สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 24 กรกฎาคม 2556

India reduced its poverty to 21.9% in FY 2012
The Planning Commission said on Tuesday the number of those below the poverty line declined to 21.9% of the population in 2011-12, from 29.8% in 2009-10 and 37.2% in 2004-05.

The estimate, based on a survey of household consumer expenditure, showed rural poverty declined to 25.7% from 41.8% in 2004-05, while in urban areas it fell to 13.7% from 25.7%. The sharp drop was attributed to the high real growth in recent years, which raised the consumption capacity. The data showed that nearly 20 millions people were pulled out of poverty every year from 2004-05 onwards, which resulted in a sharp drop in those below the Tendulkar poverty line to 270 millions in 2011-12 from 407 millions in 2004-05.

Uttar Pradesh had the highest number of poor people at 598.19 lakh, which is 29.4% of the state's total population followed by Bihar at 358.15 lakh (33.7%), Madhya Pradesh at 234.06 lakh (31.6%), Maharashtra at 197.92 lakh (17.3%) and West Bengal at 184.98 lakh (19.9%).

Prime Minister Manmohan Singh had last week highlighted the UPA government's record in poverty reduction, contrasting with the lower fall in the NDA regime and earlier. "The percentage of population below the poverty line declined at 0.75 percentage points per year before our government came to office in 2004-05. It has fallen more than 2 percentage points per year between 2004-05 and 2011-12," Singh said at an industry association function last week.

(Source: the Financial Express, Business Standard, the Economic Times)

Walmart can't meet 30% sourcing
The world's largest retailer, Walmart, has expressed its inability to the government on meeting the sourcing norm in the multi-brand retailing segment that requires 30% procurement from small industries, stating it could procure only about 20%.

According to sources, representatives of the company had met department of industrial policy and promotion (DIPP) officials in the second week of this month and informed about the company's stand on the contentious issue. However, they said it would be "really" difficult for the government to ease this provision, as "it is a politically sensitive issue".

Under the FDI policy for multi-brand retail trading, at least 30% of the value of procurement of manufactured/processed products shall be sourced from Indian 'small industries'. Several global retailers have raised their concerns over the restriction. In a meeting with Commerce and Industry Minister Anand Sharma, the global chains have flagged the issue and have demanded altering the condition to 'preferably' from 'mandatory' as in the case of single-brand retail. Although the government has permitted 51% FDI in multi-brand retail about 10 months earlier, no formal proposal has been received by the DIPP yet.

(Source: the Financial Express, Business Standard, the Economic Times)

RBI Tightens Gold Imports
The Reserve Bank of India (RBI) on Monday mandated that banks and bullion trading houses must retain 20% of every lot of imports of the metal at customs warehouses. The RBI added that fresh gold can be imported only when 75% of the stock lying in these warehouses is used for export purposes.

The RBI has asked exporters to repatriate their proceeds within nine months from the date of export until September as against the earlier 12 months. According to RBI, entities/units in the SEZ and EoUs, Premier and Star trading houses are permitted to import gold exclusively for the purpose of exports only. Further, banks and trading houses must monitor the transactions under the new norms through their international divisions, the RBI said.

A surge in gold imports had resulted in the current account deficit surging to an unsustainable 6.7% during January-March. In November 2012, the RBI had increased the period available for exporters to repatriate their export proceeds to 12 months from six months. This enhanced period was available only until end of March.
"The time period for realization and repatriation of export proceeds from April 01, 2013, onwards till September 30, 2013, shall be reckoned as nine months from the date of export," the RBI said. The reduction in the period of export proceeds repatriation would prevent exporters from holding on to dollars for lower rupee levels.
The Indian rupee hit an all-time low of 61.21/$ on July 8, triggered by dollar outflows from foreign investors and lack of dollar supply from exporters. India's exports were $25.1 billion in June, down 5.45% from a year ago.

(Source: the Financial Express)

Why Buffett bailed on India?
India has long been viewed as a value investor's dream: Rapid growth, 1.2 billion people pining for a taste of globalization, and underdeveloped industries ripe for turnarounds. So, it surprised few when the genre's guru, Warren Buffett, placed a bet on the world's ninth-biggest economy. In fact, did come as a surprise was last week's decision by the billionaire's Berkshine Hathaway Inc to give up on India's insurance market after just two years. The withdrawal came the same week India unveiled plans to open the economy as never before to foreign direct investment.

However, Buffett isn't alone in voting with his feet. Walmart Stores Inc, ArcelorMittal SA and Posco are pulling back on investments in India that they had announced with great fanfare. Headwinds from New Delhiare contributing to the slowest growth rates in a decade, a record current account deficit and a 7.9% plunge in the rupee this year. Fiscal neglect has bond traders demanding higher yields for government debt than India wants to pay. But the most devastating no-confidence vote is coming from the big, long-term money India needs to boost its competitiveness. Foreign direct investment slid about 21% last financial year, and this one doesn't look promising.

What should India do? Pass clear and strong investment laws that will survive the change of government and offer a code of conduct for state leaders. India must strengthen the rule of law as it applies to foreigners so they'll trust their money is safe. Finally, India must think long-term. Today's motivation for inviting more foreign money is to narrow the current-account deficit. The goal should be to raise competitiveness, gain fresh knowledge and create better-paying jobs for the future.

(Source: the Financial Express, the Economic Times)

Govt asked to set up Retail Regulatory Agency to unsure jobs
The Parliamentary Standing Committee on Industry asked the government to set up a retail regulatory authority to deal with issues concerning foreign multi-brand retail companies which plan to come into the country.

According to Tiruchi Siva, DMK learder and the chairman of the panel, a regulatory authority must be made to look into the impact of foreign direct investment in multi-brand retail trade on micro, small and medium enterprises (MSME). Siva added that if multi-brand retail chains are not regulated, they may adversely impact MSME farmers and domestic mandis.

The panel said, "Our own squeezed-out retailers and all those associated with the market and retail trade would lose their livelihood and become jobless. It will add to our already existing social and economic woes, which generate so much unrest and violence." Taking serious note of the implementation of sourcing norms, the panel suggested that the 30% procurement requirement be applicable item-wise. As per the current policy, 51% FDI in multi-brand retailing requires a mandatory sourcing of at least 30% of the value of manufactured or processed products to be sourced from small industries.

(Source: the Financial Express, the Economic Times)

Industry bodies revive the investment trend
Heads of two industry associations, Assocham and Ficci, call for revival of investment cycle to attract fresh money. They said that lifting curbs on FDI is good, but not enough to revive the investor sentiment.

YES Bank managing director and CEO Rana Kapoor, who took over as the president of industry chamber Assocham, stressed upon the need for a red carpet treatment for local investors to revive the investment cycle. "We need at least a red carpet for Indian companies in our own country. That's the least we should do," Kapoor said adding that there is a need to get out of this state of inertia and get into compulsive decision-making.

Calling for a political consensus on the big-ticket policy priorities to revive India's growth, Kapoor said the country's experience suggested "98% energy" must be focused on execution strategies. He also added that sectors like mining, metals and natural resources need optimal pricing and allocation policies.

(Source: the Economic Times)

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