Interesting Read.... Major firms creating slowdown to hit back at PM

Hi All,

A report worth reading by a leading Financial Services Firm published in Business Standard News Paper.... If the same is authentic (looks like as it is published in a leading business news daily) really surprising and also augers well for India over a longer term prospective. It really tells you that this governmnt is doing some good things not so very welcomed by the corporates..... 

Worth Reading

Some major power, infrastructure, metals and mining companies are planning to consciously hold back capital expenditure to “create an economic slowdown”, according to a report by Ambit Capital Research, released on Wednesday. Quoting sources close to Prime Minister Narendra Modi, the report said the move was prompted by their disappointment over the PM’s crackdown on crony capitalists.

The Ambit report also launched a spirited defence of the PM and talked about its “growing conviction that the PM is prioritising a clean-up of the system over pursuit of near-term GDP growth”. The report repeatedly quotes “sources close to the PM” as saying Modi has got multi-decadal ambitions and will not be panicked into generating short-term results which could compromise his longer-term goals.

Claiming the findings are a result of the research team’s repeated visits to Delhi and other state capitals, Ambit made other startling allegations against a section of Indian companies, without naming any.  “The forthcoming black money Bill seems likely to result in an exodus of Indian businessmen seeking residentship abroad. We have already heard about promoters of several prominent small-midcap companies who have taken tax residentship abroad in the past few weeks. Also, a significant proportion of white collar professionals working in India for MNCs are contemplating leaving the country.”

“Our sources in Delhi say the government has realised that if it hastily kicks-off major capex projects without cleaning up the ecosystem of corrupt officials and bent contractors then it will simply perpetuate the rot that had set in over the past 10 years,” Ambit said.

Asking everybody to be prepared for a short-term pain, Ambit cut its FY16 gross domestic product growth estimate to 7 per cent from 7.5 per cent estimated by it in March.

Terming it as the “PM’s detox diet for India”, Ambit said the clean-up has four facets: Pressurising crony capitalists and contractors into re-thinking their traditional approach to rigging the system; attacking the subsidy fraud through Direct Benefits Transfer and use the Aadhaar as a means of identification; pressurising civil servants and public sector company chiefs to deliver in their day job and desist from graft and attacking the “black economy”.

Macquarie Capital has come out with a note titled “Modi Meter — One year later: 7/10”. The rating is much higher than what corporate CEOs would give the government. Authored by Rakesh Arora and Arun Bhattacharya, the report on the Modi government is a study in contrast to the United Progressive Alliance government, thanks to its decisive action, transparency and development focus.

Like Ambit Capital, Macquarie’s Arora, too, says the government has done away with crony capitalism by moving all approval processes online, introducing an auction system for resources and focusing on improving ease of doing business.

Macquarie Capital says: “Corporates that are used to receiving doles and fiscal incentives are finding themselves thrown at the deep end of the pool and tackling competition to survive. However, the government’s efforts to ease land acquisition has been jeopardised by populist opposition.”

Link - http://www.business-standard.com/article/companies/major-firms-creating-slowdown-to-hit-back-at-pm-ambit-report-115052001213_1.html

What does Mr. RR has to say about one year of NDA Govt. in India .....

Hi All,

For all of you especially from Financial Industry and even me sometimes, who are confused about the performance of the present Govt.

A nice article in Financial Express -

The expectations from the Narendra Modi government when it came to power last year were “probably unrealistic” but it has taken steps to create an environment for investment and is “sensitive” to concerns of investors, RBI Governor Raghuram Rajan has said.

“This government came in with tremendous expectations and I think the kind of expectations were probably unrealistic for any government,” Rajan said responding to questions after his address to the Economic Club of New York yesterday.

He said in the minds of the people, Prime Minister Narendra Modi’s image was that of “Ronald Reagan on a white horse” coming to slay anti-market forces and such comparison was “probably not appropriate.”

Rajan, however, said the government has “taken steps to create the environment for investment, which I think is important.”

The government is “sensitive” to the concerns of investors and is looking into addressing economic issues, he said.

Rajan’s remarks come as the Modi-led government completes one year in office this month, having received a commanding majority from an electorate that wanted jobs, economic development and respite from rising prices and corruption.

The Reserve Bank of India Governor said a “big part” of the business environment is taxes and the government has said it will not bring retrospective taxation again.

“However once the tax authority levies a demand on you, there is a quasi-judicial nature of that proceeding and therefore it has to go through the courts before it is resolved. The government cannot intervene,” Rajan said.

“Legacy issues are winding their way through the courts, including issues based on laws that existed before they were changed,” he said.

The corporate tax rate will also come down one per cent every year going forward, he added.

The former International Monetary Fund chief economist said “perhaps” India could have done a “better job” in handling these issues but “going forward the government says no more of this kind of stuff we will do.”

Rajan said there are several areas where the government has taken more “serious and significant” advances to improve investor confidence and propel growth.

On the issue of subsidies, he said petrol and diesel subsidies have gone.

“Going forward these subsidies will be transferred directly into bank accounts,” he said, adding that already the cooking gas subsidy is being transferred directly to bank accounts.

Rajan said there is a “broad consensus” for the Goods and Services Tax (GST) and while he had hoped for the GST Bill to have passed in the just concluded session of Parliament, he feels there is “enough momentum” that “it will be done well in time and roll out by March 31 or April 1 next year.”

“In fact (the government) is going ahead with the apparatus to ensure that it is actually done,” Rajan said.

Another key legislation that the government is focusing on is the Land Acquisition Bill, which is important from the perspective of certain public works, Rajan said.

He said that since different states have their own land acquisition bills, some commentators have suggested the possibility that the states should decide for themselves as to how to implement their respective land acquisition provisions.

There are tremendous plans for investment, particularly in the Mumbai-Delhi industrial corridor and freight corridors, the RBI Governor said.

“My sense is that things are happening,” he said.

Rajan also called the government’s spending cuts “significant,” and said “there has been some amount of fiscal consolidation over and above what the government is owning up to.”

He said inflation “has come down tremendously in India” and rupee has basically stayed relatively flat since the beginning of the year.”

“…if you look at rupee’s volatility relative to other currencies, you’d have to argue that the rupee has been one of the most stable currencies (against) the dollar,” Rajan said.

“It’s been much stronger than other currencies,” he said.

With the Current Account Deficit also projected to come down from more than four per cent to 1.5 per cent this year, Rajan said “the big deficit numbers have come down” and the focus is on growth.

He, however, said while investment intention and investment is picking up, the pace can be faster.

Rajan noted that the problem to some extent lies in the week balance sheet of banks and there is no supply problem as banks are willing to lend.

The government is pushing the banks very hard to clean up the balance sheet and to improve the governance structure of the banks, including separate chairman and Managing Director positions. Banks are also being encouraged to elect new people as Chairman, may be from outside the system, he said.

Link - http://www.financialexpress.com/article/economy/expectations-from-new-govt-were-probably-unrealistic-rbi-guv-raghuram-rajan/74237/

Regards...

#ModiInsultsIndia First Foot in Mouth statement by NaMo!!!

Hi all,

First of all, with all due respect to Mr. Modi and his designation, him saying that we were ashamed of being born in a country before he came in to power it is completely not acceptable and definitely not expected of NaMo. I watched the video where he said it and was really amazed to see that the audience was laughing to this sentence, hope they are not from India, else I am feeling ashamed of having them as my countrymen....

So on business front (Little bit of it what I know is 26 odd deals with $ 22 BL are inked which involve companies like Adani, Bharti Airtel, Welspun etc., I also heard ICICI Bank is planning on a new bank in Shanghai to expand its operations in China....) dont think that he has done any harm to India or Indians for that matter but the actual insulting statement came in Mangolia where he said that Indians were ashamed of being born in India before his Govt...

This is a bit too much and surely not expected from a responsible person like Mr. Modi.. We have a lot of expectation from you Sir, your actions may speak up over a period of time but statements like this might have a even more long lasting impact politically, and we don't want to see any one else in power because only 5 years may not be sufficient....

Regards...

Inverted HNS beakout........ Bulls are back!!!

Hi All,

After a week of abnormal intraday volatility, Nifty managed to close crucial resistances today.

Nifty also closed strongly above the neck line for the Inverted Head and Shoulder Pattern on Daily charts, which is a very good sign..... The pattern roughly gives targets of 8600+. The volume confirmation for the same is not encouraging which means there might be some muted days or even negative days in between, however short term bias looks bullish with supports near 8300-8120-8080...

The mid term outlook is also bullish with final supports near 8000-7950....

However the next hurdle now for Nifty is near 8510 mark, which can be a litmus test for market's potential to go up further...

Cheers....

Hrishi

#ModiinChina

Hi All,

A nice article by Harsh Pant....  ‎Professor of International Relations at King's College London

Really worth reading.... Important points in Bold

For all the pomp and circumstance, the only thing that Prime Minister Narendra Modi's recent visit to China will be remembered for will be his plain-speaking. And it is by no means a small achievement. For years, Indian political leaders have gone to China and said what the Chinese wanted to hear. Modi changed all that when he openly "stressed the need for China to reconsider its approach on some of the issues that hold us back from realising full potential of our partnership" and suggested that "China should take a strategic and long-term view of our relations". In his speech at the Tsinghua University too, Modi went beyond the rhetorical flourishes of Sino-Indian cooperation and pointed out the need to resolve the border dispute and in the interim, clarify the Line of Actual Control to "ensure that our relationships with other countries do not become a source of concern for each other". This is a significant shift in India's traditional defensiveness vis-a-vis China and should put the relationship on a firmer footing.

The Chinese are masters are beguiling their interlocutors. So even as Modi was being given a red carpet welcome on his high-profile visit to China and Chinese leaders were expressing hopes that Sino-Indian ties can be taken to a new level, China's state-owned television CCTV was showing India's map without Jammu and Kashmir and Arunachal Pradesh, while reporting on the prime minister's visit. There is a method to this Chinese madness, of course.

The Chinese president became the first Chinese head of state to visit India in eight years in September 2014 and was warmly welcomed in India by Modi. But the visit was overshadowed by a border crisis when People's Liberation Army (PLA) troops entered Indian territory in Chumur, Ladakh. Given this reality, it is vital for the Indian leadership to move beyond rhetoric and insist on tackling the really thorny issues that have been bedevilling this relationship for years now, making it difficult for the bilateral relationship to achieve its full potential.

The boundary issue remains the biggest stumbling block. This military restiveness on the Sino-Indian border does not bode well for regional stability as the military balance along the long and contested border is rapidly altering in Beijing's favour with the upgrade of the Chinese military and civilian infrastructure in Xinjiang and Tibet. Chinese military modernisation has far outpaced Indian defence upgrade, raising concerns about New Delhi's ability to deter a limited conflict with China.

Trade ties too haven't grown to an extent where they can ameliorate political tensions. China's annual trade with India is only a fraction of its trade with Europe, Japan, and the United States. Indian exports to China are primarily dominated by raw materials and iron ore. The challenge confronting New Delhi is thus to match the level of Chinese exports to India and diversify the country's export basket. Even as bilateral trade between China and India is moving towards the $70-billion mark, India's trade deficit with China has soared from $1 billion in 2001-02 to more than $40 billion. This rising trade deficit in China's favour is problematic for India, as is the Indian failure to use its core competencies to enter the Chinese market.

Modi's focus has been on engaging China economically to further India's developmental needs. Underscoring Indian openness for business, Modi encouraged Chinese business to invest in India as firms signed deals worth more than $22 billion. Many of the contracts were for Chinese banks to finance Indian firms, and also included deals in the telecommunication, steel, solar energy and film sectors. Other agreements included one for the China Development Bank to fund a power plant for Adani Power, as well as a steel project between Indian conglomerate Welspun and two Chinese firms (Bharti Airtel also one of the others). Modi welcomed potential Chinese investment in sectors like housing, renewable energy, high-speed rail, metro, ports and airports, adding that India was eager to draw on China's expertise in mass manufacturing.

While China's rising profile in South Asia is not surprising, New Delhi's concern about its own strategic presence in its periphery - South Asia and the Indian Ocean region - is growing. Even as China is becoming the largest trade partner of most states in South Asia, including India, New Delhi's strategic hold on South Asia is weakening. To New Delhi, China's strategy towards South Asia seems premised on encircling India and confining it within the geographical coordinates of the region. This strategy of using proxies started with Pakistan and has gradually evolved to include other states in the region, including Bangladesh, Sri Lanka, and Nepal.

China is entering markets in South Asia more aggressively through both trade and investment, as well as improving linkages with South Asian states through treaties and bilateral cooperation. Following this up by building a ring network of roads and ports in India's neighbourhood and deepening military engagements with states on India's periphery, China has firmly entrenched itself in New Delhi's backyard.

China's plans for a maritime silk road connected by cross-border infrastructure will further cement Beijing's role in the region as regional states have lapped up China's invitation to join this initiative. India has been invited too, but it remains ambivalent about the project and is yet to make up its mind.

Unlike other major global powers, China refuses to recognise India as a global power and does not show sensitivity to its core security concerns. As a consequence, China has replaced Pakistan as the nation's primary security concern. Ultimately, however, it is more about India's own inability to get its act together. The challenge that China poses to India has been quite evident for some time now. Yet Indian policymakers failed to galvanise their diplomacy and military sufficiently to manage the problem.

There are clearly new opportunities to significantly expand economic cooperation for mutual benefit. The present government with its decisive mandate is better positioned than its predecessors to give a new direction to India's China policy. Beijing should have used the Indian prime minister's visit to reach out to India more substantively than before. But once again, China has shown that it willing to muddle along when it comes to India, if only to keep India perpetually on the defensive. Modi has broken the mould and it will be an interesting ride from here onwards.