The document discusses several proposed changes to India's foreign direct investment (FDI) policy across multiple sectors of the economy. Some of the key proposed changes include prior notification to the Reserve Bank of India (RBI) of any increases in investment threshold limits by foreign institutional investors, investments by foreign venture capital investors and qualified financial investors, and changes to FDI limits and rules in sectors like single-brand retail, pharmaceuticals, banking, insurance, and telecommunications. The document also provides details of existing FDI sectoral caps in various industries.
CHINA STOCK MARKET CRASH 2015,
CHINA
INTRODUCTION
The Chinese stock market crash began with the popping of the stock market bubble on 12 June 2015.A third of the value of A-shares on the Shanghai Stock Exchange was lost within one month of the event. Major aftershocks occurred around 27 July and 24 August's "Black Monday."
CAUSES
Enthusiastic individual investors inflated the stock market bubble through mass amounts of investments in stocks often using borrowed money, exceeding the rate of economic growth and profits of the companies they were investing in.
Investors faced margin calls on their stocks and many were forced to sell off shares in droves, precipitating the crash.
By 8–9 July 2015, the Shanghai stock market had fallen 30 percent over three weeks as 1,400 companies, or more than half listed, filed for a trading halt in an attempt to prevent further losses.
Values of Chinese stock markets continued to drop despite efforts by the government to reduce the fall.
After three stable weeks the Shanghai index fell again on 27 July by 8.5 percent, marking the largest fall since 2007.
1) Marketing Strategies of BOAT and SONY 2) Axis Bank Savings AccountAnsh Shah
1) (BOAT and SONY ) Compare marketing strategies adopted by two different companies of the same industry (FMCG / Telecommunication/media/education industry etc.) keeping in mind the following: − Product mix − Price Mix − Place Mix − Promotion Mix
2) (Axis Bank) Visit a commercial Bank. Find out the procedure to open a savings account. Find out the details of various Agency & General utility services provided by the bank.
1) Aggregate demand is the total demand for goods and services in an economy, including household spending, investment spending, government spending, exports and imports.
2) A rise in the price level causes aggregate demand to contract as real incomes fall, exports become less competitive, and interest rates may rise.
3) Shifts in aggregate demand, caused by factors like fiscal policy changes, monetary policy changes, or external economic events, impact the overall level of output in an economy.
The documentary "Inside Job" examines the 2008 global financial crisis over five parts: (1) how the crisis began through deregulation and risky financial practices, (2) the housing bubble, (3) the crisis and collapse, (4) lack of accountability as executives were paid bonuses, and (5) ongoing economic weaknesses. Directed by Charles Ferguson, it won the 2011 Oscar for best documentary and critiques the roles of banks, credit agencies, government officials, and economists in igniting and failing to prevent the crisis.
U.S recession and its impact on indian economyramanraman
The document discusses the impact of the 2008 recession in the United States on the Indian economy. It notes that the U.S. recession was caused by the subprime mortgage crisis and rising unemployment. This led to a decline in U.S. economic growth and GDP. The recession negatively impacted key sectors in India like exports, IT, real estate, banking, and manufacturing due to declining demand from the U.S. and other countries. The Indian government and central bank took steps to cut interest rates and increase liquidity to mitigate the effects. Overall, while India was still growing, the recession had significant consequences on the country's economic performance and job losses.
PESTLE Analysis of FMCG retail in IndiaMeher Kalyani
The document discusses a PESTLE analysis of the FMCG (Fast Moving Consumer Goods) retailing industry in India. PESTLE is a framework that analyzes the political, economic, social, technological, legal, and environmental factors affecting a business. The analysis covers how each of these external factors impacts the FMCG retailing industry in India. It provides examples of political influences like taxation policy and subsidies. It also discusses economic growth trends, social factors like demographics, the large impact of emerging technologies, relevant legal factors, and environmental initiatives of major retailers.
The document analyzes Porter's Five Forces model in the context of the Indian banking industry. It discusses the competitive nature of the industry, with many public and private sector banks vying for customers. While it is difficult for new banks to enter due to customer trust in established brands, online banking has reduced switching costs between banks. The major suppliers of capital to banks are customers through deposits and loans from other institutions. While insurance and mutual funds can substitute some banking services, core banking functions have no real substitutes. Overall, the Indian banking sector has grown significantly in recent decades and remains an important part of the economy.
Tanishq is India's largest jewellery brand, launched in 1995 by Titan. It initially struggled, making losses from 1995-1998. By introducing innovations like a karat meter to test purity and professional retail stores, Tanishq transformed the industry. It implemented strategies like standardized pricing, frequent design changes, and linking to gold price indexes. These changes helped Tanishq become the largest overseas jewellery chain in the US by 2001 and transform the Indian jewellery market. Going forward, Tanishq aims to focus on customers, ethics, IT investments, and global branding to further boost sales.
CHINA STOCK MARKET CRASH 2015,
CHINA
INTRODUCTION
The Chinese stock market crash began with the popping of the stock market bubble on 12 June 2015.A third of the value of A-shares on the Shanghai Stock Exchange was lost within one month of the event. Major aftershocks occurred around 27 July and 24 August's "Black Monday."
CAUSES
Enthusiastic individual investors inflated the stock market bubble through mass amounts of investments in stocks often using borrowed money, exceeding the rate of economic growth and profits of the companies they were investing in.
Investors faced margin calls on their stocks and many were forced to sell off shares in droves, precipitating the crash.
By 8–9 July 2015, the Shanghai stock market had fallen 30 percent over three weeks as 1,400 companies, or more than half listed, filed for a trading halt in an attempt to prevent further losses.
Values of Chinese stock markets continued to drop despite efforts by the government to reduce the fall.
After three stable weeks the Shanghai index fell again on 27 July by 8.5 percent, marking the largest fall since 2007.
1) Marketing Strategies of BOAT and SONY 2) Axis Bank Savings AccountAnsh Shah
1) (BOAT and SONY ) Compare marketing strategies adopted by two different companies of the same industry (FMCG / Telecommunication/media/education industry etc.) keeping in mind the following: − Product mix − Price Mix − Place Mix − Promotion Mix
2) (Axis Bank) Visit a commercial Bank. Find out the procedure to open a savings account. Find out the details of various Agency & General utility services provided by the bank.
1) Aggregate demand is the total demand for goods and services in an economy, including household spending, investment spending, government spending, exports and imports.
2) A rise in the price level causes aggregate demand to contract as real incomes fall, exports become less competitive, and interest rates may rise.
3) Shifts in aggregate demand, caused by factors like fiscal policy changes, monetary policy changes, or external economic events, impact the overall level of output in an economy.
The documentary "Inside Job" examines the 2008 global financial crisis over five parts: (1) how the crisis began through deregulation and risky financial practices, (2) the housing bubble, (3) the crisis and collapse, (4) lack of accountability as executives were paid bonuses, and (5) ongoing economic weaknesses. Directed by Charles Ferguson, it won the 2011 Oscar for best documentary and critiques the roles of banks, credit agencies, government officials, and economists in igniting and failing to prevent the crisis.
U.S recession and its impact on indian economyramanraman
The document discusses the impact of the 2008 recession in the United States on the Indian economy. It notes that the U.S. recession was caused by the subprime mortgage crisis and rising unemployment. This led to a decline in U.S. economic growth and GDP. The recession negatively impacted key sectors in India like exports, IT, real estate, banking, and manufacturing due to declining demand from the U.S. and other countries. The Indian government and central bank took steps to cut interest rates and increase liquidity to mitigate the effects. Overall, while India was still growing, the recession had significant consequences on the country's economic performance and job losses.
PESTLE Analysis of FMCG retail in IndiaMeher Kalyani
The document discusses a PESTLE analysis of the FMCG (Fast Moving Consumer Goods) retailing industry in India. PESTLE is a framework that analyzes the political, economic, social, technological, legal, and environmental factors affecting a business. The analysis covers how each of these external factors impacts the FMCG retailing industry in India. It provides examples of political influences like taxation policy and subsidies. It also discusses economic growth trends, social factors like demographics, the large impact of emerging technologies, relevant legal factors, and environmental initiatives of major retailers.
The document analyzes Porter's Five Forces model in the context of the Indian banking industry. It discusses the competitive nature of the industry, with many public and private sector banks vying for customers. While it is difficult for new banks to enter due to customer trust in established brands, online banking has reduced switching costs between banks. The major suppliers of capital to banks are customers through deposits and loans from other institutions. While insurance and mutual funds can substitute some banking services, core banking functions have no real substitutes. Overall, the Indian banking sector has grown significantly in recent decades and remains an important part of the economy.
Tanishq is India's largest jewellery brand, launched in 1995 by Titan. It initially struggled, making losses from 1995-1998. By introducing innovations like a karat meter to test purity and professional retail stores, Tanishq transformed the industry. It implemented strategies like standardized pricing, frequent design changes, and linking to gold price indexes. These changes helped Tanishq become the largest overseas jewellery chain in the US by 2001 and transform the Indian jewellery market. Going forward, Tanishq aims to focus on customers, ethics, IT investments, and global branding to further boost sales.
Inflation and its trends in indian economyNihar Routray
This document discusses inflation in the Indian economy. It lists the team members and objective to study causes and effects of inflation trends in India. It defines inflation as a rise in general prices and fall in money value. The types of inflation include creeping, trotting, galloping, and hyper. Causes include rises in crude oil and food prices, GDP, and wages. Measuring inflation includes wholesale price indices. Effects are hoarding, risks, consumption impacts. Curbing inflation involves strengthening currency, interest rate hikes, and fiscal policies. Recent inflation is attributed to food and commodity prices. References are also provided.
This document discusses exchange rate volatility and its impact on trade flows. It begins by defining exchange rates and volatility. Exchange rate volatility refers to how much currency values fluctuate. Exchange rates change due to factors like inflation, interest rates, current account deficits, public debt levels, terms of trade, and economic/political stability. Volatility impacts trade, economic growth, capital flows, and inflation. A weaker currency stimulates exports but hurts imports, while a stronger currency has the reverse effects. Overall, stable exchange rates are better for attracting investment and trade.
Rupee depreciation is a major issue in the current scenario. After the global economic crisis in 2008-2009, the Dollar has recovered due to measures taken by the US government. Unemployment, lack of projects, inflation, bulk imports and poor exports etc have led to the fall of rupee tremendously. The faulty government policies, and the political and economic instability have led to a decline in the economy of India.
This document provides an overview of money supply, inflation, and related concepts. It begins with introducing money as a medium of exchange, measure of value, and store of value. It then discusses the demand and supply of money, as well as theories like the quantity theory of money. The document defines inflation and its different types. It examines causes of inflation like demand-pull and cost-push factors. It also explores the relationship between inflation and employment via Phillips Curve. The document concludes by looking at ways to measure and control inflation through monetary and fiscal policy tools.
OBJECTIVE
The Corona virus pandemic is posing a severe health and humanitarian crisis across the globe. It has also brought an unexpected economic shock to the global economy and initiated a crisis which would burden nations for years to come. In this Webinar, we shall look at various policy measures being taken in response to the crisis at the national and international levels. The webinar will also highlight possible fiscal measures that can be adopted to respond to the economic crisis caused by COVID-19.
The document discusses India's balance of payments from pre-1991 to post-reform periods. It notes that pre-1991 saw persistent balance of payments deficits due to large-scale machinery imports to develop basic industries and rising oil prices. 1976-80 was a brief surplus period due to worker remittances and export growth. 1980-91 saw severe deficits exceeding $16 billion by 1991. Post-1991 reforms led to surpluses due to invisibles earnings, external borrowings, and foreign investment.
This document outlines the Linder Hypothesis, an alternative theory to the Heckscher-Ohlin (H-O) model of international trade. The Linder Hypothesis, proposed by Swedish economist Staffan Linder, argues that differences in domestic demand, rather than factor endowments, are the major drivers of trade in manufactured goods. Specifically, it asserts that countries will first produce goods for their domestic markets and then export surpluses to other countries with similar demand patterns and per capita incomes. The hypothesis concludes that while specific export predictions are difficult, international patterns of income and demand largely determine trade volumes in manufactured products between countries.
This presentation provides an overview of the goods market equilibrium and money market equilibrium using the IS-LM model. It defines the equilibrium conditions for the goods market as savings equaling investment, and for the money market as money supply equaling money demand. It derives the downward sloping IS curve and upward sloping LM curve, and explains how their intersection shows the overall equilibrium in the goods and money markets. The document then discusses how fiscal and monetary policies can shift the IS and LM curves and discusses the 2001 US recession within this framework.
The business cycle refers to periodic fluctuations in economic activity, involving periods of expansion and contraction. A peak marks the end of an expansion period, while a trough marks the end of a contraction period. Business cycles are caused by internal factors like consumption, investment, and government activity, as well as external factors like innovations, wars, and political events. Governments try to control business cycles through monetary and fiscal policies that influence aggregate demand and output.
This document discusses aggregate supply and demand models. It explains that aggregate supply curves represent the quantity of output firms are willing to supply at different price levels. Aggregate demand curves show the equilibrium of goods and money markets at different price levels and output. The intersection of the aggregate supply and demand curves determines equilibrium output and price. Fiscal and monetary policies can shift these curves, impacting output and inflation. Expansionary fiscal policy like tax cuts shifts aggregate demand right, increasing output in the short run but raising prices in the long run when supply is fixed.
This document summarizes the key details of the $2 billion fraud committed against Punjab National Bank (PNB) by billionaire jeweler Nirav Modi and his uncle Mehul Choksi. It outlines how Modi used fraudulent Letters of Undertaking (LoUs) issued by rogue PNB employees to secure loans from other banks. The fraud went undetected for years due to failures of internal and external auditors to follow proper procedures. The scam has severely damaged PNB and led to large-scale seizures of Modi and Choksi's assets as investigations continue.
DLF is India's largest real estate company with a vision to become the world's most valuable real estate company. It operates across six business lines - development, annuity, hotels, and others. The real estate industry in India is highly attractive due to strong growth and profitability. DLF has strong brand value and access to finance, though its distribution network and R&D performance could be improved. As a leader in a growing industry, DLF's strategy is to seek dominance, grow, maximize investment, and defend its position while identifying and building upon strengths and weaknesses.
Monetary policy aims to control money supply and interest rates to achieve objectives like price stability and economic growth. In India, the Reserve Bank of India implements monetary policy through tools like open market operations, cash reserve ratio, statutory liquidity ratio, and bank rate policy. The objectives of monetary policy include price stability, controlled expansion of bank credit, and promotion of exports. However, monetary policy faces limitations like time lags, difficulties in forecasting, and the growth of non-banking financial institutions.
The document discusses the recent depreciation of the Indian rupee against the US dollar. It notes that the rupee has fallen close to 22% against the dollar in the past year. Several factors are contributing to the rupee's decline, including a high current account deficit, lack of foreign investment, global economic uncertainties, and domestic political issues. The depreciating rupee increases costs for imports and foreign education/travel, fueling inflation. While exporters may benefit initially, a weak rupee ultimately hurts the broader economy. Policy reforms and increased foreign investment are suggested to stabilize the currency.
Distribution channel of Samsung - Presented at XIMBSomak Ghosh
Distribution channel followed by Samsung in a major Indian city, Bhubaneswar.
The presentation has its own kick ass moments, with its funny disclaimers and ludicrous taglines.
A few concepts, like the demurrage costs, space-revenue trade offs are introduced.
The distribution channel, the second P of marketing, is a crucial factor in the delivery of the created value.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
Foxconn and Manufacturing India Impact and ImplicationsSanchit Kanwar
Foxconn, the world's largest electronics manufacturer, has announced plans to invest $2 billion over 10 years to set up 12 factories in India. This will help Foxconn diversify manufacturing away from China due to rising costs and shift to India, which offers a growing market, supportive government policies, and the potential to build a full ecosystem. However, Foxconn will face challenges in India such as poor infrastructure and difficulties acquiring land. The investment could significantly boost India's electronics sector but may also hurt small businesses and jobs may not materialize as promised in the past.
The document discusses monetary policy in India. It begins by defining monetary policy and identifying the Reserve Bank of India as the central monetary authority. It then outlines the key objectives of monetary policy as maintaining full employment, price stability, economic growth, and balance of payments. The document goes on to explain the types of monetary policy as expansionary and contractionary. It also details the various tools used in monetary policy, including cash reserve ratio, statutory liquidity ratio, repo rate, and open market operations. In its conclusion, the document states that monetary policy deals with money supply to prevent inflation and recession through instruments administered by the RBI.
Impact of covid 19 on Indian Economy & Banking SectorDr Praveen S
Impact of Covid-19 on indian Economy & Banking Sector
Topics covered:
- What is Covid-19 ((Corona Virus Disease) ?
- Socio - Economic Effects of Covid-19 on global society.
- How Covid-19 hit India?
- Impact of COVID-19 on Indian Economy.
- Impact of COVID-19 on Indian Banking Sector.
- Steps to be taken by Indian Banks.
world financial crisis 2008 and impact over the tourismGocha Sharvashidze
The 2008 financial crisis was preceded by a long period of rapid credit growth and low risk premiums. It began with the bankruptcy of Lehman Brothers in the US and fears that AIG would fail and take down major financial institutions. This led to write-downs of over $1 trillion for banks in the US, UK, and Eurozone. Interest rates fell sharply during the crisis. Tourism in Europe declined significantly as well.
Impact of Foreign Institutional Investments on Indian Stock MarketAnantha Bellary
This document examines the contribution of foreign institutional investment to the Indian stock market from 2007-2012. It analyzes the correlation between foreign institutional investment (FII) inflows and the BSE Sensex and S&P CNX NIFTY indices. The study finds a positive but moderate correlation between FII inflows and the two indices, with FII influencing around 15-16% of their movements. However, the study concludes that while FII have some impact, other factors like economic conditions and government policies have a greater influence on the Indian stock market.
Inflation and its trends in indian economyNihar Routray
This document discusses inflation in the Indian economy. It lists the team members and objective to study causes and effects of inflation trends in India. It defines inflation as a rise in general prices and fall in money value. The types of inflation include creeping, trotting, galloping, and hyper. Causes include rises in crude oil and food prices, GDP, and wages. Measuring inflation includes wholesale price indices. Effects are hoarding, risks, consumption impacts. Curbing inflation involves strengthening currency, interest rate hikes, and fiscal policies. Recent inflation is attributed to food and commodity prices. References are also provided.
This document discusses exchange rate volatility and its impact on trade flows. It begins by defining exchange rates and volatility. Exchange rate volatility refers to how much currency values fluctuate. Exchange rates change due to factors like inflation, interest rates, current account deficits, public debt levels, terms of trade, and economic/political stability. Volatility impacts trade, economic growth, capital flows, and inflation. A weaker currency stimulates exports but hurts imports, while a stronger currency has the reverse effects. Overall, stable exchange rates are better for attracting investment and trade.
Rupee depreciation is a major issue in the current scenario. After the global economic crisis in 2008-2009, the Dollar has recovered due to measures taken by the US government. Unemployment, lack of projects, inflation, bulk imports and poor exports etc have led to the fall of rupee tremendously. The faulty government policies, and the political and economic instability have led to a decline in the economy of India.
This document provides an overview of money supply, inflation, and related concepts. It begins with introducing money as a medium of exchange, measure of value, and store of value. It then discusses the demand and supply of money, as well as theories like the quantity theory of money. The document defines inflation and its different types. It examines causes of inflation like demand-pull and cost-push factors. It also explores the relationship between inflation and employment via Phillips Curve. The document concludes by looking at ways to measure and control inflation through monetary and fiscal policy tools.
OBJECTIVE
The Corona virus pandemic is posing a severe health and humanitarian crisis across the globe. It has also brought an unexpected economic shock to the global economy and initiated a crisis which would burden nations for years to come. In this Webinar, we shall look at various policy measures being taken in response to the crisis at the national and international levels. The webinar will also highlight possible fiscal measures that can be adopted to respond to the economic crisis caused by COVID-19.
The document discusses India's balance of payments from pre-1991 to post-reform periods. It notes that pre-1991 saw persistent balance of payments deficits due to large-scale machinery imports to develop basic industries and rising oil prices. 1976-80 was a brief surplus period due to worker remittances and export growth. 1980-91 saw severe deficits exceeding $16 billion by 1991. Post-1991 reforms led to surpluses due to invisibles earnings, external borrowings, and foreign investment.
This document outlines the Linder Hypothesis, an alternative theory to the Heckscher-Ohlin (H-O) model of international trade. The Linder Hypothesis, proposed by Swedish economist Staffan Linder, argues that differences in domestic demand, rather than factor endowments, are the major drivers of trade in manufactured goods. Specifically, it asserts that countries will first produce goods for their domestic markets and then export surpluses to other countries with similar demand patterns and per capita incomes. The hypothesis concludes that while specific export predictions are difficult, international patterns of income and demand largely determine trade volumes in manufactured products between countries.
This presentation provides an overview of the goods market equilibrium and money market equilibrium using the IS-LM model. It defines the equilibrium conditions for the goods market as savings equaling investment, and for the money market as money supply equaling money demand. It derives the downward sloping IS curve and upward sloping LM curve, and explains how their intersection shows the overall equilibrium in the goods and money markets. The document then discusses how fiscal and monetary policies can shift the IS and LM curves and discusses the 2001 US recession within this framework.
The business cycle refers to periodic fluctuations in economic activity, involving periods of expansion and contraction. A peak marks the end of an expansion period, while a trough marks the end of a contraction period. Business cycles are caused by internal factors like consumption, investment, and government activity, as well as external factors like innovations, wars, and political events. Governments try to control business cycles through monetary and fiscal policies that influence aggregate demand and output.
This document discusses aggregate supply and demand models. It explains that aggregate supply curves represent the quantity of output firms are willing to supply at different price levels. Aggregate demand curves show the equilibrium of goods and money markets at different price levels and output. The intersection of the aggregate supply and demand curves determines equilibrium output and price. Fiscal and monetary policies can shift these curves, impacting output and inflation. Expansionary fiscal policy like tax cuts shifts aggregate demand right, increasing output in the short run but raising prices in the long run when supply is fixed.
This document summarizes the key details of the $2 billion fraud committed against Punjab National Bank (PNB) by billionaire jeweler Nirav Modi and his uncle Mehul Choksi. It outlines how Modi used fraudulent Letters of Undertaking (LoUs) issued by rogue PNB employees to secure loans from other banks. The fraud went undetected for years due to failures of internal and external auditors to follow proper procedures. The scam has severely damaged PNB and led to large-scale seizures of Modi and Choksi's assets as investigations continue.
DLF is India's largest real estate company with a vision to become the world's most valuable real estate company. It operates across six business lines - development, annuity, hotels, and others. The real estate industry in India is highly attractive due to strong growth and profitability. DLF has strong brand value and access to finance, though its distribution network and R&D performance could be improved. As a leader in a growing industry, DLF's strategy is to seek dominance, grow, maximize investment, and defend its position while identifying and building upon strengths and weaknesses.
Monetary policy aims to control money supply and interest rates to achieve objectives like price stability and economic growth. In India, the Reserve Bank of India implements monetary policy through tools like open market operations, cash reserve ratio, statutory liquidity ratio, and bank rate policy. The objectives of monetary policy include price stability, controlled expansion of bank credit, and promotion of exports. However, monetary policy faces limitations like time lags, difficulties in forecasting, and the growth of non-banking financial institutions.
The document discusses the recent depreciation of the Indian rupee against the US dollar. It notes that the rupee has fallen close to 22% against the dollar in the past year. Several factors are contributing to the rupee's decline, including a high current account deficit, lack of foreign investment, global economic uncertainties, and domestic political issues. The depreciating rupee increases costs for imports and foreign education/travel, fueling inflation. While exporters may benefit initially, a weak rupee ultimately hurts the broader economy. Policy reforms and increased foreign investment are suggested to stabilize the currency.
Distribution channel of Samsung - Presented at XIMBSomak Ghosh
Distribution channel followed by Samsung in a major Indian city, Bhubaneswar.
The presentation has its own kick ass moments, with its funny disclaimers and ludicrous taglines.
A few concepts, like the demurrage costs, space-revenue trade offs are introduced.
The distribution channel, the second P of marketing, is a crucial factor in the delivery of the created value.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
Foxconn and Manufacturing India Impact and ImplicationsSanchit Kanwar
Foxconn, the world's largest electronics manufacturer, has announced plans to invest $2 billion over 10 years to set up 12 factories in India. This will help Foxconn diversify manufacturing away from China due to rising costs and shift to India, which offers a growing market, supportive government policies, and the potential to build a full ecosystem. However, Foxconn will face challenges in India such as poor infrastructure and difficulties acquiring land. The investment could significantly boost India's electronics sector but may also hurt small businesses and jobs may not materialize as promised in the past.
The document discusses monetary policy in India. It begins by defining monetary policy and identifying the Reserve Bank of India as the central monetary authority. It then outlines the key objectives of monetary policy as maintaining full employment, price stability, economic growth, and balance of payments. The document goes on to explain the types of monetary policy as expansionary and contractionary. It also details the various tools used in monetary policy, including cash reserve ratio, statutory liquidity ratio, repo rate, and open market operations. In its conclusion, the document states that monetary policy deals with money supply to prevent inflation and recession through instruments administered by the RBI.
Impact of covid 19 on Indian Economy & Banking SectorDr Praveen S
Impact of Covid-19 on indian Economy & Banking Sector
Topics covered:
- What is Covid-19 ((Corona Virus Disease) ?
- Socio - Economic Effects of Covid-19 on global society.
- How Covid-19 hit India?
- Impact of COVID-19 on Indian Economy.
- Impact of COVID-19 on Indian Banking Sector.
- Steps to be taken by Indian Banks.
world financial crisis 2008 and impact over the tourismGocha Sharvashidze
The 2008 financial crisis was preceded by a long period of rapid credit growth and low risk premiums. It began with the bankruptcy of Lehman Brothers in the US and fears that AIG would fail and take down major financial institutions. This led to write-downs of over $1 trillion for banks in the US, UK, and Eurozone. Interest rates fell sharply during the crisis. Tourism in Europe declined significantly as well.
Impact of Foreign Institutional Investments on Indian Stock MarketAnantha Bellary
This document examines the contribution of foreign institutional investment to the Indian stock market from 2007-2012. It analyzes the correlation between foreign institutional investment (FII) inflows and the BSE Sensex and S&P CNX NIFTY indices. The study finds a positive but moderate correlation between FII inflows and the two indices, with FII influencing around 15-16% of their movements. However, the study concludes that while FII have some impact, other factors like economic conditions and government policies have a greater influence on the Indian stock market.
Global Financial Crisis And Its Impact On The Indian EconomyShradha Diwan
The document discusses the global financial crisis and its impact on the Indian economy. It provides background on how the crisis began in the US due to risky lending practices and how it spread globally. While many countries experienced economic downturns, India was less impacted due to its strong domestic savings and investment rates. The Indian government and central bank implemented stimulus measures to support the economy. Overall, India appeared to be in a better position than other nations to weather the financial crisis.
Global Financial Crisis and its Impact on the Indian EconomyShradha Diwan
The document discusses the global financial crisis that began in 2007 and its impact on the Indian economy. It provides background on the crisis, explaining that a loss of confidence in securitized mortgages in the US triggered a financial crisis that spread globally. It then examines four key ways India was affected: reduced global liquidity impacted foreign investment and lending; decreased consumer demand abroad hurt Indian exports; the IT industry saw clients like Lehman Brothers collapse; and foreign investment withdrawals led stock markets and the rupee to decline sharply. The response of Indian authorities and prospects for the economy are also assessed.
"GLOBAL FINANCIAL CRISIS AND IT'S IMPACT ON INDIAN ECONOMY"Somnath Pagar
In the subsequent parts of the research report, several issues will be discussed which will provide a detailed account of the origin of the crisis (2008-spiraled mortgage crisis, starting in the United States) and the ripple effect of economic downturn of the world„s largest economy which engulfed even the fast growing emerging economies into the crisis. The main aim of the study is to find relevant answers to questions like:
Why and how India has been hit by the crisis?
How the Indian economy and the Reserve Bank of India have responded to the crisis?
Which are the opportunities arisen from the crises?
etc.
The Indian rupee hit an all-time low against the US dollar due to a large trade deficit caused by higher imports than exports. India also has a high current account deficit due to uncertainty over economic reforms and a slowing economy. As a result, demand for dollars is increasing from importers and investors seeking to move money out of India, while dollar inflows are decreasing. The falling rupee is negatively impacting companies with foreign debt but benefiting export sectors. The rupee's value will ultimately stabilize once inflation is brought under control.
The Global Financial Crisis was caused by expanded lending to subprime borrowers in the US housing market who struggled to repay their loans, spreading losses to financial institutions globally through interconnected credit markets. The crisis impacted developing countries through lower exports due to reduced demand from industrial nations and less foreign investment as risk appetite declined. Central banks addressed the crisis through liquidity injections and government rescue plans, while major banks consolidated to avoid bankruptcy.
1. The 2008 financial crisis was caused by the bursting of the housing bubble in the U.S., also known as the subprime mortgage crisis.
2. Subprime lending involves giving loans to borrowers who may have difficulty maintaining repayments, and are characterized by higher interest rates and poorer terms.
3. The crisis occurred due to a relaxation in lending regulations, poor creditworthiness of borrowers, rising housing prices, and borrowers' inability to pay their mortgages, leading to failures of major banks and financial institutions.
The Indian rupee has depreciated significantly against the US dollar in recent months. This depreciation has both positive and negative spillover effects across various sectors of the Indian economy. Export-oriented industries like IT, gems and jewelry, and textiles are expected to benefit from greater revenues in dollars. However, importers, automobile companies, and industries relying on imported raw materials will face higher costs. The government and central bank have taken measures to provide liquidity and encourage capital inflows, but the weakening rupee still poses challenges. Overall, the document analyzes the impacts of rupee depreciation across multiple sectors.
Dark clouds were gathering on the horizon for the Indian economy in 2020 according to the document. After a period of disruption and reset in the economic paradigm since 2019, growth was expected to remain below 6% with high inflation and volatility in the markets. Globally as well, economic growth was projected to slow down with increased uncertainties. The investment strategy recommended remaining risk averse with an underweight allocation to equities and overweight allocation to precious metals and debt.
The Indian economy is experiencing significant improvement after a turbulent period in 1998-99. GDP growth is estimated at 5.7% for 1999-2000 and forecast to reach 6.3% next year. Inflation is rising due to higher fuel prices but is expected to stabilize at 6.5%. Industrial growth is strong at around 8% and the corporate sector is reporting brisk revenue and profit growth. The near term outlook assumes normal monsoon and continued growth of around 6% led by strong consumer demand. Infrastructure investment is needed to boost growth to over 8% annually.
This document discusses exchange rates and the factors that influence them. It defines the exchange rate as the rate at which two currencies are exchanged. It then discusses several ways that exchange rate movements impact economies, foreign investors, industries/companies, and debt levels. Finally, it outlines 10 factors that can influence exchange rate movements, including the demand and supply of foreign exchange, international trade levels, monetary policy, capital movement, industrial factors, currency conditions, political conditions, exchange controls, banking conditions, and national income.
Based on our scuttlebutt and feedback from industry sources and ground views of experts regarding the current state of affairs in India due to Coronavirus lockdown, We shall now present our thoughts on investment strategy for post lock down period.
Devaluation is a downward adjustment to a country's currency value relative to other currencies. It is used by countries with fixed exchange rates as a monetary policy tool. India has devalued the rupee multiple times, such as in 1966 and 1991, to combat trade imbalances and boost exports. Devaluation makes exports cheaper and imports more expensive. This improves the current account balance but also increases prices for imports, hurting consumers and raising inflation. The effects depend on elasticity of demand and supply for exports and imports.
The indian economy ppt @ bec doms bagalkotBabasab Patil
The document provides an overview of the current state of the Indian economy. It notes that GDP growth is estimated at 5.7% for 1999-2000 and forecast to be 6.3% for the following year. Inflation has risen to around 6.5% due to higher fuel prices. The industrial environment and corporate sector performance have improved, with exports and consumer demand growing. Infrastructure investment is still needed to sustain higher growth rates.
Key Takeaways:
- Overview of the FSR
- Global Macro Financial Developments
- Economic Growth and Financial Conditions in India
- Performance of Scheduled Commercial Banks
The document discusses India's balance of payments crisis in 1991. It provides background on India's economic situation in the pre-crisis period, including high growth rates but also increasing external debt. The Gulf War in 1990 increased India's oil import bill and deteriorating trade balance led to a balance of payments crisis as foreign reserves fell dangerously low. In response, India devalued the rupee, tightened imports, and worked with the IMF. Long-term reforms focused on fiscal correction, trade liberalization, industrial deregulation, and public sector reforms. These reforms and policies helped stabilize the economy and led to strong growth in the following decades.
The current crisis is unprecedented in the sense that it has seriously impacted the liquidity, solvency and viability of a large number of businesses, all at the same time. The only way out of this crisis is to inflate a colossal bubble in asset prices, which is equally unprecedented. A global bubble will inflate in healthcare sector. far bigger and durable than the dotcom and subprime bubbles, as it deals with human lives directly. The politicians, bankers, investors, policy makers, administrators, businessmen, consumers et. al. who have spent weeks locked down in their houses fearing for their lives while watching the death statistics on media, would readily accept the need for much higher investment and spending on healthcare. In that sense, this bubble will be far more tangible, believable, acceptable and inflatable.
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
The Development Of A Stake In India Baron Luc Bertrand AcBICCI
The document discusses India's economic growth and opportunities for investment. It summarizes that India is expected to recover from the global slowdown in Q3 2009 due to lower dependence on exports and stimulus measures. The cement industry in India is growing and there are opportunities in infrastructure, construction, and other sectors for foreign investment. Sagar Cements is presented as an established and efficient cement producer with expansion plans to triple its capacity.
1) When a country's imports exceed exports, the value of its currency declines as demand for that currency falls. India faces this challenge as demand for Indian goods has decreased while imports remain high.
2) A declining rupee increases inflation as it makes imports like fuel, transportation, and raw materials more expensive. Companies relying on imports see costs rise. It also makes foreign travel, education, and electronics pricier.
3) The government can take short-term measures like intervening in currency markets or increasing bank reserve requirements, but these have limitations. Long-term reforms to increase investment, productivity and competitiveness offer a more sustainable solution to stabilize the economy and currency.
ANALYSIS OF ALL SECTORS OF INDIAN ECONOMY.
An analysis of the consumer retail sector (including food and beverage, apparel and footwear, beauty), automotive, travel, and hospitality services.
OBJECTIVE
The Reserve Bank of India on 27th December 2019 released the 20th issue of the Financial Stability Report (FSR). The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system. The Report also discusses issues relating to development and regulation of the financial sector. In this Webinar, we shall understand the key findings and observations made in the Report.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the what'sapp number.
+12349014282
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
Indian rupee in Crisis
1.
2. General Changes
Prior Intimation to RBI for Increase in Threshold Limits by Foreign Institutional Investors
(FIIs)
Investments by Foreign Venture Capital Investors (FVCIs)
Investments by Qualified Financial Investors (QFIs)
Import of capital goods/machinery/equipment (including second-hand machinery)-
conversion to equity
Transfer of shares where valuation norms are not met
Limit for providing undertaking for transfer of security by PRI to PROI as gift has been
raised
Changes in Sectoral Caps
Policy on commodity exchange
Non-banking Finance Companies (NBFC) clarification on leasing
Changes in FDI policy in single-brand retail trading and pharmaceuticals sector
Foreign Investment in Pharmaceuticals Sector - Amendment to the Foreign Direct
Investment Scheme
3. Banking - 74%
Non-banking financial companies (stock broking, credit cards, financial consulting, etc.) - 100%
Insurance - 26%
Telecommunications - 74%
Private petrol refining - 100%
Construction development - 100%
Coal & lignite - 74%
Trading - 51%
Electricity - 100%
Pharmaceuticals - 100%
Transportation infrastructure - 100 %
Tourism - 100%
Mining - 74%
Advertising - 100%
Airports - 74%
Films - 100%
Domestic airlines - 49%
Mass transit - 100%
Pollution control - 100%
Print media - 26% for newspapers and current events, 100 % for scientific and technical
periodicals
4.
5. Continued Global uncertainty
Current Account Deficit
Capital Account flows
Persistent inflation
Interest Rate Difference
Lack of reforms
6.
7. Market Situation Economic Factors
Factors
Affecting INR
Political Factors Special Factors
8. Demand/Supply
FIIs situation of
currency
Buying/Selling
Floating rate of
in Forex
Currency
Markets
9. Internal Factors External Factors
• Industrial Deficit • Export Import
• Fiscal Deficit • Loan sanctions by World Bank
• GDP & GNP and IMF
• Foreign Exchange Reserves • International oil and gold
• Inflation Rate prices
• Agricultural Rate and • FDI & Portfolio investments
production
• Different types of policy
impacts( EXIM, Credit policy
etc.)
• Infrastructure
10. Delay in Delay in
Political
Implementati sanctioning
Instability
on of Policies budget
11. Events contributing in appreciation or
depreciation of INR e.g.,
Indo –China War (1962)
Indo-Pak War (1965)
Bofors Scandal (1985)
Pokhran Nuclear Test(1998)
Kargil War (1999)
CWG Scam
Anna Hazare Campaign
Recent Credit Rating
12. IT Sector– The sharp depreciation in rupee is expected to boost software sales and forex gains in coming months.
Remittances, travel expenses and dividends could increase outflows, however, they are unlikely to cause an abrasion in the P&L
position of these companies
Textiles – With easing of cotton and cotton yarn prices and improved export realisations, the textile industry is expected to gain in
the current forex environment. Mark-to-market losses on existing hedged positions and suitability of new hedging contracts would
be crucial determinants of overall profitability.
The man-made fibres segment could face some pressure on account of higher import costs of inputs and marked-to-market losses
on expenses. Dollar-denominated expenses could lend some offsetting support to margins
Pharmaceuticals – Companies in this industry are net exporters and stand to gains through higher export realisations enhanced by a
depreciating rupee.
Losses on external commercial borrowings (ECBs) and limited feasibility of conversion on foreign currency convertible bonds (FCCBs)
pose a concern to these companies, but are not expected to be huge.
Gems and jewellery – With increased investment demand amidst a volatile global economy, prices of gold and other metals, which
are inputs to this industry, have witnessed steep rise. Consequently the sectors profitability could be affected. However, the sector is
export-oriented and is expected to gain against the rupee depreciation trend.
Ferrous metals – Steep rise in prices of coking coal and iron ore aggravated by adverse rupee movements is expected to continue to
pressure raw material costs for this industry and allied segments.
Rather muted industrial production and investment activity in this industry on account of a tighter monetary regime could further
manifest in contraction of supply.
Power – Thermal power plants are expected to face some strain on account of higher import costs of ferrous metals and petroleum
products, which in turn are expected to remain firm in the near future. Furthermore, some OMCs have restated assets in rupee terms
and are likely to face added pressure in coming months
Fertilizers – The industry imports about 50% of its raw material requirement. In Q3 FY12, raw material expenses rose sharply by
nearly 20% on account of higher input costs against elevated global prices and depreciation in rupee.
Potassium chloride is one of the major import items and a decline is already being observed in the same. This trend is likely to
continue in the coming months along with a decline in sales.
13. 1966 Economic Crisis-From 1950, India ran continued trade deficits that
increased in magnitude in the 1960s. Furthermore, the Government of India had
a budget deficit problem and could not borrow money from abroad or from the
private corporate sector, due to that sector's negative savings rate. As a
result, the government issued bonds to the RBI, which increased the money
supply, leading to inflation. In 1966, foreign aid, which had hitherto been a key
factor in preventing devaluation of the rupee, was finally cut off and India was
told it had to liberalise its restrictions on trade before foreign aid would again
materialise. The response was the politically unpopular step of devaluation
accompanied by liberalisation.
The Indo-Pakistani War of 1965 led the US and other countries friendly towards
Pakistan to withdraw foreign aid to India, which necessitated more devaluation.
Defence spending in 1965/1966 was 24.06% of total expenditure, the highest it
has been in the period from 1965 to 1989 (Foundations, pp 195). Another factor
leading to devaluation was the drought of 1965/1966 which resulted in a sharp
rise in prices.
At the end of 1969, the Indian Rupee was trading at around 13 British. A decade
later, by 1979, it was trading at around 6 British pence. Finally by the end of
1989, the Indian Rupee had plunged to an all-time low of 3 British pence. This
triggered a wave of irreversible liberalisation reforms away from populist
measures.
14. 1991 Economic crisis-In 1991, India still had a fixed
exchange system, where the rupee was pegged to the
value of a basket of currencies of major trading partners.
India started having balance of payments problems since
1985, and by the end of 1990, it found itself in serious
economic trouble. The government was close to default
and its foreign exchange reserves had dried up to the
point that India could barely finance three weeks’ worth of
imports. As in 1966, India faced high inflation and
large government budget deficits. This led the
government to devalue the rupee.
At the end of 1999, the Indian Rupee was devalued
considerably.
15. Current Deregulation Of Petroleum Prices. (Earlier Government Used To
Give Subsidies, But Not It Decide D To Let The Market Forces Determine
The Price)
Central Government Intends To Do Away With Various State Sales Taxes
And Excise Duties And Combine Them All In A Comprehensive GST
(Goods And Services Tax), It Is Not Implemented Yet But Will Be Pretty
Soon In Next Year Or Two.
The Various CECA And CEPA (Kind of Free Trade Agreements) With
Malaysia And Singapore.
Allowing Retail Giants Like Wal-mart To Open Shops In India.
Supreme Court Monitored Investigation Of Indian Black Money Stashed
Abroad.
The Nuclear Fuel Supply Agreements With France, America Et Al.
16. The weighted average of a country's currency
relative to an index or basket of other major
currencies adjusted for the effects of
inflation. The weights are determined by
comparing the relative trade balances, in
terms of one country's currency, with each
other country within the index.
17. The unadjusted weighted average value of a
country's currency relative to all major
currencies being traded within an index or
pool of currencies. The weights are
determined by the importance a home
country places on all other currencies traded
within the pool, as measured by the balance
of trade.
18. Used as indicators of external competitiveness. NEER is the weighted
average of bilateral nominal exchange rates of the home currency in
terms of foreign currencies.
The Reserve Bank of India (RBI) has replaced its five-country indices of
nominal effective exchange rate (NEER) and real effective exchange rate
(REER) with new six-currency indices. It is also revising its thirty six-
country indices.
As against the present practice of having three base years in the case of
existing five-country indices, viz, 1991-92, 1993-94 and 2003-04, the last
being a moving base updated every year to facilitate comparison with a
more recent period, the new six-currency indices will have 1993-94 as
fixed base and 2003-04 as a moving base, which will change every year as
at present.
The new six-currency indices will include USA, Eurozone, UK, Japan,
China and Hong Kong SAR. The new indices will also have two new
currencies — both Asian — the Chinese renminbi and the Hong Kong
dollar. Two currencies in the existing five-country series, viz, French franc
and Deutsche mark have been replaced by euro in the new indices.
19.
20. Exporters: Exporters get their payment in dollar (or
other forex currencies ) and convert into Indian
Rupees, In the situation of falling rupee they get more
Indian rupees . Thus a falling rupee is good for the
exporters.
Non-resident Indians : NRIs send money to their family
regularly. In a falling rupee market, they can send more
Indian rupees to their relatives. Hence in a situation of
rupee becoming weak, NRIs and their relatives stand to
gain.
Receivers of fees and remuneration in foreign exchange:
People doing online jobs for foreign companies from
here and receive payment for that ( example Ad sense
revenue) can get more Indian rupee equivalent and they
gain when rupee is weak against dollar.
21. Expensive Importers: Importers face the opposite
of exporters. In a falling rupee market, they have
to pay more Indian Rupee to pay their imports in
dollars. So they stand to lose .
Indian tourists, students, Haj pilgrims going
abroad: These category of people have to pay
more Indian Rupees to fetch dollars to take care of
their travel and needs abroad. So they are badly
affected in a falling rupee market, which can
unsettle their plans.
Higher inflation
Repayment of Loans
22. Growth deceleration not accompanied by lower
inflation
Outlook for growth lowered by almost all including RBI
Lower private consumption demand
Reserve Bank’s estimates suggest trend growth (non-
inflationary) has fallen to 7.5% from 8%.
Weak monsoon feeding into food inflation worries
Currency depreciation could lead to imported inflation
Already high fiscal deficit reduces maneuverability
India is an outlier in many respects, particularly with
respect to high fiscal deficit and persistent high
inflation.
Current account deficit at 4.2% in 2011-12 is above
comfort levels
23. Large fiscal deficit and
persistent inflation limits
fiscal and monetary space
for further stimulation.
The centre’s gross fiscal
deficit (GFD) higher at 5.8
per cent in 2011-12 against
4.9 per cent in 2010-11.
Subsidies to GDP ratio –
budget proposed cap of 2%
Our peers seem to have
better fiscal fundamentals
than ours
Even our inflation is one of
the highest among peers
Note: Inflation and fiscal deficit are IMF estimates for 2012
Source: IMF
24.
25. The current & evolving economic and financial system is a product of both
domestic and external factors
Slowdown in India in 2008 was more due to global developments
Current slowdown is combination of global and domestic factors
Global developments have considerable direct and indirect influence on our
economy and financial system through various channels - 7Cs
26. Using Forex Reserves
Raising Interest Rates
Make Investments Attractive- Easing
Capital Controls
27. Key policy reforms that should be initiated includes rolling of Goods and
Services Tax (GST), Direct Tax Code (DTC), FDI in aviation and
retail, Companies Bill and diesel decontrol.
Efforts should be made to invite FDI but much more needs to be done
especially after the holdback of retail FDI and recent criticisms of policy
paralysis.
The government took steps recently to loosen rules for portfolio
investment in the Indian market, indicating its desire to sustain external
inflows.
The measure to increase External Commercial Borrowings (ECB) to
$10bn will help in borrowing in dollar at a less cost. It may take similar
steps to encourage FDI as well, helping sustain external funding.
Dollar-window For Oil Companies
Dollars against oil bonds
Sovereign-backed non-resident indian bond
Sovereign overseas bond
Moral suasion
Stagger import payments
28. Small Industries Development Bank of India
(Amendment) Bill, 2012
The NHAI (Amendment) Bill, 2011
The Microfinance Institutions (Development and
Regulation) Bill, 2012
Public Procurement Bill, 2012
Prevention of money laundering (amendment)
bill, 2011
The Direct Taxes Code Bill, 2010
The Micro financial Sector (Development and
Regulation) bill, 2011
29. The Indian Rupee has depreciated significantly against the US
Dollar marking a new risk for Indian economy. Grim global
economic outlook along with high inflation, widening current
account deficit and FII outflows have contributed to this fall. RBI
has responded with timely interventions by selling dollars
intermittently. But in times of global uncertainty, investors prefer
USD as a safe haven. To attract investments, RBI can ease capital
controls by increasing the FII limit on investment in government
and corporate debt instruments and introduce higher ceilings in
ECB’s. Government can create a stable political and economic
environment. However, a lot depends on the Global economic
outlook and the future of Eurozone which will determine the
future of INR.
Continued Global uncertainty: Owing to uncertainty prevailing in Europe and slump in international market, investors prefer to stay away from risky investments (flight to security). This has significantly affected the portfolio investment in India. Credit rating agency’s downgrade of India to BBB- with a negative outlook, the last of the investment grade has not helped the cause. Any outward flow of currency or decrease in investment will put a downward pressure on exchange rate. This Global uncertainty has adversely impacted the domestic factors (current and capital account etc.) and caused the depreciation of rupee. Current Account Deficit: While a country like China will be more than happy with a depreciating currency, the same doesn’t apply for India. China exports more than it imports, thus a depreciating currency makes its exports cheaper in the International market, in turn making China more competitive. India on the other hand does not enjoy this luxury, mainly because of increasing demand of oil, which constitutes a major portion of its import basket. The fall of oil price to $90/barrel has helped India to fight the depreciating rupee up to some extent but at the same time Euro zone, one of the major trading partners of India is under severe economic crisis. This has significantly impacted Indian exports because of reduced demand. Thus India continues to see current account deficit of around 4.3%, depleting the forex reserve and thus depreciating INR.Capital Account flows: Deficit countries need capital flows and surplus countries generate capital outflows. India needs dollars to finance its current account deficit. Institutional investors investing in India are directly impacted by the global market uncertainty. In 2008 India had a net outflow of $14billion of FIIs and INR depreciated from 39 level to 52 against dollar. A volatile currency is never good for a foreign investor as it increases the transaction risk. Thus the relation becomes a vicious cycle, thereby further magnifying the volatility. Though RBI has intervened through open market operations to arrest the downfall of INR (managed float) but the reserves of $290billion don’t provide enough room to make a significant impact.Persistent inflation: India has experienced high inflation, above 8%, for almost two years. If inflation becomes a prolonged one, it leads to overall worsening of economic prospects and capital outflows and eventual depreciation of the currency. The Real Effective Exchange Rate (REER) index (6 currencies- Euro, Yen, Pound Sterling, US Dollar, Hongkong Dollar and Renminbi) has fallen by 13.84% during the last one year while the nominal rate has depreciated by 24%. REER index measure includes the level of inflation differences across nations; it reflects a country's competitiveness in international trade. Thus the trend suggests that the country's competitiveness (measured by REER) has not improved as much as the decline in nominal exchange rate points out mainly because of increase in domestic costs. Under normal circumstances inflation is tamed by increasing interest rates, but since India already has high interest rates, it does not leave that option open, as it may lead to further slowdown in growth.Interest Rate Difference: Higher real interest rates generally attract foreign investment but due to slowdown in growth there is increasing pressure on RBI to decrease the policy rates. Under such conditions foreign investors tend to stay away from investing. This further affects the capital account flows of India and puts a depreciating pressure on the currency.Lack of reforms: Key policy reforms like Direct Tax Code (DTC) and Goods and Service Tax (GST) have been in the pipe line for years. A retrospective tax law (GAAR) has already earned a lot of flak from the business community. Attempts are being made to control the subsidy bills but fiscal deficit continues to hover around 5% of GDP. The government announced FDI in retail but had to hold back amidst huge furore from both opposition and allies. This has further made investors sentiment negative over the Indian economy.
This exchange rate is used to determine an individual country's currency value relative to the other major currencies in the index, as adjusted for the effects of inflation. All currencies within the said index are the major currencies being traded today: U.S. dollar, Japanese yen, euro, etc.This is also the value that an individual consumer will pay for an imported good at the consumer level. This price will include any tariffs and transactions costs associated with importing the good.Read more: http://www.investopedia.com/terms/r/reer.asp#ixzz2AvyvevhAWhat is real exchange rate?Real exchange rate can be defined as the rate that takes into account inflation differential between the countries. Suppose the rupee was trading at Rs 40 to a dollar at the beginning of 2009. Assuming a 10% inflation in the Indian economy and 5% inflation in the US economy for the whole year, then this model says the rupee should depreciate by 5% (10%-5%) to Rs 42 to a dollar, other things being equal.Why is the real exchange rate important?Competitiveness of a country's exports is decided not only by the nominal exchange rate, but also relative price movements in domestic and foreign markets. For instance, even if the nominal exchange of the rupee remains unchanged with respect to, say, the dollar, India's exports to the US will become less competitive if inflation in India is higher than in the US. This means nominal exchange rate will have to be adjusted for effect of inflation.How is nominal exchange rate adjusted for inflation?Central banks use the concept of 'real effective exchange rate', or REER, to adjust nominal effective exchange rate for inflation. Conceptually, the REER is the weighted average of nominal exchange rates adjusted for the price differential between the domestic and foreign countries. The price differential, however, is based on the purchasing power concept. The currencies used are of those countries with which trade is the highest.How does the RBI calculate REER?The RBI calculates REER for India. It calculates the value of the rupee with respect to two indices, one comprising six countries and the other 36 countries with a 2004-05 base. The RBI, however, uses the wholesale price index-based inflation whereas globally consumer price indices are used. One conceptual flaw with this model is that it assumes that the base exchange rate is the correct exchange rate or represents the purchasing power parities accurately, which may not be the case
The new indices will use 3-year moving average trade weights in place of the present fixed trade weights, in order to suitably reflect the changing pattern of India’s foreign trade with its major trading partners. The RBI is also revising the thirty six-country REER/NEER series. The new series has been constructed with 1993-94 as the base year as against 1985 as the base year in the existing indices.Currency Signs&#149; RBI has replaced its five-country indices of NEER and REER with new six-currency indices&#149; It is also revising its thirty six-country indices&#149; The new six-currency indices will include USA, Eurozone, UK, Japan, China and Hong Kong SAR&#149; The new indices will also have two new currencies, both Asian — the Chinese renminbi and the Hong Kong dollarThe new series comprises a revised set of currencies for better representation of countries, which have a significant share in India’s foreign trade.The revised set, includes Hong Kong SAR, Denmark, Iran, Kuwait, Qatar, Russia, South Africa, Sweden and UAE. Besides, with the expansion of the Eurozone, the new indices, include all the twelve countries that have euro as common currency.Has the rupee really fallen over the years? The rupee was around 19 against the US dollar in 1991. Now, 20 years later, the rupee is around 53 against the dollar. This means the Indian currency has fallen, or depreciated, by 179 per cent over the years against the dollar.However, the rupee has not fared badly if its value against all major global currencies is taken. The real effective exchange rate (REER) — or the REER Index of the rupee — calculated by the Reserve Bank of India (RBI) based on a basket of 36 global currencies (36-REER) was 94.2 on March 31, 2012. It was around 75.5 in 1991. This means, in real terms, the rupee has remained strong over the years. The 36-REER — with 2004-05 base as 100 — even rose by 4.7 per cent during the fourth quarter of 2011-12. However, for the full year it declined by 3.3 per cent after a rise of 8 per cent in 2010-11, the RBI says.The 6- currency REER Index, which is at 105.5 has showed a rise of 4.2 per cent in the last quarter of 2011-12. It rose 13 per cent in 2010-11 but fell marginally by 2.9 per cent in last fiscal. The central bank has kept the 6-REER Index close to the 100 level to keep the exports competitive amidst huge capital flows and dollar purchases by the RBI.The RBI takes the REER Index — adjusted for relative inflation in India and her trading partners — seriously while formulating its exchange rate policies. The rupee’s value against the dollar alone is not the deciding factor. The rupee-dollar value is not considered as the real measure of export competitiveness as India exports goods and services to several countries — not just the US alone — and the economic indicators, including inflation and currency value in these countries, are different.
Using Forex Reserves: RBI can sell forex reserves and buy Indian Rupees leading to demand for rupee. But using forex reserves poses risk also, as using them up in large quantities to prevent depreciation may result in a deterioration of confidence in the economy's ability to meet even its short-term external obligations. And not using reserves to prevent currency depreciation poses the risk that the exchange rate will spiral out of control. Since both outcomes are undesirable, the appropriate policy response is to find a balance. Recent data shows that RBI had indeed intervened by selling forex reserves selectively to support Rupee.Raising Interest Rates: The rationale is to prevent sudden capital outflows and ultimately lead to higher capital inflows. But India’s interest rates are already higher than most countries. This was done to tame inflationary expectations. So further raising interest rates would lead to lower growth levels.c. Make Investments Attractive- Easing Capital Controls: RBI can take steps to increase the supply of foreign currency by expanding market participation to support Rupee. RBI can increase the FII limit on investment in government and corporate debt instruments. It can invite long term FDI debt funds in infrastructure sector. The ceiling for External Commercial Borrowings can be enhanced to allow more ECB borrowings.
DOLLAR-WINDOW FOR OIL COMPANIESThe RBI could open a dollar window for oil companies to sell rupees and buy dollars from the central bank. This would reduce volatility in the rupee by enabling oil companies to directly source a large part of their dollar requirement instead of buying large chunks from the market. The RBI could sell the dollars to oil importers at its daily reference rate. However, that could severely strain the country's reserves given the country's large oil import bill.DOLLARS AGAINST OIL BONDSThe RBI could conduct special market operations for oil companies, holding auctions to buy oil bonds and giving the oil companies foreign exchange at market rates. However, dealers say the outstanding amount of oil bonds is too small to lead to significant rise in dollar supply. The RBI opened such a dollar window for oil companies in 2008 and discontinued it in 2009.SOVEREIGN-BACKED NON-RESIDENT INDIAN BONDThe government could issue a sovereign-guaranteed bond through State Bank of India to non-resident Indians at attractive interest rates, similar to the Indian Millennium Deposits issued in 2000, when the bank attracted around $7 billion for a $5 billion issue. However, such a move could increase the country's debt and interest liability.SOVEREIGN OVERSEAS BONDIndia could issue sovereign bonds to raise dollars from overseas investors. However, the RBI is wary of the government issuing bonds directly as it exposes the country to foreign exchange risk during repayment. One option would be to sell a dollar bond repayable in rupees. The Philippines was the first country in Asia to sell dollar bonds abroad to be repaid in its local currency in September 2010.MORAL SUASIONThe RBI can attempt to persuade banks and finance companies to raise funds in dollars abroad and bring them back to India to lend locally. Many banks have an ongoing forex bond issue programme , and the rupee's decline can make it attractive to raise dollars and convert them into rupees even after accounting for the hedging cost given the fall in forward dollar rates.STAGGER IMPORT PAYMENTSThe central bank could issue rules to effect a delay in import payments, which typically are made at the end of every month. The bunched-up outflows put pressure on the rupee, and the RBI could look at asking for staggered payments.