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Apr 20, 2012

BREAKINGVIEWS: Three reasons to be optimistic about India

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Don’t say it too loudly, but India may be grasping the nettle on its corruption and bureaucracy. Plans to cut red tape for new businesses, an RBI warning about foreign investment, and a probe into suspect land deals are all steps, however small, in the right direction.

Corruption and bureaucracy are becoming untenable. Many India-watchers complain that Congress politicians don’t seem to have moved on from the pre-reform 1970s. For countries at India’s level of development, graft can sometimes be offset by high growth – China has combined the two for years. But where China’s inefficiencies tend to promote overinvestment, India’s excessive bureaucracy and rent-seeking do the opposite.

Apr 20, 2012

Three reasons to be optimistic about India

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

By Jeff Glekin

MUMBAI, April 20 (Reuters Breakingviews) – Don’t say it too
loudly, but India may be grasping the nettle on its corruption
and bureaucracy. Plans to cut red tape for new businesses, a
central bank warning about foreign investment, and a probe into
suspect land deals are all steps, however small, in the right
direction.

Apr 17, 2012

BREAKINGVIEWS: RBI’s rate cut is more challenge than help

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

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – It’s a tale of two cities. In Mumbai, the Reserve Bank of India is doing what it can to propel the Indian economy. The central bank announced a surprisingly large 50 basis points repo rate cut on Tuesday, to 8 percent. The announcement came with a thinly veiled warning to the government in New Delhi that more progress is needed on fiscal policy and reform. Investors might have been pleased with the news – the reduction was the first in three years and was twice as large as expected. But they realised that Mumbai will not come to their rescue. The BSE Sensex was up less than 1 percent in afternoon trading.

Apr 17, 2012

India’s rate cut is more challenge than help

By Jeff Glekin

MUMBAI, April 17 (Reuters Breakingviews) – It’s a tale of
two cities. A surprise 50 basis points cut from the central bank
in Mumbai came with a warning that further moves depended on the
government in New Delhi making progress on spending cuts and
reform. That’s right. Mumbai matters, but Delhi’s policies
matter more.

Full view will be published shortly.

CONTEXT NEWS

- The Reserve Bank of India (RBI) cut interest rates for the
first time in three years by an unexpectedly sharp 50 basis
points to 8.00 percent on April 17. A Reuters poll last week had
predicted a 25 basis point cut.

Apr 16, 2012

BREAKINGVIEWS: Infosys U.S. woes tarnish India’s star sector

By Wayne Arnold and Jeff Glekin

HONG KONG/MUMBAI (Reuters Breakingviews) – Infosys’ legal troubles in the United States may complicate life for India’s feted outsourcing industry. Outsourcers have been a relative bright spot in a market dogged by worries about India’s growth prospects. But an investigation into allegations Infosys broke visa rules to get Indian employees into the United States will put them on eggshells. Until the air clears, this is another reason to avoid Indian stocks.

Indian outsourcers have been a shelter of sorts for investors, offering a way to play the India theme without the worries about domestic growth and political paralysis. They had a recession-proof appeal: companies eager to cut costs in good times would be more desperate to do so in bad times. As a result, Infosys shares had fallen only 8 percent in 2012 up to April 13, while market heavyweight Reliance Industries had slid 26 percent.

Apr 16, 2012

Infosys U.S. woes tarnish India’s star sector

By Wayne Arnold and Jeff Glekin

HONG KONG/MUMBAI, April 16 (Reuters Breakingviews)
-Outsourcing was a bright spot amid worries about India’s growth
prospects. But an investigation into alleged visa violations by
Infosys could herald a tougher time for the industry. Until the
IT group’s papers are in order, investors have another reason to
shun Indian stocks.

Full view will be published shortly.

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CONTEXT NEWS

– Infosys shares slid 13 percent on April 13 after the
company forecast slower-than-expected revenue growth in its
current fiscal year. The technology and outsourcing company
reported a 27 percent increase in fourth quarter net profits, to
23 billion rupees ($449 million). But it said it expected
revenues in the year ending March 31, 2013, to grow between 8
percent and 10 percent to as much as $7.7 billion.

Apr 12, 2012

BREAKINGVIEWS: India can risk a bold rate cut

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – The Reserve Bank of India has trouble guiding the economy because so little of the population is connected to the financial system. That may sound like a central banker’s nightmare, but it gives the RBI freedom to act where it can be most helpful.

Only 57 percent of Indians have a bank account and less than 2 percent have a credit card, according to the RBI. When it comes to inflation, policy interest rates matter less than growth in the rural economy, which is currently being fuelled by government handouts and subsidies. Average incomes in rural India have risen 12 percent in the last year, according to Kotak Mahindra Bank.

Apr 12, 2012

India can risk a bold rate cut

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

By Jeff Glekin

MUMBAI, April 12 (Reuters Breakingviews) – The Reserve Bank
of India has trouble guiding the economy because so little of
the population is connected to the financial system. That may
sound like a central banker’s nightmare, but it gives the RBI
freedom to act where it can be most helpful.

Apr 10, 2012

BREAKINGVIEWS: Singapore may not escape India’s offshore tax grab

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – India’s offshore tax grab is bad news for Mauritius. Some investors on the island have responded to the country’s crackdown on tax avoidance by shifting their operations to Singapore. Yet while the city-state is a better established financial centre, the very act of hopping islands may attract the interest of the authorities.

Mauritius owes its tax status to historic ties with India, which resulted in a treaty signed in 1983. It’s certainly been successful – over 40 percent of portfolio investment and more than 42 percent of foreign direct investment into India emanate from the tropical paradise. But the long, tax-free holiday may be coming to end.

Apr 10, 2012

Singapore may not escape India’s offshore tax grab

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

By Jeff Glekin

MUMBAI, April 10 (Reuters Breakingviews) – India’s offshore
tax grab is bad news for Mauritius. Some investors on the island
have responded to the country’s crackdown on tax avoidance by
shifting their operations to Singapore. Yet while the city-state
is a better established financial centre, the very act of
hopping islands may attract the interest of the authorities.

    • 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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