Indian Economy : News,Discussions & Updates

RISING SUN

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Dec 3, 2017
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‘India builds up forex reserves as China, others eye foreign assets’​

With countries led by China focussing on accumulating assets abroad rather than boosting foreign exchange (forex) reserves, global forex reserves as a share of GDP have fallen from 15.4 per cent of GDP to below 14 per cent in the last six years, says a research report from Credit Suisse. However, countries like India and Switzerland accumulated reserves rather than investing in assets abroad to prevent currency appreciation.

If not for Switzerland and India – which bought dollar assets to prevent Swiss franc and rupee appreciation – global forex reserves would have fallen in absolute terms too. Reserves have fallen sharply in China and Saudi Arabia – which are now investing in assets abroad instead of accumulating forex reserves — and grown slowly in most countries, according to a report from Credit Suisse (Securities) India.

Global reserves increased steadily from US$ 2 trillion in 1999 to US$ 12 trillion by 2014, but stagnated thereafter. “As a share of global GDP, after rising from 5.5 per cent in 2000 to 15.4 per cent in 2014, they are now below 14 per cent,” Credit Suisse said.

Forex reserves are foreign assets of a country held in a liquid form by a country’s central bank as insurance against financial shocks. India’s forex
reserves were $ 604 billion as on April 8, 2022.

The rise in Switzerland and India has less to do with sequestering the country’s savings into safe assets, and more with protecting the local currency from appreciating against the USD, says the report authored by Credit Suisse analysts Neelkanth Mishra, Prateek Ancha and Abhay Khaitan. A country running current account surpluses will accumulate foreign assets over time. Fore reserves are liquid assets kept with a central, state-owned entity. China and Saudi Arabia are examples of countries that surpassed what was necessary as insurance and shifted their mix of foreign assets away from forex reserves. This diversification added to safety and promised better returns, either financial or geopolitical, it said.

According to Credit Suisse, countries are diversifying and optimizing their foreign assets. China and Saudi Arabia continue to accumulate foreign assets, just not as forex reserves. Over the last decade, reserves as a share of China’s foreign assets have fallen from 70 per cent in 2010 to less than 40 per cent now. For Saudi Arabia, the fall was from over 60 per cent to less than 40 per cent.

Of major reserve holders, China and Saudi Arabia saw sharp declines. “Other than Switzerland (up) and India (flat), they have fallen in nearly every country, with the combined ratio falling from 27 per cent to 20 per cent. This is to improve returns/reduce risk: liquidity comes at a cost,” the report said.

Saudi Arabia, Singapore and Norway have built SWFs (total assets US$ 10 tn), and others like Japan and China have allowed their firms to buy assets abroad. “Such assets are hard to use in times of crisis, but are better overall for the economy,” it said.

The Credit Suisse report said the share of US dollar in the global forex reserves fell from 71 per cent in 1999 to 59 per cent in 2021. Chinese Yuan Renminbi (CNY) share is at 2.7 per cent (Russia holds a fourth of these), it said.

For reserves to shift from USD to CNY, the latter needs to be more freely tradeable (a more open capital account), and see a higher share of global transactions (trade and financing-related). China’s current account surplus potentially limits the assets it can provide to global savers, but is not a binding constraint, it said.

However, there are risks the shift may accelerate. “The recent fall in UST value is less than for other government bonds, but continued high US inflation may change that. The supply of safe assets (USTs) is exceeding central banks’ demand for them,” it said.

If some global reserves shift from USD to CNY, the percentage fall in demand for USD assets would be smaller than the percentage gain for CNY assets. “This can help reduce CNY cost of capital. However, these shifts tend to be slow,” the report said.
 

Sunshine77

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Jan 26, 2022
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IMG_20220425_192610.jpg

I found a juice made from mango juice imported from India in the supermarket.
I have never found an Indian product in the supermarket before, but this time I finally found one.
Another one is imported from Israel.

IMG_20220425_192634.jpg
 

randomradio

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Nov 30, 2017
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India
When China was about to cross 3 trillion usd mark, it was growing at 14+%.

Average global growth was also very high back then. And it was thanks to the West opening up their market to China at the time through WTO.

There was also a mix of fake and low quality growth. Like destroying a perfectly good road for a rebuild. Or useless infrastructure that no one would use.
 

jetray

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Mar 15, 2018
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When China was about to cross 3 trillion usd mark, it was growing at 14+%.
That 14% growth will lead to high inflation, not some thing we want. This entire china growth story of 14% without high inflation is just inflated BS. Chinese companies are getting delisted from US stock exchanges bcos they refused auditing of their account books. Numbers that chinese put out simply cannot be believed or verified.
 

Nilgiri

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Dec 4, 2017
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That 14% growth will lead to high inflation, not some thing we want. This entire china growth story of 14% without high inflation is just inflated BS. Chinese companies are getting delisted from US stock exchanges bcos they refused auditing of their account books. Numbers that chinese put out simply cannot be believed or verified.

You can still quantify their growth overall (and fairly credibly) w.r.t trade, investment and certain critical consumptions....since those things involve another set of hands outside the CCP.

Its always amusing when I do so for Bangladesh (relative to their nominal GDP math w.r.t vetted fundamentals)....

.....the extra-shrill noise starts from certain types that want to blindly believe (or have blind trust in ABC groups having some finetooth comb process they use)....mostly by wanting to put India down or bring BD up lol.
 
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Tatvamasi

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Jan 5, 2018
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You can still quantify their growth overall (and fairly credibly) w.r.t trade, investment and certain critical consumptions....since those things involve another set of hands outside the CCP.

Its always amusing when I do so for Bangladesh (relative to their nominal GDP math w.r.t vetted fundamentals)....

.....the extra-shrill noise starts from certain types that want to blindly believe (or have blind trust in ABC groups having some finetooth comb process they use)....mostly by wanting to put India down or bring BD up lol.
How much water is in the BD numbers? I mean the only industry is textile.
 
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randomradio

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Nov 30, 2017
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India
You can still quantify their growth overall (and fairly credibly) w.r.t trade, investment and certain critical consumptions....since those things involve another set of hands outside the CCP.

Its always amusing when I do so for Bangladesh (relative to their nominal GDP math w.r.t vetted fundamentals)....

.....the extra-shrill noise starts from certain types that want to blindly believe (or have blind trust in ABC groups having some finetooth comb process they use)....mostly by wanting to put India down or bring BD up lol.

I don't know how real their numbers are today, but they are headed towards a middle income trap without diversification.
 
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Nilgiri

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Dec 4, 2017
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How much water is in the BD numbers? I mean the only industry is textile.

Well open market, Taka is selling now for 103 to USD compared to 87 at official rate.

Some say actual equilibrium is at ~ 120 more like.

That in itself speaks volumes....along with the constant dollar GDP (which is indexed to inflation) or PPP.... which both do lot worse compared to current/nominal dollar GDP.

Anyway things will become clearer more time you let pass.

Diversification is key like randomradio says...but also its easier said then done, it needs lot of quality investment and institutional heft (for education, training, networking, diaspora outreach and so on)....laterally and vertically.

Otherwise you get caught flatfooted.

The corrections that come then is crying over spoiled milk....when the remedy is what should have been done over longer time instead of some blind jumping for joy at passing dada on some hot take flawed number.

Anyway enough about BD, they have pros and cons and thats their stuff to deal with....and they will deal with it lot better than Pakistan has (and thats good since our relations are good with BD)

India needs to keep focused on key things regarding itself still, there is nothing to be lost if media says X, Y Z is ahead in whatever (limited and faulty take) way....as long as it is taken in good faith and leads to positive pressure to keep improving things here.
 

RISING SUN

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India's per capita income remains below pre-Covid level in 2021-22​

India's annual per capita income at constant prices remained below the pre-COVID level at Rs 91,481 in 2021-22, official data showed on Tuesday.

However, the per capita income based on Net National Income (NNI) at constant price grew by 7.5 per cent in FY22 over the previous year.

The per capita income at constant price was Rs 94,270 in 2019-20 before it dipped to Rs 85,110 in 2020-21 on account of the disruption in economic activities caused by COVID-19 pandemic and subsequent lockdowns.

At current prices, the per capita income rose by 18.3 per cent to Rs 1.5 lakh during in 2021-22 fiscal.

The per capita income at current prices had dipped to Rs 1.27 lakh in 2020-21 from Rs 1.32 lakh in 2019-20.

The per-capita income is a crude indicator of the prosperity of a country.
 

RISING SUN

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Google in talks to join India's open e-commerce network ONDC​

Alphabet Inc's Google is in talks with the Indian government to integrate its shopping services with the country's open e-commerce network ONDC, two sources familiar with the matter told Reuters.

Late last month India soft-launched its Open Network for Digital Commerce (ONDC) as the government tries to end the dominance of U.S. companies Amazon.com and Walmart in the fast-growing e-commerce market.

Google's talks follow the success of its payments business because of the government's initiative for financial transactions, the Unified Payments Interface, said one of the sources, both of whom declined to be named as they were not authorised to discuss the matter with the media.

Google's existing shopping business works solely as an aggregator of listings online and doesn't carry out any order fulfilment like delivery, which the likes of Amazon do.

A Google spokesperson declined to comment on whether it was in talks with the government.

"We remain committed to focus on the enablement of small and medium businesses to leverage digital for deeper discovery and payments capabilities with Google Pay," the spokesperson said, referring to its payments service.

Partners of the ONDC project, which currently includes the likes of Indian fintech firm Paytm, will show listings from each other on their platform in search results. The government's aim is to level the playing field by reducing the cost of doing business for any seller who wants to list their products online.

The ONDC programme aims to join 30 million sellers and 10 million merchants online, and cover at least 100 cities and towns by August.
(Reporting by Munsif Vengattil and Krishna N. Das; Additional reporting by Paresh Dave; Editing by Shri Navaratnam)