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Chidambaram lists out 5 point economy health warps for 2017

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Chidambaram

New Delhi, January 2: Senior congress leader and former finance Minister P Chidambaram on Sunday highlighted 5 point economy health warps for 2017 and turned upside down Modi government’s claim of India being one of the fastest growing large economies of the world.

Rather being complacent with government’s claims that Indian economy is poised to grow at decent GDP growth rate, moderate inflation, contained fiscal deficit and swollen foreign exchange reserves Chidambaram uncovers an apparently depressing state of Indian economy.

1. Lost confidence of Foreign investors: Foreign Portfolio Investment or FPI is a standard metric of gauging confidence in the economy and since 2008 it is the first time that FPI is negative in the country.

Chidambaram highlighted until October 2016, net FPI was positive at Rs 43,428 crore but after note-ban in November and December, the flow reversed and FPI outflow was Rs 66,137 crore, resulting in negative net FPI at Rs 22,709 crore.

Now the prerogative is on Modi government to rebuild the confidence of FPI and end the FPI’s flight for uncertainty in India in 2016.

2. Whither Make in India…Index of Industrial Production (IIP) is an indicator of the health of the manufacturing sector. And post currency note ban IIP has declined rigorously. Amid declining manufacturing in consumer non-durables segment (down 25%), capital goods segment (down 6 %) IIP for March 2017 may turn out lower than the IIP for April 2016.

3. Dying credit growth. Next point of worry is purging credit growth in the country. Credit growth is recorded at historic low of 6.63 % at the end of November 2016 pointing towards parched economic activity in the country.

4.  Uncovering double whammy for the banking sector, Chidambaram wrote: While credit growth remains sluggish — indicating that there is little demand for investment credit — the gross NPA situation has worsened between September 2015 and September 2016 from 5.1 per cent to 9.1 per cent.

While PM Modi announced a series of benefits for drawing credit for small income groups, probably to increase the credit demand, P Chidambaram in his article blatantly wrote, “Banks have few takers for credit and, at the same time, banks are unable to recover loans.”

The inescapable conclusion is that the promised revival of the industrial sector remains a promise and there are no signs of revival.


A closer look at industry growth
Currently, non-food credit has grown by 6.99 per cent. Medium-scale industries including textiles, sugar, cement, jute where regular, non-casual employment is dominant, has registered negative growth every month since June 2015. While small and micro industries are crippling even worse at (-)4.29 per cent.

“Demonetisation was the last straw and many of them have shut down and thrown out of employment millions of workers,” Said Chidambaram. This cites how crippling industries can boost banking activity and draw credit when consumption and demand are already hurt (amid cash crunch arising from demonetisation) in the economy?

The analysis cites how crippling industries can boost banking activity and draw credit when consumption and demand is already hurt (by cash crunch/demonetisation) in the economy.

5. Last but not the least, Exports are a reliable measure of the manufacturing capabilities as well as the competitiveness of an economy. Former finance minister cracks out the real picture of Indian economy where manufacturing is dithered, merchandise exports are declined, markets are lost and jobs are axed. He asks how Indian economy can regain lost markets when “Neither Prime Minister nor Finance Minister has rung the alarm bells about declining merchandise exports. We have not heard a serious conversation about ways and means to reverse the situation.”

All five issues — FPI, IIP, credit growth, NPA and exports — have been adversely affected by demonetisation. So, the state of the Indian economy has become worse since the massive disruption caused by demonetisation on November 8, 2016.

While wishing Happy New Year, the economist and politician P Chidambaram’s highlighted in his Sunday article published in Indian Express why Indians with sullen and dejected faced are apprehensive about the immediate future post demonetisation.

Wefornews Bureau

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Market Review: Amid volatility equity indices rise for 5th straight week

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SENSEX NIFTY MARKET

Mumbai, June 23: Despite volatility and a broadly bearish momentum, the key Indian equity indices rose for the fifth consecutive week, although with marginal gains.

Value buying by investors, primarily in banking, healthcare and auto stocks on Friday helped the indices end higher than the previous week’s levels.

The gains in the week ended Friday, were limited by global trade war concerns due to imposition of tariffs and counter-tariffs internationally.

Index-wise, the barometer 30-scrip Sensitive Index (Sensex) of the BSE rose by 67.46 points or 0.19 per cent to close at 35,689.60 points on a weekly basis.

The wider Nifty50 of the NSE closed the week’s trade at 10,821.85 points — up 4.15 points or 0.04 per cent — from its previous close.

According to analysts, market breadth was negative in all the five trading sessions of the week.

“Markets ended the week with marginal gains after trading in a rangebound manner for a major part of the week. It was nevertheless the fifth consecutive week of gains for the Nifty50,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Shibani Kurian, Senior Vice President and Head of Equity Research at Kotak Mutual Fund told IANS: “Volatility in the market continued during the week ended June 22, 2018 amidst rhetoric of intensifying trade wars between the US and China and the possibility of imposition of further tariffs against imports from China.”

According to Equity99’s Senior Research Analyst, Rahul Sharma, stock specific actions were the flavor of the week, “wherein HDFC twins (HDFC, HDFC Bank) shimmered, gaining more than 2 per cent”.

Further, during the week all eyes were on the outcome of the Organisation of Petroleum Exporting Countries’ (OPEC) meet, said Prateek Jain, Director of Hem Securities. OPEC, was expected to decide on raising its oil production to cool down oil prices and eventually on Friday it announced an agreement to raise oil output by nearly one million barrels per day.

On the currency front, the rupee closed at 67.84 against the US dollar appreciating by 18 paise from its previous week’s close of 68.02 per greenback.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 2,088.81 crore, while the domestic institutional investors purchased stocks worth Rs 4,720.76 crore during the week.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 4,528.63 crore, or $665.71 million, in the week ended on June 22.

Sectorally, the top gainers were the Bank Nifty, pharma and energy indices, while the top losers were metal, public sector banks and IT indices, Jasani told IANS.

The top weekly Sensex gainers were ICICI Bank (up 6.57 per cent at Rs 300.85); HDFC (up 3.86 per cent at Rs 1,902.40); HDFC Bank (up 2.52 per cent at Rs 2,081.80); Tata Motors (up 1.63 per cent at Rs 308.15); and Yes Bank (up 1.41 per cent at Rs 335.20 per share).

The major losers were Coal India (down 5 per cent at Rs 265.10); Vedanta (down 4.23 per cent at Rs 228.65); ONGC (down 3.63 per cent at Rs 159.45); Wipro (down 3.34 per cent at Rs 257.95); and Infosys (down 2.66 per cent at Rs 1,246.45 per share).

IANS

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Oil prices rally after OPEC meeting

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OPEC

Vienna, June 23 (IANS) Oil prices surged as investors were closely watching the Organization of the Petroleum Exporting Countries (OPEC) meeting.

The West Texas Intermediate for August delivery on Friday rose $3.04 to settle at $68.58 dollars a barrel on the New York Mercantile Exchange, while Brent crude for August delivery was up $2.50 to close at $75.55 a barrel on the London ICE Futures Exchange, Xinhua news agency reported.

The OPEC on Friday announced an agreement to raise oil output which, in accord with non-OPEC producers, had been reduced last year in order to boost prices that had been in free fall mainly due to a supply glut.

Following a ministerial meeting here of the 14-nation cartel, the statement released, however, did not provide any details of the production increases to be allocated among members.

Current OPEC Chairman, the UAE Energy Minister Suhail Mohamed Al Mazrouei, told reporters after the meeting that the increase agreed upon is “a little bit less than 1 million barrels” over OPEC’s current output.

OPEC and non-OPEC producers, including Russia, had put in place 1.2 million barrels per day (bpd) cut from January 2017, which helped boost crude prices go over $80 a barrel last month.

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Nepal, China to enhance cooperation under Belt & Road Initiative

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Belt and Road initiative

Beijing, June 22 (IANS) Nepal and China have agreed to execute projects under the Belt and Road Initiative (BRI) to enhance connectivity that encompasses ports, roads, railways, aviation and communications within the overarching framework of Trans-Himalayan Multi-Dimensional Connectivity Network.

In a joint statement issued during the visit of Nepali Prime Minister K.P. Sharma Oli, the two sides agreed to take practical measures to promote cooperation in all fields mentioned in the MOUs that included conducting a feasibility study of Kerung-Kathmandu railway, reconstruction of two friendship fridges, protocol on the utilization of Tibetan highways for cargo transport and investment and cooperation on production capacity.

On the railway pact that aims to extend the Chinese railway network to Kathmandu, the joint statement said: “Nepal and China underscored it as the most significant initiative in the history of bilateral cooperation and believed that it would herald a new era of cross-border connectivity.

Other pacts reached during Oli’s visit from June 19-24 were setting up of a mechanism for facilitation on the implementation of China-Nepal Cooperation Programmes and Projects in the Himalayan nation, MOUs on strengthening cooperation between their Foreign Ministries, cooperation in fields of energy and human resource development.

Beijing and Kathmandu also agreed to work together in areas of economy, trade, investment, industrial capacity, post-disaster reconstruction and other mutually beneficial areas, according to the statement.

Another takeaway of the visit was an early finalization of the joint feasibility study on the China-Nepal Free Trade Agreement (FTA), establishing cross-border economic cooperation zones and an agreement on completing the post disaster recovery of two frontier inspection stations on Nepal-China border.

Beijing agreed to support the Chinese-funded banks for opening their branches in Nepal. It said that it was ready to negotiate the financing modalities of the projects on road, railway connectivity, hydropower and transmission lines, among others, proposed by Nepal.

The two sides will also boost cooperation between the law enforcement agencies on information exchanges, capacity building and training. They will negotiate the Treaty on Mutual Legal Assistance in Criminal Matters and Treaty on Extradition to fight against illegal border crossing and transnational crimes.

There will be more exchanges and cooperation between China and Nepal in areas of education, culture, tourism, media, think tanks, youth and people-to-people relations.

China said it will provide more government scholarships every year to Nepal, whereas Kathmandu said it will facilitate the teaching programme of volunteer Chinese language teachers.

“The two sides agreed to strengthen cooperation in the UN and other multilateral forums and to safeguard common interests of developing, least developed and landlocked developing countries in particular,” the joint statement added.

The two countries will also view and support each other’s participation in the regional cooperation process and enhance coordination and cooperation within the SCO, SAARC and other regional cooperation mechanisms within the agreed frameworks and guidelines.

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