Expert Zone

Straight from the Specialists

When will the rupee stabilize?

Photo

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

The rupee hit a series of record lows in August, rattling the stock market and forcing policymakers to step in. But the fall was necessary to correct India’s past mistakes and improve the dynamics of the economy. Stock markets were jolted because the rupee’s slide was sudden. But then that is how markets behave.

International markets, be it for currencies or commodities, are sensitive and therefore volatile due to underlying speculation that is difficult to control. Eventually, however, a stable point is reached at which point they settle down.

It was principally the currencies of emerging market economies that weakened. The declared intention of the U.S. Federal Reserve to taper quantitative easing (QE) created a scare that dollars would be in short supply. Most currencies in Asia, for instance, depreciated except the Philippine peso. The depreciation of currencies varied depending on the country’s internal strength and weakness.

The Brazilian real was the hardest hit with a drop of more than 16 percent in three months. The rupee was a close second, followed by the Indonesian rupiah. These currencies were already under some stress. Inflation was high in Brazil and India. Growth had dropped significantly. Investment, both domestic and foreign, had also slowed.

How to rescue the falling rupee

Photo

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

I can’t predict where the rupee will eventually land and I don’t think anyone else can either.

Of course, we are not the only country at the mercy of the dollar because almost every emerging market is suffering. But surely, that shouldn’t be any consolation.

A look at the proposed new Companies Act

Photo

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

With its overhaul of the 1956 Companies Act, the government aims to simplify its provisions, keep pace with global trends and make it easier to do business in the country.

But the proposed law’s implementation would depend on its integration with existing statutes and laws such as the Foreign Exchange Management Act (FEMA) and the Income Tax Act. More clarity is needed on certain issues.

Tying up loose ends after filing your income tax returns

Photo

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

There was a record increase in tax returns filed electronically this year after new rules made it mandatory for taxpayers with a taxable income of more than 500,000 rupees to file returns online. This change added to the last-minute rush, with the government extending the deadline by five days to Aug. 5.

Tax filing season can be painful and the last-minute rush has been known to cause a few errors. Here’s how you can make the process more efficient.

The BMW 1 Series is coming to India

Photo

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

When BMW sold Rover in 2000, the British car brand was working on Project R30. There were rumours that BMW would use badge engineering to introduce the R30 as its 1 Series but that wasn’t to be.

The R30 may have been an inspiration but the BMW 1 Series was designed from the ground up. When American Chris Chapman worked on the 1 Series, he was led by Chris Bangle – a designer known for his peculiar styling – which explains the eccentricities of its design.

Focus should be inflation, not just stemming rupee’s fall

Photo

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

Indian stocks have been battered over the past few sessions. The market condition is not unexpected, thanks to over-action by policymakers and over-reaction by stock investors.

The apparent anxiety on the part of the government was that even if the fall of the rupee was inevitable, left entirely to the market, speculative activity would push the economy into a crisis. Presumably, the rupee at 60 to the dollar was the benchmark for intervention.

India Market Weekahead – Volatility to continue in the run-up to general elections

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

Investors pressed the panic button on Friday with the Nifty diving 4 percent, its biggest single-day fall in two years, to end at 5508.

Measures taken by the Reserve Bank of India (RBI) on the eve of the Independence Day holiday to prop up the rupee were among the triggers for the fall. The rupee didn’t do all that well either, falling to an all-time low of 62.03 to the dollar early on Friday.

Recruiting goes from back office to boardroom

Photo

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

During my McKinsey days, we often talked about how all our assets (the consultants) walked out the door each night. If you rationalize this focus on talent and knowledge assets as something unique to consulting firms, you would be wrong.

While companies are investing in knowledge management and have better defined processes, talent should be the number one priority for each company.

India Markets Weekahead – An opportunity for investors

Photo

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

Indian markets were down for a third consecutive week with the Nifty closing 2 percent lower at 5565 on weak economic signals and disappointing corporate results.

The rupee held on at 60.67 to the dollar.

The appointment of Raghuram Rajan as the next governor of the Reserve Bank of India (RBI) brought the market some cheer. Rajan, a former chief economist at the IMF, is seen as a pro-growth policymaker.

A bumper crop may energize Indian industry

Photo

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

Industrial growth in India in 2012 was less than a percent and data from April and May this year doesn’t show a lot of promise. The reluctance of industry to grow has been the reason for GDP growth dropping to a disappointing 5 percent, raising doubts about whether the India story has come to an end. That may be an extreme view considering that even the best performers, such as China, are having problems.

But there is a glimmer of hope. Monsoon rains have been above average this year and a bumper crop is expected. Agriculture contributes to around 20 percent of India’s GDP and even an 8 percent increase in agricultural production will at best improve GDP growth by a percent. But agriculture does have an impact on industry and both together can make a perceptible difference.

  • Editors & Key Contributors