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Why India will overtake China

人妻漫画

Why India will overtake China

Despite recent growth, political oppression will keep the Asian tiger on a tight leash.
http://money.cnn.com/2006/08/30/magazines/fortune/IndiavsChina_pluggedin.fortune/index.htm?cnn=yes

By Cait Murphy, Fortune assistant managing editor
August 31 2006: 7:09 AM EDT
NEW YORK (Fortune) -- On behalf of thousands of peasants from his native village, Ma Wenlin, a self-taught lawyer in northern China, sued the local government in 1997 to recover taxes that had been illegally assessed.
His chances didn't look too bad: Neighboring peasants had just won a similar case, a result that the Chinese press trumpeted as proof of the progress in the country's legal system.
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In Ma's case, though, the courts refused even to hear the suit. Many of his clients were harassed and imprisoned for their presumption. When Ma persisted, going as far as petitioning the highest authorities in Beijing, he was arrested, taken into custody, beaten, and convicted of "disrupting social order."
His sentence: five years hard labor.
Ma Wenlin's story, told in Wild Grass: Three Stories of Change in Modern China by Ian Johnson, is first of all a specific human tragedy, both for him and for his overburdened clients, who scrape a mean living from the soil of the Loess Plateau, only to have their savings confiscated by corrupt, greedy and unaccountable officials.
But it also evokes a larger question: Are the impulses that animate the repression against the likes of Ma a comparative economic disadvantage for China?
And if so, might India, with its radically different traditions of democracy and freedom, eventually surpass China as an economic force?
At first glance, the answer to the latter question seems obvious: no. In 1980, China and India had roughly the same income per head; now China's is about double, fueled by a growth rate (9 percent) half again as brisk as India's. China gets more than 10 times as much foreign direct investment, and has five times India's share of world trade.
China has higher literacy and better infrastructure. It takes a month to start a business in China, and three in India. China has more savings, less debt and less poverty.
"If this is a race, India has already been lapped," concluded the Economist in a survey of the two Asian giants.
Political infrastructure
And yet beneath the surface there are trends that suggest that India can close the gap, and over time, even move ahead. Why? Because its democratic political system is more stable and better at accommodating change than China's autocracy.
But wait, even many Indians blame democracy for the country's poor economic performance for so long. They're wrong. India made a lot of poor economic decisions not because it was democratic but because, well, people made bad decisions.
At least India's democracy never did anything quite so mad as launch a Great Leap Forward (30 million dead) or the Great Proletarian Cultural Revolution (millions more).
The inspirational first generation of Indian leaders was, unfortunately, soaked in the thinking of the Fabian socialists (if only Nehru had gone to, say, Chicago, in the 1930s rather than London, how different India's history might have been!). They believed that growth comes from government plans, not profits, and that capitalism was the cause of poverty.
India adopted this outlook, added a dash of autarky, and created a mixed economy that managed only the "Hindu rate of growth" (about 3 percent) for two generations.
In 1991, impelled by crisis, India broke out of this mind set. Since then, India has undergone a peaceful cultural revolution. The Fabians are in retreat; entrepreneurs are social heroes; and the country has a newfound confidence that it can excel in the global economy.
In short, India is nearing a tipping point of economic transformation. The pace of change is not steady, but its direction is inexorable. Consider the current government, a coalition in which the Communist parties are crucial partners (and India's communists are considerably more economically orthodox than the Chinese variety). Even so, the recent budget managed to continue privatization, open pensions and mining to foreign investment, and cut corporate taxes and tariffs.
It is hard to argue that investment, competition and deregulation are bad, or anti-poor, or somehow un-Indian when the deregulation of the telecom industry helped to create the brilliant Indian IT industry.
Demonstrable success
These early successes have created momentum for more change, and a virtuous circle is beginning to close. Now it is obvious, even to the communists, that the parts of the Indian economy that are humming, such as drugs, auto parts and IT, are the ones that are most open and that this is no coincidence. Outsiders are beginning to notice.
In 2003, a survey by the Federation of Indian Chambers of Commerce and Industry found that 40 percent of companies were "positive" on India as an investment destination; last year, that figure rose to 73 percent.
China's hardware - in the form of bridges, roads, ports and the like - is incomparably better than India's. Anyone who has ever been to both Shanghai and Bombay, the countries' respective commercial capitals, does not need any convincing that Shanghai is the more modern and efficient city.
But in important ways, India's economic software is superior. India's banks report about 10 percent non-performing loans; China admits to 20 percent and the true figure could be double that.
India's capital markets work the way they should; China's are a rigged casino. India has more engineers and scientists; its domestic entrepreneurs have made a bigger mark.
And while no one in his right mind wants to go near the creaky, backlogged Indian civil courts, India is a country that does try to govern by the rule of law. China, ultimately, is a country that will break the rule of law whenever the party feels like it or deems its power to be threatened even if that "threat" is a few thousand poor peasants and their lawyer.
It is also worth noting that China's one-child policy means that it will face the costs of a rapidly aging population much sooner than India.
Since 1992, when Deng Xiaoping decided to gun for growth, China's economy has been running flat out. Over the same period, India's has accelerated from a crawl to a brisk jog; in a good year, it can deliver 8 percent growth. But with the example of positive change behind it, plus a reasonable monsoon and the willingness to learn from China's successes, it is not hard to imagine India growing at China-like speed.
It is at that point that its institutional strengths (a much richer civil society and a government that can be held accountable) give it a decided advantage.
At some point, a market economy requires a reasonably open and flexible political order. In China, that implies the end of the Communist Party's monopoly of power, or at least the chance to challenge it without being imprisoned. China's rulers are nowhere near countenancing that.
For all the advances in personal freedom in China over the past 15 years - and these have been enormous - the Communist Party's clenched grip on power has not relaxed. It's a whole lot less traumatic for a democratic country to open its economy, as India is doing, than for a dictatorship to open its politics, as China is not doing.
And that's why, a generation or so down the line, it is India that is going to be the Asian tiger that everyone watches.

人妻漫画

Indian Economy - New stats

人妻漫画
George Iype
Every month, the Department of Economic Affairs at the Union ministry of finance releases a report that details the key economic indicators of various sectors in India.

Rainfall
June 2006: The monsoon season rainfall from June l, 2006 to July 5, 2006 was normal/excess in 69 per cent of meteorological sub-divisions.
June 2005: The monsoon season rainfall from June l, 2005 to June 22, 2005 was normal/excess in 22 per cent of meteorological sub-divisions.

Foodgrain stock
June 2006: Foodgrain stocks were 21.82 million tonne as on May 1, 2006.
June 2005: Foodgrain stocks were 28.08 million tonne as on May 1, 2005.

Industrial growth
June 2006: Overall industrial growth was 9.8 per cent during April-May, 2006 as compared with 9.5 per cent in April-May, 2005.
June 2005: Overall industrial growth was 8.8 per cent during April, 2005, while it stood at 8.9 per cent in April, 2004.

Infrastructure growth
June 2006: Core infrastructure sectors achieved an average growth rate of 6.7 per cent during April 2006 as compared with 6.0 per cent in April, 2005.
June 2005: Core infrastructure sectors achieved an average growth rate of 4.9 per cent during April-May, 2005 as compared with 8.2 per cent in April-May, 2004.

Broad money growth
June 2006: Broad money growth (year-on-year) was 18.1 per cent as on June 23, 2006 as compared with 13.7 per cent last year.
June 2005: Broad money (M3) growth (year-on-year) was 14.2 per cent (net of conversion, 14.1 per cent) as on June 10, 2005 as compared with 15.3 per cent last year.
(Broad money is a measure of the amount of money in circulation, consisting of currency held by the public, savings, deposits, balances in money market mutual funds, etc).

Exports, imports
June 2006: Exports grew by 32.4 per cent in dollar terms during April-June, 2006. Imports increased by 24.5 per cent in April-June, 2006.
June 2005: Exports grew by 19.8 per cent in dollar terms during April-May, 2005 as compared with 32.8 per cent in corresponding period last year. Imports grew by 40.9 per cent in April-May, 2005 as compared with 28.3 per cent in April-May, 2004.

Foreign exchange reserves
June 2006: Forex reserves, excluding gold and SDRs -- special drawing rights, stood at $155.97 billion at the end of June 2006.
June 2005: Forex reserves, excluding gold and SDRs, stood at $132.93 billion at the end of May 2005.

Rupee
June 2006: Rupee appreciated against Japanese Yen and depreciated against US Dollar, Pound Sterling and Euro in June 2006.
June 2005: Rupee appreciated against US Dollar, Pound Sterling and Euro and was stable against Japanese Yen in May 2005.

Inflation
June 2006: The annual inflation rate in terms of WPI (Base 1993-94=100) was 4.96 per cent for the week ended July 1, 2006 as compared with 4.14 per cent a year ago.
June 2005: The annual inflation rate in terms of WPI (Base 1993-94=100) was 4.10 per cent for the week ended June 18, 2005 as compared with 6.62 per cent a year ago

Tax revenue
June 2006: Tax revenue (net to Centre) during April-May, 2006 was higher by 74.2 per cent compared with an increase of 83.5 per cent in corresponding period last year.
June 2005: Tax revenue (net to Centre) during 2004-05 (provisional) over 2003-04 (actual) was higher by 20.3 per cent.

Fiscal deficit
June 2006: In terms of value, fiscal deficit during April-May, 2006 was higher by 51.4 per cent over corresponding period last year.
June 2005: In terms of value, Fiscal deficit during 2004-05 (provisional) was higher by 3.8 per cent over 2003-04 (actual).

Revenue deficit
June 2006: In terms of value, revenue deficit during April-May, 2006 was higher by 55.4 per cent over corresponding period last year.
June 2005: In terms of value, revenue deficit during 2004-05 (provisional) declined by 19 per cent as compared to 2003-04 (actual).

Wednesday, April 26, 2006

The New Vantage Credit Score. Their "Ad"Vantage or Ours?


The New Vantage Credit Score. Their "Ad"Vantage or Ours?

Rate It / View Comments / View All Articles by Robert Tenorio
Submitted Sunday, March 19, 2006

Submitted by: Robert TenorioCreditegghead.com
The New "Vantage" Score. (Their "Ad"Vantage or ours?)
It’s no secret that your credit score affects every aspect if your financial life. Your three digit credit score impacts your mortgage interest rate, your ability to secure low interest credit cards, and possibly even your ability to land that great new job you’ve been eyeing. Your credit score is like your financial DNA that identifies you as a person who is a high credit risk or not.
One of the more popular companies that calculate your credit score is the Fair Isaacs Corporation. The number or credit score they calculate is known as your FICO credit score, based on a mathematical formula they have developed. The average consumer credit score is 677. Only about 11% of the surveyed population ranks above 800 29% ranks between 750 and 799. There are more than 30 million people in the United States with credit problems severe enough to score under 620, making obtaining loans and credit cards at reasonable interest rates difficult (subprime).
The Fair Isaac Corporation is different from the three major credit bureau’s, Experian, Transunion and Equifax, in that, Fair Isaac’s only business is to calculate’s credit scores and sell them to consumers and lenders. They have seemed to push themselves to the top of this industry and have high name brand recognition in the profitable business of selling credit scores to lenders who want to lend us money. At the same time, the big three credit bureau’s compile and sell credit reports but also calculate and sell their own version of our credit scores. Each bureau has developed their own name for their credit score as well. At Equifax, your credit score is known as the Beacon credit score. At Transunion, it’s call Empirica. At Experian, it goes by the name of "Experian/Fair Isaac Risk model". Confused yet? In addition, these credit scores are likely to all be different numbers with each company if you were to check your score with each.
The "Vantage" Score
So, do we really need another three digit number that describes a consumers credit risk to lenders? Apparently Experian, Transunion and Equifax thinks so. They have announced this week that they are producing a more consumer friendly credit score designed to be more understandable to the industry. But is it really and who really benefits from this change?
Here are some facts to consider. Apparently Experian, Transunion and Equifax are all going to drop their individual former names for the credit scores and now all are going to be known as a Vantage credit score. At first I thought, what a great idea, know consumers will have one Vantage score that represents the credit score from Experian, Transunion and Equifax. Consistency across the board at last! Wrong. That’s not the case at all. Each major credit bureau will still individually calculate a consumer’s credit score and sell it to the financial world. These credit scores are still likely to be different numbers with each company if you were to check your score with each. The only thing they have changed is that the three bureau’s have agreed to call their credit score numbers the new Vantage score number.
So basically what we have here is name change and a repackaging of an old product. Sound’s like a huge buzz generated to give new focus on an old product that has a shiny "bell and whistle" attached. Now to make it even more confusing, Experian, Transunion and Equifax have decided to interpret their credit scores by using a scale they have created which is different than the industry norm. Prior to this week, a consumers credit score was interpreted as shown below to the left. Compare this with the way the Vantage score will be interpreted on the right.
FICO CREDIT SCORE
(Range is from 300-850)
720 + --- Excellent
680-719 Good
640-679 Fair
599-639 Poor
VANTAGE CREDIT SCORE
(RANGE IS 501-990)
901-990 = A
801-900 = B
701-800 = C
601-700 = D
501-600 = F
As you can see, person’s having a perfect FICO credit score, say 850, would only be considered to have B credit under the Vantage scoring system. Obviously, the adjustment has to be accounted for but why do we need to create more confusion with such a highly important number for consumers. So who really benefits here?
So there you have it. You are know up to speed. It is expected to be about six months to a year to see whether or not this new change will take off and how it will impact the industry. For now, just remember the importance of your credit score no matter which scale is used to interpret it.
By: Robert Tenorio, Attorney at Law and owner of http://www.creditegghead.com/, a consumer reference website for improving your financial health.

Thursday, April 20, 2006

No room for reservation at Wipro

No room for reservation at Wipro
PTIBangalore
IT major Wipro on Wednesday said that there was no room for job quotas in the company.
A day after Prime Minister Manmohan Singh asked industries to broadbase employment and make it representative, Wipro Chairman Azim Premji said his firm would recruit only on merit.
"We compete with global companies. We are primarily in the service business in terms of the mix of our consolidated revenues," he said, adding that "Service business is highly people-dependent. People make you successful or the people make you less successful."
Mr Premji pointed that close to 80 per cent of Wipro's global revenues come from the US, Europe, Japan and parts of the Middle-East.
"We have no alternative but to hire the best talent available within India," he said, adding "we are an organisation which requires selection on merit".

http://www.dailypioneer.com/indexn12.asp?main_variable=front%5Fpage&file_name=story6%2Etxt&counter_img=6

Wednesday, February 22, 2006

The psychology of a falling dollar


Interesting article........ http://www.atimes.com/atimes/Global_Economy/HB17Dj01.html


The psychology of a falling dollar By Axel Merk

Given a current-account deficit in excess of 6% of US gross domestic product (GDP), many fear the dollar must decline. At the World Economic Forum in Davos, Switzerland, policymakers disagreed as to the severity of the risk, its causes and cures. In a nutshell, the United States does not export enough to the rest of the world to balance its own appetite for cheap Asian imports. The American consumer spends too much and saves too little. As a result, dollars are leaving the US in return for goods and services. Unless those dollars are reinvested in US-denominated assets at a rate in excess of US$2 billion a day, the dollar will decline. According to the Financial Times, the top international-affairs official at the US Treasury warned that if the United States were to instigate policies to rein in the consumer, it would plunge the country into a deep depression; fallout to other countries would also be severe. While we have explained in the past why the US has no interest in a consumer slowdown, this is the first time we have heard the US Treasury warn about the risk of a depression. To adjust the current-account deficit without a severe adjustment in the value of the dollar, the rest of the world could also spend more and save less. While China's savings rate of 30-40% of disposable income is likely to come down at some point, we doubt that the rest of the world can or even wants to adopt US spending habits; Americans now have a negative savings rate. Not only is much of the world economy dependent on the US economy, the US economy also dwarfs many of the emerging economies where a pickup in consumption could be expected. In many of our analyses we traditionally focus on the fundamental pressures on the dollar, including the current-account deficit described above. While fundamentals may drive the long-term view, short-term moves tend to be influenced by psychological factors and perceptions on supply and demand. From time to time, we see an argument why the current account deficit does not matter, but most of these "fundamental" arguments are about as good as explanations in 1999 of why the economy had entered a new era. One reason so many do not pay attention to fundamentals is that the daily flow of information makes it difficult to see the big picture; instead, analysts revert to trend analysis. Why bother about the dollar when it has "always" been "cyclical"? The US consumer has "always" spent too much, why worry now? Why bother about the dollar if your expenses are also in dollars? And why bother about it given that it is in the world's interest that the US consumes what the world produces? First, and this may surprise many "dollar bears", American consumers are, generally speaking, far more rational than they are given credit for. Increased debt burdens have come with gradually lower interest rates since the early 1980s. American consumers react to monetary and fiscal policies, as well as cheap Asian imports. There are side-effects that policymakers may not have intended. For example, while in the 1950s fewer Americans owned their homes, they truly owned them; now, banks are the true "owners". Most important, while we agree that it is in the world's interest to keep the dollar strong, it may be fatal for the government to base its policies on that presumption. The US dollar has enjoyed the confidence of the world as a reserve currency for many decades because of relatively prudent management. One cannot turn the world upside down and blackmail it into producing cheap goods because it is in its interest to build infrastructure and create employment. While we expect policymakers in Asia to fight tooth and nail before letting their currencies appreciate significantly, history has shown that the markets are ultimately more powerful than policymakers. This does not mean we should purchase the currencies of countries backed by unpredictable leadership. However, it does mean that the markets may punish the holders of US dollars. We believe that the currencies of countries backed by what we call sound monetary policy will be the beneficiary of any fallout. We refer to countries that are less likely to intervene in the currency markets and are less likely to engage in competitive devaluation. The currencies of many Asian countries have speculative potential, but it is one thing to try to shield yourself from a decline in the dollar by diversifying to a basket of hard currencies; it is another to speculate on the unpredictable behavior of, for example, the central bank in Japan. Japan has made it clear over and over again that it is in its interest to keep the yen weak to boost exports. The Japanese market is swimming in liquidity; the Bank of Japan is yielding to political pressure and does not mop up this added liquidity. Instead, it has agreed to allow the Consumer Price Index to be redefined so that it can stand by its promise to keep rates low while inflation is low. In the US, we argue whether government statistics have a bias to show too little inflation; in Japan, there is no debate - we know the statistics cannot be trusted. Some believe higher interest rates may save the dollar as higher rates attract more investments. This analysis ignores the fact that as of the end of last year, the US pays more in interest to overseas creditors than it receives from overseas investment. This phenomenon is more typically associated with Third World countries; as interest rates rise, obligations to foreigners increase. Foreigners mostly hold short-term denominated debt securities, those most affected by interest-rate increases. Since the US Treasury suspended the sale of 30-year bonds in October 2001, government debt has become much more interest-rate-sensitive as the duration of outstanding debt declined. Just as US consumers took out adjustable rate mortgages (ARMs) to finance their spending, so in effect did the federal government. More important than whether the United States has reached the peak in interest rates is the perception that there are not many more rate hikes, if any, in the pipeline. At the same time, there is a perception that the European Central Bank, for example, is going to raise rates further. It does not really matter that the ECB may be reluctant to raise rates and the new US Federal Reserve chairman Ben Bernanke may end up raising rates more than some expect. In our assessment, in the coming months, the perception is going to influence the dollar more than the absolute level of interest rates. It does not help the dollar that Bernanke has not yet established his credibility. Bernanke has indicated during his confirmation hearings that any crisis can be responded to by providing liquidity to the banking system. Adding liquidity is helpful to avoid panics as it allows the free market to set prices, but it may not prevent a decline in the dollar. Transitions at the helm of the Fed are frequently accompanied by a crisis; we would not be surprised if a sharp decline in the dollar was Bernanke's test. We believe policymakers may welcome a weaker dollar. Many have warned that a weaker dollar would substantially increase inflationary pressures as it makes imports more expensive. However, policymakers may try to force Asia to become even more competitive and sell at even lower profit margins. We have also argued that a weaker dollar is politically desirable in the absence on a consensus on reforms in Medicare, Medicaid and Social Security. By devaluing the purchasing power of the dollar, nominal promises can be kept without alienating voters. Is the tide shifting against the dollar? Is the decline that lasted until late 2004 going to resume? Judging by the the early action in 2006, it looks like it. Precious metals have been soaring in recent weeks - to any policymaker, this should be a warning. We do not know what is going to happen to the dollar for the remainder of the year. But we see the fundamentals further deteriorating. We also believe that dollar sentiment is turning more negative. We see an increasing number of investors taking steps to diversify out of the dollar "just in case". Similarly, while Asian economies will try to keep their currencies weak, they want to diversify their dollar holdings. Just as much of Asia has been "subsidizing" sales to the US through a weak exchange rate, Asian economies may well be inclined to subsidize sales to Europe in the future. I was invited to host a panel at a conference in China last autumn: the focus of the conference was on how to increase sales to Europe. With its "best client", the US consumer, in jeopardy, it is only prudent for Asia to foster new distribution channels for its products. Speculative money has no loyalty and is merely looking for the next trend. More and more speculators are pursuing the same strategies. In the end, these "professional" investors can influence the markets for a couple of months. We are more concerned about corporate money from overseas seeking better opportunities outside of the US as consumer spending slows. What does all this mean for investors? If you sympathize with these arguments, but believe a weaker dollar does not affect you, think again. The reason the US does not have significant "core inflation" is because that measure focuses on goods the United States can import from Asia. At some point, the market is likely to force an adjustment, and there will be few places to hide. Maybe precious metals provide some refuge. We also believe investors should consider adding a basket of hard currency as an element to their portfolio. One final note, on the media celebrations surrounding Alan Greenspan's recent departure as Fed chairman: during his tenure, the purchasing power of the dollar was cut in half. That was during "good times". Rather than hope that "bad times" never come, prudent investors should consider acting to seek protection against a further decline in the dollar. Axel Merk is the portfolio manager of the Merk Hard Currency Fund, a no-load mutual fund that invests in a basket of hard currencies from countries with strong monetary policies assembled to protect against the depreciation of the US dollar relative to other currencies. (Copyright 2006 Merk Hard Currency Fund. Used by permission.) Bernanke and the hyperinflation fear (Dec 21, '05)Globalization and the dollar (Nov 12, '05)History reserves a sad place for next Fed boss (Oct 28, '05)Greenspan's conundrum (Oct 26, '05)

Friday, February 11, 2005

Online banking growing rapidly

http://www.ciol.com/content/enterprise/2005/105021001.asp

According to a survey, nearly half of all U.S. adult Internet users now manage their bank accounts online, making banking the fastest-growing online activity.
Thursday, February 10, 2005
WASHINGTON: Nearly half of all U.S. adult Internet users now manage their bank accounts online, making banking the fastest-growing online activity, according to a survey released on Wednesday. Forty-four percent of U.S. Internet users bank online, up from 30 percent two years ago, the Pew Internet and American Life Project said.
The nonprofit group said banking has grown faster than any other online activity since it began measuring Internet use in March 2000. People with high-speed connections at home, those between the ages of 28 and 39, and more affluent households were most likely to bank online, the group said.
The survey of 537 Internet users was conducted in November 2004 and has a margin of error of plus or minus 5 percentage points.
? Reuters

Tuesday, February 08, 2005

Banking and Technology Today

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