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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Nandu who wrote (2694)	9/8/1998 7:29:00 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 12475

Anil: You make some very good points. Btw, check out the following article : india-today.com Also keep in mind that they are still not telling how much of the $4.2 billion is "new" money. If a substantial part of the total amount is "old" money (from other NR accounts paying lower interest), then all that India has done is to replace a lower interest loan with a higher interest loan! Not a very smart thing at all... ** EXCERPTS FROM THE ARTICLE : From the NRIs' point of view too, it was a golden opportunity. Without ploughing in much of their own money, they could make an easy 0.75 per cent gain by simply borrowing from the foreign banks and investing in the ribs. [...] But there are some who differ. They believe the Government could have worked on cheaper options. Apart from the higher interest rate burden (rib rates are about 1.5 per cent more than existing NRI scheme rates), the exchange rate cover will also cost a packet. According to an estimate, if the rupee was to lose a mere 5 per cent of its value against the dollar every year over the next five years, every $1 billion (Rs 4,350 crore) inflow would cost the exchequer about Rs 400 crore. [...] Another question being raised is how much of the total inflow is new money. The argument is that a substantial part of the $3.5 billion expected to come in could be black money being converted to white or being transferred from existing NRI schemes. An upbeat Government, however, dismisses such contentions. "It's money in your foreign exchange kitty and it gives a great feeling of comfort," says Mohan Guruswamy, adviser to the finance minister. [...] Everything will now depend on how the funds are utilised. What the SBI will do with the money is not clear yet. Though there is mention of a substantial investment in infrastructure, the projects are yet to be identified. Unless the Government gets cracking on high-return yielding options, the celebration may be shortlived. ** END EXCERPTS Dipy.

To: Nandu who wrote (2694)	9/9/1998 9:15:00 AM
From: Mohan Marette	Read Replies (2) \| Respond to of 12475

Anil: Thanks for your take on the Kerala government.Of course there is nothing wrong with demanding one's fair share from the center but the problem with successive Kerala governments over the years have been:- Relying almost exclusively on NRIs and the Center for its revenue which has created hardly any economic growth in the state for several years. The government whether it is led by Congress or the Commies and the planning people-the bureaucrats-have thus far shown no capability to make the state viable economic enterprise.The result is high unemployment rate,the state has hardly any industry,argicultural out have decreased,the government is virtually bankrupt [ie spends more money than it takes in],there has not been any addition of even a single kilowatt of power in the last 10 or 15 years,the enormous amount of funds deposited in the Kerala banks by NRIs is hardly used within the states-it goes directly to other investor friendly states. I can go on but you get the idea. Having said that I must I admit the various governments have done a lot [particularly the Commie led left front] in the areas of basic education and health care and that is no small achievement,now only if they could do something for the economic development of the state it would have been nice.