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Source How India’s growth ended in tears It's enough to make a poor man cry and a wealthy investor sprint for the exit. From the back of a van in Delhi's chaotic Karol Bagh market, opposition politicians are selling discounted onions to disgruntled voters ahead of next year's general election. The humble red onion, heart of the vegetable curry most Indians depend on, has more than trebled in price in the last few weeks and opposition leaders hope the increase will take a large bite into the Congress-led government's remaining support. Peeling back its bashed, husky outer skin to its tear-jerking inner layers reveals not only the story of why its price has risen so sharply in the last month, but why the rupee has bombed in the foreign exchange markets and how India's all-action 'growth story' has become a real weepy.
Last week, as the rupee tumbled below 63 to the US dollar and crashed through the 100 rupees to the pound barrier, onions were an unaffordable 80 rupees per kilo. The government may need to import them to increase supply and push back prices, but that option will become more expensive as rupee rates fall lower every day. The immediate cause of the increase was the heavy monsoon rains in Maharashtra which left the vegetables rotting in the ground, but the price may not have soared so high had the government been strong and decisive enough to reform its agricultural sector when it first planned to in 2009. It hoped foreign supermarkets like Tesco and Walmart would come in and revolutionise India's backward agricultural sector. Forty per cent of all Indian produce rots on clunky bullock carts and rough baked roads before reaching the market. When they arrive, farmers get a tiny fraction on the retail price as as they pass through at least five agents, each taking their cut. Of the eighty rupees per kilo they were selling for last week, the farmer's share was just eight.
India needs new smooth roads, cold-chain storage and modern transport logistics to replace sweaty bullock carts, and direct sales from farmer to retailer to stabilise prices, increase farm incomes and reduce food inflation - one of the country's most politically sensitive issues. The Indian government came close to collapse when it first announced its plan to allow foreign supermarkets to set up shop in late 2011. But it backed down after a key coalition partner threatened to resign and bring down the government with it. By the time the government decided to push through the reform regardless last year, all the main supermarkets had been frightened off by the instability they had seen, and requirements to source 30pc of their goods from local suppliers. The speed of India's sudden decline has taken many, including hopeful 'partners' like Britain, by surprise. Barely three years ago, as Britain and the United States were staring at the worst recession in eight decades, India's economy was growing at 8.5pc, a pound could buy only 65 rupees and ministers casually talked of double digit growth by 2011.
They planned to spend a trillion dollars on upgrading roads, building new airports, ports, and faster trains. The spoke of opening up their pension, banking, legal, defence and education sectors, and creating new low-tax special economic zones where firms could set up base without going through the dense undergrowth of Indian bureaucracy. Since then, very few of those trillion dollars have been spent, major power projects have been halted, and bills to lift other barriers to foreign investment are gathering dust as India's opposition regularly walks out of parliament in protest. Special Economic Zones have been abandoned and GDP has plunged to 5pc - not enough to maintain living standards when India's population becomes the world's largest within the next 15 years. So, like Tesco and other supermarket chains, potential investors are holding back and watching.
SubodhAgarwal, co-founder of Mergers and Acquisition specialists Euromax Capital, made his fortune as an early champion of the Indian growth story. He began from Mumbai, India's financial capital, and eventually set up shop in London, Singapore and Dubai, playing a role in the great Indian take-away which saw some of its biggest firms buy British business icons like Corus Steel, Jaguar Land Rover and Whyte and Mackay distillers. Today, he thinks he may have to close his loss-making Mumbai office, and blames the government for frittering away a golden opportunity. "Even Indians are not investing in India. Indians have lost faith in their own economy because of non-governance," he said. Read more: http://india.nydailynews.com/newsarticle/ed5c56ed8de9b8ce0e7999207a93ee3d/how-indias-growth-ended-in-tears http://www.wattpad.com/16584033-crown-capital-management-jakarta-indonesia#.UhqRZhunoXE http://crowncapitalmngt.newsvine.com/