for low carbon devel-opment. Even as the call for ecological sustainabil-ity get louder, Indian corporates are seen pro-actively working towards greener initia-tive in proclaiming the adopted sustainability measures. The movement to adopt sustainable prac-tices has emerged as a priority issue, espe-cially in the backdrop of climate change be-coming a stark reality.

Keshav Saini Blogger and

Environmentalist -environmentabout.com

nologies, will focus on promoting understand-ing of climate change, adaptation and mitiga-tion energy efficiency and natural resource conservation. The Na-tional Solar Mission aims to increase the share of solar energy in the total energy mix, while the mission on Enhanced Effi-ciency aims at staying up to 10000 MW by the end of 11th Five Year Plan in 2012. India has announced its intent to reduce emissions intensity of its GDP by 20-25% between 2005 and 2020 thus making a major contribution to mitigating the cli-

mate change. An ex-

pert group on low car-bon strategy for inclu-sive growth has been constituted under the Planning Commission to develop a roadmap

Environmental sus-

tainability is becoming

a great challenge in

India as the projected

economic growth of over eight per cent is expected to result in a growth of energy de-

mand Climate Change,

mainly caused by the emission of greenhouse

gases from energy in-

tensive human eco-

nomic activities based

on fossil fuels has be-come a grim reality. Half of the 88 indus-trial clusters have been identified as critically polluted by the Central Pollution Control Board. An ac-tion plan for its reme-diation is in progress. The National Action Plan for climate change, which hinges on the development and use of new tech-

ENVIRONMENTAL SUSTAINABILITY – A RISING CHALLENGE IN INDIA

Inside this issue:

Corporate Speaks 2

News Bits 3

Global Imbalances 3

Quote of the Month 4

February 2012

Volume 1, Issue 8 MI`Bytes BUSINESS LETTER

Mr. Govind Ambady

CEO

Louis Dreyfus Commodities LDC is a European trading company, which deals in agro sector; Mr.Govind Ambady has been at the helm of activities for many years now; sharp, clear, intelligent, dynamic yet humble. First of all I want to thank you sir from entire team of publication for taking your pre-

cious time for giving interview Q1: What is the outlook about the global economy at present?

Ans: It does not look too encouraging. Europe is in trouble and European banks are in bigger

trouble since they financed overspending nations like Greece, Portugal and Spain. Growth in

America is painfully slow and flat; moreover there is sharp slowdown in China and other devel-

oping economies. Universal opinion is, it is a matter of time when Greece will declare default, if

they do declare default then, it is to be seen whether Germany will come to save Euro zone. So, it

all looks pretty messy right now.

Q2: What has been the impact of European and American crisis on your business?

Ans. Well, Food industry is not so badly hit by slowdown, as people need food for survival. In

terms of America, it did not affect much of our business as we operate in many destination mar-

kets. Europe is a bit different story since many companies had the bank claims from European

Banks but it did not affect us as we have diverse bank lines globally. We have become more pro-

active in terms of analysing counterparty risk.

Q3: Is your group banking upon Asian market to increase its revenue?

Ans : If you look 5 years down the line, the potential of American and European market is lim-

ited in growth and if you see demography ,GDP growth and other indicators which tells that

Asia is the potential market in terms of volume. Africa too has potential.

Q4: How do you see significant changes in Agro Commodity trading in times to come?

Ans: I expect prices to go up as input costs are increasing like that of fertilizers and seeds and

also the demand is going to increase with increasing population and rising living standards.

Looking at Indian economic growth I see India moving towards relying on imports of several

commodities including the ones where we have exportable surplus as of now.

Q5: What are the most important operational changes needed at the moment in commod-

ity trade?

Ans: India does not have good infrastructure in terms of supply chain and warehousing. Indian

roads can carry an average load size of 20-25MT as compared to 60-80 MT in developed coun-

tries. Agro commodities being of perishable nature needs proper storage and cooling facilities

which we don’t have as of now.

Q6: In what way talent has become a strategic issue now?

Ans: It has always been a strategic issue and has gained more relevance in recent times as busi-

ness is becoming more talent centric along with asset based. Attracting and retaining talent now

requires a whole new approach, extending from providing right job profiles, monetary benefits

to changes required in work environment and culture. Young generation goes through a lot these

days due to peer pressure, work ethics and life style requirements.

Q8: What would be your advice to MIB students?

Ans: Do not get carried away by peer pressure as it does not last long, during initial career

building years concentrate on profile and growth, money will automatically follow. Work hard

and my best wishes for a great career ahead.

CORPORATE SPEAK

“INDIA DOES’NT HAVE

GOOD SUPPLY CHAIN

INFRASTRUCTURE ”

MI`Bytes Page 2

“100 of the Fortune 500

companies have R&D in In-

dia ”

“India is among 4 countries

that make Supercomputers”

The starting of present decade in 2000 saw the emergence of Global Imbalances in the world econ-omy. The industrial nations led by US started having huge amount of Current Account and Trade deficits and this was mirrored by huge surplus in the Emerging economies led by the South Asian nations like South Korea, Thailand and China who exported their way to growth. Global imbalances can be defined external positions of systematically important economies reflecting distortions or en-tailing risks for the global economy. The US after the dotcom bubble of 2000 embarked on extreme loose monetary policy under the chair-manship of Alan Greenspan, to fend of the recession that occurred in the US economy in 2001. In this period the US, Current Account Deficit (CAD) saw a manifold increase, from $485 billion in 2004 to $804 billion in 2006. The other nations to have experienced deficit in this period were France, Italy, Spain, Australia and UK. With the current account imbalance capital flew from the poor emerging countries to capital rich countries. This was further accentuated during the Asian crisis, when devel-oped countries took back all their capital from the Asian markets. All these measures led to change in the strategy of Emerging Market Economy (EME’s), they shifted from being net importer of capital to net exporters of capital resulting in Current Account Surplus (CAS) .Also because of the underdeveloped financial markets and cultural influences, most of these Asian nations started saving, especially post Asian crisis period when aggregate savings jumped three fold from 2001 to 2007 and had lifted the marginal propensity to save to 43%. They also started building huge foreign exchange reserves as sort of war chest to counter the sudden reversal of capital flows and to intervene in the exchange rates markets so that they could keep their currencies under-valued against the dollar, since most of the international transactions are held in Dollar.

Problems in the International System

The global imbalances after the crisis have led to divergence between the emerged and emerging economies and a cause of many spats between the Leaders of different countries. There is now differ-ent rate of growth in emerging and emerged economies, the advanced economies are reeling under huge fiscal deficits, low consumer spending and threat of deflation looming large over their heads as their economies struggles to move out of the recession. In contrast the emerging economies who have led the emergence of the world economy from the cri-sis, led by China, India suffer from active inflation threat and overheating in the economy .India ex-perienced double digit food inflation-recently came down to single digits after 16 months- which then spread to other sectors and WPI also rose, China also growing at a fast pace manner especially in real estate sector had to increase the rates and increase regulation so as to prevent the creation of asset bubbles. These differences in the macroeconomic conditions have led them to have different targets for their currency value, since majority of EME’s are export depended they want to keep their cur-rency undervalued.

These different policy goals in the developed and developing nations have led to standoff between them. The US has now started blaming China for their undervalued currency -yuan ,the US desper-ately needs to kick start its economy and is blaming China who keeps its currency undervalued so as to makes its exports competitive.US wants to make these currencies appreciate against the dollar so as to make US exports more competitive. There is also different Monetary policy conditions in these two blocs, since the developed countries are growing slowly, most of the advanced Central bankers have resorted to loose monetary policies so as to keep the long term interest rates low-in contrast to high rates of Emerging Economies- but this easy availability of capital at near zero rates in developed countries has led to flow of huge amount of capital to developing markets like India experienced the highest FII this year. But the nature of this capital flows is also uncertain, they may reverse back any-time, if some problems develop back home in developed markets and emerging countries need long term capital to grow stably.

Cont. on Page 4 ..

“Fixed investment in

China is close to 50%

of GDP”

DOES INTERNATIONAL MONETARY SYSTEMNEEDS OVERHAULING?

Volume 1, Issue 8 Page 3 GUEST COLOUMN

QUOTE FOR THE MONTH

Why join the navy if you can be a pirate?

-Steve Jobs

Cont...from page 4

Many emerging countries have reacted to these sudden flows by imposing Tobin tax, a tax on capital flows, like Brazil, Thailand and countries like China, India intervened in the financial markets to keep the value of their cur-rency low so as to keep the exports competitive. This disparate monetary ap-proach by developed and developing markets has led to “Currency war”, a term coined by Brazilin Prime Minister in September .The developed countries wants the developing countries to hold less amount of foreign ex-change and let their currency appreciate in terms of normal demand and supply condi-tions’. Timothy Geithner, the Treasury Secretary of US has proposed capping the Current Account surplus /deficit to 4 % of GDP as huge surplus lead to imbalance in the world economy .The develop-ing countries led by China are retorting by saying that the

loose policy of advanced countries like US are distort-ing the balance of the global financial order like Fed deci-sion of QE 2 would again lead to huge capital flows to their countries in search of better yields. The global crisis has high-lighted the inherent fallacies in the present monetary ex-change system, a system which encourages global im-balances and leads to crisis after crisis. The fallacy in the system was further extolled by Ben Bernanke, the Fed chief in a recent speech in Frankfurt, he stated “the inter-national monetary system has a structural flaw: it lacks a mechanism …..To induce needed adjustments by sur-plus countries, this can result in persistent global imbal-ances. It now remains to be seen, how the major economies plug in the loopholes of the monetary system and lead the

Global Imbalance

Phone: 9891984210, 9871858982

E-mail: sahilbhat_12@yahoomail.com,

soobianahmed@gmail.com

CMS, MIB

EDITOR-IN-CHIEF:

Prof. SAYED WAJID ALI

STUDENT EDITORS:

SOOBIAN AHMED NAMITA DHAMANI

SAHIL BHAT

INTERVIEW BY: SOOBIAN AHMED SAHIL BHAT

overall global recovery from the financial mess.

VIKESH KOUL

Researcher, UBS, Hyderabad