India’s 9.5% growth to push gold sales

Gold demand in India is all set to soar in the coming months as the International Monetary Fund has predicted a very high 9.5 per cent growth for the country in 2010.

According to IMF, India’s growth will accelerate to about 9.50 per cent in 2010 as robust corporate profits and favourable financing conditions fuel investment, and then settle to 8.50 per cent in 2011.

The 9.5% growth is set to give people more money to buy gold and jewellery. Large domestic demand bases in India, China, and Indonesia, which contribute substantially to Asia’s growth, could also provide the region a cushion in the event of external demand shocks, the IMF said.

This means, India and China will lead the world in growth and will have a bigger say in the market especially in bullion. If Indians and Chinese buy more gold, that will make a huge impact on the gold prices in global level.

As Asia’s strong recovery from the global financial crisis continues, despite renewed tension in global financial markets, world growth is projected at about 4.50 per cent in 2010 and 4.25 per cent in 2011.

Noting that economic activity in Asia has been sustained by continued buoyancy in exports and strong private domestic demand, the IMF has revised gross domestic product (GDP) growth forecasts for the region upward for 2010, from about 7 per cent in the April WEO to about 7.50 per cent.

For 2011, when the inventory cycle will have run its full course and the stimulus is withdrawn in several countries, Asia’s GDP growth is expected to settle to a more moderate but also more sustainable rate of about 6.75 per cent.

In China, given the strong rebound in exports and resilient domestic demand so far this year, the economy is now forecast to grow by 10.50 per cent in 2010, before slowing to about 9.50 per cent in 2011, when further measures are taken to slow credit growth and maintain financial stability, the IMF said.

In a separate Global Financial Stability Report Update, the Fund noted that despite generally improved economic conditions and a long period of healing after the failure of Lehman Brothers, progress toward global financial stability has recently experienced a setback.

Gloomy days are history for India's auto sector

Indian automobile sector ended up the year 2009 with high optimism as the industry sales showed a robust growth during the last month of the calendar year 2009.

According to a recent announcement made by the Society of Indian Automobile Manufacturers (SIAM) the automobile sales in India for the month of December 2009 stood at 1,000,500 units, showing an increase of 67.5% against the low base of 597,622 units in December 2008.

The growth is believed to be the highest so far in 2009–10, followed by the growth of 46% recorded in November 2009.

“A combination of factors like the three fiscal stimulus packages, low interest rates on vehicle financing made possible by PSU banks, cash infusion from the sixth pay commission and new models from manufacturers have helped December sales to rise,” says Pawan Goenka, President of the Society of Indian Automobile Manufacturers and President of Mahindra & Mahindra, at the ongoing Auto Expo 2010.

The rise in automobile sales would create repercussions on the metals industry, as the industry had faced one of the worst phases in the late 2008 and early 2009. Credits drying up and order deferments had put the metal companies in a fix. However, the times changed with government fiscal stimulus packages taking off well and industry once again started pounding.

On the stock exchanges, auto stocks posted heavy returns. On the Bombay Stock Exchange (BSE), the sectoral index, BSE Auto index gained significantly during the calendar year 2009. Since the start of the year, BSE Auto index surged from 2448.40 points to 7435.83 points through the year.

Leaders in auto sector, Tata Motors Ltd (BOM: 500570) gained 409.38% during the year 2009 on the BSE, Bajaj Auto Ltd (BOM: 532977) yielded 369.41% returns from 1st January 2009 to 31st December 2009. Mahindra & Mahindra Ltd (BOM: 500520) and Maruti Suzuki India Ltd (BOM: 532500) posted returns worth 307.08% and 205.36% respectively during the said period.

The 68 per cent rise in December 2009 sales was made possible by the sustained growth in cars and utility vehicles (50 per cent), continued growth in medium & heavy commercial vehicles on a low base last year (248 per cent), and in two-wheeler sales (67 per cent) last month.

Sales of large commercial vehicles, termed medium and large trucks and buses, rose for the fifth consecutive month. The December rise was an impressive 248 per cent, in which the industry sold a record 24,037 units. This is the highest growth posted by the CV industry for this year. The fourth quarter of 2009 was a low base in sales of large Cvs, when it dipped between 50 and 70 per cent. Industry executives say the high growth will continue even in the first quarter of 2010, on the back of buying before the new emission norms get effective in April. Total sales of CVs, (including light CVs) was 48,614 units.

Sales of three-wheelers, on the back of good demand for passenger carriers, grew by 83.7 per cent, at 34,993 units. Two-wheeler sales for December, led by Hero Honda and a resurgent Bajaj Auto, rose by 67 per cent, enabling manufacturers to sell 767,796 units.

Sales of passenger vehicles in December grew by 50 per cent, with the industry selling 149,097 units. November sales growth was the highest, at 67 per cent.

IndiaMART.com unhurt, records 40% growth

IndiaMART.com, India's largest online B2B marketplace, reports an impressive growth of 40 percent in revenues for 2008-2009 despite an economic downturn. The growth in revenues has also been backed by a robust 52 percent growth in supplier registrations.

"Our numbers speak for themselves, While the whole world is busy hiding behind words like recession and economic downturn to conceal their poor performance, our teams have strived hard to keep the winning streak going,'' said a beaming Dinesh Agarwal, CEO and Founder of IndiaMART.com.

Agarwal feels the steep rise in registrations is clearly indicative of recessionary pressure on entrepreneurs to make do with show string marketing budgets, which naturally pushes them to seek online marketing as the most credible and effective option. As the market leader, IndiaMART is always keen to take on path breaking initiatives to sensitize SMEs about online marketing and adoption of technology through events, trade shows and conferences.

IndiaMART.com has been ranked India's No. 1 online B2B marketplace by the Internet and Mobile Association of India (IAMAI) in its recent study done on Information, Communication & Technology (ICT) usage among Micro, Small and Medium Enterprises (MSMEs). The independent market research, with special focus on online B2B marketplaces, accords over 85 percent preference for IndiaMART among B2B suppliers who go online, and who were interviewed by IAMAI. The study also states a 60 per cent market share for IndiaMART.com in India.

IndiaMART.com received its first round of private equity investment from Intel Capital earlier this year. Bennet Coleman and Co Ltd, publishers of The Times of India and The Economic Times, also have a stake in IndiaMART as a private treaty partner.

IndiaMART.com is India's largest online B2B marketplace connecting global buyers with suppliers through business directories, online product catalogs, buy-sell offers, industry specific marketplaces, printed media and trade shows participation.

(Courtesy: PRLog)

India Shining as economic growth records 6.7%

Finally, the country has managed to record a 6.7 percent growth in financial year 2008-09, despite the global economy still in the throes of a deep recession. This has been vindicated by the official figures released recently. This growth rate, though, much lower than the 9 percent rate that we have been clocking for the previous four years, is nonetheless, well above the 6 percent growth that was being projected by some analysts. Some prophets had even predicted only a 5% growth in the last financial year. The Central Statistical Organization had pegged the GDP growth rate at 7.1 percent.

The actual growth rate is certainly in the range that the RBI had projected: 6 to 5.7 %. Our Prime Minister Dr. Manmohan Singh too had been emphasizing that the growth rate would be in the range of 6.5 to 7. That is precisely what has happened.

In a way, this growth has been somewhat unexpected. It has largely been possible by the strong 5.8 % growth in the last quarter of the financial year. The reasons for this have been the effects of huge Government spending on social programmes and construction, pumping liquidity into the market through special packages and by lowering of interest rates. Government consumption too increased by 22 percent.

The most encouraging news is the performance of the core sector which has sent clear signals of an economic recovery. In April 2009 growth rate in the core sector of infrastructure doubled to 4.3 percent, against 2.3% in the same month last year when the economy was booming. The output of cement in April went up by 11.7% compared to 6.9% in the same month last year. Steel grew by 1.6 percent against a decline of 0.6 % in April last year. Coal production grew at an impressive 13.2 percent compared to 10.4 % in the corresponding period last year. So was the case with electricity generation which jumped up by 6% in April against 1.4 % in the same month, last year.

Not less important is the increase in the collection of direct taxes by 16.88 % in May this year. In fact the collections have shown a positive growth since February this year. This will help the Government to keep the fiscal deficit under control, which could well cross 5% of the GDP against the limit of 2.5 % fixed earlier. The deficit could well be about 10 % if the state budgets are also taken into account. The actual position in this regard will, however, be known when the Finance Minister presents the budget next month. May month’s collection figures are particularly encouraging as there had been a shortfall just a month earlier.

As a result of this economic scenario, coupled with the installation of a stable Government at the centre, the financial market is also jubilant. The stocks are rising and the sensex is hovering in the 15,000 area, double than what it was less than 6 months ago. Mutual Funds too are, as a consequence, looking up.

The picture certainly would have been much better, had we not slowed down in two important sectors: manufacturing and agriculture. A sluggish manufacturing sector, which grew at just 2.4 percent during 2008-09 against 8.2% in the previous financial year, was a dampener. Similarly, agriculture, which accounts for 20 % of the country’s GDP, recorded just 1.6 % growth in the last financial year against 4.9 % in the previous financial year.

What came as a booster was the growth in the service sector: 13 % growth in the community services, 9% in transport and communications sector and a 7.8% growth in financial and other service sector. All this happened at a time when the US economy contracted by an annualized rate of 6.2 % and the Japanese economy by 12.7 %. This only proves the resilience of Indian economy. To some extent it is also due to the fact that Indian economy is more inward looking as it opened up only after 1991. It thus depends more on the domestic demand. In sectors where it looks more on the foreign markets like the textiles, the effect of global meltdown has been more pronounced. The country recorded a 33% fall in exports in March this year, leading to fall in incomes and unemployment in this sector.

President Pratiba Devi Singh Patil’s recent address to the joint sitting of the two houses of Parliament has now laid the future roadmap for the Government. It aims at pushing ahead with the economic reforms, pursuing the disinvestment and promoting Foreign Direct Investment which will also take care of the financial constraints of the Government. It also envisages increased public spending. But while doing so, care will be taken of fiscal prudence so that the widening gap in fiscal deficit is kept in check.

Liquidity in the banking sector will also be improved to make way for better access to funds by the stake holders. The Reserve Bank of India has already asked the Government for a comprehensive review of the interest rate regime to nudge the banks into reducing their lending rates which they are reluctant to do. The Finance Minister Mr. Pranab Mukherjee too has clearly pointed out to the banks that they have not so far adequately reflected in their lending rates, the reduction in key rates by the RBI. But they have now agreed to take a fresh look at the issue.

Fortunately, inflation too is under control which provides additional leg space to the Government to take fiscal and monetary measures to push up growth. The current financial year will not be without challenges and the growth rate may continue to be around the existing level. The Prime Minister told the Parliament the other day that he was confident that the country would record at least 7% growth in the current fiscal as well. But if all work together, it is possible to raise it to 8-9 % “even when the world grows at a lower rate” the Prime Minister said. These are words of satisfaction indeed. A high rate of 35% of our GDP being the savings determines the money that can be deployed for development works, though heavy public spending does carry a cost in terms of increasing fiscal deficit which has already crossed 6.2 %.

The larger picture that emerges thus is of hope, confidence and optimism on the economic front. (Courtesy: Press Information Bureau)