Do it yourself

Continuing from yesterday ( Struggle to find a balance ). From the developments, events, and engagements in the past two decades, it is evident that India has been making credible efforts to sustain an affirmative engagement with the global community. These efforts include opening the Indian economy to the global business community; actively participating in global alliances and forums; developing social and physical infrastructure; committing to global agreements in the areas like economic cooperation, climate change, transparency in fund flows & investments, crime prevention, terrorism, etc. These efforts have been made at three broad levels – (i)     At the state level through suitable changes in policy framework. This includes, inter alia , deeper strategic alliances with Western countries (civil nuclear deal, QUAD, etc.); bilateral (free) trade agreements, liberalized FDI regime; BRICS and G-20 cooperation; etc. The vaccine diplomacy during Covid was a sig...

There is little doubt in anyone’s mind that having the largest youth population (…and still growing) in the world and much improved infrastructure India is a place of immense interest to (i) the global businesses who are looking for an attractive market for their products; and (ii) enterprises who are looking to diversify their production/services base to a place with abundant and cheap skilled workforce, natural resources, favorable policy framework, and decent infrastructure. The foreign governments which run on the support of these businesses (or the governments who run these businesses themselves) are obviously keen to widen and deepen their relationship with the Indian businesses and government. Fast growing economic and geo-political influence of China in global affairs has also enhanced India’s importance as a key balancing factor in the global strategy of developed countries and strategic alliance partners. With this growing interest of the global community, it is natural that ...

India macro outlook (Gavekal Research) India’s economy is at an inflection point. The damage wrought by the pandemic still lingers, weighing on private-sector demand. But there are nascent signs that the government’s focus on investment spending is starting to pay off. Moreover, inflation is cooling more rapidly than anticipated, paving the way for policy to turn more supportive. These macro tailwinds, along with geopolitical currents, favor continued outperformance by Indian equities, despite their high valuations. By contrast, the rupee and Indian bonds are likely to remain anchored at current levels. GDP growth accelerated to 6.1% YoY in 1Q23, from 4.4% in 4Q22. The pick-up was largely driven by a sharp rise in investment, led by government spending on infrastructure. Growth in the fiscal year to March 31 (FY22-23) was 7.2%, a better-than-expected outcome, albeit slower than the 9.1% recorded in FY21-22. •       A combination of high public-sector spend...

It seems like billions of gallons of water have flown down the Ganga since the first page of a newspaper made some gratifying headlines. It’s mostly the same disappointing narrative every morning. The positive news, if any, comes mostly in the form of government claims, which I find hard to accept on their face value. Yesterday (Tuesday, 12 July 2023) was apparently one of the usual days. The newspapers were full of disappointing news relating to accidents, crimes, disasters, and platitudes. However, I found five headlines which appeared particularly alarming. These headlines highlight apathy, inconsistency, and incompetence of policymakers. While it may not be a revelation to anyone; what amazes me is the steadfast refusal of a majority of newspaper readers to question the otherwise claims of the government. As an investor, I find it critical to take note of these headlines, because these underline the risks to the India Story, which is gaining currency again. Hill states devast...

The Reserve Bank of India constituted an Inter Departmental Group (IDG) in December 2021 “To examine issues related to Internationalisation of INR and suggest a way forward”. The Group submitted its   recommendations   in October 2022; and the same have been made public last week. The following are some of the highlights of the IDG recommendations. Terms of References The terms of reference of the IDG were as follows - ·           To review the extant framework for use of INR for current and capital account transactions and assess their current levels; ·           To review the extant position of use of INR for transactions between non-residents and the role of off-shore markets in this regard; ·           To propose measures, consistent with the desirable degree of capital account liberalization, to generate incentives for use of INR for trade...

  One of the elementary principles of economics is that the price of anything is determined by the equilibrium of demand and supply. Though sometimes, in the short term, a state of inequilibrium may exist leading to higher volatility in prices; the equilibrium is usually restored by operation of a variety of factors. This principle usually applies to all things having an economic value, including currencies, gold and money (capital). The traits of human behavior like "greed", "fear", "complacence", "renunciation", and "aspirations" are usually accounted for as the balancing factors for demand and supply and not considered as determinants of price as such. However, the case of currencies and capital is slightly complex given currency’s dual role as a medium of exchange and a store of value; and use of money as a policy tool to achieve the objectives of price stability, financial inclusion, poverty alleviation, social justice etc. As a me...