28-02-2015, 14:35 #1
[EN] India to negotiate free trade zone with Russia
India is to start negotiating a free trade agreement with the Customs Union of Russia, Belarus and Kazakhstan within the next six months, Indian Deputy Minister of Commerce and Industry Rajeev Kher has said.
As most of the developed world in the West is suffering an economic downturn, the developing world has been stepping up efforts to bring their economies closer.
The Eurasian Customs Union is a regional bloc that includes Russia, Belarus and Kazakhstan aimed at creating a single economic space with common tariffs. The population of the union is about 171 million people, and its gross domestic product is expected to reach $3 trillion in 2015.
A Russian-Indian working group which was established in November 2014 will consider the negotiating of a comprehensive free trade agreement between India and the Customs Union.
Most recently, China said it could establish a free trade zone with a broader Russia-led economic bloc. The Eurasian Economic Union includes Russia, Armenia, Belarus and Kazakhstan and was officially launched on January 1. Kyrgyzstan has said it will join, with accession expected by the end of May.
Russia has been ramping up its economic ties to China over the past year, more so after sanctions cut off trade and financing opportunities with the West.
China is Russia’s second-biggest trading partner after the EU, and trade between the two was worth $95.3 billion in 2014, a 6.8 percent increase since 2013, but still short of the $100 billion goal.
China and Russia expect trade between the two neighbors to reach $200 billion by 2020. More than 80 percent of trade is natural resources like oil, iron, timber, machinery, and equipment.
A watershed in 2014 was the signing of a $400 billion gas deal, as well as starting work on the ‘Power of Siberia’ pipeline, which will deliver 3 trillion cubic meters of gas to China over 30 years.
Russian Ambassador to China Andrey Denisov said the high-speed rail links are “still just an idea,” commenting on the report made on the Chinese version of Twitter in January that a train would connect Moscow and Beijing in just 48 hours.
05-03-2015, 13:44 #2
India can become world’s fifth-largest economy by decade’s end
Jim O’Neill, who coined the term BRIC to highlight emerging economic powerhouses Brazil, Russia, India and China, said India’s budget lacked a “wow” factor but was good enough to push the country on a path of 8 percent growth or more “for a long time”.
The former Goldman Sachs economist also said India was likely to replace Brazil as the second-largest BRICS economy (“S’ for South Africa, which was later added to the group) in the next couple of years and could become the world’s fifth-largest economy by the end of the decade.
In an interview with India Insight in New Delhi, O’Neill gave his views on India’s budget, the BRICS nations, and the government’s decision to adopt inflation targeting. Below are edited excerpts from the interview. Quotes have been lightly edited for clarity.
Q. What do you think of the budget?
A: There is nothing which makes me want to go wow, which gives the impression that it was a little disappointing. But I think there’s been a lot of things announced, many of which in their own right could be very important, and collectively could be extremely important. But it’s hard to know the details and it depends on how well they get implemented.
The more I think about it, this is a budget that’s doing stuff, but we won’t be able to tell for quite some time because it’s got to get support in parliament, in the states, and it needs to get implemented. When I reflect more and more, it makes me think this could be the sort of thing that’s needed to really give confidence that India could grow at 8 percent or more for a long time.
Q. How will the budget affect Indian equities?
A: I’m afraid I’m not entirely sure in the short term. I’ve been personally invested in the Indian market through a fund for the past 18 months because I wanted to take a positive bet. So I luckily chose a fund manager that has outperformed what has been a really strong market. So I am very aware that India has had a big, big move for the past 18 months.
And a lot of it is, of course, since Modi came to power. It has also happened at a time when oil prices have collapsed, so India has been in this remarkable sweet spot. Some part of me thinks, by definition, it’s almost impossible for India to keep doing that, not certainly in the same degree. Maybe the best thing that can happen is that India consolidates for a while and we see more evidence about what’s really going to get done on the ground for this budget. But I don’t see anything to be disappointed about.
Q. Can the rupee fall back to 68 levels (against the dollar)?
A: Given an environment where everybody is thinking that the Federal Reserve board will start raising interest rates, of course that could happen. But I think, as we’ve seen in the past few months, India seems to be a lot more resilient than many other so-called emerging markets. And with this budget and the general excitement about India, I don’t really see that changing. For me the bigger question is: What are the chances of the rupee breaking through 60 and strengthening further? That would be more likely than a big weakening and I think the biggest barrier to that is probably the central bank and the finance ministry, who will try and stop it from rising because they don’t want to lose competitiveness, particularly with all this focus on manufacturing.
Q. If the Fed was to raise rates by June, what affect would it have on India?
A: The Federal Reserve board is very democratic but Janet Yellen seems to have a big, if not a bigger influence, than her predecessor Ben Bernanke. And what she says matters. And at the margin, what she said last week was a bit more dovish. So right now, if you put a gun to my head today, I think June is not likely.
Q. Two years ago, an idea was floating around that Indonesia should replace India in the BRICS.
A: When that question was put to me two years ago, I said it was ridiculous. And I never doubted India’s position within the BRICS group. Indeed, as soon as I realised there was a good chance that Modi was going to win, I was also pretty confident that Indian growth would accelerate. And so I think the notion that India’s position is vulnerable relative to another one of the big countries outside the BRICS is highly unlikely.
In fact the more I’m looking at the next two or three years, what is more likely is that India could become the second-largest of the BRICS economies replacing Brazil, and creeping closer to being in the top elite of the world. It’s not impossible that by the end of this decade, India could be the fifth-largest economy in the world, something that I wouldn’t have thought of a couple of years ago.
Q. The finance minister is relying heavily on divestment to meet fiscal targets? Do you think that’s a good idea?
A: I admire the finance ministry for stepping back from the 3.6 percent fiscal deficit target that was there for next year. I’ve argued for many years that the government should focus more on the quality of its spending, particularly if it relates to infrastructure, and not be so obsessed with some notional fiscal deficit number, which at the end of the day is going to be determined by events outside the finance ministry’s control.
Q. India has adopted inflation targeting. Your take.
A: This could be a huge event. It’s a bit surprising to me that there’s not more focus on it in the Indian media. When the UK introduced inflation targeting properly back in the early 90s, there was a big rewriting of UK assets and the pound. And if this really is the beginning of a truly heightened inflation targeting, which importantly will be mapped with the help of independent voting members, this is a huge thing.
Q. How can India turn itself into an “investor’s paradise”?
A: I think it is very difficult for any one country’s stock market to rise by 40 percent for two consecutive years. Now if there were one that can, given its growth potential, it could be India. But I don’t think there’s a wow thing that’s gonna make boardrooms in Boston and New York and LA or London and Franfurt and Zurich sitting around today going: “Wow, we’ve gotta put X amount of money in India tomorrow”. I don’t see that.
Q. India changed the way it calculates GDP, posting growth numbers higher than China. But the changes have left doubts about the veracity of the data. What do you think?
A: Even on the old data, in the second half of this decade, India would likely grow more than China anyhow. And bringing it back to the budget, what I see announced here, if it all gets implemented, I think India is definitely sowing the ground for many many years where its economic growth rates will be 7.5, 8, maybe even 9 percent and in some moments, even 10 percent or more.
So even though statistically, the only reason why people say India is growing more than China is because of its new data, I think we’re on the verge of a more sustained period where it was gonna happen anyhow.
Última edição por 5ms; 05-03-2015 às 13:47.