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Economy
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Dr Arvind Virmani, Chief Economic Adviser to the Ministry of Finance, on Thursday said that the problems that the economy is facing are cyclical and therefore short term. The medium and long term prospects of the Indian economy are very good, he said.
“Don’t confuse cyclical trends with medium term growth,” Dr Virmani said in his address to the Madras Chamber of Commerce and Industry on ‘Growth trends and Global cost inflation’.
Basing his arguments on detailed statistics, he said that on the one hand investments productive capacities are going up, thanks (at least partly) to the buoyant savings rate, which stood at a record 36 per cent in 2007-08. On the other, the incremental capital needed to produce one unit of output (measured in terms of the incremental capital output ratio) has been coming down, indicating efficiency in the use of capital.
The high rate of savings alone is enough to give a growth of 9 per cent, he said.
"Inflation"
Dr Virmani, who has over a quarter century of experience in working with the government of India, said that he was not speaking in defence of the Government, but only on the basis of pure economic thinking.
He also noted that if inflation in India appeared to be higher than in other countries, it was because of the different methods of calculating inflation. The Indian wholesale price index captures a whole lot of cost inputs, unlike the US Producer Price Index, which takes into account only the factory-gate prices.
He noted that inflation in India was because of global cost push in mainly three areas — oil, minerals (such as iron ore) and edible oil. The main reason for commodity prices going globally according to Dr Virmani is the demand-supply imbalance; speculation is only a small contribution.
For Information,with regards
rvk41
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Foreign exchange (forex) reserves dipped $1.2 billion to $305.5 billion during the week ended August 1, largely on account of revaluation of non-dollar assets in reserves against the dollar. The Bank of India (RBI) also sold some amount of dollars during the week. Commercial banks have still to see any pick-up in loan demand though deposits continued to grow steadily.
According to the latest data released by RBI in its weekly statistical supplement, total forex reserves, including gold and SDR, dipped $1,129 million during the week ended August 1. While foreign currency assets dipped $1,653 million, value of gold in reserves rose $527 million. Though the value of SDR in reserves remained unchanged during the week, reserves with IMF fell $3 million.
Loans given by commercial banks dipped Rs 6,637 crore during the month ended July 23 to touch Rs 24,06,434 crore. While food credit fell Rs 6,746 crore on a dip in demand by Food Corporation of India, non-food credit rose very marginally by Rs 109 crore. Bankers say that they have still to see any perceptible demand from corporates. Also, retail loans growth have slowed down, as interest rates have hardened.
Deposits raised by commercial banks rose Rs 33,414 crore during the month to Rs 33,12,882 crore. While demand deposits like savings and current accounts dipped Rs 11,372 crore, term deposits rose Rs 44,736 crore, largely due to banks offering higher interest rates. Bank investment in government and other approved securities rose only Rs 2,133 crore during the month to Rs 9,91,849 crore as yields were hardening during most part of the month.
In other developments, both state and central governments have not relied on ways and means advances — a temporary advance to meet its revenue mismatches, reflecting comfortable financial position during the week.
ET-...
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Dear Experts....
Some thing is better than nothing....Most of the experts were very bearish or neautral to this segment...and even after the Govt: had realised the fact, the experts turn their heads as usual...As an investor I feel this is something remarkable for the industry and a lot more in pipeline will happen in coming days..
Santhosh Kumar.O
Cochin....
In reply to:
Experts mixed on new investment policy for urea
Posted by :
MMB Messenger
The government has okayed a new investment policy for urea, reports CNBC-TV18. The Cabinet Committee on Economic Affairs, or CCEA, has okayed existing units producing additional urea to get 85% Import Parity Price. Expanding units would get 90% IPP. It has also set the urea price band at USD 250-425 per tonne for expanded units. 
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The government has okayed a new investment policy for urea, reports CNBC-TV18. The Cabinet Committee on Economic Affairs, or CCEA, has okayed existing units producing additional urea to get 85% Import Parity Price. Expanding units would get 90% IPP. It has also set the urea price band at USD 250-425 per tonne for expanded units....
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IIP numbers will come on tuesdays morning. This time they will give a clue of effects of rate hike on growth. Shances for lower growth are more. Inflation is still intact . we have to wait till we see the inflation coming down.
Crude oil to some extent is not related to inflation now. Following things can take our market lower-
1. week IIP data.
2. High interest rates.
3. political uncertainity.
4. Third wave of subprime in US
5. week rupee as compared to earlier.
6. Fiscal defifit on inceasing trend and election will add to fiscal deficit. which INDIA govt has agrred.
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aug 13 will be the d day go long on nifty or buy nifty 4400 calls gauranteed to touch 5000 on aug 13 due to short covering...
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I think inflation data is not at all trustwothy. This is because crude pricesmoved down in that week, but still the inflation showing is up. It could have been less at 11.5% atleast....
In reply to:
Inflation for week-ended July 26 at 12.01%
Posted by : MMB Messenger
The inflation for the week ended July 26 has come in at 12.01 percent. This is in-line with CNBC-TV18's inflation poll.
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Inflation broke through the psychological 12 per cent level, the highest in over thirteen years, as prices of pulses, spices, eggs, fish and meat among other things continued to rise.
The government on Thursday put the inflation for the week ended July 26 at 12.01 per cent, a marginal 0.03 per cent increase over that recorded in the previous week, even as the Finance Ministry said that the rate of price rise was "stable" on a week-on-week basis.
As per the data released on Thursday, prices of most of food articles went up, although some items like fruits showed downward trend, whose prices declined by 0.5 per cent, said official figures released on Thursday.
In its statement, the Ministry said out of a total 98 primary articles, prices of 18 have declined as compared to the previous week.
Finance Minister P Chidambaram had said at a meeting of Congress spokespersons that government was open to bringing more commodities under the futures trading ban. Eight farm commodities, including rice and wheat, are already banned for the purpose of forward trading.
Meanwhile, prices of iron and steel remained unchanged but cement prices marginally increased.
For the corresponding week, inflation stood at 4.70 per cent a year ago.
Commenting on the rate of price rise, the country's Chief Statistician Pronab Sen said that inflation was not accelerating prices had plateaued. "This is a news for comfort."
He said that restructuring of WPI will not change the bigger picture. The Commerce Ministry will have to take a call on it.
However, analysts believe that there are still price pressures and inflation could rise further.
Crisil Principal Economist D K Joshi said, "There is pressure from food side and inflation could move to 13 per cent before reversing the trend."
However, the good news is the crude oil price melt down, which can bring down prices of industrial fuels to an extent.
In a bid to tame inflation, RBI in July increased the short-term lending (repo) rate by 50 basis points to 9 per cent and also raised the mandatory deposits (CRR) that banks have to park with it by 25 basis points.
However, the exact effect of these measures will be known only after some time as official data is released with a two weeks lag and hike in CRR would come into effect only on August 30.
Among the primary article, prices of raw tobacco increased by five per cent, raw cotton by two per cent.
At the same time prices of minerals like gypsum increased by 48 per cent, phosphorite by 27 per cent, fluorite by 21 per cent and silica sand by 9 per cent. During the week furnace oil was expensive by 3 per cent. In the manufactured item group, cement went up marginally while groundnut oil by 2 per cent, man made clothes by 5 per cent, batteries by 7 per cent, printing paper by 1 per cent.
As per the revised data, inflation rate for the week ended May 31 has been updated to 9.32 per cent, against 8.75 per cent reported earlier. FE-
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I wonder if Moody or S&P or other credit rating agency know anything but to make bill and get fee from issuers of financial instruments??
Probably USA have more of chapter 11 filling and all these filling happen all of a sudden without any pre warning from these fee chargers.
I think all of these subprime securities were rated yet see USA went bankrupt over these papers.
Plz understand if business is seen as collapsing no other commodity will stay firm afterall TopLine , MiddleLine and BottomLine is what determine the prices of all commodity.
and as far as Rating agency is concerned I trust they lack basic understanding of business of choose to dupe poor retail investors.
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In reply to:
Moody's sees sharp slowdown in India growth
Posted by : MMB Messenger
Moody’s Corporation has said that the risks confronting Indian Economy have grown, reports CNBC-TV18 quoting Newswire18. It sees sharp deceleration in Indian economic growth. The burden of high price pressure is falling on the RBI, it said. According to them the outlook for reforms in India remains uncertain.
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Its now realy controlled and if the crude price will support like this till december end we shall see the inflaition is arround 10-11%...
In reply to:
Inflation for week-ended July 26 at 12.01%
Posted by : MMB Messenger
The inflation for the week ended July 26 has come in at 12.01 percent. This is in-line with CNBC-TV18's inflation poll.
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will crr be hiked by 2% more by dec ?
will interest rates rise by 2% more ?...
In reply to:
Inflation for week-ended July 26 at 12.01%
Posted by : TRUETALK
It was highly unprofessional on the part of CNBC through its news editor Ms. Latha Venkatesh to have earlier announced that the news regarding inflation figure had been leaked, as it usually gets leaked, that the inflation for the week ended July 26, 2008 was higher at 12.11% as against CNBC's estimates of 12.01%.
It was also unethical as it accused those dealing with the numbers regarding inflation of 'leaking' the numbers. Not only this, Ms. Latha even went on to say 'numbers regarding inflation have been leaked as they usually are leaked .....'.
Both CNBC and Ms. Latha Venkatesh owe an unconditional apology to the CNBC viewers on the T.V. channel itself as also in the Economic Times if CNBC does not want its credibility lost.
We, the viewers of CNBC are firming up our opinion that CNBC's views are motivated.
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It was highly unprofessional on the part of CNBC through its news editor Ms. Latha Venkatesh to have earlier announced that the news regarding inflation figure had been leaked, as it usually gets leaked, that the inflation for the week ended July 26, 2008 was higher at 12.11% as against CNBC\\\\`s estimates of 12.01%.
It was also unethical as it accused those dealing with the numbers regarding inflation of \\\\`leaking\\\\` the numbers. Not only this, Ms. Latha even went on to say \\\\`numbers regarding inflation have been leaked as they usually are leaked .....\\\\`.
Both CNBC and Ms. Latha Venkatesh owe an unconditional apology to the CNBC viewers on the T.V. channel itself as also in the Economic Times if CNBC does not want its credibility lost.
We, the viewers of CNBC are firming up our opinion that CNBC\\\\`s views are motivated. ...
In reply to:
Inflation for week-ended July 26 at 12.01%
Posted by : MMB Messenger
The inflation for the week ended July 26 has come in at 12.01 percent. This is in-line with CNBC-TV18's inflation poll.
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The inflation for the week ended July 26 has come in at 12.01 percent. This is in-line with CNBC-TV18's inflation poll.
...
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what will be the inflation data for today? will it be above 13% or 12.6%? can anybody tell it?...
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The US Dollar for the 1st-time in last 5months is testing 110 against Yen after it went to low 96 is now showing Absolute Strength Which means oil will correct further so will commodities Including GOLD
Near term markets are safe
And if Dollar retraces to 116 against YEN then Hedge-funds will start borrowing YEN and investing in BRICK again...
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