No sooner had India's October inflation numbers, at an eight-month high of seven per cent, been announced last week, than a now-familiar air of gloom settled in business circles. Still, Europe and the US made India look good. On November 7, the European Central Bank halved its main refinancing rate to 0.25 per cent - similar to the repo rate in India, which the Reserve Bank of India has set at 7.75 per cent - and kept its deposits rate at zero. There's even some talk of charging banks depositing money with the ECB! Mario Draghi, ECB President, desperately wants to ease further supply of cash to nudge up economic activity. Soon after, across the Atltantic, Janet Yellen, expected to chair the Federal Reserve from early 2014, rooted for the Fed's ultra-easy money policy. At a time when finance ministers worry if their home-economies will pass a stress test, the Draghi-Yellen utterances were welcomed in India. It helped the rupee in particular that both Finance Minister P. Chidambaram and RBI Governor Raghuram Rajan made forecasts of a lower current account deficit (CAD).
A big reason in New Delhi's success with reining in CAD (simply put the difference in exports and imports, net of transfers) is the increase in import duty - three hikes since January - on gold imports. The yellow metal's imports have shrunk nearly one-third in the July-September quarter from a year ago. But jewellery demand in India, the biggest buyer of gold in the world (it imported 845 tonnes of the yellow metal in 2012/13), has not abated and gold smuggling is back at its strongest in nearly three decades. Special Correspondent Sarika Malhotra, wove her way through obstacles - including a hawk-eyed bean-counter in the newsroom - to bring us the untold story of how gold is smuggled into Kerala, a state where more gold is bought than any other. I was astounded to hear from Sarika that even big, organised gold retailers in the state meet about 30 per cent of their gold requirement from smuggled sources and that number is as much as half in the unorganised segment.
At BT, we like our lists because you like them. In this issue, you will see one of our most rigorous: the BT-KPMG Best Banks Survey. This year, HDFC Bank, India's second-largest private lender and most valuable one, is back on the top after five years. Aditya Puri, Managing Director of the bank that was at the top between 2003 and 2008 (except in 2004, when we didn't conduct the survey), has a familiar challenge. Some 54 per cent of his branches are in semi-urban and rural areas, but they contribute just 15 per cent of his revenues. How does he fix the skew? That is a question 26 banking licence aspirants in India should be worrying about, too, and our partner and consultancy firm KPMG India has some direction for them. A team of five writers helped Senior Editor and resident banking expert Anand Adhikari put together what is a meaty read on the business of lending. Follow #BTBestBanks on Twitter for nuggets and pointers on the package. Also, notice that we are publishing Twitter handles of all our writers from this issue.
Telecom, a business that has come into being in India in the last 18 years, makes just about one-fifth of the Rs 7.63-lakh crore revenues that banking generates. Provocative as it may sound, the impact and reach of telecom goes beyond. India has about 900 million phone connections versus 350 million bank accounts. The virtuous impact of telecom has been held back in last five-odd years for multiple reasons: intense competition, lack of spectrum, and a government that sees the industry as a goose that lays golden eggs. With Rahul Khullar at the helm of sector regulator, Telecom Regulatory Authority of India, there is change in the air. Authors Executive Editor Suveen K. Sinha and Associate Editor Sunny Sen call it "breathing easy". I see it as a welcome call.
(Follow on Twitter: @joseyjohn)