India’s current account crisis weakens Rupee
India’s high import demand for petroleum (which is nearly price inelastic) and gold (driven by a shortage of investible asset classes in a high inflation environment) are primarily responsible for India’s burgeoning import bill. In fact, adjusting for India’s imports of Petroleum products and Gold would turn India’s current account deficit (CAD) into a hefty current account surplus.
Things Look Gloomy for FY 2013 – Despite a large merchandise import bill, Read more
S&P Downgrades Outlook on India to Negative
S&P has maintained India’s sovereign rating at BBB- but the outlook has been revised downward to ‘negative’. This action is based on factors that are already widely known. Importantly, at this stage it is just an outlook change and not a ratings downgrade. To that extent, it is more of a warning of increasing vulnerabilities of the country. Nonetheless, the action can impact Indian Rupee in the near term, which is already under pressure and perhaps raise external borrowing costs for some of the corporate. However, the silver lining could be that this action could exert pressure on the government to act on fiscal front (possibly by raising the diesel prices etc) as well as on policy front. Read more
Historical Indian Repo / Reverse Repo Rates vs Inflation Vs CRR
We’d like to share with you a chart that shows the Key Interest Rates in India – Repo Rate, Reverse Repo Rate, CRR and Inflation indicators WPI and CPI.
What is Repo Rate – The RBI’s lending rate or liquidity injection rate is the only ‘independently varying’ policy rate.
What is Reverse Repo Rate ? This is the liquidity absorption rate and is pegged at 100bps below the repo rate to
help improve monetary transmission.
CRR – Cash reserve Ratio – Proportion of deposits required to be held in cash by banks with the RBI.
The Following Chart Shows Read more
India’s New Reality – Oil $120+ Inflation + Poor Infrastructure + Monetary Policy
Oil price risk, India’s perennial weakness, has risen in recent months. While production and shipment risks from Iran and several African countries have impacted the supply side outlook, improved growth prospects in the US and substantial liquidity support from G-3 central banks have helped shore up demand as well, consequently pushing up global crude oil prices by 12% from the beginning of the year.
The risks of higher global oil prices translate to i) inflation and growth ii) current account deficit and rupee and iii) fiscal position of the government with special emphasis on fuel subsidies. Read more
Fraudulent ATM withdrawals while ATM Cards Safely With Owners – Unsolved
The RBI Ombudsman Manual of 2010-11 discusses an interesting case of Fraudulent ATM withdrawals while ATM Cards are Safely in the Hands of Owners and they have not disclosed any PIN. This is for not just one or two customers but around 100 customers siphoned this way.
A series of complaints were received against a few banks alleging unauthorized debits in complainants’ accounts as a result of fraudulent withdrawals through ATMs. Considering the volume, value, timing Read more
Indian Politicians + Bureaucrats Let Growth Opportunities Down the Drain
As we lay to rest the problems in Eurozone, of course temporarily, we would like to give more detail and colour on Political Deadlock in Delhi and how it is hurting the Indian economy.
How much ever FM Pranab Mukherjee may try to shield his Government in the Press, the Fact is policymaking mechanism in Delhi has now remained jammed for more than a year. There is political infighting within both the main political parties in New Delhi. Hence trust is in short Read more
SEBI Consent Order – Is Reliance Mukesh Ambani Guilty of Insider Trading above Indian laws ?
Whistleblower of the SEBI Consent Order Scam and Corruption at High Places, K Abraham former Board Member of SEBI in his letter to the Prime Minister of India has openly said that SEBI Chairman is pressurizing to settle Mukesh Ambani’s Reliance Insider Trading Case for peanuts. Reliance Mukesh Ambani has profited Rs 500 Cr in Reliance Shares Insider Trading and is liable to fine of Rs 1500 Cr. Read more
SEBI Consent Order Scam Cause Loss of Rs 40,000-50,000 Crore to Government
Politicians and Bureaucrats along with unethical Business Houses including Foreign Investors, Banks, Stock brokers, etc mostly from Dalal Street together have caused a revenue loss of Rs 40,000 Crore to Rs 50,000 Crore to the Government of India since 2002 by means of Consent Orders passed by SEBI.
What is a Consent Order ?
SEBI is a regulator for Stock Market and related entities. It investigates the wrongdoings and fines the culprits. The Culprits without Read more
Industrialization, Innovation by Inclusion – State Government of Gujarat
Gujarat doesn’t need endorsement from Ratan Tata or Mukesh Ambani for Business. The most dynamic ruler in India, Narendra Modi has set an example of Industrialization & Innovation by Inclusion. We present to you some of the facts of the state of Gujarat.
Growing at 2-2.5% higher than all-India average with 20% higher per capita income, Gujarat has chalked out a two pronged strategy for the next phase of its growth boom – Capitalize on its existing strength of industry and entrepreneurship; and Achieve new breakthroughs in agriculture and services sectors.
Industrial Growth
It was possible because of facilitating role played by Read more
US Fed Admits to Weakness – Too late ?
The Fed admitted to its incorrect assessment of the US economy yesterday by highlighting that – the recent weakness in economic activity was reflective of structural weaknesses rather than temporary dynamics (i.e. impact of high commodity prices and events in Japan) and labour market conditions as well as housing markets conditions remain depressed.
In line with its assessment of structural weakness in the US economy, the Fed declared a policy stance Read more