Business Economics & Services Team (BEST)
Economics & Investment Updates (5)
1. Capital Market Sheds the Shine
Indian capital market, which has been on a continuous bullish mood, has tanked 538 points. It is widely believed that the market was responding to unsavory global developments, such as further cuts in oil rices, deep problems confronting Russia, erosion of major currencies including rupee against dollar. It may be noted that rupee has gone further down vis a vis dollar. The preset value of over Rs 63 against dollar, many say, is untenable and is mostly due to outgo of dollar on account of steady increase in imports, particularly gold. It is an anomaly for a country like India to be in the grip of a current account deficit syndrome when the oil prices dip low, the major importing item.
2.Aviation Ministry for Bailout of Spicejet
After abetting its closure, now the aviation ministry has come to rescue of the beleaguered airline -Spicejet, which is under a deep crisis. A few days back, the aviation regulator- DGCA- has sent a warning to Spicejet not to book the tickets beyond one month. The general public took the cue and avoided booking in the budget airline, which incidentally also cancelled many flights. Since the booking for the holiday season falling on May - June 2015 starts now, many passengers diligently kept away from the crisis ridden airlines. Now the aviation ministy has extended the time for booking till 31st March 2015. But not many will go for the airline, which is also cancelling many flights on a daily basis. Not left with that, the aviation ministry is cajoling banks and institutions to pump in money into the airlines coffers. It is to be seen how many will come forward to stem the rot in the airline.
3. Russia In deep Problems
Coming close on the heels of the turmoil in Russia, many Indian companies, particularly pharma companies are facing hardhips. They are already facing severe crunch in their sales with the sanctions on Russia. Also, they are apprehensive that so they will face payment difficulties. However, the Indian gem and jewelery segment is upbeat that they will be able to start trading with Russia directly in diamonds, which are brought into the country trhough middlemen in Antwerp, Dubai etc.
4. Government Considering Ways to Curb Gold Imports
Cagey on account of the steady increase in gold imports, the government is contemplating many ways to curbs its imports, which is casting its shadows in the widening current account deficit. Gold imports has gone up by more than five times in the recent months. There are many options with the government including increasing the import duty and also restricting the import of gold for re-export purposes. Since the rupee is steadily eroding its value vis a vis dollar, if gold imports are left to market forces, it will have deleterous impact on the economy.
