Vote for Earth Hour 60!!

On the 28th of March 2009 at 20:30hrs, will kick start the world's biggest movement on climate change. It is estimated that over a billion people across the world, will come forward to "Vote for Earth" by simply switching off their lights between 20:30 hrs to 21:30 hrs. It will be history in the making, as we now have over 1508 cities and towns across the world, who have already pledged their support to this global campaign on climate change. Join WWF on the 28th of March 2009 by switching off your home and office lights to switch in to this global movement on climate change and be the change you wish to see in this world. Blogsite: http://wwfindia.blogspot.com

Business Expectations in India

Dr. Alamgir, thank for your comments and encouragement. We completely agree with your view on the “Signs of Recovery?” and hence the question mark. A see-saw ride is indeed the most apt description of what the Indian economy is likely to experience in the next 2 quarters at least. We do hope that investment projects will pick up once the new Government is in place. If the increased Rural demand is sustained then it would be an additional boon. Here are some survey based reports on business expectations in India. The corporate sector expects the period of downturn in the Indian economy to continue till May 2010 before bouncing back in response to the fiscal and monetary policy stimulus and abatement of recession in the international economy, an ASSOCHAM Business Barometer (ABB) Survey of 237 CEOs has revealed. The ABB Survey “Economic Outlook for India” was based on the responses from 237 CEOs and Managing Directors across fifteen sectors at small, medium and large scale level companies. The survey was done during the month of February. In the ABB Survey, 84 per cent of the CEOs polled across various business segments were unanimous about the view that poor Business Confidence in India may extend till the middle of the next year. Around 77 per cent of the industry heads believed that the growth rebound would be faster and sooner in India than the developed economies of US and Europe. In its 12th Annual Global CEO Survey, PWC said confidence of CEOs had plunged to its lowest level since 2003, when PWC began tracking CEOs' forecasts. Worldwide, just 21 per cent of CEOs said they were very confident of revenue growth in the next 12 months, down from 50 per cent in last year's survey. And more than a quarter of CEOs said they were pessimistic about prospects for the coming year. However, the business in India painted a contrasting picture with 70 per cent Indian CEOs expressing confidence about both short term and long term revenue growth, compared to 21 per cent and 34 per cent globally. India has recorded the highest CEO confidence levels amongst the emerging economies, and is also one of only two countries globally which are as confident about short term revenue growth as about long term revenue growth. Despite the global economic downturn affecting even the emerging economies, Indian CEOs continue to be very optimistic. India's economic growth is seen slowing to 5.5 percent in 2009/10 from an estimated 6.8 percent in the current fiscal year ending in March, Citigroup said in a recent note. However, it expects policy measures and lower commodity prices to set the stage for a pickup in 2010/11.
* Growth could decelerate due to contraction in exports, single-digit investment growth and moderation in consumption.
* Inflation could see a "negative patch" during June and September, and should average 3 percent in 2009/10, compared with 9 percent this fiscal.
* Citigroup said it expects an additional 100-150 basis points easing in interest rates in 2009/10 on the back of benign inflation and limited fiscal space and the continuation of indirect fiscal measures as the country's high fiscal deficit limits the scope for a direct fiscal stimulus.
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Signs of Recovery?

Even as US jobless claims continued to rise, retail sales slipped and businesses slashed inventories for the fifth continuous month, JPMorgan reported some signs of recovery. According to Larry Cudlow, consumer incomes, after tax and adjusted for inflation, have increased for five straight months, which is largely from the tax-cut effect of plunging energy prices. Housing affordability is at a record high. Purchasing-manager surveys are now bottoming out and the Treasury curve has been normalizing from its inverted shape, usually taken preceding a recession. Barclays too reported that commodity prices, including oil, have started to bottom out and are likely to rise in the second quarter. China's economic leaders held that according to economic statistics, the economy was already reviving in response to swift action to counter the shock of the global financial crisis. In India too, even though Industrial output dipped in January, but a strong double digit (15.4%, yoy) growth reported by the Consumer Goods sector hinted at recovery in demand and easy credit availability. FDI to India has shot up by 90% during the April-November period of the current fiscal, despite the global crisis conditions. One can only hope that Indian infrastructure would be toned up in the near future with strong government investment, as more than a third of corporate heads have gone on to say in a study conducted by KPMG and EII, that Indian infrastructure is very much inadequate to support their growth plans. Govt spending in this sector would also help to revive demand as earnings of workers in labour-intensive sectors are falling; average earnings was down by 3.5% per month in the third quarter of this fiscal. With the INR plunging to record lows, the labour-intensive Indian textile industry hopes to gain, as this export-oriented industry as these goods become cheaper in the international market due to the falling rupee.
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Market Meltdown in Early March

The markets slipped to over three-year lows this week, in tandem with world markets, which also tumbled to multi-year lows. The Sensex, which began the week with a negative gap of 129 points at 8,763, hit a low of 8,047. However, the index recovered partially and closed the week with a loss of 6.4 per cent (566 points) at 8,326. With the stock market buckling under negative global cues* and heavy selling by foreign investors, shares of over 160 firms, including Reliance Communications, Ranbaxy Labs and Suzlon Energy, plunged to their all-time lows. FIIs have sold as much as Rs 458.30 crore in Indian equities in the first week of March and their total sell off in 2009 amounting to Rs 2,114.60 crore. Trading volumes in index options have been steadily rising, as a result of investors seeking a hedge against volatility in a declining market. In December, the average daily contracts in index options (NIFTY, MINIFTY AND BANKNIFTY options) on NSE was 10,07561. This rose in January to 10,60,784 and in February to 11,30,273. The first few trading days of March have seen index option volumes rise on a daily basis; on Friday index options reached a record 16,77,878 contracts on the exchange. The open interest positions in Nifty options are also high, indicating a bearish view on the Nifty according to brokers. *The number of US bank failures is mounting as 17 lenders went bankrupt so far this year amid the deepening recession in the world's largest economy; in February 2008, 10 banks were closed down, making it the highest for any month since 2000. A total of six banks had failed in January and one in March. The US unemployment rate has moved to a record high of 8.1% in February.
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India’s External Sector Suffers the Brunt of Global Meltdown

The global recession has impacted India’s external demand in strong way; the deceleration in export began in October 2008 and every month since then growth has been negative with the worst decline of 16 per cent now in January 2009. The hardest-hit sectors include handicrafts, carpets, cotton yarn & fabrics, gems & jewellery, computer software, coal and minerals, oil meals and rice. Foreign trade figures compiled by the DGCI&S and released by the Department of Commerce show exports in January at $12.38 billion were 15.9 per cent lower than $14.71 billion in the corresponding month of 2008, while imports at $18.45 billion were 18.2 per cent lower than $22.56 billion in the comparable month. Oil imports during January 2009 were lower by 47.5 per cent at $4.46 billion (compared with $8.50 billion), reflecting the steep drop in global crude prices. The sharp drop in imports had a flattering effect on the trade deficit, which at $6.07 billion in January 2009 was lower than $7.84 billion in the same month a year ago. The outlook for exports and employees working in export industry continues to be perilous unless bold measures are put in place such as increase in drawback and the DEPB rates, abolition of fringe benefit tax and exemption from service tax and neutralisation of higher costs of credit through interest subvention, as pointed out by FIEO.
The cumulative value of exports in April-January 2008-09 at $144.26 billion shows a growth of 13.2 per cent compared to $127.45 billion in the corresponding month of 2007-08. While imports at $243.35 billion was 25.3 per cent higher than the corresponding amount of $194.28 billion. In rupee terms, the growth in import was 39.4 per cent higher (at Rs 10, 90,182 crore as against Rs 7, 82,207 crore). As the rupee has been steadily depreciating against the dollar, exports in rupee terms registered a modest 4.3 per cent increase at Rs 60,460 crore against Rs 57, 948 crore. With overall import growth registering a 25.3 per cent spurt in the first 10 months of the current fiscal and exports growing at 13.2 per cent, the trade deficit has zoomed to $99 billion, against $66.83 billion in the comparable months of 2007-08.

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