H C Singh

Economic Crisis

There is continuous rise in prices of essential food products like rice wheat, pulses and sugar. Sugar stocks are so low that the imported sager will make the sugar for common man costlier. Sugar prices are likely to be all time high crossing Rs 40 and climbing to Rs 50 a Kg compared to around Rs 30 per kgbefore crisis and import. With increase in the price of sugar by 30% or so all types of sweets, during festival season, will be offered at double the price. This will hurt common man, though Government is thinking of supplying 2 Kg sugar to each family below poverty line. But the type of economic and social structure that we have it is doubtful whether even 10% families below poverty line will actually get the 2 kg sugar at existing price or with subsidy.

As total sugar requirement of the country is 23 million tonners while indigenous production during 2009-10 is to be 15 million tonners. It means India will be imparting during current year 8 to 10 million tonnes of sugar. Besides burden on consumers it will be burden on India’s financial economy which will be becoming budget deficit further.

In addition to sugar, because of draught in almost half of India, prices of other edible commodities will also rise.

September 17, 2009 Posted by | India | , , , , | Leave a comment

Steep decline in Tatas Net Worth

It has been pointed out by Mobis Philpose and Ravi Anantha- Narayan in Mint magazine that “Tata Motors tangible net worth goes negative”. Tata Motors debt as of today is Rs 34,974 crore, borrowing from 24 Banks, including State Bank of India, Citigroup inc, Standard Chartered and JP Morgan Chase & Co. Tata Motors could go bankrupt if the Banks had denied loans or tried to recover loans already paid. “The reason Banks aren’t running scared yet is the strong backing of the parent group Tata Sons Ltd” Banks think that under no circumstance the parent Company will let one of its companies (Tata Motors) default or go bankrupt.

However the final comments of the authors of the article named above is that “Losses continue to mount at JLR (Jaguar Land Rover) and they could be an instance of playing with fire for banks and equity in vesters.”

From the above strongest ever remarks for any Tata Company it appears that Tata Motors are in deep trouble and could go bankrupt. If it happens (Tata Sons don’t save Tata Motors) it will be unprecedented and will have impact on other companies and industries which are struggling but are in heavy debt from the Banks or other sources.

September 17, 2009 Posted by | India | , , | Leave a comment

Economic crisis in Shoe-Making Industry

There is also great set back to shoe making industry in Agra and Kanpur particularly in Agra. It is said in an article by Trepathi and Chaturvedi “it is biting that Agra artisans began by making boots for Emperor Akbar’s infantry and graduated to fancy shoes before getting hit by rising costs and shrinking markets”

There are many factors leading to decline in the manufacturer of, particularly hand-made, shoes. Decline in the demand in India and abroad because of recession, rise in prices of leather and other raw material, competitions from China that is exporting cheap footwear of all types for men, women and Children mostly made from synthetic material but looking fine. USSR had been importing bulk of shoes and boots from India. But after its dismemberment, there is a steep fall in the import. The slowdown has affected 25-30% of the market which has made more than 2 lakhs of workers in great difficulty.

In Kanpur there were 500 tanneries even 30 years back but now there are only 100 because of restrictions of government besides the general decline in demand for leather.

September 17, 2009 Posted by | India | , , | Leave a comment

Textile Industry

Despite recession and losses in other sectors of industry and craft there is glimmer of hope in textile industry if it cuts down prices by 10 to 15% to compete with similar industries in Bangladesh and Cambodia. It is indicated that garments produced in Bangladesh are 15 to 25 % cheaper and in Cambodia 15-20% cheaper than those from India.

Because of high cast, India’s exports of textile and clothing during 2008-09 to USA declined by 14% compared to 2007-8. “to $1-70 billion around Rs 8,700 crores”, Gokaldas Export ltd which employs 42000 workers, its export orders had declined by 20-25 % during 2008-09 despite cut in prices by 10-15%. But now Gokaldas Export are optimistic and are opening a new production unit in Hyderabad to produce about 1,00,000 pieces a month and add Rs 50 crore a year to company’s turnover.

Orient craft ltd, apparel exporter company based in Gurgaon, has decided on price cut of 8 to 10% though it will mean a squeeze in profits but is determined to expand the facilities and export more. Similarly Orient Craft which earned about Rs 800 crores in 2008-09 despite recession, is setting up a new garment factory in Bhilwara (Rajasthan) employing 3000 workers and aims to produce about 2,50,000 pieces a month by the end of November 2009 when the new factory in Bhilwara would become operative.

Above all, the most optimistic textile industry, Alok Industries Ltd plans to boost its sales by 30 to 35% and is setting up two new garment factories during 2009. As it had already earned Rs 800 crores during 2008-09.

September 17, 2009 Posted by | Indian Economy | , , | Leave a comment