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from Breakingviews:

How Raghuram Rajan can end India’s mini-crisis

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By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Raghuram Rajan must show he is as good at managing financial crises as he is at predicting them. When he was chief economist of the International Monetary Fund, Rajan was a prescient critic of a finance-fuelled credit boom, warning of “hidden tail risks” as early as 2005. His first task as India’s new central bank governor will be to avert the country’s looming currency crisis.

The Indian rupee is in free fall. It touched a record low against the dollar on Aug. 6, just before the government announced that Rajan, currently chief economic adviser to the finance ministry, will replace central bank chief Duvvuri Subbarao when his term ends on Sept. 4.

Rajan’s first challenge will be to quickly reverse the central bank’s present strategy for defending the currency. In an effort to give investors in short-term rupee debt an incentive to keep their money in India, the Reserve Bank of India in July engineered an increase in money-market interest rates and forced a liquidity squeeze. But those moves have raised the risks of a “vicious slowdown” in the economy, according to Morgan Stanley economist Chetan Ahya.

from Expert Zone:

Indian telecoms at the crossroads again

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

In the 18 years I have been working with Indian telecoms operators, I can recall several points where I felt the industry was at a crossroads in its evolution.

from India Insight:

India’s Telangana fight explores new frontiers in political attack ads

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(Note to readers: contains slightly graphic language and an aggressively provocative image.)

Dear American political consultants: you might think you know how to produce negative political attack ads, but you have much to learn. Caravan magazine's senior editor Jonathan Shainin on Sunday shared on Twitter what he called "Unquestionably the greatest political poster of all time." I admit that I have made no broad study, but this ad, coming from Hyderabad in Andhra Pradesh, seems to me to break some kind of sound barrier in the business. (Correction: I cannot confirm that this ad appeared in Hyderabad. A readers whose comment appears below tells  me that the ad appears in Tanuku in West Godavari District)

from India Insight:

Deficit? What deficit? India makes a golden version of everything

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Indians use gold for all sorts of things. As the world's biggest gold consumer, its citizens use coins, bars and jewellery  as gifts, dowries and investments that are literally more solid than a share in a company. The ill effect that this has on India's current account deficit has led the government to try to curb demand.  Here are a few examples of demand that nobody can seem to curb.

This week, gold importer RiddiSiddhi Bullion's subsidiary Dia Jewels unveiled India’s first gold-plated motorbike. About 35 to 40 kilograms of silver went into making the miniature two-wheeler model, which is gold plated and studded with diamonds, and took six months to make, said Mukesh Kothari, director of Riddisiddhi Bullions.

from India Insight:

Markets this week: Coal India, ITC top Sensex losers

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The BSE Sensex lost 3 percent in the week ending Aug. 2, extending its losses from the previous week and marking its biggest weekly fall since mid-March.

Markets remained on the edge on uncertainty over how long the Reserve Bank of India (RBI) would continue measures to defend the rupee. The rupee fell 3.4 percent over the last five trading sessions and ended at a record closing low on Friday.

from The Human Impact:

Death in “Dev Bhoomi” – Disaster in Hinduism’s holiest place

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Prakash Kabra recites his elder brother’s mobile number and I carefully tap it into my phone – already knowing the response, but still with a naïve sense of hope.

"The number you are calling is either switched off or unreachable at the moment. Please try again later," says the automated reply.

from Global Investing:

Emerging markets funds shun Brazil, South Africa

Global emerging markets equity funds have cut average weightings to Brazil and South Africa for the fourth straight quarter, according to the latest allocations data from fund research firm Lipper.

You can see a full interactive graphic of the allocations data here or by clicking on the snapshot below.

from India Insight:

Tracking Sensex: L&T top loser this week

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By Aditya Kalra and Sankalp Phartiyal

The Sensex lost 2 percent and the Nifty slipped 2.3 percent in a tough week for stocks as Indian markets remained cautious ahead of the Reserve Bank of India (RBI) policy review on July 30.

The benchmark Sensex, which ended in the red for three of five trading sessions, touched a 2-1/2 year high during the week as consumer goods shares surged.

from Expert Zone:

New ways to distribute insurance policies

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(Any opinions expressed here are those of the author and not of Reuters)

On a rainy day in Mumbai, I was chatting with the taxi driver. It was a prolonged journey, made worse by a never-ending traffic jam. We talked about insurance and I asked him about his insurance cover. I heard the familiar story of a man being cheated into buying an expensive plan; he escaped only after losing a lot of money.

When we think of insurance, it’s typically life, motor and health insurance that come to mind. These are relatively expensive and an already reluctant Indian consumer stays away unless forced into it. This ‘push’ component has become the default sales mode. Motor insurance is mandatory by law and should have ready acceptance. But a large number of vehicles on Indian roads are still not insured.

from Expert Zone:

How the RBI’s recent measures affect you

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(Any opinions expressed here are those of the author and not of Reuters)

Banking is the backbone for growth in large economies such as India. Banks provide short-term finance to trade, industry and agriculture while also ensuring excess money is channelized into productive assets via deposits and financial intermediation.

Banks have to work under the stipulated policies of the central bank with respect to deposit mobilisation and lending for which they need to maintain minimum cash balances and government securities.

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