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There is no human need more basic than food, but with the global foodsystem, including the world trade in food, strongly resembling a cartel with nocountervailing force to corporate power, ethical and religious considerationshave to be brought to bear to eradicate chronic hunger and provide foodsecurity to the people.
Over the years there has been a fragile balance, with under-production in
some years and over-production in others. As the UN Food and Agriculture
Organization (FAO), in documents for the World Food Summits, has brought
out, while food trade increases food security in the sense of enabling
countries to consume more food than they produce and/or cushion swings in
prices or supplies, any liberalization of trade, as a result of the Uruguay
Round or WTO activities, is unlikely to have much effect on the global
availability of food in the aggregate, McLaughlin comments.
For 50 years, the American people have generously
responded to the needs of hungry people around the
world. Throughout this period, the U.S. governments
principal strategy for addressing hunger has been to
ship American food overseas, either to be distributed
to people in need, or to be sold in open markets to
generate cash to pay for humanitarian programs.
It is now apparent that these efforts, albeit generous, havefailed to prevent hunger in some parts of
the world from becoming worse. Emergency food aid
in times of crisis is, of course, important, but food
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aid alone does not adequately address root causes of
chronic hunger. CARE believes that the United States
can and should play a more effective role in ending
hunger. The current rise in hunger around the world
makes a transformation imperative. Three fundamental
changes are needed.
Chronic hunger is often the result of multiple, deeply
rooted causes. In the long term, achieving a lasting reduction
in the incidence of chronic hunger will
require improvements in agricultural productivity,
processing and marketing; greater access to information,
capital, basic education, health services and
technical training for the poor; social protection programs;
strengthening weak governments; and changes
in the status of women and girls. This ambitious list
obviously goes well beyond the mandates set forth
in any particular program. Indeed, it is beyond the
means of any single organization or government. But
this crucial, broader objective is not impossible, and
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it is fully consistent with the values of the American
people to help others help themselves.
Addressing underlying causes of hunger will require
setting common goals and promoting coordinated
action among national governments, international
institutions and agencies, implementing partners and
communities.
As the scale of chronic food insecurity has increased,
and as international commodity prices and shipping
costs have risen, it has become apparent that traditional
humanitarian responses to hunger will not be
able to keep up with the scale of current problems.Shipping food from the United States to developing
countries overseas is expensive, slow and unpredictable.
These shipments also often reach only a fraction of the
population in need. By the time that food aid arrives,
recipients are often in such dire condition that the cost
of saving lives and rebuilding livelihoods is high.
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There is an emerging consensus among development
practitioners that the chronic food security
problem now calls for a different approach. Many
experts believe that, because the problem has become much
more predictable, it is possible to design
more proactive systems that will help governments
of developing countries provide effective safety
nets at a manageable cost. These kinds of programs
would reach many more people than traditional
food aid programs.
While the focus of emergency food aid programs
has often been to rebuild livelihoods, the goal ofsafety net or social protection programs is prevention. Early
cash transfers to households are intended
to protect livelihoods, rather than rebuild them. The
principal targets of these programs are families that
face food insecurity, but have not yet had to resort
to selling productive assets. Because aid would be
delivered early, before conditions become dire, the
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amount of assistance that each household receives is
normally comparatively small.
These programs can also make important contributions tolong-term development. Reliable cash transfers are intended
to reduce risk, and thereby encourage poor people to make
productive investments in
innovations that can deliver higher, but more volatile
average returns on their investment.
Conclusion
Its past time to think differently about hunger. There
are better, proven ways to keep people from going
hungry day after day. The global food crisis may have
finally forced the issue. We now have a unique opportunity to
focus our governments policy like never
before. Given the needed fundamental changes that
are outlined above, CARE believes that it is time to
recast the U.S. approach to hunger. This will require a
dramatic shift in policyone de-emphasizing food aid
as the main response to food insecurity and focusing
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on the structural changes called.
Target 1C. Halve the proportion of people who suffer from hunger
Globally, there is evidence of improvements in children's nutritional status. The percentage of
underweight children is estimated to have declined from 25% in 1990 to 16% in 2010. Stunting in children
under five years of age has decreased globally from 40% to 27% over the same period. In Asia, the
number of stunted children is estimated to have halved between 1990 (190 million) and 2010 (100
million). However, in Africa the number of stunted children is projected to increase from 45 million in 1990
to 60 million in 2010. Despite these overall gains, around 104 million of children under five are estimated
to be underweight in 2010.
WHO activities
WHO is working with countries:
to build capacity in using standard growth assessment tools;
to assist in planning and conducting nutritional surveys;
to support the analysis and interpretation of nutritional survey results;
to support the development of nutritional surveillance systems;
to ensure that nutrition is an integral part of care and support for people with HIV and TB; to develop national nutrition plans and policies; and
to strengthen the delivery of essential nutrition actions.
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A crisis in Japan-An Introduction
Japan was hit by an enormous earthquake on March 11, 2011, that triggered a deadly 23-foot
tsunami in the country's north. The giant waves deluged cities and rural areas alike, sweeping
away cars, homes, buildings, a train, and boats, leaving a path of death and devastation in its
wake. Video footage showed cars racing away from surging waves. The United States Geological
Survey reported the earthquake magnitude to be a surprising 9.0on richterscale, which is the
largest ever in Japan's history. The earthquake struck about 230 miles northeast of Tokyo. The
Pacific Tsunami Warning Center issued warnings for Russia, Taiwan, Hawaii, Indonesia, the
Marshall Islands, Papua New Guinea, Australia, and the west coasts the U.S., Mexico, Central
America, and South America. As of June, tens of thousands of people were still in temporary
shelters and over 24,000were confirmed dead or missing.
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Crisis in the economy
Japan's economy shrank much more than expected in the first quarter and slipped into
recession after the triple blow of the March earthquake, tsunami and nuclear crisis hit
business and consumer spending and tore apart supply chains.
Gross domestic product shrank 0.9 percent in the first quarter, compared with a
median market forecast for a 0.5 percent contraction. On an annualized basis, the
economy shrank 3.7 percent against a forecast of a 2.0 percent contraction.
Net exports shaved 0.2 percentage point off GDP growth, against the median
estimate that they would trim 0.1 point from the figure.
Private consumption, which accounts for about 60 percent of the economy, was
down 0.6 percent against the median forecast of a 0.5 percent decline.
Corporate capital spending fell 0.9 percent against the market forecast of a 1.2
percent decline.
EFFECTS ON VARIOUS SECTORS OF THE JAPANESE ECONOMY
1. EFFECT ONTHE INDUSTRIAL SECTOR
ELECTRONICS
SONY
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Sony Corp surprised investors16th march by warning it is heading for its fourth straight
annual net loss and that its TV business alone would produce a loss of $2.2 billion due
to tumbling demand and a surging yen.
The maker of Bravia TVs, Vaio computers and PlayStation game consoles cut its sales
forecast for TVs, cameras and DVD players and said it may report 90 billion yen net loss
in the current financial year, scrapping its earlier net profit estimate of 60 billion yen.
Investors had expected Sony to reduce its profit forecast, but not flag a swing to massive
losses. Sony vowed to bring an end to losses in its TV division, which it expects to report its
eighth straight annual loss. But it gave scant details of a plan to halve losses next year and
drag the unit into the black by March 2014.
Domestic purchases account for 9% of Sonys total sales of the Playstation gaming console
and 11% of the total sales of the companys Bravia televisions. Sonys losses trailed a 10.6%
drop in Japans broader Nikkei Index -- which closed at 8,605.15 -- its biggest drop since the
global financial crisis of 2008.
PANASONIC
Panasonic sees tough year as quake aftermath hampers sales. - The Telegraph.
Japan's Panasonic Corp will have an extremely tough year, with the effects of the
devastating March earthquake continuing to hamper sales through September 2011.
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The company will also split the 17,000 job cuts it plans by March 2013 in roughly equal
proportions between Japanese and foreign operations, President Fumio Ohtsubo told
reporters.
He said there were uncertainties over the impact of power shortages in the peak summer
months and that he did not see much additional demand for the companyresulting fromrebuilding efforts in northern Japan.
Although Panasonic factories in northern Japan have been repaired, they are not
necessarily operating at full capacity.
Panasonic said its operating profit rose 60 percent for the year ended in March, but did
not give a forecast for the current year because of a lack of clarity about the impact of
the devastating earthquake and tsunami, and the continuing nuclear crisis.
AUTOMOBILES
Japanese automakers, which dominate the southeast Asian market, were hit just as
they were beginning to work extra hours and days to make up for massive production
losses after the March 11 earthquake and tsunami in Japan.
TOYOTA
The disaster had an impact on the operations and employees of Toyota and itssuppliers in the region. Production was suspended in Japan till 22nd of March, sothat employees could contribute to the relief efforts
The plant shutdowns had fairly large effects on Yaris sales, as well as mostToyota vehicles exported from Japan
As most of the Toyota Production Plants are located in the north of Japan hencesuspension of production allowed it to be less at-risk to the seismic events.
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HONDA MOTOR CORP.
Damage was widespread in the Tochigi area, where Honda has a number of operations. Honda
Motor Co., Ltd. has confirmed the fatality of a Honda R&D associate at the Tochigi R&D Center,More than 30 Honda associates were injured in the Tochigi area from collapsing ceilings and
other damage during the earthquake.
Honda Motor Company reports a massive shutdown of their operations affecting Japaneseproduction of automobiles, outboard engines and motorcycles
There is no immediate impact on Honda's operations in North America. More than 80% of
Honda and Acura products sold in the U.S. are produced in North America. The vast majority of
automotive parts for Honda automobiles manufactured in North America are sourced in the
region.
NISSAN MOTOR CORP.
Nissan Motor Co, Japan's No.2 vehicle maker, has said lost output would amount to
60,000 vehicles
Nissan has halted production at two plants north of Tokyo and close to the hardest hit
region in the northern part of Honshu.
Shares of Japanese automakers fell in a broad decline in Tokyo on Thursday. Toyota, Honda
and Nissan lost 1.7 percent, 3.2 percent and 3.6 percent respectively.
Honda has not disclosed how much production has been cut. Both Toyota and Honda have
withdrawn their profit forecasts for the year to March, citing uncertainty about production.
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2. NUCLEAR SECTOR CRISIS
Earthquake Caused the Nuclear Disaster
Disaster struck again onMarch 12, when about 26 hours after the earthquake, an explosion in
reactor No. 1 at the Fukushima Daiichi Nuclear Power Station caused one of the buildings to
crumble to the ground. The cooling system at the reactor failed shortly after the earthquake.
Radioactive material was detected outside the plant. These fears were realized on March 13,
when officials said they believed that partial meltdowns occurred at reactors No. 1 and No. 3 .
More than 200,000 residents were evacuated from areas surrounding both facilities. Problems
were later reported at two other nuclear facilities. By March 15, two more explosions and a fire
had officials and workers at the Fukushima Daiichi Nuclear Power Station struggling to regain
control of four reactors. The fire, which happened at reactor No. 4, releasedradioactivity
directly into the atmosphere.
The Japanese government told people living within 20 miles of the Daiichi plant to stay indoors,
not use air conditioning, and keep their windows closed. More than 100,000 people are in the
area. On Wednesday, March 16, while safety workers were still trying to contain the fire at
reactor No. 4, officials announced that reactor No. 3 may have ruptured and appeared to be
releasing radioactive steam. According to Tokyo Electric Power, the plant's operator, 5 workershave died and 22 more have suffered various injuries since the quake.
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FOOD GRAINS
Japan's normal rice harvest in autumn has been closely monitored near the nuclear accident
site at Fukushima in northeast Japan after excessive levels of radiation were found in beef,vegetables and seafood in the area.
Crops harvested in a Fukushima farmer's rice paddy were found to contain 630 Becquerels of
radioactive cesium per kilogram, compared with the government-imposed cap of 500
Becquerels, a farm ministry official said.
The farmer who grew the rice in question and nearby farmers in Fukushima city, 60 km north-
west of the crippled nuclear plant, have been asked not to ship their rice.
"The ministry, along with Fukushima prefecture, will look into what has brought radiation levelsthis high at this particular location."
The plant's operator, Tokyo Electric Power Co. working with the government, hopes to stabilize
the crippled reactors at the site by the end of the year.
3.POWER AND OIL SECTOR
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Japan's utilities burned 200,000 barrels per day (bpd) more crude and 136,000 bpd
more.
Low sulphur fuel oil in October than a year earlier to compensate for the loss of nuclear
power capacity after the March quake.
Only 11 of the country's 54 nuclear reactors are operating , forcing the world's third-
largest importer of oil and top importer of liquefied natural gas (LNG) to use even more
of those fuels to generate power to plug the nuclear shortfall.
Japan's 10 utilities consumed 216,500 bpd (6.7 million barrels or 1.07 million kilolitres)
of crude last month, compared with only 16,000 bpd the year before, data from the
Federation of Electric Power Companies of Japan showed.
Fuel oil consumption reached 189,000 bpd (933,653 kl), up from 54,000 bpd. They also
burned the equivalent of 3.90 million tonnes of LNG last month, compared with 2.97million tonnes a year earlier. Coal use at power plants declined 1 percent as some
quake-damaged coal-fired facilities remained shut.
Purchase
Sep. '11
Oct. '10
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
CoalFuel oil
Crude
LNG
Purchase
Sep. '11
Oct. '10
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The prolonged crisis at Tokyo Electric Power's Fukushima Daiichi plant has stirred fears about
nuclear safety,leaving local governments wary about granting approvals torestart reactors
taken offline for maintenance. The government hopes to rebuild public confidence and clear
the way to restarting reactors through a series of safety tests at the plants. Tokyo is also
reviewing its energy policy, whichbefore the quake was highly dependent on expandingnuclearcapacity. Nuclear power provided only about 9 percent of Japan'selectricity last month.
The nation's nuclear plant utilization rate fell to a record low of 18.5 percent in October,
plungingfrom 72.3 percent a year earlier.
1. EFFECT ON SERVICE SECTOR
Banking
Mizuho will cut 3,000 jobs as Japanese banks battle weak demand for credit at home
and a tough global growth environment, which saw half-year profits at the lender and
smaller rival Sumitomo Mitsui fall by a quarter.
-Mizuho
Mizuho Financial Group said it plans to axe the jobs, about 5 percent of its workforce, byMarch 2016 through merging its corporate and retail banking units. First-half profits at
Japan's No. 2 lender by assets slid, as the previous year's bond trading gains slowed.
Third-ranked Sumitomo Mitsui Financial Group (SMFG), whose profits also fell 25
percent, said it will buy back up to 50 billion yen ($649 million) worth of its shares, or
1.63 percent of its outstanding stock.
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Japanese bank lending fell 22 straight months to September, Bank of Japan data shows.
The decline stopped in October, but major banks continued to see a drop, and the grim
environment has already taken a toll on the nation's financial industry.
Japan's top brokerage Nomura is cutting more than 700 jobs, on top of the 300 it
announced in September. No. 2 brokerage Daiwa Securities Group is axing more than300 overseas jobs.
A Japanese securities joint venture between Mitsubishi UFJ Financial Group, the top-
ranked lender, and Morgan Stanley plans to cut 1,200-1,300 jobs, roughly a fifth of its
workforce, a source familiar with the matter said last month. The pain has not been
confined just to Japan.
Bank of America, HSBC and Goldman Sachs are among global financial institutions
shedding thousands of jobs.
Reflecting concerns on growth and upcoming capital requirements, Japanese bank shares have
been big market underperformers this year. MUFG shares are down 24 percent, Mizuho off 33
percent and SMFG down 29 percent compared with a 16 percent drop in the mainNikkei index.
Insurance
Best noted that while economic losses are expected to be in hundreds of billions of U.S.
dollars, and insured losses in tens of billions of U.S. dollars, it is of the opinion that thenon-life insurance companies in Japan are able to absorb the net losses without a
negative impact on their current ratings.
The gross loss will not exceed the reinsurance protection limit of each company, and the
net loss will not exceed the large disaster risk (LDR) amount used in Japanese solvency
calculation.
Best added that the total LDR amount of the companies that it rates is JPY 1.173
trillion [$14.4 billion] as of fiscal year 2009. The total solvency capital of thecompanies rated recorded JPY 10.340 trillion ($126.9 billion) as of fiscal year 2009
As for the dwelling earthquake risk, the non-life insurance and reinsurance companies
will assume a maximum loss of JPY 590 billion ($7.2 billion) from Japan
Earthquake Reinsurance (JER)
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Best cited the figures released by AIR Worldwide, which put insurance losses in a range
between $14.5 billion and $34.6 billion.
Deterioration stemming from reduction of unrealized capital gains due to stock market
decline will be more severe rather than deterioration stemming from the earthquakeloss, as much of the insurance loss will be absorbed by ERR (Earthquake Risk Reserves)
and catastrophe reserves.
Best also listed the ratings it has issued on the following catastrophe bonds exposed to
Japan earthquakes.
Topiary Capital Limitedbb+ on $200 million Series 2008-1 Class A Principal-at-Risk Variable
Rate Notes due August 5, 2011 sponsored by Platinum Underwriters Bermuda Ltd.; and ValaisRe Ltd. bb on $64 million and b on $40 million Series 2008-1 Class A and Class C
Principal-at-Risk Variable Rate Notes both due June 6,
2011 sponsored by Flagstone Reinsurance Holdings Limited.
2. HUMAN RESOURCES
Japan faced its worst crisis since World War Two after a 9.0 magnitude earthquake and deadly
tsunami battered its northeast coast on March 11, which left more than 24,000 dead or missingand crippling a nuclear plant.
The principally-affected region in the northeast of Japan accounts for about 4 percent of gross
domestic product -- roughly equivalent to the output from the city of Kobe, which was hit by an
earthquake in 1995.
THE DISASTER IN FIGURES:
The following is a list of the likely impact of and response to the devastating earthquake and
tsunami that rocked the northeast coast ofJapan on Friday, and subsequent crisis at nuclear
power plants.
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DEATH TOLL
The death toll approximately 10,000, with northeastern prefectures of Miyagi, Iwate
and Fukushima most severely hit.
NUMBER OF PEOPLE EVACUATED
More than 440,000 people have been evacuated, NHK says. Hundreds of people are
waiting for help in isolated areas and have no access to food.
NUMBER OF PEOPLE WITHOUT ELECTRICITY, WATER
About 850,000 households in the north are still without electricity in near-freezing
weather, Tohuku Electric Power Co. says. The government says at least 1.5 million
households lack running water.
NUMBER OF BUILDING DAMAGED
At least 87,894 buildings have been damaged, National Police Agency of Japan says. At
least 7,400 buildings are completely destroyed, public broadcaster NHK says.
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IMPACT ON ECONOMY
Citigroup expects 5-10 trillion yen in damage to housing and infrastructure, while
Barclays Capital estimates economic losses of 15 trillion yen ($183.7 billion) or 3 percent
of Japan's GDP.UBS expects Japan's economy to grow 1.4 percent this year, compared
with its previous forecast of 1.5 percent expansion. But it upgraded its growth forecastfor 2012 to 2.5 percent, up from the previous estimate of 2.1 percent. Goldman Sachs
expects total economic losses is likely to hit 16 trillion yen, while it expects real GDP to
decline by 0.5-2 percent in the second quarter.
NUMBER OF COUNTRIES OFFERING AID
According to Japanese foreign ministry, 114 countries and 24 international
organizations have offered assistance. By March 15, teams from 14 countries/regions
have arrived to help, though some have already left.
3. STOCK MARKET
The immediate reaction of most people is to assume that a disaster is bad for an economy
and subtracts from the value of stocks. This is why equity markets typically sell off rather
sharply immediately after a catastrophic event.
Analyzed in this framework, there is every reason to expect that the ultimate impact of the
ongoing catastrophe on stocks in Japan will be relatively minor.
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First, a disproportionate number of companies in Japan are oriented toward exports.
Aside from logistical issues related to damage to the plant and equipment of specific
firms and/or the transportation infrastructure that export industries rely on, the long-
term profits of export-oriented companies are not directly impacted by a domestic
disaster.
Second, by far, Japans most important productive asset is its people. As long as the
disaster does not exact such a massive toll on Japans working-age population that it
provokes significant labor shortages (that additionally could not be alleviated through
immigration) then Japans true long-term productive capacity will remain relatively
intact after the disaster.
Third, the material damages to Japans productive capacity have been and are likely to
remain relatively minor compared to the size of its capital base. These damages are, in
any event, insignificant compared to the importance of human capital. Physical capital
can be rebuilt by human resources within a relatively short period of time.
- Stock prices from March 10 2011 to March 15 2011
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INDIA-JAPAN RELATIONS
Japan and India signed a peace treaty and established diplomatic relations on 28th April, 1952. This
treaty was one of the first peace treaties Japan signed after the World War II.
Bilateral Cooperation
Cooperation on Regional and Global issues
Cooperation in Security Fields
Economic Relations
Bilateral trade is expanding in the recent years. However, the speed and scope of expansion are still
limited. In December, 2006, the Prime Ministers of the two countries decided to launch immediate
negotiations for the conclusion of a bilateral Economic Partnership Agreement/Comprehensive
Economic Partnership Agreement aiming to complete in substance as soon as possible in approximately
two years. Thirteen rounds of negotiations were held in New Delhi and Tokyo respectively as of July
2010. Japan-India Strategic Dialogue on Economic Issues which reviews the current status of bilateral
economic issues discussed at Summit meetings, and undertakes coordination as necessary was held 3
times in New Delhi and Tokyo respectively as of July 2010 since the Dialogue was launched in July 2007.In August 2007, the Business Leaders' Forum was held in New Delhi on the occasion of Prime Minister
Abe's visit to India, and the Second meeting was held in Tokyo in October 2008.
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JAPAN INDIA TRADE:
Japanese private-sector's interest in India is rising, and, currently, about 627 Japanese
companies have branches in India. (The figure doubled over the last 3 years.)
Direct Investment from Japan (Yen: billion)
0
1
2
3
4
5
6
7
8
2001 2002 2003 2004 2005 2006 2007 2008
Trade from India to Japan
Trade from Japan to india
20012002
2003 20042005
20062007
2008
18.4 18.714.6
15 29.8 59.7178.2
542.9
Direct investment from Japan
Direct investment from Japan
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Economic Assistance
Loan: 236.04 billion yen (FY 2008)
Grants: 4.28 billion yen (FY 2008)
Technical Cooperation: 11.79 billion yen (FY 2008)
Bilateral Treaties and Agreements
Treaty of Peace (1952)
Agreement for Air Service (1956)
Cultural Agreement (1957)
Agreement of Commerce (1958)
Convention for the Avoidance of Double Taxation (1960)
Agreement on Cooperation in the field of Science and Technology (1985)
Trade Connections
Japan has been the second largest destination of Indian exports (major exports include gems,
marine products, iron ore, and cotton yarn). India is also a major importer of goods from Japan,
and its importance has been growing in recent years (major imports include machinery, plant-
related products, transport equipment, and electronic machinery).
India is a first country to which Japan extended the first Yen Loan and India has been one of
the largest recipients of Japan's ODA. Japan has long been actively providing assistance to
billon yen
Loan
Grants
Technical Cooperation
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India, primarily in the form of Official Development Assistance loans, for upgrading of economic
infrastructure, alleviation of poverty through public health and medical care, agricultural and
rural development and population and AIDS countermeasures, support for small business and
for environmental conservation.
1. EFFECT ON INDIAN AUTOMARKET
Brio Delayed
The much awaited Honda Brio, which was supposed to be showcased on March 17, has been
delayed indefinitely by Honda Siel India.
Toyotas second plant inaugurationpostponed
The disaster has also forced Toyota to delay indefinitely the inauguration of its second plant in
Bangalore. Toyota had invested 3,200-crore in Bidadi with an annual capacity of 70,000 units just for
Etios and Liva. The plant was supposed to be opened on March 15 and would have offered some relief
in terms of waiting period ofEtios.
Maruti canceled 1 crore production milestone celebration
Indias largest Automaker, Maruti Suzuki has cancelled 1,00,00,000th car celebrations which was
supposed to take place on March 11. The company sells one of every two cars sold in India, exemplifying
the success of Japanese investors in India. More than 80 percent of Japanese companies in India are
profitable and more than 90 percent have expansion plans.
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Suzuki Kizashi and Nissan Teana Deliveries may be delayedThe Kizashi and Teana come to India as a completely-built-unit straight from Japan. We are predicting
that the deliveries of these cars will be affected by the Tsunami at least in the short term
According to Japanese embassy figures, the number of Japanese companies operating in India
has increased from 260 to 560 over the last two years. The Japan Bank of International
Cooperation (JBIC) recently listed India as the number one country for strategic long-term
investment.
2.JAPANESE INVESTMENTS
Institutional investors foresee positive outcomes for capital flows from this disaster over the medium
term. The start of negotiations on India-Japan CECA in January 2007, mark the beginning of a new phase
in Indias economic relations with Japan.
Investors argue, this Tsunami-quake event may prompt affluent Japanese investors to more
actively diversify overseas.
Japan's high net worth investors account for nearly 40 per cent of the wealth in the Asia-Pacific
region (holding assets worth $3892 billion), that's likely to have big liquidity implications.
Mr. Alex Wilmot Sitwell, Co-CEO of UBS Asia Pacific region, felt the crisis could prompt large
Japanese corporations to diversify their manufacturing base overseas.
Macro investment environment was not firmly structured as yet and the both parties hadconcerns about the future direction of the central government FDI policy.
If this happens, India, as one of the most promising consumer markets in the Asia Pacific, may turn out
to be a beneficiary. Given that previous India-bound deals from Japan have been sewn up at premium
valuations (Reliance-Nippon Life, Ranbaxy-Dai Ichi Sankyo), that will be good news for companies in
autos, financial services and pharmaceuticals in India.
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3. SEAFOOD
MPEDA said during 2009-10 for the first time in the history of marine product exports, the
earnings crossed USD 2 billion. Fears of radiation spread across Japan's northeast coast after
the Fukushima nuclear power plant blast due to Tsunami and earthquake recently affecting
the market. Anwar Hashim, President of Seafood Exporters' Association of India, said Marchshipments are yet to get clearances from the clearing agencies . "Japan has been a traditional
market for us over the years. Presently Tokyo and Osaka started taking shipments.
The March shipments have been affected due to the situation there," Hashim said. Last year,seafood exports from India have crossed all previous records in quantity, rupee value and US
dollar terms. Exports aggregated to 6,78,436 tonnes valued at Rs 10048.53 crore and USD 2.1
billion. This year it may end at USD 2.4-2.5 billion.
4. DELHI METRO: EFFECTS
The Delhi Metro, their best-known, recent project, stunned Indians grown cynical about publicly
financed infrastructure by finishing on time and on budget..
Japan views economic cooperation with India as an opportunity to diversify its commercial
relations beyond those concentrated in China and the United States.
A nation with a rapidly aging population, Japan can use investments in India to benefit from
Indias highly educated and growing workforce.
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Japanese officials have also expressed admiration for Indias IT, pharmaceutical, and biotech
industries.
Funding and Investment
The SPV, DMRC, was set up with equal equity participation from the union and the Delhi governments.
Phase I of the project was developed at a total investment of INR105.71 billion. Of this, the Japan
International Cooperation Agency (JICA) extended the maximum amount in six tranches, with the first
one in 1997. The loan carried rate of interest for this project is 1.2 per cent per annum . The loan has a
repayment period of 30 years with a moratorium period of 10 years.
Source: Delhi Metro Rail Corporation
Phase II is estimated to cost INR190 billion. Of this, 36 per cent is being financed through equity
participation. The initial plan was to finance 48 per cent of the project cost by way of a loan from JICA.
However, JICA reduced its earlier commitment in January 2010 to only 30 per cent. The 18 per cent will
not fall under the union and state governments share.
The remaining amount is being funded from property development, internal resources, and subordinate
debt. The economic internal rate of return for this phase is estimated at 23.63 per cent and the financial
internal rate of return at 8.18 per cent.
INR28.85 billion airport express line under this phase has been funded on a debt-equity ratio of 70:30.
While RInfra holds 95 per cent equity, the Spanish partner holds the remaining. However, the SPV had
raised a debt of INR25 billion in March 2009 at an interest rate of 13 per cent, against the requirement
of INR20 billion
Japan to fund Metro's phase III from December.
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5. THE INDIAN STOCK MARKET
Indian companies operating in Japan will incur major losses as they have to shutdown their processes
their. In the tsunami excavated city of Yokohama, one of Japan's major IT centers, has many major as
well as small Indian IT firms are located and they employ several hundred employees. A large number of
Indian workforces are from the IT industry. Indian IT companies like Infosys, TCS, Wipro and many
other small-time IT firms have their significant presence in Japan and have to recall their employees .
Moreover, the Indian IT industry may also be affected by the recent natural calamity, although not
severely, as IT export from India to Japan amounts to approximately $1 billion or 2 per cent of the
country's total IT exports.
At the wake of the earthquake, international Oil prices fell to a two week low fearing that the fuel
demand will come down. However, it was certain that it's not going to live as it is expected that the
demand for alternate might increase as the nuclear power plants got destroyed in the region.
Although the Indian market has slumped a bit on the calamity news, it came back strongly to end in a
positive note. Japanese stocks fell 7.5 percent on fears about the long-term impact on power supplies. It
had a direct impact on the base metal pack prices as Nikkei fell 8 percent in five sessions. Aluminum,
copper, lead, zinc were all severely affected in the market after the disaster.
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As Japan will focus on rebuilding the country, its investments in emerging markets like India would
decline in the coming days. Japan has shown remarkable investment interests in sectors such as
infrastructure, IT, automobiles, steel, power and pharmaceuticals in India. Japan is in the seventh
position in terms of cumulative foreign direct investment in India, amounting for $3,714 million during
the period from April 2000 to March 2010.
It should be noted that The Japanese External Trade Organization had reported that Japanese firms are
increasingly preferring India as an investment destination over China. The number of Japanese
companies in India has gone up from approximately 100 in 2006-07 to 300 companies in 2009-10. Theanalysts had predicted that Japanese investment would go up to $20 billion by 2012. But now with
heavy internal pressure to gain back its lost glory, investment might be rescheduled and the financial
impact of the disaster might be a long term one for the Indian economy.
Stock markets in the developed and emerging world have actually gained 1 to 8 per cent in the last one
month, with the Nikkei Stock Average alone losing over 10 per cent.
EFFECT OF INFLATION IN INDIA
India inflation rate chat ( in % )
Year Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2011 9.35 9.54 9.68 9.70 9.56 9.44 9.22 9.78 9.72
2010 16.22 14.86 14.86 13.33 13.91 13.73 11.25 9.88 9.82 9.70 8.33 9.47
2009 10.45 9.63 8.03 8.70 8.63 9.29 11.89 11.72 11.64 11.49 13.51 14.97
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2008 5.51 5.47 7.87 7.81 7.75 7.69 8.33 9.02 9.77 10.45 10.45 9.70
As we can see form the above figure.It is clearly visible that the japan disaster which took place
in march 2011 did not show any substantial impact on inflation on the Indian economy.
As seen Japan being a major consumer of oil the per barrel cost of oil decreased after the
Earthquake due to drastic decrease in consumption in japan hence easing the effect of inflation
in India.
However, After the Fukishima Nuclear emergency In Japan as more than 70% of Japans
Nuclear power plants were shut down by the month of August ,this increased the countrys
dependence on oil and further the rebuilding projects in Japan increased the price for oil across
the world causing the oil to shoot up to 150$ per barrel. Henceforth, leading to increase in
inflation in India to a shocking 9.78% in August and 9.72% in September having an hugging
economic effect on Private Indian Airlines.
Inflation will hurt India Inc.
HOW AND WHEN
Having said all that, though, inflation is certainly one fallout of the disaster that can hit India Inchard. Though the disaster has triggered a temporary decline in prices of critical commodities
such as oil, coal and uranium from their peaks in February, researchers warn of a late 2011 or
early 2012 spike, as Japanese reconstruction demand feeds into tightly balanced world
markets.
With about 8 per cent of Japan's power generation capacity knocked out by the disaster,
expectations are for Japan to immediately restore generation by bringing idling gas-fired or oil-
fired power capacity on-stream. The impact of additional Japanese demand on global crude oil
may be muted, but that on LNG may be sizeable for the region. That's heightened input pressure
on user industries such as chemicals, pet-coke and fertilizers, in India.
UBS Investment Research, in its March 25 report, estimates that with both India and China set
to rely heavily on imports and mining costs heading up, thermal coal contract prices may be up
sharply in 2011, especially if Japan shifts a little away from nuclear energy. The China-Indiafactor will also be at work in the case of steel inputs such as iron ore and metallurgical coal
where markets are likely to be in deficit by 2011 and 2012.
For Indian users of these materials power generators, metal and steel makers the recent
cool off in prices may be a limited window of opportunity to build up inventory of these critical
rawmaterials.
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CONCLUSION
Every time a natural disaster strikes some part of the world, we see business media predicting
gloomy days ahead for the world stock markets. This time we already came through a few
sensational headlines like, 'Japan Tsunami rattles world stock markets'. True, that the
earthquake was devastating for the people of Japan but it may not really mean depressingtimes for the Indian stock markets or the Indian economy. Japan has started recovering and thiscan be seen. The tsunami did not affect the Indian economy much at a whole but yes, in a few places .
The jolt of fear and shock has not passed yet the people of Japan, but the world is hoping that
the people show their same power of determination in overcoming the natural calamities as
they always did. The world economy has been largely affected by the Tsunami that hit
the world's third largest economy and the Indian industry was no exception.
Japanese people remain undaunted by the havoc nature has wreaked on their homeland as
step by step they rebuild their nation. They are slowly and gradually rebuilding their country.
http://www.equitymaster.com/tmhttp://www.siliconindia.com/shownews/Series_of_new_powerful_earth_quakes_rock_Japan-nid-80857.htmlhttp://www.siliconindia.com/shownews/Japan_shares_drop_on_profittaking_US_losses-nid-80901.htmlhttp://www.siliconindia.com/shownews/Japan_shares_drop_on_profittaking_US_losses-nid-80901.htmlhttp://www.siliconindia.com/shownews/Series_of_new_powerful_earth_quakes_rock_Japan-nid-80857.htmlhttp://www.equitymaster.com/tm8/2/2019 Final Ppr Presentation
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THE EFFECT ON INFLATION IN INDIA
The industrial houses as well as the policy makers are all worried with the constant increase of
the inflation in India since March of 2008.
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A PRESENTATION BY DELHI PUBLIC SCHOOL, DWARKA.
1. Harsh Vardhan Goyal XI-B
2. Rajsi Rana XI-B
3. Sanaa Krishan XI-B
4. Aakash Narendra XI-B
5. Aakriti Saini XI-B