|»5 Minute Wrap Up by Equitymaster|
On This Day - 25 JUNE 2011
Indians are now going abroad with a return ticket
In this issue:
It's never too late to get rid of 'bad stocks'.
After all, you never know how bad a market crash could get.
But what are these 'bad stocks'? How do you identify them?
For answers to these questions, and more, click here to read on...
As a result, India suffered a "brain drain" as many of its brightest and highly talented folks left the country to work elsewhere. The problems back then were also that our own economy didn't have enough opportunities to harness the full potential of these natives.
But the picture has reversed drastically now. The centre of economic gravity has moved away from the Western world to the fast growing emerging markets such as India and China.
A recent research on entrepreneurship surveyed about 153 professionals who returned from the US to their native countries (India or China) to start a business. Majority of them asserted that there were bigger and better opportunities in their own countries than in the US.
This augurs well for India. Despite having a massive young workforce, we still suffer a serious dearth of highly skilled professionals, entrepreneurs and leaders who can drive the engine of economic growth going forward. So the returning emigrants will actually be valuable intellectual capital for our country.
But it would be too naive of us to raise the toast right away. There are several things that need to be fixed before we can gain the full advantage of such intellectual capital. Now, it is a widely known fact that start-up firms are very important for an economy's good health. For instance, 62.5% new jobs in the US are created by companies that are less than 5 years old.
But do we have a really conducive business environment for start-ups. Not really! Though our country abounds in opportunities, several factors such as a dearth of initial funding sources, lack of support infrastructure, regulatory hurdles, etc. are major roadblocks that entrepreneurs are constantly faced with. We need to build strong platforms to unleash the full potential of our returning emigrants.
Such steep hikes in fuel prices are going to severely hurt both businesses and households. It is important to note that the hike would have been much higher had the government not lowered its taxes on fuels. The government has now abolished the 5% customs duty on crude oil. It has lowered the import duty on all petroleum products from 7.5% to 2.5%. Additionally, it has also cut excise on diesel from Rs 4.6 per litre to Rs 2 per litre.
Today's chart of the day shows that diesel prices in India are one of the highest in South Asia. While diesel costs a bit more in Pakistan, the same is substantially cheaper in neighbouring countries Bangladesh and Sri Lanka.
MCX-SX, the rival of NSE and the firm which filed the case had alleged that the latter had attempted to kill competition in the currency derivatives market by, among other things, not opting to charge for its services. Competition Commission of India (CCI), which slapped the fine on NSE, found the accusations to be true and also directed the firm to refrain from activities that would unfairly protect its dominant position in the currency derivatives market. We believe that the action taken by CCI is indeed the right one. Trying to kill competition by cross subsidisation isn't really the right way to compete according to us.
The survey also highlights one more important point which is the difference between the wage levels of male and female workforce. Female-male wage ratio is 0.82 in the urban area. This ratio is even worse in the rural area, just 0.63.
The Indian Government plans to spend US$ 1 trillion to build roads, ports and airports by 2017. The debt fund is expected to provide long term low cost financing options for these projects. The same is expected to get launched within a few months.
Japan was the biggest gainer of the week up 3.5% while France was the biggest loser down 1%. In Asia, China closed the week up 3.1% while Hong Kong was up by 2.2%. Indian stock markets were up by 2.1% after a surge of 513 point on Friday. This was on the back of positive sentiments that inflation would come down as the government would not raise diesel and LPG prices. However, the government's decision to raise the same late Friday night proved the markets wrong. Singapore closed the week up 2%. In Europe, UK and Germany were down 0.3% and 0.6% respectively. In the Americas, Brazil was down by 0.1% while US closed the week down 0.6%.
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