India Insight

The biggest losers in India’s economic slowdown

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

The reaction to news that India’s economy grew at its slowest rate in over a decade was predictable. There was frustration over squandered potential, pleas for a rate cut, unshaken optimism and even an opportunity to indulge in clever wordplay. Yet as everyone from economists to businessmen had their say, the demographic affected most by this slowdown was silent – India’s poor.

One of the big successes of India’s economic growth has been its positive impact on poverty reduction. The percentage of the country’s population living below the poverty line declined from 37.2 percent in 2005 to 29.8 percent in 2010 (the last year when exact numbers were available). That translates to 52 million Indians who have been lifted above the poverty line. Encouraging as those gains are, the country still counts over 320 million poor among its citizens.

Higher economic growth has also correlated with a larger rate of poverty reduction. Between 2005 and 2010, the country’s GDP grew at an average of 8.5 percent and the poverty rate (the proportion of the population below the poverty line) registered an average annual decline of 1.48 percent. In the preceding decade, when GDP growth averaged 6.5 percent, the poverty rate declined at 0.74 percent annually.

If these seem like really small percentages to quibble over, consider this: over the next seven years, India has the opportunity to lift anywhere from 66 million to 160 million people out of poverty (see chart). The difference between the two numbers is that the first assumes a 1 percent annual decline in the poverty rate, while the second assumes a 2 percent decline.

Real estate bill gets cabinet nod: what are the experts saying

The cabinet on Tuesday approved the much awaited Real Estate (Regulation and Development) Bill that proposes to make India’s largely unregulated and once booming real estate sector more transparent.

Ajay Maken, minister of housing & urban poverty alleviation, in a government statement said the bill provides for a uniform regulatory environment to protect consumer interests and ensure orderly growth of the real estate sector.

He expressed hope that the proposed legislation would significantly reduce frauds and delays. (Read the complete statement with highlights of the bill here)

L&T Infra Finance CEO upbeat on India’s economic recovery by 2015

India’s economy recorded its slowest growth in a decade in the fiscal year ending in March but the CEO of L&T Infrastructure Finance, that provides loans to companies such as Jaypee Group to develop roads and other infrastructure, is hopeful of an economic turnaround in less than two years that will boost business prospects.

The company, part of India’s largest engineering and construction conglomerate Larsen & Toubro, will likely end up dealing with a slowdown in business growth in the current financial year, but might bounce right back next year if the winner of India’s federal elections due in 2014 starts spending on infrastructure projects.

Reuters spoke to Chief Executive Officer Suneet Maheshwari about his outlook for the industry and the Indian economy. Here are excerpts from the interview:

Tracking Sensex: Top gainers, losers in May

By Aditya Kalra and Ankush Arora

Key stock indexes eked out small gains in the month of May, with the BSE Sensex gaining 1.3 percent and the Nifty rising almost 1 percent.

The stock market adage ‘sell in May and go away‘ didn’t quite hold true for the Sensex this year, as the index ended in the green after falling for three consecutive years in May.

The Reserve Bank of India cut interest rates by 25 basis points this month and India saw its inflation figure ease below 5 percent. However, GDP data on May 31 came in line with expectations, damping hopes of further rate action.

In a mixed year for lenders, IndusInd Bank shines

Rate cuts by the Reserve Bank of India, new bank licence norms, bad loan worries and money laundering accusations – Indian banks are firmly in the public eye in 2013.

Going by stock returns, lenders have had a mixed year so far. The BSE banking sub-index has gained less than 1 percent, as compared to the benchmark Sensex’s return of nearly 3 percent. Big banks such as the State Bank of India have lost 13 percent while HDFC Bank has gained around 4 percent. Some smaller players have struggled, with IDBI and Bank of Baroda falling more than 20 percent.

Small private lender IndusInd Bank, which focuses on retail lending, has been the star performer with gains of around 25 percent, making it the best performing stock in the 14-share banking index in 2013, data showed.

Smokers ignore India’s public smoking ban

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

It’s been nearly five years since India banned smoking in public places, but you wouldn’t know it from talking to Sugandha. The jeans-clad woman in her twenties is standing at a subway entrance in New Delhi as a man smokes a cigarette a few steps away, indifferent to how the fumes annoy passersby.

“We can’t say anything to anyone,” she said. “They won’t take it positively.”

Biocon chief Kiran Mazumdar-Shaw among Asia-Pacific’s biggest givers

Biocon chief Kiran Mazumdar-Shaw and Bollywood mogul Ronnie Screwvala are among the most generous people in the Asia Pacific, according to a Forbes Asia list of the region’s philanthropic heroes.

The annual list, compiled by the magazine for a seventh year, features 48 of the region’s most prominent altruists and will appear in its June 10 issue.

Four each were chosen from 12 markets in the region – Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.

Who are India’s Maoists and why they are in the news

By Shashank Chouhan and Sankalp Phartiyal

Here’s a ready reckoner on the Maoist movement in India.

WHO ARE THE MAOISTS?

The Maoists, also known as Naxals in India, are inspired by the political philosophy of China’s late Chairman Mao Zedong. They say they are fighting for the rights of poor farmers and landless labourers. In 2004, several Maoist groups merged to form the Communist Party of India (Maoist), which is now the largest left-wing extremist organization in the country. Their aim is to overthrow the state and usher in a classless society. The Maoists are banned in India. They are not to be confused with the mainstream communist parties in India who regularly get elected to legislatures and parliament.

ARE THEY GETTING STRONGER?
The May 25, 2013 ambush was perhaps their most brazen attack on politicians. On June 13, 2013, Maoists attacked a passenger train in Bihar, killing three people. On April 6, 2010, the rebels killed at least 75 policemen in Dantewada district of Chhattisgarh. The same year, Maoists were blamed for a sabotaging a crowded train in West Bengal, with around 100 passengers killed when it derailed. Maoists have also kidnapped bureaucrats and foreigners to force their demands on the state. Government data shows they have also destroyed hundreds of schools and infrastructure such as telephone towers.

HOW MANY PEOPLE HAVE DIED SO FAR?
It is difficult to arrive at an exact number but government data shows nearly 8,000 people have been killed between 2001 and 2012.

India GDP: What the economists are predicting

Investors and policymakers will be closely watching India’s fourth-quarter and full fiscal year 2012/13 gross domestic product (GDP) growth figures on Friday.

The economy grew 4.5 percent in the December quarter, but a Reuters poll has shown that Asia’s third-largest economy will likely perform a little better and expand by 4.8 percent in the quarter that ended in March.

For the financial year 2013, the government had estimated the economy will grow 5 percent, the lowest in a decade. However, if the poll consensus proves right, full-year growth will be worse than the government’s estimate.

Tata Power scouts for opportunities abroad

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

Tata Power Company Ltd, part of the salt-to-steel Tata conglomerate, is India’s largest integrated power producer. It aims to generate some 20,000 MW by 2020, up from more than 8500 MW now, and is scouting for opportunities abroad as well as building its thermal and renewables business at home.

Like its peers in the industry, the company has faced problems of land acquisition and fuel supply shortages in developing new projects, projects that are seen as key to help revive India’s flagging economy and fix blackouts.

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