India Insight

VIDEO: India’s auto sector and budget expectations

India’s automobile sector may have been dented by negative sales for two straight years, but the Society of Indian Automobile Manufacturers (SIAM) is hoping to see an uptick in sales this fiscal year.

Spiralling inflation and expensive bank loans, which most Indians depend on to buy vehicles, weighed on customer sentiment as the country’s economic growth languished at 4.7 percent in the December-quarter — about half the rate of India’s boom years.

However, a stable and business-friendly BJP government is expected to revive economic growth and kick-start the investment cycle, factors that may help the market for vehicles grow.

Here’s an India Insight video that takes a look at the automobile industry and what stakeholders may expect from this year’s budget:

(Editing by Tony Tharakan; Follow Sankalp on Twitter @sankalp_sp and Tony @TonyTharakan | Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)

Highlights – President Pranab Mukherjee’s address to parliament

The new government will pursue an economic reform agenda that foresees introducing the goods and services tax, encouraging foreign investment and speeding approvals for major business projects, President Pranab Mukherjee said in a parliamentary address on Monday.

Mukherjee also said the focus of the Modi government would be to:

- contain food inflation

- improve supply side of agro-based products

- prepare contingency plans for sub-normal monsoons

- increase public and private investments in agriculture

- address issues in farm pricing and procurement

- set up IITs and IIMs in every state

- have zero tolerance against violence against women and will strengthen criminal justice system

- tackle illegal immigration and infiltration in the north east region

- roll out broadband highways in every village in next five years

- vigorously follow up issue of black money with foreign governments

- focus on social media as a tool for participative governance

- provide predictable, fair and stable policy environment

- make every effort to introduce goods and services tax

- encourage investment through foreign direct investment

- promote labour-intensive manufacturing, tourism for job creation

- move towards a single-window system of clearances to promote manufacturing

- fast-track investment friendly public, private partnership

- liberalise foreign direct investments in defence

- encourage private investments in defence production

- implement reforms in defence procurement

- take up modernisation and revamp of railways on priority

- chalk out infrastructure development programmes for high-speed rails, roads and airports

India equity funds ride Modi rally in May, post best month in five years

India’s diversified equity funds outperformed the broader markets in May and recorded their best monthly performance in five years, as stocks rallied on hopes of an economic revival after the Narendra Modi-led Bharatiya Janata Party (BJP) won a decisive election mandate.

Equity funds clocked an average return of 11.57 percent in the month, the highest since May 2009 when funds rose 30.2 percent, data from fund tracker Lipper, a Thomson Reuters company, showed. In comparison, the BSE Sensex rose 8 percent.

Though blue-chip stocks gained, high exposure to better performers in the mid- and small-cap segment, and sectors such as financials and infrastructure, helped schemes outperform the broader markets, experts said.

Dharavi’s once-booming leather industry losing its edge

A busy street in Asia’s largest slum Dharavi leads to a quiet lane where Anita Leathers operates its colouring unit. As children play near shops that sell everything from mobile phones and garments to raw meat and sweets, the mood at the leather unit is sombre.

The leather business is one of the biggest contributors to the Mumbai slum’s informal economy, estimated to have an annual turnover of more than $500 million. About 15,000 small-scale industries, spread over an area of 500 acres, deal in businesses such as pottery, plastic recycling and garment manufacturing.

But the leather trade has been hit hard by increasing competition, an influx of cheap Chinese goods, rising raw material costs and labour shortages in recent years, leading to a decline in demand and dimming prospects of the once-flourishing business.

Strange weather: how a bad monsoon could be good for India

By Mayank Bhardwaj and Jo Winterbottom

A bad monsoon in India is the one that fails to deliver enough rain … most of the time. This year, a lack of rainclouds could be the silver lining that the government needs. India has no place left to store more grain, and can ill afford a hefty payout to farmers for the truckloads of produce that another monsoon could produce.

The annual four-month monsoon rains begin around June 1. More than half of the country’s arable land relies on the monsoon to grow the crops that help feed the world’s second-biggest country by population and put India’s rice and sugar on the global market.

But India’s last drought was five years ago. Food stocks have swelled so much since then that government warehouses, which house the grain sold at very low prices to the poor, are overflowing. Much is wasted, rotting or eaten by rats. The last thing that the government needs is another big crop yield.

Ashutosh gears up for Chandni Chowk race; talks about ‘biased’ media

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

Aam Aadmi Party’s Ashutosh might have been a TV news host, but now he talks like an experienced politician. “I am enjoying” being on the other side of the microphone, the former managing editor of Hindi news channel IBN7 told India Insight during an interview in which he discussed his decision to stand for Parliament.

It probably won’t be easy. He is taking on Kapil Sibal, a Congress party veteran and influential government minister. Sibal, a two-time member of the Lok Sabha from central Delhi’s Chandni Chowk constituency, has a knack for landing in controversies. From trying to police social media to trashing a popular upsurge against corrupt politicians in 2011, he often has become a target of public wrath.

Ashutosh, who goes by a single name, said the media is being manipulated by political parties and corporations to make sure that Gujarat Chief Minister Narendra Modi wins the prime minister’s race in May. Regarding his own former media company Network18, which accepted a large investment from Reliance Industries in 2012 in a complex deal, he had little to say. Nevertheless, he shared his thoughts on how he sees the media now that he is on the other side of the camera. Here are edited excerpts from the interview.

Organised players, growing acceptance boost India’s used car market

One would expect the former head of India’s No. 1 car maker to drive a glitzy new SUV or an imported luxury car, but Jagdish Khattar thinks differently. The industry veteran who spent 14 years at Maruti Suzuki now buys only second-hand cars and drives a used Volkswagen Passat.

Rich people buy new cars, intelligent people buy second-hand cars,” said Khattar, the founder of Carnation Auto, a service and used-cars company he started in 2008 after leaving Maruti. The used car market, he said, is the future of automobiles.

The rising presence of well known car brands in the used cars business, coupled with growing acceptance of second-hand vehicles, is spurring demand. That is putting in shape the largely unorganised used-car business at a time when new car sales have slumped for the first time in more than a decade.

Interview: Chidambaram on the state of India’s economy

By John Chalmers, Frank Jack Daniel and Manoj Kumar

(This article is website-exclusive and cannot be reproduced without permission)

The Indian government will have to rein in spending and cut subsidies to meet its fiscal deficit target, Finance Minister P. Chidambaram said on Monday, underlining that an austerity drive will not be blown off course by an election due next year.

The urbane Harvard-educated lawyer, now in his third stint as finance minister, spoke to Reuters in an interview ahead of a trip to the United States. Here are edited excerpts from the interview:

Do you think that the government has done enough to pull the economy out of the crisis that we saw it in several weeks ago?
One can never say we’ve done enough. We’ve done a lot of things, but we have to do many more things, and I think we will do them in the next few weeks and months, both by the government and by the central bank.

Outlook weak for India economic growth: analysts

India’s economy grew at 4.4 percent in the June quarter, its slowest rate since the first three months of 2009 and weaker than analysts’ consensus of 4.7 percent in a Reuters poll.

With the rupee still trading near record lows and a ballooning current account deficit alarming investors and policymakers, several investment banks are worried about the road ahead.

Here are some comments on India’s economic growth released by investment banks after the recent GDP data:

Tracking Sensex: L&T top loser this week

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.

The rupee continues to be in focus as it hit a five-week high on Friday. The RBI tightened liquidity further on Tuesday to support the rupee and the central bank is likely to hold rates at its policy review next week.

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