WEEKLY NEWSLETTER on MACRO ECONOMICS

By GROUP 3 SECTION B
Group Members:
Amit Saha M074-14
Anuran Gayali M078-14
Anup Ranjan M077-14
Ayala Somayajula Madhushree M083-14
Swarnadip Khan M128/14
Toshima Singh M129-14


Macro Economics Snapshot
Dated: October 14, 2014


Jean Tirole Wins Economics Nobel
India improve its hunger record


Date: October 14
th
, Tuesday

According to Global Hunger Index Report India has
jumped to the 55
th
spot in 2014 from 63
rd
last year

GHI = Simple average of three indicator
1. % of undernourished in population
2. % of children under 5yr who are underweight
3. % under 5 year mortality rate
Expert View (Dipa Sinha) : In the last 10 yrs, there has
been lot of improvement in the government schemes
like in ICDS, PDS and NFSA. However, there is lot left to
be done. For example quality of food under ICDS is still
very poor and maternity entitlement under NFSA still
not implemented

Link:https://drive.google.com/a/iimranchi.a
c.in/#folders/0Bxlidt2PeJnuLVZPcUpfakFR
WFk
Dated: October 14, 2014
Frances Jean Tirole won the 2014 Nobel Prize in economics Monday
(13
th
Oct 2014) for his work on how governments can better regulate
industries that lack competitions. Tirole showed how the best regulated
was adapted to each industrys specific conditions and presented a
general policy framework that he applied to industries from
telecommunications to banking, the Royal Swedish Academy of Science
said.
Link: http://www.bbc.com/news/business-29599016
Link:https://docs.google.com/a/iimranchi.ac.in/file/d/0Bxlidt2PeJn
uWEg1aGVsQnloUFE/edit

Festive Loan Offer gets Tepid Response


Demand in jewellery affected by uncertainty in gold prices: Titan

Dated: October 14, 2014
The turnaround in sentiments following the rise to power of BJP after the general election hasnt yet boosted
consumer confidence. People are reluctant to borrow despite banks cutting rates, even as online sales drive credit
card use.
Implication: Decrease in Demand in among Indian consumers
Future Implication:
Positive: Reduction in Interest rate and fall of inflation.
Negative: Less spending may result in low taxes to government, resulting in widening of fiscal deficit.
Link: https://docs.google.com/a/iimranchi.ac.in/file/d/0Bxlidt2PeJnucEl2T3NYdk9mYlE/edit
Shoppers postponed buying jewellery in September quarter till this festive season because they were expecting gold
prices to fall.
Implication: Reduction in CAD and domestic consumption.
Link: https://docs.google.com/a/iimranchi.ac.in/file/d/0Bxlidt2PeJnuckFfbUI4aFlWWGM/edit

DLF shares slump 28% on SEBI ban order










Dated: October 14, 2014
Link: http://www.thehindubusinessline.com/markets/dlf-shares-tank-25-on-sebi-ban-
order/article6499301.ece
Securities and Exchange Board of India banned Indias largest real estate developer DLF
Ltd and six officials from accessing the capital markets for three years. The board found
them guilty of engaging in unfair trade practices by suppressing material information
and raising public money through an IPO.
The Sebi ban has led to worry among buyers who have invested in DLF projects. There is
widespread apprehension that the projects which have already been delayed will be
pushed back further or even get stalled if the company isnt allowed to raise money. DLF
shares fell 28.46% to Rs. 104.95 on the BSE.

FIIs pull out Rs 4,000 crore in October
How malls are trying to counter online shopping portals
Dated: October 17, 2014
Link:http://articles.economictimes.indiatimes.com/2014-10-17/news/55148561_1_indian-
markets-other-emerging-markets-global-markets
The Indian market -- which rallied by over 24 per cent so far in the year 2014, outperforming
most of the developed markets (DMs) and emerging markets (EMs) -- came under a bit of
selling pressure in the month of October.
One reason outlined by most analysts is the fact that India has been able to manage its macro
situation relative well compared to other emerging markets. Growth is bouncing back. There is
revival in the investment cycle and business sentiment. GDP growth for Q1 FY15 has come in
at 5.7%, surpassing consensus expectations. Investment activity is expected to revive soon, say
analysts.
Dated: October 17, 2014
Link:http://articles.economictimes.indiatimes.com/2014-10-17/news/55148137_1_mall-
owners-online-retailers-online-shopping-portals
With online retailers such as Flipkart and Amazon seen cornering a chunk of the expected
growth in India's overall modern retailing, industry insiders say a lot of mall owners are
nervous.
Looking at the prospects of the flight of a chunk of middle class consumers to online
channels, malls are coming up with new offerings to attract consumers. Infiniti Mall in
Mumbai plans an e-commerce site where its tenants can sell online, but consumers must visit
the mall to take the delivery. Across town, Palladium Mall has doubled the number of events
such as musical evenings to fashion shows this year.

RBI sells 65 per cent of Rs 10,000 crore government bonds ET Bureau

Higher cash payout dampens junk loan market










The Reserve Bank of India on Monday sold about 65 per cent of Rs 10,000 crore
government bonds stipulated for an unorthodox open market operation or OMO, which was
primarily aimed at sucking excess funds from the system.

These bonds have varying maturities of seven, 12 and 13 years. Yields were priced at about
20-25 basis points above the liquid ten-year benchmark bond. However, the central bank
did not accept bids for the bonds with three-year maturity as it did not find any favourable
quote. According to bond dealers, the falling bond yields, which move inversely to prices,
may have prompted RBI to conduct the OMO sales. The central bank, which has a fierce
anti-inflation stance, is likely to cut interest rates only if lower inflation persists.

Government bond yields are expected to fall further on the latest benign inflation data and
improvement in India's macroeconomic fundamentals. The benchmark yield may dip to
8.25 per cent or even lower in the next three-six months.


Dated: October 15, 2014

RBI has changed rules so that Asset Restructuring Companies pay more cash for stressed assets. The
impact has been felt across banks including public sector banks and ARCs which led to dampening of
the market.

http://economictimes.indiatimes.com/news/economy/finance/higher-cash-payout-dampens-junk-
loan-market/articleshow/44819284.cms

How falling crude oil prices will benefit India ET bureau



Brent crude oil fell below $88 a
barrel on Monday, its lowest in
almost four years, a boost for the
country, since it imports nearly two-
thirds of its requirements.
The slide in crude oil prices to four-
year lows is a huge positive
for India as the country depends on
imports for more than three-fourths
of its consumption. It is expected to
help improve pivotal macroeconomic
indicators such as current account
and fiscal deficit besides giving a
fillip to energy firms, tyre makers
and consumer companies.
India's net imports of crude oil
amount to about a billion barrels
every year. So, if crude oil prices
average about $100 per barrel in the
current fiscal (vs about $106 per
barrel in the first six months of the
financial year), the country's import
bill will fall by $10 billion (about Rs
61,000 crore), which is close to one-
third of the current account deficit or
CAD in 2013-14. Analysts say that if
crude oil averages at $100 per barrel
this fiscal, India's CAD will reduce to
1.3% of GDP from 1.7% in the
previous year.
Cooling crude prices will also help
bring down fuel under-recoveries
(cost of selling LPG & kerosene
below cost), lowering the
government's share in the total
under-recoveries and, therefore,
resulting in narrowing of fiscal
deficit.

Dated: October 14, 2014
Iraq sets its November Barash Light
crude at $3.15 below the average of
Oman and Dubai prices for buyers in
Asia, Somo said in an email statement.
This is the biggest discount since
January 2009 and compare with $2.50
for October.
Ebola and food security topic at World Food Prize Associated Press









Dated: October 13, 014

The West African Ebola epidemic and its impact on food security will be a topic of
discussion as international dignitaries gather for the annual World Food Prize
award ceremony to discuss the challenges of feeding a growing world population.
Sierra Leone and Liberia are among the nations represented at the World Food
Prize Foundation's three-day symposium held each year in conjunction with the
awarding of the prize. More than 2,500 confirmed cases of Ebola and 753 deaths
have been reported in Sierra Leone, the World Health Organization said last
week. The country's agriculture minister for forestry and food security and a
special adviser to Koroma, Monty Jones, the 2004 World Food Prize laureate,
plans to attend. Quinn said discussion will include the immediate impact of the
Ebola epidemic on food production and distribution in the countries at the center
of the outbreak. The gathered experts also will talk about how such events affect
the ability to provide enough food for an estimated global population of 9 billion
by 2050, Quinn said.
The Food and Agriculture Organization of the United Nations said last week that
Ebola is already reducing the purchasing power of tens of thousands of
vulnerable households in Guinea, Liberia and Sierra Leone, "which means less
food on their plates and increased nutritional risks for families already on
subsistence diets," Bukar Tijani, a regional representative for the FAO in Africa,
said in a statement. "Fear and stigmatization also threaten to reduce agricultural
activities, thereby placing food security at risk."

High Street clothing sales take a battering as Indian summer leaves coats on rails
at Marks & Spencer and Next This is Money.co.uk
Fall in inflation due to dip in global commodity prices: P Chidambaram



Dated: October 15, 2014
Clothing sales at Marks & Spencer and Next look set to be the latest casualty of the Indian summer as
new data shows a record low in High Street fashion.

Footwear and clothing were the worst performing categories in September, according to the BRC-KPMG
retail sales monitor. It reports today record declines since April 2012 and March 2013 respectively,
casting a pall of gloom over the embattled clothing retailers.

Marc Bolland, chief executive of Marks & Spencer, has been under intense pressure to show a raft of
initiatives have kick-started growth in his troubled clothing arm.
The warm September weather, which has prompted shoppers to delay buying winter coats and boots,
will not be a welcome development.

David McCorquodale, head of retail at KPMG, said: After a bumper summer, this is a disappointing
outcome for retailers and has undoubtedly reversed some of the sales gains made in August.

However, if temperatures drop to a more seasonal level this cooler weather will quickly turnaround
retailers fortunes and help them to sell their autumn-winter ranges.
M&S shares fell 3.2p yesterday, closing at 383.9p, while Next dropped 50p to 6390p.
Overall UK retail sales were down 2.1 per cent on an underlying basis from September 2013. On a total
basis, sales were down 0.8 per cent, against a 2.4 per cent rise in September 2013.
This is the weakest performance since December 2008.

Dated: October 15 ,2014
Reacting to the statement made by Finance Minister Arun Jaitley that the fall in inflation is due to
reform steps taken by the NDA government, P Chidambaram attributed it to dip in global commodity
prices.

http://economictimes.indiatimes.com/news/economy/indicators/fall-in-inflation-due-to-dip-in-
global-commodity-prices-p-chidambaram/articleshow/44823871.cms

WPI inflation dips to a 5 year low of 2.38%
Modi government proposes big bang labor reforms
Andhra Pradesh government to issue municipal bonds
Dated: October 15, 2014
WPI and CPI fell sharper than expected fuelling speculations of early rate cut by RBI.

http://economictimes.indiatimes.com/news/economy/indicators/september-wpi-inflation-dips-to-5-year-
low-of-2-38-as-food-prices-ease/articleshow/44810590.cms
Dated: October 15, 2014
Big ticket labor reforms that would result in bringing in more transparency and make it easier for
workers to access various welfare schemes will be unveiled by the government.

http://economictimes.indiatimes.com/news/economy/policy/inspector-raj-set-to-be-history-with-
modi-govts-first-big-bang-labour-reform/articleshow/44818312.cms

Dated: October 15, 2014

Andhra Pradesh government proposes to issue municipal bonds to raise funds for the development of
the new capital apart from the financial assistance thatll be provided by Centre.

Read more at :http://economictimes.indiatimes.com/news/economy/finance/andhra-pradesh-
government-to-issue-municipal-bonds-to-raise-fund-for-new-capital/articleshow/44826607.cms
Dollar gains on cheery U.S. jobless claims, industrial output data
RBI chief Rajan says in talks with govt on monetary policy framework
Natural gas falls on U.S. supply report, weather forecasts
Dated: October 16, 2014
U.S. jobless claims and industrial production sent the dollar firming against most main currencies on Thursday. In
U.S. trading on Thursday, EUR/USD was down 0.24% at 1.2804. The U.S. Department of Labor reported earlier
that the number of individuals filing for initial jobless benefits in the week ending Oct. 11 fell by 23,000 to 264,000
from the previous week's total of 287,000.

Read more at: http://www.moneycontrol.com/news/rupee/dollar-gainscheery-us-jobless-claims-
industrial-output-data_1205833.html?utm_source=ref_article
Dated: October 16, 2014
Reserve Bank of India (RBI) Governor Raghuram Rajan said on Thursday the central
bank was in discussions with the government over the country's monetary policy
framework, calling the relationship between the two sides "cordial."
http://in.reuters.com/article/2014/10/16/india-rbi-government-monetarypolicy-
idINKCN0I516C20141016?type=economicNews
Dated: October 16, 2014
Natural gas futures moved lower on Thursday on news of rising U.S. stockpiles, while forecasts for mild
fall weather also pressured the commodity lower, though bottom fishing brought prices up from earlier
lows. On the New York Mercantile Exchange, natural gas futures for delivery in November were down
0.12% at $3.796 per million British thermal units during U.S. trading. The commodity hit a session low
of $3.750, and a high of $3.832.

Read more at: http://www.moneycontrol.com/news/commodities/natural-gas-fallsus-supply-report-weather-
forecasts_1205834.html?utm_source=ref_article

Fuel reform: Government deregulates diesel prices, hikes gas prices

_____________________________________________________________________________________
_____________________________________________________________________________________
Dated: October 18, 2014
Possible Impact : 1.Reduction in Fiscal
Deficit, 2.Impact on Inflation
depending on global price of diesel
Link:http://indianexpress.com/article
/business/business-others/diesel-
deregulated-prices-cut-by-rs-3-37-
a-litre/