India Says

India’s economy accelerated by a surprise 9.3 percent in the first quarter as industry and services grew strongly but a slowdown loomed, analysts warned Friday. The quicker pace of growth in the April to June period in South Asia’s largest economy exceeded analysts’ expectations of around 8.9 percent and outpaced the 9.1 percent expansion in the previous quarter, data showed.

“The GDP figures have come in strong,” said Manika Premsingh at Edelweiss Capital, but she warned of slower expansion in coming quarters as a result of a steady tightening of monetary policy to curb inflation.

India’s economy grew by 9.4 percent in the financial year to March 2007, buoyed by an increasingly affluent middle class, and is the second-fastest growing after China. Finance minister P. Chidambaram said he was “confident GDP growth will remain close to nine per cent this year” even though first-quarter growth was “a shade below” the 9.6 percent expansion logged in the year-ago period.

Other data Friday showed inflation slipped just below four percent for the first time in over 15 months for the week ended August 18, down from 4.10 percent the previous week and well under central bank targets. But economists said the fall in the wholesale price index, India’s closest watched inflation measure, was mainly due to a high year-ago base effect when inflation was 5.12 percent.

“For now, it does not seem likely the central bank will loosen rates in a hurry… (as) the economy continues to grow at an above trend pace,” said Premsingh.
The latest growth figures reflected a robust performance by manufacturing, which grew by 11.9 percent year-on-year. Services accelerated by 10.6 percent.
Agriculture, which the government is hoping to stimulate to boost overall growth, expanded by 3.8 percent.

“Construction has surprised on the upside and agriculture has turned out a bit stronger than expected,” said Soumitra Choudhury, economic advisor at credit rating agency ICRA. The growth data helped to lift India’s benchmark Sensex index by 1.30 percent or 196.86 points to 15,318.60, for its sixth straight day of gains.

“The GDP numbers were strong in absolute terms, it was a good indicator for the market,” said Naresh Garg, chief investment officer at Sahara Mutual fund. The better growth data prompted some economists to boost full-year forecasts. But the economy would still expand more slowly this year than last, when growth was the fastest in nearly two decades, according to their predictions.

Monetary tightening may already be cooling the economy. Sales of cars, motorbikes and trucks have dropped as interest rates have surged to five-year highs. Consumer durables spending has also fallen. JP Morgan said it would likely hike its full-year growth forecast to around 8.6 percent from 8.0 percent earlier. India’s central bank has forecast 8.5 percent growth.

“Growth in the remainder of the year will moderate slightly owing to the combined impact of monetary tightening and recent rupee appreciation,” said JP Morgan economist Rajeev Malik, who forecast a “pronounced” slowdown in consumer spending.

The rupee is trading at around eight-year highs against the dollar after hitting close to decade peaks earlier this year. Many analysts said India was relatively protected from the US subprime crisis, noting the direct exposure of domestic banks to the credit woes is limited.

India Inc has invested 28.9 billion dollars on acquiring companies abroad during the six months of the current fiscal, against 4.3 billion dollars in 2005, reflecting its growing appetite for inorganic growth and overseas expansion.

“This is a true barometer of globalisation and was made possible due to huge foreign exchange surpluses that the country had accumulated on account of a variety of reasons especially quantum jump in services exports,” Minister of State for Industry Ashwani Kumar said.

Addressing a gathering of finance professionals, he urged them to widen their knowledge base. “Knowledge of tax policy and gamut of other policies is required to be fully equipped to serve your clients the best. It will also allow them to sit across the table with the target company and negotiate a better deal,” Kumar said.

While globalisation is a reality that one has to accept and gear up for, prepondence of poverty, destitution, disease and malnutrition would apply jolts to the liberalisation process, he observed. Inclusive growth is the most preferred route, Kumar suggested. “We have strong delivery systems to distribute wealth and prosperity. That is a societal requirement for harmony and peace, which are critical for sustained growth,” he said.

India, whose people on average have one twentieth of the carbon dioxide emissions of those in the U.S., will negotiate new global greenhouse gas limits with developed nations to curb climate change, a government official said.

“It’s a self-obvious truth” that rich nations should agree to cut emissions because their output is causing global warming, R. H. Khwaja, an official at India’s Ministry of Environment & Forest, said yesterday in an interview in Vienna. “We are willing to negotiate without any conditions.”

Khwaja, representing India at talks on climate change at a meeting of United Nations members this week, declined to specify what the nation wanted from negotiations to set limits starting 2013, when limits set by the 1997 Kyoto Protocol end. Under that treaty, developing nations can sell emission credits from greenhouse-gas reducing projects to rich nations that overshoot targets.

India has 0.8 metric tonnes of carbon dioxide emission per person a year, according to a January report by the European Renewable Energy Council. That’s compared with 15.6 tons a person in the U.S. The European Commission, the regulatory arm of the 27- nation European Union, wants developed nations to cut their greenhouse gases by 30 percent by 2020 compared with 1990 levels and to half of 1990 levels by 2050.

Europe is pressing developed nations to curb emissions in a bid to prevent temperatures from rising more than 2 degrees Celsius. Under one commission proposal, developing nations would be allowed to emit more as their economies grow, peaking around 2020, according to a Jan. 10 statement. The U.S. has a population of about 300 million and India 1.1 billion.

Harlan Watson, the senior climate negotiator for the U.S. Department of State, said Aug. 28 some of the world’s developing nations make a good case for being allowed to increase their emissions. China and India say they should be allowed to increase output to produce the energy needed to stoke economic growth, and that “is a very compelling argument,” Watson said.

The country’s economic growth drive is maintain its strong pace this fiscal but there is a possibility of inflation emerging as the main hitch peril, said the Reserve Bank of India (RBI). A stable increase in gross domestic calculated savings and investment, demand and supply ration, addition of new facility along with rigorous and resourceful use of existing capacity are the factors that can support the growth chart 2007-08, the annual report for 2006-07 of the apex bank said.

The earlier monetary policy of central bank hooked the GDP growth at 8.5% during this fiscal for India, world’s second fastest growing economy after China. Figures reveal that India recorded an average of 8.6% growth in the last four financial years ending 2006-07 and 9.4% growth in 2007-08.

A lately released annual report said a growing demand is posing bigger strain for hastened development of delivering infrastructure, despite efforts to eliminate supply restraint in the sector. Capacity consumption was particularly prolonged in sectors viz. electricity generation, roads, ports and major airports, the RBI said.

In regards to this, Prime Minister Manmohan Singh announced a $6 billion plan this month to enhance ranch productivity and is in quest of savings to secure the nation’s power and transport network. This will surely keep inflation below the government’s target of 4% and maintain customer demand.

The report also revealed the possibility of shortages in agricultural performance and physical and social infrastructure to curb economic-growth while bearing inflationary weight. Albeit RBI directed to emergence of inflation as the key downside risk to the embryonic macroeconomic viewpoint, it said: “the current gains in bringing down inflation and in soothing price-rise expectations would definitely sustain the present phase of the growth chart.”

Also, the Reserve Bank Governor Yaga Venugopal Reddy has raised the borrowing costs nine times since Oct 2004. The central bank also made an effort to curb record bank lending by lifting the cash of lenders as reserves to a six-year high of 7% of deposits. Finance Minister Palaniappan Chidambaram is also thinking to lower the rate from the averaged 4.96% in the current fiscal year to 4%.

The nation is becoming prone to the awful routine of opening its eyes with the scenic brutality caused by another bomb blast in its any corner, be it public or private; buried or renowned palace. Bombs are lodged in packed public places viz. trains, parks, restaurants, markets and synchronized blasts leave dozens of people dead and many more mutilate.

The popular response of the organization is to blame Islamic militants and be extra vigilant in other parts of India in preparation of another potential blast. Then the investigations go on and on only ending with a long list of suspects.

In February, a bomb on a train traveling through north India on its way to Pakistan killed 68 people. In July 2006, seven bombs exploded in Mumbai, killing more than 200 and injuring more than 700 others. In October of 2005, three serial bombs killed 62 people in New Delhi. No concrete step has been taken to understand who is behind the attacks. On Saturday night, a pair of bombs went off in Hyderabad killing at least 42 people.

“Available information points to the involvement of terrorist organizations based in Bangladesh and Pakistan,” Y.S. Rajasekhara Reddy, chief minister of Andhra Pradesh said. “These investigations don’t go anywhere,” said V.K. Sood, a retired lieutenant general and New Delhi-based defense analyst. “The authorities find it exceedingly difficult to specify who was actually behind the blasts … It’s basically a guessing game.”

For the past two years, India was second only to Iraq in the number of terrorist fatalities worldwide, with 1,361 deaths in 2005 and 1,256 in 2006, says the report conducted by U.S. government’s National Counterterrorism Center. What needs to be changed is the mono centric approach of investigations that blames every attack, directly or indirectly, to Pak based terrorists. Perhaps we also need to work on technology a bit, laggards that we are.

There is good news for Indian IT Training and Education market. It is currently $656 million, and is growing at a Compound annual growth rate (CAGR) of 64%. However, the Indian IT e-learning market, which is currently $122 million is growing at a CAGR of 73%, said Navug Mohnot, CEO of India QAI.

Monhot further said that 29% of all IT training is on demand: e-learning, as it meets just-in-time training requirements, has maximum reach and no geographical boundaries, offers homogeneity and consistency in content which can be easily upgraded.

Understanding the need of the time, QAI has launched The Edista learning, an on-demand, web enabled curriculum that offers learner centric online. The launch of the Edista Institute in India aims at dealing with the fast growing software testing segment. The Indian software testing segment market was $2 billion and is expected to grow at $8 billion by 2008. Also, the size of the testing training market here is expected to grow at a CAGR of 50%.

Killing Indian Roads

In 2004 in India, 92,618 people lost their lives in road accidents, second only to China where nearly 1, 07,077 people were killed in the same year. This report was furnished by Rajya Sabha today.

Replying to a written question, Minister of State for Road Transport and Highways K H Muniyappa told the Upper House that 4,39,255 road accidents in India during 2005 resulted in as many as 94,968 deaths. The US reported a massive 19 lakh road accidents in 2004, followed by a loss of 42,636 lives, 4,29,910 accidents claimed 92,618 lives in India during the same year.

Amidst the rising protests against Blueline buses, the NCR region astoundingly reported a drop in the number of road fatalities during July this year at 748 against 821 in the corresponding period during the last year.

According to the data, China, India and the US were the only three countries which had casualties above the 10,000 mark. Singapore reported the minimum causalities during the year with 193 deaths.

The Lok Sabha took a very positive step for the pilgrims from India and Pakistan visiting religious sites in each other’s countries. It declared the pilgrims could soon avail the group tourist visa facility. “As per the existing provision, Pakistani nationals in a group of not less than ten persons are entitled for 14 days non-extendable group tourist visa,” said Minister of Tourism Ambika Soni.

Majuli: The Centre has sanctioned Rs 382.25 lakh for the development of Assam’s Majuli Island as a Heritage and Eco-Tourism Destination, Soni said. Samjhauta Tragedy: an ex-gratia of Rs 10 lakh has been paid to next of kin of 35 victims of the Samjhauta Express fire incident of February, Minister of State for Railways R Velu told the Lok Sabha.

If this proposal is finalized by the Ministry of Home Affairs, there was a provision that group tourist visa can be used by tourists as well as pilgrims of the two countries. Considering the common historical and cultural ancestry of India and Pakistan, it is a very considerate move on the part of the government. This would bring praises from all spheres, and will help in re-strengthening the old ties.

In what is seen as a very significant move, the Uttar Pradesh government today ordered all organised retail stores to be shut down in the state. The final decision would be taken by the review panel set to review the case.

All this initially started when small traders attacked Reliance Fresh and Spencer’s stores on Wednesday. Following the attacks, Chief Minister Mayawati said Cabinet Secretary Shashank Shekhar Singh would head a five-member committee that would look into all aspects governing such stores.

Among the group of traders that attacked the stores, Samajwadi Party MP Banwarilal Kanchal was also there. In Varanasi also people gathered in front of an under-construction Reliance food outlet and shouted slogans.

The Chief Minister said that in view of the protests against these retail stores, it was felt that there was a need to review the policy in this regard. Mayawati said the official committee would include principal secretaries of housing, home, agriculture and health as members. Chief Minister’s Principal Secretary Shailesh Krishna clarified that the decision is not applicable to the malls, even though they might also be selling some similar products.

Coinciding with the happiness and proud moment of the celebrations of 60 years of Indian Independence came the list of 50 powerful Indians leading change in politics, the economy and the society, compiled by the worthy and esteemed US-based BusinessWeek magazine.

The list declared by BusinessWeek editors circumscribes names of the who’s who of Indian business sector, film fraternity, Politics and T wizards. Those coming in from the business, films and politics included:
Ratan Tata
Mukesh Ambani
Sunil Mittal
Commerce Minister Kamal Nath
Aviation Minister Praful Patel
UP Chief Minister Mayawati
Delhi Metro chief E Sreedharan
Amitabh Bachchan
Rajnikant
Shahrukh Khan
Aishwarya Rai
Rahul Dravid
Sachin Tendulkar

While acknowledging the role of IT wizards the list took a turn towards:
Infosys’ N R Narayana Murthy
Wipro’s Azim Premji
Tata Consultancy Services’ (TCS) S Ramadorai

The magazine heralded the position of Indian subcontinent in the world across putting that “There’s more to India than just outsourcing.There are politicians who actually work, corporates who think globally, athletes who aim high, and designers who ensure India is in season. And Bollywood is now teaming up with Hollywood for a whole new script,” wrote the publication. With a view to divert the minds towards the achievements made by some sectors and those which are booming with an equal zest the magazine said, that initially it was the Tech gurus who dominated the show, but today the economy is seeing a swell in new sectors of growth including Telecom, financial services, retail, which are sure to bring forth new heroes, and new businesses.