The Great Debate (India)
from MacroScope:
India’s central bank battles alone in inflation struggle
What more does India's central bank have to do? Last week data showed March inflation rising to almost 9 percent on an annual basis. More importantly, core inflation is above 7 percent for the first time in 3 years meaning demand-side pressures are rising fast. And that's despite the Reserve Bank of India raising interest rates eight times since last March.
The inflation data comes just after a quarterly HSBC report based on purchasing managers indexes showed that inflation in India seemed impervious to monetary policy tightening.
The truth, is the inflation-fighting central bank has little backup from the government which remains stubbornly in spending mode. Its foot-dragging on reform and foreign investment contributes towards keeping food price inflation high. This year's fiscal deficit target is 4.8 percent of GDP and even this is seen as optimistic.
"What India really needs is to have domestic demand slowing down quite rapidly but the government is not prepared to risk that,"says Claire Dissaux, investment strategist at Millenium Global in London.
The RBI has repeatedly said it shouldn't have to do all the heavy lifting. But lack of support from the government means the central bank will have to put up rates another 100 bps this year, analysts reckon.
Of course India is not alone in this bind though it is the most extreme example of lax fiscal policy being counterbalanced by tight monetary policy. Brazilian interest rates are among the highest in the developing world at 11.75 percent and that is down to loose fiscal policy, a lot of it "quasi-fiscal spending" via the state development bank BNDES, research house Capital Economics says.
Brazil's central bank suggested recently that fiscal tightening of one percent of GDP would have the same impact as 125 bps of interest rate hikes.
Congratulate Team India
Mahendra Singh Dhoni struck a dramatic six to bring the World Cup to India on Saturday after Sri Lanka had threatened to ruin their party.
India is only the third side to win batting second, a feat that seemed beyond them when Lasith Malinga dismissed both openers in his first four overs. India also became the first country to win the World Cup as host.
Join us in congratulating Team India on their win.
A home team winning THE World Cup on IT’s most hallowed cricket stadium.
Beating EVERY past World Cup winner on it’s way.
Highest run chase EVER in a World Cup final.
A century in a World Cup final and STILL ending up on the losing side.
Having TWO legends of the game in each team.
Both the World Cup final innings ending in a SIX.
What a WIN to be remembered for generations to come.
CHEERS INDIA!
India v Pakistan: Who will win?
Nothing gets bigger in this part of the globe than a cricket match featuring India and Pakistan. The rivalry would be renewed in Wednesday’s World Cup semi-final in Mohali in Punjab.
Prime Minister Manmohan Singh and his Pakistani counterpart Yusuf Raza Gilani will watch the match in what is billed as “cricket diplomacy”.
According to a newspaper report, airport authorities have received requests from business tycoons, including Mukesh Ambani and fellow industrialist Vijay Mallya, to allow them to park their private jets in Chandigarh.
While politicians and Bollywood celebrities will also be in tow, there is a growing sense of anger among the ticket-seeking fans who complained of large-scale black-marketing.
How important is this “mother of all cricket contests”? Who do you think will win? Share your views.
ha ha ha Well Pak hasn’t beaten india buttttttt this time history is going to change!!! u just wait n watch!!!!
Congratulate Indian winners at Asian Games
Pankaj Advani won the first of India’s gold medals at the Asian Games in Guangzhou. Here’s your chance to congratulate all the athletes who made India proud.
India at the Commonwealth Games
Here’s your chance to congratulate all the athletes who made India proud.
(For Commonwealth Games LIVE Blog, click here)
You make us proud.. go get some more of those glittering ones!
Who should open the 2010 Commonwealth Games?
The latest controversy to hit the Delhi Commonwealth Games is the question of who is going to inaugurate it.
The opening ceremony for the two-week sporting event, held every four years for former British colonies, is on Oct 3.
Some media reports said there had been a row between India and Britain over whether India’s president, Pratibha Singh Patil, or Prince Charles, the heir to the British throne who is standing in for Queen Elizabeth at the ceremony, would open the Games.
A spokesman for the British embassy, however, said Prince Charles would open the Games and denied there was any controversy. Some media reports said a compromise was reached between the Indian president and Prince Charles.
Who do you think should open the 2010 Commonwealth Games?
Who should inaugurate the 2010 Commonwealth Games?customer surveys
I think Kalmadi should inaugurate, participate, win medals, sleep in the village and close the games too.
Should gambling on cricket be legalised?
The Pakistan spot-fixing scandal has once again shone the spotlight on illegal betting in the sub-continent and reopened the debate on the legalisation of gambling in India.
Media reports suggest the Indian sports ministry is now examining gambling regulations in other countries, particularly the UK, in a possible move towards legalising sports gambling.
Should gambling on cricket be legalised?
Define legalised! Does it mean everything is right as long as government earns out of it. What all will you be willing to legalize after this
Do you like the new rupee symbol?
The rupee has achieved parity with major currencies such as the dollar, euro, pound sterling and yen in one respect: it now has its own symbol.
India’s cabinet has approved the adoption of the new symbol after holding a competition that drew more than 3,000 entries, which were evaluated by a deputy governor of the Reserve Bank of India as well as artists and designers.
The new symbol, an amalgam of the Devanagari script of the Hindi language and the Roman letter “R”, “reflects and captures the Indian ethos and culture”, the cabinet said in a statement.
The winning design, pulled from a shortlist of five, came from a post-graduate student who won $5,000.
Share your views on the new rupee design.
It is great to hear that Indian Rupee has joined the elite club of currencies which symbolises themselves. This has shown that India is heading to be another super power in a short period of time. This will also globalise our economy!!
Finns have legal right to broadband – should India follow suit?
In a first of its kind legislation by any country, Finland has made broadband internet access a legal right for all its citizens.
As per the new law that came into effect from July 1, Finnish telecom companies will have to provide its citizens broadband lines with a minimum speed of 1Mbps.
Media reports say up to 96 percent of Finland’s population is already online and only about 4,000 homes will need to be connected to comply with the new rule.
Finland may have set a precedent for other governments to follow. But does this mean India could also get such a legislation in the near future?
In India, the world’s second-biggest and the fastest-growing mobile market with more than 600 million users, the broadband penetration (connections per 100 people) in the country is extremely low at 0.74.
Only 71 million of India’s billion-plus population claimed to have used the internet in 2009, according to an I-Cube report.
India has only recently come up with a legislation promising the right to education to all its children.
I think that giving mobile internet connectivity and encouraging telecom companies to set up more broad band services is a good idea. While doing this, India also needs to provide basic necessities to its citizens.
The choice can’t be an “OR” (internet or necessities), it has to be both.
The simple reason for this is both broadband/internet and food are necessities.
NRI
India at G20: Will yuan revaluation overshadow talks?
As India heads to Canada for the weekend G20 summit, the grouping’s agenda is expected largely to be dominated by China’s currency reforms and the global economic recovery.
The United States, a major trading partner of China, has been cautious in its criticism of Beijing’s tight currency controls.
U.S. Treasury Secretary Timothy Geithner in April delayed a decision on whether to name China a currency manipulator in favour of bringing in pressure on Beijing at larger global forums such as the G20.
China’s central bank recently pledged to increase currency flexibility after pegging the yuan to the U.S. dollar for nearly two years.
Indian economists have said China’s undervalued exchange rate affects emerging market economies more than it does the United States and that New Delhi may be persuaded to support a broad-based effort aimed at currency rebalancing at the G20.
Given India’s robust growth, will it be able to use the G20 platform to push pending issues such as IMF reforms? Will the yuan debate dominate the talks?
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The Wall
