Master of International Business Jamia Millia Islamia University

1. Volume 1, Issue 8
February 2012
MI`Bytes
BUSINESS LETTER
ENVIRONMENTAL SUSTAINABILITY – A RISING CHALLENGE IN INDIA
Environmental sus- nologies, will focus on for low carbon devel-
tainability is becoming promoting understand- opment.
a great challenge in ing of climate change,
India as the projected adaptation and mitiga- Even as the call for
economic growth of tion energy efficiency ecological sustainabil-
over eight per cent is and natural resource ity get louder, Indian
expected to result in a conservation. The Na- corporates are seen
growth of energy de- tional Solar Mission pro-actively working
mand Climate Change, aims to increase the towards greener initia-
mainly caused by the share of solar energy tive in proclaiming the
emission in the total energy adopted sustainability
of greenhouse mix, while the mission measures.
gases from energy in- on Enhanced Effi-
tensive human eco- ciency aims at staying The movement to
nomic activities based up to 10000 MW by adopt sustainable prac-
the end of 11th Five tices has emerged as a
on fossil fuels has be-
Year Plan in 2012. priority issue, espe-
come a grim reality.
cially in the backdrop
Half of the 88 indus- India has announced of climate change be-
its intent to reduce coming a stark reality.
trial clusters have
Inside this issue: been identified as emissions intensity of
critically polluted by its GDP by 20-25%
the Central Pollution between 2005 and
Corporate Speaks 2
Control Board. An ac- 2020 thus making a
Keshav Saini
tion plan for its reme- major contribution Blogger and
News Bits 3 to mitigating the cli- Environmentalist
diation is in progress.
mate change. An ex- -environmentabout.com
Global Imbalances 3 The National Action pert group on low car-
Plan for climate bon strategy for inclu-
Quote of the Month 4 change, which hinges sive growth has been
on the development constituted under the
and use of new tech- Planning Commission
to develop a roadmap

2. Page 2 MI`Bytes
CORPORATE SPEAK
Mr. Govind Ambady
CEO
Louis Dreyfus Commodities
LDC is a European trading company, which deals in agro sector; Mr.Govind Ambady
has been at the helm of activities for many years now; sharp, clear, intelligent, dynamic
yet humble.
First of all I want to thank you sir from entire team of publication for taking your pre-
cious time for giving interview
Q1: What is the outlook about the global economy at present?
Ans: It does not look too encouraging. Europe is in trouble and European banks are in bigger
trouble since they financed overspending nations like Greece, Portugal and Spain. Growth in
America is painfully slow and flat; moreover there is sharp slowdown in China and other devel-
oping economies. Universal opinion is, it is a matter of time when Greece will declare default, if
they do declare default then, it is to be seen whether Germany will come to save Euro zone. So, it
all looks pretty messy right now.
Q2: What has been the impact of European and American crisis on your business?
Ans. Well, Food industry is not so badly hit by slowdown, as people need food for survival. In
terms of America, it did not affect much of our business as we operate in many destination mar-
kets. Europe is a bit different story since many companies had the bank claims from European
Banks but it did not affect us as we have diverse bank lines globally. We have become more pro-
active in terms of analysing counterparty risk.
Q3: Is your group banking upon Asian market to increase its revenue?
Ans : If you look 5 years down the line, the potential of American and European market is lim-
ited in growth and if you see demography ,GDP growth and other indicators which tells that
Asia is the potential market in terms of volume. Africa too has potential.
Q4: How do you see significant changes in Agro Commodity trading in times to come?
“INDIA DOES’NT HAVE
Ans: I expect prices to go up as input costs are increasing like that of fertilizers and seeds and
GOOD SUPPLY CHAIN also the demand is going to increase with increasing population and rising living standards.
Looking at Indian economic growth I see India moving towards relying on imports of several
INFRASTRUCTURE ”
commodities including the ones where we have exportable surplus as of now.
Q5: What are the most important operational changes needed at the moment in commod-
ity trade?
Ans: India does not have good infrastructure in terms of supply chain and warehousing. Indian
roads can carry an average load size of 20-25MT as compared to 60-80 MT in developed coun-
tries. Agro commodities being of perishable nature needs proper storage and cooling facilities
which we don’t have as of now.
“100 of the Fortune 500 Q6: In what way talent has become a strategic issue now?
companies have R&D in In- Ans: It has always been a strategic issue and has gained more relevance in recent times as busi-
dia ” ness is becoming more talent centric along with asset based. Attracting and retaining talent now
requires a whole new approach, extending from providing right job profiles, monetary benefits
to changes required in work environment and culture. Young generation goes through a lot these
days due to peer pressure, work ethics and life style requirements.
“India is among 4 countries
that make Supercomputers” Q8: What would be your advice to MIB students?
Ans: Do not get carried away by peer pressure as it does not last long, during initial career
building years concentrate on profile and growth, money will automatically follow. Work hard
and my best wishes for a great career ahead.

3. Volume 1, Issue 8 GUEST COLOUMN Page 3
DOES INTERNATIONAL MONETARY SYSTEMNEEDS OVERHAULING?
The starting of present decade in 2000 saw the emergence of Global Imbalances in the world econ-
omy. The industrial nations led by US started having huge amount of Current Account and Trade
deficits and this was mirrored by huge surplus in the Emerging economies led by the South Asian
nations like South Korea, Thailand and China who exported their way to growth. Global imbalances
can be defined external positions of systematically important economies reflecting distortions or en-
tailing risks for the global economy.
The US after the dotcom bubble of 2000 embarked on extreme loose monetary policy under the chair-
manship of Alan Greenspan, to fend of the recession that occurred in the US economy in 2001. In this
period the US, Current Account Deficit (CAD) saw a manifold increase, from $485 billion in 2004 to
$804 billion in 2006. The other nations to have experienced deficit in this period were France, Italy,
Spain, Australia and UK. With the current account imbalance capital flew from the poor emerging
countries to capital rich countries. This was further accentuated during the Asian crisis, when devel-
oped countries took back all their capital from the Asian markets.
All these measures led to change in the strategy of Emerging Market Economy (EME’s), they shifted
from being net importer of capital to net exporters of capital resulting in Current Account Surplus
(CAS) .Also because of the underdeveloped financial markets and cultural influences, most of these
Asian nations started saving, especially post Asian crisis period when aggregate savings jumped three
fold from 2001 to 2007 and had lifted the marginal propensity to save to 43%. They also started
building huge foreign exchange reserves as sort of war chest to counter the sudden reversal of capital
flows and to intervene in the exchange rates markets so that they could keep their currencies under-
valued against the dollar, since most of the international transactions are held in Dollar.
Problems in the International System
The global imbalances after the crisis have led to divergence between the emerged and emerging
economies and a cause of many spats between the Leaders of different countries. There is now differ-
ent rate of growth in emerging and emerged economies, the advanced economies are reeling under
huge fiscal deficits, low consumer spending and threat of deflation looming large over their heads as
their economies struggles to move out of the recession.
In contrast the emerging economies who have led the emergence of the world economy from the cri- “Fixed investment in
sis, led by China, India suffer from active inflation threat and overheating in the economy .India ex-
perienced double digit food inflation-recently came down to single digits after 16 months- which then China is close to 50%
spread to other sectors and WPI also rose, China also growing at a fast pace manner especially in real
estate sector had to increase the rates and increase regulation so as to prevent the creation of asset
of GDP”
bubbles. These differences in the macroeconomic conditions have led them to have different targets
for their currency value, since majority of EME’s are export depended they want to keep their cur-
rency undervalued.
These different policy goals in the developed and developing nations have led to standoff between
them. The US has now started blaming China for their undervalued currency -yuan ,the US desper-
ately needs to kick start its economy and is blaming China who keeps its currency undervalued so as
to makes its exports competitive.US wants to make these currencies appreciate against the dollar so as
to make US exports more competitive. There is also different Monetary policy conditions in these
two blocs, since the developed countries are growing slowly, most of the advanced Central bankers
have resorted to loose monetary policies so as to keep the long term interest rates low-in contrast to
high rates of Emerging Economies- but this easy availability of capital at near zero rates in developed
countries has led to flow of huge amount of capital to developing markets like India experienced the
highest FII this year. But the nature of this capital flows is also uncertain, they may reverse back any-
time, if some problems develop back home in developed markets and emerging countries need long
term capital to grow stably.
Cont. on Page 4 ..

4. CMS, MIB
QUOTE FOR THE MONTH
Phone: 9891984210, 9871858982
E-mail: sahilbhat_12@yahoomail.com,
soobianahmed@gmail.com
Why join the navy if you can be a pirate?
-Steve Jobs
Global Imbalance
EDITOR-IN-CHIEF:
Prof. SAYED WAJID ALI Cont...from page 4 loose policy of advanced overall global recovery
countries like US are distort- from the financial mess.
Many emerging countries ing the balance of the global
have reacted to these sudden financial order like Fed deci- VIKESH KOUL
flows by imposing Tobin tax, sion of QE 2 would again Researcher,
a tax on capital flows, like lead to huge capital flows to UBS, Hyderabad
STUDENT EDITORS: Brazil, Thailand and countries their countries in search of
like China, India intervened better yields.
SOOBIAN AHMED
in the financial markets to
NAMITA DHAMANI The global crisis has high-
keep the value of their cur-
SAHIL BHAT lighted the inherent fallacies
rency low so as to keep the
exports competitive. in the present monetary ex-
INTERVIEW BY: This disparate monetary ap- change system, a system
proach by developed and which encourages global im-
SOOBIAN AHMED developing markets has led to balances and leads to crisis
SAHIL BHAT “Currency war”, a term after crisis. The fallacy in the
coined by Brazilin Prime system was further extolled
Minister in September .The by Ben Bernanke, the Fed
developed countries wants the chief in a recent speech in
developing countries to hold Frankfurt, he stated “the inter-
less amount of foreign ex- national monetary system has
change and let their currency a structural flaw: it lacks a
appreciate in terms of normal mechanism …..To induce
demand and supply condi- needed adjustments by sur-
tions’. Timothy Geithner, the plus countries, this can result
Treasury Secretary of US has in persistent global imbal-
proposed capping the Current ances.
Account surplus /deficit to 4
% of GDP as huge surplus It now remains to be seen,
lead to imbalance in the how the major economies
world economy .The develop- plug in the loopholes of the
ing countries led by China are monetary system and lead the
retorting by saying that the