Expert Zone

Straight from the Specialists

Leveraging the digital revolution

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

We live in an age where emerging technologies are narrowing the divide between humans and machines. As features of mobile phones become more customized and complex, they cease to be just devices of communication. Mobile phones now store more personal information than ever before. They are increasingly being perceived as personalized devices that enhance our lives.

We are also living in times when remote robotic surgeries and online classrooms are transforming healthcare and education in ways never imagined before. We are truly living in a digital age.

Look around. More than 50 percent of the world’s population is under the age of 30. There are 2.7 billion internet users globally and 87 percent of the world’s population has a mobile phone. According to new research, by the end of 2013, there will be more internet-enabled mobile devices than people in the world.

The strategic shifts in the digital ecosystem have opened up opportunities as well as challenges. Let’s look at what it has in store for key stakeholders.

India Markets Weekahead: Invest with an eye on the exit door

Photo

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

Markets touched new highs this week but the usual euphoria was missing as it wasn’t a broad-based rally. Finance Minister P. Chidambaram said the worst may be over for India as the current account deficit is getting under control while a bumper harvest could help rein in food inflation and boost the rural economy. Hopes of a revival and the mirage of green shoots coupled with international liquidity due to delayed U.S. Federal Reserve tapering has fuelled this rally, which is expected to spread to other sectors that are comparatively under-valued.

But the ground-level situation is in stark contrast to the optimism in the indexes. October auto sales were flat to negative for a number of automobile majors despite huge discounts. The festive season hasn’t spurred sales in white goods either, as food inflation reduced the disposable income of the middle class.

India-Pakistan border flare-up a zero-sum game

Photo

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

At places along the Line of Control (LoC), barely a wire separates the Indian soldier and his Pakistani counterpart. The genesis of the recent flare-up was the killing of five Indian soldiers on the Indian side of the LoC. The media blitz in Delhi found more fodder with a spike in infiltration attempts and exchange of fire beyond the LoC at posts across the international border.

Need to rebalance RBI’s interest structure

Photo

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

In its mid-quarterly monetary policy review last month, the Reserve Bank of India (RBI) made some hasty changes in the interest structure. The repo rate was raised possibly because of the rise in inflation and the marginal standing facility (MSF) rate was cut after the rupee recovered against the dollar. The interest structure is still lopsided with short rates exceeding long rates. This anomaly needs to be corrected.

It is believed that the economy is susceptible to a rundown when short rates exceed long rates. A further slowdown, in any case, needs to be prevented and is quite feasible since the compelling conditions that necessitated an interest hike have been contained. There is now enough room for the RBI to restore balance.

Invisible hand of market at work

Photo

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

India’s economic situation is at least grave, if not exactly in dire straits. Growth is at a decadal low, consumer inflation is persistently high, jobs have never been as scarce, the currency is volatile and the investment cycle is showing no signs of revival. Many of these problems are a result of bad policy and global economic conditions, but several are also the outcome of a natural economic cycle.

Rupee should not harden further

Photo

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

The rupee has recovered over the past few weeks after falling to a record low of 68.85 per dollar in August. After a period of unease, the finance ministry and the Reserve Bank of India can now take it a little easy. But care needs to be taken that the rupee is not driven up further.

Speculation about the end of the U.S. Federal Reserve’s bond-buying programme in May affected global currencies and the rupee was not alone in this predicament. The announcement had created a scare about the tapering of quantitative easing. That would have dried up liquidity that the market had got used to. The Brazilian real, Indonesian rupiah, and the Indian rupee were the principal losers.

India Markets Weekahead: Investors should wait for a correction to buy

Photo

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

Markets continued a strong rally to close the week around 3 percent higher. After the partial U.S. shutdown was confirmed and triggered speculation over the postponement of QE tapering, a weakening dollar and the rupee’s subsequent appreciation also helped lift the mood.

Though the current account deficit for the first quarter was a better-than-expected 4.9 percent, IIP data that came in after market hours on Friday showed India’s industrial production had slowed to a dismal 0.6 percent in August. This suggests that buoyancy in the stock markets was driven by liquidity and sentiment, while things are different on the ground.

SEBI tries to get it REIT again

Photo

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

Ease of funding is a key recommendation for the growth and development of the Indian realty sector in the coming decade. New instruments of funding should be allowed into the sector, especially real estate investment trusts (REITs) — an investment mechanism that buys income-generating real estate assets and passes on the yield to investors.

In this current climate of dwindling investor sentiment and a plunging rupee, there is a need to implement funding options such as REITs for infusing much needed liquidity into the sector. The total REIT market size in the Asia-Pacific region is approximately $205 billion but India has been unable to take advantage of this funding opportunity, mainly because of the lack of an existing regulatory framework.

Terrano might just be the ace up Nissan’s sleeve

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

I could have said the Terrano — Nissan’s compact SUV — is a glorified and beautified Renault Duster, but Nissan isn’t silly to invest money and effort to market a product already in the market.

The Terrano gets the distinctive front grille treatment of a Nissan SUV. When you walk around to the rear, you will see that the tail lamps extend into the hatch — a departure from the now familiar look of the Duster — which helps conceal its mass and heaviness. The bumpers have also been changed to give the Terrano a bit more up-market appeal. Judging by its looks, the Terrano looks a lot more modern and aggressive while the Duster is rather plain.

Rajan panel proposals not a cure for disparity among states

Photo

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

The report of a committee headed by Raghuram Rajan on backward states has drawn attention to development disparities among states in India. Not that these were not known or assessed before. The report offers an index for identification of states according to the degree of backwardness and their share of financial assistance from the central government.

The committee’s recommendations, even if efficiently implemented, are not likely to show results soon. The per capita income in Bihar, for example, is a fourth of the per capita income of Goa and half that of Gujarat. But it is encouraging that GDP growth in backward states has recently accelerated and, to some extent, reduced the income gap. It took place because state governments realized that growth counts politically, not because of any additional assistance from the central government.

  • Editors & Key Contributors