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Thursday, June 21, 2012

Manmohan's largesse to Eurozone crisis; what for home ?


Villagers are simpletons – they fear many things primarily because they do not understand Economics, Finance, Strategies, International relations – the list of things that they do not know is endless. One of their fears is about the functions conducted by eminent people of the village and nearby.  Sure when big people conduct functions, the celebrations will be of a big magnitude and when simple people have to partake, they have to necessarily gift bigger things, which sure would affect running their families !

India no longer lives in villages – people have shifted to Cities in search of wisdom and greener pastures.  We live in a World of information overflow – people are educated, read, hear, analyse news and are well informed.

G 20 -  is a group of Finance Ministers and Central Bank Governors representing 20 major economies.  It is elitist to be part of such groups.  In fact, it consists of 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank. Collectively, the G-20 economies account for more than 80 percent of the gross world product (GWP), 80 percent of world trade (including EU intra-trade), and two-thirds of the world population. The G-20 was proposed by former Prime Minister of Canada Paul Martin as a forum for cooperation and consultation on matters pertaining to the international financial system. The heads of the G-20 nations met biannually at G-20 summits between 2008 and 2011. Since the November 2011 Cannes summit, all G-20 summits have been held annually.  It is a matter of pride that India is part of this G20.

Internationally, at Singapore, Gold slipped for a third straight day  after the U.S. Federal Reserve stopped short of launching another round of quantitative easing to stimulate the economy, a move that could have boosted bullion’s appeal in times of uncertainty. Spot gold fell $3.49 an ounce to $1,601.89, having slipped to $1,520.29 an ounce on Wednesday, its weakest since June 12 following the Fed’s announcement.

At a National level, raising grave concerns, the  rupee fell further today coming close to a record low against the dollar, as risk assets fell on disappointment about the scope of US Federal Reserve’s bond purchases and after HSBC factory data from China showed a contraction.  Traders are on watch for any potential intervention from the RBI to defend the currency.  This morning the rupee  was at 56.34/38 to the dollar versus its 56.15/16 close on Wednesday. It fell to 56.45 in early trade, close to its record low of 56.52 hit on May 31. Increased demand for the American currency from importers and a weak opening in the local equity market also put pressure on the rupee, traders said.   They added dollar gained against euro in overseas markets on concerns that Spain’s troubled banks may need a bigger bailout.
We have Dr Manmohan Singh, Pranab Mukherjee, P Chidambaram and other financial wizards who will sure take action to allay our fears and ensure that economic is stable. The threats and downratings  of S&P, Flitch are hotheaded revelations of their not so correct study of Indian economic position, if our Rulers are to be believed. 

At the Earth Summit  India had more than one reason to be happy, with its main concerns addressed in the draft of the declaration to be adopted by the 90 global leaders here,  but  Environment Minister Jayanthi Natarajan felt let down by rich nations for lack of commitment in funding green programmes.  She felt saddened by the lack of firm commitment by the rich nations on how to fund schemes, technologies and programmes that will result in making planet Earth greener and promote growth and inclusion in a sustainable manner.

Manmohan Singh, is scheduled to address Thursday the key event, which also marks the 20th anniversary (hence Rio+20) of the first such gathering of world leaders in Brazil’s largest city that first emphasized the concept of sustainable development.  He has a large heart and naturally cares for the World crisis of which India must have a role in bringing back things to normalcy.    In tune with the ideals, Dr Man Mohan Singh has announced that India would contribute $10 billion (around Rs. 55,000 crore) to the global firewall that seeks to contain any financial contagion emerging out of the euro zone debt crisis.  Brazil, Russia, India, China and South Africa (Brics) agreed to contribute to the fund created under the International Monetary Fund (IMF) during its Spring meeting in Washington in April, but had not disclosed the exact sums.  Now with India’s declaration at the G-20 meeting at Los Cabos in Mexico, the Brics nations’ contribution to the war chest will swell to $75 billion.

Prime Minister Manmohan Singh said at the summit there was concern that the firewall may not be adequate to deal with a contagion. “The resources currently expected to be mobilized by Europe and the IMF are less than what was estimated a year ago, and the crisis is actually more serious,” he said.

A  good initiative given India has to play a leading role at the global level.  Experts are quoted as saying that this would not be a burden on India’s forex reserves ! – do you understand how and why such a largesse, when we are struggling at our domestic front. There are reports that the Country’s growth is not on expected lines, that the Nation is struggling to reduce rising inflation and staring at a gaping fiscal deficit in order to revive growth, nothing appears to have been done locally except questioning the wisdom and trying to analyse the personal side of those involved in downsized rating – but  Prime Minister has announced  commitment to contribute  a whopping $ 10 billion to the International Monetary Fund's crisis coffers to tackle the Euro Zone crisis.

Economics is never easy to be understood by the common man

With regards – S. Sampathkumar.

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