Monday, 21 October 2013

VRITTAM (13 OCT 2013 - 19 OCT 2013)


Prime Minister will look to clinch energy, defence and other economic deals to boost trade and investment to kick-start sluggish growth.
India may launch interest rate futures in next two months
India plans to launch trading of government bond futures within the next two months as part of efforts to deepen its financial markets. These interest rate futures would help banks and financial firms in Asia’s third-largest economy assess expectations for borrowing costs and hedge the risks of rate changes to their bond portfolios. It would also provide the country’s policymakers with a valuable gauge to measure market expectations for their future rate decisions.

Hong Kong and Shanghai Banking Corp. Ltd plans to discontinue its retail broking and retail depository services businesses in India, operated under HSBC Invest Direct Securities (India) Ltd, following a review of its business in the country, a spokesperson said on Thursday. About 300 employees at these two divisions will likely lose their jobs, the spokesperson said. HSBC employs about 30,000 people in India.

India may have to dip into its foreign exchange reserves to finance the current account deficit (CAD) in 2013-14, the World Bank said. The CAD for the first quarter of the current financial year was USD 21.8 billion, or 4.9 percent of gross domestic product, driven by sluggish exports and high gold imports in April and May.

With gold's safe-haven status eroding, analysts say volatility indexes like the VIX are becoming the preferred method for hedging risk. As a traditional safe-have asset, gold typically rallies during periods of heightened economic risk, but in recent years gold's behavior has befuddled many analysts. Over the course of the over two-week US government shutdown, for example, gold has fallen 3.35 percent.

India's economy will pick up by year-end thanks to the start-up of billions of dollars’ worth of stalled resource projects and a good monsoon season that will bolster agricultural production, the Reserve Bank of India's chief said on Tuesday. The Reserve Bank of India is due to review monetary policy on October 29, with a rising pace of inflation bolstering odds for another central bank interest rate hike even as the economy stumbles through its worst crisis since 1991. He said that he believed India's economic growth would start to pick up in the fourth quarter after a commission gave the green light to scores of resource projects that had been put on hold during a sweeping government review of transparency and environmental policy.

In April, the World Bank had projected India's GDP would grow at 6.1 percent in the current financial year and at 6.7 per cent the following year. The World Bank today slashed India's economic growth forecast for the current financial year to 4.7 percent.

At a time when rating agencies are raising doubts over US' financial stability , Finance Minister P Chidambaram is trying his best to dismiss negativity surrounding the Indian economy. The International Monetary Fund recently lowered India’s growth forecast from 5.6 percent to a steep 3.8 percent. Chidambaram, however, believes India does not deserve this downgrade.

From pariah to world's favourite, rupee becomes carry trade pick on Raghuram Rajan’s moves
Reserve Bank of India governor Raghuram Rajan has turned the rupee from a pariah to the world's favourite currency after just a month in office as he intensifies efforts to quell inflation and lure capital. Investors selling dollars to buy rupees earned 10 per cent since Rajan took over on September 4, the most among 44 currencies tracked by Bloomberg and a turnaround from a 2.8 per cent third-quarter loss.

India has 240 million households living in informal urban settlements, including slums — 40 per cent higher than 140 million slum households estimated by Census of India 2011 data, says an independent study by research firm Indicus Analytics and civil society organisation PRIA. The study on the 'economic contribution of urban poor in India' has also found that people living as informal settlement dwellers contribute about more than 7.5 per cent to the country's urban GDP.


By R Jagannathan, editor-in-chief, digital and publishing, Network18 Group

To know what are the risks of a US Treasury default, click on the slide show below


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