Politics

India on the brink of its own financial crisis

Canada India Education Council (CIEC)

Source: The Guardian

In a reprise of the 1997-98 Asian crisis, India’s stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country.

India’s financial woes are rapidly approaching the critical stage. The rupee has depreciated by 44% in the past two years and hit a record low against the US dollar on Monday. The stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country.

In a sense, this is a classic case of deja vu, a revisiting of the Asian crisis of 1997-98 that acted as an unheeded warning sign of what was in store for the global economy a decade later. An emerging economy exhibiting strong growth attracts the attention of foreign investors. Inward investment comes in together with hot money flows that circumvent capital controls. Capital inflows push up the exchange rate, making imports cheaper and exports dearer. The trade deficit balloons, growth slows, deep-seated structural flaws become more prominent and the hot money leaves.

The trigger for the run on the rupee has been the news from Washington that the Federal Reserve is considering scaling back – “tapering” – its bond-buying stimulus programme from next month. This has consequences for all emerging market economies: firstly, there is the fear that a reduced stimulus will mean weaker growth in the US, with a knock-on impact on exports from the developing world. Secondly, high-yielding currencies such as the rupee have benefited from a search for yield on the part of global investors. If policy is going to be tightened in the US, then the dollar becomes more attractive and the rupee less so.

But while the Indonesian rupee and the South African rand are also feeling the heat, it is India – with its large trade and budget deficits – that looks like the accident most likely to happen. On past form, emerging market crises go through three stages: in stage one, policymakers do nothing in the hope that the problem goes away. In stage two, they cobble together some panic measures, normally involving half-baked capital controls and selling of dollars in an attempt to underpin their currencies. In stage three, they either come up with a workable plan themselves or call in the IMF. India is on the cusp of stage three.

India Inc presses panic button on sagging rupee, economy

Canada India Education Council (CIEC)

Source: Business Standard

Indian companies gearing up for new ‘normal’ for rupee.

With rupee ending at an all-time low of 63.13 a dollar, chief executive officers (CEOs) of top Indian companies are redrawing their currency risk strategies as a “new normal” for the rupee is fast emerging.

Some of the top companies such as Reliance Industries, Birlas, Essar, Adani group, and the Tatas have huge exposure in foreign currency and any change in the rupee’s value increases their costs of operations in a big way.

“I am disappointed, not surprised, with the way the rupee is falling,” says Rahul Bajaj, chairman of Bajaj Auto and one of corporate India’s vocal voices. “We are paying for the last four years of inaction and absence of reforms. The government has spent a lot of money in loan waivers, NREGA (employment guarantee scheme) and Food Security Bill and all these populist measures have now added to the deficit. We are not opposing pro-poor moves. We are against populist measures. We should be treating the disease and not the symptom. Now is the time to change policies.”

Mahindra & Mahindra chairman Anand Mahindra recently said the rupee is falling without a parachute and capital controls announced by the Reserve Bank of India (RBI) is just taking India back to the 1980s. The mood in the corporate camp is sombre. This is in spite of leading CEOs’ many suggestions to the Prime Minister during their meeting on July 29 on how to ring-fence the rupee. However, since then, the rupee has been continuing its downward journey.

Other CEOs say the economic slowdown and lack of initiatives by the United Progressive Alliance (UPA) government is unprecedented which is taking the country on the road to a complete shutdown. “There are no takers for infrastructure projects, and no growth in order book due to land acquisition problems, environmental clearance and corruption. This is perhaps one of the worst times for Indian companies to do business in India,” said the CEO of an infrastructure company asking not to be named.

RBI has already acted aggressively, tightening liquidity and raising interest rates, banning companies and individuals from spending money abroad in an attempt to stem the ongoing rupee weakening. RBI’s surprise tightening has been stark, but similar to that in early-1998, soon after the Asian crisis. This time, however, CEOs say that none of these measures is helping the rupee stop its slide against the dollar.

Bajaj says the government should change its policies instead of trying to manage the Indian currency. CEOs such as S Gopalakrishnan, executive vice-chairman of Infosys, say it would have been more appropriate to initiate policies that prevent an influx of non-essential imports such as coal and iron ore, and augment forex inflows by encouraging foreign direct investments. For this, a conducive and stable policy regime is needed, they add. Foreign institutional investments should also be liberalised by removing short-term capital gains tax.

According to the CEOs, another worrying factor is that oil prices are going up while the rupee is falling. With Brent crude at around $110 a barrel, its impact on inflation and Indian economy is still not being taking into account.

Under the World Trade Organisation rules, India can always impose a higher import duty on expensive, foreign-made cars and this is the right time to take action. “This was something the Prime Minister was made aware of on June 29. Importing coal into India when Coal India is sitting on massive reserves is a shame, they say. The government should immediately take action to part privatise Coal India so that all those power plants, which have shut down due to lack of coal can be revived,” said a CEO.

For many companies including the Adanis, Lanco and Reliance Power, the falling currency has been a double whammy. Many companies had taken massive loans from abroad without taking a forward cover.

They are also importing raw materials from overseas. With the surprise fall in the rupee, many companies are staring at the prospect of a default. “This is like the replay of the 2008-09 crisis. The only difference is that this time the government is groping in the dark and has no clue how to stop the slide,” said the CEO quoted above.

Analysts say sectors such as chemicals, paper, auto ancillaries, power and steel are the most affected from rupee depreciation. Among these sectors, mid-sized companies with exposure to forex risk but limited expertise or intention to hedge might be the most adversely affected.

CEOs say in the coming days, the government could look at the option of increasing import duty on select commodities, such as electronic goods, to reduce the import bill. The electronic goods import bill was $31.5 billion in FY13 (ended March 2013).

A similar 150 per cent import duty on expensive cars may also be considered. A sharper hike in diesel prices, although politically difficult, would also curb the oil import bill, which stood at $169 billion in FY13.

India’s newest state has more people than Canada and more Microsoft IT employees than anywhere but Redmond

Canada India Education Council (CIEC)

Source: Quartz

The creation of India’s newest state, Telangana, marks the end of a decades-long quest for self-governance in the country’s south, and was greeted with celebration on the streets of Hyderabad, the state’s new capital city.

But the ruling Congress party’s vote to approve the state’s creation Tuesday night may also usher in an era of uncertainty for dozens of multinational companies with major operations in Hyderabad.

If it was a stand-alone country, Telangana, with a population estimated at 36 million people, would be more populous than Canada, Saudi Arabia, Taiwan or Australia. At 44,300 square miles, Telangana will be about the same size as the US state of Kentucky.

Most importantly for global business, Telangana will share Hyderabad, the south Indian information technology metropolis, with Andhra Pradesh, the state is it separating from, for the next ten years. After that, the city will go to Telangana, whose leaders may have scant business experience, particularly with global corporations.

The city houses the information technology operations of some of the world’s biggest companies, including the largest Microsoft IT center outside of its Redmond, Wash. headquarters. Microsoft’s website calls the Hyderabad center the “backbone” of the company’s IT operations and says it handles IT for more than 1.3 million devices and 194,000 end-users in over 108 countries as well as managing Microsoft’s global data centers and corporate network.

Thousands of employees from other multinational companies including Accenture, Bank of America, Dell, Novartis, JP Morgan, Google, and Facebook also work in Hyderabad’s sprawling business parks.

The Times of India reported that Wednesday “Brand Hyderabad is set to shine once more and brighter at that,” with the Telangana decision made. But Telangana’s independence movement has been tainted by violence, and Tuesday night’s announcement does not seem to have put an end to that. Businesses, schools, and public transportation were shut Wednesday as rock-throwing protestors vented their anger over the decision to give Hyderabad to the new state.

Canada makes immigration more difficult

Canada India Education Council (CIEC)

Source: GulfNews.com

At the centre of the rule changes is a new definition of the phrase “dependant child.”

DUBAI: If you plan to move to Canada after January 1 and have children who are 19 or older, they will have to make separate and independent applications.

And new rules coming into effect then will also make it more difficult for older children who plan to study full time to move to Canada.

It’s estimated by officials in Ottawa that the new rule changes will cut an estimated 7,000 applicants from moving to Canada.

At the centre of the rule changes is a new definition of the phrase “dependant child”. At present, those under 22 are considered to be dependant children and qualify to automatically move with parents if the parents’ application for permanent residency is granted.

Under the new rules, those past their 19th birthday will have to make a separate application — opening a new immigration application file with permanent residency being granted or denied on the merits of the application. With education and work experience being a critical part of the points test for permission to emigrate, the new rule will make it virtually impossible for those new files to be approved — at last until third-level education and work experience build up the needed points.

“These rule changes are going to make it a lot harder for parents who have older children to move here,” Dev Patel, an immigration consultant and paralegal based in Mississauga, Ontario, told Gulf News. “This rule change was announced about a month ago and I am already seeing a spike in files and people wanting to come to Canada are worried. I think that it’s important to spread the news that if you plan to move to Canada, the earlier the better. I know that Dubai and the UAE is often used as a stepping stone for many people from the sub-continent who want to come to Canada. I have several files on my desk right now and two families in Dubai will have to make separate files for their older children if they don’t follow through on the current paperwork.”

The rule changes were detailed in a seven-page report post on the Citizenship and Immigration Canada web site.

“The earlier in life immigrants arrive, the more their educational experience will resemble that of their Canadian-born counterparts and the easier it will be to learn an official language and adapt to Canadian cultural traits and social norms,” a says.

Under the current immigration rules, a child is considered a dependant if they are under 22 and single, but there are exceptions if the person is over 22 and still rely on direct financial support from their parents or legal guardian — and are full-time students.

According to the latest statistics from Ottawa, 64,757 of all sponsored children to Canada were under 19 in 2012 — making up nearly 90 per cent of the total. There were 7,237 applicants as dependant children over 19 in the same year.

Part of the reasoning given in the briefing paper outlining the rule changes says that Canada’s economy remains fragile and needs to be protected.

Age at emigration frequently determines where a person receives his or her education. With the difficulties in determining a foreign credential’s value in Canada and evidence that the return on Canadian education is much higher, the report says. “I think the lesson for all now is that it is becoming harder and harder to immigrate to Canada,” Patel said. “This government has brought in new criteria, raised fees, changed rules and is generally making it more difficult to move to Canada. The reality is that Canada needs new immigrants to continue to grow.”

The dependant children’s age cut-offs in the United States is 21 and, in Australia, 25.

Our medical schools must not become shills for big pharma

Canada India Education Council (CIEC)

Source: The Globe and Mail

Most Canadians might be surprised to learn that medical students in Canada are routinely taught by faculty who have financial ties, and work in partnership, with drug companies. Conflict of interest (COI) policies at medical schools are important to ensure that students get an unbiased education based on the best available clinical evidence, free of industry-sponsored, commercially-driven information. After all, these students go on to become our doctors and we want the best doctors education can provide.

So, do medical schools in Canada lack appropriate conflict of interest policies or are they simply not following them?

In a study published in PloS One, we examined the COI policies at all 17 medical schools across the country. Our findings reveal a glaring problem, and something that should concern all of us. The majority of medical schools (12 of 17) have generally weak or non-existent COI policies, and four schools had policies that were moderately restrictive. Only one medical school – Western University – had stringent COI rules.

In other words, the bulk of our doctors-in-training in Canada are receiving health information that is potentially biased and misleading.

Here’s a telling example: Between 2002 and 2006, the University of Toronto held a pain-management course for medical and other health science professional students that was partly funded by grants from Purdue Pharma LP, the maker of OxyContin. As part of the course, a chronic pain-management book – funded and copyrighted by Purdue Pharma – was distributed to the students free of charge by a lecturer who worked in partnership with Purdue Pharma and was external to University of Toronto. The wording in the book exaggerated both the benefits and the approved uses for these medications, based on the current evidence at that time. Despite recognition of these concerns by the university after a student complained, those who attended the sessions were never informed of the bias or the problematic content of the lectures and book (which was used in a related course up to 2010).

The most poorly regulated areas noted in our study include curriculum selection, receiving free drug samples, visits from pharmaceutical sales representatives and taking part in speaking engagements on behalf of pharmaceutical companies.

Bottom line: Unrestrictive policies allow industry to influence medical residents’ education about appropriate, effective and safe medicines, as well as prescribing choices.

Free drug samples have been found to increase the likelihood that medical residents will choose to provide medications to patients that cost more than equally effective prescription treatments, or other non-pharmaceutical options. Frequent visits by drug sales representatives are associated with influencing prescribing practices, resulting in more frequent prescribing and poorer prescribing quality.

The biggest concern, however, is the lack of education provided to medical students about the pervasiveness and effects of COI relationships with drug companies. Without such guidance, medical students, who will become prescribing physicians, graduate without being fully equipped to deal with either potential conflicts of interest in medical practice, or the influence of industry promotion on clinical judgement.

Our findings mean that industry has the ability to influence the resources provided and information that is taught to medical students. Without effective, stringent policies to regulate industry’s interactions with medical students and faculty, drug companies are granted the ability to be present in medical schools and play notably influential roles in the clinical training of medical students.

If we want the best doctors in Canada, our medical schools need to revise and improve their policies to regulate conflicts of interest between medical faculty, residents and the pharmaceutical industry. These policies should address the medical curriculum and the ways in which relationships with pharmaceutical firms may affect the attitudes and information that is taught to medical students.

Medical students should be educated by medical faculty using the best available clinical evidence that is unbiased by industry so that when medical students graduate, they are able to provide their patients with the best, most effective, and safest treatments possible.

Harper Government continues to deepen Canada-India Partnership

Canada India Education Council (CIEC)

Source: Department of Foreign Affairs and International Trade via Indian Economic Business News

On May 17th, The Honourable Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, and the Honourable Bal Gosal, Minister of State (Sport), met with members of the Indo-Canadian business community in Brampton, Ontario, to highlight the benefits for small and medium-sized enterprises (SMEs) of an ambitious Canada-India comprehensive economic partnership agreement (CEPA). The event’s hosts were the Indo- Canada Chamber of Commerce and the Brampton Board of Trade. “With SMEs accounting for more than 99 percent of companies in Canada, our government understands the crucial role that these businesses play in generating jobs, growth and prosperity in every region of our country,” said Minister Fast. “That’s why we continue to work hard to open new markets for our exporters in the largest, most dynamic and fastest-growing economies in the world, including India.” Further fuelling Canada’s growing trade with India are our strong people- to-people ties,” said Minister Gosal. “Nearly one million Canadians of Indian descent enrich our communities in cities and towns across Canada, and our government is committed to utilizing these strong links to build a partnership that will lead to new opportunities and new sources of prosperity in both countries.”

Canada lures Indian Entrepreneurs with New ‘Startup Visa’

Canada India Education Council (CIEC)

Source: Silicon India via Indian Economic Business News

The Canadian government has launched attractive schemes and provisions, to lure potential Indian entrepreneurs who are struggling to get their green cards or trying to extend their H- 1B visas in the United States, as per a report by Business Insider. Mr. Jason Kenney, Canada’s Minister of Citizenship, Immigration and Multiculturalism, has been aggressively campaigning to promote their governments move on offering startup entrepreneurs a new visa. The new “startup visa” was launched by the government in April. It will grant immediate permanent residency and a subsequent path to citizenship to those qualifying entrepreneurs, who can start a business in Canada and have attracted investments for their start-up ventures, and raise enough capital funds and angel investors.

In a first for India, Gujarat plans 5-yr export policy

Canada India Education Council (CIEC)

Source: Economic Times via Indian Economic Business News

Gujarat, which accounts for about a quarter of India’s total exports, is mulling a five-year export policy to focus on value-added exports in sectors such as textiles, agriculture and dairy. The move by the top exporting state in the country comes on the back of sagging efforts by the centre to boost dwindling exports. The first state in the country to have an export policy, Gujarat plans to increase the share of exports from the state from 25% to 30% in five years. As a precursor to the policy, the Federation of Indian Exports Organization undertook a study for Gujarat on the state’s export competitiveness and identified sectors with export potential. “We are working on improving exports from the state and will take steps to increase the share to 35% of total India’s exports by 2020,” said a state government official. The government may announce incentives ranging from exemption from value-added tax (VAT) in some sectors to focus market scheme and focus product scheme to offset high freight cost and other externalities to select international markets and promote products with high-export intensity. Given that over 90% of Gujarat cotton goes to other states for value addition, emphasis would be laid on readymade garments. The state already has potential in the textile sector, as nearly 23% of the state gross domestic product comes from textile and related industries.

After lingerie mannequin ban, Mumbai politicians want ban on lingerie ads too

Canada India Education Council (CIEC)

Source: NDTV

Mumbai: Are mannequins, which display lingerie, as harmless as they look? Or are they silently promoting the surge of sex crimes?

If politicians in Mumbai are to be believed, it is the latter. And such is the potential “danger” posed by lingerie mannequins, the general body of 227 corporators of the Brihanmumbai Municipal Corporation (BMC) unanimously decided it was best to ban the ladies in plastic.

“Lingerie mannequins promote rapes. Skimpily clad mannequins can pollute young minds. After the Delhi rape case, I felt something had to be done,” explained Ritu Tawade, the BJP corporator who mooted the proposal.

Though the municipal commissioner is still to approve the proposal which was passed on May 16, when asked if lingerie advertisements on TV, in newspapers and on billboards should also be banned, Tawade agreed.

Dumbfounded Mumbaikars however, thought the initiative was ridiculous.

“Sex crimes are committed by people who have a twisted mentality and basically if they want to be, if you like, sexually aroused, all they have to do is switch on the net. It’s all over the net. What are they talking about? It is really absurd. That is why I think ‘Big Moron Corporation’ is a good title for BMC,” Ad Guru Alyque Padamsee said.

Block blasphemous material on social media: Pak court

Canada India Education Council (CIEC)

Source: Times of India

ISLAMABAD: A Pakistani court on Tuesday directed authorities to take immediate steps to block “blasphemous material” on social media websites and sought a detailed response within 20 days.

A division bench of the Peshawar high court headed by Chief Justice Dost Muhammad issued the order in response to a petition filed by a lawyer named Arif Khan.

The judges said authorities should takeimmediate measures to block blasphemous and disputed material on social media websites.

The Chief Justice observed that anti-Islam material on social media websites incite religious sentiments and “cause chaos in society”.

They also issued notices to officials of the interior ministry, Pakistan Telecommunication Authority and other departments, seeking detailed replies on the issue within 20 days.

It could not immediately be ascertained which websites the judgeswanted the authorities to act against.

YouTube, the popular video sharing website, has been banned in Pakistan since last year over the hosting of clips of an anti-Islam movie.

Four Indian warships on overseas deployment

Canada India Education Council (CIEC)

Source: Times of India

NEW DELHI: India has dispatched four warships, including a frontline destroyer and a stealth frigate, on a long overseas deployment through the strategic Malacca Strait to Malaysia,Vietnam and Philippines.

The four warships from the country’s Eastern Fleet — stealth frigate INS Satpura, guided-missile destroyer INS Ranvijay, missile corvette INS Kirch and fleet tanker INS Shakti – will make port calls at Klang in Malaysia, Da Nang in Vietnam and Manila in Philippines before returning to India towards end-June. Eastern Fleet commander Rear Admiral P Ajit Kumar is leading the flotilla.

“Constructive engagement is our principle weapon during peacetime. The idea is to enhance security and stability in the entire Indian Ocean Region (IOR) by engaging with regional and extra-regional maritime powers,” said a senior officer.

India, of course, is also building strong maritime security bridges with countries like Japan and Vietnam in a bid to counter China’s “string of pearls” maritime construct in the IOR.

Incidentally, Prime Minister Manmohan Singh, who is currently inTokyo, said on Tuesday that India shares with Japan a strong strategic interest in expanding cooperation on maritime security and promoting regional stability.

India views Japan as a “natural and indispensable partner” in the quest for stability and peace in Asia. Ensuring sea lanes remain open and free is vital for the region’s prosperity, given its dependence on oil imports from the Middle East, he added.

India feels its central location in the Indian Ocean, astride major commercial routes and energy lifelines like the Malacca Strait, makes it a major stakeholder in the region’s security and stability.

Just last week, while laying the foundation stone of the Indian National Defence University, the PM had held that India was “situated at the strategic crossroads of Asia and astride one of the busiest sea lanes of the world”.

While exuding confidence about India’s growing military might, Singh said, “We have also deepened political, economic and strategic relationships in the Asia Pacific, Indian Ocean and West Asian regions.”

“We have also sought to assume our responsibility for stability in the IOR. We are well positioned, therefore, to become a net provider of security in our immediate region and beyond,” he added.

India Antiterror Agency Probes Maoist Ambush That Killed 24

Canada India Education Council (CIEC)

Source: The Wall Street Journal

NEW DELHI—India’s federal antiterror agency will probe a weekend attack blamed on Maoist insurgents in Chhattisgarh state that left two dozen people dead, including local leaders of the ruling Congress party, government officials said Monday.

The government, which earlier had said 28 people were killed in Saturday’s ambush in the state’s Jagdalpur region, revised the toll to 24 on Monday. Some bodies were counted twice initially, one of the officials from the federal home ministry said.

The official said the National Investigation Agency will investigate the attack. The government also will send 2,000 more paramilitary personnel to reinforce the state’s fight against the rebels, he said.

Thousands have been killed in the Maoist insurgency that began in the late 1960s as a peasant uprising.

Prime Minister Manmohan Singh has described the movement as India’s biggest internal security challenge. On Sunday, Mr. Singh indicated the government could intensify its fight against the rebels who are skilled in jungle warfare and equipped with modern weapons.

“We will pursue the perpetrators of this crime with urgency and I can assure the nation that the government is committed to bringing them to justice,” he said in Raipur, the capital of Chhattisgarh. “Those who commit such dastardly crimes are working against the interests of peace and development in the area.”

Chhattisgarh is rich with minerals such as iron ore and bauxite. It is also one of the most-affected by the country’s Maoist insurgency.

The rebels say they are fighting for the rights of tribes and the rural poor who they say have been left out of India’s economic development and have been exploited by companies looking for minerals. According to authorities, the insurgency has crippled economic activity in India’s central and eastern regions including Chhattisgarh, worsening unemployment and poverty.

Saturday’s ambush, in which the suspected insurgents set off a land mine and fired at a convoy of cars carrying Congress workers from a party rally, was one of the most deadly targeting politicians. Among those killed were Chhattisgarh Congress chief Nand Kumar Patel and Mahendra Karma, a party leader who founded the government-backed militia, known as Salwa Judum, to fight Maoist rebels.

Senior Congress party leader and former federal minister Vidya Charan Shukla was among 32 injured. Mr. Shukla, 84 years old, was airlifted to New Delhi Sunday and is undergoing treatment at a hospital near the national capital.

“He is critical, but stable,” said Naresh Trehan, chairman of Medanta Hospital, where Mr. Shukla is being treated.

The rebels are inspired by Chinese revolutionary leader Mao Zedong. They are also called Naxalites because the movement began in Naxalbari, a town in West Bengal state. The insurgency spread in the 1980s to Andhra Pradesh, Maharashtra, Bihar and Madhya Pradesh. Chhattisgarh was later carved out of Madhya Pradesh.

Home ministry data on Maoist attacks and arrests show the insurgency is extending into states such as Karnataka, Punjab, and deeper into Uttar Pradesh.In Karnataka, a southern Indian state, a police officer was killed by Maoists in 2011. Senior insurgent leaders were arrested in Punjab and Delhi, both in the north, between 2009 and 2012.

R.K. Vij, the top police official in charge of Chhattisgarh’s anti-Maoist operations, said the state police had launched a special drive against rebels last month. But, given the vast territory and forests the police need to cover, more forces are required, he said.

According to the home ministry official, the federal government has deployed 81,000 paramilitary personnel to fight Maoists. Nearly 40% of this is in Chhattisgarh, he said.