Economy Round Up – May 19 to 23, 2014

India Infoline News Service | Mumbai |

The economic reforms that helped India to elevate growth in the 1990s happened in large part due to the external crisis India faced then and ever since progress in reforms have been rather arduous as if in a ‘two steps forward and one step back’ mode

Top Stories

Modi checks in: India’s tryst with destiny

"A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation long suppressed finds utterance". Thus spoke Jawaharlal Nehru, India’s first Prime Minister in his celebrated Tryst with Destiny address to the nation on the eve of India’s Independence in August 1947. While India woke up to life and freedom at the stroke of that midnight hour, successive Left-of-Centre governments never allowed India to attain its true economic freedom and her full growth potential. Between 1950 and 1990, India’s GDP growth Cagr was a low 4%. The economic reforms that helped India to elevate growth in the 1990s happened in large part due to the external crisis India faced then and ever since progress in reforms have been rather arduous as if in a ‘two steps forward and one step back’ mode. Nonetheless, GDP growth improved to 6.5% Cagr between 1990 and 2010. This momentum of positive change though broke in 2010 as the Congress led UPA-II recoiled back more vigorously to the centrist-socialist, entitlement driven, welfare-state model (partly to overcome the stigma that came from the revelation of a series of corruption scandals). The policy environment turned regressive, business sentiment soured, job creation nearly stagnated, investment cycle weakened, productivity waned and the resultant stress, as is well known, drove a slump in growth and spike in inflation over the past three years. There is little doubt that a large part of the pain was self-inflicted due to the faulty policies (or the lack of right ones), poor execution and bad governance of the outgoing government...Read More

Modi era: The roadmap for the economy and equity markets

7 reasons why Modi as PM marks a tectonic shift in India’s history

Narendra Modi to be sworn in as PM on May 26

Modi-swearing in… Ruchira Kamboj to manage protocol affairs

Pakistan PM Sharif invited for Modi's swearing-in ceremony

President appoints Narendra Modi as Prime Minister

My position shows the strength of democracy: Narendra Modi

BJP elects Narendra Modi as leader

Victory’s dawn has risen; Faleomavaega congratulates Modi: USINPAC

Narendra Modi may sign Teesta water-sharing agreement with Bangladesh

State-Wise Voter turnout in General Elections 2014

Modi resigns, Anandiben Patel named new Gujarat CM

Gujarat's revenue minister Anandiben Patel was elected leader of the BJP Legislature Party Leader, who will succeed Prime Minister-designate Narendra Modi. Narendra Modi submitted his resignation as the chief minister to state governor Kamala Beniwal. Modi will take oath as the Prime Minister of the country on May 26. Anandiben Patel will be the first woman chief minister of Gujarat. Anandiben Jethabhai Patel is an Indian politician and the first woman Chief Minister of Gujarat. She is a member of the Bharatiya Janata Party (BJP) since 1987. She is currently the Cabinet Minister of Road and Building, Revenue, Urban development and Urban Housing, Disaster Management and Capital Projects in the Government of Gujarat. She is considered to be the front runner for the role of Chief Minister of Gujarat, when Narendra Modi moves to Delhi post parliament elections 2014. Indian Express has listed her in top 100 most influential people of India this year...Read More

Outlook on India is stable: Moody's

Stable Government could take growth to 6.5%: CII

Modi win: SARE Homes sees confidence in real estate market

We look forward to policies that will bolster infrastructure development: Anil Chaudhry

AIAI welcomes stable government for growth

Modi’s massive mandate a vote for stability: Srichand Hinduja

Election result sentiment from a staffing perspective: Kelly Services India

Jitan Ram Manjhi is Bihar's new CM

Bihar Scheduled Caste and Schedule Tribe Welfare Minister Jitan Ram Manjhi is the new Chief Minister after Nitish Kumar steps down Kumar reportedly said that he would lead the party’s campaign in the 2015 Assembly election. Kumar, along with party chief Sharad Yadav and State unit president Bashist Narain Singh, called on Governor D.Y. Patil and staked claim to form a new government with the support of 117 JD(U) legislators, one CPI MLA and two Independents in the Assembly with an effective strength of 239. Jitan Ram Manjhi is an Indian politician from the eastern state of Bihar, serving as its 23rd Chief Minister following Janata Dal (United) supremo Nitish Kumar's resignation. Previously, he had served as minister for scheduled castes and scheduled tribes welfare in Nitish's cabinet. Before that, he was associated with the Indian National Congress and Rashtriya Janata Dal. Manjhi has been a member of the Bihar Legislative Assembly since 1980 to 1990 and then again from 1996...Read More

Akhilesh Yadav sacks 36 Minister-rank leaders

Competition in the Banking Sector: Opportunities and Challenges

RBI Governor Raghuram Rajan said, "Healthy competition is not just the best way to grow but also the best way to include all citizens; what better way to get needed services to a poor housewife than to encourage providers to compete for her money? What better way to uplift a member of a backward community than for private employers to compete to hire her for a good job?" Healthy growth-inducing inclusive competition does not, however, emerge on its own. Without intervention, we get the competition of the jungle, where the strong prey on the weak. Such competition only encourages a certain kind of winner, one who is adapted to the jungle rather than the world we want to live in. In contrast, healthy competition needs the helping hand of the government; to ensure the playing field is level, that entry barriers are low, that there are reasonable rules of the game and clear enforcement of contracts, and that all participants have the basic capabilities such as education and skills to compete... Read more

Crude Oil: Is Ukraine really a prop?

Ukrainian crisis pre-dominated the market attention, with the ever evolving geopolitical situation benefitting Brent oil more than WTI crude. Effectively, the spread between WTI and Brent is hovering around US$8/bbl, as compared with the gap of US$4-6/bbl during the month of April. The accord between Russia, Ukraine, US and EU lost track, with pro-Russian separatists showing no inclination of disarming themselves or relinquishing illegal control over government buildings. Consequently, US expanded the list of people whose assets will be frozen and who will be denied travel visas. EU has also drawn up a list of additional names on which various sanctions will be enforced. In the latest, pro-Russian rebels in eastern Ukraine defied the appeal by Russian President Vladimir Putin to procrastinate the plebiscite on secession and went ahead with the vote.

The authorities in the region declared that overwhelming majority of the votes demanded separation from Ukraine and ensuing confederation with Russia. Markets are now keeping an eye on the key May 25th elections in Ukraine. Kiev is appealing to EU and US to consider imposing tougher sanctions against the Russians considering the palpable signs of Moscow trying to undermine the political situation in the country. Meanwhile, German Chancellor Angela Merkel and French President Francois Hollande stated that they will enforce further sanctions against Russia if there are disruptions during the significant elections in Ukraine to form a new government.

Rupee hits fresh 11-month high

The rupee retreated from an 11-month high to fall on Friday. The partially convertible rupee closed at 58.52/53 per dollar, after gaining as high as 58.33 intraday, its strongest against the dollar since June 18. The stock market in India ended with smart gains on Friday extending its winning streak to the second consecutive trading session. Sentiment got a boost after SBI announced its quarterly results and investors were pleasantly surprised to see the fall in gross NPAs.

News Infocus

Employees prefer higher ‘in-hand’ pay out compared to other components

According to TimesJobs.com’s latest Compensation and Benefit survey, rising inflation and increasing cost of living has led employees to re-evaluate their priorities on how they are compensated for their work. Our survey indicates that most employees, across generations, prefer a higher ‘in-hand’ pay out compared to other components of the salary. ‘In-hand’ salary matters more to the junior level employees than the mid or senior level. Kishore Sambasivam, director-total rewards, SAP, attributes this trend to the fact that employees at junior levels are typically single and seek ownership. They do not want money locked up in a PF or superannuation benefit. Employees at this level want to plan their investment strategies which may have a higher risk and return profile...Read More

Skills gap is hampering businesses’ recruitment efforts

More organisations are planning a hiring spree over the next 12 months as their growth prospects improve, but nearly two thirds (63%) are concerned that they won’t be able to find the people with the skills they require to fill these positions. A global PwC survey of over 1,300 CEOs in 68 countries reveals that after a number of years of headcount cuts, half of organisations surveyed are looking to hire again. Organisations in the Middle East (71%), the South East Asian nations (54%) and China (53%) plan to make the most net hires over the next 12 months, while business services (51%), insurance (49%) and technology (46%) are the sectors looking to make the most net hires. Despite the positive outlook for jobs, PwC’s research reveals that business leaders are more concerned than ever about being able to find the right people to fill these roles. 63% of CEOs (an increase of 5% from 2013) say the availability of key skills is the biggest business threat to their organisation’s growth. CEOs in Africa (96%), the South East Asian nations (90%) and South Africa (87%) are most concerned about the lack of skills. Technology and engineering firms are struggling the most with the shortage of skilled employees...Read More

Mumbai at bottom, Tokyo on top amongst top 37 tourist cities

TripAdvisor announced the results of its second annual Cities Survey, revealing how global travellers view key tourist cities around the world. The results were compiled based on more than 54,000 responses from those who have recently written TripAdvisor reviews for featured cities around the world. Ranking first for city with the best overall experience was Tokyo. The city also claimed top spots for helpfulness of locals, taxi service, local public transportation, and cleanliness of streets. Tokyo received high marks across the board, as it ranked among the top 10 in 13 of 16 categories in the survey... Read more

Buying compact homes is a wise investment

Home loans rates have been slashed to 8%. If such an announcement in the paper prompts you to buy a house, count yourself among those who act in haste and repent in leisure. Why do people become impractical while buying property? Is it prudent to buy a house just because there are home loans available? In most of the cases, we see people buying huge houses irrespective of the fact whether it meets their budget requirement or not. If you have a decent income with some money set aside for monthly equated installments, then it’s wise to go for house that is well within your financial reach. It’s obviously the size of the apartment that determines the price of the property. A big and fancy house will undoubtedly be the cynosure of all eyes except probably its occupants if they have gone beyond their budget to invest in such a property. Buying a house is a huge investment and in most of cases it’s a long term financial burden, if you are going by the EMI way. So, isn’t it wise to analyze your financial picture and settle down for a house that you would be comfortable in...Read More

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