INDIAN AUTOMOBILE INDUSTRY-NO NEED FOR EXPANSION

09/01/2014

India has a population of 120 crores. The number of households will be about 25 crore. As of now, India produces about 25 lakh cars annually. Assuming that cars have a life of about 10 years, there will be about 2.5 crore cars in working condition in the country shortly.

The annual production of two-wheelers in the country is about 1.4 crores. Here also it can be assumed that the life of a two- wheeler is about 10 years. This means that there will be about 14 crore two-wheelers in the country shortly.

Besides cars and two-wheelers there are three wheelers, commercial vehicles etc. There are also bicycles, battery cycles etc.

As in Japan, India should also recondition vehicles on a large scale so that the vehicle life can be extended.

Taking all vehicles into account there will be one vehicle per family shortly. Considering the acute fuel shortage, traffic jams, shortage of parking space etc in the country, government and the banks should discourage people from owning more vehicles.

Considering all the above, the existing capacity for automobiles appear to be sufficient. Vehicle manufacturers should devote attention on improving the quality and performance of the vehicles rather than on expanding the capacity.

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Indian Projects- no need for foreign loans

03/01/2014

There is news that India will get a loan of $160 million from World Bank for modernizing roads in Rajasthan. When the money is received by India, the equivalent amount of Rs.996 crores will be brought into circulation in India. It may come from the reserves and /or from printing currency notes. Roads can be modernized without importing any material from abroad or in other words there is no need for foreign exchange for the project. Only Indian Rupees is needed and this is available in India or can be printed. Inflation will be there whether loan is taken from World Bank or the Indian currency is released into circulation without taking loan in foreign currency from abroad. So in cases where imports are not required for projects loans should not be taken from abroad and the required amount should be loaned by Reserve Bank of India.