Indian Economy : News,Discussions & Updates

[vstol Jockey]

A fool needs no certificates and you have many to certify your foolishness. You had asked me how Raghurajan created NPAs and I explained to but you twisted things thereafter and your replies have been nothing but an exercise in absurdity and stupidity. If only your Masters in Finance had taught you how money supply and growth are related which can take pressure off the value of rupee. As I told you, I am not here to teach or give you a tutorial. Infact you can call me very Brahminical as I consider it a sin to teach an idiot and also a sin to not educate a brainy person. For me you are a stupid. All the education and all the degrees fit to be flushed down a toilet only.

 

[_Anonymous_]

Govt wants Rs 3.6 lakh crore from RBI, a third of its reserves, central bank says no

 

[Pundrick]

3.6 lakh crore is huge amount. But RBI should consider giving some reserves for capital expenditure which we need badly.

 

[RISING SUN]

India October services PMI jumps to 52.2 on stronger orders
Activity in India's dominant services sector increased at its fastest pace in three months in October, driven by a strong pick-up in new business, a private survey showed on Monday.

The Nikkei/IHS Markit Services Purchasing Managers' Index rose to 52.2 last month from a four-month low of 50.9 in September, holding above the 50-mark that separates growth from contraction for five straight months.
A sub-index tracking demand jumped to 52.4 from September's 50.1, which, accompanied by a slower increase in both input costs and prices charged boosted overall activity and encouraged firms to accelerate hiring at the fastest pace in six months.

"Cost pressures faded in October. At the same time, a robust expansion in workforces one of the best seen for over seven-and-a-half years added to firms' expenses," noted Pollyanna De Lima, a principal economist at IHS Markit.

"The waning of cost inflation, coupled with competitive pressures, resulted in only a marginal uptick in charges."
Some firms said tougher competition was preventing them from lifting their prices.
Weaker cost pressures, alongside a decline in oil prices, may prevent inflation from shooting above the Reserve Bank of India's medium-term target of 4 percent.

The central bank surprised markets and kept interest rates on hold last month after increases in June and August. But it did shift its bias from "neutral" to "calibrated tightening".

Stronger services activity and better-than-expected growth in manufacturing led a composite index to increase to 53.0 last month from September's 51.6, with employment rising at its quickest rate in nearly eight-and-a-half years.
"A positive outlook is by no means assured, however. With business expectations about future activity dropping to the lowest for 20 months in both the manufacturing and service sectors, firms are becoming more guarded in the face of growing uncertainties," added de Lima.

"The sustainability of current market conditions and political worries both weighed on optimism and pose downside risks to growth."
India October services PMI jumps to 52.2 on stronger orders

 

[RISING SUN]

India's plastics export jump 31.6% to $4.59 bn in H1 FY19
India's plastics exports posted a growth of 31.6 percent at $4.59 billion during the period April - September 2018 (H12018-19) as against $3.48 billion in same period during H1 2017-18, registering a faster pace of growth than the overall merchandise export growth from India, as per the Plastics Export Promotion Council (Plexconcil).
During H1 2018-19, India reported merchandise exports worth $164.04 billion, up 12.5 percent from $145.75 billion in H1 2017-18. According to Plexconcil, plastics formed 2.80 percent of India's overall merchandise exports in H12018-19.

The growth in India's plastics export has been primarily boosted by higher shipment of plastic raw materials, plastic sheet, film, plates, and packaging materials.
During H1 2018-19, 23 out of the top 25 destination countries recorded year-on-year growth in plastics export from India.

Exports to China, Vietnam and Mexico witnessed high growth rates ranging between 70-140 percent during the H1 2018-19 period, association said in a statement.

"China, United States and United Arab Emirates continue to be top-3 destinations for India's plastics products. These three countries accounted for 27.5 percent of India's plastics product exports, by value, during H1 2018-19.
And we added new destination countries for plastics export which includes French Guiana, Guam, Kiribati Republic, Lesotho, Marshall Island, Mayotte, Monaco, Nauru Republic and United States Virgin Islands," Plexconcil chairman Ravish B Kamath said.

"In the first half of 2018-19, the trend in plastic exports from India has been very positive with a strong year-on-year growth vis-a-vis 2017-18 with August 2018 topping $800 million and registering 38.1 percent y-o-y growth. India's plastics exports in H1 2018-19 were boosted by higher exports, especially to North-East Asia, Africa, European Union, Asean, South Asia, and North America," Plexconcil executive director Sribash Dasmohapatra said.
"Having achieved a superior growth in H1 2018-19, we are confident of surpassing our export target of $10.6 billion in 2018-19 for products under the purview of our council. We laud the government's support and outreach initiative for the micro, small and medium enterprises (MSME) sector that was unveiled recently. Since MSMEs form the backbone of our economy, the initiatives in the form of easier access to credit of upto Rs 1 crore within 59 minutes, and increase in interest rebate from 3 to 5 percent for exporters, among others are steps in the right direction," Kamath said.

The country's plastics industry offers potential in terms of capacity, infrastructure and skilled manpower. India is currently ranked among the top five consumers of polymers in the world and has 30,000 plus plastic processing units employing over four million (40 lakh) people across the country, the release said.
India's plastics export jump 31.6% to $4.59 bn in H1 FY19

 

[randomradio]

3.6 lakh crore is huge amount. But RBI should consider giving some reserves for capital expenditure which we need badly.

The cash reserves are necessary to deal with any impending crisis, it can't simply be handed over to the govt. Our economy has started doing well now anyway.

 

[vstol Jockey]

The cash reserves are necessary to deal with any impending crisis, it can't simply be handed over to the govt. Our economy has started doing well now anyway.

In June and August RBI increased rates and held firm this month. The economy had started gaining momentum in June itself and what did RBI do? Think again. Who is playing spoil sport here.
Regarding your point about cash Reserves. I agree with your point but how much is adequate. Why not have 100% reserves and let there be nothing in circulation as that will be the safest bet. We have a saying in aviation, best flight safety is not to fly at all but will we remain in aviation business after that?
A cheat or a man with dubious intentions always sugar coats his arguments like RBI Governors have been doing for last two terms.

 

[randomradio]

In June and August RBI increased rates and held firm this month. The economy had started gaining momentum in June itself and what did RBI do? Think again. Who is playing spoil sport here.
Regarding your point about cash Reserves. I agree with your point but how much is adequate. Why not have 100% reserves and let there be nothing in circulation as that will be the safest bet. We have a saying in aviation, best flight safety is not to fly at all but will we remain in aviation business after that?
A cheat or a man with dubious intentions always sugar coats his arguments like RBI Governors have been doing for last two terms.

When economy goes up, rates increase, that's normal. If they don't increase rates, then there will be too much money flow and inflation will increase. If inflation is not controlled, the entire system will fail.

Haven't you seen the US Fed also increasing rates because the US is hitting 3.5-4% growth?
US Fed raises policy rate by 25 basis points, signals 3 rate hikes in 2019

The US Fed has increased rates 3 times this year alone, and another one is expected in December. And they are expecting 3 more hikes in 2019.

What the govt wants to do is take away "free" money and distribute it to the poor. They have no intention of creating wealth using the money.

Companies have been running ponzi schemes at the cost of our entire financial sector for long enough. If people can't manage money flow in their own companies, they should either shut shop or sell their stake to more deserving people. RBI's main job is controlling inflation. They don't care if people can't run their own companies, the RBI has a whole country to manage.

RBI's current rate is neutral, which is a decent place for the economy right now. But what the country needs now is a higher savings rate, not more cash flow. Our savings rate is quite low, at only 30%, and we need that to increase again. So RBI's rate should actually increase at least once more, if not twice over the next one year.

 

[vstol Jockey]

When economy goes up, rates increase, that's normal. If they don't increase rates, then there will be too much money flow and inflation will increase. If inflation is not controlled, the entire system will fail.

Haven't you seen the US Fed also increasing rates because the US is hitting 3.5-4% growth?
US Fed raises policy rate by 25 basis points, signals 3 rate hikes in 2019

The US Fed has increased rates 3 times this year alone, and another one is expected in December. And they are expecting 3 more hikes in 2019.

What the govt wants to do is take away "free" money and distribute it to the poor. They have no intention of creating wealth using the money.

Companies have been running ponzi schemes at the cost of our entire financial sector for long enough. If people can't manage money flow in their own companies, they should either shut shop or sell their stake to more deserving people. RBI's main job is controlling inflation. They don't care if people can't run their own companies, the RBI has a whole country to manage.

RBI's current rate is neutral, which is a decent place for the economy right now. But what the country needs now is a higher savings rate, not more cash flow. Our savings rate is quite low, at only 30%, and we need that to increase again. So RBI's rate should actually increase at least once more, if not twice over the next one year.

What I am trying to say is that we already had high rates in June and with economy picking up there was no need to hike the rates again. This Governor has completely redefined the reserve ratios to be maintained by RBI by linking it to actual inflation. His idea is that since we have an inflation rate of about 4-5%, the effective reserve ratio is just 2-2.5% considering that it is now 6.5. Now this is really funny as this has direct impact on Repo rates and reverse Repo rates and also SLR which determine the overall money supply in the system and also the lending rates.
Finance minister is always superior, RBI governor can't defy him: Manmohan Singh in 2014 book - Times of India

This is what MMS has to say.

 

[randomradio]

What I am trying to say is that we already had high rates in June and with economy picking up there was no need to hike the rates again. This Governor has completely redefined the reserve ratios to be maintained by RBI by linking it to actual inflation. His idea is that since we have an inflation rate of about 4-5%, the effective reserve ratio is just 2-2.5% considering that it is now 6.5. Now this is really funny as this has direct impact on Repo rates and reverse Repo rates and also SLR which determine the overall money supply in the system and also the lending rates.
Finance minister is always superior, RBI governor can't defy him: Manmohan Singh in 2014 book - Times of India

This is what MMS has to say.

I wouldn't go by what politicians have to say about the economy.

We have seen for a fact by ourselves that inflation was increasing, we don't need politicians or economists to tell us that. Let the economy speak for itself. Whenever inflation rises, RBI has to increase rates, that's how it works. If RBI doesn't do its job, we will get an Argentina instead.

The rates were not increased because the economy was picking up, it was increased because inflation touched 5% back in June. With the rate hike, it came down to less than 4% in August.

Throughout Modi's tenure, there were continuous reduction in rates. We have seen 2 hikes for the first time in nearly 5 years. If the govt actually wanted to see further reduction in rates, they should have reduced taxes on fuel corresponding to the increase in rise of oil prices instead. This would have reduced their income, but inflation would have stayed under control without RBI intervention. So what you see the govt doing is self-preservation for the sake of polls. You shouldn't be supporting it.

As for over-leveraged companies not surviving due to NPAs and higher rates, let them die out, better companies will take their place. If an established company has reached a point where it can't service its outstanding debt, it should disappear.

 

[vstol Jockey]

I wouldn't go by what politicians have to say about the economy.

We have seen for a fact by ourselves that inflation was increasing, we don't need politicians or economists to tell us that. Let the economy speak for itself. Whenever inflation rises, RBI has to increase rates, that's how it works. If RBI doesn't do its job, we will get an Argentina instead.

The rates were not increased because the economy was picking up, it was increased because inflation touched 5% back in June. With the rate hike, it came down to less than 4% in August.

Throughout Modi's tenure, there were continuous reduction in rates. We have seen 2 hikes for the first time in nearly 5 years. If the govt actually wanted to see further reduction in rates, they should have reduced taxes on fuel corresponding to the increase in rise of oil prices instead. This would have reduced their income, but inflation would have stayed under control without RBI intervention. So what you see the govt doing is self-preservation for the sake of polls. You shouldn't be supporting it.

As for over-leveraged companies not surviving due to NPAs and higher rates, let them die out, better companies will take their place. If an established company has reached a point where it can't service its outstanding debt, it should disappear.

What was the cause of inflation spike? was it not fuel price and cycle of food shortage due to floods and rains which happens every year.

 

[randomradio]

What was the cause of inflation spike? was it not fuel price and cycle of food shortage due to floods and rains which happens every year.

Sure. But food shortage and rising oil prices are the govt's responsibilities, not the RBI's. The RBI only sees a number on a chart. If the number fluctuates, they react to it.

The govt's job is to keep the economy going, while the RBI's job is to keep inflation under control. The RBI is doing their job.

 

[vstol Jockey]

Sure. But food shortage and rising oil prices are the govt's responsibilities, not the RBI's. The RBI only sees a number on a chart. If the number fluctuates, they react to it.

The govt's job is to keep the economy going, while the RBI's job is to keep inflation under control. The RBI is doing their job.

Can RBI and GOI function individually without anykind of synergy? RBI knows that we have this problem every year due to rains and floods that food inflation rises and gets settled within couple of months. This governor has been over reacting. Mistakes can happen, Mistakes can also happen in series one after the other as a consequence of one big mistake and also randomly with no connection with the other but when things like this happen, they point towards a well laid out plan & design. Which in this case is to scuttle Indian economy.

 

[vstol Jockey]

if you had watched Dangal movie, I would like to remind you of a dialogue of Mahavir Singh when he analysed the bouts of his daughter. He said," You could have won all the bouts you have lost because of your stupidity, when you were leading, you went into defense while you should have attacked and when you were losing, you went into attack and lost."
Our economy is now in a very strong position due to the efforts of Govt even with an unhelpful RBI Governor. Is it not time to use this strength to take some calculated and controlled risks?
As Fighter pilots we flew day and night. World knows its risky but did we stop? Do you know why flew the way we did and do? because we asses risks very well and stay very focused and within our limits.

 

[randomradio]

Can RBI and GOI function individually without anykind of synergy? RBI knows that we have this problem every year due to rains and floods that food inflation rises and gets settled within couple of months. This governor has been over reacting. Mistakes can happen, Mistakes can also happen in series one after the other as a consequence of one big mistake and also randomly with no connection with the other but when things like this happen, they point towards a well laid out plan & design. Which in this case is to scuttle Indian economy.

It's the govt that's trying to break this synergy.

The fiscal policy for this year was already laid out by the govt early this year, and the RBI created their policies in support of the govt's policies. But now the govt wants to change their fiscal policy in the middle of the year and are asking RBI to "adjust a bit". The govt has failed to manage their finances this year, so they want RBI to take the fall for it. Completely unwarranted.

Even after two rate hikes, it appears that inflation is still rising. This proves that the money flow is already too much.

And the CRR is required to deal with a financial crisis, not help the govt deal with their fiscal deficit.

 

[vstol Jockey]

It's the govt that's trying to break this synergy.

The fiscal policy for this year was already laid out by the govt early this year, and the RBI created their policies in support of the govt's policies. But now the govt wants to change their fiscal policy in the middle of the year and are asking RBI to "adjust a bit". The govt has failed to manage their finances this year, so they want RBI to take the fall for it. Completely unwarranted.

Even after two rate hikes, it appears that inflation is still rising. This proves that the money flow is already too much.

And the CRR is required to deal with a financial crisis, not help the govt deal with their fiscal deficit.

What should be the ideal inflation rate? What is better, inflation or deflation? Can an economy grow with deflation? In 2003-04 what was our CRR, and repo rates and also interest rates and inflation rate. Those were the best years of Indian economy which gave us the momentum for next 4-5 years.
If 3.7% inflation is too high a figure than I think that either the world is foolish our RBI governor the only brainy person in the world. Govt has maintained its fiscal deficit target well within the budgeted levels. The GST collections have also reached the budgeted levels and economy is on the upswing. This is the time to go for big ticket initiatives including increasing money supply and not bother too much for inflation in the short term.

 

[CountryFirst]

Can RBI and GOI function individually without anykind of synergy? RBI knows that we have this problem every year due to rains and floods that food inflation rises and gets settled within couple of months. This governor has been over reacting. Mistakes can happen, Mistakes can also happen in series one after the other as a consequence of one big mistake and also randomly with no connection with the other but when things like this happen, they point towards a well laid out plan & design. Which in this case is to scuttle Indian economy.

I think the days of all these traitors and globalists are all numbered. Their time is up, which is why all the desperate acts. I' hopeful about Bharat. It feels like the Achhe Dins are coming soon.

 

[vstol Jockey]

I think the days of all these traitors and globalists are all numbered. Their time is up, which is why all the desperate acts. I' hopeful about Bharat. It feels like the Achhe Dins are coming soon.

there was no problem with RBI after demonetisation and GST implementation as they disrupted the economy but economy came out of those ill effects rather quickly and these Jaichands who want to sabotage are growth story are being exposed. They have no reason now to cry about inflation. Ideally an inflation rate 50% of growth rate is considered an ideal inflation rate but if the growth rate is low, than an inflation rate equalt to the growth rate must be maintained otherwise it will result in deflation.
USA grows at about 1.5-2% annually and they maintain an inflation of 2% but for India depending on our growth rate 3.5-4.5% is ideal rate and we are maintaining this rate for last two years on annual basis.
A small check of Chinese inflation rates in last two decades when they maintained a scorching growth rate will make things clear to those who doubt these figures.
The way oil price is coming down and likely hood of fuel being added to GST basket in Jan 2019 will result in sudden drop of inflation and may result in deflation making our economic fundamentals weak. Govt is therefore forcing RBI to increase money supply in anticipation of this move and RBI governor is working to derail our economy. Anyone who calls 3.7% inflation high for an economy growing at 7.5% is unfit to be even countered.

 

[randomradio]

What should be the ideal inflation rate? What is better, inflation or deflation? Can an economy grow with deflation? In 2003-04 what was our CRR, and repo rates and also interest rates and inflation rate. Those were the best years of Indian economy which gave us the momentum for next 4-5 years.

The conditions at the time were different from where we are today. We were at a lower base and our per capita income at just $550 put us in a lower income bracket. Policies that worked then won't work now, especially when technology is taking centre stage.

Our ideal inflation rate today is 4%. The RBI is doing a good job maintaining this rate.

If 3.7% inflation is too high a figure than I think that either the world is foolish our RBI governor the only brainy person in the world. Govt has maintained its fiscal deficit target well within the budgeted levels. The GST collections have also reached the budgeted levels and economy is on the upswing. This is the time to go for big ticket initiatives including increasing money supply and not bother too much for inflation in the short term.

Inflation is measured over the year, not just a month or two. Even with 3.7% in August, RBI believes inflation for H2 will be at 4.8%. So it is headed in an upward trend even with the rate hikes, which means more hikes are in store for us in the near future. The problem with ignoring inflation now is, next year, the tightening will become even worse.

Money flow should be determined by market forces, not simply based on the whims of the govt for the sake of winning elections.

 

[vstol Jockey]

Inflation is measured over the year, not just a month or two. Even with 3.7% in August, RBI believes inflation for H2 will be at 4.8%. So it is headed in an upward trend even with the rate hikes, which means more hikes are in store for us in the near future. The problem with ignoring inflation now is, next year, the tightening will become even worse.

Well they have been proven wrong. Their decision to hike rates in June and August have already been proven wrong. The effect of US sanctions in Iran was the main reason for worry about inflation that has now been proven wrong and oil prices have cooled down. So why not do the correction? We are here on this forum and let us see what happens in Jan when we usually have the lowest inflation rates. For oil and as well as for food.

Govt is not doing it for elections, it is doing it to support its future policies. If they had to do it, they would have done it three months back as politically that was the best time but they waited to let GST collections reach the targeted values. The overall shortage for this FY for GST is just 27K crores and govt will make it up this shortfall within this fiscal itself as from now on the GST collections will only grow. I will be least surprised if the govt exceeds its GST targets within this year itself.
The compensation which needs to be paid for states like TN was one of the main reasons for higher GST but it has now been proven that those states do not need compensation from central GST and that gives the govt leeway to add fuel in GST.
‘Year 1 GST compensation to States only Rs. 5,000 crore’