Metamorphosis of Indian Economy

Recently there was a very popular message circulating on cell phones

In 1990-samosa was 1 rs and call was rs.7

In 2011-samosa is rs.7 and call rs.1

Inflation is same but rates are shifted somewhat….

Message was nice though…

No doubt we have seen a paradigm shift as compared to 1990 to the present time..

We all are aware of India’s condition after independence.we were totally ruined and our economic condition was at its worst.

Welfare of the country and making and economic democracy was the main thing in India at that time.Our first prime minister pundit Jawaharlal Nehru wanted India to be a self sufficient company and started central govt planning on account of soviet union(Russia).The first five year was started in 1951.no doubt they tried to make lots of changes in terms of industry and growth.

But as far as I see the major reforms started in 1971, under Nehru's daughter, Indira Gandhi, the Government tried to eliminate poverty by promoting small, labor intensive enterprises. One of the most wonderful things to happen to the world was the genetic development of high-yielding grain varieties, the Green Revolution, under- ground nuclear tests and development on defense took place in 1974 along with development of various large scale industries.

All these changes were followed by economic reforms by Rajiv Gandhi.as he himself was Imperial college pass out, so when he came to power he increased government support for science and technology and associated industries, and reduced import quotas, taxes and tariffs on technology-based industries, especially computers, airlines, defense and telecommunications.

India was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in the wake of an exceptionally severe balance of payments crisis which will be covered in the next post..or I can say coming up soon…..

hey...:)

Cabinet is reshuffle again after january.........

some ministers are promoted and some are thrown out too like Dayanidhi Maran (Textiles) resigned in the wake of his being named in the 2G scam and Murli Deora(Corporate Affairs), M S Gill (Statistics and Programme Implementation), B K Handique (DONER), Kantilal Bhuria (Tribal Affairs) are the others who were dropped out of the cabinet..

Heading the annoyed Congress ministers Gurudas Kamat resigned as Minister of State after the reshuffle as he was unhappy after the decision made.

List of new cabinet ministers are...

1. Parliamentary Affairs- Rajiv Shukla

2. Railways-Dinesh Trivedi

3. Science and Technology, and Earth Sciences-Vilasrao Deshmukh

4. Steel-Beni Prasad Verma

5. Environment and forests-Jayanthi Natarajan

6. Health and Family Welfare-Sudip Bandopadhyaya

7. Home-Alwar MP Jitendra Singh

8. Communication and IT-Milind Deora

9. Rural Development-Jairam Ramesh

Manmohan Singh did not touch the 'big four'--finance, home, defence and external affairs--and also kept four ministries, including telecom and civil aviation...

hope this change is for goood.......!!!!!!!!!!

RBI hiked interest rates by 25bps for the 10th time in 16 months as it resists handling the mounting inflation. The RBI has raised the short-term lending (repo) rate by 25 basis points to 7.50 per cent and the short-term borrowing (reverse repo) rate by a similar margin to 6.5 per cent.
The purpose of hiking interest rates is to reduce the money supply to the public. Higher rates of interest implies that borrowing will not be easy for those who wish to invest in new industries, expand existing infrastructure, purchase houses or vehicles, etc. This has a negative tendency of slowing down growth
Like the markets reacted very negatively to this act and this latest hike will further dampen the auto sector because industry is already under pressure and this fresh step will further worsen the condition, followed by high inflation and high fuel prices.
Other factor which affected world markets and currencies was rate hike by China and Australia is on the cards which resulted in weakening of Euro and Dollar.
Finally coming back to Indian Scenario, Dalal-Street experts see Sensex sinking to 15k by December 2011. Investors worldwide are more risk-exposed because of the European crisis and this will result in the market trending lower over a period of time. The majority of the factors affecting inflation are given out from a gush in prices of imports and exports which RBI is not able to handle ad so it should wait and watch more local and global data before taking further actions.

What’s on economy these days…???

Inflation petrol prices all time high and European zone debt crisis..Most importantly RBI hiking rates again and again and because of that we see share markets coming down and almost all the industries in the country are getting affected.

First of all if we’l talk about European sovereign debt crisis or Greek Debt Crisis particularly.

In 2010 the debt crisis was mostly centered on events in Greece followed by Ireland and Portugal the most..they have 'credibility problem', because they lack the ability to repay adequately due to their low growth rate, high deficit, less investments etc. On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh Greek austerity measures. The Greek bail-out was followed by a €85 billion rescue package for Ireland in November, and a €78 billion bail-out for Portugal in May 2011.

If we see the present situation Greece’s 18-month sovereign debt crisis brought the government to the brink of collapse.

Along with that the fall of the Irish and Portuguese governments in recent months has driven the countries into bankruptcy. Despite the sharpening sense of urgency, European Union governments, the Europe Central Bank, and the European Commission remained gridlocked over how to respond to the debt emergency, which pushed Greece closer to sovereign default and Europe towards a fresh banking crisis. These borrowing costs soared to record levels as investors took fright which resulted in suffering for global stock markets

Albeit Germany has back tracked from this Greece crucial stage while promising a debt compromise plan but Till date European Central Bank, IMF, Bank of England are trying to take out possible measures for dealing with this problems. e.g

The 17 Eurozone finance ministers has structured a new three-year bailout for Greece in Luxemborg in a way that would persuade European banks, pension funds and other private creditors to roll over the country's inflated debt releasing bailout package of 110 billion Euros (159 billion dollars).

All these steps are taken with a hope that it will solve the Greece debt soon and thereby improving their economy.

Hey friends…

Few days back we got to know about the 9^th rise in the Repo and Reverse rate by Reserve Bank of India (RBI). Generally the people were very agitated after this act of raising rates, also the share markets showed a very negative impact with a downfall of 460 points that day.

RBI is a very proactive institution of India which focuses more on growth of the country.

Now if we consider the present inflation scenario, ultimately its affecting the growth factor.

Inflation is reached new levels (8-9%) which is at the end hampering the development.

Inflation can be due to many reasons such as currency difference, supply-demand mismatch. In India the prime reason is supply-demand mismatch. Due to increasing population demand always rises and due to some or the other reason supply is always constrained i.e. Due to less supply, more demand the prices of a commodity increases thereby causing inflation.

So in such kind of cases the inside situation is the producer knows that the consumer has money and the consumer needs the product no matter how costly it is so taking the advantage of circumstances they increase the prices which leads to price rise and hence inflation.

RBI in order to control prices increases the repo rate i.e. the rate at which RBI lends money to banks.

When banks will get money at a higher rate from RBI then they will lend it an advanced rate topeople which will ultimately increase their EMI or take their liquidity which will lower the prices. As in when consumers will have less money, demand of a commodity goes down which will eventually control the prices.

e.g. a person has surplus money ,he is getting loans at a very low rate from bank so he’ll go and purchase say three flats because he’s getting money very comfortably but if he won’t get loan so easily and when he’ll get that too at a very high rate so he’ll buy only one flat which reduces the demand for flats and thereby dwindling the costs.

Through this post I just wanted to convey that all we do is blaming RBI and other policy makers but without knowing the inside story.

RBI is taking good measures and I don’t comment on politicians but personally RBI is doing well..

Thanks

Take care..:)

Hello friends..hope you are njoyng..:)
In today’s scenario both India and China are amongst the top contenders of global economy and are the world's most assorted nations. Still, if we try to analyze the different economic and market vogues , we can make a contrast between Indian and Chinese economy.
If we see past few years,Trade between India and China stood at $42.4 billion in 2009-10
Of this, import to India was of $30.8 billion, while the country exported goods worth $11.6 billion to China.
China is still a much bigger economy than India, even though the two countries have roughly similar numbers of people
According to a report on Asia’s middle classes this year, India still has about 650 million people living on under $2 dollars a day measured in 2005 while China now has less than 100 million living on that amount
Some important facts and figures related to India and China are as follows:-

Facts
1.GDP

India $1.3123 trillion

China4909.28 billion

2.GDP growth

India 8.90%

China 9.60%
3.Per capital GDP

India $1124

China $7,518
4.Inflation

India 7.48 %

China 5.1%
5.Labor Force

India 467 million

China 813.5 million
6.Unemployment

India 9.4 %

China 4.20 %
7.FDI

India $12.40

China $9.7 billion

Foreign Direct Investment
8.Gold Reserves

India 15%

China 11%
9.Foreign Exchange Reserves

India $2.41 billion

China $2.65 trillion
10.World Prosperity Index

India 88Th Position

China 58th Position

Other add-ons of China
1. Fastest speed train.
2. World manufacturing hub.
3. Own plants for making air planes.
4. Own arms and weapons manufacturing unit.
5. Well developed Telecom companies.
6. Top performer in Sports at world events.
Indians buy aeroplanes , weapons from foreign companies ,our chemical industry is heavily dependent on Chinese and Japanese imports.In matter of sports we are never on top 5 at world events e.g. India hosted the Commonwealth Games in October, China hosted the Asian Games in November but the news coverage of the Indian Games was rife with words like “delays,” “corruption,” “shambles” while China, it appeared, had lovely, shiny venues ready to go about five months ahead of the event.
One of the biggest firm Reliance just gave billion of dollor worth order to china for its power plant but not to BHEL, its we who are making other countries stronger by not working ourselves self dependent.
In order to be considered a developed Country, India needs to focus on the common man. On the prosperity of the general public and on the living conditions that its residents have to face.

some other parts that can help
1. Improve governance and young people in politics
2. Raise educational achievement and increase quality and quantity of universities
3. Control inflation along with introduce a credible fiscal policy
4. Liberalize financial markets and monitoring on foreign investments by bilateral trade
5. Increase agricultural productivity
6. Improve infrastructure and improve environmental quality.

India is well on the way to becoming an Economic Super Power by 2020. India will have a large enough economy forecast at around $ 10.8 Trillion. By 2020 India would be well considered a major global economic player and should have a well developed Infrastructure and production capacity with a much larger skilled resource pool with a comparatively young (median age).

Shift in Infosys management panel…

Infosys

Infosys was founded on 2 July 1981 by seven entrepreneurs, N. R. Narayana Murthy, Nandan Nilekani Krish Gopalakrishnan, S.D. Shibulal , K Dinesh with the present value of $6 billion.

Narayana Murthy who was the founder of company,needs no introduction, he started the company by borrowing Rs.10,000 from wife Sudha Murthy will retire in in august 2011

Nandan Nilekani was of the originator of Infosys became the CEO of Infosys in March 2002, taking over from Murthy. Nilekani served as CEO of the company from March 2002 to April 2007, when he relinquished his position to his colleague Krish Gopalakrishnan, becoming Co-Chairman.He left Infosys on 9 July 2009 to serve as the chairman of the Unique Identification Authority of India.

Krish Gopalakrishnan another founder Infosys Technologies Limited. The initial years of his responsibility at Infosys included management of design, development, implementation and support of information systems for clients in the consumer products industry. But after he took over as CEO and MD his functions included Customer Services, Technology, Investments and Acquisitions.

S.D.Shibulal,was supposed to be the best niche for this place. He’s the co-founder of the company. On June 22, 2007, Shibu took over from S. Gopalakrishnan as Chief Operating Officer. According to the company website, Shibu's focus has been on increasing competitiveness, improving customer experience, enhancing employee engagement and increasing the depth of services.On April 30, 2011, Shibu took over the role of Chief Executive Officer.

This was about the creators of Infosys and the deciding panel for choosing new CEO and MD was laid by Jeffrey Sean Lehman. He stated this thing Narayana Murthy's successor is not his replacement.

But now finally KV Kamath appointed new chairman of Infosys, Shibulal new CEO functioning from 21^st august,2011.

He is the non-Executive Chairman of ICICI Bank, the country's largest private lender. KV Kamath was a natural choice as he was a non-IT person and he has a very acute mind he would have the same kind of keen sense in the business even if he was from the IT industry.

Shibulal as already mentioned is a person who will ensure that his leadership transition is smooth along with making other organisational changes to strengthen our market position and ability to serve our clients better.

While Krish.Gopalakrishnan continued to hold his position as Executive Co-Chairman of the company and will work on enhancing customer, employee and investor connect ensuring that this company moves forward in the strategic direction that it has been set.

According to Mr.Murthy he’s leaving his company in capable hands These three leaders meld an extraordinary range of talents and experiences with a united commitment to drive the company... We could not be in better hands…