fin 444 - india final presentation
TRANSCRIPT
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Namrata GurungBrian DaltonKris Kohtz
Rachel OleniaczSuresh Lee Krishnamoorthy
FIN 444Final Presentation
April 4, 2007
Delhi
Mumbai
Calcutta
BangaloreChennai
INDIA
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India - Introduction
History
Indias Economic Reform
Foreign Direct Investment
Centralized v. Market Based Economy
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DELHI
Namrata Gurung
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Delhi
Capital of India
Parliament of India,
District Administrationof Delhi, FinancialInstitutions situated inDelhi
Center of SupervisoryPower
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Urbanization of Delhi
Four Satellite Suburbs
Gurgaon is the most developed Hub for outsourcing and off-
shoring business Increase workforce and
businesses Increasing middle-class
families. Increase in Net domestic
Product - Delhi
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Delhi Policies Indias economic growth by 10% this year.
State Bank of India raised the prime-lending rate from11.5% to 12.25% 2nd time in two months
Central bank raised the interest rate by a quarter-point to7.5%
control the rapid credit expansion Help stem inflation
*Tightening the Money supply
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Delhi Politics Decision-making
Congress is the largest party in the coalition but other leftleaning parties and the Communist party play a vital role
The decision of raising the futures price of wheat and rice primary sustenance of the poor farmers
The government was forced to freeze the futures price
Affects the farmers as well as the NCDEX
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Delhi Politics cont
Recently Congress Party lost 2 local elections
Chances of ruling coalition to become unstable Policies remain undecided E.g. 1999 Parliament election
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MUMBAI, Economy, Financial
Brian Dalton
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Mumbai Formerly known as Bombay Most populous city in India (over
25 million people) Financial and entertainment
capital of India National Stock Exchange of
India (NSE) Bombay Stock Exchange (BSE) Reserve Bank of India (RBI)
Bollywood
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Indian Economy: Introduction In terms of PPP, India is
the fourth largesteconomy in the world
Economy has beengrowing at around 8% per year for the past four years
2007 growth is estimatedat ~ 9%
Total nominal GDP isexpected to surpass $1trillion USD in 2008
Rapid growth has beenleading to concerns over inflation
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Indian Economy: Introduction
But with over a billionpeople, it is no wonder thatthe World Bank stillclassifies India as a LowIncome country
Nevertheless, it is stillremarkable how far Indiahas come over the pastfew decades
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Indian Economy: Brief History Pre-1757: India ruled by various warlords, clans,
and empires. Rich in exotic goods desired by Europeans Extensive world trade In 1700, it is estimated that the amount of world income
controlled by India was nearly as great as all of Europe 1757 1947: Colonial Era The great wealth and natural resources entices
Britain to colonize much of India Britain exploits the countrys resources
Britain makes some positive contributions to India,however. The develop roads, institute standardcurrency, property rights, capital markets,transportation and communication networks. Theyalso emphasize education.
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Indian Economy: Brief History 1947 Present:
Independence 1947- 1970s: Isolation and
Socialism leads to extremepoverty and stagnation
Beginning in the 1980s andthrough the 90s India began toliberalize its economy, and startthe move towards a morecapitalist-type economy
Today India is the second fastestgrowing larger economy and thefourth largest economy in theworld.
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Indian Economy: Industries,Exports and Trading Partners
Most Indians still work in agriculture-related jobs, but services are becomingand increasing important sector
Unlike countries like China, India is not so well known for its manufacturingexports.
Exports include textiles, natural resources like tea and cotton And of course the cultural exports like food and Bollywood India has recently become associated with its service exports (outsourcing),
and this is becoming a very important part of the economy India is a net importer Main trading partners include: US, China, EU, Russia and Japan
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Banking System Reserve Bank of India
(RBI): The Central Bank Controls currency (Rupee) Manages foreign exchange
Supervises and regulates thefinancial system Promotes economic
development Bank of the central
government Headquarters in Mumbai, and
22 regional branches
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The Rupee The Rupee is relatively confined
to India, and is not usedextensively in any other country
Later years of British colonialrule: Pegged to gold standardb/w of British Pound
1966: de-pegged from the Britishpound; pegged to the US dollar
1971: de-pegged from US dollar (b/c USD was tanking)
Today, the RBI conducts amanaged float on the INR/USDexchange rate; INR/EUR andINR/JPY are market determined
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Financial Markets The Securities and Exchange
Board of India regulates Indias 22financial exchanges
The largest financial exchanges inIndia are: The National Stock Exchange of India
(NSE) The Calcutta Stock Exchange (CSE) The Bombay Stock Exchange (BSE) The Delhi Stock Exchange (DSE)
The two most importantexchanges to foreign investors arethe NSE and BSE, both located inMumbai
SEBI Mumbai Offices
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National Stock Exchange of India(NSE)
The third largest stockexchange in the world(number of transactions/day)
Traditionally, the firstexchange to introduce newtechnology and tradingadvancements First to create a clearing
corporation First to begin internet trading First to trade ETFs
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Bombay Stock Exchange (BSE) Oldest stock exchange in
Asia Smaller than the NSE,
but to foreigners, oftenthe more importantexchange
BSE Sensex indexclosely followed byinternational investors
Many of the largestIndian companies list onthe BSE (Wipro, Infosys,Tata Group)
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Forex Indian forex market tightly
regulated by the RBI RBI often directly intervenes
in INR/USD trade to stabilize
the rupee Forex market is small, but
growing rapidly Currency derivatives market
is larger than the spot market Most of the trade is in
INR/USD
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Bonds Government bonds
T-bills (91-day and 364-day) sold by RBI Many investors dont like them because they offer no tax benefits Foreigners are allowed to purchase Government market is growing as a result of increased liquidity
in Indian market Corporate bonds
Regulated by the SEBI Corporate debt placements have increased by over 40% in the
past two years
Companies are required to be rated as investment quality toissue public debt Debt market primarily limited to wholesale orders No market for junk bonds, but probably will be developed in the
near future
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Bollywood Indias Hollywood
Largest film industry in theworld
Puts out more than 1000films/year (most are crap,but some are worthwhilekinda like Hollywood)
Many films funded by foreigninvestors, Indian banks, andMumbais criminalunderground
Important part of the Mumbaieconomy and Indian culture
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Bengalru
Kris Kohtz
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Strengths
Business ProcessOutsourcing (BPO) Comparative
Advantages Software exports Information
Technology
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Challenges
Infrastructure Regulations Expansion into China
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CHENNAIAlso known as Madras
Rachel Oleniacz
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Demographics
City of 6,400,000 Fourth largest metropolitan
Second largest exporter of IT & services Connected by the Golden Quadrilateral
Project
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Culture & Roots
Tamil Nadu ~ TheProvince
Tamil ~ The
Language Bharatanatyam
Kalakshetra
Carnatic music Music Season Hindu Temples
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Nomenclature & History
The city with two names Madras Patnam by The East India Company Chennaipuri by the locals
Foreigners role in the then town Port and trade
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Commerce & Trade
Chennai port General industrial (containers) Automobiles Shift to green & clean
Ennore port Coal Ore Bulk cargo
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Automobiles
Detroit of South Asia Potential as one of top three automobile
giants in the world Ford, Hyundai, Mitsubishi, TVS, Ashok
Leyland, & BMW
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CALCUTTA
Suresh Lee Krishnamoorthy
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CALCUTTA-14 million inhabitants-Manufacturing centered
-Faced major productivity crisis-Political instability
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RECOVERY AVENUES
Major growth in the IT sector
Calcutta Stock Exchange
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QUESTION?