Tagged #India

Today

India to Become Single Market and Outperform Global Markets

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More than six decades after it achieved independence, India has yet to have a single internal market, with its economy divided up by state taxes on commerce. 

That may be about to change, following the reversal by one of the biggest foes of a national sales tax—Narendra Modi, the Prime Minister who took office in May 2014. After opposing a goods and services tax (GST) during his 12 years running Gujarat, Modi has pulled his ruling party behind the idea and plans to enact it within eight months. 

Success would mean replacing more than a dozen types of tax that increase incentives for corruption, and offer the economy a boost of as much as 1.7%, according to the National Council of Applied Economic Research in New Delhi. 

Here are the reasons why India will outperform global markets in long term:

Foreign Institutional Investors (FIIs) have already poured in $26 billion in equities:

FIIs have been raising their ownership steadily in the Indian markets so far in the year 2014. They have already poured a little over $26 billion so far in the year, on account of the reforms agenda of the new government at the Centre.

Foreign institutional investors, which have been the primary contributor to the massive rally, increased their ownership in top Nifty-50 stocks in the June quarter, ICICI Securities said in a report.

Macro showing signs of improvement: 

Sentiment on domestic economic activity appears to be reviving, with incoming data suggesting a firming up of industrial growth and exports. The June round of the Reserve Bank's industrial outlook survey also points to improvement in business expectations in Q2.

India Ratings & Research (Ind-Ra) has revised its FY15 gross domestic product (GDP) growth forecast to 5.7% from 5.6% (April 2014 forecast). Even though the Union Budget FY15 has addressed certain supply-side issues plaguing the economy, they believe a single budget or one year's policy reforms are not enough to ensure a non-inflationary, sustained and higher economic growth. 

The rating firm also expects industrial GDP growth in FY15 to improve to 5.1%. If achieved, it will be the highest since FY12 (7.8%). The Index of Industrial Production (IIP) grew 4% over April-May 2014. The Index of Eight Core Industries grew 4.6% during Q1 FY15. Although it is still early to call it a trend, we believe this could be the beginning of a broad-based industrial recovery. 

Continuation of policy reforms by the new government: 

There will not be many global triggers for the Indian markets, but much of the action will revolve around policy action by the newly appointed Modi-led government.

Earlier this week the Union Cabinet allowed foreign investment in the Railways for the first time and raised limit for such investment in the defense sector, a step in right direction, say analysts.       

India has definitely a very bright future ahead…

15/08/2014

Happy Independence Day!

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The Independence Day of India, celebrated on 15 August, is a holiday commemorating India's independence from the British rule and its birth as a sovereign nation on 15 August 1947.

India achieved independence following the Indian independence movement noted for largely peaceful nonviolent resistance and civil disobedience led by the Indian National Congress.

The independence coincided with the partition of India wherein the British Indian Empire was divided along religious lines into two new states—Dominion of India (later Republic of India) and Dominion of Pakistan (later Islamic Republic of Pakistan).

The Independence Day is a national holiday in India. The flagship event takes place in Delhi where the Prime Minister hoists the national flag at the Red Fort, followed by a nationally broadcast speech from its ramparts.

The day is observed all over India with flag-hoisting ceremonies, parades and cultural events. Citizens rejoice the day by displaying the national flag on their attire, household accessories, vehicles; varied activities such as kite flying, bonding with family and friends, and enjoying patriotic songs and films are seen.

 

05/08/2014

India Overtakes Japan as World’s Third Largest Economy

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India has displaced Japan to become the world's third biggest economy in terms of purchasing power parity (PPP), according to the World Bank.

The 2011 round of the bank's International Comparison Program (ICP), a United Nations program in tandem with the World Bank, ranked India after the US and China. The last survey in 2005 had placed the country on 10th place.

PPP is used to compare economies and incomes of people by adjusting for differences in prices in different countries to make a meaningful comparison.

India's share in World GDP (Gross Domestic Product) in terms of PPP was 6.4% in 2011 compared with China's 14.9% and the US' 17.1%, the latest ICP showed. The survey covered 199 economies.

Despite high inflation in India in recent years, prices in the country are still well below those in advanced economies, explaining the higher raking for India on the PPP measure. But according to the International Monetary Fund (IMF), India's economy is 12th largest and only about a third of Japan's in terms of absolute unadjusted dollars.

PPP is particularly important in the study of poverty levels and quality of life across countries as it adjusts for price changes across national economies. PPP, for example, is used by the World Bank in its poverty threshold of $1.25 per day per person. Given that a dollar can buy more in some countries and less in others, PPP-based comparative analyses allow for comparisons between economies. India’s GDP per captia in PPP terms still ranks the country 127 out 199 — a reminder that the country has much to do in combating poverty.

In terms of FDI, China’s rose last year by 5.3%, to a whopping $117.6 billion, albeit at slower rates of increase than previously attained. India’s, while smaller at some $28 billion, still rose by 17% over the previous year – an increase over three times higher than that of China’s.

The World Bank’s report has been widely featured in the Indian media and is a morale-improving piece of news for a country that has been besieged by high inflation, stagnant growth, corruption, and other economic ills in the past year.

India has the potential to outpace China with new business friendly reforms to come under the new Government - investment into infrastructure is racing ahead at close to 8% growth per annum.