Indian Economy - News & Discussion

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Indian Economy - News & Discussion

Post by MehtaRahulC » Tue Oct 03, 2017 1:46 pm

Indian Economy - News & Discussion

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Re: News on Indian Economy (news only)

Post by sbajwa » Tue Oct 03, 2017 2:10 pm

http://www.rediff.com/business/report/c ... 171003.htm

Core sector growth rises to 4.9% in Aug; highest in 5 months

Helped by robust performance of coal, natural gas and electricity, the eight core sectors recorded a five-month high growth rate of 4.9 per cent in August, official data showed on Tuesday.

These eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had witnessed 3.1 per cent expansion in August last year.


The infrastructure growth was 2.6 per cent in the previous month of July. The core sector growth in August is the highest since March, when it grew by 5.2 per cent.

The production of coal, natural gas and electricity rose by 15.3 per cent, 4.2 per cent and 10.3 per cent, according to the official data released on Tuesday.

However crude oil, fertiliser and cement recorded negative growth in the month under review.

The production growth of refinery products and steel slowed down to 2.4 per cent and 3 per cent in August as against 2.5 per cent and 16.7 per cent respectively in the same month last year.

Cumulatively, the eight core sectors in April-August recorded a growth rate of 3 per cent as against 5.4 per cent in the same period a year ago.

Healthy growth in key sectors would have positive implications on the Index of Industrial Production (IIP) as these segments account for about 41 per cent to the total factory output.

Commenting on the data, rating agency ICRA said: "Given the favourable base effect and the expected rebuilding of inventories prior to the festive season, we expect the IIP (index of industrial production) growth to improve in August relative to the initial estimate of 1.2 per cent for July 2017".

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Re: News on Indian Economy (news only)

Post by MehtaRahulC » Tue Oct 03, 2017 2:49 pm

http://indianexpress.com/article/busine ... y-4871829/
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From textiles to I-T: Wave of job losses hits new and old economy
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Textile to capital goods, banking to I-T, start-ups to energy, the economy’s downward spiral is leaving a trail of job losses across both old and new economy sectors. In the near absence of consolidated employment numbers, disaggregated data collated from across these sectors by The Indian Express points to spreading employment distress in a market where fresh hiring opportunities are increasingly limited. Consider:
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In the textiles sector, in the last three financial years, 67 units are reported to have closed down across the country, impacting over 17,600 workers — this is as per official Union Textile Ministry data restricted to just the organised segment of the cotton and man-made fibre textile mills. This excludes the small scale industries (SSI) section of the textile value chain where shutdowns and job losses are reported to be far higher.

Capital goods major major Larsen & Toubro (L&T) laid off about 14,000 employees across businesses during the first two quarters of the fiscal ended March 31, 2017, terming it a “strategic decision.”

During the first quarter of this fiscal, three of the five biggest IT companies that together employed 878,913 people at the end of the June quarter, saw their workforce shrink by over 1800 people. TCS saw its workforce decline by 1,414 people, Infosys Ltd saw a net decline of 1,811 while Tech Mahindra Ltd, reported that its workforce shrunk by 1,713 people. The numbers would have been worse but for Wipro Ltd and HCL Technologies Ltd which reported net additions to their workforce.

HDFC Bank’s total employee headcount came down by 6,096 during the January-March 2017 period – from 90,421 to 84,325. In the preceding October-December 2016 quarter, the headcount was down by 4,581. Other private sector banks are also reported to be cutting down on staff strength.

(see link for whole article)
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http://www.business-standard.com/articl ... 683_1.html
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Govt may sell up to 60% stake in producing oilfields of ONGC, OIL

India is the world's third-largest crude importer, buying 80 per cent of its supplies from overseas

....
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The government is making the decision after failing to draw investment from global oil majors in new fields. The plan would boost India's domestic oil and gas output and would meet Prime Minister Narendra Modi's target to reduce oil imports by 10 percent by 2022. However, the plan could reduce profits of state-owned companies.

India is the world's third-largest crude importer, buying 80 per cent of its supplies from overseas.

The sales plan would affect so-called "nomination blocks" or fields handed to state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd. The fields are located both onshore and offshore, according to the sources.

The Directorate General of Hydrocarbon (DGH), a unit of the oil ministry, has suggested these state companies form joint ventures with private firms including foreign majors that have long eyed these fields, the sources said.
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(see link for whole article)
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http://www.financialexpress.com/market/ ... st/851830/
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India’s fuel demand falls 6.1% in August
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India's fuel demand fell 6.1% in August compared with the same month last year. Sales of gasoline, or petrol, were 0.8% lower from a year earlier at 2.19 million tonnes.
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India’s fuel demand fell 6.1% in August compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 15.75 million tonnes in August, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Tuesday. Sales of gasoline, or petrol, were 0.8% lower from a year earlier at 2.19 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales increased 11.8% to 2.06 million tonnes. Naphtha sales fell 7.6% to 1.06 million tonnes. Sales of bitumen, used for making roads, were up 8.5%. Fuel oil use fell 6.9%. While India’s fuel demand grew by over 1% in ......
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(see link for whole article)
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Re: News on Indian Economy (news only)

Post by MehtaRahulC » Tue Oct 03, 2017 3:07 pm

About land marlet of mumbai - news came in ToI jan-2017
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http://timesofindia.indiatimes.com/city ... s?from=mdr
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Nine landowners control a fifth of Mumbai's habitable area

MUMBAI: Who owns Mumbai, a city where land is scarce and where every square foot of space fetches a huge premium?
A preliminary survey carried out by the Slum Rehabilitation Authority (SRA) last month stumbled upon interesting figures-just nine private land owners and private trusts control around 6,600 acres in Greater Mumbai, whose limits stretch from Colaba to Dahisar in the western suburbs and up to Mulund in the eastern suburbs. The city itself covers an area of approximately 1.07 lakh acres, of which the habitable area is roughly 34,000 acres. So the nine entities own 19.4%-or almost a fifth-of Mumbai's total habitable area.

The SRA, which collated land-holding data from three tehsils in the city-Borivli, Kurla and Andheri-found that roughly 3,000 of these 6,600 acres have been completely encroached upon and occupied by slum dwellers.

The SRA survey was done after the state government warned Mumbai's five biggest land owners that it would acquire their encroached land if they failed to redevelop it under the slum rehab scheme. Under this scheme, plot owners/developers must relocate slum dwellers free of cost on a portion of the land.
In return, the owner receives additional construction rights to utilize the remaining land portion to build luxury housing to be sold in the open market.

--- pls see link for full news
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As per newslink, Godrej trusts alone own over 3400 acres of land in mumbai alone !!! One acre is about 4000 sqmt. So 3400 acre * 4000 = 1,36,00,000 = about 1.36 crore sqmt !!! At throw away price of Rs 200,000 per sqmt, that would be over Rs 272,000 crore i.e. close to Rs 3 lakh crore !!!
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Now this thread is for news only, and so I will not post views here. But you all can run basic maths and get an idea about lands people own
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old dec-2014 news
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http://www.firstpost.com/business/a-tat ... 02200.html
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A Tata Coalgate? 999-yr mine lease at 25p a bigha!
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For a meagre annual rent of around Rs 3,250, Tata Steel has a 999-year lease on a captive coal mine in Jharkhand's Ramgarh district, but the company is allegedly using a part of this coal for commercial sales. The company is also alleged to have avoided royalty payments, but has since agreed to pay up.

The coal mine, spread over a surface area of 13,007 bighas, was given to Tata Steel at a surface rent of 25 paise a bigha (Rs 3,251.75 per annum) in 1946, but even after the Mines and Minerals (Development and Regulation Act) came into force in 1957, the 999-year lease was continued. The understanding was that the coal would be used only for captive purposes for producing iron and steel.

(see link for full news).
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Essentially, Tata got coal mine in 1946 for 999 year lease on which lease was Re 1 PER YEAR PER ACRE !!! Yes, per acre --- no matter how much coal they mine. The condition was --- the coal can be used only for steel mills !!! And no govt took over the mine or demanded more lease till dec-2014 !! I dont know the status now.
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Re: News on Indian Economy (news only)

Post by sbajwa » Tue Oct 03, 2017 3:12 pm

http://www.rediff.com/business/intervie ... 171003.htm

As the government looks for resources to perk up the economy, NITI Aayog vice chairperson Rajiv Kumar tells Indivjal Dhasmana that additional funds could be generated through divestment, and that the fiscal deficit should be widened while focusing on the revenue deficit.

Kumar refuses to call demonetisation and the Goods and Services Tax (GST) disruptive measures, and says these are “remarkable” structural reforms. Excerpts:

The government is not able to propel the economy as its fiscal deficit has already touched 96 per cent of the Budget Estimate in the first five months of the current financial year. Do you think this is a fair assessment?

No, I don’t think so, as government expenditure includes large allocations to ministries which remain unspent.

You always have the first two quarters when revenues are much smaller than expenditure.

This is more so because of advancement of the Budget this year, which has done away with the practice of starting allocations from June.


At least 27 per cent of the expenditure was in the first quarter this time, against the usual 15 per cent, and the big chunk of revenues will come later.

So, this scare which has been caused by the fiscal deficit numbers is quite wrong.

Is it possible for the Centre to stimulate the economy by sticking to the targeted fiscal deficit or should the latter be widened to provide room for a stimulus?

Resource mobilisation could still be made by divestment, on which the NITI Aayog has given a long list, of which 17 have been approved. That could be an additional revenue measure.

Second, my stand always has been that the government should reduce the revenue deficit, not the fiscal deficit. Anyway, the N K Singh committee has recognised that there could be a 0.5-percentage point escape route during structural reforms.

The government must have instruments to counter cyclical situations.

Will the government be able to surpass the target of Rs 72,500 crore it set for divestment, including those from strategic ones, this financial year?

I think so. You’ve already got over Rs 20,000 crore from divestment. Two quarters are still left. A number of companies are in the pipeline, including Air India.

Do you expect Air India’s privatisation this financial year?

That is the target.

The NITI Aayog in its action plan has said underemployment is a bigger problem than economic growth. If so, what should the government do for job creation?

The focus has to be on promoting employment-sensitive sectors. The NITI Aayog has set up a task force on employment and export.

What we have found in our first couple of meetings is that there is much more policy focus on this direction.

Second, there could be a great boost to the low-cost housing sector. The government is already committed to this.

The third would be to look at the National Apprenticeship Promotion Scheme again, to make it more attractive to the rivate sector.

Fourth, the government should take large investment projects on an EPC (engineering, procurement, construction) basis, to crowd in private investments.

Is automation coming in the way of job creation and Make in India?

I don’t like this trade-off. Automation is required to make Indian firms globally competitive. Automation in one industry always makes available job opportunities in others.

When (late prime minister) Rajiv Gandhi brought in computers and laptops in the late 1980s, this (alleged) trade-off was cited.

Your expectations from the Reserve Bank’s monetary policy review, with inflation within the stipulated range and economic growth dwindling?

My wish would be that it would reduce the rates but I expect it would hold these and take a softer policy stance, going forward. There is a difference between my wish and my expectation.

Why is there such a difference?

I think the RBI will hold the rates because it believes food prices are on a rise, petroleum prices, too, and developed economies might tighten their monetary stance.

It does not want outflow of capital.

However, I wish it would cut the rates because I think petroleum prices will not rise any further, the monsoon is over and so we will see food inflation declining, and lower interest rates would help weaken the rupee, always a good thing for India.

With the current account deficit rising at a steep clip, we can arrest it by weakening the rupee. Those are my arguments for lowering rates.

But, there is the other side, too, on which the central bank will base its arguments for holding on to the rates.

The monsoon is below normal this year. Will that affect food prices?

Only four regions had deficient rains, including Vidarbha, parts of Punjab and Haryana. The rest of the country had a normal monsoon. I don’t think that would raise food inflation.

You have said the government should allow foreign direct investment in multi-brand retailing.

I have always said that. I will continue to maintain that.

http://www.rediff.com/business/intervie ... 20.htmWill that not be a difficult political call for a BJP government?

I don’t think so. In any case, that is the existing law and now the states should charge up, as that will create good quality jobs that are needed and modernise the retail sector.

Demonetisation and the Goods and Services Tax (GST) are two disruptions that have taken a toll on economic growth.

I don’t think these are disruptions. These are remarkable structural reforms. These will have a very positive impact on the economy.

How long will their (adverse) impact last?

I think it’s over.

But, August GST collections had slightly dipped, compared to those in July.

In any other country, the collections in August would have been called stable -- Rs 90,669 crore (Rs 906.69 billion) against Rs 94,063 crore (Rs 940.63 billion) in July.

You have been calling for privatisation of banks. But, public sector banks were lauded for providing a cushion to the economy when the global financial crisis had a ripple impact on India.

By retaining 49 per cent of equity, that particular feature would remain with the government.

A senior politician has taken on this government, saying 5.7 per cent economic growth in the first quarter of this financial year means only 3.7 per cent in the older GDP series. Do you agree?

I can’t say this unless the ministry of statistics comes out with back-series GDP figures. There is (currently) no basis for this (criticism). I really can’t comment on this.

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Re: News on Indian Economy (news only)

Post by sbajwa » Tue Oct 03, 2017 3:14 pm

http://www.hindustantimes.com/business- ... LENnL.html

India’s holdings of American govt securities touch $135.7 billion, highest in a year
India is the 12th largest holder of US government securities just behind Saudi Arabia whose exposure stood at USD 142.5 billion at the end of July.


India has sharply increased its exposure to US government securities with holdings worth USD 135.7 billion at the end of July, official data showed.

Neighbouring China continued to top the charts with holding to the tune of USD 1.166 trillion, followed by Japan with exposure worth USD 1.113 trillion.

In recent months, India has increased its purchase of American government securities and the country is the third largest holder among the BRICS group after China and Brazil (USD 271.9 billion).

At the end of July, Russia held securities worth USD 103.1 billion.

According to the latest data from the US treasury department, India’s holding of the securities touched USD 135.7 billion as on July end – also the highest in a year.

There has been a significant jump in the exposure compared to June when it stood at USD 130.3 billion. Since February this year, India’s holding of these securities has been on the rise.
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At the end of January, the exposure was just USD 113.7 billion.

India is the 12th largest holder of US government securities just behind Saudi Arabia whose exposure stood at USD 142.5 billion at the end of July.

Other countries in the top ten are Ireland (USD 310.8 billion) at the third place, followed by Brazil, Cayman Islands (USD 259.2 billion), Switzerland (USD 244.8 billion), United Kingdom (USD 229.7 billion), Luxembourg (USD 213 billion), Hong Kong (USD 199.1 billion) and Taiwan (USD 182.5 billion).

In a recent release, the Treasury department said foreign residents increased their holdings of long term US securities in July and net purchases stood at USD 5.1 billion.

“Foreign residents increased their holdings of US Treasury bills by USD 3.1 billion. Foreign resident holdings of all dollar-denominated short-term US securities and other custody liabilities increased by USD 7.4 billion,” the release said.

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Re: News on Indian Economy (news only)

Post by sbajwa » Tue Oct 03, 2017 3:18 pm

http://indianexpress.com/article/busine ... y-4872929/

Excise duty on petrol, diesel cut by Rs 2 per litre; Govt may suffer Rs 13,000 crore loss
The news comes nearly a week after Icra in its report said Petrol and diesel prices have jumped 8 per cent since daily price revision was implemented in mid-June.

Facing heat from Opposition over high fuel price, the government on Tuesday cut excise duty on petrol, diesel by Rs 2 per litre. “Govt of India has reduced Basic Excise Duty rate on Petrol&Diesel [both branded& unbranded] by Rs 2 per litre w.e.f. Oct 4,” the Finance Ministry tweeted.

Prices of petrol and diesel will be reduced by the amount of duty cut with effect from tomorrow. Petrol currently costs Rs 70.88 per litre in Delhi while a litre of diesel is priced at Rs 59.14, the highest ever. On petrol, the government currently levies excise

On petrol, the government currently levies excise duties totalling Rs 21.48 per litre while that on diesel is Rs 17.33per litre. The government, which had raised duties three years back to take away gains arising from plummeting global oil prices, has been criticised for not cutting excise duty despite a sustained rise in fuel prices since early July. Petrol price has jumped by Rs 7.8 per

Petrol price has jumped by Rs 7.8 per litre since July 4, while diesel rates have touched an all-time high after rates went up by Rs 5.7. “This (excise duty cut) has been done to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on their retail sale prices,” the ministry said in another tweet. The duty reduction will lead to a Rs 13,000 crore loss of revenue to the government during the remaining period of the fiscal.


Only last week, the Icra in its report said petrol and diesel prices have jumped 8 per cent since daily price revision was implemented in mid-June. The ratings agency had warned that a sustained price hike can hit demand growth and create inflationary pressures. The rise in fuel rates can be attributed to a 14 per cent increase in international petrol and diesel prices beside rise in commission paid to petrol pump dealers, the ratings agency said in a report.

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Re: News on Indian Economy (news only)

Post by sbajwa » Tue Oct 03, 2017 3:47 pm

http://economictimes.indiatimes.com/ind ... 913316.cms

What triggers Kachha credit rates falling?
MUMBAI: Interest rates that money lenders charged borrowers hardly budged for decades irrespective of policy decisions. But even that is collapsing faster than what it is in the formal banking system, thanks to the implementation of Goods and Services Tax. Borrowing in the informal market is no more lucrative.

Lenders who fund small traders and merchants have lowered their rates to just a third of what they were charging, but still the demand is not showing up.

This market is known as a platform for lending and borrowing unaccounted or untaxed money without any collateral. Traders now shy away from availing such credit amid cash squeeze triggered by reform measures like Goods and Services Tax, Demonetisation or the country's currency note exchange programme.

Sometimes, people take highly leveraged positions borrowing such money, which a bank would have declined. A garment trader who may be eligible to borrow say, Rs 10 lakh in the absen ..
of creditworthy balance sheet, can take a loan up to Rs 50 lakh due to personal knowledge of businesses, dealers said.

The practice is prevalent mostly in the garment industry in Kolkata, Coimbatore, Tirupur.

In Mumbai's Bhiwandi, a business and trading centre, used to be the hotbed of it. It has died down significantly after the Central Value Added Tax (CENVAT), a central government tax levy introduced by Vajpayee-led National Democratic Alliance, was introduced early part of last decade.

"People are not comfortable to deal with cash now,'' said another trader. some traders used to encourage accounting malpractices as they tried to set off tax liabilities showing fictitious unsold goods (inventory)." ``Even in Coimbatore some traders used to encourage accounting malpractices as they tried to set off tax liabilities showing fictitious unsold goods (inventory)."


While the GST implementation has caused havoc with businesses, some believe that it is helping in formalisation of the economy.

"Clearly, money has started flowing through formal channels instead of those informal ways. This itself is an achievement of certain bold steps taken by the government," said head of treasury of a treasury of a large foreign bank.

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Re: News on Indian Economy (news only)

Post by Hari Seldon » Thu Oct 05, 2017 4:08 pm

http://www.moneycontrol.com/news/india/ ... 05117.html
IT, BPO no longer job creating sectors; focus on renewable and medical technology, says Jayant Sinha

According to United Nations unemployment in India will rise to 18 million in 2018 with automation as the major threat
Finally, someone in GoI addressing employment generation matter-of-factly.
Think service sector, think Information Technology; but don’t look at them for jobs, feels the government, which believes that automation and technology are the new areas that will push jobs in the market.

Jayant Sinha, minister of state, civil aviation, today said that the economy is “going through a paradigm shift” and that there is a lot of innovation happening.

“Right now, we are going through a paradigm shift in the economy… We are going through a fundamental and structural transformation and that’s why the job numbers, which are sort of a traditional way, are really not a good way to understand the jobs of the future…,” he said at the India Economic Summit 2017 organized by World Economic Forum and the Confederation of Indian Industry (CII).

He said that India is moving towards newer ways of employment, like micro-entrepreneurship, and that such technology-driven sectors will create jobs.

“Every time a new economic cycle starts, it’s not the old industries that really power it, it’s the new industry,” said Sinha. “Don’t look at IT services and business process outsourcing (BPO), that industry is maturing. Look at aviation, for example, or renewable energies or medical technology, that’s where the new growth is going to come from”.

Modi government rose to power in 2014 on the pretext of job creation. It has now taken a stand of being a “job enabler” and not a job “creator”.

Sinha said that the government can only enable people to apply for jobs but can’t create direct employment.

Also read: Economic Survey: Employment creation a great challenge

According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), a trade body, Indian labour market sees an addition of approximately 72 lakh people to potential workforce.

Data revealed by Centre for Monitoring Indian Economy, a business information company that produces business and economic database, also showed that potential workforce bloated by 9.7 million people during January to April, 2017 to touch 960 million mark.

It was, however, reported that 1.5 million people lost jobs during this period.

“While the number of persons employed fell by 1.5 million, the number of people who declared themselves unemployed fell much more - by 9.6 million. As a result, the labour force fell by 11 million,” the data said.

A recent study by United Nation’s International Labour Organisation’s study said that “unemployment in India is projected to increase from 17.7 million last year to 17.8 million in 2017 and 18 million next year”.

Unemployment rate has been rising in India and stood at 4.5 percent on October 3, higher from 4.47 percent during September as per BSE data.

A study by World Economic Forum also shows that beyond 2020, world would be looking towards more technologically driven jobs rather than manual tasks.

As per the report, cognitive skills would be required as much as 52 percent for any job by 2025, while manual skills would be reduced to only 31 percent.

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Re: News on Indian Economy (news only)

Post by MehtaRahulC » Fri Oct 06, 2017 3:50 am

Financial Express reports -- Housing sales fall 35% in 8 cities; supply dips 83%
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http://financialexpress.com/industry/ho ... 83/883519/
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Housing sales fall 35% in 8 cities; supply dips 83%
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Housing sales fell by 35 per cent across eight major cities in the July-September quarter this year as demand slowdown continued in the property market, says research firm PropEquity.
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Narendra Modi government eyes booster shot for economy; from relief for taxpayers to selling Air India, here is what is on agendaNarendra Modi government eyes booster shot for economy; from relief for taxpayers to selling Air India, here is what is on agenda
Bad news for property buyers, Haryana yet to set up RERA authorityBad news for property buyers, Haryana yet to set up RERA authority
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Housing sales fell by 35 per cent across eight major cities in the July-September quarter this year as demand slowdown continued in the property market, says research firm PropEquity. Housing sales stood at 22,699 units during third quarter of 2017 in eight major cities as against 34,809 units in the previous quarter. These eight cities are Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai.
“Housing demand (absorption) across key cities dropped by 35 per cent to 22,699 units from 34,809 units due to fewer new projects in the market and the lag effect in the revival of the end user driven demand,” PropEquity said. The demand is expected to pick up from the current quarter, it added. New home launches dipped 83 per cent during July- September period to 4,313 units from 24,900 units in the previous quarter as developers were focusing on compliances with RERA and implementation of GST.
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“This year the festive season has begun early and now we are witnessing the green shoots of recovery in the real estate sector specifically mid and affordable housing,” said Samir Jasuja, founder and CEO, PropEquity said. There is a stable demand for ready-to-move-in & resale properties, he added. With fall of new launches, the unsold inventory dipped by 4 per cent to 4,46,730 units from 4,65,116 units during the period under review. “We expect this festive season to do better than last year as developers are now offering lot of freebies and discounts to clear their earlier stock as well as selectively launching new projects. There is lot of unsold inventory in the market which is nearing completion,” Jasuja said.
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Re: News on Indian Economy (news only)

Post by gunjur » Tue Oct 10, 2017 8:55 am

The conglomerate dilemma: India’s conglomerates need to slim down to reasonable sizes and focus on a few core businesses
India’s big business conglomerates, from the Tatas to the Birlas to the Ambanis and many others, are products of the licence-quota-permit raj. When business opportunities were not open to all comers, when access to capital depended on the blue chip nature of your entrepreneurial parentage, and when multi-point tax structures (both excise and sales tax) were in vogue, it made sense to keep all businesses – whether related or unrelated – in one conglomerate, or even one company.

But that’s no longer the case. Conglomerates have become slow-moving leviathans as they are overloaded with debts, and unrelated businesses keep demanding lots of equity to grow. In a brilliant articulation of the conglomerate dilemma, N Chandrasekaran, chairman of Tata Sons, told a sister publication of this newspaper that the Tata group needs to reduce its complexity. He would rather see the Tatas as focussed on five, six or seven broad businesses, and not as a conglomerate of 110 or 120 companies.

What he said about the Tatas may be equally true of the Birlas, Ruias, GMRs, GVKs or any of the other major business groups, all of which diversified into multiple businesses when the going seemed good, but are now having to downsize, sell or seek new partners.
Put simply, in the age of hyper-competition and economic slowdown, depending on debt for growth is simply not on. One of the key reasons why India Inc is not investing is because it is busy disinvesting, recovering from an excess of diversification and over-investment based on borrowed capital.

Conglomerates face tougher dilemmas in this age because of the sheer diversity of the business portfolios they hold. In the past, their sheer size was an advantage, since that gave investors comfort that their loans or equity investments were safe. But at a time when the Reserve Bank of India is forcing banks to resolve bad debts by seeking recourse to the National Company Law Tribunal, which administers the Insolvency and Bankruptcy Code, this comfort is gone.

Banks will lose money while resolving debts, but so will investors, and this means conglomerates have to downsize and focus in order to restore their old standing with lenders and investors. Even internally, conglomerates face dilemmas that they never did before.
The most important decision a business group has to make is the allocation of capital between different, unrelated businesses in the group. In the case of the Ruias, for example, they had interests in oil refining, steel, telecom, power and many other sectors. They exited telecom well in time to emerge winners from it, but they have had to sell their biggest business – oil – recently to Russia’s Rosneft to reduce group debts. Their steel plant too is being taken to the bankruptcy court.

Elsewhere, GVK had to sell its stake in the Bengaluru airport to achieve the same end, and the Jaiprakash Group had to do the same with its cement assets. The Tatas, despite having no problem raising equity or resources from banks, now have the unenviable talk of writing off their telecom business, which the Tata Sons chief clearly says is now up for divestment.
The problem is simple: when banks lend to you because you are a big group, it means you are putting the entire raft of businesses at stake to get larger and larger loans for cash-hungry pet projects. Vijay Mallya, for example, staked large shares in his very profitable spirits business to invest in Kingfisher, and is now paying the price for it.

A related problem in conglomerates is cross-holdings between group companies. Equity in new ventures has come not from one promoter company, but also from related companies. This means the capital invested by Company A is blocked in Company B, even though Company A has no interest in Company B. If many group companies have invested in a failing business everybody has to take a loss, which may well upset shareholders in those companies.

Another issue is the stock market. Most conglomerate ventures are listed entities, and investors have trouble understanding their finances. When you are a conglomerate, especially a large company invested in multiple, unrelated sectors, how does an investor figure out your intrinsic value?
An interesting case is that of Reliance Industries, which is into oil, petrochemicals, refining, retail, telecom and media, among other things. As an investor, you now have to figure out the fortunes of each one of those underlying sectors to know whether the current share price of the company is too low or just right. What if you want to invest in just the oil business and not the media part; or you are keen on telecom, but not retailing?
For the company, life becomes more complex as it has simply too many stakeholders, both internally and externally. India’s conglomerates were appropriate for another era, when businesses were small, and there was safety in aggregating the risks in one larger entity called the business group which could vouch for the creditworthiness of its component companies.

Today, the same structure is slowing down the progress of larger groups which have become too complex and entangled with one another to manage efficiently. Debts in one unviable entity are dragging down the performances of more profitable ones.
India’s conglomerates need to slim down to reasonable sizes and focus on a few core businesses so that the viable parts can grow faster. Right now, complexity is slowing them down.

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Indian Economy - News & Discussion

Post by Schmidt » Wed Oct 11, 2017 10:28 am

http://www.thehindu.com/news/cities/che ... 837450.ece

Drab Deepavali season has shopkeepers worried

Aditya_V
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Re: Indian Economy - News & Discussion

Post by Aditya_V » Fri Oct 13, 2017 8:16 am

Schmidt wrote:
Wed Oct 11, 2017 10:28 am
http://www.thehindu.com/news/cities/che ... 837450.ece

Drab Deepavali season has shopkeepers worried
What is not stated is some of these Big shopkeepers(T Nagar area) have had NPA worth crores with Nationalised Banks since 2008 which was window dressed until a few years but kept doing their Business and enjoying the cashflows.

Now the same shopkeepers who looted these Banks pay an article in the Hindu and we guys blame Modi etc.

Yes may be down 5% due to GST/ Slowdown etc but part of it due to the very sins some these shopkeepers have done in the past and continue to do.

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Re: Indian Economy - News & Discussion

Post by geeth » Fri Oct 13, 2017 5:02 pm

^ many of the 'small time traders' (actually some of them make more money than Cabinet secy) dont know what tax is all about. First time in their life they have faced with a situation like this
Most of them are running around like headless chiken, still refusing to accept reality.

They have to change..and accept the new reality...slooooowly

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Re: Indian Economy - News & Discussion

Post by Sicanta » Mon Oct 16, 2017 9:03 pm

Morgan Stanley bets on India, says world’s fastest growing economy to grow 10% per year for 10 years

http://www.financialexpress.com/economy ... ey/896195/

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Re: Indian Economy - News & Discussion

Post by SRoy » Wed Oct 18, 2017 12:11 pm

These small shopkeepers have passed on the GST enforced tax compliance in shape of increased end user price to hapless customers. And they are pretty happy about it.

One chappie proudly told me that he and his fellows are not affected, only the govt. is getting more taxes and screwing the common man in the process.

So, the message down to the common man is that "The govt. devised GST to screw you guys".

There is no way one can report these guys, unless a honest policemen (eh ?) are posted at their cash counters to note what these guys are doing. The way rural/mofussil economy works is that the farm hands, labourers, hawkers, farmers and some small shop keepers themselves buy daily grocery in quantities that is outside the formal economy's supply chain. These people lead hand to mouth existence and their home and hearth depend on daily earnings. These people have taken a hit due to GST and unscrupulous shopkeepers have passed on the tax overhead over to them.

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Re: Indian Economy - News & Discussion

Post by Sridhar k » Wed Oct 18, 2017 4:50 pm

^^^That is the crux of the issue with GST implementation. Powerful anti profiteering enforcements is the key to ensure that the end customers are not adversely impacted. Lot of SMBs are using the opportunity to jack up the price and blame it on GST

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Re: Indian Economy - News & Discussion

Post by MehtaRahulC » Thu Oct 19, 2017 11:09 am

A good GoI website link to see India' month to month electricity consumption
-
electricity report of aug-2017 - see page-4 of http://www.cea.nic.in/reports/monthly/e ... ary-08.pdf
.
Change "08" before ".pdf" to see the month you want.
.
eg electricity report of jul-2017 - see page-4 of http://www.cea.nic.in/reports/monthly/e ... ary-07.pdf

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Re: Indian Economy - News & Discussion

Post by MehtaRahulC » Mon Oct 23, 2017 10:48 am

monthly cement production after oct-2016 in thousand tons
.
https://tradingeconomics.com/india/cement-production
.
sep-2016 = 22627
oct-2016 = 24262 <------
nov-2016 = 20516
dec-2016 = 22001
jan-2017 = 22480
feb-2017 = 21454
mar-2017 = 25208
apr-2017 = 23773
may-2017 = 25397
jun-2017 = 24591
jul-2017 = 22704
aug-2017 = 21993
.
So overall, cement production seems to have decreased. One can post annual data if one has. This is the best I could google.

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Re: Indian Economy - News & Discussion

Post by salaam » Mon Oct 23, 2017 10:54 am

MehtaRahulC wrote:
Mon Oct 23, 2017 10:48 am
monthly cement production after oct-2016 in thousand tons
.
https://tradingeconomics.com/india/cement-production
.
sep-2016 = 22627
oct-2016 = 24262 <------
nov-2016 = 20516
dec-2016 = 22001
jan-2017 = 22480
feb-2017 = 21454
mar-2017 = 25208
apr-2017 = 23773
may-2017 = 25397
jun-2017 = 24591
jul-2017 = 22704
aug-2017 = 21993
.
So overall, cement production seems to have decreased. One can post annual data if one has. This is the best I could google.
How does zig-zag data prove anything?

Atleast post 24 months of m-o-m.

Still this is better than posting 5000 words rants. Which are a classic case of tldr.

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Re: Indian Economy - News & Discussion

Post by Chandragupta » Mon Oct 23, 2017 11:11 am

Sridhar k wrote:
Wed Oct 18, 2017 4:50 pm
^^^That is the crux of the issue with GST implementation. Powerful anti profiteering enforcements is the key to ensure that the end customers are not adversely impacted. Lot of SMBs are using the opportunity to jack up the price and blame it on GST
That is absurd. This is how license raj came into being - post a gobirmant inspector at every nook & corner to catch evil Hindu baniya evading taxes. Where did that land us?

If a shopkeeper is jacking up prices it is because he wants to have the same profit as he made earlier, perhaps without tax. If earlier he charged X amount to make Y profit, now he will charge X+18% to make the same profit. Why would he shell out the 18% out of his own pocket? If the consumer doesn't like it, he can go to another shopkeeper who can provide the same stuff cheaper. Pure market economics.

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Re: Indian Economy - News & Discussion

Post by SRoy » Mon Oct 23, 2017 3:39 pm

^^

@Chandragupta

You will have to read what I have posted.
Your statement "go to another shopkeeper who can provide the same stuff cheaper. Pure market economics" does not make any sense.
Were does a rural daily wage earners to go for 50ml cooking oil and 200gm rice?
No Big Baazar's exist in villages and even if they do, they don't sell such small quantities.

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Re: Indian Economy - News & Discussion

Post by Chandragupta » Mon Oct 23, 2017 5:34 pm

That rural daily wage earner will get looted one way or the other, no GST play there. If you want to counter that, you need better rural infra, connectivity and electrification. Entirely different issues than taxation. No easy solutions there. Government tried public distribution and we all know how that turned out. Modi's way is the right way - of improving rural economics.

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Re: Indian Economy - News & Discussion

Post by Sridhar k » Mon Oct 23, 2017 6:13 pm

Chandragupta wrote:
Mon Oct 23, 2017 11:11 am
Sridhar k wrote:
Wed Oct 18, 2017 4:50 pm
^^^That is the crux of the issue with GST implementation. Powerful anti profiteering enforcements is the key to ensure that the end customers are not adversely impacted. Lot of SMBs are using the opportunity to jack up the price and blame it on GST
That is absurd. This is how license raj came into being - post a gobirmant inspector at every nook & corner to catch evil Hindu baniya evading taxes. Where did that land us?

If a shopkeeper is jacking up prices it is because he wants to have the same profit as he made earlier, perhaps without tax. If earlier he charged X amount to make Y profit, now he will charge X+18% to make the same profit. Why would he shell out the 18% out of his own pocket? If the consumer doesn't like it, he can go to another shopkeeper who can provide the same stuff cheaper. Pure market economics.
Sir
No body is asking them to pay the 18 %. At least in Chennai the issue is that majority of the restaurants are charging GST on top of the earlier MRP which already included tax. How does their cost go up if they can claim input tax credit and everyone is doing the same thing and formed a cartel through their association. In fact some of them were distributing pamplets stating that Govt is charging low for alcohol and high for food and asking us to take it up with Govt. The reality is that alcohol is excempted from GST. How do you handle this practice?

Still lot of them are offering stuff without gst as well if u pay cash and dont ask for bill.

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Re: Indian Economy - News & Discussion

Post by SRoy » Tue Oct 24, 2017 2:41 am

Chandragupta wrote:
Mon Oct 23, 2017 5:34 pm
That rural daily wage earner will get looted one way or the other, no GST play there. If you want to counter that, you need better rural infra, connectivity and electrification. Entirely different issues than taxation. No easy solutions there. Government tried public distribution and we all know how that turned out. Modi's way is the right way - of improving rural economics.
Fair argument, but the fact is that GST has caused significant increase in price for these commodities.

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