Byapaar.com – The Indian Business Blog

It was supped to happen!

When economies around the world were either in recession or contraction, Indian government has been projecting a GDP growth of more than 7% for the fiscal of 2008-09 which many economists and analysts termed as over optimistic. With falling demands in major markets around the world, the only way to keep a high growth rate is to create more demands in the domestic market and Indian government has been trying it through three-staged stimulus package by reducing interest rates and releasing huge flow of funds in the market.

It seems the packages were not timed well as third quarter (ending on 31st December from 1st October) GDP growth fell to 5.30% – thus falling below 6% for the first time since 2003. What is more worrying is the fact that farm sector contracted up to 2.20% and manufacturing sector fell 0.2% from the level during same time last year.

As a result of this, stock market fell by 0.7% during the day and Indian Rupees breached the record Rs. 51 barrier against the Greenback amidst sustained pressure for the dollar by foreign banks and oil importers.

With the announcement of this economic performance, eperts are having varied opinions. Some economist like Sherman Chan of Moodys believe that the governments projection of over 7% growth is over optimistic and it is high time the projection is revised. On the other hand, Pawan Kumar Bansal, the junior Finance Minister says the government still expects GDP to grow at over 7% during current fiscal. This group is of the opnion that the stimulus measures are yet to have major effects and the economy will recover during the 4th Quarter.

whatever happens, Industry is of the opnion of more rate cuts by the Central Bank as they need more liquidity in the market to take full advantage of stimulus packages announced by the government recently. This has necessitated more with this announcement of poor performance by the economy. Most believe that, if the economic growth slips below 6%, there will be huge job losses and India need to maintain a GDP growth rate of 8-9% in order to dent against the huge percentage of its people living below poverty line.

Day before yesterday, the caretaker Finance Minister of India Mr. Pranab Mukherjee (the Ministry usually lies with the Prime Minister Dr. Manmohan Singh who is recovering from By-pass surgery) announced another round of stimulus package to bring impetus into the economy. This is the third such initiative by the government in as many months. This time no fund is to be infused to help the market reeling under severe liquidity crunch but the latest effort is aimed at reducing production costs of goods so that demand increases and industry grows. For this purpose the government has reduced excise duties on several products by 2 percent to 8 percent from existing rate of 10 percent. This effectively means cheaper steel, cement and consumer durable goods. The automobile sector which had a booming last year but suffering from current economic meltdown will not benefit directly. But due to cheaper rates of raw materials and accessories it might get some indirect lift. Also the heavy vehicle sector which has excise rate of 20 percent will get direct benefit from the latest move.

But the highest gain will be reaped by the service sector as service tax too was slashed from present level of 12 percent to 10 percent. It will benefit all those industries engaged in service sectors like hospitality, BPO and telecom. Experts expect that mobile rate will come down due to reduction in service tax. This reduction in taxes will cost the government to the tune of Rs. 300 billion.

This third stimulus package was announced on a day global rating agency Standard & Poor downgraded India’s sovereign credit rating due to ever growing fiscal deficit that is likely to be around 11.2 percent of GDP (Rs. 3620 billion) during this fiscal ending 31st March. Being an election year, the government took many populist measures like hiking central government employees’ salaries, writing off agricultural debt, high crude prices for most part of the year and lastly but not the least – the economic stimulus packages. This down gradation will not harm the government as it seldom borrows from foreign (continue reading…)

Its election time folks. One can feel it in the air through out India. I too can feel it.

It has been quite long since I blogged on my favorite India business blog or my education blog which are so dear to me because they are my personal blogs and in no way commercial.

The UPA government led by Dr. Manmohan Singh just presented its last budget for the current five years term and it can only be known after elections if  people of India give them another chance or they vote for a change. Elections, whether local, regional or nationals are always the biggest events simply because India, the largest democracy in the world has a unique political system in the sense that hundreds of parties vie for election glory.

With elections, come populism. True, it is the norm for every government in the world to entice the electorate with popular measure on the eve of elections – but they pale in nature and magnitude when it comes to India. True to the style, the UPA government announced huge salary hike for its close to three million civil servants costing the exchequer nearly $8 billions. It also waived huge amount of agricultural loans to farmers costing around $15 bilions. On top of it the Mumbai horror caused the government to allocate more extra funds to the armed forces. In between came the global economic crisis that resulted in the government spending hundreds of billions to infuse the liquidity starved market with more cash.

But all these has not deterred political parties rulling different states of the country to announce populist measures ahead of the national election slated to be held form 2nd week of April. Just the other day, Uttar Pradesh government led by Bahujan Samaj Party chief Ms. Mayawati as Chief Minister announced employment of 26,000 teachers at a time when experts says $782 billion bail-out package of the USA government is not enough and 50 million people around the world are to loose jobs by end of 2009!!

Still, the Railway Minister of India, Mr. Lalu Prasad Jadav of Rastriya Janata Dal (RJD) (continue reading…)

Its not always good to write only about business all the time specially  when things are not going that good – isn’t?

So, I do some personal posting from time to time just to change some moods.

Before I indulge into some local ranting, let me just do some routine update on India business scene.

• Petrol prices are slated to come down by Rs. 5 anytime this week which is great news for us using petrol engines. Price of Gas and Diesel will also come down.
• Government and IT industry doing its best to recover from Satyam scandal.
• Pan-India license fee for 3G mobile to be doubled.

Well thats it in short. On a personal note, our state government is slated to raise our salaries by a good margin but it will still fall short on Central government employees by 30-33% depending on position of the employee. It has angered the employees to no end as our tiny state depends on central government for 90% of the state budget and center has already given written assurances to seven backward states including ours that it will provide full support if they implement the central pay-scale. Lets see what happens!

Now the main topic. Last week, local municipality organized a book fair on the central open compound of our small town which has a population of over 100,000 (very big town by western standard but its just a big village by Indian standard). I usually don’t like to visit any of the fairs held in our village but this time I had to go with a friend of mine who needed some books. Once there, I was really impressed by the size and magnitude of the fair. There were more than hundred stalls – big and small showcasing their publications and products. What amazed me more were presence of some very big publication houses from Kolkata who have come all this way to a tiny and remote place in a landlocked, backwater state. So we went around the galleries and looked for books he wanted.

While browsing through pavilion to pavilion I noticed stark contrast of qualities of books published by local publishers and those of Kolkata who also had some international books on their shelf.  Its not only the catalog printing that differentiates the books, but also contents. One just has to browse through local books for few minutes and see the so many misspelled words that he or she would rather leave the book alone. (continue reading…)