5.12.11
Somewhere in Australia....
Australia’s ruling Labor Party representatives have passed a motion to remove a ban on uranium exports to India after a passionate debate that saw sharp divisions in the cabinet. While 216 delegates voted in favour of the decision, 185 Labor representatives expressed their opposition to any such move. The party had imposed the ban on uranium export to non-signatories of Nuclear Non-Proliferation Treaty (NPT) like India four decades back. Earlier, prime minister Julia Gillard had urged that Australia should sell uranium to India to boost trade and also to enhance bilateral ties with India. “We are at the right time in the history of the world to seize a new era of opportunity of the Asian century,” Julia Gillard said while addressing the Labor National Conference on Sunday. “We need to make sure that across our regions we have the strongest possible relationships we can, including with the world’s largest democracy, India,” she said. “That is why today we should determine to change our platform and enable us, under safeguards, to sell uranium to India,” Gillard said even while anti-uranium mining protesters flocked outside the conference venue. Gillard also highlighted the fact that Australia sells uranium to China but not to the world’s largest democracy with a clean nuclear record. Those opposing overturning of the policy on uranium exports to India included four ministers in the Gillard cabinet.
FDI in Retail gets some support at last
HDFC chairman Deepak Parekh and member of Parliament Ashok Ganguly have appealed to corporate India to come out strongly in support of a besieged government, which is overwhelmed by opposition to its proposal to open up foreign investment in retail. The two senior business leaders are part of a group of 14 eminent citizens who had come together to raise the issue of policy paralysis, and later the Lokpal Bill. In a joint statement titled ‘The false dangers of FDI in modern retail trade’, the two have made a call “to the saner sections of Corporate India to come out and strongly support progressive measures and reforms with the same spirit and gusto with which we take the liberties to criticize policies or issues we do not appreciate”. Backing the move to allow FDI in retail, the statement said: “Modernization of retail trade is an essential part of India’s growth story. It is well known, from experiences of countries such as China, Indonesia and several others, that modern retail trade and traditional traders can, and do, prosper side by side, raising employment along the supply chain, improving farm incomes, reducing spoilage and delivering affordable products to consumers.”
4.12.11
India's gold fixation
India's innate fascination with gold continues as Indian households hold gold worth over $950 billion which in turn is around 50% of the country's GDP in dollar terms, says a report. Gold consumption is part of India's culture and tradition and the country is the world's largest consumer of gold, followed by China.
Indian households hold 18,000 tonnes of gold which represents 11% of the global stock and worth more than $950 billion, around 50% of India nominal GDP in dollar terms, says global research firm Macquarie. According to Macquarie, 7–8% of India's $329 billion in household savings was held in gold in 2009-10. With gold evolving as a store of value more than an adornment, rising gold prices have also contributed towards increasing Indian households' "perceived wealth". Macquarie used the term "perceived wealth" because most Indian households are reluctant to part with their gold jewellery and other gold holdings, even at times of crisis, as doing so is considered a stigma, it said.
Notwithstanding the 64% cumulative rise in gold prices, (in rupee terms) between January 2010 and September 2011, gold consumption in India in volume terms (including jewellery and net retail investment) is still holding strong. During the first three quarters of 2011, there has been a 5% year-on-year increase, on the top of 72% year-on-year growth registered in 2010, Macquarie said.
Although during the quarter ended September, 2011, gold demand in volume terms declined 23% over last year largely owing to sharp depreciation in rupee, high gold prices and inauspicious times according to the Hindu calendar. However, in value terms "India still remains the world's largest consumer of gold as of September, 2011, in tonnage terms," Macquarie said.
The report further noted that rising gold consumption is one of the reasons for a depreciating rupee. "Gold imports alone have contributed nearly 40 basis points to the 130 basis points widening in India's current account deficit between FY'08 and FY'11," Macquarie said.
Gold imports are the third-largest of India's merchandise imports after crude oil and capital goods. In 2010, about 92% of the supply of gold in India was met through net imports and the rest through recycled gold and other sources.
One of the factors behind the weakness in rupee is the high current account deficit of India, while most other Asian countries have a current account surplus. In addition, it is running a very high fiscal deficit and domestic growth is slowing, Macquarie said. "We expect the current account deficit to remain high at 2.8% of GDP for FY2011-12," Macquarie said.
Following the US sovereign debt downgrade and increased uncertainty in the euro zone, the Indian Rupee has depreciated by 18.6% against the US Dollar since August, 2011.
While the weakening trend against the US Dollar is across the board, the rupee has been the worst performing currency in the Asia excluding Japan region.
Indian households hold 18,000 tonnes of gold which represents 11% of the global stock and worth more than $950 billion, around 50% of India nominal GDP in dollar terms, says global research firm Macquarie. According to Macquarie, 7–8% of India's $329 billion in household savings was held in gold in 2009-10. With gold evolving as a store of value more than an adornment, rising gold prices have also contributed towards increasing Indian households' "perceived wealth". Macquarie used the term "perceived wealth" because most Indian households are reluctant to part with their gold jewellery and other gold holdings, even at times of crisis, as doing so is considered a stigma, it said.
Notwithstanding the 64% cumulative rise in gold prices, (in rupee terms) between January 2010 and September 2011, gold consumption in India in volume terms (including jewellery and net retail investment) is still holding strong. During the first three quarters of 2011, there has been a 5% year-on-year increase, on the top of 72% year-on-year growth registered in 2010, Macquarie said.
Although during the quarter ended September, 2011, gold demand in volume terms declined 23% over last year largely owing to sharp depreciation in rupee, high gold prices and inauspicious times according to the Hindu calendar. However, in value terms "India still remains the world's largest consumer of gold as of September, 2011, in tonnage terms," Macquarie said.
The report further noted that rising gold consumption is one of the reasons for a depreciating rupee. "Gold imports alone have contributed nearly 40 basis points to the 130 basis points widening in India's current account deficit between FY'08 and FY'11," Macquarie said.
Gold imports are the third-largest of India's merchandise imports after crude oil and capital goods. In 2010, about 92% of the supply of gold in India was met through net imports and the rest through recycled gold and other sources.
One of the factors behind the weakness in rupee is the high current account deficit of India, while most other Asian countries have a current account surplus. In addition, it is running a very high fiscal deficit and domestic growth is slowing, Macquarie said. "We expect the current account deficit to remain high at 2.8% of GDP for FY2011-12," Macquarie said.
Following the US sovereign debt downgrade and increased uncertainty in the euro zone, the Indian Rupee has depreciated by 18.6% against the US Dollar since August, 2011.
While the weakening trend against the US Dollar is across the board, the rupee has been the worst performing currency in the Asia excluding Japan region.
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