Do it yourself

"Invest in India" - Caveat de Emptor Nick Read, the chief executive officer of Vodafone Plc, sounded the alarm bell on the future of the beleaguered Indian JV of the company with AV Birla group. In an interaction with the press in London, Mr. Read said, "the company's future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges." He warned, ”If you’re not a going concern, you’re moving into a liquidation scenario -- can’t get any clearer than that.” It is pertinent to note in this context that Vodafone, which owns 45% of Vodafone Idea having a 30% share in India telecom market, wants a two-year delay on spectrum payments and lower license fees and taxes. It’s also calling for the spectrum payments demanded by the court to be spread over 10 years and is asking for a waiver on interest and penalties. In my view it is a case of business decision gone wrong due to competitive intensity and p...

In the month of September, India’s industrial output contracted the most in nearly eight years with weakness seen across most key segments. Of the 23 sub-sectors within manufacturing, 17 recorded year-on-year contractions. The Index of Industrial Production contracted by 4.3% in September 2019 over last year compared to a contraction of 1.1% in August. The contraction is much higher than the generally expected number of 2 to 3% contraction. For records, this fall in industrial output is the deepest since October 2011. As of now, the first half of the current fiscal has recorded an average growth of 1.3% in the industrial production. The capital goods segment, that reflects the growth in investment activity, contracted 20% in September after a 21% fall in August. The consumer durable production contracted for the fourth straight month in September. The worst, consumer non-durable category also recorded its first contraction in FY20 during the month of September....

The autumn festival season in India shall end with Kartik Purnima and Guru Nanak Dev's birthday celebrations next Tuesday. From the following Monday (18th November), a four week winter session of the Parliament will start. Given that the festival season has failed to bring the much awaited cheers to the economy, and the distress of common man appears to be deepening further with each passing month, the government will have lot of explaining to do. Besides, the Supreme Court verdict on the Ayodhya dispute (expected next week), may also cast a shadow on the parliamentary proceedings. Going by the past trends, the treasury side would be happy if the opposition disrupts the parliament proceedings on non economic issues like Curfew in J&K, phone tapping by Israeli firm, NRC, pollution, onion prices etc. As per a recent survey report by Bank of America - Merrill Lynch (BAML), more than 90% of storekeepers in Mumbai indicated footfalls were lower than the last year’s fest...

One of the key principles of economics which underpins the very concept of globalization is that "trade can make everyone better off". As per the famous economist Gregory Mankiw, "Trade allows each person to specialize at what he or she does best, whether it’s farming, sewing, or home building. In the same way, nations can specialize in what they do best. In both cases, people get a wider range of choices at lower prices." Conceptually therefore no one should have a problem as such with trans border trade, so long it benefits the people at large in both the producer and consumer jurisdictions. If we want to understand it in the context of India's decision to withdraw from the RCEP agreement ( see here ) consider this. One of the examples cited for this decision was the threat of New Zealand dairy product flooding Indian markets and harming poor Indian milk producers. It is pertinent to note that India is the largest producer of milk ...

India has reportedly decided not to join the Regional Comprehensive Economic Partnership (RCEP). The decision, as per the External affairs ministry’s secretary (East), Vijay Singh Thakur, reflects both the government’s assessment of current global situation and of the fairness and balance of the agreement. The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) ( Brunei , Cambodia , Indonesia , Laos , Malaysia , Myanmar , the Philippines , Singapore , Thailand , Vietnam ) and its FTA partners ( China , Japan , South Korea , Australia and New Zealand ). The process of forming RCEP was initiated in the August 2011 ASEAN meeting. The formal negotiations were launched in 44th ASEAN summit in August 2012. Since then 27 rounds of negotiations between officials and three summits of the leaders of the proposed participants have taken place. In December...

In one of his recent interview, Brian Coulton, the Chief Economist at Fitch Ratings, emphasized that the persisting credit squeeze in the Indian economy may hurt the economic growth much more than the present estimates. Brian cautioned that the GDP growth in FY20 could slip to 5.5%, much below the current RBI and government estimates of 6%+ growth. For records, the Indian economy grew at the rate of 5% in the first quarter (April to June 2019) of the current fiscal year, the slowest in more than 6 years. The slowdown was visible in all sectors of the economy including agriculture, manufacturing and services. Within services, the growth in finance, insurance and real estate sectors was cited as particularly worrisome, as it highlighted poor credit conditions. Besides, the credit availability, the high cost of credit is cited as one of the constricted factors. Despite 135bps cut in policy rates in the year 2019, the real rates are found to be still elevated, constraining the gr...