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Jul 12, 2012

Infosys woes start at home

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By Jeff Glekin

MUMBAI, July 12 (Reuters Breakingviews) – The Indian
outsourcer trimmed its growth forecasts, pulling the share price
down sharply. The slowdown in global growth has made life more
difficult, but the company has not been as nimble as local rival
TCS. A policy of rotating bosses may have led to losses in
market share.

Full view will be published shortly.

CONTEXT NEWS

- India’s number two IT outsourcing company, Infosys
, cut its sales outlook for this fiscal year amid
worries clients will reduce spending on outsourcing services due
to global economic uncertainty, sending its shares down nearly 9
percent on July 12.

Jul 11, 2012

BREAKINGVIEWS: MCX-SX faces 3 big challenges

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – At long last, India gave the green light to the creation of a third national stock exchange. MCX-Stock Exchange’s two-year long legal tussle with the Securities and Exchange Board of India (SEBI) has ended in victory. But the young contender now faces three big challenges.

First it needs investors. The SEBI’s approval is based on MCX’s submissions that backers MCX and Financial Technologies will cut their combined current stake to 5 percent from 70 percent today, including warrants.

Jul 6, 2012

Manmohan Singh can start by tackling silly laws

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Manmohan Singh, prime minister and finance minister, is talking a good game. He wants to woo back disaffected investors. Symbolic wins removing tax uncertainty and encouraging foreign investment will help, but his real test will be to hack away India’s rampant red tape.

Singh set out his vision in an interview with the Hindustan Times on Friday. He wants to improve response times, cut down on “infructuous procedures”, and generally make India a more business-friendly place. That’s no easy task in a country the World Bank ranked 132nd out of 183 in last year’s report on the ease of doing business.

Jul 5, 2012

India’s pro-poor policy may be getting healthier

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – A $5.4 billion plan to provide free generic drugs to millions could mean the government is finally beginning to address its woeful healthcare system. Medicine has lost out to food and fuel subsidies for too long. The drugs plan may spook Big Pharma, but long term even foreign drugmakers could benefit.

Only seven governments in the world spend less on health than India as a percentage of GDP, according to the Organisation for Economic Co-operation and Development. India allocates about 1.2 percent of output annually – lagging behind, say, China, at 2.3 percent. The number of children who die before their fifth birthdays, mainly from preventable diseases like malaria and diarrhea, stands at 66 per 1,000, compared with 19 in China and 21 in Brazil.

Jul 4, 2012
via Breakingviews

Deteriorating asset quality strains Indian banks

Photo

By Jeff Glekin

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

As India’s growth rate fades, its banking system is developing bad habits. Debt restructurings are on the rise. And Indian banks have the lowest bad debt reserves in the Asia-Pacific region. Without an improvement, the pressure to fudge the numbers will only increase.

Jun 28, 2012

Manmohan Singh needs cunning to boost economy

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Manmohan Singh needs to find his inner wily fox. That’s the species the technocrat-turned-politician needs if he’s to revive what he calls the Indian economy’s “animal spirits”. There are ways the prime minister, now also finance minister, can get India moving again without tackling the political opponents of reform head-on.

Over the past eight years, Singh’s Congress party has overpromised and underdelivered on reforms. If he is crafty, he’ll take a new approach. To start with he could draw a line under his finance ministry predecessor’s attempts to tax a gain Vodafone made on an offshore acquisition – efforts that continued after the Supreme Court dismissed the tax claim. An end to talk of retroactive taxes on merger transactions and clarity about India’s tax regime going forward would cheer foreign investors.

Jun 28, 2012

India’s Singh needs cunning to boost economy

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Jeff Glekin

MUMBAI, June 28 (Reuters Breakingviews) – Manmohan Singh
needs to find his inner wily fox. That’s the species the
technocrat-turned-politician needs if he’s to revive what he
calls the Indian economy’s “animal spirits”. There are ways the
prime minister, now also finance chief, can get India moving
again without tackling the political opponents of reform
head-on.

Jun 27, 2012

Coke, IKEA show India story hasn’t gone flat

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Amid the pessimism surrounding India’s reforms, it’s easy to forget that growth hasn’t stopped. Big multinationals like Coca-Cola (KO.N: Quote, Profile, Research) and IKEA can afford to focus on the country’s robust long-term prospects. The two companies’ flagship bets on India’s consumers will help steady nerves in Delhi, and could serve as a catalyst for foreign direct investment from other sources, too.

Consumer stocks show why investing in Indian customers remains a no-brainer. The Bombay Stock Exchange’s FMCG Index, which tracks the locally listed businesses of the likes of Nestle and Colgate, is up 21 percent since the start of 2012 – 12 percentage points more than the Sensex.

Jun 25, 2012

Pranab Mukherjee goes out with a flop

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Talk about over promising and under-delivering. Pranab Mukherjee inflated the market’s hopes that he’d take bold measures to boost investor confidence, but came up with a few small tweaks – on his last day as finance minister. Hopefully his successor will talk less and act more.

At the end of last week the rupee hit another all time low against the dollar. Over the weekend, the Prime Minister, Manmohan Singh, returned to India from the G20 summit and outgoing Finance Minister, Mukherjee, began his election campaign for the ceremonial role of President. Both men briefed the press about the bold steps that they were preparing which would raise India out of its present slump.

Jun 25, 2012

India’s finance minister goes out with a flop

By Jeff Glekin

MUMBAI, June 25 (Reuters Breakingviews) – Talk about over
promising and under-delivering. Pranab Mukherjee inflated the
market’s hopes that he’d take bold measures to boost investor
confidence, but came up with a few small tweaks – on his last
day as finance minister. Hopefully his successor will talk less
and act more.

Full view will be published shortly.

CONTEXT NEWS

- India has increased the limit on foreign investment in
government bonds by $5 billion to $20 billion, the Reserve Bank
of India said on June 25. The rupee and SENSEX trimmed gains
after the Reserve Bank of India’s announcement, which
disappointed investors who had expected bolder measures.

    • About Jeff

      "Jeff Glekin is the India columnist for Breakingviews. Jeff is a former diplomat. He spent four years in Mumbai as the Deputy Head of Mission and First Secretary Financial and Economic at the British Deputy High Commission. Before joining the diplomatic service he spent four years with HM Treasury in London. He has a BA in Philosophy, Politics and Economics from Mansfield College, Oxford University."
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