Saturday, December 27, 2008

Economic forecast for 2009

If the Indian economy grew at 8 -9 % in 2007-8. I must believe that, about half of this came due to intrinsic or local market factors that is about 4 to 4.5 % . So we will continue with that growth with some downward slide in 2009, and also that the remaining half was due to foreign or extrinsic factors. Which i believe, will reduce by a good 50 % . So intrinsic or internal growth will contribute between 3.5 to 4.5 % and remaining 2- 2.5 % will come from the extrinsic factors . So in all , i guess the next year we will witness growth somewhere around 6.0 to 7.0 %. If the World economies shrink badly , which is expected. This might impact this growth a little more and bring it down under 6.0 %


Rajendra Pratap Gupta
President
Countryfirst
Cell : + 91- 9323109456
+ 91- 9867300045
(USA) +1515-450-6165
Skype: rajendra.india
E-Mail: mail@rajendragupta.org / rajendragupta@aol.in
www.countryfirst.org

Economy in a severe recession- Government in a denial mode

Indian Economy is in a severe recession: Rajendra Pratap Gupta

Our Mr. Blind ( P. Chidambaram ) and Mr.Sardar ( Not Asardaar – Mr. Manmohan Singh ) have recently denied that Indian Economy is in a recession.

Except God, for everything else , i believe in data. Here is what the duo might need to relook to give up their selective blindness . Sir’s please look into the same

The Tax collections for December quarter dropped by 22 % ( According to the Economic Times dated 27th Dec 2008 )

60 % of the 8000 units into diamond polishing and cutting business went on forced holiday leaving 100,000 people without jobs . Narendra Modi has refused any package for them ( Times of India 27th Dec 2008). There is a 40 % reduction in demand according to Gems and Jewellery Promotion Council ( GJEPC). Exports account for $ 20 billion in the industry

The gross NPA’s of banks will reach 4.7 % of the total loans in FY10 from the current of 2.3 %. Credit card delinquency has gone up to as high as 14 %. Loan defaults would follow shortly and this will be a big blow to the banking / loan system. In the first half of Dec 2008, in Bangalore itself there have been defaults to the tune of Rs.80.23 crore at Corporation Bank . Out of the total home loan portfolio exposure of Rs.1000 cr , 50 % is in the IT sector. Defaults will start increase going forward. We will see the real impact in April 09.

I was recently in Delhi and talked to my cab driver ( he drives for a cab company at Delhi airport ). He informed me that, earlier he would earn between 15 – 22000.00 per month . Now for the last three months , his income has dropped to Rs.6000.00. He is expected to do a minimum of 52 trips a month which is getting difficult now . So he was worried.

Approx 90 % of all the commercial vehicles sold in India are via loans. Kotak Mahindra Bank has repossessed about 200 vehicles. Deepak Sachdeva , President of the Delhi Goods Transport association said that between April and December 2008 alone , close to 158000 commercial vehicles were either surrendered or repossessed due to loan defaults. According to The Mint dated Dec 26th 2008. With such an massive loss, just imagine what must be happening to the families of 158000 truck drivers, helpers , cleaners and the people associated with providing services at Dhabas and repairers for these trucks !! It is a solid loss for a small economy like India

All the businesses have cut down the expansion plans and the same will continue for the next year in my view . TATA motors have cut the production for two days a week, Cisco is on long Christmas and a new year holiday, All auto majors including Maruti is slowing or voluntarily suspending production to take care of the ‘standing or piled up’ inventories

ACC cement has already shut the production in one of the plants and slowed the same in others

I visited quite a few malls and talked to employees. At Lifestyle store at Mulund last year around this time , the 2nd floor has five counters. This year they just had one counter. The salesman when quizzed ,did accept that there is a drastic drop in customers and sales

Big Bazaar, has no different story. They were operating with two counters and not long queues which earlier operated eight counters. Big Bazaar has launched shopping schemes that is drawing customers but not much sales. The same scheme in 2007 March could have doubled the turnovers. ‘Marketing Steroids’ are not working well

The best mall in the country , Inorbit Mall employees had the same views. They were shocked at the drastic drops in customers and sales. Their wide aisles at the Hypercity had few customers.

Aditya Birla retail is likely to shut down around 100 out of 700 stores in the name of rationalization . They are doing a business of Rs. 5 per Sq. Feet and expenses of Rs.200 per Sq. Feet. It is a thumb rule, that such retail formats should not incur more than 120 per sq. Ft.

A month back when i visited the Fame Adlabs at Kharghar to watch the night show for the hit film Fashion, my wife and myself were refused tickets as we were the only two people to watch the movie and the counter girl told us that, she needed at least 5 people to start the show !! Did you expect this in good times !!

Reliance retail is no better, they have changed the strategy for the second time in the last two years and if i remain accurate in my predictions. This time again Reliance will have to redo a lot of things to avoid exiting the retail venture . All these retail majors banked on experienced retail expats . Who themselves wanted to ‘Earn while Learn in India ’ at the cost of these employers.

Some organised retailers are not even in a position to recover their expenses , losses are mounting and credit is moving at an escape velocity not imagined in 2007 !! Money is not available, as earlier even the small companies would value themselves on the lines of the listed companies . With stock market following the Wal-Mart model ( everyday low prices, even Wal street is joked and nick named as Wal-Mart street !!! ).Now there are no takers for these companies . Defaults are increasing day by day. We know the outcome.

Industrial production and growth is slowed . I believe that at this time , for most businesses , survival is the main question and not growth or profits !! . Takeovers will happen or closures. In India , bankruptcy is not practised widely. So we will see closures. The government should keep vigilant on big business houses for accounting and reporting in case they are listed, or we might see a fraud and failure like Enron or WorldCom. This is a step to avoid ‘financial terrorism’ . Some business houses ‘control’ many politicians and this is an area of big concern. We have created unequal wealth in the form of strong and gigantic business houses who are iconic Any wrong doing in such a big business houses would be like a corporate suicide and will severely impact the market scenario. I don’t rule out ‘accounting manipulations’ or ‘jugglery’ in these ‘tough times’ to keep the image and reputation intact for such big business houses.

Even the TATA’s are not able to raise funds , the rights issue was a case in point . DLF , Unitech were rising stars in 2007 are shooting stars now. Projects are delayed and more news is to come in the times ahead.

The Dec 08 quarter results of companies will be disappointing and that will take the shine off the Indian growth and strong fundamentals story.

I urge our politicians to give up the ‘Academic definition’ of recession and accept that we are into a recession and take steps to correct the path going forward .
Let’s see the countries by their GDP and their share in the World GDP. India may not be more than a rounding error at this point !!

2006 GDP USD GDP as % of the world GDP
1.USA 13,201,819 27.3
2. Japan 4,340,133 8.9
3. Germany 2,906,681 6.0
4. China 2,668,071 5.5
5. UK 2,345,015 4.8
6. France 2,230,721 4.6
7. Italy 1,844,749 3.8
8. Canada 1,251,463 2.6
9. Spain 1,223,988 2.5
10. Brazil 1,067,962 2.2
Top Ten Total 33,080,602 68.6
World 48,244,879 100.0


Chinese Consumer spending is to reach USD 1.3 Trillion this year, France USD 1.4 trillion, US economy is USD 9.9 Trillion , India is just 660 Billion according to the Mint Dec 23 , 2008. So if the world’s biggest economies is de-growing and we are dependent on these countries. How can we say that we are not into a recession ??? Are you talking sense Mr.P.C and Mr. Singh ????. Those who buy clothes and other merchandise from US / Europe know well, that all leading brands outsource their production to India , Bangladesh and Sri Lanka . Now that the sales are down, these countries are under sever loss . USA, Japan and Europe account for 68 % of the world GDP and they are into recession. Do we need more reasons to convince ourselves that we are heading towards a more severe recession. Problem started with US , till it ends in the US the problem the world over will continue. The interest rates in USA and Japan have come close to zero. China will get into recession or pass on the pressures to countries like India via dumping cheaper goods to avoid recession. This is one area where India needs to be watchful. US recession will also pass on pressures to nations dependent on its economy

I believe that congress may take to surgical strikes to play with the public sentiment , to dodge the economic issues to come into power. Forgetting , that the parliament attacker is still alive. All these steps should have been taken when parliament was attacked . If then we did not act then, i see no reason to act except for the fact that the elections are near . The government needs to fight many forms of terrorism . i.e. Economic terrorism, militant terrorism ,healthcare terrorism ( seeing that 6000 children die every day below the age of 5 years due to disease and malnutrition ). Few reasons that India might not attack Pakistan are that , we are working with weapons which are Bofors like and secondly , our economy cannot afford to take on a full-fledged war with Pakistan, thirdly, in case we do surgical strikes , Pakistan will drop a nuclear bomb as it is not a nation that honours any pact ( All likelihood , that it will not honour its pack on this as well and quote anything stupid to justify its act.)

India needs to understand the order of world has changed with history. Earlier , the nation with a stronger military was considered stronger , then the nation which was financially stronger was stronger . Future will be for both technically and financially stronger nations . India needs to be financially and technically independent .

New year is not going to be better than 2008. So i don’t know how to wish you for 2009, but i must send my best wishes for hopeful and a pragmatic 2009 that is full of moderation in growth plans , better financial regulation , increased spending from governments , encourage and increase savings for emergencies and a more peaceful 2009

Best wishes

Rajendra Pratap Gupta
President
Countryfirst
Cell : + 91- 9323109456
+ 91- 9867300045
(USA) +1515-450-6165
Skype: rajendra.india
E-Mail: mail@rajendragupta.org / rajendragupta@aol.in
www.countryfirst.org

Monday, December 22, 2008

India is a poor country but Indians are rich

LOOK WHERE OUR MONEY IS GOING????


Revelation on Swiss Bank Accounts "who can save india no one knows where tax payer money is going "

Revelation on Swiss Bank Accounts


This is so shocking . . . . . wish black money deposits was an Olympics event . . . . . India would have won a gold medal hands down.
The second best Russia has 4 times lesser deposit. US is not even there in the counting in top five !! India has more money in Swiss banks than all the other countries combined !!!!

Recently, due to international pressure, Swiss govt. agreed to disclose the names of the account holders only if the respective govts formally asked for it. Indian govt. is not asking for the details . .
. . no marks for guessing why ????

We need to start a movement to pressurise the govt. to do so !!
This is perhaps the only way, and a golden opportunity, to expose the high and mighty and weed out corruption !!

Please read on . . . . . and forward to all the honest Indians to . .. . . like somebody is forwarding to you . . . . . and build a ground-swell of support for action !!
Is India poor, who says? Ask Swiss banks With personal account deposit bank of $1500 billion in foreign reserve which have been misappropriated, an amount 13 times larger than the country's foreign debt, one needs to rethink if India is a poor country?.

DISHONEST INDUSTRIALISTS, scandalous politicians and corrupt IAS, IRS, IPS officers have deposited in foreign banks in their illegal personal accounts a sum of about $ 1500 billion, which have been misappropriated by them. This amount is about 13 times larger than the country's foreign debt. With this amount 45 crore poor people can get Rs 1,00,000 each.
This huge amount has been appropriated from the people of India by exploiting and betraying them.

Once this huge amount of black money & property comes back to India , the entire foreign debt can be repaid in 24 hours. After paying the entire foreign debt, we will have surplus amount, almost 12 times larger than the foreign debt. If this surplus amount is invested in
earning interest, the amount of interest will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to maintain the country very comfortably..

Some 80,000 people travel to Switzerland every year, of whom 25,000 travel very frequently. 'Obviously, these people won't be tourists.
They must be travelling there for some other reason,' believes an official involved in tracking illegal money. And, clearly, he isn't referring to the commerce ministry bureaucrats who've been flitting in and out of Geneva ever since the World Trade Organisation (WTO)
negotiations went into a tailspin!

Just read the following details and note how these dishonest industrialists, scandalous politicians, corrupt officers, cricketers, film actors, illegal sex trade and protected wildlife operators, to name just a few, sucked this country's wealth and prosperity. This may
be the picture of deposits in Swiss banks only. What about other international banks?

Black money in Swiss banks -- Swiss Banking Association report, 2006 details bank deposits in the territory of Switzerland by nationals of following countries :

Top Five
1. India ---- $1,456 billion
2. Russia ---$ 470 billion
3. UK -------$390 billion
4. Ukraine - $100 billion
5. China -----$ 96 billion
Now do the maths - India with $1456 billion or $1.4 trillion has more money in Swiss banks than rest of the world combined.

Public loot since 1947: Can we bring back our money? It is one of the biggest loots witnessed by mankind -- the loot of the Aam Aadmi (common man) since 1947, by his
brethren occupying public office.
It has been orchestrated by politicians, bureaucrats and some businessmen. The list is almost all-encompassing. No wonder, everyone in India loots with impunity and without any fear. What is even more depressing in that this ill-gotten wealth of ours has been stashed
away abroad into secret bank accounts located in some of the world's best known tax havens. And to that extent the Indian economy has been stripped of its wealth.

Ordinary Indians may not be exactly aware of how such secret accounts operate and what are the rules and regulations that go on to govern such tax havens. However, one may well be aware of 'Swiss bank accounts,' the shorthand for murky dealings, secrecy and of course
pilferage from developing countries into rich developed ones.

In fact, some finance experts and economists believe taxhavens to be a conspiracy of the western world against the poor countries. By allowing the proliferation of tax havens in the twentieth century, the western world explicitly encourages the movement of scarce capital
from the developing countries to the rich.

In March 2005, the Tax Justice Network (TJN) published a research finding demonstrating that $11.5 trillion of personal wealth was held offshore by rich individuals across the globe. The findings estimated that a large proportion of this wealth was managed from some 70 tax
havens. Further,augmenting these studies of TJN, Raymond Baker -- in his widely celebrated book titled 'Capitalism' s Achilles Heel : Dirty Money and How to Renew the Free Market System' -- estimates that at least $5 trillion have been shifted out of poorer countries to the
West since the mid-1970.

It is further estimated by experts that 1 % of the world's population holds more than 57 % of total global wealth, routing it invariably through these tax havens. How much of this is from India is anybody's guess. What is to be noted here is that most of the wealth of Indians
parked in these tax havens is illegitimate money acquired through corrupt means.


Naturally, the secrecy associated with the bank accounts in such places is central to the issue, not their low tax rates as the term 'tax havens' suggests. Remember Bofors and how India could not trace the ultimate beneficiary of those transactions because of the secrecy
associated with these bank accounts?

IS THERE ANY ONE WHO CAN SAVE INDIA ?

Rajendra Pratap Gupta, U.S.Economy, Indian economy enters recession,Winter in USA, Christmas, Snow Fall, Bailout of Auto majors,GM motors,Stock markets in USA , stock markets crash, stock markets crash, Economic theory