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Sri Lanka's foreign exchange reserves drop from over $7.5 billion in 2019 to about $2.8 billion in July 2021. The tourism industry on which Sri Lanka depends for foreign exchange and which supports the economy has been hit hard by the coronavirus pandemic. Sri Lanka rupee has depreciated by 8% in 2021 and the country struggles to maintain food imports with declining dollar reserves. Sri Lankan government declared an economic emergency last week with rising food prices.

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Two years after it was launched the Jal Jeevan Mission to bring tap water to every household in India has made significant progress. Only 17% of all rural households had tap water in 2019, today even with covid disruptions 41% of rural households have tap water. 48 million more households have tap water connections added. The goal of Har Ghar Jal (Every home tap water) is now seen as achievable by 2024. Financing in 2021-2022 is increased from 115 billion rupees to 500 billion rupees, quadrupling the financial resources dedicated to providing water to all of India's people. The Swach Bharat Mission Director General, Akshay Rout, shows how this mission for water is moving as as quickly as the open defecation free ODF mission  under SBM. A household in ODF saved Rupees 50,000 a year from cleanliness and medical costs according to UNICEF. A WHO study shows 200,000 diaorrhea deaths prevented. JJM is decentralized, demand driven and community managed. Rout says that setting a deadline and aiming for saturation that leaves on one behind is a good way of tackling critical problems such as hygiene, sanitation and water. He says shoddy implementation or product can be prevented by robust monitoring and supervision systems. By 2019 India had made big achievement in hygiene and clean India campaign with ODF open defecation free achieved under this approach. ...

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RBI says the Rupees 2000 notes have a life of 4-5 years and they are being withdrawn because they are reaching the end of their life.

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The US dollar is rapidly appreciating against currencies such as the Indian rupee, the Japanese yen, the euro and the pound. The aggressive interest rate policy in the US and investor sense that the US central bank will take action against inflation is one reason the US dollar is stronger and will continue to strengthen in coming years. The weakness of emerging market currencies, the Bank of Japan's policy to continue keeping interest rates low, and the stronger US economy vs the European economy as Europe struggles with a war and cutoff of energy supplies from Russia, are other reasons for a stronger dollar in 2023 and beyond.

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India plans to vaccinate 300 million people in the first drive of the vaccination campaign. The two vaccines approved are the Covishield from Astra Zeneca partnership with Serum Institute of India, and the Bharat Biotech vaccine. India is the largest vaccine manufacturer in the world, and its vaccination production and campaign is being watched closely.  The largest maker of vaccines is Serum Institute of India based in Pune. Countries that are seeking India's help in vaccines are Brazil, South Africa, Morocco, Saudi Arabia, Bangladesh. Brazil has ordered 1.5 million vaccine doses. The Indian government has approved sending vaccines to other governments. Price of 100 million doses to be supplied by Serum Institute to the Indian government is 200 rupees a dose or about $2.73 a dose. Vaccine sold in private markets will be priced at 2000 rupees a dose. Serum Institute and Bharat Biotech have stockpiled 70 million doses. ...

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Treasury Secretary Paulson's remarks to the US-India CEO forum in Mumbai.

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Bringing together all ministries and parts of government into an integrated planning and execution sought under the Indian prime minister's Gati Shakti Master plan for infrastructure is likely to bring a change in the culture of ministries and government at every level in India. Before for the years since independence in 1947 no attention was given to this idea of one team of many teams all working under one master plan at every level of government, much of the activity was conducted for development in separate silos. This massive culture change will accelerate development and ensure every rupee or dollar is spent to get the most out of infrastructure building efforts that benefit the public in India.

 

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The Economist points out serious problems at India's state owned banks. Following a $21 billion or 1.3 trillion rupee bailout from the government, and a new bankruptcy law to help banks deal with bad loans, the Indian banking sector was seen as recovering. Last week (Feb. 2018) showed new problems at three of the largest state owned banks. PNB, Punjab National Bank, is faced with fradulent transactions for 114 billion rupees, about a third of its market capitalisation. A jeweller, Mr Nirav Modi, had PNB employees issue letters of credit which were then used to borrow overseas, but the credit was not shown in PNB's books. The State Bank of India, SBI, is faced with losses after tackling bad loans. The Reserve Bank of India, India's central bank and bank regulator, has taken action to have banks recognize more bad loans to clean up the banking system.  The Bank of Baroda, the third largest state owned bank, is exiting South Africa after entering that market and lending to the controversial Gupta family that is seen as having undue influence on the government of ex- president Jacob Zuma of South Africa.  These events have battered the reputation of state owned banks in India. One private lender HDFC bank alone now has market capitalization worth more than the entire state owned banks in India. State banks are worth less than net assets in the market, showing a huge credibility gap. The bad loan situation that goes back to previous governments is affecting the growth rate in India's economy and creating new pressures on the government of prime minister Modi as it faces general elections in 2019. ...

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How Ratan Tata's vision of a small car for 1 lakh rupees or about $2500 for the Indian market may change the way the world looks at and buys cars. Note that the Indian car market is expected to become the fastest growing car market by 2013 at 14.5% compared to 8% in China according to estimates by CSM Worldwide. In 2008 Tata will come up with its new 1 lakh rupee car. What Tata's vision has done is challenge the world's leading car makers to come with versions of a small car for the Indian market of their own, with Renault-Nissan, Hyundai and VW and Honda all taking up the challengein the days and years ahead. This is also a challenge for Indian infrastructure, and for the road system in all of South Asia from Sri Lanka to all the way up the South Asian subcontinent to Pakistan and Afghanistan. It will also bring about greater integration of the whole region and create the conditions for significant economic development.

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At this time following the Brexit vote $1 trades for 82 pence. This is a sharp drop in the value of the British pound. With it tech companies Dell, Microsoft, HP, and Apple are raising their prices sharply. Apple prices are up about 25% as a result of Brexit and fall in value of sterling. The price of Apple apps now reflects the falling value of the pound. Not only Britain is affected. In India the app which cost $0.99 now costs 80 rupees in India from 60 rupees previously, a 33% increase. In Turkey the increase is 30%. It all goes to show that as the Bank of England's GOvernor Carney has pointed out that Brexit comes at a price, a price that the British public were not alerted on at the time of the vote with the temporary crises of refugees influx and internal squabbles inside Labor and Tories deciding the vote.

 

 

 

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PM Modi says in Mann Ki Baat monthly radio program that Unified Payments Interface UPI has recorded 3.5 billion digital transactions in the month of August. Digital payments of 2 trillion rupees is happening using UPI on average. In this way it is transforming India. "Through this the economy of the country is acquiring cleanliness and transparency, and we all kn ow that the importance of fin-tech is increasing a lot," said Modi

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India will continue to maintain progress and will be a good investment destination in 2008 even in the light of the strong rupee and the slodown in the USA.

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As the Indian economy experiences a slowdown in 2019-20 a revealing statistic that lack of loans in the banking system is playing a critical role comes from the central bank, the RBI. Compared to the 6 month period April to September 2018 when 800,000 crore rupees loans were made to borrowers in the first 6 months of 2019 the loan volume dropped to 90,000 crore rupees.

Bad loans in the banking system and mismanagement in the banking system have caused the drop in loans, leading to government efforts to inject money into banks and consolidate banks by merging failing banks into larger better run banks. Additional causes of a slowdown are the drop in consumption, sales decline in the auto and other industries. A cut in corporate tax and the 2020 budget with investments in infrastructure, relaxing fiscal limits to invest more.  are designed to stimulate growth.

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The federal government in India provides support for loans to farmers on the interest rates paid after the interest rate increase by the central bank RBI. An additional budgetary provision for Rs 34,856 crores has been made for this purpose for the period 2022-2023 to 2024-2025. It will keep interest rates below 7% for farmers. This will support agri-loans of upto 3 lakh rupees for farmers in India. This is to provide adequate agricultural credit for the rural economy of India. Short term agriculture credit would be at 4% interest per year when loan is repaid on time.

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India, Brazil and South Africa as members of BRIC's means that the US position has support within BRIC's with nuances such as words on multipolarity of institutions. India has allowed trade to be done in rupees with Russia as trade is heavily imbalanced with Russia- India exports $4.1 billion to Russia and imports oil and gas worth $61 billion. Russia gets Rupees for the oil and invests it in the Indian equity markets and bonds.

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India's airline market has grown from 51 million passengers in 2010 to 138 million in 2018. 600 planes are in operation with 859 on order. The airline industry in India is experiencing intense competition and putting some airlines such as Jet Airways in trouble as they compete with low cost carriers such as Indigo.

Jet Airways has temporarily stopped operating its 115 planes on about 1000 routes as it has failed to win new funding. This could lead to higher prices. Fuel prices and depreciation of the rupee hurt Jet Airways.  A problem for Indian airlines is the thin margins and the uncertain oil price environment. Etihad Airways took a 24% stake in Jet Airways but that partnership has not prevented Jet from having problems with lenders.

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Underlying the importance that Information Technology plays in India's growth Tata Consultancy Services (TCS) becomes India's most valuable company. TCS has an estimated market value of 2.272 trillion rupees compared to Reliance's market value of $2.269 trillion rupees (42.8 billion), using the February 24, 2012 trading figures.

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S. Gurumurthy of the Hindu points out the dangers of economic growth without job creation in a country like India. He points out that demonetization- removal of high denomination currency notes- came at a critical time when the economic growth was not creating enough jobs. He points to the five year period till 2010 as having created 2.7 million jobs with 8.5% growth. Even though with lower growth of 5.4% in the period 1999-2004 the job growth was for 60 million jobs created. Had demonetization not happened he says, the economy could have seen the problems the U.S. faced in 2008 with a bubble developing in the real estate market. The fundamental shift of the economy to digitization of payments, increase in tax receipts brings more of the informal economy- with a size of 50% of the economy generating 128 million jobs ten times the formal sector - into the formal economy. A step that is key for India to see rapid growth in the decade ahead. The slackening of the economy for a year is part of  a needed long term plan, says Prof. Gurumurthy, visiting IIT faculty in Bombay, just as liberalization was in the 1990's.  Some errors were made in implementation and flow of credit to the informal economy, including by the RBI, yet the fundamental shift through demonetization served a good purpose. Gurumurthy says, sadly this is missing in the current politicized debate.  ...

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Reports of ATM's running out of cash in India in 8 states. The government says this is a result of a spurt in demand and will ease in a few days. The government's policies are to increase the number of debit card and digital transactions to shift more of the transactions in an underground economy into the formal economy so that tax revenues to fund infrastructure can be generated. As a result fewer currency notes of Rs. 2000 or about $30 are being printed. This is aggravated by black market hoarders of 2000 rupee notes. Public confidence in the banks was shaken by some high profile scandals leading to people keeping extra cash at home increasing the demand. The government plans a bailout of $32 billion for bad loans at banks.

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Following Scotland's decision to provide women's hygiene products free can India do the same and provide women's period products free, asks Isha Bhatia. She describes her experience with the lack of hygiene products for periods when she was growing up in India and remembers being handed a dirty cloth by her grandmother. About 70% of all reproductive diseases in women are caused by poor menstrual hygiene. The cost of Rs. 100-250 is too much cost for average Indian families. Only 18% of Indian women have access to sanitary pads. The cost should be brought down with government subsidizing manufacturing of sanitary pads so that it would cost less than 10 rupees or be provided free under government subsidized initiative for women's health.