Jagannadham Thunuguntla said, “Mahatma Gandhi said that India live in her villages. This statement reflects the current Indian economy, besides taking into account the significant segment of rural consumers on the economy.”

1. What 2009 holds for India’s economy?
17
ADC Business
AFTERNOON DESPATCH & COURIER
FRIDAY, JANUARY 23, 2009
BY MANIK K. MALAKAR have been enhanced, they continue. The Mumbai attacks last November. The contin- ing. “There is a huge supply-demand mis-
spending will total 6.8 billion dollars and will uous threat of terrorism, the development of match in affordable housing,” write Poddar
W
hat will the tea leaves for 2009 likely be in sectors like rural roads and irrigation. infrastructure and civil aviation capacity and Bhandari in their report. Indications are
to read? This is surely a question The National Rural Employment Guarantee promise to boost homeland security spend- that 30 million units need to be supplied to
that is on the mind of most people Act and the raising of the minimum support ing, says the report. Geo-political pressures tackle the shortage in housing, the majority
in the country as well as abroad who have an price for food grains are also factors that will with Pakistan, will continue to affect the of this will be in the ‘low-income’ housing
interest in the Indian economy – one that contribute to the strengthening of the rural economy, said Thunuguntla. bracket. It is estimated that an additional
has attracted the attention of the world. consumers. “Liquidity in the economic system is like 140 million people will move to cities by
The economy will be the centre of inter- Jagannadham Thunuguntla said, “Ma- blood circulation in the body. Hence, to 2020, thus increasing the housing problem.
est as always. But it will not be an easy year hatma Gandhi said that India live in her vil- maintain the liquidity the government A problem may be the strained economic
for the Indian economy. India’s GDP growth lages. This statement reflects the current should start spending more,” Thunuguntla conditions that the country and the world is
is expected to slow to 5.8 per cent in FY10. Indian economy, besides taking into ac- said. However, he cautioned that there may going through. “This may prevent buyers
The decline from the high growth rate that count the significant segment of rural con- not be additional packages from Indian gov- from committing big amounts for housing
has characterised the Indian economy for so sumers on the economy.” ernment as government’s balance sheet is purchases,” said Thunuguntla. An added
long will be caused due to falling external Thunuguntla informed that in Tier II and already stretched with the already an- hitch is that real estate companies are gen-
demand as well as slowing investment. Tier III cities, villages will play an important nounced two stimulus packages. erally refusing to reduce their prices. “Of,
A surprise will be the fact that rural con- role in the scheme of Indian policy making “India’s general elections to Parliament course with the deepening recession, this
sumers will come into their own. There are and implementation. Jagannadham will be a massive event and entail significant may not continue for long,” he said.
800 million rural consumers and they have Thunuguntla is the Equity Head of SMC official and unofficial spending,” says Pod- A possible solution? A reduced interest
a new role to play. These facts are the sub- Capitals, one of India’s leading financial dar and Bhandari. Some 500 million people rate regimen may attract some buyers, in-
ject of a report ‘India: Four macro themes for services companies. He informs that since are expected to cast their votes in the forth- formed SMC’s Thunuguntla. This would
2009’ brought out by Goldman Sachs. Ana- there is a concentration of 80 per cent of coming elections. The 2004 elections cost largely depend on how quickly real estate
lysts Tushar Poddar and Pranjul Bhandari India’s population in rural areas 300 million dollars (an officially recognised developers fall in line with realty and reduce
have written: “The global credit crunch will The government will be a major factor in figure), this years elections may well top 400 housing prices.
have little impact on at least one corner of the economic milieu this year, continue million dollars it is estimated. Trends in the housing market indicate a
the world – the rural Indian consumer.” Poddar and Bhandari. Following global Inflation will continue to be a problem, decrease in household size Goldman Sachs
Tushar Poddar is the Vice President, Gold- trends the government will be the only with deflation a distinct possibility. WPI has opined. The shortage of land, something
man Sachs and Pranjul Bhandari is analyst, major actor in the economy able to expand (Wholesale Price Index) too is expected to that we can relate to in Bombay, will propel
Goldman Sachs India. its balance sheet. India’s fiscal deficit is likely fall due to the demand destruction and the trends towards small size apartments. And
The rear 2009 is likely to be a good one for to rise to 8.5 per cent of GDP for FY 10, esti- commodity price collapse. Sectors that have also the government has provided fiscal in-
the rural people as this is an election year. mate Poddar and Bhandari. variable costs as compared to those that centives towards boosting low income hous-
This would translate into a lot of sops for Jagannadham Thunuguntla too informs have fixed costs will benefit. This is since ing. “The demand for affordable housing is a
them. There are a lot of other good things that, “the learning from the aftermath of the they will have more flexibility in reducing compelling opportunity,” say Poddar and
that will come for the rural consumer this Great Depression of 1929 is that in periods cost structures. Bhandari.
year. There is loan waiver for farmers of severe crisis, the government must take Finally, real estate which was one of the Besides various uncertainties already
amounting to 15.5 billion dollars that will quick steps in meaningful sizes.” Continu- most glamorous sectors of the previous year prevalent in the economy, the spill-over af-
benefit 42 million rural consumers, Poddar ous liquidity in the system must be ensured. as well as one of the most hyped will likely fect of the recessionary conditions of US and
Rise in inflation, RIL
and Bhandari continue in their report. Another factor that has to be considered predominate this year too. However, this from Europe will play a major role in the
ASUS defers decision to make mother boards in India
Public investments in rural infrastructure is an increase in defence spending post the year the focus will likely be on low cost hous- coming year, concludes Thunuguntla.
show anxiety curb Sensex M
umbai: Taiwanese hardware maker ASUS said on ASUS launched a 16-inch multimedia, touchscreen
Thursday that it has deferred its decision to set home PC called Eee Top ET 1602 on Thursday
up a manufacturing unit in India this in 2009 as the “In India, five per cent is the market share for high-
global economic scenario was not encouraging. end computers. We are targeting 2-3 per cent of this
M
umbai: A sudden reversal boost after Bharti Airtel an- “That project (hardware manufacturing facility) is in CY09,” Tung said, but did not say how many units of
in inflation and intense nounced handsome results. On a little bit on hold right now, because of the economic the new product they intend to sell.
speculation over Reliance other hand, some others said RIL, condition globally. Maybe next year...We are still eval- The company specialises in making motherboards
Industries’ performance in the which would announce the results uating it,” ASUS (India) Managing Director Albert and sold eight million units of the same along with
third quarter played spoilsport in later in the day, is expected to dis- Tung told PTI here. The firm, which specialises in OEMs (Original Equipment Manufacturer), a PC com-
markets on Thursday as the appoint the market. making motherboards for personal computers (PCs), ponent.
benchmark index fell sharply from RIL, which has the highest had planned to set up a factory here at a cost of USD “This year, our sales target for motherboards is 10
the day’s high but still ended mar- weight in the Sensex, moved be- 10 million, he said. “Getting closer to India is impor- per cent more than last year,” Tung said.
ginally higher by nearly 35 points. tween Rs 1,107.10 and 1,153.40 be- tant for us in view of the large market here. I think in ASUS, which launched other variants in the Eee
RIL VSS to
The BSE barometer ended at fore ending 1.21 per cent higher at 2-3 years, the economy will be booming like never be- family last year, said Eee Top is a green product and
8,813.84, up by 34.67 points from Rs 1,132.95 on late buying support fore. Recession doesn’t matter, we are staying here, it uses just 25 MW of power against 200 MW that a nor-
Airtel NP up 25 p.c.
its last close, cutting short its los- at the day’s lower levels. is a long term view,” Tung said. mal desktop PC consumes.
ing streak of the past two days. It Markets opened on a strong
430 employees
has lost 550 points in the last two note on positive trends from the
days. The broader 50-share Nifty of Asian bourses which closed in the
the NSE also improved by 7.65 range of 0.13 per cent to 2.0 per
points to close at 2,713.80, cent. The indices in the region
M
reports PTI. were bolstered by Wall Street umbai : Riding on a smart rise in subscriber base,
While there was intense specu- where Dow netted a gain of 3.5 per country’s largest mobile operator Bharti Airtel
lation that RIL would come out cent overnight. Another boosting today posted a 25 per cent hike in its net profit while
with poor numbers, another blue- factor was that banking stocks, the total revenue closed in on the Rs 10,000-mark.
chip Bharti Aitel surprised markets which were hit in the past two day The net profit stood at Rs 2,159 crore for the quarter
M
with a 25 per cent rise in net in US, Europe and Asia, recovered. umbai: In the midst of massive job cuts by ended December 31. “Year-on-year, we have grown 38
profit. Aitrel closed up 6.19 per However, a rise in inflation companies across the world to cut costs, the per cent in revenue, reaching Rs 9,633 crore in the
cent, the biggest gain among Sen- snapping 10-week long streak of country’s top corporate house Reliance Industries quarter. Margin has been sustained at 41 per cent
sex stocks. decline, doused the sentiment. Ltd.(RIL) on Thursday said about 430 of its employ- which is a positive feature of our results,” Bharti Airtel
Reliance Power net
Some marketmen said Sensex The rate of price rise increased ees agreed to “voluntary separation” during the CEO Manoj Kohli said.
may have gained only 35 points 5.60 per cent for the week ended quarter ended December 31, 2008.
Inflation rises to 5.6 per cent at Rs 106 crore
but the sentiment has got a real January 10. RIL, led by the country’s richest person, Mukesh
Ambani, paid a sum of Rs 110 crore during the quar-
ter to the affected employees, says a PTI report
“The company announced a Voluntary Separation
Scheme (VSS) for the employees of Patalganga unit
during the quarter ended December 31, 2008. About
N ew Delhi : Snapping a 10-week declining spree, inflation rose to Mumbai : Reliance Power Ltd., a company of the Re-
430 employees accepted the VSS offered by the com-
5.60 per cent as vegetable prices went up 18 per cent and liance ADA group, on Thursday announced its un-au-
pany,” RIL said while announcing its quarterly
processed fish 40 per cent among products that became expensive, dited financial results for the third quarter ended
results. December 2008. The net profit of the company is Rs
but economists termed the increase an aberration largely due to the RIL incurred total staff cost of Rs 605 crore during 106 crore (US$ 22 million). Total income Rs 131 crore
truckers’ strike. the quarter, up from Rs 577 crore in the year-ago (US$ 27 million) and net worth Rs 13,739 crores (US$
The rise in inflation notwithstanding, some economists say that the period. 2.8 billion), according to a company’s press release.
RBI would signal cuts in interest rates in its third quarterly review of In the first nine months of the current fiscal, the The release adds construction work for the 600 MW
monetary policy, slated for January 27. Inflation, based on wholesale total staff cost rose to Rs 1,844 crore, from Rs 1,544 Rosa phase 1 project in Shahajahanpur, U.P., is pro-
crore in the year-ago period.
prices, rose by 0.36 percentage points for the week ended January 10 gressing and the project is expected to be commis-
In the fiscal ended March 31, 2008, RIL had in- sioned six month ahead of schedule.
from 5.24 per cent for January 3, says a PTI report.
curred a total staff cost of Rs 2,119 crore.