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Asia Economics Special: India: Coping with headwinds - policy meeting
takeaways [Taimur Baig]
We summarize the findings from our meetings over the past week with senior
policy makers in the Ministry of Finance and the Reserve Bank of India:
Ministry of Finance
* In Delhi, the government's focus now is almost entirely on governance issues
and a forthcoming cabinet reshuffle. Reforms through the legislative channel have
become very challenging.
* Expectations of controlling subsidy spending and raising substantial
disinvestment revenues have been scaled back.
* Some diesel and kerosene price increase appears to be just a matter of time,
although the magnitude would not be sufficient to mitigate fully the subsidy risk.
* Move toward targeted cash subsidies (and market-based pricing) for food and
fertilizer is underway.
* There is growing recognition that more foreign inflows to the debt market would
be useful from a fiscal and market deepening point of view
Telecommunications: First signs of a tariff hike? [Srinivas Rao]
Newsflow (Bloomberg) indicates that Tata Docomo (GSM) has increased its
prepaid tariffs in the Tamil Nadu circle. Our channel checks indicate: Baseline tariff
for Tata remains at 1p/second. It has increased the cost of certain special
vouchers in Tamil Nadu. For eg. the cost of a voucher for availing local on-net tariff
of 1p/6 second has been increased from Rs 25 to Rs 46. Tata has increased its
baseline SMS tariffs for new customers enrolling after 16th June 2011 across all
circles.
India Equity Strategy: Portfolio Musings: Prefer rate sensitives [Abhay
Laijawala]
While RBI’s stance remains predominantly anti-inflationary in the immediate term,
we sense that it may be in the final stage of its near 15-month rate tightening
cycle. Our economist Taimur Baig expects a further 50bps hike (over next 2 policy
meetings) cumulating to a total of 325 bps. Recent global macro developments
(Greece’s sovereign debt crisis, end of QE2, concerns over slowing economic
growth in EU and US) will also influence RBI’s policy biases..
India Economics Weekly: Inflation and monetary policy, RBI's financial
stability report [Taimur Baig]
The Reserve Bank of India raised the repo and reverse repo rates by 25bps each in
its June policy meeting, stressing that inflation is persisting at "uncomfortable
levels." The RBI also noted that (i) interest rate sensitive sectors are being
impacted by monetary tightening but evidence of a broad-based economic
slowdown is marginal, (ii) current headline figures understate the true price
pressure in the economy as commodity price pass-through is incomplete
The Wide Angle - Is Outsourcing History? [Sanjeev Sanyal]
For decades, outsourcing of manufacturing and later of services to Asia has
defined the trajectory of global production. However, sharp increases in
wages/salaries in both China and India have led some observers to question
whether or not this dynamic is coming to a close, particularly in view of the
renewed competitiveness of US manufacturing.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Asia Economics Special: India: Coping with headwinds - policy meeting
takeaways [Taimur Baig]
We summarize the findings from our meetings over the past week with senior
policy makers in the Ministry of Finance and the Reserve Bank of India:
Ministry of Finance
* In Delhi, the government's focus now is almost entirely on governance issues
and a forthcoming cabinet reshuffle. Reforms through the legislative channel have
become very challenging.
* Expectations of controlling subsidy spending and raising substantial
disinvestment revenues have been scaled back.
* Some diesel and kerosene price increase appears to be just a matter of time,
although the magnitude would not be sufficient to mitigate fully the subsidy risk.
* Move toward targeted cash subsidies (and market-based pricing) for food and
fertilizer is underway.
* There is growing recognition that more foreign inflows to the debt market would
be useful from a fiscal and market deepening point of view
Telecommunications: First signs of a tariff hike? [Srinivas Rao]
Newsflow (Bloomberg) indicates that Tata Docomo (GSM) has increased its
prepaid tariffs in the Tamil Nadu circle. Our channel checks indicate: Baseline tariff
for Tata remains at 1p/second. It has increased the cost of certain special
vouchers in Tamil Nadu. For eg. the cost of a voucher for availing local on-net tariff
of 1p/6 second has been increased from Rs 25 to Rs 46. Tata has increased its
baseline SMS tariffs for new customers enrolling after 16th June 2011 across all
circles.
India Equity Strategy: Portfolio Musings: Prefer rate sensitives [Abhay
Laijawala]
While RBI’s stance remains predominantly anti-inflationary in the immediate term,
we sense that it may be in the final stage of its near 15-month rate tightening
cycle. Our economist Taimur Baig expects a further 50bps hike (over next 2 policy
meetings) cumulating to a total of 325 bps. Recent global macro developments
(Greece’s sovereign debt crisis, end of QE2, concerns over slowing economic
growth in EU and US) will also influence RBI’s policy biases..
India Economics Weekly: Inflation and monetary policy, RBI's financial
stability report [Taimur Baig]
The Reserve Bank of India raised the repo and reverse repo rates by 25bps each in
its June policy meeting, stressing that inflation is persisting at "uncomfortable
levels." The RBI also noted that (i) interest rate sensitive sectors are being
impacted by monetary tightening but evidence of a broad-based economic
slowdown is marginal, (ii) current headline figures understate the true price
pressure in the economy as commodity price pass-through is incomplete
The Wide Angle - Is Outsourcing History? [Sanjeev Sanyal]
For decades, outsourcing of manufacturing and later of services to Asia has
defined the trajectory of global production. However, sharp increases in
wages/salaries in both China and India have led some observers to question
whether or not this dynamic is coming to a close, particularly in view of the
renewed competitiveness of US manufacturing.
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