1. November 2010, Volume: 7
Sensex 19136.61 Nifty 5751.95 Dollar 45.84 Gold 20385 Silver 41764 Crude Oil ($) 85.56
Investeurs Chronicles
INSIDE
• Current Chronicles
• Cover Story – Bihar - New
Found Confidence &
Exuberance Returning
Growth
• Open Forum – Is India
Story full of sound and
fury signifying nothing?
• Emerging Markets
• Outlook – US Dollar
• Financial Q
• In Focus – Emerging
scams in Emerging India
Investeurs Consulting P. Limited
S-16, U.G.F, Green Park Ext. New Delhi-110016, www.investeurs.com

2. Current Chronicles
Axis Bank, India’s fourth-largest bank in terms of market India plans another round of export sops in January next
capitalization, has acquired the investment banking and year to help the country’s manufacturers tide over weak
equity capital market business of Enam in an all-stock deal demand in their traditional markets such as the US and
valued at Rs2,067 crore. Following this, Enam will become EU. The sectors that might benefit include textiles, leather,
an Axis Bank subsidiary, headed by Enam Director Manish handicrafts and some engineering goods, although all
Chokani. these sectors too have started registering growth.
More… More…
A new study by an international watchdog on the illicit flight of
Mahindra today said it has signed a definitive agreement
money from the country, perhaps the first ever attempt at
with Ssangyong Motor Company Limited (SYMC) to acquire
shedding light on a subject steeped in secrecy, concludes that
70 per cent stake in the ailing South Korean auto maker at India has been drained of $462 billion (Rs 20,556,848,000,000 or
a total cost of USD 463 million (about Rs 2,105 crore). The over Rs 20 lakh crore) between 1948 and 2008. The amount is
company said in a statement that it expected the deal to be nearly 40% of India’s GDP, and nearly 12 times the size of the
concluded by March 2011. More… estimated loss to the government because of the 2G spectrum
scam. More…
More than three months after the $8.48-billion Cairn-
CBI has arrested eight finance executives, including the
Vedanta deal was announced, Cairn Energy Plc today
chief of LIC Housing Finance, accusing them of taking
sought government permission under three production
bribes to give big corporate loans and sending shockwaves
sharing contracts (PSCs) to sell its stake in Cairn India.
through stock and property markets at a time the
Cairn is selling 40 to 51 per cent stake in Cairn India, the
government is buffeted by a series of high-profile
operator of the nation’s largest onland oilfield, to London-
scandals.
listed Vedanta for $6.65 billion to $8.48 billion.
More…..
More…

3. C Bihar - New Found Confidence & Exuberance Returning Growth
o If one was to draw a list of NPA’s of India in terms of state, there are every possible chances of
Bihar figuring at the top. Not anymore. Bihar is steadily losing its top slot from this list, and it
v does not seem to mind. From the corruption capital of the country to one of the most
transparently run states in the recent times, Bihar has surely come a long way. Not long back,
e crime was the only flourishing industry in the state. Now, figures of this industry suggest a
deep run recession, and no one is complaining.
r
Miracle State
S This has become Bihar’s introductory remark at national & international forums. Overdue
economic reforms and increased agricultural production have enabled state to achieve an
t outstanding growth rate of 11.03% during 2005 to 2009. Figures might not appear impressive
when compared to other best performing states of India (Maharashtra, Gujarat & Kerala), but if
o put against a dismal 3.9% a year SDP growth from 1999-2004, growth has been definitely
stupendous.
r
So, what has changed? Precisely, mundane things of living became mundane for Bihar too.
y Until 2007, kidnapping & ransom industry was running a parallel economy in Bihar. Law &
order was in tatters. Against 411 cases of kidnap reported in 2004, there has been only 55 so
far in 2010. Murders have fallen from a high of 3,861 in 2004 to 2,295 this year. A lot has to
be still done but at least change is evident.
Star Performers
Although it has been an all-round performance by the state, there are three sectors which have
really stood out in such an astounding growth. Top slot goes to construction industry which
has registered 35.8% growth followed by communication with 17.68% and trade, hotel &
restaurants with 17.7%.Tele density has shot up to 22.18% from a meager 5.18% in 2006.
Internet connections in rural areas have gone up by leaps & bounds. In fact, two districts of
Bihar, Muzaffarpur & Khagaria have the highest number of internet connections.
Road connectivity is another feather in cap. About 2,417 roads were constructed in the state in

4. Cover Story “Bihar- New Found Confidence & Exuberance Returning Growth”
2008-09, while 415 kms were made in 2005- third of the national average.
06. It has contributed immensely to economic
development in the rural hinterland. Bihar has witnessed economic growth in patches
in past. However, it has been always eclipsed by
This improved state has attracted 3.46 lakh volatility. Such high volatility in growth figures
tourists in 2009 compared to 61,000 in 2003. has been on account of dependence of state
Per capita income has risen from 10,415 per economy on only agriculture. Even in
year in 2008 to Rs. 13,959 in 2009. It was Rs. agriculture, much is needed to be done.
7,443 in 2004-05. Despite rise in per capita Irrigation, flood control & drainage system have
income, consumer price index increased by 90 to be taken care of to avoid stagnation in this
points in the state between 2007-08 and sector. However, to tackle recurrent volatility,
November 2009-10 while the all India index economy needs to be diversified. Manufacturing
rose by 115 points. accounts for just 4-5% of the state income, with
the major share coming in from the
Is picture so rosy? unregistered sectors. That is, organized
Work in progress manufacturing still accounts for just under a
Some argue that recent growth in Bihar has
In India, growth has been largely driven by the quarter of the manufacturing activity in the
been on the back of the remittances by the
lesser populated peninsular India while the state. This segment has to be revived for
migrant bihari workers, whose number has
densely populated, mainland states have been economic growth to be stable.
grown to 5-6 million out of 100 million
retardants. The transformation of Bihar is,
population of the state.
therefore, vital to the transformation of India. Although, gradual, change in the state has been
Others lament about the fact that this
development has been largely in Patna. There steady. Considering that income of Bihari
Bihar has set its foot on the development path but immigrants is 3-4 times the state income per
is a deep disparity between capital & other
it remains beset with several challenges. While head, and they constitute 5-6 million of the total
areas of the state. Patna district has only 3.4%
Bihar has 8.5% of the India’s population, it 100 million Bihar population, that would have
of Bihar’s area and 5.7% of its population, but
accounts for a meager 1.6% of the total national been an addition of 12-20% to GDP-that is 0.9-
gets nearly 44% of the money spent by the
GDP. Landless farm laborers constitute about half 1.6% a year. It reflects the main growth engine to
state government. On one hand are couple of
of the state’s work force which is higher than 27% be within the state itself and not reliable on the
rich districts with average income of about
national average. State’s per capita, though immigrant population. Law & order has
Rs.37,000 & on other side, poor districts with
improved in last half a decade, still stands at one definitely contributed to this change.
average income of around Rs.5,000.

5. Cover Story
Infrastructure has been improving, total outlay on social
Election 2010 – A milestone……
sector has increased 10 times to Rs. 1,455 crs in 2009-10.
Despite all the pros & cons, something which stands apart is Land where good governance was a good distance thought for most
the new found confidence & exuberance returning to the of its inhabitants. Where, good governance meant giving, & that too
state. Bihar has shown that with efforts, intention & apparently to few caste constituencies for electoral purpose; Bihar
integrity involved in the functioning, turn around in any elections 2010 have broken that jinx for sure. This election is
situation is possible. outstanding & commendable for the state whose politics was used to
run on Muslim Yadav combination. This time people of the state
If a state accounting for around 9% of India’s population,
voted for development, for growth & for other common needs than
can lift itself up, it will lift the nation up with it.
on any casteism. To Nitish Kumar’s credit he reportedly didn’t refer
even once to caste during the poll campaign.
The charm of the Nitish Kumar’s governance lied in reviving hope
of the people of Bihar in their state. This was amply reflected in the
current elections. Now, much is expected out of second term of
Nitish Kumar’s government. Any significant growth in one of the
biggest BIMARU states of India is vital & crucial for over all progress
of the country. People of Bihar have addressed this issue at their
level reasonably well. Now it is turn of the state government.

6. Open Forum Is India Story full of sound and fury signifying nothing?
“Pizza reaches home faster than Ambulance and Police?”
“Car Loan @ 6% & Education Loan @ 12%?”
“Rice is Rs.40 but Sim card is Rs.10?”
“Far more Indians have access to cell phones than to basic
sanitation?”
Every citizen dreams of a nation which is true, beautiful and egalitarian.
India has progressed as a nation in the last few decades and is
increasingly taking its place on the global stage and in international
forums as a 21st century superpower. India has emerged stronger and
more resilient to any global crises so far and is expected to be the
world's fastest growing economy by 2018, according to Economist
Intelligence Unit, a research arm of the Economist magazine.
India is its people - the teeming millions who struggle for a foothold in
today's world. India is the hapless middle class for whom every new
day brings with it the reality that life is not easy, but that they have to
live, nevertheless. India is the slum dwellers, who do not know life
beyond the hell-holes that they inhabit.
Even today, a baby of a rural woman dies she couldn't reach the
So the question arises - Does this so-called growth reach Indians private hospital on time. The place she did reach -- a government
living at the lowest rung of the society? Does 8-8.5 per cent rise in primary health centre -- did not have the medical officer (who
gross domestic product indicate better living conditions for the may/may not have been busy getting a piece of that 'growth' at
poorest of the poor? that time).
Or
Though India is one of the world's top-10 performers in terms of Take the case of a tribal woman in India's heartland -- whose life
income growth over the last 40 years, but is far outperformed by much is going to be changed totally -- because 8 per cent GDP
poorer countries in terms of health and education. We need to look at translates to her being evicted out of her ancestral home and her
what is happening to the poorest of the poor,” land dug up for bauxite or chromium or hematite ore or coal.

7. Open Forum
fulfill ‘basic needs' - livelihood, food, clothing, shelter, education, health (mental
and physical), security, pleasure, dignity, choice, for all people of the country. In
contrast, the most published indicators seem to point that number of our dollar
billionaires is on the rise. The names of the top industrial house owners are now
part of the global rich list and going by the public display of their spending, it
does seem that they are getting richer.
Thus, if we look closely, the growth is happening across India in the context of
the rapid spread of information and communication infrastructure -
approximately 700 million mobile connections, a fast growing Internet network,
and widespread access to media - which is allowing information and ideas to
travel faster than ever. As a result, development in India is perhaps uniquely
disruptive in global history: India is transitioning from a large, rural, agriculture-
As for education, the least said the better. A lot of big talk is based economy to a modern. And thanks to pervasive media access, this
doing the rounds about free and compulsory education for all. transformation is widely visible to much of our population, whether they are
But nearly 50 per cent of India's children are still not going to part of the growth story or not.
school. We must remember that every child who is not in school
The nature of the government's role has shifted significantly in the years since
is doing labor somewhere -- at home or outside. Is there a
Independence and over the years, the government has substantially changed the
political zeal to deal with child labor, a shame for a country that
means by which it seeks to achieve this goal.
boasts of 8.5 per cent growth? Let's face it: we have absolutely
failed our children we have not been able to give them even a
The Indian state has taken a place 'on the balcony': focused less on direct
fraction of their rights.
interventions in the economy, instead functioning as the player who possesses
Law and order is the backbone of any organized society. A recent broad oversight, establishes independent regulatory institutions; makes the
article says that India averages only 142 policemen per 100,000 social investments necessary for inclusive growth; and finally, influences the
populace when the UN standard is 222. If we were to extrapolate economy through policy and incentive-led investment, taking advantage of
it to a billion plus population, we have a deficit of 800,000 entrepreneurial innovation where possible. It’s time we wake up and focus on
policemen. It is, therefore, a pressing issue that needs to be inclusive growth so that India emerges as a developed nation in 2020.
taken care of on a priority basis.
In spite of fabulous economic growth, we have not been able to

8. Russia says in final stage of WTO accession
Emerging Markets
The gap between yields on benchmark ruble Philippines Growth slower than forecast
talks
debt due in 2012 from OAO Gazprom and its RESTRAINED state spending and a protracted
Russia has entered the final stage of its 17-
2013 dollar bonds climbed to 286 basis points, dry spell put the brakes on third-quarter
year-bid to join the World Trade Organization
or 2.86 percentage points, the widest since economic growth but the Philippines remains
and outstanding issues should be resolved in
March 1, from 29 basis points in May, according on track to exceeding this year’s target, the
the coming months, Economy Minister Elvira
to data compiled by Bloomberg. Bank Rossii has government said.
Nabiullina said. The comments indicate that
reduced cash by selling at least $3.8 billion of Growth slowed to 6.5% in July to September,
the largest economy still outside the 153-
foreign currency this month, matching the below the government’s 6.7-7.7% forecast. It
member WTO could join the body that
amount for all of October, which was the most in was lower than the first quarter’s 7.8% uptick
regulates world trade in the course of 2011.
almost two years, First Deputy Chairman Alexei and an upwardly revised 8.2% for April to
U.S. backing for Russian membership, as part
Ulyukayev said in a Bloomberg News interview. June. The contraction was the Philippines’
of a broader improvement in relations
first in six quarters and added to signs of a
between Moscow and Washington, injected
Brazil New Economic Team Emphasizes broader slowdown in Asia. After a strong
new momentum into Russia's bid in
Stability, Spending Cuts finish to 2009 and start to 2010, Asian
September.
In what appeared to be an indication of a economies have lost momentum as export
The outstanding multilateral issues, of
startling change of course for Brazilian policy, growth has slowed and the impact of
interest to about a dozen countries, include
the top economic advisers named by Brazilian government stimulus around the world fades.
the level of subsidy that Russia will pay its
President-elect Dilma Rousseff said the new
farmers -- a sensitive topic as other WTO Thailand may impose more baht measures
administration was preparing firm measures to
members try to cap agricultural support Thailand is preparing to impose additional
control spending in an effort to assure declining
among them under the long-running Doha measures to stem speculation on appreciation
interest rates, government deficits and debt.
round. of its currency. The central bank governor
Brazilian Finance Minister Guido Mantega, who
has gained a reputation for allowing loose announced the decision in a media briefing.
Ruble Squeeze Sends Yields to Nine-Month
spending and credit conditions, said the Thailand is not alone. The baht has surged
High Over Dollar
government was planning to implement more than 10 percent against the dollar this
Russian companies are facing the highest
spending controls in 2011 as part of its aim to year.And the Bank of Thailand has other
ruble borrowing costs in nine months
cut the net public sector debt to 30% of gross measures at its disposal if need be one being a
compared with dollar debt as the central bank
domestic product over the coming four years. tax on financial transactions, sometimes
drains cash from the banking system.
The net public sector debt stood at 41% as of termed a Tobin tax after James Tobin, the
September. Nobel Prize winner.

9. Outlook on US Dollar
Outlook
During the first round of quantitative easing
the Fed bought $1.725 trillion of government Call Rates as on 26th November 2010 → 3.30% -
and mortgage bonds between November 2008 6.64%
Aluminum (1 kgs) 102.30
and March 2010. In the past three years the Commodities
Copper (1 Kg) 378.05
Dollar Index measuring the currency
performance has ranged from a low of 70.698
Zinc (1 kg) 95.55
in March 2008 to as much as 89.624 in March pressure. With prospects of remaining PIGS
Steel (L) (1000kg) 25890
2009. This year’s high was 88.708 in June. countries i.e. Portugal and Spain looking
bleak, common currency is expected to be
The dollar index against those of six major
strained further. Last week saw further boost
As on 26th November 2010
trading partners has climbed as much as 5.1
in US dollar rose after North Korea fired Forex
percent from its low this year on November 4. Forward Rates against INR as on November 26,
artillery at a South Korean island. Volatility in
2010
However, soon after dollar marked a decline in
the currency market on account of the Korean Spot Rate 1 mth 3 mth 6 mth
its value on the expectations of a massive US 45.75 46.07 46.48 47.02
tension and European debt crisis has forced
Euro 60.6 61.01 61.55 62.24
second round of quantitative easing by the Fed.
investors and speculators to look for a safe Sterling 71.83 72.30 72.94 73.76
Announcement by the Fed officials that it Yen 54.63 55.04 55.55 56.25
haven which has traditionally been USD. This
Swiss 45.64 45.98 46.41 46.98
would buy 600bn$ of US government debts as Franc
will strengthen US$ in short term.
an economy booster, certainly fell in line with Source: Hindu BusinessLine
the market expectations. This will have direct Shifting focus on Indian market, since
November 10, FIIs have been net sellers in the Libor Rates as on November 26, 2010
implications on the long term interest rates,
Indian equity market of more than Rs 1,200 Libor % 1 mth 3 mth 6 mth 12 mth
thereby, stifling prospects of a sharp US dollar
US 0.26 0.29 0.46 0.78
recovery. Hence, US$ is projected to depreciate crore. This is in contrast to the net buying of
Euro 0.75 0.97 1.21 1.49
in the long term with Fed’s QE-II money being more than Rs 8,700 crore by FIIs in the first Sterling 0.58 0.74 1.03 1.49
10 days of November. Such market sentiments Yen 0.12 0.19 0.36 0.60
circulated in the economy.
Swiss Franc 0.14 0.17 0.24 0.52
will continue, at least in short term with Forward Cover % as on November 26, 2010
Although dollar appears set to depreciate in the
renewed interest of investors in US$. 1 mth 3 mth 6 mth
long term, short term expectations are US 8.24% 6.38% 5.58%
Consequently, US $ is expected to remain
completely opposite. Dollar is expected to gain
strong against Rupee in short to medium term
Euro 7.83% 6.22% 5.42%
ground in near term. Sterling 7.62% 6.15% 5.39%
but depreciate over a longer period horizon.
Yen 8.91% 6.75% 5.97%
First Greece, & now, Ireland approaching Euro Rs/Dollar Price range over a long period is Swiss Franc 8.80% 6.75% 5.91%
expected to be in range of 45-46. Source: Homefinance.nl
Union for bail out, euro has been battling under

10. Financial Q In Focus
1. The double-entry bookkeeping system is the basis of Emerging Scams of Emerging India
the standard system used by businesses and other
organizations to record financial transactions. From
CBI exposed a racket in which key officials in large finance firms, including
which country does it originate?
banks, sanctioned large-scale corporate loans, while disclosing confidential
2. British Virgin Islands is mostly notable for what is
information in return for bribes.
not subject to taxation. Which kind of taxation was
introduced there in 2005?
3. Which European country was the first to introduce
paper money in 1661?
4. In 1974, the United States created the Library Group,
an informal gathering of senior financial officials.
What is this group called today?
5. The VAT (Value Added Tax) was invented by a
French economist, Maurice Lauré, joint director of
the French tax authority. Which year was VAT first
introduced?
6. Who owns The Wall Street Journal (January 2007)?
7. Which Stock Exchange, established in 1602, is
considered the oldest in the world?
SEBI is set to investigate trading patterns in stock of firms named in CBI probe
8. What is the scientific study of currency and its
into the bribes-for-loans scam.
history called in one word?
9. Which period of time does a balance sheet Source: www.livemint.com
represents?
10. A business, product or asset that once acquired and Answer of Quiz: 6
paid off will produce consistent cash flow over its
lifespan. Please give us a slang name for such an (1) Diners Club (2) Avis (3) Rasna (4) Infosys (5) Arzoo! Inc. (6) Xerox (7) Small
'animal'...... is beautiful (8) Guinness (9) Wipro