Month: November 2012

Five signs you may get laid off

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Anyone who thought the job market was getting back to normal received a nasty shock on Monday when Goldman Sachs laid off approximately 50 people, many of them managing directors. These and other layoffs may have caused some people to wonder if they might be the next ones on the chopping block.

CNBC.com spoke with human resource experts to find out the five tell-tale signs that you may need to update your resume.

1. Mergers: According to career coach Cheryl Palmer, mergers that result in duplicated job functions can spell trouble. “If you have a position that has a counterpart in the acquiring company, your job could be very much in danger,” she told CNBC.com in an e-mail. “Generally speaking, the acquiring company will eliminate duplicate positions.”

2. Passed Over for Promotion: Fred Cooper of Compass HR Consulting told CNBC.com that if “you are passed over for an internal promotion where your qualifications (not just seniority and longevity) are in fact greater than those of the one selected,” then the powers that be may have already decided that you’re on the way out.

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3. Sharing Your Files: “A tell-tale sign you are going to be laid off is being asked to share your files, and update another team member on all of your projects,” Debby Carreau of Inspired HR told CNBC.com. “If you are asked for passwords, client lists and contact information, this is further evidence the organization is preparing to have someone backfill your position.”

4. “Special” Projects: Fred Cooper told CNBC.com that if you’re assigned to a short-term project that has little – or nothing – to do with your regular job, then you have good reason to be wary. “When completed, you may not have a job waiting for you,” he said. “Even long-term special projects have similar risks associated with being assigned that ‘honor’.”

5. There’s a Computer That Can Do That: Palmer said that any job that can be automated is a dicey proposition for the human being that’s currently performing it. “If the type of work that you do can be done by a machine instead of a person, you may need to look for another type of job,” she said bluntly. “It’s usually just a matter of time before your company decides that a machine can do your job for less money.”

Luckily, there are some things you can do that can help you survive a human resources bloodbath. According to Morgan Norman, co-founder and CEO of the WorkSimple social performance application, “requesting real-time feedback, documenting and tracking your goals, sharing your work socially, and building a visual portfolio of your accomplishments are all ways you can prove that you’re an asset to the company and not someone who should be handed a pink slip.”

© 2012 CNBC.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here’s how to trade the huge week in global politics

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Political events this week in the world’s two biggest economies may have had investors sitting on the sidelines, but strategists say it’s not time to be overly cautious, rather, investors should resume some risk and buy equities.

A US presidential vote takes place on Tuesday and on Thursday China’s ruling Communist Party starts its 18th National Congress, ushering in a new generation of leaders that will govern for the next 10 years.

The US elections are particularly significant because the results will determine first, if the economy continues to get a boost from quantitative easing (QE) under Federal Reserve Chairman Ben Bernanke and second, how the stalemate over the “fiscal cliff” of impending tax cuts and spending hikes will be resolved, says IG Markets strategist Justin Harper.

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“Traders want to know who is best at dealing with the “fiscal cliff”, which is both an economic and political nightmare waiting to happen,” Harper said. “For many, (Republican) Mitt Romney would be good for equities, although he may want to end QE3 and replace Bernanke at the Fed.”

However, if Democrat incumbent Barack Obama wins, the quantitative easing program will be continued and is likely to remain a “potent force” in helping the US economy get back on its feet, Harper added.

Under Obama, the Fed has embarked on three rounds of quantitative easing, in 2009, 2010 and this September, to boost the U.S. economy and lower interest rates. Republican challenger Romney has said he does not believe the policy works.

The two candidates also cannot agree on ways to avoid the “fiscal cliff”, which economists expect to push the US economy into recession unless Congress acts.

While the “stakes are indeed high” this week, investors may have been too cautious, said Wellian Wiranto, investment strategist with Barclays Bank.

“Given that the elections remain too close to call, investors are likely to sit tight,” he told CNBC. “Nonetheless, for long-term investors who have been overly focused on ‘safe haven’ assets, there may be opportunities to rotate into assets with better risk-adjusted returns, including equities.”

Nick Maroutsos, managing director of fund manager Kapstream, agrees, adding that it may be time for investors to take on a little bit more risk in their portfolios. 

“Once we get past that election, once we get past that fiscal cliff, I think we will have a lot more clarity on where investments can be headed over the long term,” Maroutsos told CNBC Asia’s “Squawk Box”.

“Looking around the globe, government bonds don’t really interest us. Yields are at historical lows… I think equity markets can run into 2013. We would be relatively bullish the equities sector.” 

Investors may want to start looking at Chinese stocks, for example, Maroutsos said. 

Time to Buy Chinese Stocks? 

China’s once-in-a-decade transition comes against a backdrop of an economy that has slowed for the past seven quarters. 

Xi Jinping, currently the vice-president, and Li Keqiang, currently the vice-premier, are tipped to become China’s next president and premier respectively, taking over from President Hu Jintao and Vice President Wen Jiabao.

Analysts said China’s new leaders would manage the transition, and economic slowdown well – a prospect that means it could be a good time to buy Chinese equities.

Chinese stocks have been the laggard of global equity markets this year, with the Shanghai Composite Index own 4 percent, while the S&P 500 has gained 12.5 percent and Hong Kong’s Hang Seng Index has rallied almost 20 percent.

“We are China bulls. We remain China bulls in light of what’s happening with the reduction in growth prospects,” Maroutsos said.

“The (China situation) really doesn’t pose much risk in our view, because the wheels have been in motion for quite some time, and you will get a situation where the new leadership that comes on board will likely maintain continuity towards the existing policies that are in place,” he added.

-By CNBC’s Jean Chua

© 2012 CNBC.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why 2013 may not be a great year for Asian economies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The recent slew of manufacturing data suggest Asian economies are on the path to recovery after a year of slowing growth, but economists warn it might be too early for celebration.

Latest purchasing managers` indices show factory activity picked up in October from earlier lows in China, South Korea, Indonesia and India, but experts caution that unless there is sustained improvement in the manufacturing sector a rebound in the region`s economies is unlikely next year.

“I think in 2013, Asian economies will just muddle through. I think people are expecting that growth is not going to be very strong,” said Manpreet Gill, senior investment strategist with Standard Chartered in Singapore.

He added that “a lot of it (economic growth) will depend on what happens in China and the United States, for example, if we do go over the `fiscal cliff,` that is clearly not going to be good for Asian exports.”

Exports Hold the Key

Exports are a key engine of growth for Asian economies, accounting for as much as 35 percent of gross domestic product (GDP), according to data from the World Bank. A slowdown in Europe, the U.S. and China this year has therefore had an impact on Asian exports and growth, with few signs that the developed Western economies will be out of the doldrums soon.

Exports from economies across the region, including Singapore, Indonesia and South Korea, have declined for the past five months.

At the same time, the looming “fiscal cliff” in the U.S. could push the world`s biggest economy into a recession further hurting Asian exports.

The “fiscal cliff” refers to a combination of tax cuts and spending hikes that are due to kick in at the start of 2013 unless Congress takes action.

“We believe a strong rebound in exports will be difficult, considering the outlook for domestic demand in the U.S. and Europe. The most immediate concern on the horizon is the U.S. `fiscal cliff` and its impact on fourth quarter and first quarter 2013 GDP growth,” Morgan Stanley economist Chetan Ahya wrote in a report published on Thursday.

Weaker than expected exports and continued global risks is why the International Monetary Fund cut its projections for GDP growth for the developing Asia this year to 6.7 percent in October from 7.1 percent in July. The institution also reduced growth forecast for next year to 7.2 percent from 7.5 percent.

Economists said the region`s policymakers could come up with measures to boost domestic demand but that would work only in the short-term. The most important element for regional growth still remains exports, according to Jonathan Reoch, AMP Capital`s head of Asian equities, excluding Greater China.

“I don`t believe we will see a strong rebound in 2013 as structural factors in the developed world will mean generally sub-par growth, with prospects for shocks to confidence,” Reoch said. “Asian exports need the world to stimulate growth thus the current sweet spot may not last for that long.”

–By CNBC’s Jean Chua

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Obama or Romney? Here’s how Asia markets will vote

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While investment strategists in the US view a Republican victory as positive for the stock market given their presidential candidate Mitt Romney’s pro-business policies, market players in Asia believe a win for the former Massachusetts Governor would in fact be negative for equities on their side of the world.

At a time of heightened uncertainty, with the ongoing European debt crisis and the upcoming leadership transition in China, a new president in the world`s largest economy will cause additional nervousness among Asian investors, experts told CNBC.

“Asian traders don`t like change in leadership. You would see weakness in the markets if Romney won, because people would question how well he would deal with the impending doom of the `fiscal cliff.` Obama would be a safer bet, as investors would enjoy continuity at a time of a lot of uncertainty,” said Justin Harper, market strategist, at IG Markets.

“Because of his four years in power, Obama is better positioned to deal with Congress at trying to negotiate programs to give the economy time to find its feet,” he added.

Besides, Romney`s stance on China is particularly worrying feels Harper. The presidential hopeful has said he will name China a “currency manipulator,” which could lead to more tensions with the mainland, including on the trade front.

“You would expect trade between the two nations to suffer, this would have a knee-jerk reaction on trade in the region,” he added.

Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole, added that if Romney were to take a tougher stance on the Chinese currency, and put pressure on the government to let the yuan appreciate further, it would force other Asian currencies higher and could hurt the competiveness of economies in the region that depend on exports.

Correlations between Asian currencies and the yuan are stronger than between them and the U.S. dollar, Kotecha said.

On top of Romney`s stance on China, Mohammed Apabhai, head of Asia trading strategy at Citigroup, said his leadership may be negative for Asian markets in the longer-term because of his reluctance to provide more stimulus – which is now a critical driver of risk appetite in the markets.

“The statements coming out from Romney range from the replacement of Ben Bernanke (as the chairman of the Federal Reserve) to anti-QE (quantitative easing) statements – it`s a very different rhetoric that could tie the hands of the Fed,” Apabhai said.

“Some of Romney`s advisors have said that QE3 would not be effective at all, with vice president candidate Paul Ryan arguing that QE3 is not needed,” he said

Romney has indicated he will not reappoint Bernanke when his term expires in January 2014 and this would likely see a less dovish Fed Chairman appointed, said analysts.

While a Romney victory may weigh on Asian markets, strategists say an Obama win would not produce big gains, either.

“If Obama wins, I don`t think there will be much of a reaction. It will be business as usual, more of the same,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

-By CNBC’s Ansuya Harjani

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Can Apple afford to ignore emerging markets?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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For 32-year-old Mumbai resident Nilesh Kothari, buying an Apple iPhone is not an option.

The Indian human resources manager, who is looking to purchase a smartphone within the next two months, says the cost of the latest iPhone, which starts at nearly USD 850 in India, is beyond his Rs 15,000 to Rs 20,000 (USD 280-372) budget.

“I don’t find it [the iPhone] value for money as far as the product is concerned,” Kothari told CNBC. “There are better products that will probably give me the same or comparable features to an Apple iPhone.”

Kothari is among millions of major emerging-market consumers who are deciding not to buy the top-selling product of the world’s most valuable company because it is too expensive.

From India and Indonesia to Brazil, the cost of an iPhone is often double, if not, triple the retail price in developed countries, due mostly to a lack of availability and subsidies from mobile network operators which makes the popular smartphone out of reach for most mobile phone users, according to analysts.

The iPhone’s penetration of India’s smartphone market was a dismal 3.2 percent in 2011, compared to close competitor Samsung which had over 20 percent market share, according to research firm Euromonitor. It’s a similar story in Indonesia, where the iPhone had a less than 1 percent market share last year, compared to Research in Motion which dominated with over 40 percent. In Brazil, while the iPhone held a respectable 10 percent market share, it still lagged competitors RIM, Samsung and Nokia.

Analysts say while the company can afford to neglect major emerging economies for now, overlooking them going forward would be a mistake.

“In the long run, they [Apple] will definitely need to go into emerging markets,” Loo Wee Teck, global head of consumer electronics research at Euromonitor said. “In the short term – the next one to two years – it will not lose out too much by ignoring emerging markets, but in the long run, they definitely need to cater and factor in the requirements for emerging markets.”

Four of the world’s five biggest mobile phone markets by shipments in the first half of this year were emerging economies – China, India, Indonesia and Brazil – according to research firm IDC. The four were home to 40 percent of all new mobile phones shipped globally, totaling 330 million.

As such, Apple is under pressure to create cheaper products to compete with the likes of Samsung, which has a spectrum of products catered for both the high- and low-end consumers. Yet, as most Apple watchers note, that’s not a solution.

“I think it [Apple] is still lagging behind,” Teck said. “I don’t think it is wise for them to actually lower the price or try to make an emerging market specific model. They will not be able to win if they get into a price fight.”

Rob Enderle, principal analyst of technology research firm Enderle Group, backs that sentiment, saying creating cheaper products could undermine Apple’s premium branding.

“When you’re a high margin vendor, chasing a low margin competitor is probably not going to end well,” Enderle said.

Apple Needs to Increase Presence

Instead, analysts say Apple should focus on improving distribution in emerging markets through partnerships with mobile network carriers, to make the latest products available quickly and at a cheaper rate to consumers; and boosting its presence by opening more stores.

Cape Town based Ian Duvenage, consulting manager for Africa at market research firm Frost and Sullivan, said Apple hasn’t done much to attract customers in Africa’s developing markets, where there has been a significant uptake for smartphones, compared to its rivals which are doing loads of marketing.

“Although it’s underdeveloped, the competition in the market for Apple is quite high,” Duvenage said. “I don’t think they’re aimed to be a low-end mass market product… but there is a portion of the market that will be able to afford it, I think it’s just the availability to the high end customers in all the African markets – the ecosystem – is lacking.”

According to Mumbai’s Kothari, there are members of his family who can afford an iPhone but have chosen not to buy one.

“They had a choice between Apple, Samsung and HTC, but they chose Samsung or HTC,” Kothari said.

London based Dominic Sunnebo, Global Insight Director at consumer research firm Kantar Worldpanel, says Apple should replicate the strategy used in China, where it has seen relative success. By targeting the country’s affluent population, Apple has created a sense of status associated with its products, resulting in huge demand, even from consumers who can’t really afford them.

“I think it’s very important for Apple to build up the brand, so then when markets like Brazil potentially drop their import taxes and affluence increases, there is the desire there and the recognition of the Apple brand,” Sunnebo said.

Enderle, however, argues that Apple will have a better chance getting future growth from developed markets over emerging ones, because of the stiff competition they’re already facing from competitors in the latter.

“Android phones have a significant cost price advantage, because the vendors that sell them are used to operating on a much thinner margin and the carriers prefer those phones anyway from a price standpoint,” Enderle said. “Apple will probably be better served in the mature markets trying to regain the market share they’ve lost than they would trying to buy into markets where the margins would have to be tighter.”

While gaining market share has never been the top priority for Apple, which has essentially focused its revenue model on high margins, Teck Zhung Wong, senior market analyst at IDC Asia-Pacific says the company may have to reconsider its strategy eventually.

“The question is will Apple still be as desirable one or two years down the road when there’s so many other alternatives now,” Wong said.

– By CNBC’s Rajeshni Naidu-Ghelani.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What’s the best smartphone in an emergency?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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What phone is better to have on you during an emergency, an iPhone, Android or a Blackberry? Well, it sort of depends.

There are three things to think about when calamity strikes: can you make a phone call? Can you keep tabs on the latest information? And will your battery last?

There’s no one type of phone that’s the best at all three, but let me walk you through some of the tradeoffs.

First, making a phone call. Research in Motion’s BlackBerry devices are great at this. Pretty much universally, my BlackBerry can get a signal where my iPhone just cannot. If you’re in the type of emergency where you’re stuck in one spot and can’t roam around to get a signal, the Blackberry proves helpful.

On the other hand, if you can walk a couple blocks in search of a better signal, that might make things easier.

Next, apps. Why do apps matter? In emergencies, social media is the new email.

You can follow emergency response on Twitter, let your Facebook friends know you’re OK, even ask others for help. Apple’s iPhone and Google’s Android smartphones tend to handle social media better.

Then there’s the battery. If you can plan ahead, you can get an external charger for iPhones and Android devices that uses AA batteries. Something like Energizer charger.

You can’t, however, swap out the battery in an iPhone, but an external charger is arguably better because you can keep your phone running longer that just changing the battery.

So, bottom line? If a completely unexpected disaster hits, it’s nice to have a BlackBerry – or a plain old feature phone. But if you’ve got any time to plan, to get some accessories, iPhone and Android really have significant advantages.

© 2012 CNBC.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s secret weapon: Its young population

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The average age of employees at India’s top software services exporter – Tata Consultancy Services (TCS), one of the country’s largest private sector employers – is 28.

This is 10 years less than the median age at American technology giant Oracle, according to data from PayScale, an online provider of employee compensation data.

The composition of TCS employees is a reflection of India’s young and burgeoning working-age population – a competitive edge that sets Asia’s third-largest economy apart from countries across the world, many of which are aging fast.

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“A young workforce means having more innovative minds. It also means we are able to better leverage technology and increase efficiency,” said Ranjan Bandyopadhyay, global HR head of business process outsourcing for TCS.

Like TCS, the median age of India’s population as a whole is 28, significantly lower than that of regional peers China and Japan, at 37.6 and 44.4, respectively, according to data from global market research firm Euromonitor.

India’s workforce, those between 15 and 64, is expected to rise from almost 64 percent of its population in 2009 to 67 percent in 2020. Meanwhile, China’s is expected to start declining from 2014 resulting in a labor shortfall by 2050, according to some estimates.

“India has close to ideal demographics. It’s in a sweet spot,” said Robert Prior-Wandesforde, director, Asian economics research at Credit Suisse. “As the population’s working age expands, savings increase – and that turns into a source of funding for investment. This will be beneficial for the country’s competitiveness as other countries age,”

India’s “demographic dividend” – the window of opportunity that a large workforce creates to strengthen an economy – could add 2 percentage points to the country’s annual growth rate over the next two decades, the International Monetary Fund said in 2011.

While growth in India has been slowing this year, the economy has on average grown close to 8 percent annually over the last five years, helped in large part by this demographic dividend.

“A growing workforce is an advantage for both the manufacturing and services sectors in India. Not only do businesses have access to people that are young and physically fit, it means less cost pressures, particularly on the wage front, because of the availability of labor,” said Arvind Singhal, chairman of consultancy firm Technopak Advisors.

Compelling Consumption Story

India’s youthful population is also contributing to India’s consumption boom.

Between 2006 and 2011, consumer spending in the country almost doubled, from USD 549 billion to USD 1.06 trillion. Sunil Devmurari, country manager for India at Euromonitor, said this is just the beginning.

“Two hundred and fifty million people are set to join India’s workforce by 2030. As a big chunk of the population shifts into the working age group, the offshoot of that is an increase in disposable incomes and conspicuous consumption. This is the most exciting aspect of India’s demographic dividend,” Devmurari said.

The country’s favorable dynamics, accompanied by the population’s growing propensity to spend, have lured investors. For example, New Silk Route, a USD 1.4-billion global private equity firm headquartered in the US, has invested in a vegetarian fast food chain in South India called Adigas and Café Coffee Day, India’s equivalent of Starbucks.

Its founder Parag Saxena thinks India’s favorable demographics present huge opportunities for marketers. Discussing the motivation behind the firm’s investments in two restaurant chains, he said, “A crucial part of the long-term demand comes from the constantly growing younger population.”

As more young Indians enter the labor force, they will begin to play a bigger part in determining marketing campaigns, said Dheeraj Sinha, chief strategy officer, South and Southeast Asia at Grey Worldwide.

“Demographics play an increasingly important role – all the people featured in the advertisements must look young and appeal to the younger crowd,” Sinha said.

There are 200 million people between the age of 18 and 25 in India, and manufacturers of fashion wear to motorcycles are all targeting this group, he added.

“It’s a market that has been ignored for some time. There was a certain myopia that the middle class, and the middle-aged were the ones to go after. But people are now waking up to the younger consumer,” Sinha said.

Demographics Are Not Destiny

While the country’s young demographic base is beneficial for India’s growth, harnessing its full potential is a major challenge, said Siddhartha Sanyal, chief India economist at Barclays.

“As far as the headlines are concerned, it’s a big advantage, but we have to be careful about the finer details. This huge young population is coming from areas where economic development is not of the highest level,” Sanyal said.

It is crucial for the country to scale up the potential of its people entering the workforce by enhancing education and employability, he added.

The male adult literacy rate stands at 75 percent, while female literacy is significantly lower at 51 percent, according to World Bank data. This compares to levels above 90 percent for both male and female literacy in China.

Mohit Hira, former chief marketing officer at NIIT, a talent development institute specializing in training for the IT sector, said, “A lot of kids face challenges getting hired because their communication skills aren’t good enough.”

Plus, India has to ensure that there are enough jobs to accommodate its growing working age population. But this is proving to be difficult, as India largely skipped the manufacturing phase of growth that has accompanied the economic development of countries such as China, and jumped straight into developing its services sector, said Gareth Leather, economist at Capital Economics, a global macroeconomics research firm.

“Although India has been able to develop a world class services sectors, they will not provide nearly enough jobs in the coming decades,” he said.

While the official unemployment rate in India stands at a low 3.8 percent, economists argue this is not a fair reflection of employment conditions. The employment data only cover the so-called “official sector” such as public-sector jobs and large companies – a fraction of the entire job market – while leaving out those in the “unofficial sector” including small-to-medium sized enterprises or the agricultural sector, where under-employment is widespread.

“The demographic dividend is not a dividend if people aren’t educated and trained, and if there aren’t enough jobs for them,” said Prior-Wandesforde of Credit Suisse.

Leather warns that this could turn the dividend into a burden. One of the big risks that could emerge from a lack of jobs is social unrest, said Leather, pointing to the Arab Spring – protests and demonstrations across the Middle East triggered in large part by frustration over high levels of unemployment.

The extent to which India reaps the benefits of its demographic gift in the future hinges on whether the country can turn its large working-age population into an employable force.

– By CNBC’s Ansuya Harjani.
© 2012 CNBC.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why India’s central bank resisted pressure to ease

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India’s refusal to succumb to pressure to cut interest rates shouldn’t be seen as a snub at the government; rather, the move implies that containing inflation remains at front and center, the central bank’s deputy governor Subir Gokarn told CNBC on Wednesday.

On Tuesday, the central bank left rates steady at 8 percent, choosing instead to cut the cash reserve ratio for banks by 25 basis points. The move triggered immediate criticism from Finance Minister P Chidambaram, who had hoped for more aggressive easing measures from the RBI to support the government’s current campaign of boosting growth.

The finance minister on Monday unveiled a five-year plan to cut the country’s hefty fiscal deficit, a day ahead of the central bank decision, in hopes that the RBI would reciprocate with sufficient stimulus.

The government has been urging the central bank to lower rates for months now, especially since unveiling drastic reforms in September aimed at increasing investment in the country. A call the central bank has so far resisted.

Gokarn says while he recognizes that the government is an important “stakeholder” in its monetary policy, the central bank will not lose sight of its prime objective to keep inflation under control.

“The government is obviously an important stakeholder in the policy, and the RBI is quite sensitive to it, but we cannot ignore the fact that inflation is still high, and is likely to go up over the next three months,” Gokarn told CNBC on Wednesday.

Wholesale price inflation, India’s main inflation gauge, spiked to 7.8 percent in September – the highest level in 10 months – driven by the government’s recent diesel price hike. During its policy review, the RBI raised its inflation forecast based on the wholesale price index (WPI) to 7.7 percent from its earlier estimate of 7.3 percent.

Gokarn, who is one of the four deputy governors at the central bank, said aggravating the risk of further price pressures with premature easing is unjustified, adding that a rate cut is unlikely until the upward trend in inflation reverses.

“When we look at the trajectory of inflation beyond December – the baseline scenario suggests it will show a steady moderation, and that is the scenario that gives us a little more space to start thinking about easing,” he said.

The Reserve Bank last cut interest rates in April, when it lowered the repo rate by 50 basis points. It has cut the cash reserve requirement ratio for banks by 175 basis points since the start of the year, in an effort to ease liquidity in the banking system.

Deficit Target

While the government’s new target to nearly halve the budget deficit to 3 percent by 2017 is seen as ambitious by many economists, Gokarn said he believes it is achievable.

“Making this commitment places an enormous obligation on the government’s shoulders. If growth isn’t going to be that fast, it will be a challenge, but it’s not unachievable,” he said.

“It puts pressure on the government to take action consistent with this roadmap, like expenditure cuts, tax reforms, like a GST (goods and services tax),” he added.

Discussing movement in the rupee – which fell 2.5 percent against the US dollar in October, after rising 5 percent in September – Gokarn said this recent volatility is tied to the general risk-off sentiment by global investors.

“Even if we had continued to see domestic (reform) action, a strong global risk off will have taken it down,” he said.

By CNBC’s Ansuya Harjani

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow