Thursday, June 24, 2010
For Kerala, which is a similar country to Philippines, Vietnam, Laos, Cambodia, Indonesia, Brunei, Malaysia, Singapore etc, there are opportunities of benefiting from this ASEAN FTA. More than FTA, the Kerala Government is to be dreaded.
What Keralites should do is to face the challenges thrown by ASEAN FTA. The business equation of Globalisation is " Compete or Die ". So we should compete with the ASEAN countries in products and services and use the opportunities for our benefit.
There is fear in the Keralite mind about the challenges posed by ASEAN countries. Even though the Center says that the pact will work out to the advantage of India ultimately, Keralites feel that Kerala is not yet ready to face up to the challenge.
This fear is bound to be there till Jupiter, the financial planet, leave for Aquarius on Dec 19. Suddenly the 3.5 million workers in the coconut sector and one million fish labourers find themselves threatened.
The Center maintains that what Kerala fears are mere micro losses. India will get access to ASEAN countries' markets and bilateral trade, flourishing now at $ 34 b, will rise to more than $100 b.
We cannot protect a nation in these days of Globalisation. We have to compete or die.
What is a Free Trade Agreement ? It is a trade sans tax. 56 million is the population of ASEAN. India's population stand at 1.17 billion. Who are the ASEAN countries ?
It was in Oct 2003 the framework of the ASEAN pact was formulated. Bilateral trade rose to $6.93 b in 2000-2001 and in 2008, it stood at $34 b ! Experts point out that bilateral trade will be tenfold in the future !
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Yesterday the Indo- Asean FTA was signed.
Let us see how bilateral trade will fare ! It is bound to shoot up.
We feel that Kerala's fears will be unfounded, as India gets access to ASEAN markets. India is leading in IT, BT, NT and other services. India will capture the ASEAN market and bilateral trade will be to India's advantage !
Even though ASEAN countries have more yield and more productivity, India will compete in all fields. India will become the third largest economy in the world, according to a Goldman Sachs report, based on GDP growth !
The ten member countries of ASEAN - Malaysia, Indonesia, Singapore, Philippines, Brunei, Thailand, Vietnam, Cambodia, Laos, Myanmar - exported goods worth $864 b and imported $ 774 billion. India gets access to a one trillion dollar ASEAN economy !
The pact has been welcomed by industry lobbies. The CII welcomed the move, saying it will give India access to ASEAN markets. ASSOCHAM said that the bilateral trade will go to a whopping $60 billion in the near future.
FICCI said that the pact will open up new market opportunities for Indian business with zero tariffs on 80% of ASEAN imports within four years.
Indian PM Dr Singh had called a group of ministers to allay domestic fears before signing the pact. 489 items were kept out of the ambit of the pact.
The positiive stance of Jupiter, in India's Seventh House, is responsible for this move. India's exports ( and imports ) are bound to rise !
According to a Kerala Report, a new challenge has propped up. India has to improve her competitive efficiency to meet this new challenge. It is to be noted that exports to ASEAN are only $14 b, whereas imports are $20 b. A deficit of $ 6 b. Challenges are more; achievements may be less !
Cash crops, rice, fish, crude oil, electronics, auto accessories etc are all ASEAN exports to India. India exports wheat, oilseeds, pharmaceuticals, organic chemicals, ornaments and refined oil. China has tenfold India's grab of the ASEAN market. S Korea, New Zealand, Japan and Australia have signed pacts with ASEAN. Even though it is a free trade pact, India faces a formidable challenge !
In 07-08, India had a deficit of $14.56 billion. This is 15% of Indian total deficit. Indian trade deficit is increasing !
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Why does Kerala dread the Indo-Asean FTA ? Reasons are many.
Kerala Govt had asked the Centre to put 1400 items under the Negative List. Only 489 items have been now included in the Negative List.
The import tax on Kerala's products like coffee, tea, rubber, copra, coconut, coir, cashew, pepper, cardamon, coconut oil etc will have to be brought down to 50% or less by 2019. Import tax for Palm Oil has to be brought down to 40%.
After 2005, import tax is cent percent for tea and coffee. It is 70% for pepper and 90% for Palm Oil. When import tax on these items comes down to 40%, the backbone of Kerala economy will be threatened.
The Left and Saffron parties are against the Congress Govt signing the deal. They are going to start movements against the deal.
There are 3.6 lk workers working in the coir sector and 2.5 lk in the cashew sector. This year's cashew exports are 1500 crores. All these will be affected as the pact comes into effect from Jan 1, 2010.
The lowering of import tax on fish products and coconuts will affect the 1 million labourers working in the fisheries sector and 35 lk farmers in the coconut sector will also be affected.
While this is the Kerala perspective, the Center begs to differ saying that the pact may be a big challenge but it is a great opportunity. The Centre points out that India's bilateral trade had gone to $ 37 b with ASEAN and $80 b with EAS ( East Asia Summit ) countries.
EAS countries are 16. Six more countries added to the ten ASEAN member nations - China, Japan, New Zealand, Australia, S Korea and India !
Jupiter will be in Aquarius, in India's Eighth House, the House of Hindrances, when this pact becomes operational.
Let us hope that, after the initial hurdles, India will capture the one trillion dollar ASEAN market !
The Sensex crashed 627 points on Black Monday and all indices crashed worldwide !
We had warned in our columns not to invest in the stock market. We are proved right, even though the market has perked up by 250 points today.
Realty, metals, energy, gas etc were the badly hit sectors yesterday. Realtex fell by 7.5% yesterday. Investors lost 2 lk crores in a single day. Metals, auto, oil, gas, Banking, FMCG etc fell by 4-6%. DLF fell by 8%, Hindalco 7%, Tata Steel, Tata Motors and Sterlite lost 6%.
Debilitated Jupiter is not good for either realty or stock markets.
Kerala finds it difficult to compete with other Indian states like Karnataka and T Nadu, let alone the ASEAN countries !
Gujarat and other states have declared their will power to compete with Malaysia and Thailand. It is unfortunate that Kerala finds it difficult to compete with the ASEAN countries !
Kerala is politically balkanised, with the Left and the Saffron parties opposing the ASEAN pact and Congress supporting the pact.
Congress maintains that there are merits. The Left maintains that there are demerits.
India gets access to the one trillion ASEAN market. The services sector worth 180 billion dollars. Indian milk products like AMUL can find their way to the ASEAN markets. Indian IT companies have got a competitive edge than their ASEAN counterparts. India stands to benefit a great deal.
On the contrary, the Leftists aruge that Globalisation has broken the back of the Kerala agri sector. Now 247 districts have been declared as drought affected. Deficient monsoon have wreaked havoc on the Indian economy. Palghat, one of the districts of Kerala, is worst hit. Facing drought and the demerits of the globalising world, Kerala finds itself at the receiving end. To compound the woes of Kerala is the ASEAN pact which will break the backbone of Kerala economy. The import tax on Coffee, tea and Palm Oil will be brought down to less than 50% and this will lead to a crash in prices, putting the Kerala farmers in the doldrums.
Congress maintains that these are micro losses, when compared to the macro gains India is going to have !
Jupiter in Capricorn, debilitated, affects not only the realty and stock markets, but also the economy !
The Leftists have unleashed negative propaganda that the ASEAN FTA will break the backbone of the Kerala economy. This was highlighted by the ex_CM of Kerala, Mr Ommen Chandy.
Mr Chandy points out that the four major items, viz - tea, coffee, pepper and Palm Oil - are in the Negative List, known as the Execution List. There are five lists - ordinary list, special list, execution list, sensitive list and highly sensitive list - and there are 12,168 items included in all. The items in the negative list are protected and there is nothing to fear for Kerala. 489 items are in the Negative list, of which 303 are agri products. The prevailing import tax will be there for all items in the Negative list and hence their uncontrolled imports will be discouraged.
Copra, cocounut, rubber, rice, cashew, honey, tapioca, mushrooms, sardines, shrimps, crab, fish products, milk and milk products, banana, pine apple, mangoes, orange, grapes, apple, elaichi, nutmeg, vanilla, ginger, turmeric etc are all in the Negative List.
The main products of Kerala, coffee, tea, pepper and Palm Oil are in the Special List. The import tax of these will have to be brought down to 50% or less within ten years.
The services - investment pact will greatly benefit India and Indian IT companies will conquer the ASEAN market !
Jupiter in the Seventh in India's horoscope is responsible for the signing of this pact, which gives India access to one trillion dollar ASEAN market !
While many countries are showing negative growth, India and China show positive growth.
When a country shows a negative GDP growth, that country is said to be in Recession, according to IMF.
Here are the stats
Nation 2009 2010
China 7.5 5.5
India 5.4 6.5
Russia -6.5 1.5
Brazil -1.3 2.5
England -4.2 2
US -2.6 0.8
Japan -6 1.7
Germany -6.2 -0.6
France -3 0.4
Italy -5.1 -0.1
Australia -0.5 1.3
Saudi Arabia -0.9 3.9
World GDP growth has come down to -2% and it is a miracle that China and India are showing positive GDP growth !
During the Great Depression of 1928, about 11500 banks went bust and 25% of the labour force lost jobs. It took the US five years to come out of that recession. Now the world is going through a torrid economic phase and the prophets of doom point out that the world is going towards a Second Great Depression.
In India, the consumer based industries show a bullish trend but IT appears to be bearish. IT which clocked a compunded annual growth of 30% has now come down to 5%.
The IT scrips of the Stock Market may be impacted. More so with the Satyam Computers scam.
Sept 08 will see the end of Elarata Saturn for India and Saturn's stay in Virgo may see the rise of steel, cement etc.
Karnataka alone exported $17 billion. Bangalore accounted for 97% of that figure and India's total exports zoomed to $ 50 b !
India is changing, with 40 million people added every year to the huge middle class base of 450 million. India has the largest TV network in the world and the second largest scientific and technical manpower. 3 million graduates are churned out per year. Net userbase has gone to $50 million and is growing at 26% per year. ICT has changed the face of India !
From Sep 08th onwards, Saturn will be in the lunar 3rd and furthur prosperity is indicated for India !
In April, 144,000 cars were sold, a growth of 40%. Indications that the country has moved away from Recession and is entering a growth curve.
On the export front, car exports registered a growth of 27% and motor bikes 95%. Total export of auto units increased from more than one lakh to two lakhs !.
These are the companies which did it and shares of these companies should be bought at declines, when the stock market reacts sharply.
Company Percentage growth
Tata Motors 200%
Bajaj Auto 200%
TVS Motors 88%
London listed Vedanta Resources, acquired the zinc unit of UK's Anglo American for 1.3 billion. This will give Vedanta 11% global marketshare. Acquisition to be done through Hindustan Zinc & this company's share can also be bought at declines. Now HZ is trading at 1119.
Jupiter in Pisces, in India's Ninth House, will definitely bring some positive news for India on the economic front.
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There are reports from Cyberabad ( Hyderabad ) that Hyderabad is more or less dried up. One lady on T V said lakes were encroached and there is a depletion of water resources. Hence the Water Crisis. If an IT Center like Hyderabad is like this, what about the other parts of India ?
If the desertification of Kerala has been initiated by some ignorant elements, Keralites have only themselves to blame. Let us put an end to encroachments on our water resources ! Despite having 44 rivers, despite having the highest water well density, despite receiving the highest rainfall ( 3000 mm, which is thrice the national average of India ), some of her places have a semi arid look, which is a cause for alarm and despondency !
Before Globalisation, India's growth was a mere 3 percent. After Globalisation, it is now 7%.
The Sensex was just 2000 pre-Globalisation. After Globalisation, now it is at 17,000.
Globalisation has done wonders for India. India's rise in IT, BPO sectors are again after Globalisation. Urban India is undergoing a transformation as malls, hotels and resorts boom. Rural India is also improving and the total rural market is estimated at $450 billion.
Jupiter in Pisces now should bring more positive news for India, as Pisces is India's Ninth House.
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