Net neutrality: A truly digital India is on the way

With its verdict on Monday barring differential pricing of data services, the Telecom Regulatory Authority of India (TRAI ) has upheld best practices in line with what is best for long-term public discourse towards India’s broadband needs.

India has set an example for the rest of the world to preserve innovation and transparency on the internet. The verdict will go a long way in establishing network neutrality as a benchmark for future upgradation of networks, bandwidth services and introduction of new services. While some telecom service providers (TSPs) and content providers have argued that a differential pricing model helps them with bettering their response to customers, it is laudable that TRAI has taken a larger view of the situation.

It has, in fact, stated that differential pricing is “anti-competitive, nontransparent, discriminatory and against content innovation”.

A key takeaway from the verdict is a clear message to the likes of Facebook that discriminatory practices, such as the proposed Free Basics programme, are not welcome in India.

A correct decision has been taken. This is not only ideal for India, but also shows leadership in the digital domain for other developing nations to safeguard themselves against exploitative programmes in the garb of ‘internet for all’.

The war for achieving a truly digital India may have just begun. But the first struggle for net neutrality has just ended in favour of the Indian public. India needs to take its mission forward by demonstrating strategies through which internet adoption by the poor is not only encouraged but benefits them in meaningful ways.

India to Become Fastest-Growing Big Economy

India is on course to overtake China to claim the position as the world’s fastest growing, big economy in the next two years, the World Bank said Tuesday, the latest vote of confidence in the roadmap set out by the new leaders of the South Asian nation to revamp the economy.

The Washington-based development institution raised its forecasts for India, saying growth in Asia’s third-largest economy would accelerate in the coming years even as much of the world is slowing down. What might be the reason? New Delhi is implementing changes that will make the country’s economy more efficient and vibrant.

Prime Minister Narendra Modi took office in May after his party won a rare majority in Parliament on a campaign promising smaller government and bigger growth. Since taking office, he has unveiled ambitious plans to change how India’s economy is managed.

India has been struggling to emerge from China’s shadow for more than a decade but in 2017 it may at last outgrow its neighbor to the north, expanding 7.0% that calendar year while China’s growth slows to 6.9%.  Some other economists–including those at Goldman Sachs—predict India could outpace China as early as next year.

Of course the end of 2017 is still a long way away and a lot of things will likely change in the interim to force economists to fix their forecasts. In India, they will be watching closely to see if the country continues to tweak laws and regulations to give companies and consumers more confidence to invest and help the economy expand.

Rupee value sliding down : a major worry

Movements in the rupee and Sensex continued to worry market watchers. The rupee tanked below the level of 68 per dollar on 21 January, trading at its lowest level since Raghuram Rajan took over as the governor of the Reserve Bank of India (RBI). On the same day, the Sensex slipped to its lowest level of 23,962.21 since Prime Minister Narendra Modi took office in May 2014. The clamour about the rupee going below 70 per dollar has increased in a scenario in which most emerging market currencies are under pressure.

The recent fall in the rupee might be due to conditions in the euro zone, plunging stock markets, falling foreign investment inflows and strengthening of the dollar.

As India runs a large current account deficit, it needs a constant inflow of dollars, which was not there. High oil prices inflated the import bill and resulted in further widening of the current account deficit, which accelerated the rupee fall.

So what can possibly save Indian rupee??

To begin with, there needs to be a true gold alternative. In the past few years, gold ETFs and loans added to its liquidity. Banks and PSUs pushed gold coins to cash in on the craze. Also there is nothing wrong in heavily taxing imports of luxury consumables and durables; and preventing low-value imports that can be produced locally. Our manufacturing sector has to grow aggressively and has to be provided with enabling infrastructure. India needs to promote its own economic union with the goods and services tax. Most importantly, we need a majority government with a clear mandate for development.

How does the interest rate hike in the US affect Indian economy?

Actually its not the Indian economy that alone will be affected. World over all the economies will be affected. Only the degree will differ depending on the individual economies.  

Let me analyze how the Indian economy will get affected.

When US increases interest rates, investors evaluate the whole set of things. They dispose off risky asset classes and repay. This process will set off a selling spree in the asset classes. Sudden outflows cause temporary mismatches in currency positions, causes currency depreciation,  aggregates selling across asset classes. 

Worldwide there is always a universal demand for US dollars. When interest rates are increased in US, this causes liquidity of  dollars to dry or diminish. The external commercial borrowings of corporate in India will face pressures for repayment of principal and interest payments.  

What would be the real impact is that it affects the currency more than the economy.

Some of foreign money has to come to India because they do not earn attractive returns there. If that situation is going to change, and as the interest rate spread benefit reduces, some foreign investors may want to pull out from India to invest in their own country. That will put a pressure on rupee. But it may not affect Indian economy severely though a weakening currency will have some impact.

Industrial output to 5 year high..a positive growth....

With 17 of the 22 industry groups in the manufacturing sector showing a positive growth, the industrial output in October recorded a five-year high of 9.8 per cent year-on-year.

The higher growth was on account of a favourable base.The industrial output in September 2015 was 3.6 per cent.

Though manufacturing registered a high growth in October, the low base in major sectors like capital goods and consumer durables has contributed significantly to this high growth. Nonetheless, the outlook for growth remains positive and can be strengthened in coming months if pace of reforms continues.

The global slowdown continues to impact trade and affect India’s exports adversely thus impacting manufacturing growth especially when the domestic demand is also sluggish.

What we can infer from this is that it is a positive growth. After five years, for the first time industrial growth is 9.8 percent . It is a welcome note. Environment for industrial growth is cordial in India now. It may slowly increase step by step due to the actions of central government. Foreign direct investments are flowing into the country because of efforts of PM Narendra Modi through Make in India and other initiatives like Indo-Japan relations. Inflation is 5.5 percent. If the production increases in many sectors, essential commodities rates will come down and be beneficial to the people.

Why HSBC bank announced closure from Indian private banking business

The HSBC bank announced the closure of its private banking business in India.

Unlike mass banking, private banking is the dedicated banking services for high net worth individuals (HNIs). So what could be the reasons for shutting shop when India is the only bright spot in the world???

 The following might be the reasons that led to the closure:

The Environment Of Stress: The Indian economy is  yet to see a big pick up despite being in the bright spot as India is more consumption-oriented than other emerging markets such as China or Brazil.

Competition:The private banking space is hugely competitive. Few decades ago, foreign banks had an edge in the private banking space because of quality service, global investment tools and an untapped market. 

·     Falling Returns: Look at the investment class from commodities, gold, equity,  to real estate. They are  already instances of HNIs losing big money because of bets going wrong. There is no hope of a major recovery in many of the asset classes. Take for instance, India despite being on bright spot is now witnessing any major moves in its stock market. In fact, the stock market has plunged from a high 30,000 in March this year to 26,000 levels.

Will rupee also make its way to special drawing right like yuan??

The International Monetary Fund’s decision to include China’s yuan in its currency unit and considering it as the weighted average of several convertible currencies, known as the special drawing right, or SDR is indeed an approval of China's economy. China was the world’ largest exporter, and second-largest importer, in 2014. 

                   To be in the SDR basket, a currency needs to also be “widely used” to make payments for international transactions and “widely traded” in the principal exchange markets.Chinese currency accounts for 15% of global output and qualifies on this count too, says the IMF. But that’s a big minus. Capital controls will have to go before the yuan becomes a major global currency.The immediate gain for China would be to have more of its trade settled in yuan, perhaps even before next October, when the yuan will officially be part of the SDR.

 Now the question is will rupee too be in the SDR basket soon???

                   As India continues to register strong growth, even as the rest of the world either shrinks, its share in world output cannot but rise. Unlike in the case of China, India’s financial sector is far more transparent. Sure, the country is nowhere close to full rupee convertibility, and we are not in  a hurry either. What we need urgently is a fully developed financial market and later lets see whether rupee will make it to the SDR.