India’s $13bln spectrum auction has room for upset 3 Mar 2015 The top mobile operators are limbering up to renew licences that support as much as 70 pct of their revenues. The worry is that rivals or new entrants such as Reliance Jio may bid aggressively for additional bandwidth. An expensive auction will weigh on balance sheets.
India’s infrastructure push could be envy of West 2 Mar 2015 The government has pushed back its deficit reduction target in order to boost spending on roads, rail and power. New Delhi is now unmistakably pursuing a public investment-led growth strategy. It’s an opportunity that rich nations, which can borrow far more cheaply, are missing.
India goes back to future with $137 bln rail push 27 Feb 2015 The government’s ambitious plan will require finesse in raising money. But the investment case is strong. India’s British rulers reaped huge productivity gains by building out the railways 150 years ago. Modernizing the dilapidated network could produce even better returns.
India in depth: Time for big ideas in tight budget 25 Feb 2015 This week’s federal budget is likely to put a squeeze on public spending. But it also needs to strike a strongly pro-business note. Investor enthusiasm for Prime Minister Narendra Modi’s policies is starting to wane. Big-ticket reforms could give “Modinomics” a credibility boost.
Indian electoral upset could weigh on reforms 10 Feb 2015 The upstart Common Man Party has regained power in Delhi a year after its first brief rule. For now, that’s a minor embarrassment for Narendra Modi. But if his rival’s left-wing rhetoric gains national traction, the prime minister may have to rethink his pro-business policies.
India’s "improved" GDP statistics strain credulity 2 Feb 2015 Revised data shows the economy grew 6.9 pct in the year to last March, just as fiscal and monetary tightening was taming inflation and narrowing the current account deficit. That’s something no major economy has experienced in recent history. Investors are right to be sceptical.
Modi market mania faces test in $3.7 bln coal sale 30 Jan 2015 The government is selling a 10 percent stake in the lumbering monopoly to meet its deficit target. A pledge to ramp up domestic production makes it easier to lure buyers. Still, investor enthusiasm for Coal India shares will set the tone for a big pipeline of chunky deals.
India in depth: Relaxing the budget squeeze 28 Jan 2015 The states of India need a break. They have lived with spending curbs that New Delhi has never accepted for itself. But this has bred angst. The upcoming budget is a chance to boost regional spending even as the federal government cuts back. The rebalancing will spur GDP growth.
Obama’s nuclear gift to Modi is shrewd investment 26 Jan 2015 The U.S. president has unblocked a stalled nuclear power deal with India, allowing Prime Minister Narendra Modi to build new reactors. While that will boost orders for GE-Hitachi and Westinghouse, bigger gains to the U.S. economy will come from ending India’s energy deficit.
Modicare may add to big pharma’s Indian gripes 22 Jan 2015 The Indian prime minister plans to launch a universal healthcare scheme on a tight budget. That bodes ill for efforts to improve patent protection. Despite pressure from Barack Obama and big drugmakers, it will be tough to shake India’s addiction to cheap generic pharmaceuticals.
Asia’s big demons: debt, deflation, demographics 16 Jan 2015 The unholy trinity threatens to sap the region’s growth potential. Central banks need to fight the fiends by cutting borrowing costs so that output and prices revive. But fears of higher interest rates in the United States are prompting them to sit tight. That may be an error.
India’s rate cut is first of several this year 15 Jan 2015 With inflation tame and output growing below potential, Governor Raghuram Rajan’s policy of high interest rates was beginning to look ill-advised. A quarter-point decrease alone won’t perk up a sluggish economy. Investors will expect a further loosening of the monetary noose.
Cheaper oil no friend to Asia’s households 24 Dec 2014 Real wages are growing 2 percentage points below their long-term average, reflecting labour’s weak bargaining power amidst slowing growth. Falling oil prices and low inflation could prompt employers to be even more tight-fisted in 2015. Household finances might wobble.
India’s growth spurt could be for real this time 23 Dec 2014 The country’s decade-long obsession with GDP expansion has proved costly. It stoked inflation and damaged balance sheets due to a lack of effort to boost production. By contrast, Prime Minister Narendra Modi’s reforms promise a slow buildup to a more enduring increase in output.
Stick with BRIC 22 Dec 2014 It’s easy to mock the idea that the four biggest emerging markets – Brazil, Russia, India and China – will reshape the world economy. But the balance is still moving their way, even with slowdowns and Russian turmoil. Markets say otherwise because they were too keen at first.
SpiceJet rescue is no fix for India aviation woes 17 Dec 2014 The government is cajoling banks to lend to the indebted airline, which really needs more equity. The lifeline just might prevent a repeat of Kingfisher’s high-profile failure. But high fuel taxes and the lack of a bankruptcy law will keep the industry stuck in an air pocket.
Xiaomi growth loses its shine with India ban 12 Dec 2014 A patent dispute has forced a retreat for China’s top smartphone brand. The stakes are high because Indian demand for low-end phones could be huge. Xiaomi can probably pay up and start selling again, but patent fees will squeeze margins, and in turn the company’s valuation.
India may boast world’s steepest rate cuts in 2015 2 Dec 2014 The Reserve Bank resisted strong pressure from the government to start cutting interest rates from their current 8 percent. Governor Raghuram Rajan wants more proof of correction and disinflation. It may be a short wait. A weak economy urgently needs lower borrowing costs.
India in depth: Time to follow China on rates 26 Nov 2014 Global disinflation is creating room for the Reserve Bank to follow its counterpart in Beijing and cut borrowing costs. Unlike the People’s Republic, India doesn’t need to worry about triggering overinvestment. Monetary easing now would have few risks, and several benefits.
Indian bank M&A looks hard to copy 24 Nov 2014 Kotak Mahindra’s $2.4 billion all-share offer for ING Vysya is a rare example of consolidation amongst India’s sizeable private banks. Founder Uday Kotak needs to reduce his stake. Dutch group ING’s willingness to accept a smaller shareholding in a larger group is also key.