Indian Economic symphony
With the Rupee depreciating by over 20% against the US dollar over a period of 15 months, Indian Corporates who had gone for Foreign Currency Convertible Bonds, will opt for redemption rather than exercising the option of conversion, for which they have to raise funds thro’ External Commercial Borrowings. According to Cricil, Nifty companies suffered a nett loss of Rs 48 billion between July-September 2011, wiping out 8% of the profits (total of Rs 572 billion) before tax. One of the highest aggregate losses, due to 3 fold rise in foreign debt of these companies in the last 8 years. In the next quarter (Oct-Dec), these losses would be around Rs 35-40 billion. High level exposure to foreign currency debt, which is calculated on the closing exchange rate (around $ 1.5 trillion)(24% of their total outstanding debt of Nifty companies). The hedging of funds will enhance the foreign exchange losses, as the derivative instruments are market to market. With rupee shedding another 31 paisa, the Rupee was Rs 53.03 against the dollar on Dec 27, 2011.
With increased cost of Credit, 13 interest rate increases in the last 1 ½ years, the Industrial growth showing wide disparity even touching negative growth in recent months, dwindling exports, increased expenditure putting pressure on funds, do we need to be cautious as the cloud overhead is a couple of shades darker.
However, the silver lining in the dark clouds was the downward journey of food inflation to 1.8%, savings rate going up, and the core sector growth steadying at 6.8%(November 2011) with infrastructure showing positive growth coal products(4.9%), cement(16.6%), power production (14.1%), IIP turning positive with 4.6% growth against 5.6% (between April-November of current year and past year).
Government, taking into consideration the pathetic economic growth has forecast 7.5% growth in the GDP in 2011-12 against the earlier anticipated 9%.
Will the New Year continue with the economic slowdown or persist with economic recession. Will the fury of recessionary trend be “v’ shaped curve or would the curve be scary elongated “u” shaped and can India stay immune from the euro zone crisis? If so, how long?
But economic growth or conditions pertaining to economic growth, creating scare, etc we need to be cautious. The way TV channels are airing expert opinions which seems to be very many, or dozens worth of truck loads, seem to shake the confidence or lead astray your optimism, then the broadcasters could do a world of good by stopping their expert commentaries. If they were so expert, why do they not invest or follow their own suggestions and make themselves richer. These TV channels who claim they are the fourth pillar of the Constitution and mirror the view of the Society should remember not to stand depending upon where they sit!
No comments:
Post a Comment