Comment by Riaz Haq on April 4, 2023 at 4:15pm

Analysis: India's surging services exports may shield economy from external risks

https://www.reuters.com/world/india/indias-surging-services-exports...

IT services still accounted for 45% of India's total services exports in April-December.

Professional and management consulting grew the fastest - at a 29% compounded annual growth rate over the last three years, as per estimates by economists at HSBC Securities and Capital Markets.

The recent growth in services exports has been largely powered by global capability centres, which have started to offer global clients a range of high-end and critical solutions such as accounting and legal support.

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This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.


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A surge in India's services exports, which hit a record high in the October-December quarter, is expected to shield the economy from external risks as a slowing global economy will likely weigh on the country's merchandise exports.

Service exports are no longer being driven by IT services alone but also by more lucrative offerings such as consulting and research and development, analysts and economists told Reuters.

India's services exports rose 24.5% on year in October-December 2022, hitting a record $83.4 billion during the quarter, data released by the Reserve Bank of India (RBI) on Friday showed.

The services surplus, which deducts any imports in the category, also rose 39.21% to a record $38.7 billion.

This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.

"We expect services exports to grow to over $375 billion by March 2024, as compared to $320-350 billion for the year ending March 2023," said Sunil Talati, chairman of the Services Export Promotion Council.

Services exports will likely surpass goods exports by March 2025, he said.

October-December merchandise exports stood at $105.6 billion, according to latest RBI data.

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As a result, such exports will hold up better compared to goods exports in the face of a weakening global economy, analysts said.

Over the last two to three years, there has been a rapid growth in global capability centres, said Sangeeta Gupta, chief strategy officer at software industry lobby group Nasscom.

Nasscom estimates that India is home to over 45% of such global capability centres in the world.

According to Pranjul Bhandari, chief India economist at HSBC Securities and Capital Markets, such centres started off providing support functions, but they have now moved up the ladder to tech enablement, business operations, capability development, and even R&D and business development.

While U.S. companies were the first movers in India, a lot of companies from Europe, Australia and Asia are also exploring stepping up their operations, Nasscom's Gupta said.

An acceleration in digitalisation after the Covid crisis and a lack of adequate tech talent in some of these countries are key factors, she added.

Sectors such as tourism, education, financial services and health also contributed to India's higher service exports.

Comment by Riaz Haq on April 7, 2023 at 10:36am

Adani’s business empire may or may not turn out to be the largest con in corporate history. But far greater dangers to civic morality, let alone democracy and global peace, are posed by those peddling the gigantic hoax of Modi’s India. Pankaj Mishra


https://www.lrb.co.uk/the-paper/v45/n08/pankaj-mishra/the-big-con


Modi has counted on sympathetic journalists and financial speculators in the West to cast a seductive veil over his version of political economy, environmental activism and history. ‘I’d bet on Modi to transform India, all of it, including the newly integrated Kashmir region,’ Roger Cohen of the New York Times wrote in 2019 after Modi annulled the special constitutional status of India’s only Muslim-majority state and imposed a months-long curfew. The CEO of McKinsey recently said that we may be living in ‘India’s century’. Praising Modi for ‘implementing policies that have modernised India and supported its growth’, the economist and investor Nouriel Roubini described the country as a ‘vibrant democracy’. But it is becoming harder to evade the bleak reality that, despoiled by a venal, inept and tyrannical regime, ‘India is broken’ – the title of a disturbing new book by the economic historian Ashoka Mody.

The number of Indians who sleep hungry rose from 190 million in 2018 to 350 million in 2022, and malnutrition and malnourishment killed nearly two-thirds of the children who died under the age of five last year. At the same time, Modi’s cronies have flourished. The Economist estimates that the share of billionaire wealth in India derived from cronyism has risen from 29 per cent to 43 per cent in six years. According to a recent Oxfam report, India’s richest 1 per cent owned more than 40.5 per cent of its total wealth in 2021 – a statistic that the notorious oligarchies of Russia and Latin America never came close to matching. The new Indian plutocracy owes its swift ascent to Modi, and he has audaciously clarified the quid pro quo. Under the ‘electoral bond’ scheme he introduced in 2017, any business or special interest group can give unlimited sums of money to his party while keeping the transaction hidden from public scrutiny.

Modi also ensures his hegemony by forging a public sphere in which sycophancy is rewarded and dissent harshly punished. Adani last year took over NDTV, a television news channel that had displayed a rare immunity to hate speech, fake news and conspiracy theories. Human Rights Watch has detailed a broad onslaught on democratic rights: ‘the Hindu nationalist Bharatiya Janata Party (BJP)-led government used abusive and discriminatory policies to repress Muslims and other minorities’ and ‘arrested activists, journalists and other critics of the government on politically motivated criminal charges, including of terrorism’. Last month, as the BJP’s official spokesperson denounced the BBC as ‘the most corrupt organisation in the world’, tax officials launched a sixty-hour raid on the broadcaster’s Indian offices in apparent retaliation for a two-part documentary on Modi’s role in anti-Muslim violence.

Also last month, the opposition leader Rahul Gandhi was expelled from parliament to put a stop to his persistent questions about Modi’s relationship with Adani. Such actions are at last provoking closer international scrutiny of what Modi calls the ‘mother of democracy’, though they haven’t come as a shock to those who have long known about Modi’s lifelong allegiance to Rashtriya​ Swayamsevak Sangh, an organisation that was explicitly inspired by European fascist movements and culpable in the assassination of Mohandas Gandhi in 1948.

Comment by Riaz Haq on April 11, 2023 at 7:01pm

India desperately wants to decouple from China but it can't.

https://www.scmp.com/week-asia/economics/article/3216717/indias-bid...

By Kunal Purohit

A study by the Indian Institute of Foreign Trade (IIFT), a state-backed university in New Delhi, found that Chinese imports were boosting India’s manufacturing and its exports in key sectors, including inorganic chemicals, pharmaceuticals, iron and steel.

It also found that rising imports in all the selected industries, except iron and steel, had led to a corresponding rise in output in those industries.

It also found that rising imports in all the selected industries, except iron and steel, had led to a corresponding rise in output in those industries.
From sectors where Chinese goods were the cheapest choice to industries where they were the sole option, the paper highlighted the crucial role of such imports and recommended a re-evaluation of Prime Minister Narendra Modi’s campaign to make India self-reliant.

“The current policy thrust on ‘self-reliance’, or atmanirbhar bharat, will not be effective unless the domestic manufacturing is propelled to high-technology products. Then rising imports will not be a concern as they lead to an increase in exports,” stated the paper by IIFT Professor Sunitha Raju.
It recommended the Indian government lower trade barriers and encourage imports to strengthen the country’s domestic manufacturing capabilities. Such an approach, the paper argued, would boost manufacturing growth and create greater employment opportunities.
India’s Commerce Ministry declined to comment on the issue when contacted by This Week in Asia.
Since 2020, when clashes between Indian and Chinese soldiers led to a stand-off at numerous points along their border, Delhi has been attempting to decouple India’s economy from China’s.
It has placed restrictions on Chinese investments in India, blocked Chinese firms in sensitive sectors such as power and railways, and banned hundreds of mobile apps originating from China, including the popular TikTok.
Despite these efforts, trade between the two countries has skyrocketed. In 2022, bilateral trade reached a record US$135.98 billion, according to Chinese customs data.
To Delhi’s dismay, Indian imports of Chinese goods accounted for more than US$100 billion of total trade. The Modi government in January summoned 18 top ministries to discuss ideas to cut down imports from China.
IIFT’s latest research might lead to second thoughts in Delhi about cutting Chinese imports. The paper found such imports not only provided crucial raw materials but also bolstered productivity in other industries. “All this also leads to an increased manufacturing output,” Raju said.
The study found that of the 32 product subcategories imported from China, it was the cheapest supplier in nearly one-third of cases. For the remaining 70 per cent, there were cheaper alternatives available, and yet, the Chinese product was preferred.
“There is a misconception that Chinese imports are preferred only because they are cheaper,” said Raju, adding that the quality of goods provided by Chinese suppliers varied, depending on the price buyers were willing to pay. “We found many domestic buyers who said they preferred the quality of products from China to the products made elsewhere.”
Complicating the matter further is the fact that China was the sole supplier for 16 products, leaving domestic manufacturers with little choice.
On the ground, traders and experts agree.

Comment by Riaz Haq on April 11, 2023 at 8:39pm

Why India, China's Bitter Foe, Won't Become a U.S. Ally

https://www.newsweek.com/why-india-chinas-bitter-foe-wont-become-us...


But even as New Delhi takes unprecedented steps toward shoring up relations with the Washington, there appears to be little chance the traditionally non-aligned nation will establish any formal defense alliance with the U.S.

"In fact, we do refer to India and the USA as natural allies," former Indian ambassador to China Ashok Kantha told Newsweek, "but this is not in the sense of a military alliance."

Such an alliance would run contrary to more than 75 years of India's post-colonial history after winning its independence from the United Kingdom and suffering a violent partition with Pakistan, sparking the first of several wars over disputed territory with the neighboring Islamic Republic as well as one with China six decades ago. Even during some of the nation's most dire crises, however, India has opted to not choose sides among world powers.

"We had to suffer a period of colonial subjugation lasting two centuries, and then we emerged as one of the most populous countries in the world, which was also innovative in democracy, in multiculturalism and in an open society," Kantha said. "We came to the conclusion during the Cold War period that India cannot be a camp follower of either great power, at that time the USA and the Soviet Union, that we will work with both countries."

Today, this policy referred to by India as "strategic autonomy" continues amid growing frictions between the U.S. and China, even if New Delhi saw Washington as the better partner.
-------------------

Swaran Singh, a visiting professor at the University of British Columbia with decades of experience lecturing at India's major diplomatic and military institutions, also argued that managing this relationship was essential for achieving the long-term objectives of both powers.

"De-escalation is the only way as both China and India cannot afford to derail their development trajectories and miss their imagined historic resurgence to the center stage of world affairs," Singh told Newsweek. "But as two rapidly growing economies and peer civilizational states reclaiming their place under the sun, their competition remains inevitable."

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Still, China's growing clout in the economic, military and diplomatic spheres have presented both risk and opportunity for New Delhi.

"While China has demonstrated an unprecedented economic growth that undergirds its political influence and military modernization, China's rise has made India the preferred partner for status quo powers in the U.S.-led liberal world order," Singh said. "This has opened doors for technology transfers and defense cooperation for India, making India the only neighbor that has showcased capacity to stand up to China."

India has also doubled down on its participation in another multilateral group, the Quadrilateral Security Dialogue, commonly known as the Quad, alongside the U.S., Australia and Japan. The quartet has intensified cooperation among members and it is regularly accused by China of representing an attempt to form a bloc built on containing the People's Republic.

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"The power gap between India and China, is certainly a major factor driving the current convergence of U.S.-India ties," Joshi said. "But India's positions are mainly driven by its size and interests. It perceives a significant security threat from Pakistan, whereas the U.S. has been at various times a major military ally of Pakistan. And where it sees Iran as a relatively benign actor in the Persian Gulf and a friend, the U.S. has seen Tehran as a hostile player."

"This rules out the possibility of a formal military alliance with the U.S.," Joshi said, "something that would require a much closer identity of views."

Comment by Riaz Haq on April 17, 2023 at 5:35pm

US becomes India's biggest trading partner in FY23: Report

https://www.livemint.com/news/india/us-becomes-india-s-biggest-trad...


(Indian) Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.

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The US has emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries.

According to the provisional data of the commerce ministry, the bilateral trade between India and the US has increased by 7.65 per cent to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21.

Exports to the US rose by 2.81 per cent to USD 78.31 billion in 2022-23 as against USD 76.18 billion in 2021-22, while imports grew by about 16 per cent to USD 50.24 billion, the data showed.

On the other hand, during 2022-23, India's two-way commerce with China declined by about 1.5 per cent to USD 113.83 billion as against USD 115.42 billion in 2021-22.

Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.

Experts believe that the trend of increasing bilateral trade with the US will continue in the coming years also as New Delhi and Washington are engaged in further strengthening the economic ties.

Federation of Indian Export Organisations (FIEO) President A Sakthivel said that increasing exports of goods such as pharmaceutical, engineering and gems and jewellery is helping India to push its shipments to America.

"The trend of increasing trade with the US will continue in the coming months also," he said.

FIEO Vice President Khalid Khan said India is emerging as a trusted trading partner and global firms are reducing their dependence only on China for their supplies and are diversifying business into other countries like India.

"The bilateral trade between India and the US will continue to grow as our exporters are getting good orders from that country," Khan said.

Rakesh Mohan Joshi, Director of the Indian Institute of Plantation Management (IIPM), Bangalore, too said that India provides huge trade opportunities for the US as India is the world's third largest consumer market and the fastest growing market economy.

"Major export items from India to the US include petroleum, polished diamonds, pharmaceutical products, jewellery, light oils and petroleum, frozen shrimp, made ups etc. whereas major imports from the US include petroleum, rough diamonds, liquified natural gas, gold, coal, waste and scrap, almonds etc," Joshi said.

America is one of the few countries with which India has a trade surplus. In 2022-23, India had a trade surplus of USD 28 billion with the US.

The data showed that China was India's top trading partner since 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner.

In 2022-23, the UAE with USD 76.16 billion, was the third largest trading partner of India. It was followed by Saudi Arabia (USD 52.72 billion), and Singapore (USD 35.55 billion).

Comment by Riaz Haq on April 17, 2023 at 5:47pm

IMF: "China will be the top contributor to global growth over the next 5 years, with its share set to be double that of the US"


https://www.businesstimes.com.sg/international/china-be-top-world-g...

CHINA will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund.

The nation’s slice of global gross domestic product expansion is expected to represent 22.6 per cent of total world growth through 2028, according to Bloomberg calculations using data the fund released in its World Economic Outlook released last week. India follows at 12.9 per cent, while the US will contribute 11.3 per cent.

The emergency lender sees the world economy expanding about 3 per cent over the next half decade as higher interest rates bite. The outlook over the next five years is the weakest in more than three decades, with the fund urging nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity.

In total, 75 per cent of global growth is expected to be concentrated in 20 countries and over half in the top four: China, India, the US and Indonesia. While Group of Seven countries will comprise a smaller share, Germany, Japan, the United Kingdom and France are seen among the top 10 contributors.

Brazil, Russia, India and China – known by the acronym BRIC coined by Jim O’Neill, a former Goldman Sachs Group chief economist – are expected to add almost 40 per cent of the world’s growth through 2028.

The four nations established the BRIC forum in 2009 and the bloc became Brics a year later when South Africa – by far the smallest economy in the grouping – was admitted, a move O’Neill disagreed with.

Comment by Riaz Haq on April 20, 2023 at 8:06am

Kapil Sibal
@KapilSibal
·
12h
India ahead of China
Population :
India 1428 mn
China 1425 mn

Other indicators(2021)
World Bank Data :

GDP
China : $17.73 trillion
India : 3.18 trillion

Unemployment:
China : 4.8%
India: 7.7%

Annual inflation
(consumer prices) :
China : 1%
India : 5.1%

Think about it !

https://twitter.com/KapilSibal/status/1648877269124009984?s=20

Comment by Riaz Haq on April 20, 2023 at 1:36pm

#India Topping #China in #Population. Can it top China's #GDP? #Modi never misses a chance to cheer India as "world’s largest #democracy", "5th largest #economy" but it relegates #Muslims to 2nd class status. Can India create 90 million new jobs by 2030

https://www.nytimes.com/2023/04/19/world/asia/india-china-populatio...


“The young people have a great potential to contribute to the economy,” said Poonam Muttreja, the executive director of the Population Foundation of India. “But for them to do that requires the country to make investments in not just education but health, nutrition and skilling for employability.”

There also need to be jobs. That’s a longstanding deficiency for a top-heavy and at times gridlocked economy that must somehow produce 90 million new jobs before 2030, outside agriculture, to keep employment rates steady. Even in the years immediately before the pandemic, India was falling far short of that pace.

In China, a shrinking and aging population will make it harder to sustain economic growth and achieve its geopolitical ambitions to surpass the United States. But in previous decades, when it was still growing, it found its way to transformative growth through export-driven manufacturing, like smaller East Asian countries did before it.

India has yet to be able to replicate that formula or to come up with one of its own that can achieve more than incremental gains.
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The rate of development across the huge country remains widely unequal, with some Indian states akin to middle-income nations and others struggling to provide the basics. The distribution of resources is increasingly becoming a tense political issue, testing India’s federal system.

When Gayathri Rajmurali, a local politician from the southern state of Tamil Nadu, found herself in India’s north for the first time this year, the disparity shocked her. “The north, they are behind 10 to 15 years to our places,” she said, pointing to indicators like basic infrastructure and average income.

And then there is the combustible environment created by the Hindu-first nationalism of Prime Minister Narendra Modi’s ruling party, as his support base has sped up a century-old campaign to reshape India’s pluralist democratic tradition and relegate Muslims and other minorities to second-class citizenship. Demographic numbers are part of the political provocation game, with right-wing leaders often falsely portraying India’s Muslim population of 200 million as rising sharply in proportion to the Hindu population as they call on Hindu families to have more children.

Mr. Modi and his lieutenants say India is heading in only one direction: Up. They point to the undeniable gains in a country that has quadrupled the size of its economy within a generation.

Comment by Riaz Haq on April 20, 2023 at 1:45pm

#India Topping #China in #Population. Can it top China's #GDP? #Modi never misses a chance to cheer India as "world’s largest #democracy", "5th largest #economy" but it relegates #Muslims to 2nd class status. Can India create 90 million new jobs by 2030

https://www.nytimes.com/2023/04/19/world/asia/india-china-populatio...

The two nations share several historical parallels. The last time they traded places in population, in the 18th century or earlier, the Mughals ruled India and the Qing dynasty was expanding the borders of China; between them they were perhaps the richest empires that had ever existed. But as European powers went on to colonize most of the planet and then industrialized at home, the people of India and China became among the world’s poorest.

As recently as 1990, the two countries were still on essentially the same footing, with a roughly equal economic output per capita. Since then, China has shaken the world by creating more wealth than any other country in history. While India, too, has picked itself back up in the three decades since it liberalized its economy, it remains well behind in many of the most basic scales.

Today, China’s economy is roughly five times the size of India’s. The average citizen of China has an economic output of almost $13,000 a year, while the average Indian’s is less than $2,500. In human-development indicators, the contrast is even sharper, with infant mortality rates much higher in India, life expectancy lower and access to sanitation less prevalent.

The divergence, analysts say, comes down largely to China’s central consolidation of policy power, serious land reform, an earlier start in opening up its economy to market forces starting in the late 1970s, and its single-minded focus on export-led growth. China took the first-mover advantage and then compounded its dominance as it pursued its plans relentlessly.

India started opening its quasi-socialist economy nearly a decade later. Its approach remained piecemeal, constrained by tricky coalition politics and the competing interests of industrialists, unions, farmers and factions across its social spectrum.

“There is that element where China is a natural role model — not for its politics, but for the sheer efficiency,” said Jabin Jacob, a professor of international relations and governance studies at Shiv Nadar University near New Delhi.

Comment by Riaz Haq on April 20, 2023 at 3:57pm

BRICs investing is a form of Winner Takes All......Investors favor a few at the expense of many.


https://fs.blog/mental-model-winner-take-all/

Winner Takes it All: How Markets Favor the Few at the Expense of the Many
Markets tend to favor unequal distributions of market share and profits, with a few leaders emerging in any industry. Winner-take-all markets are hard to disrupt and suppress the entry of new players by locking in market share for leading players.



***

In almost any market, crowds of competitors fight for business within their niche. But over time, with few exceptions, a small number of companies come to dominate the industry.

These are the names we all know. The logos we see every day. The brands which shape the world with every decision they make. Even those which are not household names have a great influence on our lives. Operating behind the scenes, they quietly grow more powerful each year, often sowing the seeds of their own destruction in the process.

A winner-take-all market doesn’t mean there is only one company in the market. Rather, when we say a winner takes all, what we mean is that a single company receives the majority of available profits. A few others have at best a modest share. The rest fight over a miniscule remnant, and tend not to survive long.

In a winner-take-all market, the winners have tremendous power to dictate outcomes. Winner-take-all markets occur in many different areas. We can apply the concept to all situations which involve unequal distributions.

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