IMF blames UPA for economic slowdown

ew Delhi: The International Monetary Fund (IMF) on Thursday said that the slowdown in the Indian economy was largely due to internal and not external factors, punching a hole in the oft-repeated claim of the government that global factors beyond its control were to blame.

It also cautioned that growth would decline further if the drag caused by internal factors in some emerging market economies since 2012 is not addressed.

The fund, in a chapter of its World Economic Outlook titled On the Receiving End? External Conditions and Emerging Market Growth Before, During, and After the Global Financial Crisis, said the slowing growth in some emerging market economies since 2012 can be attributed largely to internal factors. “External factors have generally been much less important compared with internal factors for some relatively large or closed economies, such as China, India, and Indonesia,” it said.

According to IMF, internal factors began to act as a drag on India’s growth in early 2008, likely as the result of stress from growing bottlenecks in infrastructure after a period of rapid growth. “Their negative incidence continued until mid-2009,” it said.

Once again, internal factors started posing a drag beginning 2011 and lasted till the quarter that ended on 31 December 2012, the fund added.

In contrast, it said the sharp dip in growth in Brazil and Indonesia during the global financial crisis was almost entirely driven by external factors.

“In Russia and South Africa, external factors dominated growth dynamics during the global financial crisis, but internal factors also played a role, possibly reflecting problems related to domestic overheating,” it added.

In India, the high cost of borrowing and delays in securing mandatory government approvals have stalled corporate investments, while high inflation and slower hiring have shaken consumer confidence and forced households to reduce consumption expenditure.

Samiran Chakraborty, regional head of research, South Asia, at Standard Chartered Bank, said IMF had corroborated what most analysts have been saying all along. “The decline of India’s growth rate from near 10% to less than 5% cannot be entirely attributed to external factors. In fact, in last couple of quarters, we could have seen lower GDP (gross domestic product) prints without the buoyancy in merchandise exports, implying positive play of external factors on economic growth.”

The economy grew less than 5% for the seventh consecutive quarter in the three months ended 31 December as manufacturing output contracted. The 4.7% growth rate in the December quarter of 2013-14 also reduces the chances of the economy meeting the 4.9% full-year growth estimate made by the statistics department.

IMF will release its global growth projections, including that for India, on 8 April.

The Asian Development Bank (ADB) on Tuesday reduced India’s growth forecast for 2014-15 to 5.5% from its December estimate of 5.7% on the back of a sharper-than-expected industrial slowdown. In 2015-16, economic growth is expected to improve to 6%, as a revival in advanced economies bolsters external demand and government action counters some structural bottlenecks that have impeded industry and investment.

In its Asian Development Outlook, the Manila-based multilateral lending agency said the Indian economy has bottomed out in the last fiscal year. It added that the economy would not reach its potential until the remaining structural bottlenecks are overcom

md.aqui alam 

pgdm 2 sem

source.live mint

 

 

Capital goods firms eye overseas markets as India growth slows

Firms such as L&T, Thermax and ABB India are looking to Africa and the Middle East markets to generate higher revenue 

Mumbai: Indian capital goods companies are increasing their focus on expanding exports and revenue from international businesses, as they struggle with sluggish economic growth and stalled projects in their home market.

Larsen and Toubro Ltd (L&T), the country’s biggest engineering and construction company, Thermax Ltd and ABB India Ltd are looking to markets such as Africa and the Middle East to increase their global footprint and generate higher revenue overseas.

At home, economic growth slowed to 4.5% in the year to March 2013, the least in a decade, and is forecast by the Reserve Bank of India to remain below 5% in the fiscal year that has just gone by. High borrowing costs, and delays in government approvals and project execution have crimped the cash flows at many companies and stalled projects.

“For de-risking the organization, having an international business is a must for growth,” said M.S. Unnikrishnan, managing director and chief executive officer, Thermax. “We are taking initiatives for increasing our export business and also to be locally present in some critical markets outside India.”

Only about 33% of Thermax’s revenue now comes from outside India—from exports and overseas subsidiaries.

The company intends to increase it to 40% in five years. The company plans to focus on growth in South-East Asia, the Middle East and Africa.

For the December quarter, Thermax reported revenue of Rs.1,013.77 crore, a 3% drop from a year ago.

At L&T, which has been proactive in bidding for infrastructure projects outside India, even smaller business units like the electrical and automation (E&A) business are targeting higher exports.

L&T’s E&A business is seeking to increase its annual international revenue to 35% of its total sales, from the current 30% by the 2016 fiscal, said S.C. Bhargava, senior vice- president and head of E&A. The unit expects to cross Rs.5,000 crore in annual revenue in the just-ended fiscal year, Bhargava said.

According to Bhargava, the only way to compensate for the impact of the domestic slowdown is by expanding in fast growing overseas markets.

“Dubai and Qatar continue to have a boom in the building and construction industries and we keep looking for opportunities there,” Bhargava said.

At Crompton Greaves Ltd, the management expects the performance of its international business in the 2015 fiscal to be better than the current year, Nomura analysts Amar Kedia and Vineet Verma wrote in a report dated 30 January. The company’s international order book at the end of the December quarter was up 21% compared to a year ago, it added.

“The domestic market continues to remain challenging due to a slowdown in the investment cycle, but the order outlook for international business (including automation) is looking much better,” the Nomura report said. 

 

 

The management at Crompton Greaves did not comment, as it is in the so-called silent period ahead of the announcement of its fourth quarter earnings.

ABB India’s export order book for calendar year 2013 grew by more than 25%, according to Subir Pal, head of country business development and marketing. At present exports contribute around 15-17% of the ABB’s revenues and it plans to maintain that ratio.

“We have reached a stage from where we can only grow the numbers,” Pal said, adding that the company did not have a specific target for the international business.

ABB will also increase its focus on Africa as a potential market.

In many parts of Africa, gross domestic product growth is in excess of 6%, presenting a potential business opportunity for the country to tap, Pal added.

Some analysts say the overseas focus risks crimping profitability in the short run.

“It is a good strategy to expand in different locations, but companies should ensure that they scale up gradually in these geographies, since rapid scale-up in the absence of optimal controls can impact profitability negatively,” said Misal Singh, director of institutional equities at Religare Capital Markets Ltd

source- Livemint.com

                   By

Shah Mohammad Abdul Qadir

            PGDM v1st year

IIMT College Of Management

         Greater  Noida, U.P.

Sensex falls 60 points on weak Asian stock markets

 

Mumbai: The 30-share bellwether BSE Sensex on Friday was trading 60 points lower tracking weakness in Asian stock markets.

At 9.30am, the Sensex was trading lower 0.26%, or 59.09 points, at 22,449 points, while the National Stock Exchange’s (NSE’s) broader 50-share Nifty was trading down 0.26%, or 17.6 points, to 6,718.5 points.

 

The gainers included ITC Ltd that jumped 0.59% to Rs.348.40 and Tata Consultancies Services Ltd (TCS) that rose 0.45% to Rs.2,176.40.

 

Among the losers, Axis Bank Ltd shares lost 1.01% to Rs.1,422.8, while Bharat Heavy Electricals Ltd (Bhel) fell 0.91% to Rs.185.90.

 

 

The BSE consumer durables index was the top sectoral gainer, up 0.58%. The capital goods index was the top loser on BSE, down 0.87%, followed by the Bankex that fell 0.58%.

 

BS Ltd was trading at Rs.14.94 on BSE, up 19.14% from its previous close, after it reported that it got an order worth Rs.722 crore from power utilities.

 

 

Gammon India Ltd was trading at Rs.15.16 on BSE, down 3.56% from its previous close, after its board approved issue of debentures for up to Rs.100 crore and appointment of consultants to advise the company on options for value optimization of the company’s business.

 

Since the beginning of this year, the BSE Sensex has gained 6.39%, while foreign institutional investors have bought $4.75 billion from local equity markets.

 

Asian markets are trading subdued with investors cautious ahead of US jobs report. The US non-farm payrolls report will be released on Friday. Japan’s Nikkei Stock Average was up 0.13%, Hong Kong’s Hang Seng fell 0.14%, while China’s Shanghai Composite was up 0.33%.

 

Overnight, US markets closed marginally lower. The S&P 500 fell 0.11%, Nasdaq Composite was down 0.91%, while Dow Jones Industrial ended unchanged.

Rahul kumar gupta

PGDM,1st Year

Source:-Mint

Tata Group, Singapore Airlines venture takes another step closer to take-off

The US’ tirade against India for the latter’s “poor record” in protecting intellectual property (IP) seems to have made the commerce and industry ministry more cautious despite its public posturing to the contrary, report Kirtika Suneja & Jayati Ghose in New Delhi. While the health ministry sought compulsory license (CL) for Bristol-Myers Squibb’s (BMS) anti-cancer drug dasatinib, Anand Sharma’s ministry has told it to let a domestic firm ask for a CL if the issue was one of “affordability”. The commerce and industry ministry has sought details and empirical data from the health ministry to support any claims of non-affordability (which calls for issue of CL un
Alternatively, the health ministry was told, it would have to establish prevalence of “national emergency, extreme urgency” or a valid case for “public non-commercial use” to make a case for invoking Section 92 under which the government can suo motu issue a compulsory licence, sidestepping a patent.
“If the ministry of health wants to proceed on the grounds of affordability, then it has to comply with provisions of Section 84,” the department of industrial policy and promotion (DIPP) said in a letter to the health ministry. While the health ministry, which has been trying to get a compulsory licence for dasatinib for the last two years, had written to the DIPP on January 17 seeking issuance of compulsory licence under Section 92, it had built its case around (lack of) affordability of the drug. The commerce ministry's remarks are significant as in October last year the Indian Patents Office rejected Mumbai-based BDR Pharmaceuticals' application under Section 84 for a licence to manufacture and market a generic version of dasatinib.
der Section 84 of the Patents Act at the instance of a local firm).
TANU
PGDM 1ST

IDFC, Bandhan first to get new bank licences 

Firms given 18 months to comply with rules; central bank to consult govt on India Post’s application

 NEW DELHI: Ending months of speculation and regulatory scrutiny, the Reserve Bank of India (RBI) on Wednesday said that it has given “in-principle” approval to Mumbai-based nonbanking finance company IDFC and Kolkata-based microfinance organisation Bandhan Financial Services to set up new banks in the country. 

 

 

The approval, which will remain valid for 18-months, comes a day after the Election Commission allowed the RBI to go ahead with the process as it did not violate the model code of conduct that prevents authorities from taking decisions that can influence voters ahead of polls.
Yes Bank and Kotak Mahindra Bank were the last ones to get bank licences in 2003-04.
RBI received 27 applications in July 2013 including IFCI, Reliance Group, Aditya Birla Group, L&T Finance Holdings and Muthoot Finance among others. Tata Sons and Videocon Group later withdrew their applications.

NAME- RAJ GAURAV

               PGDM 2 SEM

Irda issues draft guidelines for insurance marketing firms

An insurance marketing firm will be allowed to market insurance policies along with other financial products such as mutual funds 

 

To be an insurance marketing firm, a company will need to have at least Rs10 lakh of net worth at all times. Photo: Pradeep Gaur/Mint

 

Mumbai: Paving the way for a new distribution channel, the Insurance Regulatory and Development Authority (Irda) issued draft guidelines for insurance marketing firms on Wednesday.

An insurance marketing firm is an entity that will be allowed to market insurance policies along with other financial products such as mutual funds that are approved by financial sector regulators, Irda said.

To sell these products there will be two kinds of licensed individuals: an insurance salesperson, who will be responsible for soliciting and marketing insurance products alone, and a financial service executive, who will handle other financial services, such as offering financial advice, sale of mutual funds and the national pension system, or NPS.

These licensed individuals will have to obtain the necessary qualifications and licences from the respective regulators. To become an insurance salesperson the individual needs to have passed Class 10 and needs to clear the insurance brokers examination. Insurance agents are not eligible to become insurance salespersons, and the latter can’t cross over to become agents unless their licences as salespersons are active.

Financial service executives will need certification from regulatory bodies. For instance, to sell mutual funds, they will need to be certified by the Association of Mutual Funds in India (AMFI). For distributing NPS, they will need to be certified by the Pension Fund Regulatory and Development Authority (PFRDA), and for sale of financial products regulated by the Securities and Exchange Board of India (Sebi), they will need to obtain registration as investment advisers under the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013.

In case of insurance, salespersons will be involved in soliciting insurance policies, but their remuneration will not be commission-based. According to the draft rules, they would be paid a fixed amount and a performance incentive that may be over and above this. The role of the salespersons will lean more towards being a broker in the sense that they will need to keep the interest of their customers paramount. 

 

NITESH KUMAR SINGH

PGDM 2ND 

SOURCE- LIVEMINT

New bank licence: Not-on-list applicants Reliance Capital, Aditya Birla Nuvo put up a brave face

SUMMaRY :- RBI has decided to give out bank licences only to IDFC Ltd and Bandhan Financial Services.

 Industrial groups put up a brave face after the Reserve Bank of India decided to give out only two bank licences on Wednesday. The licences to IDFC Ltd and Bandhan Financial Services will raise the number of banks in India to 90.

 The RBI, however, held out a promise that entities, which did not qualify in the current round, will be able to apply afresh. "RBI believes that some of those entities, which did not qualify in this round for a full-fledged banking licence, could well apply in future rounds or could apply for differentiated licences under the proposed framework", a release issued by the central bank noted.

Nirmal Jain, chairman of India Infoline, one of the permit aspirants said, "We are not disappointed as this is only the first set of licences and RBI has promised that going forward it will be on-tap." The big industry names which had applied included Reliance Capital of the Anil Ambani group, the Aditya Birla Group, Bajaj Capital and Larsen & Toubro.


The two will have an 18-month window to fulfill the guidelines stipulated by the RBI to offer banking services. "Until a regular licence is issued, the applicants would be barred from doing banking business," the RBI noted. 


The HLAC had also recommended that in the case of Department of Posts, which has applied for licence, it would be desirable for the RBI to consider the application separately in consultation with the government. "The RBI has accepted the recommendation of the HLAC," it said. 

TANAY TAPAS
PGDM 1st