Inflation, main concern for India

One of the world’s large consumers of raw materials, India isn’t afraid of crisis. Instead it is afraid of inflation. Announcing the strengthen of its economical partnership with India, the European Union hopes to take advantage not only from the emergent market, that is forecasted to increase during this year with 7,5%, and also from an economy somehow avoided by the financial crisis that continues to shake USA and the Old Continent.

In the day in which the bankruptcy of Lehman Brothers bank was announced, on September 15, the stock exchange from Bombay recorded a deviation of only 3%. In terms of a volatile financial market, this decrease practically wasn’t noticed. The Indian banks have managed, at least till now, to save themselves from the crash of the American financial institutions.  It’s true that on October 6, the Sensex index that regroups the biggest 30 companies of the country, has fallen to the lowest level, loosing 600 points (4,97%), till 11.926 points, as a result of the disorganization from the Asian stocks. The biggest decline was recorded by the stocks of the companies that produce consumption goods on long term, metallurgical concerns and construction companies. Because the fears related to the slowdown of the world economy, the experts have foreseen that the descended trend of quotations will continue. In what concerns the banks, the most spectacular falls were grounded at the first private institution of this type from the country. As a result of Lehman Brothers transfer under the state’s subordination, ICICI Bank has lost 83 million dollars, meaning 0,1% from its assets.

The most exposed to crisis are the informatics companies. Most of the customers are installed in USA, are numerous and are in the financial sector. Only they represent 42% of the business group Tata Consultancy Services, the biggest Indian group from the area of calculation technologies services. But the difficulties faced by the foreign beneficiaries could determine these to expand  their presence in India. In an interview offered on September 21 to the French daily Le Monde, Azim Premji, the owner of the IT services company, Wipro, was very optimistic: “The internationalized groups that haven’t resorted to the Indian companies for externalizing their informatics sector, are seriously considering to repair this deficiency. On average, is cheaper with 25%”.

Long time criticized for the rigidity and the perfectionism of its financial segment, India has now the occasion to defend.  It’s true that in conditions in which the moves from the capital markets from all over the world have an incontrollable aspect, and the evolution, sometimes surprisingly, of the stocks of some different companies change the force report in many activity domains,  nothing seams to be stable. Although, India thinks to be more protected in comparison with other emergent countries. The short time capital moves are forbidden, and the rupee isn’t convertible. “Those who wanted to learn us better practices, proved to be incapable of helping their own financial sector”, Kamal Nath, Indian minister of foreign trade said boasting this system. Unlike the Western countries, “our financial system and our economy aren’t on different orbits”, he concluded. He cautiously recognized that withdrawing the foreign institutional investments could affect the national economy. Instead, the general secretary of the Indian Federation of trade and industry chambers, Dr. Amit Mitra, don’t shows to be concerned: “Between 92% and 93% from the capital deriving from internal economies”. However, the inflation remains the main problem.   

The export of automobiles from India increased five times during the last five years, and in the following three years it is forecasted to increase with 300%, and will reach to over 500.000 cars per year. The analysts in domain that forecasted this increase had taken into account the evolution till the present of this industrial activity domain. In 2007, India delivered over border 200.000 vehicles, against Japan with five million and South Korea with three million. Everybody’s attention focused on Nano, a type of toy for the people with humble wages and that will be worth only 2500 dollars. Big suppliers on the foreign markets are the already famous brands such as Suzuki Motor, Hyundai Motor and Nissan Motor. At the end of September, Hyundai has included at the company from the South of India, the night shift, hoping that so it will increase the production with  40% in order to satisfy the demand for the model of small liters i10. In India, Hyundai started to manufacture automobiles 20 years ago, when the country was less developed. In 2004 it became sector leader, and now is selling its products in 70 states all over the world. The smallest of its vehicles -  Santro and i10 - are being exclusively produced in India and are directed especially to the Europeans.  This year, the company has touched a production of 500.000 automobiles and in 2009 wants to produce up to 650.000 units. Maruti Suzuki and Nissan Motor have presented at the showroom from Paris cheap vehicles conceived especially for Western Europe. Suzuki Alto and Nissan Pixo will be produced in the North of India. The plant Nissan will deliver on the market 200.000 cars per year, half of them being exported. Last year, Suzuki sent abroad about 50.000 cars and in the next two years wants to increase this index up to 200.000.

The president of the director counsel of the Russian “Sistema”, Vladimir Evtusenkov, stated that his group of companies doesn’t intend to change his plans concerning the construction of a digital phone network in India. “Not for the moment. We’ll live and see”, said the owner estimating that “the end of the crisis isn’t close”.  According to the programs of development, in 10 years, “Sistema” plans to invest in the expansion of its network in India about five billion dollars, of which one billion during this year.

The industrial giant Tata has chosen a new location, in the state Gujarat, from the West of the country, for manufacturing Nano, the cheapest car from the world, worth of 2.500 dollars per unit. The first “headquarter”, in the East of the country was abandoned because of the discontent showed by the inhabitants whose terrains were taken.  In the moment of departure, a month ago, the unit was raised in proportion of 90% and investments of a few tens of million dollars.At BollywoodAfter he had flirted with China, Steven Spielberg decided to change Hollywood with India, confirming so the forecasts made a few years ago. The essence of these speculations – the escape of the movie industry from Occident, precisely from the world movie citadel towards East:in other words, at Bollywood, how is frequently named the Indian industry of film. The wealthiest and most legendary director from Hollywood will set up an independent company together with the company from Bombay, Reliance Ada Group, that invested in this operation 550 million dollars, the same as it fallows to invest the banking group JP Morgan Chase. The agreement stipulates a collaboration of five years and directing 30 films by the company DreamWorks, founded in 1994 by Spielberg together with Geffrey Katzenberg and David Geffen.