China's hard landing to trigger meltdown in India: "We Will See Another Crisis"

“The weakness in India’s exports is striking, not only in terms of past trend, but also from a cross country perspective,” Deutsche Bank wrote at the time. “Indeed, India’s exports performance has been the weakest in the region in 2015.”

In short: in a world gone Keynesian crazy, you live and die by your willingness to engage in competitive easing and with China having just a month earlier moved to devalue the yuan, India had little choice but to cut lest the export picture should darken further.

Since then the malaise has deepened.

Exports have now fallen for 12 straight months and although some of the decline is probably attributable to slumping prices (as opposed to lower volumes), it’s worrisome nevertheless.

As a reminder, the country's fiscal situation is a bit precarious or, as Citi puts it, Modi has "good intentions in a challenging environment." "We believe that the government is committed to a fiscal consolidation path, but balancing the credibility of its deficit compression promise and presenting a realistic budget which does not give a negative growth shock is going to be tricky," Citi wrote, in a note out Monday.

Yes, it's "going to be tricky" because as we've seen in countless other countries over the past five or so years, fiscal retrenchment and booming growth aren't compatible.

So ultimately, the spillover from China may well force India to choose between shoring up the deficit and keeping the economy going with fiscal stimulus as private investors close their wallets. Meanwhile, a sharp drop in the rupee is going to put tremendous pressure on Indian corporates who have borrowed in dollars and are "less [hedged] than we would wish", to quote Rajan.

confuzzled dude wrote:

“The weakness in India’s exports is striking, not only in terms of past trend, but also from a cross country perspective,” Deutsche Bank wrote at the time. “Indeed, India’s exports performance has been the weakest in the region in 2015.”

In short: in a world gone Keynesian crazy, you live and die by your willingness to engage in competitive easing and with China having just a month earlier moved to devalue the yuan, India had little choice but to cut lest the export picture should darken further.

Since then the malaise has deepened.

Exports have now fallen for 12 straight months and although some of the decline is probably attributable to slumping prices (as opposed to lower volumes), it’s worrisome nevertheless.

As a reminder, the country's fiscal situation is a bit precarious or, as Citi puts it, Modi has "good intentions in a challenging environment." "We believe that the government is committed to a fiscal consolidation path, but balancing the credibility of its deficit compression promise and presenting a realistic budget which does not give a negative growth shock is going to be tricky," Citi wrote, in a note out Monday.

Yes, it's "going to be tricky" because as we've seen in countless other countries over the past five or so years, fiscal retrenchment and booming growth aren't compatible.

So ultimately, the spillover from China may well force India to choose between shoring up the deficit and keeping the economy going with fiscal stimulus as private investors close their wallets. Meanwhile, a sharp drop in the rupee is going to put tremendous pressure on Indian corporates who have borrowed in dollars and are "less [hedged] than we would wish", to quote Rajan.

http://www.zerohedge.com/news/2016-01-11/chinas-hard-landing-trigger-meltdown-india-we-will-see-another-crisis

Marathadi-Saamiyaar wrote:

confuzzled dude wrote:

“The weakness in India’s exports is striking, not only in terms of past trend, but also from a cross country perspective,” Deutsche Bank wrote at the time. “Indeed, India’s exports performance has been the weakest in the region in 2015.”

In short: in a world gone Keynesian crazy, you live and die by your willingness to engage in competitive easing and with China having just a month earlier moved to devalue the yuan, India had little choice but to cut lest the export picture should darken further.

Since then the malaise has deepened.

Exports have now fallen for 12 straight months and although some of the decline is probably attributable to slumping prices (as opposed to lower volumes), it’s worrisome nevertheless.

As a reminder, the country's fiscal situation is a bit precarious or, as Citi puts it, Modi has "good intentions in a challenging environment." "We believe that the government is committed to a fiscal consolidation path, but balancing the credibility of its deficit compression promise and presenting a realistic budget which does not give a negative growth shock is going to be tricky," Citi wrote, in a note out Monday.

Yes, it's "going to be tricky" because as we've seen in countless other countries over the past five or so years, fiscal retrenchment and booming growth aren't compatible.

So ultimately, the spillover from China may well force India to choose between shoring up the deficit and keeping the economy going with fiscal stimulus as private investors close their wallets. Meanwhile, a sharp drop in the rupee is going to put tremendous pressure on Indian corporates who have borrowed in dollars and are "less [hedged] than we would wish", to quote Rajan.

http://www.zerohedge.com/news/2016-01-11/chinas-hard-landing-trigger-meltdown-india-we-will-see-another-crisis

And..if MMS and the fascist White mata ji had won instead of Modi ji, India would have seen a 12.8% growth....

We agree.