India GDP growth to fall below 4%?

I had analyzed in an earlier post [Impact of Global Meltdown on India] that India’s economic growth has been fueled by foreign currency borrowings and hence India’s GDP growth was in for a decline.

Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, expresses this same opinion in an article published in Newsweek [Growth in the Rearview Mirror]:

There is something amiss with a forest in which every tree grows to the sky. Yet few of us stopped to question the magical boom that hit virtually every country in the world, beginning in 2003. There was some skepticism about the housing-led growth spurt in the United States, but now it is increasingly apparent that the simultaneous acceleration from Brazil to India and even China was also rooted in a global credit bubble.

Growth in the Rearview Mirror, Newsweek, Nov 22, 2008

Fotrune 100 Health Check

In order to judge the real severity of the current economic meltdown, I analyzed the health of the US Fortune 100 companies. I used the stock price trend over the last three years to classify each company as “healthy” or “sick”.

Here is what my analysis shows:

Financial and Auto sectors are badly hit – no surprises there. All other sectors seem to be sound at this point in time. Surprisingly even Retail sector seems to be doing quite well so far. As per this analysis, the US economy looks pretty good as of now.

If you want to see the details of this analysis, check out my spreadsheet on the Google cloud. All company names and ticker symbols on the “Data” sheet are hyperlinks, so feel free to click on them to check out my source (CNN Money).

This cloud computing is really cool!

Time to Look at Cloud Computing

Last month, my company-issued laptop’s hard disk crashed. All  the information I had collected over a period of five years was wiped out, just like that.

Over the last three months, my home PC has been progressively slowing down. Sometimes, it does not even boot up and says “insert boot drive”! I give the CPU box a shake and it corrects itself! Chkdsk auto-ran twice during the boot sequence and detected corrupted headers and fixed them. So far I have not lost any data but I guess a hard-disk crash is round the corner.

Time to take a closer look at cloud computing.

I tried Google Documents last night and I liked what I saw. Google provides a PowerPoint like interface inside a browser and it works pretty neat. I was able to create a technical presentation (with lots of UML diagrams), save it and publish it on Google Documents. And I hear Microsoft is getting serious about Cloud Computing [Microsoft to Google: Get Off My Cloud] and plans to morph its development platforms to work with cloud computing [Azure Services Platform].

I had always had a future-state vision of the Earth acting as a storage device (“Plug Into the Earth For Unlimited Storage”). Turns out  I got the medium wrong!

Of course, like Web 2.0 this Cloud thingy does not seem to have direct business relevance (for instance, how will this impact the way insurance policies are bought and sold, insurance claims are processed?). But it certainly has personal relevance - I plan to throw my home PC’s hard disk away two years from now!

Uh Oh! Here comes the next wave!

In case you thought the worst of the global meltdown was over: 

As Citigroup shares fell 26 percent Thursday, traders began comparing the bank to the Titanic.

For months, the nation’s largest banks have struggled to regain investors’ trust. In the center of the vortex is Citigroup, whose precipitous stock-market plunge accelerated on Thursday, sending shock waves through the financial world.

The shares slumped 26 percent Thursday; the bank has lost half its value in just four days.

- Citigroup Tries to Stop the Drop in Its Share Price, The New York Times, Nov 20, 2008

Here is what the Citigroup share price movement looks like:

This is the event I was waiting for when I wrote my earlier post The Sensex Shenanigans.

And in case you were living on a different planet, here is news from the American auto industry:

Bangalore Airport – 21 Wise Men Recommend Rs. 1000 Cr Makeover!

Bengaluru, Nov. 20: The 21-member Joint House Committee (JHC) headed by the BJP MLA, Dr Hemachandra Sagar, to look into perceived lapses by Bengaluru International Airport (BIA) wants a complete makeover that reflects the ethos of the city.  But BIAL has baulked at the idea, particularly as the bill for the face-lift touches Rs 1,000 crore.

“The committee is of the opinion that the airport is functional but looks as if it was built in a hurry,” an official said. The members, who visited the airport recently, said they found it inferior compared to other airports in India and abroad. “The changes they suggested would cost around Rs 1,000cr. With BIAL partners already concerned over revenue loss and expansion plans on hold, BIAL is unwilling to spend,” the officer said.

- BIAL Makeover Demanded, The Deccan Chronicle, Nov 20, 2008

Which world are these guys living in? The global economy is unravelling and these guys want to spend Rs. 1000 Cr on a “makeover”? And the media reports this with no comments?

And the never-ending comparison to airports abroad

Most of these anti-BIAL noisemakers compare BIAL with the airports in Singapore, Hong Kong, Seoul, Atlanta, Detroit, Chicago, Frankfurt, London, Amsterdam etc. These are the airports through which most Indians transit on foreign tours.

When comparing facilities it is also necessary to compare traffic volumes and the nature of the traffic. Take a look at the following chart:

Long Live Greenspan!

When I look at the current financial market meltdown and hear about how Americans have been completely irresponsible and were living way beyond their means for way too long, how credit derivatives are so complex that no one really understands them, how Hank Paulson had been pushing for looser regulation of the financial markets, how he is now unable to decide whether buying toxic assets is a good move or not, how the global economy is so interlinked that contagion spreads like virus etc., I am reminded of George Bernard Shaw’s observations on post-first-world-war Europe in 1920 in his play Back to Methuselah:

Franklyn: You are now, Mr Lubin, within immediate reach of your seventieth year. Mr Joyce Burge is your junior by about eleven years. You will go down to posterity as one of a European group of immature statesmen and monarchs who, doing the very best for your respective countries of which you were capable, succeeded in all-but-wrecking the civilization of Europe, and did, in effect, wipe out of existence many millions of its inhabitants.

The Tricolour that Landed on the Moon

Bangalore, November 14: : India marked its presence on Moon tonight to be only the fourth nation to scale this historic milestone after a Moon Impact Probe with the national tri-colour painted successfully landed on the lunar surface after being detached from unmanned spacecraft Chandrayaan-1.

Miniature Indian flags painted on four sides of the MIP signalled the country’s symbolic entry into moon.

- Indian Tri-colour Lands on Moon, The Indian Express, Nov 14, 2008

Here is a photograph of the tri-colour that landed on the moon, courtesy Mr. R. Krishnamurthy of Bangalore, whose Durano Process created these anodized plates for ISRO [B'Lore Firm Behind the Chandrayaan Tri-colour]:

Mr. Krishnamurthy is, deservedly, over the moon now that his creation has landed on the moon!

Three cheers to Mr. Krishnamurthy and his Durano team!

The Real Racism Row in Australian Cricket

The day Australia lost the test series to India, there was another piece of cricketing news from Australia:

India whips Symonds-less Australia and Symonds is recalled on the same day!

What do I make of these two events?

Impact of Global Meltdown on India

What started with the sub-prime crisis in the USA has now spread all over the world. Yet, we all know that Indian banks are much more conservative than American and European banks when it comes to lending. Hence, the exact same problems that beset global financial institutions (risky loans) is not expected to affect Indian financial institutions.

Neither is India an export-driven economy like many other Asian countries (the software industry does not exactly dominate Indian economy though it does dominate mind-share). India’s GDP growth is driven by domestic consumption. That being the case, a deceleration of American and European economies should by and large leave India unscathed.

But India does not seem to be unscathed. Something is wrong with the above reasoning.

Some time back, I started realizing that the key to India’s GDP growth is not domestic consumption but something else – foreign funds inflow into the Indian economy.

Portfolio investments is highly visible in the gyrations of BSE Sensex, but less visible are FDI inflows and foreign currency borrowings. With a deceleration of first-world economies, all these three are set to decrease and that is how the current financial crisis is bound to depress Indian economy.

Are the Fab Four Really All That Fabulous?

Today’s display by the Fab Four is very representative and indicative of why, in spite of having four batsmen reckoned to be the best in the game in the team for the past many years, we have never been able to dominate cricket:

Also remember the very first innings of this series where Zaheer Khan (57) and Harbhajan Singh (54) both:

1. individually scored more than any of the Fab Four and
2. together scored more than all the Fab Four put together (102)

As a country, we really ask too little of our cricketing heroes.