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
RBI Must Investigate the Surge in Exports – Possible Black Money Laundering
Kotak Securities known for investigative research on Indian Companies and Economy pin-pointing the wrong doings ir-respective of his stature – Prime Minister or RBI or Mukesh Ambani is commendable, in out opinion.
Kotak Analysts are unable to tally the data of Exports and the sudden surge ahead of the Government signing treaties with various nations to prevent Black Money and Laundering. Here are some of the obvious questions which RBI as banking Regulator must investigate and explain.
Engineering goods exports accounted for 55% of incremental Read more
Top 10 Foreign Exchange Remittances to India
A reader wanted to know the Top 10 Foreign Exchange Remitters to India. According to Data compiled by our analyst, the Middle-Eastern economies together account for 48% of total remittance flows into India. Here is the complete list of Foreign Exchange Remittances in USD Bn by NRIs to India.
- UAE – $14 Bn [Chances are high that Indian Politicians and Other Businessmen Havala Racket is very strong from UAE]
- USA – $12 Bn
- Saudi Arabia – $5Bn
- United Kingdom – $4.5 Bn
- Canada – $3.8 Bn
Decade of Gold for Indians – Investment Rises
India’s traditional love for Gold is well known. Over the last five years the relationship has become even more intense despite the sharp rise in Gold prices. Over the last three years, average annual investment in Gold has been of the order of US$20 bn…higher than that in ULIPs and substantially higher than that in equity linked mutual funds.
Demand is price elastic over the short term. A sharp increase in Gold prices has Read more
India Trade deficit remains in double digits
In June, India’s trade deficit eased a tad to USD 10.5 bn from USD 11.3 bn in May 2010, although higher than the average of ~USD 9 bn over the past 12 months. Thus, Q1FY11 trade deficit has reached ~USD 32 bn, highest on record, excepting the quarter ending September 2008, when it was at ~USD 43 bn on the back of exceptionally high oil prices. Relatively slower growth in exports compared to imports (particularly oil imports) in the first three months of the current fiscal led to widening of the trade deficit. Sharp Read more
Deficit Watch – fiscal improvement + red flag on the current account
India’s current account balance has been subject historically to pronounced seasonality – improving sharply in the second half of each fiscal year (October- March). For FY09/10, however, we were surprised that the seasonal impact did not apply – instead, the current-account deficit actually widened for October 2009-March 2010 (to 3.4% of GDP, from 2.2% of GDP for April-September 2009). There were two main factors responsible; the trade balance was broadly unchanged between the two halves of the fiscal year Read more
Current Fitch Sovereign Rating of India
Here is what Fitch the international rating agency thinks of India. It said,
The Negative Outlook on the Local?Currency IDR reflects the agency’s judgement that the fiscal deterioration in the year to end?March 2009 (FY09) and FY10 has been partly structural in nature, and that India’s public finances are set to stress comparisons with ‘BBB’ peers beyond breaking point. The agency looks for meaningful fiscal consolidation measures to get India’s public finances onto a path consistent with the current ratings. Read more
Indian Rice Export Scam of Rs 2,500 Cr – Courtesy Pranab Mukherjee + KamalNath
If you read the Outlook magazine dated Dec-21st, you will notice that despite objections raised by then Finance Minister Mr. P. Chidambaram and Agriculture, Food and Civil Supplies Minister – Mr. Sharad Pawar, empowered group of ministers headed by Mr. Pranab Mukherjee under the controversial leadership of then Commerce Minister Mr. Kamal Nath pushed for Rs 2,500 cr Rice Export Scam when India itself was facing food inflation and rice shortage. So now you know why prices of food and essential commodities rise 
Read more
Exports may continue to fall through H1 FY10
India’s exports may continue to fall through the first half of FY10, according to the trade secretary on Monday. He also said that exports in March may have fallen by 31%, sixth straight decline in exports.
Exports during the full fiscal 2008-09 would probably reach the downwardly revised figure of $170 billion. However, the next fiscal will bring more pain and the declining trend may not turnaround before the second half of FY10. As a result, there will be flat growth at the best in FY10.
Most of the developing countries have witnessed sharp decline in exports due to deepening recession in Europe and US and resulting decline in consumer spending in these regions.
However, some support for India’s exports has been coming from areas like Latin America and South-east Asia which has prevented even the worst kind of nightmare for most of the export industries.
RBI Forex reference rate for the dollar at Rs 50.52 on Monday
The Reserve Bank of India on Monday fixed the reference rate for the dollar at Rs 50.52, as compared to the previous rate of 50.14 on Friday.
The corresponding exchange rate for the euro was Rs 69.11 (Rs 68.39) and that for the UK pound was 73.5647 (Rs 72.4222).
The reference rate for the Japanese currency was fixed at Rs 52.50 (Rs 52.95) per 100 yen.