Good,Bad and Ugly

The forecasts for the year 2009 given by three prominent economists of the country can be categorized as :

1.Good - Arvind Virmani, chief economic advisor of the government;
2.Bad- Raghuram Rajan, economic advisor to the prime minister;
3.Ugly- Rajiv Kumar, head of the Indian Council for Research on International Economic Relations (ICRIER).

According to Mr. Viramani the forecast is a strong 8.5% growth in the fiscal year 2009-10, this is based on the analysis done by him which says that Indian with a strong saving of 36% will allow it to substantially ward off the crisis. Normally the growth rate would be a quarter of the saving so it should be 9% theoretically but because of the global influences it is expected to be around 8% which is a very good number at the present situation we are in.He also says that as india is not a export oriented country the deficit will be less as we import many raw materials to produce the products to be exported so the exports and imports both will decline at same level.

According to Mr. Raghuram Rajan, the GDP growth for the year 2009-10 will be about 5-7%, this is a huge range and the probability of this coming true is also high. The higher level will be attained if the global economic situation improves and the lower range is when the situation worsens further. This is bad but not ugly.

According to Mr.Rajiv Kumar, the results of the ICRIER model that he developed which has given accurate predictions of the 2007 GDP growth of 9% and the first model to indicate the slow down has predicted a staggeringly low GDP growth of just 3.9 % for the fiscal year 2009-10. Ugly right. This models takes into account 10 leading indicators including GDP growth in the US and Europe, factoring in the global slowdown.

If a probabilty has to given to the above predictions :

1. good - 10%
2. bad - 60%
2. ugly - 30%

This a biased prediction as would want the economy to be good or bad not ugly at any circumstances.

Where is the tiger?

India is losing the war on " Tiger protection", according to the latest data using advanced technology and calculations tiger population in India is only 1411. According to minister of state for environment and forest the status of population of tigers is very poor. Going at the present trend tigers will be extent in another 10-15 years from India. What a shame if we cannot protect the national animal.

People say tiger is the real king of the forest but has the king lost the charm? No, its the humans greed every where thats taking the toll on the environment and the economy.



Even after PM taking drastic initiatives the population of tigers is reducing at an alarming rate, get ready to see the tiger in the zoo in future thats where all the animals will be in the future.

Economic recovery patterns

The present economic crisis has left the best of the economists searching for the bottom.

How will the bottom be?

The recovery is expected to be in any of the three ways:

1. U-recovery
2. V-recovery
3. L-recovery

U-recovery: The most probably the recovery from the present crisis would be a u one. There is a 60% chance of the recovery being this type and the bottom is expected to last for at least an year so the stability can be expected to come only in the year 2010.

V-recovery: This is the next probable recovery type. In this there would a drastic recovery happening once it touches the bottom. The probability of this type of recovery is only 30%, though it is the most desired. This type of recovery means that in mid 2009 we can see our economies back to normalcy.

L-recovery: This is the most hated type of recovery with the bottom lasting for a long time may be even a decade and then a recovery. The probability is only 10% Thank GOD.

What ever be the type of recovery the economy will bounce back. "What goes down has to come up"

Fed rate to be Zero

US fed is thinking of reducing the fed rate to zero tomorrow. With the present fed rate at 1.o% a 50bps reduction would mean that the rate would as low as .50% the least since july 1954.

This with some unconventional means to pump much needed liquidity into the market is expected by the fed.

But the question remains will this change the tide? will zero interest rate of the fed funds bring America and rest of the world out of the recession? According to me the recession is more than the liquidity crisis.

The Madoff scam, the bailout rejection to the auto majors will bring the impact of the rate cut down.

The investor confidence is critically low, the recovery looks to be way far for now.

Hope is what remains, hope for the best crossing our fingers.

Nokia suspense mobile...

Nokia the worlds largest mobile phone maker will be unveiling its new phone at the Nokia World media and industry conference in Barcelona.

Nokia is using suspense as a tool to create the buzz around the product. The virus has started to spread with many people searching the net for the new phone, but their are no photographs or any other product specific news on the net. All they could find is the timer on the nokia website.

Nokia is using suspense to its advantage.

The product that was launched is the " true iphone killer " Nokia N-97.

The device combines a large 3.5in touch-screen, similar to that found on the Apple iPhone, with a slide-out Qwerty keyboard reminiscent of the Sony Ericsson Xperia X1 and the T-Mobile G1.

it has a five-megapixel camera, and a huge 48GB of memory, capable of storing thousands more songs than the Apple iPhone and many other leading devices.

"From the desktop to the laptop and now to your pocket, the Nokia N97 is the most powerful, multi-sensory mobile computer in existence," said Jonas Geust, a vice president at Nokia.

Nokia has put high-speed web access at the heart of its new device, along with one-button, 'always-on' access to social-networking sites such as Facebook. The phone also uses its built-in GPS technology to provide location-specific information. Nokia, which calls the service 'social location', said that it will enable N97 users to update their social-networking profiles with precise details about their location and find nearby friends.

The Nokia N97 is expected to go on sale in the first half of 2009, and will cost around £470 and is expected by the mid of 2009 in India.

Global GDP growh to be less than 1%

Scary thought to be in a period where in the global GDP grows at less than 1% this was told in the UN " world economic situation and prospects 2009" . With major economies that contribute to the consumption in recession. US, Japan and Europe contribute to about 70% of the world consumption with these economies in recession the impact will be global.

Nomura saying that the Indian GDP estimate for this year is only 6.7% saying that their will be a sharp decline in the growth rate in Q4 and expects the growth rate to be mere 5 % in the next year.

Scary thought if this forecast turns true then 15% of the Indian workforce will be unemployed and the salaries will fall by 60%.

The tips that will help one to land in a new job during the recession are : Six tips to help you land a new job.

Still the outlook for India is good from many organizations so their is some thing to smile. God is with us as he sent a smiley tonight for all of us. :-)

GLOBAL ECONOMIC OUTLOOK
COUNTRY DATA

Country	Item	2001	2002	2003	2004	2005	2006	2007	2008	2009
India	Annual growth rate of real GDP, (%)	4.5	4.5	7.3	7.1	11.5	7.3	9.1	7.6	7.2
India	Annual CPI inflation rate, (%)	3.7	4.4	3.8	4	4.3	5.8	6.4	6.2	5.7

e=mc2 finally collaborated

Hundred years after Einstein gave the e=mc2 formula it was finally collaborated thanks to a heroic effort by the worlds best physicists. they used some of the mightiest super computers to compute the mass of the protons, neutrons and the particles of the nucleus of the atom.

According to te traditional model of particle physics, protons and neutrons comprise of smaller particles called the quarks and the formula e=mc2 has not been collaborated to the sub atomic particles. Even though the formula has been instrumental in the making of the ATOM BOMB.


The odd thing is this: the mass of gluons is zero and the mass of quarks is only five per cent. Where, therefore, is the missing 95 per cent?

The answer, according to the study published in the US journal Science on Thursday, comes from the energy from the movements and interactions of quarks and gluons.

resolving the formula to the sub atomic particle level has been difficult at the scale of the equations called the quantum chromodynamics.until now.

New Direct marketing tool

The dabbawalas of Mumbai are not just delivering lunches but have become a means of direct marketing for many companies from mutual funds to soft drinks.

The best part is the company can reach over a lakh of customers directly. The ISO certifies dabbawalas are also getting the benefit by earning a couple of hundreds more.

The means of advertising is sure to reach the people as the dabbawalas never lose the delivery. this means can also be used by the India Inc. to communicate effectively about the promotional activities as the people catered by the dabbawalas are mostly the middle income class.

The dabba has now transformed to a marketing communication tool.

Warning bells

After the Indian economic summit on Sunday the top leaders of the India inc. have warned of bad situations if the government doesn't take appropriate action to make funds available for the companies.



The corporate heads have told that they will forced to layoff or take other punitive action to reduce the costs. this is evident from the placements of premier b schools, the placements at IIM-A have seen a sharp decline in the average salaries. the salaries have fallen by over 42 percent compared to the last year and the overseas placements have fallen by 60 percent. The case is same in other premier b schools and IIMs across India.



The R.B.I is expected to cut the CRR by 200-250bps and SLR by other 100bps to make the banks lend to the corporates. With the general elections coming near the government is expected to take unconventional steps to induce liquidity in the market.



The mood at the summit was nothing but upbeat and the message was simple we need to act agressively and quickly.

Be fearful when others are greedy, and be greedy when others are fearful.

This is the statement given by the "WHITE KNIGHT" Warren Buffett in an article written by him in news column. He said that this is the simple rule that dictates his buying. The statement might look to be philosophical and correlating to the statement given by sun tzu in his "THE ART OF WAR" that when the enemy attacks retreat; when the enemy retreats attack;

This is true as when the markets are booming amateur investors will be greedy to make money with out any knowledge of the market and economic life cycle and even the P/E ratio.When the world is investing the seasoned investor retreats and when the world is selling then the seasoned investor buys!!.

This can be seen in the present crisis situation,when the whole world is selling the two legendary investors Warren Buffett and Soros are investing from America to Australia. Buffett had invested 5 billion dollars in Goldman Sachs and 3 billion dollars in G.E. in preferred stocks. He also said that he is buying American stocks.

so my advise would be to gain wisdom and learn from the mistakes, if you cannot understand the mistake then better leave to experts or opt for mutual funds.

In Proverbs 4:7, the Word of God states “ Wisdom is the principle thing; Therefore get wisdom. And in all your getting, get understanding”. The sad part is that amateur investors often have neither and think that God is speaking for his own health; But He’s not. He’s speaking for ours.

Reliance fresh costly....

Reliance fresh is celebrating the 2nd anniversary, but are the consumers happy? thats the big question. It has around 600 + centres in India and operating on this scale should give it a reasonable competitve advantage. Reliance is looking to backward integrate and produce vegetables and friuts and also having tieups with the farmers, but is this value being forwarded to the consumer?

I have done a small research on the prices and quality of vegetables and fruits in reliance fresh centers in vizag and the neighboring kirana and vegetables mandi's. The results are astonishing the prices in reliance fresh in some case are as high as 70% than the mandis. The price of potatoes was Rs. 8 in the kirana shop and astonishingly it was Rs.14 in the reliance fresh.The quality of the vegetables was also that good compared to the mandis.

The same was in the case of friuts with apples costing not less than Rs.130 in the reliance fresh. The Ambience is also not good with the cartons being stocked in the entrance.

Reliance fresh has to change its strategy otherwise the Indian consumer is not going to buy into it for long.

FED to cut rates this week

U.S fed is looking to cut the CRR rate by a minimum of 25bps to 1.25, the rate cut can also be upto 50 bps, this is to spur the economy. Because of the recent economic crisis the oil prices have dropped and the inemploymeny in the US has increased to a record high of 6.5% and expected to touch 7.5% by the year end.

with the christmas season coming the economic downturn is going to effect the company revenues and the growth of the country. This festival season as experienced by the Indian diwali which was a mere mediocre in the celebrations because of the soring prices and the economic uncertainity.

The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday showed a drop of 16.6 per cent in August from the year ago, the largest on record going back to 2000. The smaller, 10-city index, fell 17.7 per cent, the biggest decline in its 21-year history.

The fed cut is also expected to spur rally in the oil prices, with the OPEC cutting the production and planning to cut production further. According to me the oil prices are to stabilise around $75 by the year end.

Frame work to evaluate poverty in India

According to Professor Aasha Kapur the poverty evaluation done in India is not done properly she has come up with a frame work with drivers, maintainers, interrupters weighted framework

Drivers: What propels people into poverty?

High healthcare costs

Adverse market conditions

Loss of assets

High interest loans from moneylenders

Social expenses, deaths

Crop Failure

Maintainers: What keeps people stuck in poverty?

Casual agricultural labour

Landless households

Illiterate households

Larger households with more children

Interrupters: What helps escape from poverty?

More income earning opportunities

Proximity to urban areas

Improved Infrastructure

Initial literacy status of household head

Income from physical assets: cropland, livestock, house

Another important finding is that while more people among the Scheduled Castes had been able to escape poverty, fewer among Scheduled Tribes had.

Taken from www.ndtv.com

Japan set to be Indian IT's next big Market

With the economic meltdown in US the Indian IT companies are suffering a lot due to the loss of the clients. The share of financial sector as the client percentage in the Indian IT sector is about 1/3rd. The crisis has made it essential to the Indian IT companies to look beyond US, Europe too being in the financial crunch Japan looks to be good market.

The Indian IT exports to Japan stand at a mere 4 2 billion as of now. With a huge market availability due to the opportunities in the market, it also comes up with the threats that the Indian IT companies have to face.



Opportunities:

1. Second biggest economy:Japan is the worlds second biggest economy after US. Japans economy is highly technology dependent, giving a good chance for the companies to develop the market.
2. Application Development: Japan has low overall IT spending with spend/sales ratio being around 1-1.5 per cent for most industries as compared to around 3.5- 4 per cent in the US. BFSI and manufacturing are the highest spenders amongst all industries. Embedded systems development and engineering and R&D services are the prospective quick win service offerings for Indian vendors. Application development and maintenance are the next big opportunities.
3. Application implementation : Japanese companies are still working on the legacy systems so the Indian IT companies can help them implement new applications like SAP, Finnacle.
4. Shortage of Human resources: Japanese population is fast aging creating a shortage in the manpower, this is forcing companies to look out for alternatives in the emerging markets.

Challenges:

1. China:China is the biggest off shoring partner of japan. China has an advantage of having the cultural similarity with japan.But recently their have been problems due to off shoring to China.
2. Keiretsu model: The Japanese service industry is based on the keiretsu model, where in the supply chain in vertically integrated. The Oligopolistic control on the vendors and clients is high in the japanese IT sector.

Japan should be seen as along term partner and investment and not as the temporary solution to the present economic crisis in the west.

India should be prepared for temporary slowdown

Speaking in the parliament P.M. Manmohan singh said "India like other developing economies is feeling the ripple effect of the crisis. Several financial institutions are in trouble and on the brink of solvency."

He also reacting to the steps taken by RBI "Number of unconventional steps are being taken by the government to stem the tide, which is causing a steep decline in the stock markets. It is the worst crisis since the Great Depression and we have taken a number of steps to minimize the impact,"

The Prime Minister, however, assured that all the bank deposits are safe.

He also assured the investors that India has a financially sound system so no fear should be there.

"We are taking steps to combat the liquidity crisis. The RBI has released Rs 25,000 cr for the banking sector. It has also cut 100 basis points in the repo rate to minimize the effect," he said.

Prime minister that the global meltdown will have an indirect impact on the Indian economy which will lead to the temporary slowdown in the Indian growth curve.

The PM also said that India's growth could come down to 7 per cent.



The ripple effect as said by the prime minister has spread like a wild fire with the majority of the industries like I.T., aviation, manufacturing ( alarming IIP of 1.3% ) showing signs of significant slowdown.

The consumers are very vary at the moment because of the double digit inflation and the liquidity crisis hitting the middle class in the form of salary cut and job losses. An increase in home and car loan interests have meant that many middle income families have to cut their festival budgets.

Marketers can expect the sales for the coming festival season the be down if the present crisis worsens.

Nandan Nilekani CEO of Infosys said that the companies can handle the crisis by using strategy.

future of nano

Tata's to move from singur, with the singur row extending for more than a month tata's are looking at possibilities of shifting the base from singur.
The relocation of the mother plant would take 12 - 18 months even if it is done at war footing.
The options for tata's are open with many states offering then proposals for setting up the plant in their state.
Gujarat is said to be the forerunner, followed by karnataka and maharastra.
does this mean west bengal has lost its credibility?
yes until the singur row is resolved don't think any other company would dare to setup their plant in west bengal. too much is at stake.
west bengal lost tata's for sure.
The official announcement is expected to come in this week unless some miracle happens tata's are leaving west bengal for good.

men or women whose on top?

According to a survey conducted with the help of master card women shop more as compared to men online also. The survey was conducted taking 4157 respondents across Australia, Chinese mainland, China's Hong Kong, India, Japan, Singapore, South Korea and Thailand. out of the respondents 78% of the women shopped online and more than 50% of the women shopped more than six times in the past quarter.

but men bought for more money, 79% of the men who shop online in the respondents spent more than $100 compared to 72% women.

Women bought more impulsively 61 % over the net when compared to men who did a research before buying online.Women bought impulsively as they were attracted to the low prices over the net.

Over the net the main criteria for buying is value (perceived value).

So for a marketer who wants to sell the products online women are on top.

India Stock market to go down today

Oil Increased by a staggering $25 to end at $120.92 .The rise is the record single day increase in the oil prices ever. This is going to effect the Indian economy Multi folded, the inflation concern is back with oil prices set to rise. The sentiments of the Indian stock market is hit, with the current financial crisis the increase in oil will wreck havoc today in the BSE and the Nifty. I predict that the sensex is goin down by 200 points and main companies that will get effectd is the bankex and realty sectors.

Graziano Disaster

Graziano, the Multi national electronics company attacked today has nearly 600 employees. It is a large Italian multinational, Mr.Lalit Kishor Choudhury who died at work had been the managing director cum CEO for 10 years.
In this IT age of globalization, the ghost of the past the worker menace has come back today with a dreaded reality. M.D of Graziano electronics was brutally killed by a group of workers at his office.
He was hit on the head with sticks as if he was a snake, his mistake to help control the situation between the workers and the H.R regarding them being fired 2 months ago.
Mr. L.K. Chaudhary is survived by his wife a college lecturer and a son studying in class 12.What could he have done? could he have been still alive? whose mistake was it? these questions need to be answered.
Companies sacking people because of the macro economic conditions prevailing in the global economy. who is to be blamed for this? who will answer the son?
This points out to the fact that India is still in its socialistic past.
Government should take proper action against the culprits so that India Inc. doesnt lose its face in the international community.

Nokia's Mobile market to be down in India

At present the market share of Nokia in India is about 62% followed by Samsung . Nokia is at present losing the price war against companies like fly where in they are selling the mobile set with connection for just Rs.800. whereas Nokia’s starting model is priced at Rs.1500.
Nokia is losing out in the most attractive market in the Indian context the rural market.
Nokia has for long dominated the handsets segment and this is probably among the few industry segments where the market leader has had such a huge market share.
Even as companies work on their distribution, they are also bringing handset manufacture closer home. Nokia recently had a high profile launch of its manufacturing facility in Tamil Nadu.
LG, which also has a manufacturing facility in Pune, claims that setting up a local manufacturing unit has more benefits those economies of scale or savings on logistics - product modification, for instance. Two just-launched LG phones have a cricket game, based on customer feedback on the popularity of the sport here.
"We wouldn't have been able to meet market requirements if the product were being made elsewhere," points out H S Bhatia, product group head, GSM mobiles, LG.
So Nokia may not have any added advantage as all the mobile manufacturers have set up the plants in India.
Even though the market is growing I feel that with the entry of Apple Iphone in the market which is expected to cost around Rs.20000 in the next 3 months, will affect the sale of Nokia N and E series.
With the competition growing from the duplicate markets (China phones) Nokia will still lose its sales in the future. Nokia N 95 which costs Rs.25000 in the open market, N985 a duplicate from China costs only Rs.5000
Nokia should come up with marketing strategies to combat this rise in competitors.
Nokia’s main advantage is it brand in India and then the user friendly features which should emphasized in the low end products and the innovation in the high end products.
Nokia being a big player should be able to target the new entrants in this industry like fly and virgin mobile. Virgin mobile can take away the market share from Nokia because of their innovative strategies.