RBI and CSO data released shows decline in growth allover

The number crunching game of economics is the only thing at boom in this recessionary atmosphere around the globe. Data is being analyzed rigorously in order to get some positive outcome but the more the data come out and more the analysis done, we get more hopeless results every time. Recently I was going through the data released by the RBI and CSO, few renowned economists in India have predicted over the growth prospects of India in 2008-2009. Things are definitely not as bright as it had been in recent past.

Real growth of GDP(market prices) would fall to 7.1% in 2008-09 from 9.02% and GDP growth at factor cost too would remain at around 7.1% in 2008-09.

Growth of agriculture and allied activities would be at 3.3% this fiscal year when compared to last year's 4.55% growth. Industry sector which was experiencing an average growth of above 10% in last 4 years would decline to dismal 5.7% growth. IIP figures of August showed manufacturing output growth to be at 1.15% which is lowest monthly figure reported since October 1998. Outputs of capital goods have slumped to 2.3% from 20.4% immediately previous month. Tertiary sector or services will grow at 9.0% this year after enjoying a growth of above 10% every year in past three years. Per capita real GDP growth was 7.49% last year and may fall to 5.60% this time round.

Peaking oil prices of 2008 has already added greatly towards the debt of the country. Balance of payment will again remain negative. Exports in 2008-09 would touch $ 200billion from $ 159 billion last fiscal but the gain from exports would be subsided by the increase of imports this year. Imports, this year, will be $ 314 billion from $240 billion last year. Out of this $314 Billion, import crude and products alone accounted for $106 billion.

Data is one part, the current economic turmoil is taking its toll all over the world. US government has bailed out Bank of America and Citi group twice now and still they doesn't seem to be in comfortable position. Bank of America has acquired toxic assets worth $118 billion,when it acquired Merillynch, of which around $100 billion would be bailed out by government itself. According to a report by financial times 50% of US household are on the verge of bankruptcy. Sales of automobile are down by more than 30% now. Spiraling effect of economic activities or no activities has started to make things to get worst. Great depression doesn't seem impossible now.Ripple effects of this downturn is sure to reach India.

Disaster is waiting...be aware!!!

Indian corporate world has been shaken miserably with the unfolding of the Satyam misgovernment case.This has set inquires by government over the bank accounts of other major business houses in India. Let me tell you what Raju did recently is being done all around the corporate world but only thing is Satyam was involved in multiple frauds and due to this investors lost all his confidence on Satyam.

If these inquiries are carried on properly then be sure of big big defaulters ahead. And the bigger than the biggest is also among one of them,Mr. Mukesh Ambani. Recently he acquired more shares of RIL and his share in RIL rose to 49.03%. Now in last two years he has bought shares of his own company worth $12 Billion(Rs.570 billion). From where did he get this much money??? It certainly came from RIL only through some channels which were disclosed to SEBI but nobody said anything because of the respect which is attached with the name AMBANI.
If we look at the recent earnings of Mukesh Ambani we will find that he never earned anything near to 12 billion to buy these many shares of RIL.
Mr. Ambani has received only Rs. 500 million (USD 11 million) as salary
and commission from RIL, and dividend of Rs. 750 million (USD 16
million) from his shareholding in RIL in past 2 years.
It is the investors money that is being used to buy back the shares of RIL by Mr. Ambani, same that happened in the case of Satyam Computers.
Things doesn't seem to be going well for Indian Corporate giants.We hope Mukesh Ambani would not be next Raju or this will ruin the image of India's honchos which were very recently considered to be the poster boys of new vibrant India.

Indian Media:Irresponsible yet most effective

Media is supposed to be the mirror of the society. It builds the consensus of a nation over which that nation grows and develops in its culture, dynamism and intellect. But in recent years Indian Television media has put forward such a agnostic picture of themselves that I fail to understand the reason for those channels being aired and concept of media seems to be in doldrums. Democratic system of Indian Republic gave birth to a free and independent media but media has very recently downgraded itself to a new version and its not media, its Entertania(Entertainment+Media).INDIA'S FREE AND INDEPENDENT ENTERTANIA.

Recently I was in Noida discussing about Indian Media with a businessman named Sajeev Mathur. He told me about a incident which happened recently in Noida. He said that in a house in nearby sector there lived a family of three. Husband and Wife ,aging around 40, with their niece.There was some quarrel between this girl and her local guardian who were the people with whom she was living in Noida. Girl went to police station and filed a complaint against her local guardian charging the man, who was living there, of molestation and attempt to rape.This news some how reached to media people. They made their own judgement and showed the story on TV and declared those local guardians as convicts while police was yet to take action.Now these husband and wife,they were so ashamed and there ego so much hurt that they both committed suicide.Later, after police investigation it was found that husband wife were not the culprits rather it was the girl who used to go around with a boy and when guardians tried to resist her she used to get angry and often quarrel with them and one day she decided to take revenge.So she reported fake molestation charges to police.The two innocent died because they could not bear the desolate from the society. None of the media person ever came up for any kind of apology, showing height of irr esponsibleness. I was shocked after hearing this news. But now a days these shocks have become so common that every time you open a news channel they are ever ready to serve you with some new kind of shock. Mumbai terror attacks showed entirely new face of media. Media reporters are great actors too. They were posing themselves as they are more close to terrorist than the policemen who were fighting there. One of the reporter was lying on the floor and reporting in that posture only, while a policeman was standing beside them comfortably and a news reporter from some foreign news agency was reporting with all ease while standing. More respectful journalist like Barkha Dutt was pretending herself ,which was very easy for someone to understand, that those crocodile tears are not for the nation but for the TRP which is the first and last thing which matters the most to these media..

News channels have become combo pack channels containing a bit of other entertainment channels and these stuffs have nothing to do with any kind of news. These ENTERTANIA channels have done something to the viewers. They have divided them into two groups, one running away from such media and other group enjoying it. People in real search of news are moving towards more contemporary news style like online contents and blogs. But the thing of concern is that the media today is reeling under identity crisis...people have forgotten the role of media in shaping up the society and they think media channels to be a great time pass with every news being a breaking news.         

Bailout word itself is depressing...it wont bring back the lost sentiments

World is rotating at its axis and economic world is rotating over bailout packages. Axis and bailout has analogy here, there subjects would end if they seize to exist. Americans have now become afraid of this word. Every time a bailout is announced it sends a signal to the world that there are another new defaulters in the market and this brings down the sentiments of the consumers further.
This is not the case in countries like India where bailout is being taken in good spirits. There is a reason for this difference in the way same word is being used today. When a bailout is announced in India its basically a economic stimulus package not the bailout like that in America where bailout is being given to save the big defaulters. Bailout of bankers like AIG,Citi and others had brought a depressing effect over the people. I am telling this story because in this grim situation US government should try to improve the sentiments of consumers more than anything else. Until the consumer spending kicks off again nothing is going to happen. Just bailing out the defaulters wont work.US is already reeling with the worst economic deficit in history totaling to staggering $1 Trillion which is almost equal to the entire GDP of India.With that kind of deficit what will happen if situation does not improve after these bailouts as it has been happening till date and government is in no position to bail out further because of low availability of dollar. Even if that does not happen and bail outs work for now, US will generate such a deficit that it will have horrendous impact over its reserves and dollar itself which would give other competing currencies to built their supremacy over dollar.I think this situation is now quite apparent to Mr. President elect too and that is why he recently said that bailing out is not the solution to the problem and they will have to devise some better plan. Hope his economic advisory team which has the best of the minds and experience of the world would soon come up with something which would bring in much needed confidence among the consumers.

Russia's Economic revival may be the revival of COLD WAR era...

Fall of Russian communism may have sent a good signal to the world and the feel of triumph for the western countries because of their belief that this would bring much needed stability to the world, but the humiliation within the former USSR is becoming evident as it tries to gain back its lost supremacy. Best example to resurgence of Russian might in post Cold War era was war with Georgia. Mr. Vladimir Putin is said to be a man from that totalitarian system which ended with lowering flag above Kremlin. Mikhail Gorbachev, the last president of Soviet Union, said "The totalitarian system has been eliminated.. free election ,free press, freedom of worship, representative legislatures and the multi party system have all become reality." US were the first to recognize and welcome the new independent and democratic Russia.

10 Years after cold war era ended Russia started to grow its economy the high growth rate and sought to regain its lost glory. But in its attempt to strengthen itself it has constantly increased its pre-cold war era activities as it gain economic power. Russia has tried to show that it has always been at par with US even after its great demise in 1991.Russia's war in Georgia and its unilateral recognition of South Ossetia and Abghazia copied the west's recognition of Kosovo in the Balkans, Mr. Putin said unilateral recognition of Kosovo was "immoral and illegitimate". Russia very recently developed and tried to strike a defense deal with India providing Missile Defense System when US was trying to do that.

I seem Russia has still not been able to come out of the COLD WAR era hangover. Russia still has to go a long way before it can come somewhere near might of US. Russia still suffers from low level of income and poverty, per capita earning being just 700$ per month. Divide between the rich and poor is increasing and the corruption in Russian oligopolistic system which is eating it away from inside.

Mental divide still a hinderance

This is not like my typical blog on economics rather its something related to it through my personal experience. I am in a train and 10 minutes ago was really getting bored so I decided to write a post because the constant murmuring of few people did not allow me to sleep even. I then decided to hear those murmur more seriously as the topic they discussing interested me a bit. They were discussing over the topic : The role of youth in education today.

This train goes from Delhi to Mussfarnagar. Delhi is off course well known but Mussafarnagar is a small town in Bihar, I have never visited it though. Most of the people are from Bihar except few like me and my friend, a couple sitting above talking continuously as the time is really running short for them and a pretty girl sitting in front me and reading 5 point someone. These people will probably drop at the Lucknow Station. Same sense of looking the way people are talking and doing has made me to derive this logical conclusion and this demarcation is so big in India that one can easily reach such conclusions. Again back to the group discussion taking place in my fellow compartment and which has gained even more energy and participation of the people around. I said i have a bit of interest on such topic so I had my own view point over this. As I started to listen to these people I was bit amused over the way the education is imparted in my country and the education system about which these people were talking about.

One person here is a teacher from a degree college in Balia, a place very close to Bihar. His anguish for the students was more than evident. He said, one of his fellow teacher was recently murdered by a student and it was not the first instant that this has happened in his area. It is been happening in regular succession there. This drew my attention even more towards them. He went on to demean the students in his college by giving examples as to how the students produced fake mark sheets and certificates, how they got involved in politics of the colleges and committed crimes to prove that they are best suited to the Indian politics. Another men sitting there started to applaud there own student age when they used to study and used to get beaten hard for not doing so. All of them together produced such a dismal picture of the student and education system that I had nothing to say but to be astonished. My astonishment was obvious, if I had been asked to speak or put me view I would have initiated with all applauds for the youth and would have given evidences has how youth is constructing the future of this nation by there efforts. I had been very proud of the youth of India before I listened to these people but now I think it is not whole of the young Indian lot that making India shine but a part of it and that part is really very small.

I am certainly not happy when I come to know that changing India has not changed much but unfortunately it happens very often everyday. Things have changed a lot in metros but most of the India still remains unvisited by the development. Reason has to be in the roots only. Why the youth from one part of the India is creating incredible India and why some other youth are far away from thinking about development???? We need to change the mind set of the youth and that can be done only by imparting correct education right from the basic level. Correct brining up changes the way one things. I had different perspective about Indian youth because I had been brought up in that way. For me the young Indians are my friends, my idols whom I see on TV and young entrepreneurs but for them its entirely different story. They live in environment where crimes, stealing and murders are part of life. I am still in train and something very disgusting had just happened which I will tell you some other day.

Exchanges Causing Volatility,Cant we go Euro way???

I might be questioning very fundamental on which current global exchange rate trading fraternity exists but the same economic crisis has made me to think that way. This New Year was not like the past ones. Credit crunched citizens did not spend and enjoy as they were doing in the past. The reason is very obvious, known and talked about in every corner of the world today. Many conclusions are being drafted every second and most of them pointing towards one solution and that being more regulations. Now again a question arises: How much regulation? Applying high level of regulation would question entire concept of free market and having low degree of regulation would lead to disasters like current economic crisis. So, regulation may only be the part of the solution, not the complete solution. Then what can be the other solution??

Euro has turned 10 this New Year eve.Though not much hype was created on this context but Euro has traveled a long way since its inception in 1999 when 11 nations of the Europe agreed to integrate their currency and form a common one.Current economic crisis has shown something good coming out of it. Countries using Euro as currency has  somewhat saved themselves from this meltdown and the reason is simple,they have a unified and integrated economic system between them so they are less exposed to the volatility of exchange. "The euro is sheltering businesses from the exchange rate volatility, which has battered them in previous downturns," Barroso said on Monday. "To put it simply, the euro works." Members in Euro community has increased  to 16 with the addition of its newest member Slovakia. Currently Euro is covering around 320 million population. That is remarkable  achievement for a currency started just a decade ago. Even Iceland which not a EU country is eyeing into euronization. I am not sure, will Euro replace the Dollar as the global currency or not,neither am I much bothered about arguing which one is the best but current insulation from volatility which Euro has provided to its nations has made me think that having a common world currency would save us from devaluating our currencies at the time of such crisis and save us from pathetic government and central regulations. Having a common currency would make trade between the countries lot more simple and markets more susceptible to volatility. I think rounds and rounds of WTO meeting without outcome would then finally provide more leveled play field between developing and developed world.