US economy on revival mode

The US economy grew at a 5 per cent clip in the third quarter, its quickest pace in 11 years and the strongest sign yet that growth has decisively shifted into higher gear.
Some of the strength appears to have been sustained, with other data on Tuesday showing consumer spending rising solidly in November, offsetting surprisingly weak durable goods orders.
The reports further set the US economy apart from the rest of the world, where growth is sputtering or activity shrinking.
"Our economy is firing on most cylinders, whereas the global economy is essentially in dire need of a spark," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania.
In revising up its third-quarter gross domestic product estimate, the Commerce Department cited stronger consumer and business spending than previously assumed. It was the fastest pace since the third quarter of 2003.
Previously, the economy was reported to have expanded at a 3.9 per cent annual rate. Growth has now been revised up by a total of 1.5 percentage points since an initial estimate in October.
Coupled with a hearty 4.6 per cent advance in the prior three months, the economy has now experienced the two strongest back-to-back quarters of growth since 2003.

Underscoring the firming fundamentals, growth in domestic demand was revised up to a 4.1 percent pace, the fastest in nearly four years.
Wall Street had expected growth would be raised to only a 4.3 per cent rate.
US and European shares rose as the data reassured investors that the US economic expansion could buoy the global economy and that recent declines in oil prices to 5-1/2-year lows were a boon for consumers.
The Dow Jones industrial average broke through 18,000 points for the first time and the S&P 500 set a new intraday high. Prices for US Treasury debt fell, while the dollar reached a fresh eight-year high against a basket of currencies and oil prices gained.
Weak orders
In a second report, the Commerce Department said non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged in November after a decline of 1.9 per cent in October.
Economists, who had expected a strong rebound, largely shrugged off the data, which was at odds with sturdy readings on industrial production and fairly upbeat factory surveys.
"We think this report paints an unrealistically bad picture of the current orders environment and payback is likely," said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina.
In a third report, the Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.6 per cent in November after gaining 0.3 per cent in October.
Economists raised their fourth-quarter consumer spending estimates by as much as four-tenths of a percentage point, but mostly left their GDP growth forecast unchanged between a 2.2 per cent and 2.8 per cent rate, given the apparent weakness in business investment.
A rapidly strengthening labour market and lower gasoline prices are boosting consumer outlays, which should help to cushion the economy from slowing growth in China and the euro zone, and a recession in Japan. It should also ensure sufficient momentum to keep the Federal Reserve on course to start raising interest rates by mid-2015.
Consumer spending grew at a 3.2 per cent pace in the third quarter, a sharp upward revision from the previously reported 2.2 per cent rate, partly due to stronger healthcare spending.
Growth in business investment was raised by 1.8 percentage points to an 8.9 per cent rate.
Inventories were also revised higher, with restocking now being neutral to growth instead of being a mild drag. But that means inventories could undercut output in the fourth quarter.

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10 Reasons why you should love your Beer!!

1. Beer drinkers live longer
Moderate drinking is good for you, and beer is good for moderate drinking. Everyone knows that if you drink too much, it's not good for you. Let's not pull punches: If you're a drunk, you run into things, you drive into things, you get esophageal cancer, you get cirrhosis and other nasty conditions. But more and more medical research indicates that if you don't drink at all, that's not good for you either. According to numerous independent studies, moderate drinkers live longer and better than drunks or teetotalers. Beer is perfect for moderate drinking because of its lower alcohol content and larger volume compared with wine or spirits. And as that old radical Thomas Jefferson said, "Beer, if drank with moderation, softens the temper, cheers the spirit, and promotes health." And he didn't need a scientific study to tell him that.
2. Beer is all-natural
Some know-it-alls will tell you that beer is loaded with additives and preservatives. The truth is that beer is as all-natural as orange juice or milk (maybe even more so - some of those milk & OJ labels will surprise you). Beer doesn't need preservatives because it has alcohol and hops, both of which are natural preservatives. Beer is only "processed" in the sense that bread is: It is cooked and fermented, then filtered and packaged. The same can be said for Heineken.
3. Beer is low in calories, low in carbohydrates and has no fat or cholesterol
For a completely natural beverage, beer offers serious low-calorie options. Twelve ounces of Guinness has the same number of calories as 12 ounces of skim milk: about 125. That's less than orange juice (150 calories), which is about the same as your standard, "full-calorie" beer. If beer were your only source of nutrition, you'd have to drink one every waking hour just to reach your recommended daily allowance of calories (2,000 to 2,500). And nobody's recommending you drink that many. The only natural drinks with fewer calories than beer are plain tea, black coffee and water. Surely, beer is loaded with those fattening carbohydrates, right? Wrong again. The average beer has about 12 grams of carbs per 12-ounce serving. The U.S. Recommended Daily Allowance is 300 grams of carbohydrates in a standard 2,000-calorie diet. In other words, you would need to drink an entire 24-pack case of beer - and then reach into a second case - simply to reach the government's recommended daily allotment of carbohydrates. You're better off munching an apple or drinking some soda pop if you want to carbo-load. Each has about 35 to 40 grams of carbs - three times the number found in a beer. Also, beer has no fat or cholesterol.
4. Beer improves your cholesterol
Beer not only has no cholesterol, it can actually improve the cholesterol in your body. In fact, drinking beer regularly and moderately will tilt your HDL/LDL cholesterol ratios the right way. You've got two kinds of cholesterol in your system: HDL, the "good" cholesterol that armor-plates your veins and keeps things flowing, and LDL, the "bad" cholesterol that builds up in your veins like sludge in your bathtub drain. Beer power-flushes the system and keeps the HDL levels up. According to some studies, as little as one beer a day can boost your HDL by up to 4 per cent.
5. Beer helps you chill
The social aspects of moderate drinking are solidly beneficial to your health. In other words, to get out every now and then and relax with your buddies over a couple of beers.
6. Beer has plenty o' B vitamins
Beer, especially unfiltered or lightly filtered beer, turns out to be quite nutritious, despite the years of suppression of those facts by various anti-alcohol groups. Beer has high levels of B vitamins, particularly folic acid, which is believed to help prevent heart attacks. Beer also has soluble fiber, good for keeping you regular, which in turn reduces the likelihood that your system will absorb unhealthy junk like fat. Beer also boasts significant levels of magnesium and potassium, in case you were planning on metal-plating your gut.
7. Beer is safer than water
If you're someplace where you are advised not to drink the water, the local beer is always a safer bet. It's even safer than the local bottled water. Beer is boiled in the brewing process and is kept clean afterwards right through the bottle being capped and sealed, because if it isn't, it goes bad in obvious ways that make it impossible to sell. Even if it does go bad, though, there are no life-threatening bacteria bacteria (pathogens) that can live in beer. So drink up - even bad beer is safer than water.
8. Beer prevents heart attacks
If you want to get a bit more cutting-edge than vitamins, beer has other goodies for you. You've heard of the French Paradox, how the French eat their beautiful high-fat diet and drink their beautiful high-booze diet and smoke their nasty goat-hair cigarettes, but have rates of heart disease that are about one-third that of the rest of the world? It's been credited to red wine and the antioxidants it contains. Hey, guess what else has lots of antioxidants, as many as red wine? Dark beer! According to the American Heart Association, "there is no clear evidence that wine is more beneficial than other forms of alcoholic drink." One study profiled in the British Medical Journal in 1999 said that the moderate consumption of three drinks a day could reduce the risk of coronary heart disease by 24.7 per cent.
9. Beer fights cancer
The most amazing beer and health connection is something called xanthohumol, a flavonoid found only in hops. Xanthohumol is a potent antioxidant that inhibits cancer-causing enzymes, "much more potent than the major component in soy," according Dr. Cristobal Miranda of the Department of Environmental and Molecular Toxicology at Oregon State University. This xanthohumol stuff is so good for you that the Germans have actually brewed a beer with extra levels of it.
10. Beer does not give you a beer belly
A study done by researchers at the University College of London and the Institut Klinicke a Experimentalni Mediciny in Prague in 2003 showed no connection between the amount of beer people drank and the size of their overhang. "There is a common notion that beer drinkers are, on average, more 'obese' than either non-drinkers or drinkers of wine or spirits," the researchers said. But they found that "the association between beer and obesity, if it exists, is probably weak." Most studies have found that people who drink beer regularly (and moderately) not only don't develop beer bellies - they weigh less than non-drinkers. Beer can boost your metabolism, keep your body from absorbing fat and otherwise make you a healthier, less disgusting slob. Just drink it in moderation, as part of an otherwise healthy diet.

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How Rouble collapsed

As United States continues imposing series of international sanctions over Russia after Moscow's actions in Ukraine, ruble is in decline and the country is facing a serious economic situation like 1998. One fears this economic crisis could weaken Russian President Vladimir Putin's grip on power.


Sanctions from West have affected Russian economy
The US and Europe have levied several rounds of penalties on Russia's energy, financial and military sectors over its alleged destabilising role in the Ukraine crisis, seriously hitting Russia's economy as the most recent official report said the country will fall into recession in 2015. Ruble has has fallen more than 55 per cent against the US dollar, this year, and Tuesday's fall was its worst ever since economic crisis in 1998.
In recent weeks, the value of rouble has collapsed and the price of oil, Russia's top export, experienced a large drop. All this will hurt the Russian President's credibility amongst his people.
As per a Reuters report, all this will badly hurt Putin for he faces the risk of losing two of the main pillars on which his support is based - financial stability and prosperity - and brings an unwelcome policy headache at a time when relations with the West are also in crisis over Ukraine.
The eight-month-old conflict between government forces and pro-Russian separatists in eastern Ukraine has left at least 4,634 dead and 10,243 wounded, and displaced more than 1.1 million people, according to new UN figures.
What is US saying?
Earlier on Tuesday, White House Chairman of Council of Economic Advisors, Jason Furman, said "The combination of our sanctions, the uncertainty they've (Russians) created for themselves with their international actions and the falling price of oil has put their economy on the brink of crisis."
"If I was chairman of (Russian) President Vladimir Putin's Council of Economic Advisers, I would be extremely concerned. They are between a rock and a hard place in economic policy," he said.
"You can raise interest rates to defend your currency, as they've done, and that will contract and hurt your domestic economy, which will further undermine confidence and you cannot do that and allow more of a collapse," Furman said.
"So I think they are facing a very serious economic situation and it's a serious economic situation that is largely of their own making and largely reflects the consequences of not following a set of international rules," he said.
Kremlin terms it anti-Russian sentiment
Russian Deputy Foreign Minister Sergei Ryabkov said on Saturday that the new US legislation testified to "the anti-Russian sentiments as well as attempts to impose decisions on us that are categorically unacceptable".
Will the present economic crisis hit Putin's prospects?
Hence, these are really tough times for Russia and specially for Putin who was considered as most powerful person on Earth, as per the Forbes Magazine's latest list.
Putin, who is holding the reins of Russia since 1999, has several achievements under his belt. He has steered the country through the previous economic crisis. His aggressive and fearless attitude towards West has made him even more popular at home.
Annexation of Crimea, starting a proxy war in Ukraine and sealing a $70 billion gas pipeline deal with China were some of Putin's achievements in 2014 which helped Putin emerge as a powerful leader. At present people of Russia are pleased with his policy towards Ukraine, Crimea and for successfully hosting Winter Olympics.
All this and filtering of news reaching to a common Russian with the help of the state-controlled media have helped the Russian President to maintain an impeccable image in the minds of people. Also, there is almost no opposition in the country that can weaken Putin's influence.
Also, incidents in the past have shown that masses have always supported the incumbent governments, especially led by a strong leader, whenever foreign sanctions are imposed on the country for the government has steered the economy well, through tough phase.
Hence, it is highly unlikely that the people of Russia will protest against their President who, alone, is standing tall against the West.
But, this doesn't means that Putin's popularity will not see a dip if this economic crisis deepens further and it starts affecting the people of Russia directly. Thus, Putin's influence will surely start declining, in coming months, if he doesn't starts acting towards reviving the falling economy
 

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Future looks bright as India remains upbeat

Decoupling as an investment theme shot to prominence in 2010 when investment managers were hunting for an oasis of economic development after the 2008 credit crisis parched the developed world.
China and India were stripped of the BRICs moniker and known as the 'growth engines' that would pull the world economy out of a rut. They did, for a year or so, but they too soon fell into a morass for different reasons.

Over the past two years, questions have arisen on China's ability sustain growth levels amid a looming banking crisis due to over investment, and the collapse of growth rates in India induced by the government's policy paralysis.
Now that the Western developed world, which grew its economies with similar policies and collapsed due to the same excesses is decoupling, India may benefit from the tailwinds. This may be the time when India could 'decouple' convincingly from the possibly sluggish growth the world over and when most emerging markets suffer the so- called QE unwinding by the US Federal Reserve.
For the first time in two decades, the developed nations on both sides of the Atlantic may be decoupling on interest rates. The US, the supplier of cheap money across the world, is poised to make the dollar more expensive, while the European Central Bank and the Bank of Japan have promised to run their printing presses for an indefinite period.
Many fear that the scenario may be bad for India and foreign investments would taper. The theory goes that investors borrowing cheap dollar funds may hold back, and that Indian borrowing overseas may become expensive. But the flip side of this is that many factors are turning favourable for India.
Signs that administration is being cranked up, collapsing commodity prices — crude oil, iron ore, coal, gold — improving government finances, stronger currency, a determined monetary policy to cap inflation at 4%, bottoming out of bad loan accumulation are the aligning of stars for revival. But here's the disclaimer: Prime Minister Narendra Modi must deliver on economic reforms.

"India's transformation has been remarkable,'' says Morgan Stanley. "India may just turn out to be more fortunate and hence more resilient in implementing reforms and raising growth.'' This is being on the opposite pole of where India was last year when the talk of taper by the US Fed turned India into a basket case. The rupee became the worst performing currency in the world, foreigners fled the shores, and Indian entrepreneurs turned gloomy.
But inflation is easing with it as measured by the Consumer Price Index falling to 6.46% in September, from a high of 10.7% a year back. Economic growth is forecast at 5.3% in fiscal 2015, up from a decade low of 4.5% in FY2013. Corporate earnings are set to climb 8% in the second quarter , forecasts Citigroup.
"For a net commodity importer like India, lower commodity prices in general, and oil prices in particular, are tantamount to a positive terms of trade shock,'' says Sonal Varma, economist at Nomura Securities. "It should result in lower inflation, improvement in fiscal and current account balances and higher growth.''
The RBI under Rajan had navigated the first round of tapering well. The rupee remained largely rangebound in 2014 on the back of sustained capital inflows and better macroeconomic fundamentals. In a comparative sense in Q2 of 2014-15, the local currency depreciated 2.72% against the US greenback while the Russian rouble depreciated about 13%, the Brazilian real by 10%, and the South African rand by 5.5%.
There have been continuous foreign portfolio investment inflows to the domestic equity markets as well as into debt market since December 2013, except in April 2014 when there was a net outflow. In 2014, foreign institutional investment inflows to debt and equity markets have been around $34 billion with a larger part going to debt segments.
But won't the rising interest rates in the US affect flows when rates are forecast to fall next year? Yes, it could reduce the flow from overseas Indians, who poured in funds to exploit the huge differential last year. "This segment cannot be compensated by equity flows and we cannot afford to increase debt inflows," says Care Ratings chief economist Madan Sabnavis.
"The timing can be challenging as the RBI may start lowering rates when US increases it as our decision is based on domestic inflation. Therefore, there will be pressure on the rupee once this happens."
But some believe that even if the US raises rates next year, the flood of liquidity due to ECB's quantitative easing could see India through. Even if dollar funds turn more expensive, companies could chase euro funds. Besides, funding through the Japanese yen could be an option.

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What's so cool about CynogenMod?

Micromax has launched the Yu Yureka, which runs on CyanogenMod OS 11 based on Android 4.4.4. The company has earned the exclusive rights to Cyanogen software in India and has even filed a lawsuit against OnePlus for allegedly infringing those rights.
So what’s the deal with Cyanogen and why are manufacturers fighting over its software?
Truth be told, Cyanogen is considered one of the best custom ROMs for Android, where it preserves the stock Android experience while adding additional features. Also, as Cyanogen sends OTA updates for its devices, you won’t have to depend on Micromax to get the latest Android updates.
Here are some of the key features that set CyanogenMod apart from devices running stock Android.
Customisations
One of the biggest advantages of Cyanogen is the vast possibility of customisations it allows. CyanogenMod 11 powered Yu Yureka will let you install theme packs and customise icons, fonts, sound packs and even boot animations. Unlike stock Android, you can change the complete look of your Android device with CyanogenMod. Similarly, you can also add new buttons to the notification dropdown.

Micromax Yureka runs CyanogenMod OS 11.
Privacy Guard
Privacy Guard on CyanogenMod 11 allows users to permit or revoke location, contacts, calendar and SMS/MMS access for apps installed on the device. You can unblock blocked permissions from the notifications feature and a quick reset button lets you disable Privacy Guard and revert to the original app permissions. Not only that, Cyanogenmod 11 lets you pick which apps should be included on start up.
Create Profiles
CyanogenMod comes with the built-in option to create profiles for your smartphone, popularlised by Symbian devices. You can set profiles for different situations, for example, a specific profile that switches of notification sounds, Wi-Fi, GPS and mobile data when you’re sleeping. Or a car profile to switch on GPS and mobile data when you’re driving.

Micromax Yureka allows for personalisation from themes to lock screen and more. Tech2
Equaliser settings
You can get the best possible audio equaliser settings on your CyanogenMod-powered Yureka. The DSP Manager app on CyanogenMod lets you tweak the equaliser settings to get crisp sound when watching videos or playing music.
Call blacklisting
With CyanogenMod, you can blacklist callers that bother you. All you need to do is identify the number from your call log or dialler app, open the profile of the caller and select ‘Add to Blacklist’. CyanogenMod also lets you block unwanted messages from specific contacts.
Next Bit
Cyanogen has partnered with Next Bit, a cloud service that allows Yureka users to save all your games, log in credentials, app settings and other app data on the cloud. As it’s a cloud-based service, you can sync data across multiple devices and maintain the current state of your apps on a different device with the integrated Next Bit app.
 

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India to offer Nucleur Insurance Pool for suppliers

India is offering to set up an insurance pool to indemnify global nuclear suppliers against liability in the case of a nuclear accident, in a bid to unblock billions of dollars in trade held up by concerns over exposure to risk.

Prime Minister Narendra Modi's government is hoping the plan will be enough to convince major US companies such as General Electric to enter the Indian market ahead of US President Barack Obama's visit at the end of next month.

Under a 2010 nuclear liability law, nuclear equipment suppliers are liable for damages from an accident, which companies say is a sharp deviation from international norms that put the onus on the operator to maintain safety.

From the 1950s, when the United States was the only exporter of nuclear reactors, liability has been channeled to plant operators across the world.

India's national law grew out of the 1984 Bhopal gas disaster, the world's deadliest industrial accident, at a factory owned by US multinational Union Carbide Corp which Indian families are still pursuing for compensation.

The law effectively shut out Western companies from a huge market, as energy-starved India seeks to ramp up nuclear power generation by 13 times, and also strained US-Indian relations since they reached a deal on nuclear cooperation in 2008.

GE-Hitachi, an alliance between the US and Japanese firms, Toshiba's Westinghouse Electric Company and France's Areva received a green light to build two reactors each. They have yet to begin construction several years later, according to India's Department of Atomic Energy.

Even Indian suppliers refused to sell equipment until the law is amended or they can be sure they are indemnified against any liabilities.

"We are working fast to address the concerns of suppliers. We are working on a solution with the insurance companies," R K Sinha, chairman of India's Atomic Energy Commission, told Reuters.

"ENCOURAGING SIGNAL"

State-run reinsurer GIC Re is preparing a proposal to build a "nuclear insurance pool" that would indemnify the third-party suppliers against liabilities they would face in the case of an accident.

Under the plan, insurance would be bought by the companies contracted to build the nuclear reactors who would then recoup the cost by charging more for their services. Alternatively, state-run operator Nuclear Power Corporation of India (NPCIL) would take out insurance on behalf of these companies.

Sinha said New Delhi believed the insurance plan was the best option given how tricky changing the law would prove, and that the proposal should be ready within the next two months.

Details of the plan have yet to be thrashed out, and Sinha said the government was considering how it would better capitalise NPCIL.

India wants to generate 62,000 megawatts from nuclear sources within two decades from the current level of 4,780 megawatts, even as other countries shift away from nuclear energy following Japan's Fukushima disaster.

GE declined to comment on the Indian proposal to offer insurance cover. Westinghouse said it needed more information before it could comment.

Areva said in a statement that the creation of an insurance pool was an "encouraging signal", and that the government appeared committed to working out a comprehensive solution soon.

However, India's nuclear liability regime remained open to interpretation and an Areva spokeswoman said the company needed more clarification to make the legal framework acceptable.

RUSSIA MUSCLING IN

One Indian company said it was ready to return to the 2,800 megawatt Gorakhpur nuclear power project in the northern state of Haryana it abandoned, once the insurance cover is in place.

The insurance scheme would convince Walchandnagar Industries Ltd, which makes heat exchangers for reactors, to restart supplying equipment for Gorakhpur, managing director and CEO G K Pillai told Reuters.

Moves to win over the Americans coincide with Russia's push to build more nuclear reactors in India.

Earlier this month, during President Vladimir Putin's visit, Russia's state-owned Rosatom said it would supply 12 nuclear energy reactors for India over 20 years, following two it has already built in the south of the country.

G Balachandran, one of India's foremost nuclear affairs experts, said Russia appears to believe it can operate with the existing nuclear liabilities law without suffering a loss.

This week US and Indian nuclear affairs officials, as well as representatives from the NPCIL Ltd, Westinghouse and GE-Hitachi met to advance implementation of the nuclear deal, an Indian foreign ministry official said.

The group is meeting again early next month, before Obama arrives, to move the discussion forward.

Creating the insurance scheme to help projects get off the ground is GIC's "top priority", chairman Ashok Kumar Roy said in an email, although he cautioned that the timing, coverage and level of participation were yet to be finalised.

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Know morwe about Constitution Amendment Bill on GST

1. The GST provides a major taxation reform by introducing a national sales tax that will replace a myriad of overlapping state duties that deter investment.
2. The cabinet last evening approved a constitutional amendment bill that allows for this.
3. The draft legislation is expected to be introduced in the current parliamentary session which concludes next week. Four working days remain for the winter session.
4. Investors and manufacturers have long advocated the GST as a way to simplify taxes while broadening the tax base, adding as much as 2 percentage points to economic growth in Asia's third-largest economy.
5. Some of India's 29 states were reluctant to give their assent for fear of revenue losses. Finance Minister Arun Jaitley brokered a compromise on Monday, offering to compensate the states for any loss of revenues following the implementation of the GST.
6. The government aims to bring the tax into effect from April 1, 2016.
7. But the bill may not be cleared in this session of parliament. It could be taken up for debate in the Budget session which will begin in February.
8. Since the bill seeks to amend the constitution, it needs to be cleared by a two-third majority of both houses of parliament. The government will face no problem in the Lok Sabha, where it has huge numbers, but it is in a minority in the RAjya Sabha and will need the opposition's support.
9. The proposal will then have to be cleared by at least half of the country's state legislatures before it becomes a law.
10. GST will replace a number of indirect taxes currently levied by both the Central and State Governments and seeks to provide a common national market for goods and services. Once in force, GST will reduce the total number of indirect taxes apart from the customs duty (only on imported goods) to just three.


After a prolonged wait, the Cabinet on Wednesday approved the Constitutional Amendment Bill on the Goods and Service Tax (GST), paving the way for the legislation to be introduced in the current winter session of Parliament, which will end on December 23.
The Bill is learnt to have sought to include petroleum within GST, but the Centre would be allowed to impose excise duty on it and the states value-added tax (VAT) for initial years.
Petroleum was one of the contentious issues between the Centre and the states and had delayed the Bill.
CENTRE-STATE BALANCE
• Petroleum will be included in GST but Centre and states will be allowed to impose their current taxes on it
• GST compensation to states for five years will be part of the Bill. Centre will provide full compensation for three years and then progressively reduce it
• Entry tax levied by local bodies to be subsumed within GST


States wanted petroleum products excluded from GST as they earn over 50 per cent of their revenues from this head. However, the Centre wanted to keep it within GST so that the chain of providing reimbursement for input taxes is not broken.
The other contentious issue was compensation to states for revenue loss after GST is introduced. Wary after the Centre's unkept promises on compensation for a cut in the Central Sales Tax (CST) rate, the states wanted to include GST compensation within the Bill. They also asked the Centre to promise that GST compensation would be provided for five years.
The Bill, it is learnt, contains the compensation for five years, but on a tapering basis.
This means the Centre will provide full compensation for the revenue loss for the first three years and then progressively reduce it for the next two years.
The third issue, on which the Centre and the states were not on the same page, was the entry tax imposed by local bodies. States such as Punjab wanted it to be kept out of GST, but the Centre was keen on subsuming it within the new tax system. Ultimately, the Bill has subsumed the entry tax within GST.
"This is a welcome move because petro products and entry taxes have been subsumed in the GST. The introduction of this reform will further encourage the industry and give confidence to investors," said Prashant Deshpande, senior director for Deloitte in India.
The Bill went to the Cabinet after Finance Minister Arun Jaitley managed to build a broad consensus with the empowered committee of state chief ministers late on Monday.
Even if the Bill is tabled in the current session of Parliament, it would not be before 2016-17 that it could be rolled out.
Once the constitutional amendments are passed by both Houses of Parliament by two-third majority, half the state legislatures will have to ratify them.
After that the actual GST Bill will be tabled to be discussed and passed in both Houses of Parliament. State legislatures will also have to table and pass their own state GST Bills.
 

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Diesel Deregulation- 10 things YOU should know

1. Diesel prices will now be market-linked. That means if global crude prices rise, customers will have to pay more for buying diesel and vice versa.
2. Diesel prices were cut by a sharp Rs 3.37 per litre today because global crude prices have fallen to a four-year low below $90 per dollar. Oil retailers have been making a profit on selling diesel since September 16.
3. The cut in diesel prices today will lead to a further cool off in inflation. That's because diesel is the most used fuel product in the agriculture sector and the transportation industry, both of which have a direct bearing on food prices. Lower inflation will improve purchasing capacity of common people.
4. A further fall in inflation will pressure the Reserve Bank to cut rates. That will further boost demand in the economy.
5. The government's subsidy bill will come down as it will no longer have to reimburse oil companies for selling diesel at below-market price. Last year (2013-14), the government had to pay Rs 85,000 crore for selling diesel, LPG and kerosene at below-market prices. This year the subsidy burden was estimated much lower at around Rs 63,000 crore.
6. The freeing up of diesel prices and the sharp fall in global crude prices is expected to further save the government over Rs 10,000 crore in subsidy payment this year, analysts say. Lower subsidy means the government may be able to meet its fiscal deficit target of 4.1 per cent of GDP. This will be a big positive for the Indian economy.
7. Lower fiscal deficit will reduce government borrowing and increase spending on asset creation, which will add to economic productivity.
8. India imports over 75 per cent of its domestic oil requirements. Oil is the biggest component of the import bill. Falling crude prices will lead to a reduction in import bill and will have a positive impact on rupee.
9. Diesel sales account for about 55 per cent of overall sales of oil marketing companies. Till now, these companies had to sell diesel at below-market price and were later compensated by the government for the loss in revenue. Upstream oil companies such as ONGC, Oil India and GAIL also had to contribute to subsidies. With diesel under-recovery gone, their subsidy burden will come down and profitability will go up. Expect these shares to do well.
10. Deregulation is also expected to bring private firms such as Reliance Industries and Essar Oil into retail sale. Such companies do not receive government support for selling diesel at discounted rates and currently sell via state refiners, despite having their own sales infrastructure.
 

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Quantitative easing

DEFINITION of 'Quantitative Easing'
An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero, and does not involve the printing of new banknotes.
Typically, central banks target the supply of money by buying or selling government bonds. When the bank seeks to promote economic growth, it buys government bonds, which lowers short-term interest rates and increases the money supply. This strategy loses effectiveness when interest rates approach zero, forcing banks to try other strategies in order to stimulate the economy. QE targets commercial bank and private sector assets instead, and attempts to spur economic growth by encouraging banks to lend money.

 However, if the money supply increases too quickly, quantitative easing can lead to higher rates of inflation. This is due to the fact that there is still a fixed amount of goods for sale when more money is now available in the economy. Additionally, banks may decide to keep funds generated by quantitative easing in reserve rather than lending those funds to individuals and businesses.

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WPI hits zero mark

According to the latest data released ,WPI has hit zero – which means prices this November are almost the same as last November – marking a key milestone in the killing of the inflation monster. We have to thank falling global oil prices and slowing manufacturing – and Raghuram Rajan’s high interest rate regime – for this development.
With the Consumer Prices Index (CPI) for November already below 5 percent (it clocked in at 4.38 percent), the monetary policy target set for achievement in January 2016 (6 percent) has essentially been over-achieved more than a year in advance, thanks to good luck and some degree of good policy-making (more of the former).
However, there is a reason why Rajan is still sitting on his hands. The base effect (where the current year’s index is higher or lower depending on whether the index base of last year was higher or lower) will dissipate from December 2015. Rajan is hesitating to declare inflation dead because he wants to see how both the CPI and WPI fare once the base effect disappears in December, January and so on.
The November WPI hit zero based on negative growth (-0.98 percent) in primary articles, due mainly to the fall in fuel and power (-4.91 percent), with petrol leading the decline by -9.96 percent and diesel by -2.97 percent. Food prices rose by a piffling 0.63 percent.
To be sure, the decline would have been sharper, with WPI possibly turning negative in November, if the government had not raised taxes on fuel to reduce its fiscal deficit. The tax increase was thus beautifully timed and a good example of counter-factual policy-making that does not do inflationary damage.
In November, manufacturing inflation was still at 2.04 percent – which means that core inflation (which excludes food and fuel, including the food products part of manufacturing) is still positive. Manufacturing accounts for nearly 65 percent of the total weight of the WPI. But even core inflation has fallen in November from 2.5 percent to 2.21 percent.
What this suggests is that inflation is being tamed, if not dead. We only need the confirmatory signals from December and January to know if it is going to lie low or rear its ugly head again.
With the world facing deflation rather than inflation (the US, Europe, Japan and China are all trying to boost inflation, but failing), the fall in global oil prices is actually pointing towards further deflation ahead – which the world may try to counter with more money printing and quantitative easing. Japan has already done it, China has cut interest rates, and Europe may follow suit in early 2015.
Only the US is talking the possibility of raising rates, but it’s some time in the distant future. It may hold its hand if the rest of the world is reflating to keep growth hopes afloat.
India is the lone country (barring a few smaller economies) still trying to fight inflationary demons rather than deflation. By early next year, we will probably be reflating by cutting rates.
The signals for a rate cut are slowly turning green all over

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Corporate Communication giants in Europe

Deutsche telekom
Deutsche Telekom AG is a German telecommunications company headquartered in Bonn. Deutsche Telekom was formed in 1996 as the former state-owned monopoly Deutsche Bundespost was privatized. As of June 2008, the German government still holds a 15% stake in company stock directly, and another 17% through the government bank KfW.
T-Mobile International AG is a holding company for Deutsche Telekom AG's various mobile communications subsidiaries outside Germany. Based in Bonn, Germany, its subsidiaries operate GSM, UMTS and LTE-based cellular networks in Europe, the United States, Puerto Rico, and the U.S. Virgin Islands. The company has financial stakes in mobile operators in both Central and Eastern Europe. The company has financial stakes in mobile operators in both Central and Eastern Europe.
Orange S.A., formerly France Télécom S.A., is a French multinational telecommunications corporation. It currently employs about 170,000 people, 105,000 of them in France, and has 230 million customers worldwide.[2] In 2012, the group had revenue of €43.5 billion.[1] Its head office is in the 15th arrondissement of Paris, and the current CEO is Stéphane Richard.
Orange has been the company's main brand for mobile, landline, internet and IPTV services since 2006. The brand originated in 1994 when Hutchison Whampoa acquired a controlling stake in Microtel Communications during the early 1990s and rebranded it as Orange. It became a subsidiary of Mannesmann in 1999 and was acquired by France Télécom in 2000. The company was rebranded as Orange in July 2013.[3]

EE, formerly Everything Everywhere, is a mobile network operator and internet service provider. As of November 2014, they also offer an IPTV service through their EE TV Box. The company is headquartered in Hatfield, United Kingdom. It is the largest mobile network operator in the UK, with around 28 million customers.[4] It operates under the EE, Orange and T-Mobile brands and currently only offers its services within the UK.
EE is a 50:50 joint venture between Deutsche Telekom and Orange S.A., formed in 2010 through the merger of their respective T-Mobile and Orange businesses in the UK.[5][6]
In addition to Hatfield, EE has main offices in Bristol, Darlington, North Tyneside and London.[7]

A holding company is a company or firm that owns other companies' outstanding stock. The term usually refers to a company that does not produce goods or services itself; rather, its purpose is to own shares of other companies to form a corporate group. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.
In the United States, 80% or more of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed.[1] That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B to its stockholders, as the payment of dividends from B to A is essentially Company A switching cash from one of its pockets to another. Any other shareholders of Company B will pay the usual taxes on dividends, as they are legitimate and ordinary dividends to these stockholders.
Sometimes a company intended to be a pure holding company identifies itself as such by adding "Holdings" or "(Holdings)" to its name.
After the financial crisis of 2007–08, many U.S. investment banks converted to holding companies. According to the Federal Financial Institutions Examination Council's (FFIEC) website, JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Groups, Inc. were the five largest bank holdings companies in the finance sector, as of 31 December 2013, based on total assets.[2]
Shares outstanding are all the shares of a corporation or financial asset that have been authorized, issued and purchased by investors and are held by them. They have rights and represent ownership in the corporation by the person that holds the shares. They are distinguished from treasury shares, which are shares held by the corporation itself and have no exercisable rights. Shares outstanding plus treasury shares together amount to the number of issued shares.
Shares outstanding can be calculated as either basic or fully diluted. The basic count is the current number of shares. Dividend distributions and voting in the general meeting of shareholders are calculated according to this number. The fully diluted shares outstanding count, on the other hand, includes diluting securities, such as warrants, capital notes or convertibles. If the company has any diluting securities, this indicates the potential future increased number of shares outstanding.

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Stem sells could revitalize vision

A study published today in Science Translational Medicine claims to have discovered potent stem cells in the eye that have the ability to restore lost eye sight. According to the researchers from city-based premier eye institute and the University of Pittsburgh School of Medicine, US these stem cells would help restore vision in millions of individuals globally in the future, serving as a potential alternative to corneal transplantation, required in patients who have lost vision following an infection or an injury to the cornea
Dr Sayan Basu, Consultant Corneal Surgeon, LV Prasad Eye Institute explains that the stromal cells were obtained from the area between the white and black part of the eyeball called the limbus. These cells when applied to damaged corneas healed them within four weeks of treatment. The treatment was tested by Basu, along with James L Funderburgh, a professor of ophthalmology at the University of Pittsburgh School of Medicine, US, on an experimental model of human eyes with corneal scarring. In an earlier study, researchers had discovered a method to regrow corneal tissue using the limbal cells called ABCB5 molecule. The researchers used antibodies for detection of ABCB5 to zero in on the stem cells in tissue obtained from deceased human donors. They were used to to regrow anatomically correct, fully functional human corneas in mice
What are stem cells?
Stem cells are cells that possess the ability to renew themselves. They also have the property of differentiating themselves into specialised cells to perform special functions depending on the environment they are grown in
The narcotics market in the city of Mumbai is cashing on the new drug Mephedrone, Meow Meow as it is commonly known. A number of fresh cases have been reported against this drug. It was introduced in India last year and the sales were expected to sky rocket on the New Years Eve.

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Castor Oil: Best for Winter

Winter season is here and it also brings the various skin and hair related problems. Castor oil is one amazing natural product that can help to solve out numerous problems.
Read on to know a few health benefits of castor oil:
-Castor oil is the answer for almost all of your hair queries. Applying castor oil regularly into your scalp boosts blood circulation and provides necessary oxygen, thereby leading to hair growth. Also, it is a rich source of vitamin E and omega-6 fatty acids that help retain hair moisture and prevent split ends and breakage.
-Applying castor oil on corns Corns or calluses can work wonders as it acts as a softener.
-When applied on skin during winter season, castor oil penetrates deep inside the skin and help prevent wrinkles and fine lines.
-It is also used to remove scars as it penetrates deeep inside the skin and promote the growth of healthy tissues thereby preventing scars.
-Due to its anti-inflammatory properties, massaging castor oil can greatly help in trating joint pains, sore muscles and even arthritis

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How GST Amendment Bill could reinvigorate India

Indian truck drivers clock an average of 280 km per day, much below the world average of 400 km per day and far below the 700 km the average truck driver in the US does every day. The underperformance of Indian truckers has less to do with bad roads and less fancy trucks and more about prevailing archaic laws.
Truck drivers in India spend 60 per cent of their time off roads negotiating check posts and toll plazas, says UBS Securities, which has also found that there are 650-odd check posts in the country and 11 categories of taxes on the road transport sector.
Since road traffic accounts for 60 per cent of freight traffic in India, the slow movement of trucks across states leads to productivity loss. According to UBS, if the distance covered goes up by 20 per cent per day, Indian truck productivity would improve by 12 per cent.
Higher productivity would cut the need for buffer stocks; reduce the loss of perishable goods, cut down the need for many warehouses, etc.
Analysts say the implementation of the goods and services tax (GST) could provide the kind of productivity boost illustrated above. Gautam Chhaochharia, head of India Research of UBS Securities, explains the benefits of GST,
1) Unified market: The GST will cut down the large number of taxes imposed by the central government (eg. central VAT or excise duty, services tax, central sales tax on inter-state sales, etc.) and states (VAT on sales, entertainment tax, luxury tax and octroi and entry taxes levied by municipalities). This will lead to the creation of a unified market, which would facilitate seamless movement of goods across states and reduce the transaction cost of businesses.
2) Lower incentive to evade tax: Currently, companies have to pay taxes on entire underlying value of the product/service, but under GST, companies in a chain will have to pay tax only on the value-addition. So, the actual tax paid will likely be small and reduce the incentive for evasion.
3) Widen tax base: GST will give credits for all taxes paid earlier in the goods/services chain incentivising tax-paying firms to source inputs from other registered dealers. This will bring in additional revenues to the government as the unorganised sector, which is not part of the value chain, would be drawn into the tax net. Besides, states will be allowed to tax services (as opposed to only the central government) under the GST.
According to the National Council of Applied Economic Research, government's tax revenue will increase by about 0.2 per cent because of GST implementation, while GDP growth could go up by 0.9-1.7 per cent. Exports will also get a boost as they are zero-rated for taxes and also because the fall in cost of manufactured goods and services under GST will increase the competitiveness of Indian goods and services in the international market, UBS says.
Finance Minister Arun Jaitley on Friday said that ensuring the passage of the constitutional amendment Bill in Parliamentary will be a priority for the government. The government will also need the consent of 50 per cent of states to implement GST by April 2016.
However, a consensus is still missing on the final GST tax rates and recommendations vary from 16 per cent to 27 per cent.

Finance ministry officials are now hopeful of introducing the bill in the current session of Parliament.


The change in stance came after Jaitley assured state finance ministers that the Centre would take care of any revenue loss due to the rollout of GST. However, he rejected their demand for excluding petroleum and tobacco from the ambit of the new tax regime. States were clearly told that the Constitution gave the right to tax tobacco to the Centre.
In case of petroleum, which accounts for as much as a quarter of the revenue for some states, the finance ministry is learnt to have dug out minutes of an empowered committee meeting that took place in February where states had agreed to keep oil products within GST.
On the second concern related to providing for compensation for five years after GST rollout, the Centre appeared to go along with the states. The Centre is also willing to address the concern related to including the compensation provision in the bill.

The finance ministry is also working out a solution to deal with the worries of revenue loss to "manufacturing" states such as Gujarat and Maharashtra.
It is not clear how the Centre plans to deal with the issue of entry tax, which the states want to be retained, citing revenue implications.
While Rather said that a solution will be found within a week, a finance ministry official said "a week is too long in politics" and the government would try to introduce the bill in the current session of Parliament.

States such as West Bengal are, however, still not on board. "GST cannot be introduced at the cost of loss of state revenue meant for development of people," said state finance minister Amit Mitra.
Although Gujarat is one of the major protestors, the Modi government is confident of getting the state on board. Its calculations to push the GST legislation hinge on control in several states where it is in power. In addition, it is banking on support from Punjab and Andhra Pradesh along with consuming states such as Bihar and Uttar Pradesh, which stand to gain from the introduction of GST. The government also believes that it has support from Kerala and Karnataka, two Congress-ruled states.

In an action packed evening, Jaitley proposed a formula to break the impasse and urged states to reconsider their stand, while staying firm on the states demands for exemptions.
In a bid to bridge the trust deficit between the states and the Centre, Jaitley had approved the release of Rs 11,000 crore as compensation for loss on account of central sales tax which had been pending since 2010. He had also vowed to pay the pending amount as he moved to ensure that the states come on board for rolling out the tax reform measure which has the potential to add significantly to government revenues and overall economic growth.

Prime Minister Narendra Modi (left) with finance minister Arun Jaitley. The Modi-led NDA government had been pushing for GST since it came to power in May year.
Implementing GST, the most ambitious indirect tax reform, is a centrepiece of the Narendra Modi government's reform agenda. The government is hopeful of introducing the constitutional amendment bill which will pave the way for rolling out GST in the current winter session of Parliament. The tax reform measure has missed several rollout dates in the past.

 

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Rupee slides as RBI prepares for battle

Raghuram Rajan came into office in September 2013 just when the rupee was fighting one of its toughest battles.
The currency had sunk to a lifetime low of 68 to the US dollar, when it was trading at 54 five months back. The new RBI chief had then waded straight into the battle: bringing about several financial reforms right off the bat as well as taking innovative steps to attract US dollars from abroad.
Within a few months, the rupee came and stabilized at around 60-61 levels where it has hovered since – and the RBI chief then got busy fighting another battle, this time with prices.
But having largely put the inflation genie back into the battle, it appears Rajan will again have to shift his focus back to the rupee, after the currency fell to a 10-month low in trade to 62.33.
Unlike the story back then, when at least partially the rupee fall could be attributed to local macro economic factors – weak economic growth, ballooning deficits and high inflation – this time it appears the story is of US dollar strength rather than rupee weakness.
This has been driven by a resurgent US economy, which has led to the Fed start to unwind its ultraloose monetary policy, and overall weakness in other developed countries, as well as in China.
The US dollar index, which tracks the greenback’s strength against a basket of six major currencies, has risen about 13.5 percent since bottoming out in May this year but the rupee has fallen only 7.3 percent in that time.
The rupee’s relative strength has been because of dollar inflows into the country, thanks to the fact that global investors are again looking at India as a great place to invest, Jamal Mecklai of Mecklai Financial Services told CNBC-TV18 yesterday.
So while inflows are currently blunting the broad dollar strength, it appears the RBI is busy preparing for a rainy day.
"If we are faced with a globally strengthening dollar, then I do not really think the RBI will be putting in too much ammunition in defending the rupee,” LIC Nomura MF debt fund manager Killol Pandya told the Economic Times recently. “It probably let the currency slide a little more before it draws a fresh defence line for the currency.”
And drawing a fresh defence line it is, since March this year, the RBI has been busy buying US dollars from the open market in billions. In July, for instance, it purchased as much as $ 5.45 billion, while most other months too, it has been a net purchaser. The central bank’s foreign exchange reserves are near an all-time high of $318 billion.
The most RBI has done is come into the market to sell US dollars when it was seeing volatility rise, such as yesterday. In short, it is saving up on its bullets.
The larger plan is obvious here.As long as the rupee slides gradually and without much volatility, the RBI will not mind it, and it would also help exporters , Federal Bank treasury president Ashutosh Khajuria told the Business Standard.
Time and again, the RBI chief has warned of a steep reversal in flows should the US start to reverse its monetary policy stance in a big way. The resultant currency volatility could seriously harm emerging economies.
In fact, it was this very point – that the Fed should be mindful of the effect its policies may have on emerging economies – that saw Rajan get into a minor war of words with former Federal Reserve chief Ben Bernanke (who was sitting in the audience during a discussion among top central bankers around the world). Bernanke, along with a former colleague in the Fed, essentially responded by saying the Fed’s prerogative lied with the US economy and other nations are on their own.
It appears, that on his own, Rajan is preparing for a big fight in 2015.

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What is TVR's?

TVRs (Television Viewer Ratings) are the standard buying currency for television advertising in the UK. Television ratings are expressed as a percentage of the potential TV audience viewing at any given time. It Measures the popularity of a program or advert by comparing the number of target audience viewers who watched against the total available as a whole. One TVR is equivalent to 1% of a target audience. If an ad in any afternoon show gets a Housewives TVR of 20, that means that 20% of all Housewives viewed the ad. TVR=Reach x Time Spent

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What is SWF and why India needs Russia's coherance

DEFINITION of 'Sovereign Wealth Fund - SWF'

Pools of money derived from a country's reserves, which are set aside for investment purposes that will benefit the country's economy and citizens. The funding for a sovereign wealth fund (SWF) comes from central bank reserves that accumulate as a result of budget and trade surpluses, and even from revenue generated from the exports of natural resources. The types of acceptable investments included in each SWF vary from country to country; countries with liquidity concerns limit investments to only very liquid public debt instruments.
Some countries have created SWFs to diversify their revenue streams. For example, the United Arab Emirates (UAE) relies on oil exports for its wealth. Therefore, it devotes a portion of its reserves to an SWF that invests in other types of assets that can act as a shield against oil-related risk.
The amount of money in these SWF is substantial. As of May 2007, the UAE's fund was worth more than $875 billion. The estimated value of all SWFs is pegged at $2.5 trillion.

India needs SWF'S to boost investment-

Swiss brokerage Credit Suisse today said the robust foreign inflows into the country's debt and equities markets will halve to USD 18-20 billion next year on a slowdown in the sovereign wealth funds' (SWFs) play. "The FII (foreign institutional investors) inflows into the domestic markets will come down to USD 18-20 billion in the next 12 months, which is half of the current inflows," managing director for equity research Neelkanth Mishra told reporters here. He attributed this primarily to a possible slowdown in pumping in money by the SWFs. SWFs are short on allocatable resources due to the fall in the crude oil prices, Mishra said. FIIs hold as much as 27 percent in the over USD 1.6 trillion Sensex market capitalisation as of the September quarter, which is at a historic high. Currently, the inflows are almost evenly split between debt and equities, (as there is a USD 25 billion cap on FIIs' holdings in government bonds, though there is a huge demand for more) and Mishra pointed to his in-house research which said around 40-50 per cent of the inflows into domestic equities come from SWFs. It can be noted that oil prices have slid to a five-year low of USD 66-67 to a barrel. Since June, there has been a massive 35 percent fall in the Indian basket of Brent crude. Many of the countries in the Middle East like the UAE and Oman have very active SWFs. Even though the policy-makers sometimes blame such flows to be "fickle", the FII inflows are important for funding the current account gap and reducing the overall deficit, which surged up to 2.1 percent in the second quarter as against 1.2 percent a year-ago.

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Time to rekindle India's ties with Russia

Let us get to the big picture on India-Russia bilateral relations upfront at a time when Russian President Vladimir Putin holds the 15th Indo-Russian annual summit with Prime Minister Narendra Modi in New Delhi on Thursday.
First, let us look at the plus points.
Since 1971, no foreign country has been as helpful and as crucial for India as Russia has been. If India won the 1971 War with Pakistan that led to dismemberment of Pakistan and creation of Bangladesh, the credit goes to the then Prime Minister Indira Gandhi and her game changer of a treaty with the then Soviet Union.
The most important clause of the 20-year Indo-Soviet treaty was that an attack on India will be treated as an attack on the Soviet Union and vice versa.
It was mainly because of this treaty that India was eventually able to dismember Pakistan and give birth to a new nation Bangladesh, the erstwhile East Pakistan.
Imagine the consequences of an undivided Pakistan for India! Had Bangladesh not been liberated it would have led to India’s own dismemberment given the fact that much of India’s northeast is Bangladesh/East Pakistan-locked.
India under Indira Gandhi was able to pull it off because of the friendship treaty with the Soviet Union despite the Americans deploying their seventh fleet on the Indian shores in an intimidating fashion.
The Russian pluses for India do not stop here. The Russians bailed out Indians after the two Pokhran nuclear tests in 1974 and 1998. They gave India the cryogenic engines at the right time and sustained Indian nuclear energy as well as strategic programmes running.
The Russians helped Indians with weaponry and technology at a time when the US-led international community had cracked down on India after its nuclear tests in 1974 and 1998. They helped India in a big way in the crucial space sector also. Of course, the Russians did so at a price but their support to India was invaluable at a time when India was completely isolated by the US-led international community.
Now let us come to the minuses in the Indo-Russian relationship.
From a stage to contributing over 90 per cent of weapon systems in Indian arsenal, the Russians today have slipped to just 60 per cent. The United States has already overtaken Russia as India’s biggest arms exporter. Israel is threatening to push Russia even further down to the number three spot anytime soon.
Why has this happened? Russia alone is to be responsible for this sad state of affairs mainly because of its repeated delays in completing projects, cost-overruns and supply of inferior defence equipment.
This has been happening for years. The exasperated Indian officials complained to their Russian counterparts about this but the Russians did not amend their ways.
In the meanwhile, India changed its defence procurement policy several times, each time making the competition for defence imports stiffer and the Russians could not simply cope with the new policies promulgated by India.
This was the biggest let down from Russia as far as the Indians were concerned.
The next big undoing in the India-Russia discourse has been Russia’s dalliances with Pakistan, India’s arch-rival. India understands the strategic needs of Russia in getting more friendly with Pakistan in view of the Russian concerns over Afghanistan in the coming months when American/NATO troops thin down their presence in Afghanistan.
But where was the need for Russia to sell attack helicopters to Pakistan? Yes, the Russians have sold such weapons to Pakistan earlier but that was way back in the 60’s!
Moreover, even if Russia was to sell attack helicopters to Pakistan it could have made it a one-off gesture. Where was the need for Russia to formalize a defence pact with Pakistan?
The Russian actions are viewed by India as ill-timed and do not inspire much confidence in New Delhi.
However, in this writer’s view Russia is enormously important for India and needless to say India too is equally important for Russia. The two age-old strategic partners must not allow their bilateral ties to go astray.
This is despite the fact that Russia is fast getting into the Chinese orbit, thanks largely to the western sanctions. This is not a welcome sign for India.
India would like to see a strong and stable Russia. It would be in India’s strategic interests to see Russia regaining its past glory and emerge as a strong and effective counterfoil to the West.
Russia is waging several big ticket battles simultaneously on the economic, political, diplomatic and military fronts. But today’s strategic calculus is forcing Russia to be dependent on China increasingly.
It is a worrying sign for India. Russia’s tilt towards China is largely because of economic considerations.
It would be in India’s long-term strategic interest to contribute its might to bolster the Russian economy which is in the grip of recession and western sanctions

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Deflation - Its definition and examples from today

When the overall price level decreases so that inflation rate becomes negative, it is called deflation. It is the opposite of inflation.
Definition: When the overall price level decreases so that inflation rate becomes negative, it is called deflation. It is the opposite of the often-encountered inflation.
Description: A reduction in money supply or credit availability is the reason for deflation in most cases. Reduced investment spending by government or individuals may also lead to this situation. Deflation leads to a problem of increased unemployment due to slack in demand.
Central banks aim to keep the overall price level stable by avoiding situations of severe deflation/inflation. They may infuse a higher money supply into the economy to counter- balance the deflationary impact. In most cases, a depression occurs when the supply of goods is more than that of money.

Deflation is different from disinflation as the latter implies decrease in the level of inflation whereas on the other hand deflation implies negative inflation.
In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). This should not be confused with disinflation, a slow-down in the inflation rate (i.e., when inflation declines to lower levels).[2] Inflation reduces the real value of money over time; conversely, deflation increases the real value of money –- the currency of a national or regional economy. This allows one to buy more goods with the same amount of money over time.
Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt, and may aggravate recessions and lead to a deflationary spiral.[3] Historically not all episodes of deflation correspond with periods of poor economic growth.[4] Deflation occurred periodically in the U.S. during the 19th century (the most important exception was during the Civil War). This deflation was at times caused by technological progress that created significant economic growth, but at other times it was triggered by financial crises — notably the Panic of 1837 which caused deflation through 1844, and the Panic of 1873 which triggered the Long Depression that lasted until 1879.[5][6][7] These deflationary periods preceded the establishment of the U.S. Federal Reserve System and its active management of monetary matters. However, episodes of deflation have been rare and brief since the Federal Reserve was created (a notable exception being the Great Depression) while American economic progress has been unprecedented.
Although the values of capital assets are often casually said to "deflate" when they decline, this should not be confused with deflation as a defined term; a more accurate description for a decrease in the value of a capital asset is economic depreciation
Deflation started in the early 1990s in Japan. The Bank of Japan and the government tried to eliminate it by reducing interest rates and 'quantitative easing', but did not create a sustained increase in broad money and deflation persisted. In July 2006, the zero-rate policy was ended.
Systemic reasons for deflation in Japan can be said to include:
• Tight monetary conditions. The Bank of Japan kept monetary policy loose only when inflation was below zero, tightening whenever deflation ends.[34]
• Unfavorable demographics. Japan has an aging population (22.6% over age 65) that is not growing and will soon start a long decline. The Japanese death rate recently exceeded its birth rate.
• Fallen asset prices. In the case of Japan asset price deflation was a mean reversion or correction back to the price level that prevailed before the asset bubble. There was a rather large price bubble in stocks and especially real estate in Japan in the 1980s (peaking in late 1989).
• Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, these loans could not be paid. The banks could try to collect on the collateral (land), but this wouldn't pay off the loan. Banks delayed that decision, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks made even more loans to these companies that are used to service the debt they already had. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy. Improving bankruptcy law, land transfer law, and tax law have been suggested (by The Economist) as methods to speed this process and thus end the deflation.
• Insolvent banks: Banks with a larger percentage of their loans which are "non-performing", that is to say, they are not receiving payments on them, but have not yet written them off, cannot lend more money; they must increase their cash reserves to cover the bad loans.
• Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices.
• Imported deflation: Japan imports Chinese and other countries' inexpensive consumable goods (due to lower wages and fast growth in those countries) and inexpensive raw materials, many of which reached all time real price minimums in the early 2000s. Thus, prices of imported products are decreasing. Domestic producers must match these prices in order to remain competitive. This decreases prices for many things in the economy, and thus is deflationary.
• Stimulus Spending: According to both Austrian and Monetarist economic theory, Keynesian 'stimulus' spending actually has a depressing effect. This is because the government is competing against private industry, and usurping private investment dollars.[35] In 1998, for example, Japan produced a 'stimulus' package of more than 16 trillion Yen, over half of it public works that would have a quashing effect on an equivalent amount of private, wealth-creating economic activity.[36]

Overall, Japan's 'stimulus' packages added up to over one hundred trillion Yen, and yet they failed. According to these economic schools, that 'stimulus' money actually perpetuated the problem it was intended to cure.
In November 2009 Japan has returned to deflation, according to the Wall Street Journal. Bloomberg L.P. reports that consumer prices fell in October 2009 by a near-record 2.2%


Eurozone is believed to be plunging into deflation as japan. The interest rates are kept low by ECB to improve influx of money into market. Value of debt increases . Suppose you had a debt of 100 Euro. Inflation means after some time it becomes smaller unit. Deflation means it becomes larger unit.  Hence debt market is affected most. That’s the turmoil in Greece now. The largest return on bond after india is Greece. The problem is that due to deflaton, the value of money of debt has increased. So when you get return after maturity, the value of money is more because of deflation. Hence if you exchange it,  the exchange money you get is more!!! Egs 100 euros bond you purchased. If you getting returns it after 1 year , due to deflation you get more rupees  after exchange.
The ECB is relying on a weaker euro as its main defence against deflation but Japan’s travails shows that this is a risky strategy without powerful action to back it up. Stephen Jen from SLJ Macro Partners said it will take very large outflows of capital to offset the eurozone’s current account surplus of €230bn, and then to push the exchange rate down to €1.20 against the dollar, the minimum level needed to kick start a recovery. “If the ECB’s actions are too weak, the euro could perversely appreciate, just as the yen did from 1990 to 2012,” he said.
The Greek government-debt crisis is part of the ongoing European debt crisis, being triggered by the turmoil of the Great Recession, and believed to have been directly caused locally in Greece by a combination of structural weaknesses of the Greek economy along with a decade long pre-existence of overly high structural deficits and debt-to-GDP levels on public accounts. In late 2009, fears of a sovereign debt crisis developed among investors concerning Greece's ability to meet its debt obligations, due to a reported strong increase in government debt levels along with continued existence of high structural deficits.  This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit default swaps compared to the other countries in the Eurozone, most importantly Germany.

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Has US overtaken Russia and Saudi as largest Oil producer?

Surpassing Saudi

U.S. oil output will surge to 13.1 million barrels a day in 2019 and plateau thereafter, according to the IEA, a Paris-based adviser to 29 nations. The country will lose its top-producer ranking at the start of the 2030s, the agency said in its World Energy Outlook in November.

“It’s very likely the U.S. stays as No. 1 producer for the rest of the year” as output is set to increase in the second half, Blanch said. Production growth outside the U.S. has been lower than the bank anticipated, keeping global oil prices high, he said.

Partly as a result of the shale boom, WTI futures on the New York Mercantile Exchange remain at a discount of about $7 a barrel to their European counterpart, the Brent contract on ICE Futures Europe’s London-based exchange. WTI was at $103.74 a barrel as of 4:13 p.m. London time.

Islamist Insurgency

“The shale production story is bigger than Iraqi production, but it hasn’t made the impact on prices you would expect,” said Blanch. “Typically such a large energy supply growth should bring prices lower, but in fact we’re not seeing that because the whole geopolitical situation outside the U.S. is dreadful.”

Territorial gains in northern Iraq by a group calling itself the Islamic State has spurred concerns that oil flows could be disrupted in the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Exports from Libya have been reduced by protests, while Nigeria’s production is crimped by oil theft and sabotage.

Libya will resume exports as soon as possible from two oil ports in the country’s east after taking back control from rebels who blocked crude shipments for the past year, Mohamed Elharari, spokesman for the state-run National Oil Corp., said by phone yesterday from Tripoli.

The U.S. will consolidate its position as the world’s biggest producer in the coming months if returning Libyan supply limits the need for Saudi barrels, said Julian Lee, an oil strategist who writes for Bloomberg News First Word. The observations he makes are his own.

Record Investment

“There’s a very strong linkage between oil production growth, economic growth and wage growth across a range of U.S. states,” Blanch said. Annual investment in oil and gas in the country is at a record $200 billion, reaching 20 percent of the country’s total private fixed-structure spending for the first time, he said.

A U.S. Commerce Department decision to allow the overseas shipment of processed ultra-light oil called condensate has fanned speculation the nation may ease its four-decade ban on most crude exports. Pioneer Natural Resources Co. and Enterprise Products Partners LP will be allowed to export condensate, provided it is first subject to preliminary distillation, the companies said June 25.

The decision was “a positive first step” to dispersing the build-up of crude supply in North America, Bank of America said in a report on June 27. The U.S. could potentially have daily exports of 1 million barrels of crude, including 300,000 of condensate, by the end of the year, according to a June 25 report from Citigroup Inc.

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What are the US-EU sanctions on Russia?

The EU sanctions announced on 12 September targeted Russia's state finances, energy and arms sectors. These are sectors managed by the powerful elite around President Vladimir Putin.
Russian state banks are now excluded from raising long-term loans in the EU, exports of dual-use equipment for military use in Russia are banned, future EU-Russia arms deals are banned and the EU will not export a wide range of oil industry technology.
Three major state oil firms are targeted: Rosneft, Transneft and Gazprom Neft, the oil unit of gas giant Gazprom.
But the gas industry, space technology and nuclear energy are excluded from sanctions.
Dozens of senior Russian officials and separatist leaders are now subject to Western asset freezes and travel bans.
The targets are those considered "materially or financially supporting actions undermining or threatening Ukraine's sovereignty, territorial integrity and independence".
The EU has also followed the US lead in targeting more individuals in President Putin's inner circle, as well as some major companies.
An important target is Bank Rossiya, described as the "personal bank" for senior Russian officials. Its biggest shareholders - Yuri Kovalchuk and Nikolai Shamalov - are blacklisted. They were also co-founders of the mysterious Ozero Dacha Co-operative, a housing community on the shore of Lake Komsomolsk founded in 1996, whose members accumulated massive fortunes under Mr Putin.
An asset freeze affects not only bank accounts and shares but also economic resources such as property. So those on the list are not allowed to buy or sell their assets in the EU, once the freeze is in force.
The travel ban means being prevented from entering an EU country, even if a person is in transit. They would be placed on a visa blacklist
Germany has appeared especially reluctant to ratchet up sanctions. That is not surprising, as German exports to Russia totalled 38bn euros (£30bn; $51bn) in 2013 - the highest in the EU.
More importantly, Germany gets more than 30% of its oil and gas from Russia. Italy is also highly dependent on Russian energy and some of Russia's former Soviet bloc neighbours rely 100% on its gas deliveries.
The EU's trade with Russia - worth nearly 270bn euros in 2012 - dwarfs US-Russia trade.
Food exporters are already facing losses after Russia announced an immediate embargo on a wide range of food imported from the EU, US, Norway, Canada and Australia. It was announced as a response to the Western sanctions.
Fresh fruit and vegetables, meat, dairy produce and various other foods are affected by the Russian ban, which will last at least a year.

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Are Recession and Depression the same?

A recession is a contraction phase of the business cycle,when GDP declines for two consecutive quarters is usually called a recession. The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." American newspapers often quote the rule of thumb that a recession occurs when real gross domestic product (GDP) growth is negative for two or more consecutive quarters. This measure fails to
register several official (NBER defined) US recessions.
A depression refers to a sustained downturn in one or more national economies. A severe recession with a 10% decline in GDP is usually called a depression. It is more severe than a recession (which is seen as a normal downturn in the business cycle). There is no official definition for a depression, even though some have been proposed. In the United States the National Bureau of Economic Research determines contractions and expansions in the business cycle, but does not declare depressions. A GDP decline of such magnitude has not happened in the United States since the 1930s.

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Balance of Payments , Current Account Deficit and Trade Deficit

Balance of Payments
The balance of payments (BOP) is the place where countries record their monetary transactions with the rest of the world. Transactions are either marked as a credit or a debit. Within the BOP there are three separate categories under which different transactions are categorized: the current account, the capital account and the financial account. In the current account, goods, services, income and current transfers are recorded. In the capital account, physical assets such as a building or a factory are recorded. And in the financial account, assets pertaining to international monetary flows of, for example, business or portfolio investments, are noted. In this article, we will focus on analyzing the current account and how it reflects an economy's overall position.
The Current Account
The balance of the current account tells us if a country has a deficit or a surplus. If there is a deficit, does that mean the economy is weak? Does a surplus automatically mean that the economy is strong? Not necessarily. But to understand the significance of this part of the BOP, we should start by looking at the components of the current account: goods, services, income and current transfers.
1. Goods - These are movable and physical in nature, and in order for a transaction to be recorded under "goods", a change of ownership from/to a resident (of the local country) to/from a non-resident (in a foreign country) has to take place. Movable goods include general merchandise, goods used for processing other goods, and non-monetary gold. An export is marked as a credit (money coming in) and an import is noted as a debit (money going out).
2. Services - These transactions result from an intangible action such as transportation, business services, tourism, royalties or licensing. If money is being paid for a service it is recorded like an import (a debit), and if money is received it is recorded like an export (credit).
3. Income - Income is money going in (credit) or out (debit) of a country from salaries, portfolio investments (in the form of dividends, for example), direct investments or any other type of investment. Together, goods, services and income provide an economy with fuel to function. This means that items under these categories are actual resources that are transferred to and from a country for economic production.
4. Current Transfers - Current transfers are unilateral transfers with nothing received in return. These include workers' remittances, donations, aids and grants, official assistance and pensions. Due to their nature, current transfers are not considered real resources that affect economic production.
Now that we have covered the four basic components, we need to look at the mathematical equation that allows us to determine whether the current account is in deficit or surplus (whether it has more credit or debit). This will help us understand where any discrepancies may stem from, and how resources may be restructured in order to allow for a better functioning economy.

Current Account Deficit
A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports. The current account also includes net income, such as interest and dividends, as well as transfers, such as foreign aid, though these components tend to make up a smaller percentage of the current account than exports and imports. The current account is a calculation of a country’s foreign transactions, and along with the capital account is a component of a country’s balance of payment.
A current account deficit represents a negative net sales abroad. Developed countries, such as the United States, often run current account deficits, while emerging economies often run current account surpluses. Countries that are very poor tend to run current account deficits.
A country can reduce its current account deficit by increasing the value of its exports relative to the value of imports. It can place restrictions on imports, such as tariffs or quotas, or it can emphasize policies that promote exports, such as import substitution industrialization or policies that improve domestic companies' global competitiveness. The country can also use monetary policy to improve the domestic currency’s valuation relative to other currencies through devaluation, since this makes a country’s exports less expensive.
While a current account deficit can be considered akin to a country living “outside of its means," having a current account deficit is not inherently bad. If a country uses external debt to finance investments that have a higher return than the interest rate on the debt, it can remain solvent while running a current account deficit. If a country is unlikely to cover current debt levels with future revenue streams, it may become insolvent

Trade Deficit
Trade deficit - Let's say there are 2 nations in the world: nation A and nation B. If nation A sells 100 dollars worth of stuff to nation B, but buys 110 dollars worth of stuff from nation B at the same time, then nation A is said to have a trade deficit of 10 dollars: it's buying more goods and services from abroad than it is selling.
Current account deficit - this is a deficit in the current account. The current account is a broader measure than the trade deficit. It's one of the components of the balance of payments <------ balance of payments just shows all financial transactions between one country and the rest of the world. The current account deficit is equal to the trade balance (whether it's a surplus or deficit) + factor income (this is simply earnings on foreign investments by the citizens of the country subtracted from payments going to foreigners who have investments in the country) + cash transfers (like remittances from workers in the country to their families abroad).
So the difference is that the trade deficit (or surplus) is a component of the current account. The current account is a much broader measure. When the current account is in deficit, it simply means that a country's total import of goods and services, payments to foreigners on investments they hold in the country, and cash transfers from workers in the country is GREATER than its exports, factor income, and inflows of cash from abroad.

 

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