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Asia Pacífico | Observatorio Parlamentario
India monthly review: Bleak month for economy
14 noviembre 2008
Indian news included the following issues in October 2008: an historic drop in its stock market, the Reserve Bank of India’s reduction of repurchase rates, approval of the US nuclear accord, the canonization of its first saint and flooding in much of the country.
Indian news included the following issues in October 2008: an historic drop in its stock market, the Reserve Bank of India’s reduction of repurchase rates, approval of the US nuclear accord, the canonization of its first saint and flooding in much of the country.
October was a black month in terms of economics. India is among the Southeast Asian countries hardest hit by the current global financial crisis. In fact, the Indian stock market fell to its lowest point in two years on October 8, when the Sensex dipped below 11,000. Although it later rallied, it still closed 3% lower.
In order to combat the effects of the crisis, India's central bank unexpectedly made its first repo rate cut in over four years. The repo rate, which is the rate at which the RBI lends to banks, was lowered to 8%. This measure was aimed at stabilizing the damaged Indian financial sector. As a result of the announcement, the stock market rose 5.6%, and closing at just above 2.5%.
However, in late October the government introduced a new measure, which opens way to foreign investment. It is proposes raising the 26% limit on foreign direct investment to 49%. Multinational insurers will also now be allowed to enter the Indian market, where only 20% of the population of over one billion people is insured.
One of the sectors most affected by this crisis has been the airlines, according to the president of the most important line of India, Air India. When the recession ends, he expects at least half of the companies in the sector will have disappeared.
October was a black month in terms of economics. India is among the Southeast Asian countries hardest hit by the current global financial crisis. In fact, the Indian stock market fell to its lowest point in two years on October 8, when the Sensex dipped below 11,000. Although it later rallied, it still closed 3% lower.
In order to combat the effects of the crisis, India's central bank unexpectedly made its first repo rate cut in over four years. The repo rate, which is the rate at which the RBI lends to banks, was lowered to 8%. This measure was aimed at stabilizing the damaged Indian financial sector. As a result of the announcement, the stock market rose 5.6%, and closing at just above 2.5%.
However, in late October the government introduced a new measure, which opens way to foreign investment. It is proposes raising the 26% limit on foreign direct investment to 49%. Multinational insurers will also now be allowed to enter the Indian market, where only 20% of the population of over one billion people is insured.
One of the sectors most affected by this crisis has been the airlines, according to the president of the most important line of India, Air India. When the recession ends, he expects at least half of the companies in the sector will have disappeared.
Indian Politics
On the political front, the US Senate approved the nuclear agreement enabling India to access the international market for nuclear technology. India will therefore be able to expand its nuclear industry without subscribing to the Non-Proliferation Agreement, as nations do.
Also, on October 14 elections, to be held next month, were announced in the assemblies of five states. Thus, between November 14 and December 4, votes were cast in Rajasthan, Delhi, Mizoram, Madhya Pradesh and Chhattisgarh.
On the political front, the US Senate approved the nuclear agreement enabling India to access the international market for nuclear technology. India will therefore be able to expand its nuclear industry without subscribing to the Non-Proliferation Agreement, as nations do.
Also, on October 14 elections, to be held next month, were announced in the assemblies of five states. Thus, between November 14 and December 4, votes were cast in Rajasthan, Delhi, Mizoram, Madhya Pradesh and Chhattisgarh.
Meanwhile, on October 24, Prime Minister Singh arrived in Beijing for the 7th Asia-Europe Summit (ASEM). 44 leaders met to discuss climate change, trade, energy, and food security. Singh arrived in Beijing after a three-day visit to Japan.
Indian society and culture
Bollywood was paralyzed when thousands of technicians and actors went on strike October 1. The strike was ostensibly due to failure to pay salaries and poor working conditions. The conflict was resolved two days later, with nearly 150,000 workers returning to their posts on the condition that the unpaid salaries be paid within 15 days, and that shifts be limited to 12 hours per day.
In the religious sphere, the Catholic nun Alfonsa became the first Indian woman to be named a saint on October 12, 2008. She was canonised by Pope Benedict XVI at the Vatican. The ceremony was closely followed by the Catholics of southern India in Kerala, the state where Sister Alfonso lived until her death in 1946.
Indian society and culture
Bollywood was paralyzed when thousands of technicians and actors went on strike October 1. The strike was ostensibly due to failure to pay salaries and poor working conditions. The conflict was resolved two days later, with nearly 150,000 workers returning to their posts on the condition that the unpaid salaries be paid within 15 days, and that shifts be limited to 12 hours per day.
In the religious sphere, the Catholic nun Alfonsa became the first Indian woman to be named a saint on October 12, 2008. She was canonised by Pope Benedict XVI at the Vatican. The ceremony was closely followed by the Catholics of southern India in Kerala, the state where Sister Alfonso lived until her death in 1946.
In other news, a report released October 14, by the International Food Policy Research Institute (IFPRI), stated that twelve Indian states are experiencing an "alarming" famine, while in the state of Madhya Pradesh the situation is “extremely alarming”. The investigation measures famine based on three indicators: child malnutrition, infant mortality rates and the number of people with calorie deficiency. The research showed that India has more people suffering from hunger than any other country in the world (over 200 million).
On October 20, the Indian people proudly celebrated the successful launch of their first mission to the moon. The rocket was launched from the Satish Dhawan Space Center, which is located on an island in the Bay of Bengal. The satellite, Chandrayaan-1, has a mission that will take place on the moon. All the technology used in the mission is of Indian origin, and despite the fact it already has several successful satellites in operation, this is the first beyond the Earth’s orbit.
If the mission is successful, India will join China and Japan in the group of Asian powers that have conducted moon missions. But India will have achieved it at a cost of $80 million, or much lower than the $187 million spent by China, or the $480 million by the Japanese.
On October 20, the Indian people proudly celebrated the successful launch of their first mission to the moon. The rocket was launched from the Satish Dhawan Space Center, which is located on an island in the Bay of Bengal. The satellite, Chandrayaan-1, has a mission that will take place on the moon. All the technology used in the mission is of Indian origin, and despite the fact it already has several successful satellites in operation, this is the first beyond the Earth’s orbit.
If the mission is successful, India will join China and Japan in the group of Asian powers that have conducted moon missions. But India will have achieved it at a cost of $80 million, or much lower than the $187 million spent by China, or the $480 million by the Japanese.
To end the month, unexpected floods in the Indian state of Assam left hundreds of thousands homeless, crops damaged and major roads unusable. Floods in India generally occur in the monsoon season, which lasts from June to September. The monsoons, combined with the excessive release of water by companies that generate electricity, are blamed for this situation.
