The new BJP Modi government has been attracting a lot of international interest, foreign diplomat visits and most importantly renewed FDI in its slow by sure attempts to open up, ever so slightly to the global market.
Look East - Is the plan. It’s closer and easier than West
As India renews somewhat strained ties with China and Japan rather than letting in the likes of Wall Mart and McDonalds through the door.
Japan is doubling its investment in India after the honorable PM visited, and China is next in line
INR Internalization is being looked at seriously as well. Which such a large offshore NDF market – particularly in Dubai the question gets asked in India. “Is it the tail wagging the dog”?, and its up to the pundits, commentators and experts to consider whether the RBI should take the INR out to market like RMB. Or go the complete opposite. And if they don’t it will grow anyway?
The meeting was a far cry from the rapid Rupee decent and recovery of last year ( see e-Forex Jan 2014 )
With somewhat positive market response to the new economic approach and reforms ( at time of writing Indian stocks were on a 6 week high and Rupee on a 5 week low ) and domestic focus on both Inflation and Monetary policy seen as both a positive and important move. One of the great dangers is a
low rupee imports inflation and higher diesel prices affect far more than the very reasonable taxi prices. The whole country runs on it
The new government will bring in GST which is no small task – but create very large tax revenues which will no doubt have a growth versus poverty dilemma. As well as reforming the labour laws. Its been 50 years since that happened.
All this won’t happen overnight. India - in the eyes of one – is more a collection of cities that happen to be next to each other more than a single nation. Change is slow and everything is full of paperwork, back handers, and more paperwork. Anyone who has applied for a business visa will know what I mean.
The meeting was perhaps best summarised by Nasser Munjee, Chairman of Development Credit Bank with his comment that India needs to “Put the power plants near the coal…”
Every state has local power stations which rely on train loads of coal to supply the energy needs of a growing nation. Why not put them near the source ? – its easier to transport electricity than it is coal – freeing up badly needed freight space for everything else that’s required.
Including the power needed to run all those banks of servers…