An Economic History of India from 1947-2013
India economy, the third largest economy in the world, in terms of purchasing power, is going to touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy of the world just after US and China. It will grow to 60% of size of the US economy. This booming economy of today has to pass through many phases before it can achieve the current milestone of 9% GDP.
The history of Indian economy can be broadly divided into three phases: Pre- Colonial, Colonial and Post Colonial.
Pre Colonial: The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world [editor’s note: India developed the way most other nations did: by peaceful settlement, wars and invasions], which is evident from the coins of various civilizations found at the site of Indus valley.
Before the advent of East India Company, each village in India was a self sufficient entity. Each village was economically independent as all the economic needs were fulfilled with in the village.
Then came the phase of Colonization. The arrival of East India Company in India ruined the Indian economy. There was a two-way depletion of resources. British used to buy raw materials from India at cheaper rates and finished goods were sold at higher than normal price in Indian markets. During this phase India’s share of world income declined from 22.3% in 1700 AD to 3.8% in 1952.
After India got independence from this colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. More here.
India’s GDP Growth Rate
The Gross Domestic Product (GDP) in India expanded at an annual rate of 8.60 percent in the last quarter. India Gross Domestic Product is worth 1296 billion dollars or 2.09% of the world economy, according to the World Bank. India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India’s output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. – Source
from foreigntradeexchange.com circa 2008:
US-India Trade Relations: The Importance of Partnership
India and US trade relation has seen its ups and downs. From the time India got her independence to the present day, there have been so many twists and turns that it can put even the highly watched soap operas to shame. Even before India got her freedom from the British, American companies like Citibank and IBM India, a wholly owned subsidiary of the main IBM World Trade Corporation, was operating in the Indian subcontinent since the turn of the 20th century. As India became independent, the country that defined democracy as “of the people, by the people and for the people” was expected to come close to this new democratic nation on the rise. However, as the countries of the world started to group themselves around the two superpowers, USA and USSR, the then prime minister of India chose to stay neutral. He started the Non-Alignment movement, which was not viewed quite well by the US government.
The period from 1960s to 1970s was the most turbulent time for Indian and American manufacturers. The leaning of US towards Pakistan during the Bangladesh War of 1971 did not go down well with the Indian government. The personal dislike of the then government officials in both the countries hampered the foreign trade between them. The excessive licensing and permit system of the country hampered the American exporters as well as importers. The relation during this period was more of a donor-receiver as India became one the of the biggest US aid receiving countries in the world. But this was the time when Indians went to US to study and gradually build the Indian Diaspora in that country.
The nadir in the trade relation between India and US came in the mid-1970s when the infamous India’s Foreign Exchange Regulation Act (FERA) came into being. It sought to reduce foreign investment to 26%, which IBM did not adhere to. As a result, IBM along with Coco Cola had their license revoked by the Indian minister George Fernandez. As cold war raged on, the relationship between US and India remained somewhat frosty. The thawing of the relationship started in the last decade of the 20th century as the former alley and trading partner of India, USSR started to disintegrate and ultimately collapsed.
During the same time, the Indian government began the long needed economic reforms of its present laws. The present prime minister of India, Mr. Manmohan Singh, was then the finance minister under the Narshimha Rao led government who started the process of liberalization. The license policies were heavily reviewed much to the comfort of the companies doing business with India. Indian exporters as well as importers also cheered the changes the government started to implement; changes, which boosted international trade, and the several section of the market was opened for direct investment by American investors.
The government changed in both countries but the reform and liberalization started by the previous government continued. Clinton government was quick to notice the growing economic power and India and identified it as one of the top 10 emerging market. The trade relationship between India and US rode rapidly as American manufacturers found the burgeoning market of India as its middle class began to rise rapidly. Indian exporters were thrilled by the demand of Indian products specially shrimp and processed stones in the US market.
The nuclear test in 1998 saw a new change in relationship between USA and India. The test brought a host of sanctions, which affected both American exporters as well as Indian exporters. In the long run, it was seen that the Glenn Administration Sanction had a negative impact on the American exporters and manufacturers. That is why an amendment was brought and sanctioned by President Clinton, which lifted some of the sanctions boosting the trade relationship between the two countries.
A New Beginning
The new millennium brought a new chapter in the Indo-US trade relationship. The visit of President Bill Clinton saw the signing of the historical “Vision Document”. As a part of the agreement, a joint Indo-US Working Group on Trade was established with participation on the ministerial level from both sides. The focus of the group was to regularly discuss on issues important to the improvement of the trade relation between USA and India.
All these initiatives bore fruit and started a rapid increase in trade volume between the two countries. While in 1993 Indian exporters brought in $4,551, American exporters made $2,761. The same figure in 2000 was $10,686 and $3,663 respectively; and that too only in goods! If we add the software export, the two-way trade amount would be something near $18 billion dollar! The next government change in both the countries continued with the improvement of the trade relation between USA and India. For President George Bush, India was a natural partner for USA as it was the world’s biggest democracy! The trade relation grew at an unprecedented rate and by 2004, the Indo-US bilateral trade reached a staggering $21.68 billion. The Bush government in 2001 restored 42 products in the GSP for India. GSP or Generalized System of Preference is a list of product specific to a country, which enjoys reduced duty access to the US market. These have doubled the volume of foreign trade between the two countries.
The Main Items of Trade
The first product on the list that has benefited Indian exporters very much is Jewelry. Indian manufacturers are bringing in the much needed foreign exchange by exporting precious stones, worked gold and diamond jewelries textiles, iron/steel products, textile floor coverings, organic chemicals and machineries like taps, valves, transmission lines, etc.
These are just the material things that are being exported by India. One of the biggest exports of India is perhaps in the IT sector. Since the last decade, India has emerged as a software giant thanks to the ingenuity, hard work, and technological prowess of Indians. The fact that most Indians can speak and converse in proper English have turned cities like Bangalore, Hyderabad and Gurgeon into “the back office of the world”. Through outsourcing the growing IT sector of India and companies like Infosys, Wipro, and others have not only developed a national presence, but made its foray into the US market as well. IT giants like Microsoft, Intel, IBM, and 3M have made India one of their hottest destinations.
Another big area where Indian exporters are thrilled with the rise of indo-us trade relation is agriculture and fisheries. The export of shrimp and other seafood have risen from $188 million in 1999 to $270 million in 2000. The amount has been going up since then as more and more Indian exporters comply with stringent safety and quality standard of US Food and Drug Administration. Besides these, other agro-based food products produced in India have also captured the US market. Mention can be made of Indian mangoes, which is one of the latest exports of India that have thrilled the American importers due to their demand. Indian mangoes, as claimed by the Indian Minister Kamal Nath, are much better in taste, flavor, and aroma than Mexican or South American varieties that were previously found in the US market.
As for US exporters, they have seen a steady rise in the demand for Engineering goods and machinery including electrical goods (30.20%), precious stones and metals (9.25%), organic chemicals (7%), optical instruments and equipments (also 7%). Furthermore, the aviation industry, which occupies 10.50%, got a further boost due to the new Boeing orders in both passenger and freighter category. The company is expecting an order of anything between $86 billion to $105 billion!
The growing middle class, which is nearly equal to the population of the USA, is a great market for USA exporters and manufacturers. The middle class of India today is flushing with money like never before. Companies like Proctor and Gamble, Pepsi, Coco Cola, General Electrical, Whirlpool, Ford have all scripted their success story in the Indian market. Beside these popular brands, multinational companies like McDonalds, Subway, and Yum! Group have a substantial presence in the Indian market.
In fact, many FMCGs have found success by adopting unique business methods like using the small sachet of popular items like shampoo, toothpaste, and detergent. It has helped them to capture the vast rural market of India where the demand is good but the purchase power of the people is very limited. Even luxury brands are eyeing their share of the market whether it is designer clothes, high-end cars, or the latest gadgets. …
Future Trade Between India [and the] United States
No international trade between two countries can be without hiccups. The same is between India and United States of America. Though at present USA is the second largest investor in India, but in the context of overall international FDI done by USA abroad, India only shares .24% as of 2002. In matter of doing business with India, it held the 24th position among US exporters, while Indian exporters stood at the 18th position. Both the countries are keen on improving the amount of international business transaction between them, but some barriers remain.
The high tariff barriers in some sectors, for example, distilled spirit and wine frustrate USA exporters. The fact that many commodities, especially, food products have to go through stringent checks and quality standards of Indian government forces. Many American manufacturers give up hope of conducting business with India. India’s patent law, which is not WTO-consistent and poor enforcement of Intellectual Property Rights Protection, makes many American manufacturers, especially in the biotechnology field, think twice before entering the market. The red tape and multiple layers of permits and certifications frustrate the American investors who are used to working fast.
Similarly, the caps in FDI in certain sectors like banking, retail and insurance does not go well with companies doing business with India. The slow progress of economic reforms especially in these sectors is holding back the much-needed FDI that can flow from US to India. As for Indian exporters, the main contention against America and other developed nations is the subsidy they give to their farmers. It puts the economically weak farmers in India in a poor position. The Antidumping & Countervailing law of USA is hurting many Indian manufacturers. – More here.
India’s Growth Since 1980
edited by Daniel Knight
The rate of growth improved in the 1980s. From FY 1980 to FY 1989, the economy grew at an annual rate of 5.5 percent, or 3.3 percent on a per capita basis. Industry grew at an annual rate of 6.6 percent and agriculture at a rate of 3.6 percent. A high rate of investment was a major factor in improved economic growth. Investment went from about 19 percent of GDP in the early 1970s to nearly 25 percent in the early 1980s. India, however, required a higher rate of investment to attain comparable economic growth than did most other low-income developing countries, indicating a lower rate of return on investments. Part of the adverse Indian experience was explained by investment in large, long-gestating, capital-intensive projects, such as electric power, irrigation, and infrastructure. However, delayed completions, cost overruns, and under-use of capacity were contributing factors.
Private savings financed most of India’s investment, but by the mid-1980s further growth in private savings was difficult because they were already at quite a high level. As a result, during the late 1980s India relied increasingly on borrowing from foreign sources (see Aid, this ch.). This trend led to a balance of payments crisis in 1990; in order to receive new loans, the government had no choice but to agree to further measures of economic liberalization. This commitment to economic reform was reaffirmed by the government that came to power in June 1991.
India’s primary sector, including agriculture, forestry, fishing, mining, and quarrying, accounted for 32.8 percent of GDP in FY 1991 (see table 17, Appendix). The size of the agricultural sector and its vulnerability to the vagaries of the monsoon cause relatively large fluctuations in the sector’s contribution to GDP from one year to another (see Crop Output, ch. 7).
In FY 1991, the contribution to GDP of industry, including manufacturing, construction, and utilities, was 27.4 percent; services, including trade, transportation, communications, real estate and finance, and public- and private-sector services, contributed 39.8 percent. The steady increase in the proportion of services in the national economy reflects increased market-determined processes, such as the spread of rural banking, and government activities, such as defense spending (see Agricultural Credit, ch. 7; Defense Spending, ch. 10).
Despite a sometimes disappointing rate of growth, the Indian economy was transformed between 1947 and the early 1990s. The number of kilowatt-hours of electricity generated, for example, increased more than fiftyfold. Steel production rose from 1.5 million tons a year to 14.7 million tons a year. The country produced space satellites and nuclear-power plants, and its scientists and engineers produced an atomic explosive device (see Major Research Organizations, this ch.; Space and Nuclear Programs, ch. 10). Life expectancy increased from twenty-seven years to fifty-nine years. Although the population increased by 485 million between 1951 and 1991, the availability of food grains per capita rose from 395 grams per day in FY 1950 to 466 grams in FY 1992 (see Structure and Dynamics, ch. 2).
However, considerable dualism remains in the Indian economy. Officials and economists make an important distinction between the formal and informal sectors of the economy. The informal, or unorganized, economy is largely rural and encompasses farming, fishing, forestry, and cottage industries. It also includes petty vendors and some small-scale mechanized industry in both rural and urban areas. The bulk of the population is employed in the informal economy, which contributes more than 50 percent of GDP. The formal economy consists of large units in the modern sector for which statistical data are relatively good. The modern sector includes large-scale manufacturing and mining, major financial and commercial businesses, and such public-sector enterprises as railroads, telecommunications, utilities, and government itself.
The greatest disappointment of economic development is the failure to reduce more substantially India’s widespread poverty. Studies have suggested that income distribution changed little between independence and the early 1990s, although it is possible that the poorer half of the population improved its position slightly. Official estimates of the proportion of the population that lives below the poverty line tend to vary sharply from year to year because adverse economic conditions, especially rises in food prices, are capable of lowering the standard of living of many families who normally live just above the subsistence level. The Indian government’s poverty line is based on an income sufficient to ensure access to minimum nutritional standards, and even most persons above the poverty line have low levels of consumption compared with much of the world.
Estimates in the late 1970s put the number of people who lived in poverty at 300 million, or nearly 50 percent of the population at the time. Poverty was reduced during the 1980s, and in FY 1989 it was estimated that about 26 percent of the population, or 220 million people, lived below the poverty line. Slower economic growth and higher inflation in FY 1990 and FY 1991 reversed this trend. In FY 1991, it was estimated that 332 million people, or 38 percent of the population, lived below the poverty line.
Farmers and other rural residents make up the large majority of India’s poor. Some own very small amounts of land while others are field hands, seminomadic shepherds, or migrant workers. The urban poor include many construction workers and petty vendors. The bulk of the poor work, but low productivity and intermittent employment keep incomes low. Poverty is most prevalent in the states of Orissa, Bihar, Uttar Pradesh, and Madhya Pradesh, and least prevalent in Haryana, Punjab, Himachal Pradesh, and Jammu and Kashmir.
By the early 1990s, economic changes led to the growth in the number of Indians with significant economic resources. About 10 million Indians are considered upper class, and roughly 300 million are part of the rapidly increasing middle class. Typical middle-class occupations include owning a small business or being a corporate executive, lawyer, physician, white-collar worker, or land-owning farmer. In the 1980s, the growth of the middle class was reflected in the increased consumption of consumer durables, such as televisions, refrigerators, motorcycles, and automobiles. In the early 1990s, domestic and foreign businesses hoped to take advantage of India’s economic liberalization to increase the range of consumer products offered to this market.
Housing and the ancillary utilities of sewer and water systems lag considerably behind the population’s needs. India’s cities have large shantytowns built of scrap or readily available natural materials erected on whatever space is available, including sidewalks. Such dwellings lack piped water, sewerage, and electricity. The government has attempted to build housing facilities and utilities for urban development, but the efforts have fallen far short of demand. Administrative controls and other aspects of government policy have discouraged many private investors from constructing housing units.
Liberalization in the Early 1990s
Increased borrowing from foreign sources in the late 1980s, which helped fuel economic growth, led to pressure on the balance of payments. The problem came to a head in August 1990 when Iraq invaded Kuwait, and the price of oil soon doubled. In addition, many Indian workers resident in Persian Gulf states either lost their jobs or returned home out of fear for their safety, thus reducing the flow of remittances (see Size and Composition of the Work Force, this ch.). The direct economic impact of the Persian Gulf conflict was exacerbated by domestic social and political developments. In the early 1990s, there was violence over two domestic issues: the reservation of a proportion of public-sector jobs for members of Scheduled Castes (see Glossary) and the Hindu-Muslim conflict at Ayodhya (see Public Worship, ch. 3; Political Issues, ch. 8). The central government fell in November 1990 and was succeeded by a minority government. The cumulative impact of these events shook international confidence in India’s economic viability, and the country found it increasingly difficult to borrow internationally. As a result, India made various agreements with the International Monetary Fund (IMF–see Glossary) and other organizations that included commitments to speed up liberalization (see United Nations, ch. 9).
In the early 1990s, considerable progress was made in loosening government regulations, especially in the area of foreign trade. Many restrictions on private companies were lifted, and new areas were opened to private capital. However, India remains one of the world’s most tightly regulated major economies. Many powerful vested interests, including private firms that have benefited from protectionism, labor unions, and much of the bureaucracy, oppose liberalization. There is also considerable concern that liberalization will reinforce class and regional economic disparities.
The balance of payments crisis of 1990 and subsequent policy changes led to a temporary decline in the GDP growth rate, which fell from 6.9 percent in FY 1989 to 4.9 percent in FY 1990 to 1.1 percent in FY 1991. In March 1995, the estimated growth rate for FY 1994 was 5.3 percent. Inflation peaked at 17 percent in FY 1991, fell to 9.5 percent in FY 1993, and then accelerated again, reaching 11 percent in late FY 1994. This increase was attributed to a sharp increase in prices and a shortfall in such critical sectors as sugar, cotton, and oilseeds. Many analysts agree that the poor suffer most from the increased inflation rate and reduced growth rate. – Source
The Economic History of India and Economy of India [from 1951-1996]
by Thayer Watkins
The Economic System of India
Before the last decade, the 1990’s, India was probably on the short list of almost every economist outside of India of the countries with the worst economic systems. India had and probably still has a parasitical class of politicians and bureaucrats that micromanage the economy in the interests of their class. They hypocritically aver that they are doing what they are doing in the interest of the people of India. There has been some official allegiance to socialism with a goal of achieving it through Stalinist central planning. The fact that the result has been some horrible mixture of state capitalism and moribund corporatism is usually attributed to incompetence and ineptitude on the part of the bureaucracy. The Indian American economist Jagdish Baghwati of Columbia University remarked that he agreed with the view that “India’s misfortune was to have brilliant economists: an affliction that the Far Eastern super-performers were spared.” The policies implemented by the Government of India before the last decade were brilliant only in maintaining the power and influence of the bureaucrats. Judged with respect to an promoting the welfare of the Indian people those policies were ridiculously bad, to the point of stupidity.
The bureaucracy has been rather competent in generating excuses for the failure of their policies. One of those exceuses has been that there is a Hindu rate of growth that is significantly lower than the rate of growth that other countries could achieve. What the bureacrats dare not say is that in maintaining a pool of economic rents the bureaucrats’ policies were an outstanding success.
The disappointing economic progress in India up to 1990 cannot be attributed to any shortcoming in talent among the Indian people or the impediments resulting from Indian cultures. Indians out from under the oppression of the bureaucracy of the Indian Government have succeeded spectacularly in professions and business.
Probably the misguidance of India development can be attributed to India’s first prime minister, Jawarharlal Nehru. Nehru chose the goal of economic self-sufficiency with economic development to be achieved by central planning modeled on that of the Soviet Union. By cutting off imports India gave a protected market to domestic producers. India got domestic production but it was production of low quality, obsolete products. The policies stifled economic growth and India, with its high level of population and poverty, could ill afford low rates of economic growth.
The two makes of automobiles produced in India, copied from models of the British Austin and Hillman of the 1950’s, remained unchanged for more than forty years.
The planning and adminstration of the economic did not emerge full blown. The first five year plan (1951-55) called for the planned development of only a few industries, the ones that private industry had not developed for one reason or another. In the first five year plan the other industries were left to the market.
The second five year plan (1956-1961), the product of P.C. Mahalanobis’ work, was more inteventionist. It tried to implement the elements of British socialism and combine them with the tenets of Mahatma Gandhi. It sought to eliminate the importation of consumer goods, particularly luxuries, by means of high tariffs and low quotas or banning some items altogether. The large enterprises in seventeen industries were nationalized. License were required for starting new companies, for producing new products or expanding production capacities. This is when India got its License Raj, the bureaucratic control over the economy. Not only did the Indian Government require businesses get bureaucratic approval for expanding productive capacity, busineeses had to have bureaucratic approval for laying off workers and for shutting down. When a business was losing money the Government would prevent them from shutting down and to keep the business going would provide assistance and subsidies. When a business was hopeless an owner might take away, illegally, all the equipment that could be moved and disappear themselves. In such cases the Government would try to keep the business functioning by means of subsidies to the employees. One can imagine how chaotic and unproductive a business would be under such conditions.
Government planning also involved requiring businesses to produce in particular areas, usually economically backward areas. It also might require the production of certain goods such as cheap cloth for the poor.
The Indian Economic Plans had to be financed and this often meant taking resources away from agriculture and giving them to pet industries that were not viable on there own. Ultimately this meant starving agriculture to feed inefficient industries the Government favored. Such a program was not likely to alleviate poverty and so in 1971, under Nehru’s daughter, Indira Gandhi, the Government tried to eliminate poverty by promoting small, labor intensive enterprises.
The net effect of the Government programs was to take away resources from agriculture in the countryside to give it to favored businesses in the cities. When the effects on agriculture and the countryside became significant the plan added programs to help the countryside (labor intensive small businesses) and programs to aid agriculture such as a fertilizer subsidy. These programs to help agriculture and the countryside generally came from resources which the Government took away from agriculture and the countryside. The fertilizer subsidy may have been of greater benefit to the wealthier farmers than to the poorer farmers.
India’s output did grow but not as much as did that of other countries in the region. The Government of India generally takes credit for growth, but when India’s performance is compared to that of other countries one sees that the Government’s contribution to growth was negative. The followi shows the magnitude of the shortfall in growth that India’s oppressive system is responsible for.
With the top performers achieving a growth rate of industrial production of about ten percent while India achieved a growth rate of only at most about five percent the cost of the License Raj to India’s growth rate was about five percent, or half the rate of growth.
One of the most wonderful things to happen to the world was the genetic development of high-yielding grain varieties, the Green Revolution. This development probably put an end to famine from natural causes. Between 1970 and 1989 agricultural production in India did grow but the rate of increase was only 2.1 percent per year whereas over the same per period the annual rates of growth of farm output in Indonesia, Malaysia, the Philippines and Thailand were 3.7%, 4.7%, 3.6% and 4.5%, respectively. Again the cost of the License Raj to growth in India was about half the rate of growth. The cost of the License Raj more importantly is in the slower pace of alleviating poverty. – More here.
Free Trade Between Mercosur and India
by Ranja Sengupta, edited by Daniel Knight
A framework trade agreement was signed between India and the Mercosur trade block of Latin America on the 17th of June in Asuncion, Paraguay. This sets in motion the process that will ultimately establish a ‘Free Trade Area’ between the Indian market and Mercosur – the Southern Core Common Market in Latin America. “The signing of the framework agreement will pave the way to enter into Preferential Trade Agreement as the first step and ultimately to negotiate a Free Trade Agreement in long-term interest,” the official spokesman for the Indian Ministry of Commerce said in New Delhi, prior to the actual signing of the agreement. The protocol calls for “clear-cut, reliable and enduring ground rules to further the development of trade and investment”. “India is a significant point of reference for Mercosur, and not solely on account of the extraordinary growth that we have witnessed in some sectors, such as information technology and specialty chemicals,” the Paraguayan foreign minister said.
The procedure for a Preferential Trade Agreement (PTA) and a subsequent Free Trade Agreement (FTA) is likely to be concluded by August 2003. Tariff concessions on a reciprocal basis and the mutual reduction of Customs duties should follow soon after. For India, this offers major trading possibilities since Mercosur is the third largest common market in the world, after the US and the European Union. For Mercosur, which has been keen to develop markets outside the US and the EU, its largest trading associates outside of Latin America, this also poses exciting opportunities. India, with its second highest growth rate among the developing nations and a population of over one billion, can offer a market which is both large and possesses considerable buying power. – More here.
India’s Exports of Milk and Meat Products
India’s exports of milk and milk-based products showed a significant drop of nearly 55% during the past year and was estimated at Rs. 436 crores in 2006-07. Concentrated milk and cream products such as skimmed milk continues to be the largest item of export, which together accounts for nearly 78% of net milk and milk products exports during the year 2006-07. The exports of skimmed milk reached Rs. 343 crores in 2006-07 as against Rs. 78 crores in 2001-02. On the other hand butter, butter oil, ghee and other milk fat together accounted for just over 10% of the net milk and milk product exports from India during 2006-07.
As may be seen from the following table, India’s exports of poultry products attained a peak in 2006-07 (Rs. 318.3 crores) as compared to previous years. Birds, eggs, in shell, fresh, preserved or cooked constitute the largest segment with about 50% share. Processed egg products accounted for about 48% of the exports. Meat products accounted for very low share of around 1%.
India’s export of meat and meat products reached Rs. 3,224 crores during 2006-07. Frozen bovine meat dominated the exports with a contribution of over 97%. The demand for bovine meat in international market has sparked a sudden increase in the meat exports from India. The main markets for Indian bovine meat are Malaysia, Philippines, Mauritius, and Gulf countries.
Among exports of other animal products other Raw skin/hide accounted for over 60% of exports earning Rs. 3,358 crores during 2006-07 followed by Silk (Rs. 1,753 crore) which accounted for over 30% of the export animal products other than milk, egg and meat. Honey exports however, decreased by half contributing only 1% of the total exports. – Complete report here.
Most Popular Products Traded Between India & America
by Daniel Workman, edit by Daniel Knight
Zinc, sugar & steel are the fastest growing Indian exports to the U.S. while military products, artwork & antiques are leading imports into India from America.
India exported US$21.8 billion worth of merchandise to the United States in 2006, up 16.1% from 2005 and up 84.7% in just 4 years. Indian imports from the U.S. rose 26.3% to $10.1 billion in 2006, up 146% since 2002.
In terms of the merchandise flow between the two countries, America’s trade deficit with India was $11.7 billion in 2006, up 52% from 2002. The U.S. trade deficit with India increased 8.5% in 2006 – down from the 14.3% deficit increase in 2005 from the year earlier.
- India’s Exports to U.S.
Of the $21.8 billion in American imports from India in 2006, the following product categories had the highest values.
1. Cotton household furnishings & clothing …US$3.5 billion
(16.1% of India to U.S. exports, up 13.5% from 2005)
2. Diamonds … $3.3 billion (14.9%, up 5.8%)
3. Jewellery (e.g. watches, rings) … $2.4 billion (11.1%, up 37.4%)
4. Medicinal, dental and pharmaceutical preparations … $799.2 million (3.7%, up 47.7%)
5. Semi-finished iron & steel products … $735.3 million (3.4%, up 101.1%)
6. Non-cotton household furnishings & clothing … $668.6 million (3.1%, down 14%)
7. Textile floor coverings (e.g. rugs) … $602.5 million (2.8%, up 11.9%)
8. Industrial machinery … $431.2 million (2.0%, up 25.6%)
9. Industrial organic chemicals … $398.5 million (1.8%, up 19.9%)
10. Generators, transformers & accessories … $398 million (1.8%, up 144%)
- Fastest-Growing Indian Exports to U.S.
Below are American imports from India in 2006 with the highest percentage sales increases from 2005.
1. Zinc … US$42.4 million (up a staggering 51,000% from 2005)
2. Sugar … $3.1 million (up 25,400%)
3. Steelmaking materials … $3.3 million (up 286%)
4. Precious metals … $12.4 million (up 226%)
5. Rubber … $11.3 million (up 192%)
Exchange rate of the Indian Rupee from 10/3/2006 to 12/3/2007
Global Financial Crisis[: What Is] India’s Status?
10/5/2008/11:44 P.M. IST
by Taneesha Kulshrestha
New Delhi: The main concern for the emerging market economies (including India) may not be the direct exposure to global financial institutions, but more about access to credit and the slowdown it is causing in America and other European economies.
RPG Foundation chairman and economist, D.H. Pai Panandikar, says that Indian markets may not be as affected by the subprime crisis as they would be if there was a recession in the US. He adds that Europe is on the brink of recession, and Germany is already in it. When big countries hit a recession, it is bound to have an effect on the Indian economy. ”This will affect our rate of growth,” he says.
Economists point out that the extent of the effect will be decided by the nature of the US recession. If it is shallow (and the US comes out of it quickly), India may not suffer much of an impact. But if it is long and deep, India’s exports will be hit.
As per S&P India Principal Economist, D.K. Joshi, “Countries in the western world are net importers. If they slow down, Asian imports will also slow down.
And don’t forget the liquidity crunch – India Inc is already having difficulty in raising funds. Market sentiments remain weak as FIIs pull out money and uncertainty rules.
Funding in sectors like real estate are showing signs of drying up altogether. Other Indian companies looking at borrowing outside will also have more difficulty, and the GDP growth too is expected to stall.
D.K. Joshi says that his company has forecast India to grow by 7.8% this year. ”Next year will be slower,” he says.
Yet there are some bright spots amid this gloomy scenario. Sanjay Panth, IMF India Representative, says that different countries will benefit or be affected differently. For instance, India is different from some other large emerging market economies in that it is not a net commodity exporter. In turn it will be helped by the decline in prices of commodities. Also its large domestic demand does shield it to some extent from the events outside. Panandikar adds that IT companies may actually benefit as there will be pressure on US companies to cut costs. So outsourcing to Indian IT companies may actually increase in the long run. – More here.
Excerpted from the “Center for Strategic and International Studies” (Published 10/03/2008):
Mercury Rising: India’s Looming Red Corridor
by Sukanya Banerjee
A Civil War Erupts:
The state of Chhattisgarh has seen a sharp rise in [Naxilite] violence. The lack of positive economic development for tribal people and the destruction of the natural environment have sown seeds of discontent in the state for decades. Health, education and infrastructure have also been neglected. In May, the Maoists declared a parallel government in the state, including ministries of education and agriculture. They administer retributive justice in the areas they control through jan adalat, or people’s courts, that empower local people to decide on violent punishments for crimes.
The state supports the Salwa Judum, a paramilitary force that attempts to reestablish control, but its responses have only served to increase bloodshed. According to the Asian Centre for Human Rights, the group has perpetrated violent crimes against civilians and Naxalites alike, and the clashes between state forces and Naxalites have uprooted more than 45,000 tribal people. Civilians have been marched to government camps where conditions are described to be “deplorable,” lacking access to adequate shelter, food, or clean water. In March, the Indian Supreme Court declared its disapproval of the Salwa Judum and called for an independent investigation into the formation and actions of the group.
Comprehensive Strategy Needed: Government officials have constantly argued that using armed force alone against the rebels is not enough. A more holistic development-based approach must be taken to address the grievances and economic insecurities faced by peasants and dalits supporting the movement. While there is no nation-wide rehabilitation program, some states have implemented surrender policies that provide families with economic support in return for dispensing arms. Maharashtra provides cash benefits, promotion of self-employment, and education to defectors, and Orissa grants cash, loans, and free government health care. But poor implementation policies have undermined these efforts. Since 2005, 282 Naxalites have surrendered in Maharashtra, but only 18 of them have been rehabilitated so far.
New Delhi’s Response: The national government has invested in weaponry, modern equipment, and intelligence. It has also deployed 33 battalions of its Central Paramilitary Reserve Force (CPRF) that specialize in counter-insurgency operations and 26 India Reserve battalions will be added for more long-term operations. Most of the troops will be dispatched along the eastern corridor that includes Chhattisgarh, Jharkhand, and Orissa. The Indian Army has pledged to help train state police. The government has also announced a $125 million initiative to aid mobility for forces in jungle areas by providing basic infrastructure, secure camping grounds and helipads. Money for development in tribal and rural areas has also been provided under the Backward District Initiative and other economic programs. Coordination between the national and state governments is weak, however.
Why it Matters – Energy Security: Minerals from areas of Naxalite activity are vital for the Indian economy. India uses coal for 75 percent of its electricity generation, and five of the states in the “red corridor” provide 85 percent of the country’s coal. These states are also rich in bauxite and iron ore, and are attracting major investment plans in steel and in oil refining. The security situation will affect the viability of these investments. Naxalites will most likely spurn the incoming development or try to extort money from the companies. In Chhattisgarh alone, the government has approved a Rs. 3.25 trillion deal with major corporations such as Tata, but tribal opposition is strong.
Adivasis’ concern about the impact of investment in forest has already led to Naxalite violence. In April 2008, 300 men and women armed with bows and arrows and sickles attacked an iron ore processing plant owned by Essar Steel in Chhattisgarh and torched the heavy machinery on site. In spite of the violence, the fact remains that economic growth and development in these regions may not occur without investment inflows, but Naxalite leaders continue to see capital infusions as attempts to curtail their power.
The Nepal Question: The long-standing Maoist insurgency in Nepal and the Maoists’ dominant position in Nepal’s Constituent Assembly and interim government have raised deep concerns in India about the possibility of the Naxalite insurgents finding sanctuary and other forms of support across the border. There are indications that some arms transfers and training in guerrilla warfare tactics may have taken place between the two groups, but at this point there do not appear to be close organizational links. Indian Maoists have been critical of the electoral approach taken by their Nepali counterparts. The Indian government may have to tread a thin line in its stance toward Nepal’s newly elected Maoists to prove that power is best achieved through the ballot box.
Impact on India’s Future: India has registered large economic growth figures since it liberalized economic policy. At the same time, the violent Maoist insurgency has filled a void in the villages and hinterlands of India, as the poorer members of society failed to get much benefit from good governance or economic prosperity. As the gap between the rich and poor widens, Naxalites may continue to gain a foothold in the eastern states, and it could become a problem the government cannot afford to ignore. – Source See also: The Economic Costs of Naxalite Violence and the Economic Benefits of a Unique Robust Security Response
The Godfather of Bangalore
by Scott Carney
It’s a little past midnight, and a lonely parcel of farmland not far from the new international airport in Bangalore, India, is soaking up a gentle rain. At the center of the lot is a house surrounded by a low stone wall. There’s a hole in the roof and a bushel of ginger drying under an awning. Large block letters painted on the wall read: this property belongs to chhabria janwani. Inside, eight men—two armed with shotguns—confer in hushed voices as they peer out the windows. Is it safe for them to go to sleep, or should they stand watch another few hours? A guard wearing a dirty work shirt is the first to notice signs of trouble. In the distance, flashlight beams sweep the roadway. The lights advance, accompanied by a chorus of voices. Then the sound of people scrambling over the wall. One of the guards makes a break for the gate, sprinting toward a police station a mile away. Before the others can do much more than scramble to their feet, 20 attackers brandishing swords and knives emerge from the shadows. Some carry buckets of blue paint. It takes them only a minute to overrun the building. Three guards who stood their ground lie bleeding on the floor. The others surrender.
Firmly in control, the marauders shift gears. They pull out rollers and slather paint over Chhabria Janwani’s claim to the land. By the time a police jeep pulls up, the sign is only a memory. The attackers have achieved their goal. Thanks to the convoluted rules surrounding land ownership, the removal of Janwani’s lettering throws his claim into question. The dispute is no longer just a criminal matter of a gang of outlaws taking over a piece of ground; now it’s a civil issue that will have to be mediated in the courts. This kind of legal battle, with its near-endless appeal process, could easily last 15 years. If Janwani hopes to develop or sell the parcel during that time, he’d be better off just letting his assailants have the property in exchange for a fraction of its value.
Bangalore’s Mobster Turned Mogul: Muthappa Rai is an Indian real estate power broker. He used to be a mafia don, wanted for murder by the Indian police. Wired’s Scott Carney talks to the Bangalore land baron.
For more, visit wired.com/video. Bangalore, the fifth-most populous city in India, is the tech outsourcing capital of the world. In the past decade, more than 500 multinational corporations have established office parks, call centers, and luxury hotels here. The arrival of US companies like Adobe, Dell, IBM, Intel, Microsoft, and Yahoo, along with the emergence of homegrown outfits like Infosys and Wipro, has transformed this sleepy outpost into a premier showcase of globalism. Bangalore accounted for more than a third of India’s $34 billion IT export market in 2007. Upscale commercial spaces like UB Tower, modeled after the Empire State Building, and first-rate educational institutions like the Indian Institute of Science set the standard for what India could become.
But there’s a dark side to Bangalore’s rocket ride. City officials—at least those who aren’t taking bribes—struggle to reconcile the gleaming promise of the information economy with the gritty reality of systemic corruption, a Byzantine justice system, and a criminal underworld more than willing to maim and murder its way into control of the city’s real estate market. As tech companies gobble up acreage, demand has pushed prices into the stratosphere. In 2001, office space near the center of town sold for $1 a square foot. Now it can go for $400 a square foot. Janwani bought his 6-acre plot in 1992 for $13,000. Today, even undeveloped, it’s worth $3 million.
Photograph: Scott Carney But high prices are only part of the problem for businesses looking for space in the city. It’s nearly impossible to determine who actually owns any given piece of Bangalorean real estate. Some 85 percent of citizens occupy land illegally, according to Solomon Benjamin, a University of Toronto urban studies professor who specializes in Bangalore’s real estate market. Most land in the city, as in the rest of India, is bound by ancestral ties that go back hundreds of years. Little undisputed documentation exists. Moreover, as families mingle and fracture over generations, ownership becomes diluted along with the bloodline. A buyer who wants to acquire a large parcel may have to negotiate with dozens of owners. Disputes are inevitable.
That’s where Bangalore’s land mafia comes in. With the courts tied up in knots, gangsters offer to secure deeds in days rather than years. “Businesspeople like to do their business, but many times the system does not permit them to do it,” says Gopal Hosur, the city’s joint police commissioner. “Because of escalating land values, unscrupulous elements get involved. They use muscle power to take control of the land.” Some 40 percent of land transactions occur on the black market, according to Arun Kumar, an economist at Jawaharlal Nehru University. Often the local authorities facilitate these deals. A World Bank report rated the Bangalore Development Authority, which oversees urban planning, as one of the most corrupt and inefficient institutions in India. – More here.
India’s Foreign Trade and Global Economic Policies
India is quickly emerging as a powerful trade partner in the global economy. What was once an undeveloped, closed-off economy is now becoming a massive economic force in Asia, rivaling all in the region.
The economy of India is twelfth largest in the world (in exchange rates, with a GDP of US $1.089 trillion) and the fourth largest in the world by purchasing power.
India has a population of 1,147,995,904, making it the second largest country in the world. In 2006, India’s trade reached 24% of GDP, which is by no means excessive, but is a huge increase from the 6% it was in 1985. On a global scale, Indian trade represents 1% of the world’s commerce.
- India’s Exports
In 2007, India’s exports stood at $140.8 billion, making it the 26th-largest export economy in the world. The country’s exports have grown steadily in the past few decades, ever since foreign direct investment (FDI) was allowed on a large scale, and most of the state-run industries were privatized. Most of these changes have occured since the economic reforms India implemented in 1991.
Below is a table illustrating the volume of exports India has seen between 2003 and 2008:
Total Exports: $140.8 billion (2007)
Year………………………Exports Rank….% Change…Date
2003 $44,500,000,000 32…………………………….2001 est.
2004 $57,240,000,000 31………………28.63%……2003 est.
2005 $69,180,000,000 33………………20.86%……2004 est.
2006 $76,230,000,000 33………………10.19%……2005 est.
2007 $112,000,000,000 29………………46.92%……2006 est.
2008 $140,800,000,000 26………………25.71%……2007 est.
# Products exported by India include: Petroleum products
# Textile goods
# Gems and jewelry
# Engineering goods
# Leather products
In addition to these goods and products, much of India’s GDP is contributed to by the business process outsourcing (BPO) industry, call centres, and other service-based jobs from the US, Europe, and some of Asia.
- India’s Imports
# Vehicles, including aircraft
# Mineral fuels and lubricants
# Beverages and tobacco
# Chemical fertilizers
# Medical equipment
# Electronics and computer accessories
As the middle class of India becomes more affluent and wealthy, domestic consumption will continue to increase, as it has been doing in recent years. This will fuel more imports.
Interestingly, India banned all toy imports from China in February 2009. This was due to fears about safety issues of the Chinese toys and worries about the fate of domestic toy producers in India. – Source
India Maintains Sense of Optimism and Growth
by Heather Timmons
NEW DELHI — While most of the world grapples with a crippling financial crisis and a recession, optimism reigns in much of India as its economy continues to grow. India’s trillion-dollar economy remains a relative bright spot, some say, in part because the country’s bureaucracy and its protectionist polices have kept it insulated from the fallout of the global downturn.
“India is not as vulnerable” as other countries, said Rajeev Malik, head of Indian and Southeast Asian economics at Macquarie Capital, who recently wrote a report titled “India: Better Off Than Most Others.”
On Friday, India reported that its economy grew 5.3 percent in the quarter ended in December when compared with the previous year. While that was down from the 7.6 percent growth in the earlier quarter, it was in sharp contrast to the retrenchment in other countries.
Washington, for example, reported Friday that gross domestic product for the end of the year had contracted at an annualized rate of 6.2 percent, and Japan recently reported that its economy shrank at an annual rate of 12.7 percent. – More here.
from globalpost.com via huffingtonpost.com:
India: Economic Crisis Forces Businesses To Focus On The Poor
by Jason Overdorf I
NEW DELHI — In India, the economic crisis may actually be good news.
During the salad days of the past decade, India’s entrepreneurs grew fat selling gas guzzlers and palatial homes to the country’s new rich, while ignoring the needs of the biggest segment of Indian consumers: the poor. It was an expatriate Indian, the University of Michigan’s C.K. Prahalad, who first posited that there were millions to be made selling to the “bottom of the pyramid.”
Now that’s starting to happen.
The rich aren’t buying, and Indian businessmen are finally starting to look at the teeming masses as something more than cheap labor. The result could be the solution of some of India’s most persistent problems — an abysmal housing shortage, chronic underemployment and an unsustainable rate of rural-urban migration, for instance.
“The slowdown was a great thing to happen to India,” affirmed management consultant Harish Bijoor, who said the downturn has encouraged companies to look beyond the “low-hanging fruit” in the urban market to the vast multitude of consumers in India’s rural heartland — which still accounts for more than two-thirds of the country’s population and some 60 percent of its gross domestic product.
“There are a whole slew of energy products, both solar and thermal, and cook stoves and all types of things, all of which are aimed at reducing fuel consumption or replacing traditional fuels,” said Vijay Mahajan, founder of BASIX, a microfinance company that provides credit to more than a million poor customers. “And there’s a whole slew of clean drinking water products. These have both health and economic benefits.”
Story continues below
The best example of the upside of the downturn, so far, comes from the real estate sector. Throughout the boom years, posh high rises were the name of the game in Indian real estate. But as the buyers for $200,000 to $1 million apartments have dried up and falling property values have left builders scrambling to finance the completion of existing projects, a dozen-odd companies have begun to take interest in building housing for the nearly endless market represented by the urban poor.
Led by Tata Housing’s so-called “Nano homes,” which will go for as little as $8,000, these ventures represent the entrance of respected business leaders into the low-income housing market, including figures like Jaithirth Rao (founder of outsourcing heavyweight Mphasis), Ramesh Ramanathan (founder of the citizen’s action group Janaagraha) and established companies like Bangalore’s CSC Constructions. The trust factor that these players bring has given this sector new viability, according to Subir Gokarn, chief economist at Crisil, the Indian arm of Standard & Poor’s.
“The focus on the base of the pyramid to create scale businesses was overdue,” Jaithirth (Jerry) Rao said. “You can sell millions of homes in this category, whereas in the upscale category you can only sell tens of thousands.”
But real estate isn’t the only sector where the financial crisis has had an unexpected upside for India’s future. Almost every type of business — from refrigerators to motorcycles to computers to mobile phones — is now looking to the vast market represented by India’s urban poor and the legions living in its villages. By increasing competition, this expansion lowers prices, connects the dispossessed to the broader economy and makes new, income-generating products affordable.
“Telecom is a great example. The kind of price at which a rural poor person can now talk to their migrated family members and so on is incredible,” said Mahajan. “That’s all happened because of the penetration rush and price competition, and the same thing is beginning to happen in microfinance, it’s beginning to happen in solar energy. The volumes attract new suppliers and as more suppliers come in, then competition sets in, and it’s a win-win for all sides.”
The push to widen the footprint of broadband internet and boost the average revenue per user from low-income mobile subscribers, for instance, has put more muscle behind the network-based computing devices like Novatium’s NetPC — which provides a computer, broadband access, software and support to consumers for a bundled price as low as $25 a month. Recently Airtel, India’s largest integrated telecommunications company, launched a similar service, while Nokia has rolled out its Nokia Life Tools range of agriculture, education and entertainment services for consumers in small towns and rural areas. Samsung has launched Solar Guru, a solar-powered mobile phone.
The sales network for fast-moving consumer goods and products like motorcycles and refrigerators is also expanding into the rural hinterland. Motorcycle maker Hero Honda, for instance, has boosted its “touch points” in rural areas from 2,000 in 2006 to 3,500 in 2008, while Godrej Consumer Products Ltd. will appoint 1,500 wholesalers in small towns and villages this year, up from 500 last year. – More here.
India Economy: Effects of the US Financial Crisis in India
by Charles Cole
New Delhi[…] It is often said that when the US sneezes the rest of the world catches a cold. This three-part series looks at how India, China, and Russia have been affected by the US financial crisis.
Before we get into detail about how much this US problem is spreading globally, we should understand the severity of it and the possible consequences in the US. How sick is the US?
Some have compared the situation in the US with the Great Depression of 1929, but this situation is far from a depression – in fact it’s not even a recession. In the Great Depression there was no work and there was widespread poverty. People struggled through the winter with no heating and no food. We are not seeing such extensive suffering in the US.
In the US, August 2008 unemployment figures were at 6.1%, according to the US Bureau of Labor Statistics. In the Great Depression unemployment was higher than 25%. The Commerce Department reported that GDP growth was at 2.8%, hardly indicative of a recession, although this was revised down from the 3.3% figure it projected a month ago.
But one cannot ignore yesterday’s 777 point drop in the Dow Jones Industrial Average after the $700 billion bailout plan failed to pass through Congress. These paper losses of more than a trillion dollars may be the sneeze that disrupts global markets.
Even before this controversial rescue plan was shot down, Indian markets took a dive of their own on Monday 29 September. The stock market sank to an 18-month low and the rupee a 5-year low. The stock market dropped 5.3% to 12,595.75.
According to Business Standard, vice-president of Karvy Stockbroking Ambareesh Baliga, said, “We are advising our clients to stay away from trading till selling by Foreign Institutional Investors (FIIs) stops. Also, there is no support to the markets from any domestic institution. While markets are below their fundamental levels, fear has gripped investors and there is panic selling.” – More here.
Manmohan Assures Industry[, “]Economic crisis hurting India, but banks safe[“: Prime Minister (of India)]
New Delhi: Prime Minister Manmohan Singh has admitted that the global economic turbulence has begun to hurt India.
Singh met top industry leaders on Monday in New Delhi and asked them to remain cautious but also assured them that the banking system and deposits were safe and the government would take more steps to protect economic growth.
“The government is closely monitoring the evolving macro economic situation and is fully alive to its responsibilities to sustain the growth momentum of the economy at a reasonable rate,” the Prime Minister assured industry leaders.
“A crisis of this magnitude was bound to affect our economy and it has. International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty is also tending to dampen investor sentiment,” he was quoted as saying by PTI.
He asked industry to refrain from any “knee-jerk” reaction such as large-scale lay-offs, which might lead to a negative spiral, and said “industry must bear in mind its societal obligations in coping with the effects of this global crisis”, which the Prime Minister felt “is now likely to be more severe and prolonged”.
“Our first priority was to protect the Indian financial system from possible loss of confidence or contagion effect … the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day to day basis and more steps will be taken if required.”
“We have given very clear assurance to the Prime Minister and his Cabinet colleague that there is no question of any lay-off and the industry is going forward in an expansion drive and it will continue,” Sajjan Jindal Vice Chairman & MD, JSW Steel said. – More here.
Delhi land mafia gobbles up 200 enemy properties
by Eklavya Atray
New Delhi: The capital’s land mafia has been holding on to 200 enemy properties for decades. These are properties evacuated by people who migrated to Pakistan during partition.
A recently released list of the department of revenue shows only a handful people control more than 80% of these properties.
Nearly 78 of the enemy properties are collectively owned by Tahir Ul Aslam, Zahir Ul Aslam, Shahidul Islam, and a woman named Jawahar Sultan. Most of the properties owned by these four persons are shops located in Jama Masjid and central Delhi.
They are followed by Rehman Elahi and Mohammad Yusuf Wasim who own 17 and 15 of these enemy properties respectively. One Fatima Bi owns four of these properties.
The data comes from a letter written by state revenue minister Raj Kumar Chauhan to the top brass of the Delhi government. The letter was sent to lieutenant governor (LG) Tejendra Khanna and chief minister Sheila Dikshit, seeking permission to initiate action against these land-grabbers.
All property left behind by people who migrated to Pakistan are owned by the Mumbai-based Custodian of Enemy Property for India (CEPI), which functions under the Union home ministry. Following the approval of Chauhan’s communique by Khanna, Vinay Kumar, joint secretary in the state revenue department, issued a notification on January 14, banning the registry or mutation of all enemy property on “the list.”
The notification directed that the name CEPI be put in place of the present owners listed against the said property.
The notification effectively means that hundreds of people in the capital living in such enemy properties would lose the title and registry rights to their property.
The trigger to this entire controversy was an alleged land deal of Lok Janshakti Party MLA Shoaib Iqbal. Delhi government sources have made available documents which show plans for construction of a structure in the name of Shoaib’s wife, Huma. Iqbal has called it a “political conspiracy”. The plan was to set up a hotel, Huma Semiramis, on plots 913-921 in Ward No 9, Jama Masjid. Iqbal has denied the allegations and said he will file a defamation suit against the government.
Another set of documents showed property number 921 as “enemy property” with a general power of attorney having been executed in Pakistan in the favour of one Fatema Bi. Under the Enemy Property Act of 1968, it is illegal to conduct transactions in such properties.
Delhi government sources claim the original file relating to plot 921 which was supposed to be acquired by the government before Bi’s family went to court has gone missing. One Ibrahim who identified himself as the eldest son of 84-year-old Fatima Bi denied any transaction. “We have been fighting a case in Delhi high court for the past 18-19 years,” said Ibrahim.
Dinesh Singh of CEPI had visited some of these properties in Delhi on December 12 and met the principal secretary (revenue) on the issue. – Source
2/5/2010/1:29 P.M. IST
Melbourne: Australia’s Reserve Bank has said that Indian economic growth will continue to work in favour of the country’s mineral exporters.
Reserve Bank of Australia (RBA) said Indian economy has gradually strengthened over the past two decades and the Asian nation will continue to improve in the years ahead, The Australian daily reported.
“The Indian economy looks likely to continue to expand at a relative rapid pace in coming decades and to become an increasingly important part of the world economy,” the daily quoted the bank as saying.
RBA had released its quarterly statement on monetary policy on Thursday.
The central bank said the rise in India’s prominence in the global economy has been a boost to the Australian economy.
“Indian demand for Australia’s exports has risen sharply, with particularly rapid growth over the past decade,” it said, adding that “This has seen India’s share in Australia’s total exports increase to around 6.5 per cent, a four-fold increase in less than a decade.”
As per the official data, “India was Australia’s fourth largest export market in the second half of 2009.”
RBA said coal exports to India has risen strongly over the past decade is likely to rise in the next few years. It accounted for 40 per cent of total goods exports to India in 2008-09.
Liquefied natural gas (LNG) is another likely source of future growth in Australia’s good exports to India. – Source
Is India’s High Growth Sustainable?
by Anna Fedec
After almost 7% growth in 2008/09 fiscal year, in the first three months of 2010 India’s economy expanded 8.6% boosted by industrial production and services. But, is the third largest economy in Asia able to keep its high rate of growth?
Indeed, the better than expected performance of Indian economy in the last few quarters had a lot to do with a significant fiscal stimulus and loose monetary policy. In fact, two stimulus packages providing tax cuts and increasing infrastructure spending in connection with lower interest rates have supported significantly domestic demand. Yet, with demand growing at a faster pace than supply, inflation is becoming a growing concern. Not surprising, the Reserve Bank of India has raised its benchmark interest rates twice to 3.75%. And it is expected that by the end of June the rate may increase as much as 100 basis points. However, India’s central bank should be more cautious in shifting its monetary policy. Tightening too much or too early is likely to squeeze credit availability and weight on growth which is essential in keeping fiscal deficit at sustainable levels.
Looking further, stimulus spending had expanded fiscal deficit from 2.6% of GDP in 2007/08 to 10% in 2009/10. And although due to strong growth numbers the shortfall is more than sustainable, Indian government should be able to better control its expenditure. In fact, while Union Budget for 2011 increases infrastructure spending, raises taxes for petroleum products and reduces for middle-income families it fails to slash inefficient subsidies on fertilizer, fuel and food. More importantly, the new administration is slow in implementing economic reforms promised investors after last year’s wider-than-expected election victory. The government has made progress in new tax laws, disinvesting state run companies, it formed an experts panel to ease foreign investment in the financial sector. Yet, labor reforms and farm prices release are far from being executed. – <a href=”http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=INR”>Source</a>
Is this 21st-century apartheid?
The segregation and abuse of the low-caste Dalit people is a stain on India’s reputation, but a militant fightback is under way
Eight people were convicted on Monday of the murder of four members of a lower-caste Dalit family in the western Indian state of Maharashtra.
A Dalit farmer’s wife, daughter and two sons were lynched and beaten to death by an upper-caste mob in a land dispute in 2006. The women were also raped.
What is unusual about this case is that the perpetrators were successfully prosecuted. Normally, the killers of Dalits walk free.
One reason why the murderers have been bought to justice is the rising tide of Dalit militancy. There has been a wave of mass demonstrations by Dalit people demanding justice and equal treatment. Newly confident and organised, the Dalits are fighting back with strikes and boycotts.
Shaken by this burgeoning protest movement, some Indian authorities are finally being pushed and pressured into action, albeit slowly and exceptionally. …
Over 100,000 cases of rape, murder, arson and other abuses against Dalits are reported in India each year.
Some states record conviction rates as low as 2-3%. Moreover, the police themselves are sometimes the perpetrators of abuses against Dalit people. – More here.
BROKEN PEOPLE[:] Caste Violence Against India’s “Untouchables”
by Human Rights Watch
ATTACKS ON DALIT WOMEN: A PATTERN OF IMPUNITY
Singularly positioned at the bottom of India’s caste, class, and gender hierarchies, largely uneducated and consistently paid less than their male counterparts, Dalit women make up the majority of landless laborers and scavengers, as well as a significant percentage of the women forced into prostitution in rural areas or sold into urban brothels.15 As such, they come into greater contact with landlords and enforcement agencies than their upper-caste counterparts. Their subordinate position is exploited by those in power who carry out their attacks with impunity.
Throughout this report, Human Rights Watch has documented the use of sexual abuse and other forms of violence against Dalit women as tools by landlords and the police to inflict political “lessons” and crush dissent and labor movements within Dalit communities. In Laxmanpur-Bathe, Bihar, women were raped and mutilated before being massacred by members of the Ranvir Sena in 1997; in Bihar and Tamil Nadu, women have been beaten, arrested, and sometimes tortured during violent search and raid operations on Dalit villages in recent years. Like other Indian women whose relatives are sought by the police, Dalit women have also been arrested and raped in custody as a means of punishing their male relatives who are hiding from the police. As very young women, they are forced into prostitution in temples under the devadasi system. – Complete report here.
Bill gates, the one name that is almost synonymous to Wealth and to Microsoft was till recently the richest man in the world, with assets worth 59 billion dollars! Declared the richest man in the world in the year 1995, he adorned this prestigious and coveted title for almost a decade. Some time back he was briefly overtaken by Mexican tycoon Carlos Slim, but Slim’s stint at the top was short term and was again overtaken by Gates. Recently, the whole world was shocked when it was declared that Mukesh Ambani, the chairperson and managing director of Reliance Industries has become the richest man in the world with assets worth 63.2 billion USD. The magic run of the Indian share market was largely responsible for this somewhat unprecedented development.
It is quite expected and accepted when a person from the countries like the US or the UK adorn the crown of the richest man, but it is hard to believe that a man from a third world country that is counted among the poorest in the world would house the richest man in the world. India is a country that is plagued by much social malice like poverty, population, illiteracy, unemployment, superstitions, gender biasness, social stigmas etc. In this country that has a population of over a billion; around 22-23 crores of people are still living below the poverty line. Disparity in the distribution of wealth continues to be a big blow to the Indian economy. Many of them are not even earning 1 dollar a day. On one hand there are people who are not even earning a dollar per day, on the other hand Indian youth is counted among the highest spending youths in the world. On one hand mergers and acquisitions have been made worth millions, on the other hand the rate of poverty has almost remained static in the span of the last two decades. On one hand larger then life malls, luxury foreign car showrooms are opening, on the other hand the agricultural sector, the backbone of the Indian economy is yet to show profits and improvements. One would not know whether to be happy for India or sad at the superficiality of its development. The rich are growing richer and the poor are growing poorer, thanks to the highly unequal distribution of income in the Indian economy!
The question is whom to blame. Nobody is to be blamed solely yet everybody is responsible for the situation India is in today. The population, the government, the entrepreneurs, the system, or the constitution? Everybody has a role to play. Venturing into this topic is like counting the stars in the sky. Vast and unending. The affluent society of the country is no doubt not apprehensive of spending, yet there are certain concepts that inspite of being very popular in the west and inspite of being quite upmarket are not that popular in India. Ecommerce is one such concept. There are people who buy stuff online. Infact there are many who are too short of time or energy to go hunting for stuffs. Thus they take the easy way out and buy things online. But there are very few concerns in India that are ready to open an estore. Conversely however, there are quite a few software development companies in India that provide ecommerce solution and ecommerce software to people living outside India. Many Indian concerns are into offshore software development. They have clients from all over the world who come to them for software development in order to do business online, but it’s very rare that one would find an Indian company venturing into ecommerce web site development; one trend that so far India has not taken from the west!
‘India Will Muddle Along Until The Debt Crisis Hits’
S. Srinivasan, Forbes, edited by Daniel Knight (added who was speaking)
After all the budget euphoria, it is time for a reality check. Investor and venture capitalist Jim Rogers remains deeply skeptical of India’s future. In an interview with S. Srinivasan, he argues that the country is sitting on a fiscal time bomb.
Forbes: The finance minister has changed the direction of India’s budget deficit by reducing the target for 2010-11 to 5.5%.
Jim Rogers: You really believe it will happen? Go back over the years and see their previous claims.
Forbes: He has got a lot of praise for that in India. Still you are not impressed. Why?
JR: Even if it happens, it is not being done by sound budgeting. It is from selling off the family jewels, if it happens.
Forbes: Don’t you think a high deficit was justified last year when the government had to spend and help the economy revive?
JR: No. They are just trying to push the problems out into the future rather than solving the underlying problems. Do you really think the solution for a problem of too much debt and too much consumption is more debt and more consumption?
Are we not living in extraordinary times when we have to follow such flexible policies?
We are indeed. They are making the problems worse in extraordinary times which require tough measures to correct decades of abuse.
Forbes: The finance minister rolled back some of the economic-stimulus measures he had announced last year. Would you have preferred to see a complete rollback rather than a partial one?
JR: Yes. And more.
Forbes: If you were to set an agenda for the government, what would it be?
JR: Cut spending and subsidies dramatically. Many studies have shown that countries start having serious growth problems when debt is 90% of GDP (gross domestic product). India is now [at] 80% and will be [at] 90% soon under this budget. The subsidies distort the economy in less-productive areas. – More here
India Inflation Quickens to 8.98%, Increasing Pressure on Rates
by Unni Krishnan, edited by Stephanie Phang
4/15/2011/1:16 A.M. PT
Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010.
India’s inflation accelerated more than economists estimated in March as the cost of fuel and manufactured goods rose, putting pressure on policy makers to raise interest rates in Asia’s third-largest economy.
The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. That exceeded all 28 estimates in a Bloomberg News survey, where the median forecast was for an 8.36 percent increase.
Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010. Inflation in the first quarter has exceeded the Reserve Bank of India’s forecast that price increases would be 8 percent by the end of March this year.
“Inflation is going to remain uncomfortably high this year,” said Leif Eskesen, Singapore-based chief economist at HSBC Holdings Plc. “The RBI needs to raise rates more aggressively and we are looking at three more rate increases this year.”
The Bombay Stock Exchange’s Sensitive Index extended declines after the inflation report, falling 1.4 percent at 11:52 a.m. in Mumbai. The yield on the 8.08 percent bond due in August 2022 was at 8.25 percent, compared with 8.21 percent before the data was published.
Rising oil and commodity costs and sustained economic growth are escalating pressure on Asian central banks to boost borrowing costs. China on April 5 raised rates for the fourth time since mid-October. Vietnam, Taiwan, South Korea and Thailand also increased borrowing costs this year to curb inflation, and Singapore said yesterday it would allow further currency gains.
China’s economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008, with consumer prices rising 5.4 percent from a year earlier, a report showed today.
Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end. The central bank’s next monetary policy announcement is scheduled for May 3.
“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.
Manufactured-products inflation was 6.21 percent in March, compared with 4.94 percent in February, today’s report showed. Fuel and power prices rose 12.92 percent, compared with 11.49 percent the previous month. India relies on imports to meet three-quarters of its annual energy needs.
Food prices rose 8.28 percent in the week to April 2, compared with 9.18 percent in the previous week, the commerce ministry said in a separate report today.
India’s economy may expand as much as 9.25 percent in the year ending March 31, 2012, the finance ministry said in February.
Still, India’s industrial production growth unexpectedly slowed to 3.6 percent in February, a report showed this week.
“Even as industrial production continues to be volatile, other indicators, such as the latest purchasing managers’ index, direct and indirect tax collections, merchandise exports and bank credit, suggest that the growth momentum persists,” the central bank said in the March 17 statement.
India’s industrial output has fluctuated since May, when it registered a 12.2 percent expansion. The growth eased to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.9 percent in September and then recovered in October, according to government data.
Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, plans to boost capacity by 21 percent in the current financial year as part of investment plans totaling as much as 40 billion rupees ($900 million), Chief Financial Officer Ajay Seth said in an interview on April 6. The company’s sales climbed to a record in March.
Recent data show lenders are giving loans at a faster pace than the central bank’s target. Commercial loans rose 21.4 percent from the previous year as of March 25, more than the 20 percent rate prescribed by the Reserve Bank of India.
Manufacturing grew for a 24th straight month, with the purchasing managers’ index holding unchanged at 57.9 in March from February, when it accelerated at the fastest pace in three months, HSBC Holdings and Markit Economics said April 1.
Salaries in India this year may rise the most in the Asia- Pacific region, fueling consumer demand, a survey by Aon Hewitt LLC showed March 8. Spending under the government’s National Rural Employment Guarantee Act of 2005 has surged almost fourfold to 399 billion rupees.
Demand may find more support from Finance Minister Pranab Mukherjee’s budget for the fiscal year ending March 31, 2012, which plans to spur spending and exempt incomes below 180,000 rupees from tax, higher than the previous threshold of 160,000 rupees. – Source
India’s middle class struggles with personal debt burden
By Mukul Devichand Reporter, BBC News
India’s recent binge on credit cards and personal loans has ended badly for some – but there are ways to fight back against debt.
India’s recent binge on credit cards and personal loans has ended badly for some – but there are ways to fight back against debt.
Mr Sayed remembers his lowest point in late 2008. The father of two in Mumbai was guarding a dark secret from neighbours, friends and even his wife.
After several years of signing up to all the credit cards and personal loans he could find, he had notched up Rs 3,000,000 ($66,000) in debt.
He bottled up his growing sense of shame. “I thought better you run away from Mumbai, or you commit suicide,” he remembers.
Until recently, the Indian middle class were deeply conservative borrowers. With a strong cultural aversion to loans and with very little finance on the market, most people lived frugally all their lives.
But in the years before the global economic crunch, credit cards and loans flooded onto the markets of most Asian countries.
The amount of outstanding credit card debt in India tripled between 2004 and 2007, according to industry reports. Private and foreign banks marketed credit cards and loans to consumers who had little experience of borrowing.
“Getting credit cards in India two or three years back was very easy,” recounts Mr Sayed. “They would fill out the forms for you.” He got six cards and nine unsecured loans, with few questions asked.
His business was failing, so he started using the credit cards to withdraw cash, which he spent on everything from paying his staff to feeding his children.
Mr Sayed didn’t realise that with most credit cards, high interest charges kick in immediately when you withdraw from ATMs. His feelings of shame prevented him from seeking help. – More here
India’s middle class pays the price for growth
By Mukul Devichand Reporter, BBC News
The Pawar family The Pawars took financial advice when they started losing their savings
The world is jealous of Asia’s sky-high growth rates, but for ordinary people the price of success is corrosive inflation which could eat away their savings.
“From outside it looks good,” says Manasi Pawar. “We’re staying in a big house, paying so much in rent and our kids are going to great schools.”
Manasi, a qualified software worker in hi-tech Hyderabad in India, recently became a full-time mother. Her husband also works in the IT industry.
The couple epitomise the emergence of a well-to-do middle class in Asian countries – except there’s one significant snag.
“We were actually losing money,” says Manasi.
The couple recently woke up to the fact that inflation rates of nearly 9% meant that their savings were actually disappearing in front of their eyes.
“We were sitting on a bunch of cash but we didn’t know where to put it, and it’s important that we don’t let it lie there in the bank – because a bank doesn’t give an interest rate that even matches the inflation rate,” she says.
The inflation rate measures how fast prices are going up.
Across Asia, various pressures are pushing inflation up – from growing wage bills to the high global prices of food, commodities and fuel in resource-hungry economies.
The pressures are so intense that some economists fear that inflation will now derail Asia’s high economic growth altogether. – More here
Is India’s Economy Faltering?
A nationwide two-day strike called by trade unions in India has brought the country’s transport system to a standstill.
Many government offices, schools and public utility services are closed in what has been dubbed a ‘hundred million man strike’.
Unions are demanding that the government take urgent steps to control rising prices, raise the minimum wage and halt the privatisation of public resources. …
The government reforms are an attempt to jump-start India’s faltering economy. It is Asia’s third-largest but faces the threat of a downgrade in its global credit rating. – More here
More Information On the Indian Economy