raised their rates for non-residence external (NRE) fixed deposits following the liberalisation of the same by the RBI.

"India’s secret weapon is its 25 million strong overseas diaspora who sent twice as much money into India last year than FDI and FII combined,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "$70 billion in annual remittances by Non-Resident Indians (NRIs) provides India with a distinct advantage over other BRIC economies, which is expected to increase to about $80 billion this year with the rupee depreciation.”

India’s dependence on foreign capital is also high and has risen sharply. The current-account deficit soared to almost 7% of GDP at the end of 2012, although it is expected to be 4% to 5% this year. External borrowing has not risen by much relative to GDP—the ratio stands at 21% today—but debt has become more short-term, and therefore riskier.

"A cheaper rupee will also encourage exports and discourage imports,” said Rangar. "If investment and exports begin to surge again, business confidence will return; that’s when the rupee will strengthen.”

The rupee has lost about 20% of its value this year and is one of the world's worst performing currencies. India's currency has also been hurt by a range of other factors, not least the country's burgeoning current account deficit.

"The government needs to be more proactive,” added Rangar. "So far, all the actions taken have been to contain a crisis and not to prevent it”

India's current account deficit, which stood at 4.9% of the GDP in calendar year 2013, was the third highest in the world in terms of absolute numbers. At $98 billion, India's current account deficit in absolute numbers stood behind only the US ($473 billion) and the UK ($106 billion).

"A widening deficit not only puts a strain on the nation's foreign exchange reserves and but also indicates that it may need to borrow more money,” said Rangar. "That has triggered fears that India may not be able to trim its deficit.”

India imports almost 80% of its oil and there are concerns the higher prices will lead to higher inflation and a worsening of India's deficit.

The Wholesale Price Index, India's most closely watched inflation gauge, dropped to 4.7% in May on an annual basis, down nearly two-tenths of a percentage point from its 4.89% level in April. The broadly based wholesale price inflation reading, the lowest since late 2009, was well below market forecasts of a 4.9% rise.

A slowdown in India's growth rate - which has hit its lowest level in a decade - has also hurt investor confidence. International investors have withdrawn nearly $12 billion in shares and debt from India's markets since the beginning of June.

India's economic growth rate slipped to a decade low of 5% in 2012-2013 on account of poor performance of farm, manufacturing and mining sectors. It is projected to rise to 5.7% in the 2013 fiscal year and firm to 6.5% and 6.7% in 2014 and 2015, respectively.

Policymakers have consistently struggled to come up with steps that can convince markets they can stabilize the rupee and attract funds into the country despite extraordinary measures last month by the central bank to drain liquidity and action to curb gold imports and cut India's huge oil import bill.