Archive

from Photographers Blog:

From man into woman

By Adnan Abidi

Hardeep Singh, a father of two, leaves his home in west Delhi every day at around 2 p.m. Dressed in a pair of light trousers and a shirt, he reaches a local charity, where he undresses to reveal his female clothes underneath and transforms into Seema.

The 33 year old is a male-to-female transgender, or “hijra”, as they are known in India. Living with two identities, by day, he is a married family man and by night, a hijra sex worker.

With no legal recognition in India, transgenders like Seema have little choice but to turn to prostitution to earn a living, which is something she hides even from her family.

from Global Investing:

Battered India rupee lacks a warchest

The Indian rupee's plunge this week to record lows will have surprised no one. After all, the currency has been inching towards this for weeks, propelled by the government's paralysis on vital reforms and tax wrangles with big foreign investors. These are leading to a drying up of FDI and accelerating the exodus from stock markets. Industrial production and exports have been falling.  High oil prices have added a nasty twist to that cocktail. If the euro zone noise gets louder, a balance of payments crisis may loom. The rupee could fall further to 56 per dollar, most analysts predict.

True, the rupee is not the only emerging currency that is taking a hit. But the Reserve Bank of India looks especially powerless to stem the decline. (See here for an article by my colleagues in Mumbai) .  One reason  the RBI's hands are  effectively tied is that  India is one of the few emerging economies that has failed to build up its hard currency reserves since the 2008 crisis and so is unable to spend in the currency's defence. Usable FX reserves stand now around $260 bilion, down from $300 billion just before the 2008 crisis.  See the following graphic from UBS which shows that relative to GDP, India's reserve loss has been the greatest in emerging markets.

But there is worse. The relative decline in reserves since 2008 coincides with a ballooning in India's external debt, both private and public. Comprising mostly of corporate borrowing and trade credit, the debt stands at $350  billion, up from $225 billion four years back.

No wonder investors have upped their bearish bets on the rupee: a Reuters poll of Asian fund managers shows these at a six-month high and significantly higher than any other Asian currency. For now, the trade  looks worryingly like a one-way street.

from Expert Zone:

Hillary Clinton’s farewell visit to Delhi: from prickly estrangement to empathetic divergence

(The views expressed in this column are the author's own and do not represent those of Reuters)

U.S. Secretary of State Hillary Clinton will rank as the most accomplished, poised and successful woman politician in American history. She has pierced many glass ceilings with tenacity and grace. She almost made it to the White House and future sociologists and historians will be able to more objectively assess the misogyny index that still lurks deep within American society and its relevance in the Obama-Clinton Democratic party tussle. The U.S. demonstrated in late 2008 that it had evolved to a point where it could accept a coloured President but not a woman.

However, South Asia with its distinctive dynasty-cum-family political ethos is more at home with strong woman politicians and the top leadership over the decades includes Indira Gandhi, Benazir Bhutto, Sirimavo Bandaranaike (the world’s first woman prime minister) and her daughter Chandrika to Sheikh Hasina. Thus, South Asia would provide a natural comfort zone for Hillary Clinton who has just completed a whistle-stop visit that took her from Beijing to Dhaka to Kolkata before she arrived in Delhi for high-level meetings with her Indian counterpart on Tuesday.

Clinton is no stranger to India and has visited many parts of the country -- both as the U.S. First Lady and now as the Secretary of State. Paradoxically, even though she was not in the political loop at the time, her husband Bill Clinton (the U.S. President in 1993) castigated India for its nuclear profile and heightened the estrangement between the two democracies.

However, to his credit, the same Bill Clinton led the rapprochement with India in March 2000 and this was given a dramatic fillip in the second term of President George Bush in July 2005. Progressively, the bi-lateral relationship moved from prickly estrangement over the nuclear issue to one of greater dialogue, leading to a nascent partnership. Divergences do exist but they have been handled with empathy -- till now.

On what has been billed as her farewell visit to Delhi, one of the more contentious divergences looms large -- it is presumed in an unintended manner. An Iranian trade delegation arrived in India on the same day that Clinton touched Kolkata (on Sunday) and the symbolism is stark. The U.S. is encouraging Delhi to reduce its hydrocarbon dependence on Iran -- as it has with many other nations -- and June 28 is the date when Washington DC will impose a range of strictures and penalties on the defaulting nations.

Given its energy vulnerability, Delhi has conveyed its inability to comply with this U.S.-led diktat and has indicated that while it will respect all U.N. resolutions on the subject, it has a divergent perception about how best to deal with the Iranian nuclear nettle. The Indian position on Iran is more in consonance with that of Russia and China and the issue cannot be reduced to a binary “with us-against us” reminiscent of September 2001.

from Global Investing:

In India, no longer just who you know

It's not what you know but who you know. There are few places where this tenet applies more than in India but of late being close to the powers in New Delhi does not seem to be paying off for many company bosses.

Look at this chart from specialist India-focused investor Ocean Dial. It shows that since mid-2011 companies perceived as politically well-connected have significantly underperformed the broader Mumbai index. The underperformance has intensified this year.

According to David Cornell, portfolio manager at the fund, this is down to several factors such as The Right to Information Act which has helped curb unfettered corruption as well as shifting political power away from the centre towards provincial governments.  He says:

Political connections at a corporate level are no longer a pre-requisite for stocks to perform. Stay away from areas of the economy that rely on government patronage such as real estate, mining and power.

On Friday, media reported that Reliance, a giant company once seen by many as exemplifying India's politics-business nexus, would not be allowed to recover $1.2 billion costs before starting to share gas production profits with the government.  Reliance shares slumped 1.7 percent after the report. This year they have risen just 4 percent, less than half the gains of the Mumbai index.

from Global Investing:

Trading the new normal in India

After a ghastly 2011, Indian stock markets have't done too badly this year despite the almost constant stream of bad news from India. They are up 12 percent, slightly outperforming other emerging markets, thanks to  fairly cheap valuations (by India's normally expensive standards)  and hopes the central bank might cut rates. But foreign  inflows, running at $3 billion a month in the first quarter, have tapered off and the underlying mood is pessimistic. Above all, the worry is how much will India's once turbo-charged economy slow? With the government seemingly in policy stupor, growth is likely to fall under 7 percent this year. News today added to the gloom -- exports fell in March for the first time since the 2009 global crisis.

So how are fund managers to play India now? According to David Cornell, who runs an India portfolio at specialist investor Ocean Dial, they must simply get used to the "new normal" -- subpar growth and high cost of capital. In this shift, Cornell points out, return on assets in India has fallen from a peak of almost 14 percent in 2007 to less than 10 percent now. While that is still higher than the broader emerging asset class, the advantage has dwindled to less than 1 percent as companies suffer from margin compression and falling turnover. Check out these two graphs from Ocean Dial:

Cornell is playing the new normal by focusing on three sectors -- consumer goods, banks and pharmaceuticals. These companies, he says, have pricing power and structural barriers to entry (banks); provide access to still-buoyant demand for services such as mobile phones (consumer goods) and are well-run and profitable (pharmaceuticals). And the export-oriented pharma sector is also an effective hedge against the weakening rupee.

If cost of capital is high, you want to avoid leverage, you want to be in banks which have pricing power. In pharmaceuticals you have 20 percent earnings growth and transparent accounting. In an uncertain environment these sectors should perform well. (Cornell says)

from Breakingviews:

The rupee looks vulnerable

By Jeff Glekin The author is a Reuters Breakingviews columnist. The opinions expressed are his own. India’s ballooning trade deficit means it has to run just to stand still. Without steady capital inflows, the currency will collapse. But without a steady currency, it is hard to attract foreign capital. The rupee’s 19 percent fall against the dollar over the past year is worrying.

During most of the last decade, the current account deficit has been funded without great difficulty. Foreign direct investment, portfolio investments and about $60 billion a year of remittances have usually exceeded the shortfall in trade. India has accumulated around $300 billion of foreign currency reserves, equivalent to 17 percent of GDP.

But the annual trade gap has widened from $104 billion to $185 billion. At 3.7 percent of GDP, the current account deficit is the highest since 1980, when the International Monetary Fund starting collecting data. High energy prices are the main culprit for the recent deterioration - oil accounts for two-thirds of the country’s import bill. Of course, the blow would have been less painful if India had a stronger export sector.

The support of foreign investors is more necessary than ever, but New Delhi’s mismanagement has discouraged them. Foreigners bought an average of $3 billion dollars a month of Indian debt and equities in the first three months of 2012, according to the Securities and Exchange Board of India’s website. So far in April, they have been net sellers of $403 million.

The currency’s fall threatens to create a negative spiral. More expensive imports are inflationary and put pressure on corporate profits. Government subsidies of domestic fuel prices become more costly, adding to the fiscal deficit, which swelled to 5.9 percent of GDP in the fiscal year that ended in March. Furthermore, the rupee’s slide creates financial stress for Indian companies that have borrowed in dollars.

India’s currency reserves provide a buffer. But if capital flows turn sharply negative the reserves could melt away quickly. And if investors start to believe that the rupee is a one-way downwards bet, they will race for the exit. Predictions of a declining currency - UBS suggested a further 6 percent fall last week - could prove self-fulfilling.

from Global Investing:

Where will the FDI flow?

For years the four mighty BRIC nations have grabbed increasing shares of world investment flows. But the coming years may not be so kind.  These countries bring up the bottom of the Economic Freedom Index (EFI) for 2012. Compiled by Washington D.C.-based think-tank The Heritage Foundation the EFI measures 10 freedoms --  from property rights to entrepreneurship -- and according to a note out today from RBS economists, there is a strong positive link between a country's EFI score and the amount of FDI (foreign direct investment) it can secure. So the more "free" a country, the more FDI inflows it can expect to receive -- that's what an RBS analysis of 2002-2008 investment flows shows.

So back to the BRICs. Or BRICS if you add in South Africa (part of the political grouping though not yet included in the BRIC investment concept used by fund managers). The following graphic shows Russia languishing at the bottom of the EFI, China just above Russia and India third from bottom.  Brazil is sixth from bottom while South Africa ranks two places higher.

At the other end of the spectrum is tiny Singapore. Its EFI score is double that of Russia and between 2002-2008 it attracted FDI equivalent to 50 percent of its economy. Russia in contrast saw negative net FDI (outflows exceeded inflows)

What comes next will be interesting. China grabbed the most FDI in absolute terms in the past decade (around $1.3 trillion or almost half the $2.1 trillion flows to the 21 leading EMs) but RBS notes this is slowing. That's because China's low-value manufacturing base is becoming less competitive relative to the rest of Asia and stringent restrictions remain in place in many sectors. Corruption, red tape and general business-unfriendliness prevail. "The decreasing allure of China from a manufacturing perspective means the country is at risk of suffering a decrease in FDI inflows in coming years," RBS writes. The bank also notes the nature of FDI into China is changing: half the 2011 flows went to real estate.

On the other BRICS:

from The Human Impact:

Does marriage stop prostitution? Indian village thinks so

Is marriage a guarantee that a woman won't be prostituted?

It's a question that played heavily on my mind recently when I went to the remote village of Wadia in India's western region of Gujarat to cover a mass wedding and engagement ceremony of 21 girls, which was aimed at breaking a centuries-old tradition of prostitution.

I arrived in the small, neglected hamlet on the eve of the big ceremony. Preparations were well underway.

Soon-to-be-brides sat inside the mud-walled compounds of their homes surrounded by singing female relatives, with "haldi" or turmeric paste smeared on the faces and arms - a South Asian pre-wedding ritual believed to make the skin "glow".

Sporting long, curled moustaches, large turbans and gold studs in their ears, old men idled on charpoys outside, smoking beedis under the shade of trees.

They told me they were from the Saraniya community - a once nomadic group who inhabited the arid landscape of Gujarat and the neighbouring Rajasthan.

from The Human Impact:

Undernourished and anaemic – the plight of India’s teen girls

The U.N.'s latest report on the state of the world's 1.2 billion adolescents gives food for thought, especially on the plight of India's girls aged between 10 and 19.

The report explores a range of issues affecting teenagers around the globe, from nutrition and health to sexual behaviour, knowledge on HIV/AIDS, attitudes towards gender violence and access to education.

Data from surveys of adolescent girls in India, and South Asia in general, are once again a reality check - which we shouldn't need but unfortunately still do.

Soon to overtake China as the world's most populous nation by 2050, India already has the highest number of adolescents in the world at 243 million, says the report by the U.N. Children's Fund (UNICEF).

Yet nearly half of Indian girls aged 15 to 19 are underweight, and more than a quarter are underweight in 10 other countries including Bangladesh, Nepal, Niger, Ethiopia and Cambodia.

"Such undernutrition renders adolescents vulnerable to disease and early death, and has lifelong health consequences," says the report. "In adolescent mothers, undernutrition is related to slow foetal growth and low birthweight."

from Expert Zone:

India hiding from its own ‘crap’

By C. Uday Bhaskar

(The views expressed in this column are the author's own and do not represent those of Reuters)

India, to put it euphemistically, is awash in its own ‘crap’ -- a word derived from old Dutch to mean excrement. While accurate to an alarming degree, coming soon after the euphoria over the Agni missile tests, the discomfiture is evident.

Till recently, collective India preferred to do the ostrich act over its own excreta and waste management and stoutly refused to acknowledge that such a situation existed at all -- let alone perceiving it as a major national challenge. The Indian ostrich act was to bury the collective head and public discourse into the 3C sand -- the staple cricket-cinema-crime combine.

Management of waste -- public, private household -- was not even quantified in a scientific and systematic manner and hence the problem did not exist. The state and its municipal/civic affiliates responsible for such disposal opted to live in virtual reality and the unwritten media norm was to blank out the crap from the news. Baudrillard’s simulacrum has indeed enveloped India -- crap and all.

But the reality that rears its head is that not one India city qualifies to be deemed to have average/acceptable waste disposal capacity -- in keeping with the prevailing global standard for water, soil and air pollution.

However, there is a silver lining to this dark and stench-filled cloud, in that there is the emergence of a more scientific and holistic approach to this issue. In a pioneering study, the Delhi-based Centre for Science and Environment (CSE) led by Sunita Narain has released what may be termed the first  detailed report that is aptly entitled: ‘Why Excreta Matters’ -- as part of the  “Citizens’ Seventh Report on the State of India’s Environment”.