April 18, 2021

Rupee Suffers Another Record Low

HONG KONG — The beleaguered Indian rupee continued its steep descent on Wednesday, hitting a record low of 64.54 to the dollar amid global nervousness about the timing and scale of the Federal Reserve’s likely scaling back of its bond-buying program.

The 2 percent drop took the Indian currency’s decline since early May to 20 percent, raising worries about the impact it will have on the country’s substantial import bills and on an already large current account deficit.

Indian stocks also dropped. The Sensex index closed down 1.9 percent and the Nifty ended 1.8 percent lower. Both indexes have dropped more than 10 percent since late July.

Signs that the American central bank will reduce its bond purchases soon set off big outflows of cash from emerging markets around the world in May, and the reverberations continued Wednesday. A drop in the Indonesian currency sent the rupiah to 10,755 per dollar, its lowest level since April 2009. The South African rand and Brazilian real likewise are now at their weakest level since early 2009. Indonesia also has a large current account deficit.

In India, however, the rupee’s latest decline comes on top of a slide that began in 2011, when mounting signs of reform gridlock began to cast a serious pall over the once-rosy India story. In total, the rupee has now sagged more than 40 percent since mid-2011, and many analysts warn that it could fall even further.

The Indian government, scrambling to halt the slide, have in recent weeks rushed out measures like higher import duties on gold and silver and restrictions on the amount that local companies can invest overseas without seeking approval. The Reserve Bank of India also appeared to have intervened in the currency markets on Wednesday to stem the rupee’s fall, Reuters reported, citing traders.

So far, however, these efforts have not succeeded in restoring investor confidence, which had already been undermined by slowing growth and by the prospect that elections next year may handicap efforts to push through much-needed structural reforms.

“Rupee sentiment is very fragile,” Brian Jackson, global currency strategist at Coutts, wrote in a research note. It is hard to see the central bank “being able to control the rupee’s fall without further impeding growth, either by pushing up bond yields or making it more difficult to access bank financing,” he added.

Kim Eng Tan, senior director of Asia-Pacific sovereign ratings at Standard Poor’s, said in an e-mailed statement that recent government measures to restrict capital outflows had increased uncertainty among foreign and domestic investors.

If this continues, he said, “business financing conditions could deteriorate further and investment growth could slow further. India’s long-term growth prospects could weaken on a sustained basis, with negative implications for the sovereign credit fundamentals. It is, however, too early now to tell if this scenario will come to pass. This will be largely dependent on policy makers’ reactions to these latest developments. We maintain a negative outlook on India’s BBB- sovereign credit ratings.”

Article source: http://www.nytimes.com/2013/08/22/business/global/rupee-suffers-another-record-low.html?partner=rss&emc=rss

India’s Aakash Venture Produces Optimism but Few Computers

THE idea was, and still is, captivating: in 2011, the Indian government and two Indian-born tech entrepreneurs unveiled a $50 tablet computer, to be built in India with Google’s free Android software. The government would buy the computers by the millions and give them to its schoolchildren.

Enthusiasts saw the plan as a way to bring modern touch-screen computing to some of the world’s poorest people while seeding a technology manufacturing industry in India. Legions of customers placed advance orders for a commercial version of the tablet, thrilled at the prospect of owning tangible proof that India was a leader in “frugal innovation.”

Even the secretary general of the United Nations, Ban Ki-moon, lavished praise on the audacious project, called Aakash, the Hindi word for sky. “India is a superpower on the information superhighway,” Mr. Ki-moon said at a ceremony in November at the United Nations headquarters in New York.

Stoking expectations was Suneet Singh Tuli, the charismatic C.E.O. of the small London-based company that won the bid. “I am creating a product at a lower price than anyone else in the world with the hope that it impacts people’s lives and I make money out of it,” he said in a recent interview.

But over the last few months, it has become increasingly evident that Mr. Tuli, 44, and his older brother, Raja Singh Tuli, 46, are unable to deliver on most of their ambitious promises.

The Tulis acknowledge that their company, DataWind, will not even come close to shipping the 100,000 tablets it has promised to India’s colleges and universities before its year-end deadline. Most of the 10,000 or so tablets delivered through early December were made in China, despite the company’s early pledge to manufacture in India. Financial statements filed with British regulators show that the company is deeply in the red.

And the project’s entire premise — that India can make a cheap tablet computer that will somehow make up for failures of the country’s crippled education system — is fundamentally flawed, according to some experts in education and manufacturing.

Leigh L. Linden, an assistant professor of economics and public affairs at the University of Texas at Austin who has studied the use of technology in schools in India and other developing countries, said that, at best, computers merely match the performance gains from far less costly projects that involve hiring additional teachers or teaching assistants. And in some cases, Professor Linden said, the introduction of computers can actually lower students’ test results.

“Based on the available research,” he said, “this would not be the most effective strategy for education in developing countries.”

The notion that India’s weak manufacturing sector can catch up to China in advanced computer hardware also strikes some experts as far-fetched. “China became the manufacturing center of the world, and India missed that boat,” said Surjit S. Bhalla, an economist and managing director of Oxus Investments.

So far, the Indian government is standing firmly behind the project.

“All pathbreaking ideas do look too ambitious when conceived,” the Ministry of Human Resource Development, which oversees the Aakash project, said in an e-mailed statement. Aakash is “an all-encompassing project,” not just the creation of a tablet computer, the ministry said. With it, the government plans to create “an entire manufacturing ecosystem” in India.

INTERVIEWS with DataWind executives, government officials, Chinese manufacturers, business partners and former and current employees paint a picture of a small family company that was overwhelmed by a complex project that even China’s cutthroat technology manufacturers would find challenging to execute at the price expected by the government.

Leading a tour last month of the company’s small touch-screen factory in downtown Montreal, Raja Tuli, DataWind’s co-chairman and chief technology officer, said he had initially opposed his brother’s desire to bid on the Aakash contract, and he expressed lingering regrets.

“We got stuck in it,” he said. “We’re doing our best.”

DataWind’s real goal, Mr. Tuli said, is to sell low-cost wireless Internet access for tablets in developing countries like India. He said DataWind’s proprietary data compression technology, which made its debut in Britain years ago with a device called the PocketSurfer, efficiently delivers Web pages over older, slower cellphone networks.

Pamposh Raina reported from New Delhi and Amritsar, India, Ian Austen from Montreal and Heather Timmons from New Delhi. Mia Li contributed reporting from Beijing.

Article source: http://www.nytimes.com/2012/12/30/technology/indias-aakash-venture-produces-optimism-but-few-computers.html?partner=rss&emc=rss