chanakya volume i issue ix

8/14/2019 Chanakya Volume I Issue IX

http://slidepdf.com/reader/full/chanakya-volume-i-issue-ix 1/4

ChanakyaIs Colombo Port humbled by Indian Ports! Sri Lankan shippers are feeling the pressure of India's booming export-

import trade with some of the major shipping lines deciding to give

priority to Indian ports over Colombo.

Maersk, UASC, K-line and Norasia, one the leading shipping lines in theworld, have diverted some of their services to Nhava Sheva in Mumbai.

Some have withdrawn their European services to and from Colombo.

Hanjin-K Line-UASC combine used to operate two services to Europe

from Colombo, but recently pulled out one. Norasia-Zim Line pulled

out its weekly European service. This action of these leading shipping

lines have created a shortage of 650 TEUs (twenty-foot equivalent

units) a week for the Colombo-Europe sector.

Why did they orphan Colombo Port? The answer is obvious, India is

booming. Look beneath we find interesting facts. The direct services

from India obviate the need for Indian cargo to be transshipped through

the Colombo port to Europe or the US thus saving around $100 a TEU

for the shippers. India is now a cargo-rich base as industry is booming.

Consider this; the shipping lines will consider diverting the ships based

on the volume. For example, Maersk Line recently introduced a route

change and also introduced a new service out of Chennai. Its European

vessel has now been dedicated to the UK trade mainly giving preference

to garments to the UK. This is despite expenses incurred due to delays

at Indian ports.

The infrastructure in the Colombo Port is also one the concerns, which

has not seen a major investment for the past 15 years. The worst hits

are Sri Lanka's exporters of garments, tea and coir. However, the

Colombo port is not ready to give up its ‘numero uno’ position in the

region and is investing heavily. The strategic advantage of Colombo is its

geographical location, but can it withstand the onslaught of the volume

advantage that Indian ports provide. Remains to be seen!

This Issue

Is Colombo Port Humbled by Indian

Ports ‐ 1

Indian Real Estate Boom: Shifting

Geographies 2

Construction Boom: Are we Ready 3

Economic Indicators 4

Team Chanakya 4

DATE: 1ST December 2007

VOLUME NO: I

ISSUE NO: IX



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Indicators Nov’07 Oct ‘07

Bank Credit 22.47% 20%

Deposits 26.8% 26.6%

Money Supply 21.8% 21.8%

Inflation 3.11% 3.32%

Home Loan Rates 11.5% 11.5%

IIP 9.3% 10.7%

Forex Rate 39.80 39.23

Forex Reserves (US$Billions)

279.80 271.14

Economic Indicators

Team Chanakya

D Joel K Pandian

DGM-Strategic Planning

Anup Choudhary

Asst Manager- Strategic Planning

The Economic Indicators of the Indian economy may

be termed as positive and more efficient then the

Chinese, but is in-efficient in managing the resources.

The Government is been building up the forex

reserves with a vengeance, the ghost of 1991 seems to

be hounding the bureaucracy till today, and so the

inefficient investment and contradictions in the macro

economic variables have started cropping in.

To taste a few, the Indian inflation is at 3.11%, very

comfortable for a 9% economic growth, but RBI is still

raising the CRR which will result in increased interest

rate. The classical economic theory dictates these two

cannot have such a big variance of 10% as it is today in

India.

The culprit is sitting somewhere in the form of global

forex markets and smiling at RBI. With very low/ever

decreasing interest of the US and European economies

all the dollars are washing at the shores of India where

the return is high, just by putting your money in bank

and forget about lending the same.

So where does it lead to? This leads to increased FDI

in Indian financial system, increased value of Indian

Rupee. These events force RBI to buy dollars and

infuse Indian Rupee to save a few exporters (exports

forms only 3% of Indian GDP). With money infusion

the inflation will go up and RBI will take back the

money from the system (maintain M3) to contain

inflation by increasing the CRR. Which in turn will

force the banks to increase the interest rate, while all

the dollars earn nothing more than 1.2% for the

nation, the Indian citizens and companies have to bear

and interest of 13%?

Doesn’t it look funny way of managing the

forex?

chanakya volume i issue ix

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