The rate of increase in US external debt holidngs seems to be acceleration.
US total external debt has crossed its GDP figures in November 2011. It took hardly another year for it to add another trillion to cross $16 trillion in September 2012. Now in just 2 months, debt seems to have galloped by another 340 million.
At this rate by the end March or early April, it will cross the 17 trillion mark, making it 110 % of US GDP.
What is to be noted is that at teh current bond yields, it will easily consume almost 2 % of US GDP growth to pay off the interest of US's external borrowings.
Hence for US economy to growth by 1 % , it in fact has to effectively grow by 3 %.
Tuesday, December 4, 2012
OMCs Incurring Daily Under-Recoveries of Rs 420 Crore
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The
Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and
Natural Gas has reviewed international prices of crude
oil and petroleum products during the 2nd Fortnight of November 2012. Accordingly,
the under-recovery on High Speed Diesel (HSD) applicable for Ist fortnight of December
effective 01.12.2012 has increased to Rs 10.03/Litre. This was Rs 9.06
per litre effective 16.11.2012 for 2nd fortnight
of November 2012. In case of Domestic
LPG the under-recovery for December 2012 has risen sharply to Rs 520.50/cylinder
against Rs 478.50/ Cylinder for November 2012. The Under-recovery on PDS
Kerosene too has remained at high level of Rs 30.93 per litre
for December 2012, though slightly lower than Rs 31.30 per litre
for November 2012
Product-wise Under-recoveries of
Public Sector Oil Marketing Companies (OMCs);
*Additionally, a
subsidy of Rs
0.82/Litre on PDS Kerosene and Rs 22.58/Cylinder on Domestic LPG is provided by the
Government. The under-recoveries on these products are computed on monthly
basis.
OMCs are currently (effective 01 December
2012) incurring daily under-recovery of about Rs 420 crore on the sale of
Diesel, PDS Kerosene and Domestic LPG. This was Rs 412 crore
per day for the previous fortnight effective 16.11.2012.
Further, the OMC’s have reported the
following under-recoveries during April-September 2012:
3.
Details of average International FOB price and Exchange rates are:
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Sunday, November 25, 2012
Top Infrastructure Bonds
Following are the best infra bonds in India:
REC enjoys a credit rating of AAA, which implies that it offers the most security for its investors especially in factors such as timely repayment of principal and interest. Following are the ratings details of some other infra bond issuing organizations:
IDFC Infra Bonds
How to choose infra bonds
At the least, an investor needs to compare the returns being provided by various companies issuing the infrastructure bonds and check out their credit rating. Experts opine that an investor should also keep in mind the latest financial performance of a company before buying its investment instruments.
How to invest in infra bonds
Investors looking to make the most of their money in infra bonds are often asked to put 50% of the deductible money in the 10 year bonds and the rest in the 15 year bonds. But experts opine that since 20,000 is a small amount it is better to not split it as it may not be tracked properly.
From the 2012-13 fiscal onwards the infrastructure bonds will not provide tax benefits. The tax benefit had been extended till 2011-12 and experts had asked that the tax exemption limit be increased.
However, the Union Finance Ministry did not touch upon the infra bonds in the latest bonds and opted to completely do away with the tax benefits being granted previously.
- IDFC Infrastructure Bonds
- L&T Infrastructure Bonds
- IDBI Flexibonds
- IIFCL Long Term Infrastructure Bonds
- IFCI Infrastructure Bonds
- ICICI Safety Bonds
- REC Tax Saving Infrastructure Bonds
REC enjoys a credit rating of AAA, which implies that it offers the most security for its investors especially in factors such as timely repayment of principal and interest. Following are the ratings details of some other infra bond issuing organizations:
- IFCI - AA- (from Brickwork Ratings), CARE A+ (from CARE), LA (from ICRA)
- PTC India Financial Services - A+ (from both CARE and ICRA)
- SREI - AA (from CARE)
IDFC Infra Bonds
- Interest rate - 8.70%
- Eligible for maximum tax benefit of INR 20,000
- AAA rating by ICRA and Fitch
- Lock in period - 5 years
- Can be sold at both NSE and BSE after lock in period
At the least, an investor needs to compare the returns being provided by various companies issuing the infrastructure bonds and check out their credit rating. Experts opine that an investor should also keep in mind the latest financial performance of a company before buying its investment instruments.
How to invest in infra bonds
Investors looking to make the most of their money in infra bonds are often asked to put 50% of the deductible money in the 10 year bonds and the rest in the 15 year bonds. But experts opine that since 20,000 is a small amount it is better to not split it as it may not be tracked properly.
From the 2012-13 fiscal onwards the infrastructure bonds will not provide tax benefits. The tax benefit had been extended till 2011-12 and experts had asked that the tax exemption limit be increased.
Wednesday, November 21, 2012
Did the Indian Capital Controls Work as a Tool of Macroeconomic Policy? by Ajay Shah
Did the Indian capital controls work as a tool for macroeconomic policy,
Ila Patnaik and Ajay Shah.
IMF Economic Review, page 439--464, volume 60, 2012.
In 2010 and 2011, there has been a fresh wave of interest in capital controls. India is one of the few large countries with a complex system of capital controls, and hence offers an opportunity to assess the extent to which these help achieve goals of macroeconomic and financial policy. We find that the capital controls were associated with poor governance, were unable to sustain the erstwhile exchange rate regime, and did not support financial stability. India's experience is thus inconsistent with the revisionist view of capital controls. Macroeconomic policy in India has moved away from the erstwhile strategies, towards greater exchange rate flexibility combined with capital account liberalisation.
In 2010 and 2011, there has been a fresh wave of interest in capital controls. India is one of the few large countries with a complex system of capital controls, and hence offers an opportunity to assess the extent to which these help achieve goals of macroeconomic and financial policy. We find that the capital controls were associated with poor governance, were unable to sustain the erstwhile exchange rate regime, and did not support financial stability. India's experience is thus inconsistent with the revisionist view of capital controls. Macroeconomic policy in India has moved away from the erstwhile strategies, towards greater exchange rate flexibility combined with capital account liberalisation.
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Tuesday, November 20, 2012
India 4th largest economy but has low per capita income: Survey
India has become the fourth largest economy in the world due to a strong
economic growth but still has a low per capita income, the Economic
Survey revealed today.
“India has emerged as the fourth largest economy globally with a high
growth rate and has improved its global ranking in terms of per capita
income. Yet, the fact remains that its per capita income continues to be
quite low,” it said.
“India has moved up the ranks, but is still the poorest among the G-20,” the survey added.
The per capita income of India stood at $ 1,527 in 2011, it said.
“...this is perhaps the most visible challenge. Nevertheless, India has a
diverse set of factors, domestic as well as external, that could drive
growth well into the future,” the survey said.
Between 1980 and 2010, India achieved a growth of 6.2 per cent, while
the world as a whole registered a growth rate of 3.3 per cent. As a
result, India’s share in global GDP more than doubled from 2.5 per cent
in 1980 to 5.5 per cent in 2010, it said.
Consequently, India’s rank in per capita GDP showed an improvement from
117 in 1990 to 101 in 2000 and further to 94 in 2009. China, however,
improved its rank from 127 to 74 during the same period.
G-20 or the Group of 20 nations was formed in 1999 after the East Asian
crisis as a forum of finance ministers and central bank governors.
Meanwhile, the survey said any slowdown in eurozone, which accounts for
19 per cent of the global GDP, could impact the Indian economy. The
International Monetary Fund (IMF) has forecast that the eurozone is
likely to go through a mild recession in 2012.
Thursday, November 15, 2012
Per Capita Income of Indian states
| Sl. No | State/UT | 2010-11 (Rupees) | 2011-12 (Rupees) | 2011-12 % Growth |
| 1 | Andhra Pradesh | 62912 | 71540 | 13.7 |
| 2 | Arunachal Pradesh | 55789 | 62213 | 11.5 |
| 3 | Assam | 30569 | 33633 | 10 |
| 4 | Bihar | 20708 | 24681 | 19.2 |
| 5 | Jharkhand | 29786 | 31982 | 7.4 |
| 6 | Goa | 168572 | 192652 | 14.3 |
| 7 | Gujarat | 75115 | N.A | N.A |
| 8 | Haryana | 94680 | 109227 | 15.4 |
| 9 | Himachal Pradesh | 65535 | 73608 | 12.3 |
| 10 | Jammu & Kashmir | 37496 | 41833 | 11.6 |
| 11 | Karnataka | 60946 | 69493 | 14 |
| 12 | Kerala | 71434 | 83725 | 17.2 |
| 13 | Madhya Pradesh | 32222 | N.A | N.A |
| 14 | Chhattisgarh | 41167 | 46573 | 13.1 |
| 15 | Maharashtra | 83471 | N.A | N.A |
| 16 | Manipur | 29684 | 32284 | 8.8 |
| 17 | Meghalaya | 50427 | 56643 | 12.3 |
| 18 | Mizoram | 48591 | N.A | N.A |
| 19 | Nagaland | 52643 | 56116 | 6.6 |
| 20 | Odisha | 40412 | 46150 | 14.2 |
| 21 | Punjab | 69737 | 78171 | 12.1 |
| 22 | Rajasthan | 42434 | N.A | N.A |
| 23 | Sikkim | 81159 | N.A | N.A |
| 24 | Tamil Nadu | 72993 | 84058 | 15.2 |
| 25 | Tripura | 44965 | 50750 | 12.9 |
| 26 | Uttar Pradesh | 26355 | 29417 | 11.6 |
| 27 | Uttarakhand | 66368 | 75604 | 13.9 |
| 28 | West Bengal | 48536 | 55864 | 15.1 |
| 29 | A & N Islands | 76883 | 82272 | 7 |
| 30 | Chandigarh | 128634 | N.A | N.A |
| 31 | Delhi | 150653 | 175812 | 16.7 |
| 32 | Puducherry | 98719 | 95759 | -3 |
| All-India Per Capita Net National | ||||
| Income(2004-05 base) | 53331 | 60972 | 14.3 | |
Wednesday, November 14, 2012
China's 2012 October PPI drops 2.8%
This marks the eighth straight month of year-on-year decline, as China's PPI dropped for the first time in March this year since December 2009.
But the PPI inched up 0.2 percent in October on a month-on-month basis, according to the NBS.
But the PPI inched up 0.2 percent in October on a month-on-month basis, according to the NBS.
Friday, November 9, 2012
Diageo buys 53.4% stake in United Spirits for Rs 11,166 crore
Diageo Plc has agreed to buy a 53.4 per cent stake in liquor baron Vijay
Mallya's United Spirits Ltd for more than $2 billion, according to an
internal memo related to the deal obtained by Reuters.
The purchase marks the biggest inbound Indian M&A deal since British oil firm Cairn Energy Plc's agreed to sell a majority stake in its Indian business to Vedanta Resources Plc last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.
The purchase would ramp up Diageo's presence in the world's largest whisky market, while Mallya will gain much-needed cash to reduce United Spirit's debt although it may not be enough to revive his grounded Kingfisher Airlines Ltd.
The two companies said in September that they were in talks about a possible deal.
"United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm," United Spirits had said in a filing to BSE.
The purchase marks the biggest inbound Indian M&A deal since British oil firm Cairn Energy Plc's agreed to sell a majority stake in its Indian business to Vedanta Resources Plc last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.
The purchase would ramp up Diageo's presence in the world's largest whisky market, while Mallya will gain much-needed cash to reduce United Spirit's debt although it may not be enough to revive his grounded Kingfisher Airlines Ltd.
The two companies said in September that they were in talks about a possible deal.
"United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm," United Spirits had said in a filing to BSE.
Meanwhile, shares of United Spirits surged 6 per cent to a 52-week high on 9 November following reports that Vijay-Mallya led UB Group has reached a deal with the world's largest spirit maker Diageo for stake sale in the company.
After opening strong, shares of USL further jumped 6 per cent to Rs Rs 1,425 -- its highest level in a year on the BSE.
At NSE too, the scrip gained 6 per cent to touch a 52-week high of Rs 1,425.
In September, United Spirits had confirmed that it was in talks with UK-based Diageo Plc for a stake sale.
USL is the world's second largest spirits maker after Diageo and markets various liquor brands including Signature, Bagpiper, Antiquity, Royal Challenge, Signature in the country.
Mallya-led United Breweries Holdings Ltd (UBHL), the promoter of USL, holds 18.03 per cent stake as on September 30.
The purchase marks the biggest inbound Indian M&A deal since British oil firm Cairn Energy Plc's agreed to sell a majority stake in its Indian business to Vedanta Resources Plc last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.
The purchase would ramp up Diageo's presence in the world's largest whisky market, while Mallya will gain much-needed cash to reduce United Spirit's debt although it may not be enough to revive his grounded Kingfisher Airlines Ltd.
The two companies said in September that they were in talks about a possible deal.
"United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm," United Spirits had said in a filing to BSE.
The purchase marks the biggest inbound Indian M&A deal since British oil firm Cairn Energy Plc's agreed to sell a majority stake in its Indian business to Vedanta Resources Plc last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.
The purchase would ramp up Diageo's presence in the world's largest whisky market, while Mallya will gain much-needed cash to reduce United Spirit's debt although it may not be enough to revive his grounded Kingfisher Airlines Ltd.
The two companies said in September that they were in talks about a possible deal.
"United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm," United Spirits had said in a filing to BSE.
Meanwhile, shares of United Spirits surged 6 per cent to a 52-week high on 9 November following reports that Vijay-Mallya led UB Group has reached a deal with the world's largest spirit maker Diageo for stake sale in the company.
After opening strong, shares of USL further jumped 6 per cent to Rs Rs 1,425 -- its highest level in a year on the BSE.
At NSE too, the scrip gained 6 per cent to touch a 52-week high of Rs 1,425.
In September, United Spirits had confirmed that it was in talks with UK-based Diageo Plc for a stake sale.
USL is the world's second largest spirits maker after Diageo and markets various liquor brands including Signature, Bagpiper, Antiquity, Royal Challenge, Signature in the country.
Mallya-led United Breweries Holdings Ltd (UBHL), the promoter of USL, holds 18.03 per cent stake as on September 30.
Indian GDP set to hit $ 2 Trillion mark
The Gross Domestic Product (GDP) in India was worth 1847.98 billion US dollars in 2011. The GDP value of India is roughly equivalent to 2.98 percent of the world economy.
At the current rate of growth provided the exchange rates remain relatively stable we will see the GDP cross 2 trillion mark towards the end of 2013. (assuming a growth rate of 5.5 %. in constant currnecy terms. The estimated GDP stands today at USD 1.93 Billion.
The country's GDP crossed the trillion-dollar mark for the first time in history when rupee appreciated to below 41-level against the US greenback on 25th April 2011, joining the elite club of 12 countries with a trillion dollar economy.
India was initially supposed to half crossed 2 trillion mark this fiscal year (at an exchange rate of 45 Rs per USD) but a sharp decline in exchange rates means that we will have to wait for another year. India's Gross Domestic Product (GDP) is expected to cross the US$ 5 trillion mark by 2020
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