The Indian Economy has created and saved US jobs

The Economic Times

NEW DELHI: Indians are not taking away jobs in the US, instead they have created and saved 65,000 jobs in the recent years through increased investments, an official of an Indian industry chamber said Wednesday.

“Recent Indian acquisitions have created and saved 65,000 jobs in the US. A total of 374 acquisitions have been made and 127 greenfield projects have been set up in the US by Indian investors,” said Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI).

November 7th, 2010
Indian Express

The Report, ‘India – A Growth Partner in the Indian Economy’, estimates that, “India sourcing of US military and nuclear hardware and civilian aircraft could create over 700,000 jobs in the US over the next 10 years.”

Yesterday, US President Barack Obama had announced $10 billion worth of deals between Indian and US companies, including a $2 billion equipment order from Anil Ambani Group firm Reliance Power and the purchase of 30 Boeing 737 aircraft by low-cost carrier SpiceJet.

These deals would create more than 50,000 jobs in the US.

Finance: Teaser loans, realty checks and pre-payment penalties

November 8, 2010

Om Prakash Bhatt, chairman of State Bank of India (SBI), the nation’s largest lender, seems to be quite disappointed with the Indian central bank’s decision to raise the provisioning requirement for so-called teaser home loans. In its mid-year review of monetary policy, the Reserve Bank of India (RBI) last week raised the provision for standard assets of such loans five fold—from 0.4 percent to 2 percent. Higher provisioning will jack up the cost of funds for banks and discourage them from aggressively pushing for teaser loans. According to RBI, such loans impact the quality of assets as chances of defaults by the borrowers are high.

Investopedia, a comprehensive investing dictionary on the web, describes teaser loans as “an adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years”.

November 8, 2010
The Hindu

Housing and real estate sectors are the important areas, which need regulation. Shelter is one of the basic necessities of a human being. As real estate prices shot up to unprecedented levels, housing is one precious thing, which a common man is unable to afford. The action of the Reserve Bank of India (RBI) last Tuesday, while announcing some measures to forestall spiraling housing prices, was only an acknowledgement of this bubble rather than bursting it. This astronomical rise in assets would negate the expected growth plans of the central bank.

Sangita Mehta, Mumbai, November 8, 2010
The Economic Times

Banks are losing their battle for penalty on home loan pre-payments as the Reserve Bank of India sees no case for such a levy given that lenders don’t play a fair game with borrowers. In a meeting with chief executives of banks last week, RBI deputy governor KC Chakrabarty backed the Competition Commissioner of India’s stance that banks waive the clause on pre-payment penalty in mortgage documents since it is anti-competitive, said two people familiar with the discussions at the meet.

If implemented, this would erode one of the key elements of easy profits for banks which charge as much as 2 percent of the loan amount in some cases.

More cities for a growing urban population

Sunil Jain, November 8, 2010
The Financial Express

Make no mistake, the Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), which plans to develop 24 industrial cities over 5,500 sq km, is a project India sorely needs. With around 40 percent of India’s population estimated to live in cities by 2030 (at which point 70 percent of GDP will come from urban India), India desperately needs new cities. Since DMICDC’s main focus is on industrial cities (the idea is to raise industrial output in the six DMIC states 1.6 times by 2040), it will at best house 15 million people as compared to the 260-280 million that will move into urban areas by 2030. So we need not just one DMICDC, we need lots of them. And given the kind of planning DMICDC has in mind—smart planning to ensure people can walk/cycle to their workplaces can reduce energy consumption by as much as 40 percent—it’s obvious we need this kind of approach replicated in other cities, both new as well as the existing ones.

The structure is also an innovative one. Each city would cost Rs 40,000-50,000 crore, so financing this the conventional way is pretty much a non-starter. DMICDC, a joint venture between the Government of India and infrastructure firms IL&FS and IDFC, plans to do it differently. It will do the complete master plan of the city and, to begin with, start work on part of the trunk infrastructure, say a power plant or the beginnings of a BRT corridor—it has asked the government to give it around Rs 3,000 crore per city for this purpose. Once this is done, the land values in the vicinity of the infrastructure will rise, the SPV that is to develop the city (this SPV won’t have DMICDC in it, but will be a 50:50 venture between the Centre and the state government) will sell part of the land and monetise the increased value. This will then be given to DMICDC to do some more development of the trunk infrastructure … the cycle goes on.

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