The main reason for the duty hike is the rising current account deficit, driven largely by India’s traditionally large gold imports – demand which has grown with the price pulling back below $1600 per ounce and the rupee strengthening somewhat from its worst levels. The current account deficit reached an all time high of 5.4% of Gross Domestic Product in the third quarter of 2012. India’s current account deficit problems look similar to the balance of payments crisis in 1991, when the Reserve Bank of India had to sell 47 tons of gold to Europe as collateral for a loan to avert a sovereign default.
India’s government finally admitted defeat in subsidizing diesel prices and will repeal the subsidy in the near future.More than 80 percent of India’s fuel needs are fulfilled by imports. Petrol prices were liberalized by the government in June 2010 but the government has constantly tried to prevent prices from rising to insulate the Indian economy from ever-increasing oil prices on global markets. Fuel consumption in India increased 5 per cent in the last fiscal year, its fastest since 2007-08.If you subsidize something you get more of it.The Indian government has finally bowed to this simple economic reality.
Ford Motor Co. (NYSE:$F) has shocked the 4,300 employees at its 48 year old Belgium assembly plant by announcing the facility’s eventual closure in the next two years, after its workers had agreed to a pay cut. Following the closure, which comes with a price tag of $1.1 billion, the company is aiming to save $730 million annually. It is going to shift some of its vehicle productions to its Spanish facility while some of the Spain’s production can be moved to the plant in Saarlouis, Germany. In addition, Ford is also shutting two plants in the U.K. next year that will cause 1,400 layoffs.
Peter Pham is an author, international fund manager, and a registered financial director by the Cayman Monetary Authority (CIMA). In 2013 he published his first book entitled, The Big Trade: Simple Strategies for Maximum Market Returns. He currently manages the portfolio of a global hedge fund and runs an asset management company, Phoenix Capital. (read more)
The Big Trade: Simple Strategies for Maximum Market Returns
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