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To: Yaacov who wrote (12844)	1/6/1998 2:40:00 PM
From: Mohan Marette	Respond to of 97611

Well geez Yaacov,that seems to be a tall order. 'Lemme' dig around and see I can come up with any answers for ya.I'll get back to you.

To: Yaacov who wrote (12844)	1/6/1998 3:56:00 PM
From: V Lakshman	Respond to of 97611

Yaacov, I would love to tell you that the reason India's currency is not collapsing is because Indian banks are more cautious and that the projects they invest in are more profitable. Sadly, that is not the case. The corporations are more inefficient than in Korea. The banks are as subject to political pressure. There are lots of bad loans and scandals lurking. However, there has been no march toward growth. Consequently, no investments in infrastructure of the scale of Korea have been made. More info: nssl.noaa.gov lakshman

To: Yaacov who wrote (12844)	1/6/1998 4:50:00 PM
From: TechnoWiz	Read Replies (1) \| Respond to of 97611

Greetings Yaacov: Happy, healthy and prosperous 1998 and beyond. rgds Wiz

To: Yaacov who wrote (12844)	1/7/1998 12:26:00 PM
From: Mohan Marette	Read Replies (3) \| Respond to of 97611

WAY OFF TOPIC(Warning-stay away it is boring). Yaacov,for the sake of brevity I will only highlight some points to answer you question on India,and besides you seem to be rather well informed on World Affairs. <<<Given your knoweldge of your country, India, could you pls. tell me why the world is worried about Asia as a whole with the exception of India>>>>> It is not only India,but China also seem to be holding up pretty well.Let us get something straight before we go further and that is: the size of the Indian economy is rather small compared to the industrialised nations. As an example India's contribution to the world trade is a puny .8-1 %,not very significant. In 1990 Indian economy was on the verge of collapse with less than a billion dollars in foreign reserve and this prompted them to initiate a set of reform processes as they figured they won't be able to survive in the new global economy if they remained 'closed'.The then Finance Minister,(Dr.ManMohan Singh a alumni from the London School of Economics) started these economic reforms and the government got back on their feet in a short time. His successor Mr.Chidambaram (a Harvard MBA) continued the process along with the help of Dr.Rangarajan (a Harvard trained economist)the head of Reserve Bank of India. Some of the things(under the direction of their respective political bosses) they have done so far are: 1.Opened up the economy for Foreign Investors and Companies. 2.Reduced personal income taxes. 3.Reduced coporate taxes 4.lowered interest rates. 5.Reduced fiscal defecits 6.Eliminated bureaucratic impediments for businesses. 7.Introduced laws to gradually phase out a lot of subsidies. 8.Made the Indian currency the Rupee convertible on Current Account. 9.Introduced laws to sell of Public Companies to the public. 10.Allowed Indian Corporations to raise funds from overseas markets. 11.Slashed import duties and lifted import restrictions. etc etc etc. These refroms in fiscal and monetary polcies have started to show modest results. Example would be,GDP grew some 7% annually for the last six years,foreign exchange reserves have reached comfortable leveles,created 5-10 million jobs annually for the last few years, inflation remained checked at below 5%,increased the income tax base modestly etc etc. These reform processess are being administered in measured dozes and there is a long way to go before India becomes fully 'reformed'.Still there are a lot of bottle-necks,in infrastructure,port facilites,telecommunications etc etc.If these problems are not addressed immediately,this will hamper the growth of the economy to a great extent for a country's growth is directly related to its infrastructure.There is lack of electricity/energy,less than desirable roads and highways, pathetic ports and airports etc etc.Inorder for these to become adequate it is estimated that India would need over 500-800 billion dollars in new investments within the next 5-10 years. In tax collection, India is way below the world averages as only 12 million people pay income taxes with a population of some 900 million. This means the country has a huge parellel 'under-ground' economy.In order to make the 'black money' into 'white money' the goverment recenty introduced an amnesty program and was able to make some 11 billion dollars into white money and collected 3.5 billion in taxes and it is said that this just the tip of the iceberg. The government is also trying to widen the income tax base by going after people, who owns a house, cellular phone,automobile,telephone connection etc, and have never filed an income tax in their life! To conclude and answer your main question why India seems to be immune to the Asian Contagion, I would like to offer the following explanation: 1.Indian economy is less exposed to foreign investments as opposed to the Tiger economies.Case in point-Foreign investment in India is less than 2 billion dollars annually compared to 30 billion annually in Phillipines untill the bottom fell off. 2.Indian economy is still not 'open' a 100%. 3.The reason Indian currecny,the Rupee,is somewhat stable is that it is not fully convertible yet and as such somewhat insulated from attacks by currency speculators. The Reserve Bank of India can interfere and can stabilise the currency incase of any trouble as the Rupee is only convertible on the Current Account and not on the Capital Account. Sorry for the long winded explanation,inspite of my 'brevity' statement up front.Hope I didn't bore you guys with it.

To: Yaacov who wrote (12844)	1/10/1998 12:07:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 97611

Who'ya gonna call. Ghost Busters/aka IMF??? Well,DON'T. Quote of the day:"''Whenever your economy is in a crisis, the first thing to remember is not to call the IMF.'' Here is a scathing attack on IMF,the U.S rating agencies etc by a reputable economist. --------------------------------------------------------------------- Source: Economic Times (India) SATURDAY 10 JANUARY 1998 India safe from Asian crisis; never call IMF, says Sachs Our New Delhi Bureau ---------------------------------------------------------------------- NEW DELHI 9 JANUARY INDIA is unlikely to become a victim of the contagion effect now plaguing Southeast Asia, economist Jeffrey Sachs has said. Addressing a seminar here today, organised by NCAER, Mr Sachs said the Southeast-Asian crisis was unique and ''India was certainly not in the middle of it. India did not have the vulnerabilities of some of the crisis-hit economies.'' He agreed with the Indian strategy of allowing the exchange rate to depreciate gradually. ''One should never defend the nominal exchange-peg in such situations,'' he said. He also conceded that the country had a much better external debt profile as compared with the Southeast-Asian economies. In his two-hour-long presentation, he took a few digs at international credit rating agencies and the IMF. He said Moody's and other rating agencies had no inkling of the crisis as they continued to give the tigers positive ratings till the currency crisis suddenly erupted. Post-facto, however, these rating agencies started ''recklessly downgrading them''. Similarly the IMF was holding some of these economies as models of high and sustainable growth till they hit the brick wall. The IMF had predicted South Korea's GDP would grow by 6 per cent but now it appears they will register a negative growth rate. ''Whenever your economy is in a crisis, the first thing to remember is not to call the IMF.'' He disagreed with the current IMF prescription to revive the South Korean and Indonesian economy. ''The IMF has gone and asked for a closure of a number of banks and finance companies in these countries, which is not the right thing to do, especially as these banks provided working capital to the corporate sector.'' He said as a result of closing down the banks, several Korean automobile firms have cut production at a time when their depreciated currency has prepared the ground for an export boom. ''You can't close banks and finance companies in the middle of such a crises. It makes much more sense to recapitalise them so that they continue lending to the industry,'' Mr Sachs said. In general, Mr Sachs conceded the southeast-Asian crises was totally unanticipated and, ''we are still far from a proper understanding of the events there''. He maintained that the traditional economic fundamentals of these economies were very strong, and that they are still quite healthy. Some of them had budget surpluses, high forex reserves and moderate inflation when the crisis visited them. So what then caused them to fall like nine pins? Mr Sachs attributes their fall to what he describes as ''self-fulfilling panic and stampede''. Panic feeds on panic and this may not have any relation to economic fundamentals. But there is one factor which adds to short-term panic and stampede: that is if the country's short-term debt is more than the central bank's forex reserves then theoretically there can be a run on the reserves.