Rocked by scandal, Satyam Computer Services Ltd. (ADR: SAY) is embarking on a massive corporate restructuring, but with India’s reputation as an investment destination and world leader in information technology at stake, time is of the essence and the government could be forced to step in with a financial bailout.

“We are considering all options and will soon announce definite steps to help the company overcome the current crisis as it is the question of saving jobs and an international brand,” Commerce and Industry Minister Kamal Nath said Monday. “The Prime Minister is closely monitoring the developments on Satyam.”

Indian authorities last Friday detained former Satyam Chairman B. Ramalinga Raju on charges of forgery, breach of trust and criminal conspiracy after the founder of India’s fourth-largest software exporter confessed to falsifying about $1 billion in cash on Satyam’s books and exaggerating

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Even a few months ago, India promised to be more resilient in the global downturn than other battered economies. After Satyam Computer's (SAY) revelations of a $1 billion accounting fraud, however, it looks far from possible. It has been a week since India's biggest corporate scandal came to light and the markets are still reeling from the shock.

The Indian IT sector, which generates more than half of its revenue from outsourced work from the United States, has taken the worst hit. Already grappling with the effects of the recession, it may see delay in large contracts from global firms after the Satyam fiasco.

The Securities and Exchange Board of India (SEBI), now faced with the challenge of avoiding such fraud in future, will review papers of auditors who cover stocks listed on the Sensex 30 and Nifty 50.

While some companies are apprehensive about overscrutinization, more skeletons are

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Even a few months ago, India promised to be more resilient in the global downturn than other battered economies. After Satyam Computer's (SAY) revelations of a $1 billion accounting fraud, however, it looks far from possible. It has been a week since India's biggest corporate scandal came to light and the markets are still reeling from the shock.

The Indian IT sector, which generates more than half of its revenue from outsourced work from the United States, has taken the worst hit. Already grappling with the effects of the recession, it may see delay in large contracts from global firms after the Satyam fiasco.

The Securities and Exchange Board of India (SEBI), now faced with the challenge of avoiding such fraud in future, will review papers of auditors who cover stocks listed on the Sensex 30 and Nifty 50.

While some companies are apprehensive about overscrutinization, more skeletons are

...

India’s central bank yesterday (Monday) unexpectedly lowered its base lending rate for the first time since 2004 – a move that signals that India Reserve Bank Governor Duvvuri Subbarao sees weaker growth and the credit crisis as bigger threats than inflation in Asia’s third-largest economy. The Reserve Bank of India cut its overnight lending rate from 9% to 8%, according to a government statement issued in Mumbai yesterday. The “surprise move” that came days before a regularly scheduled meeting of its policy board came after India’s central bank reduced the cash reserve ratio by 2.5 percentage points to 6.5% – retroactive to Oct. 11, Bloomberg News and MarketWatch.com both reported. The so-called “repurchase rate” is the discount rate at which India’s central bank lends money to commercial banks to infuse liquidity into the market. India’s rupee ...

by Edward Hugh: Barcelona

Executive SummaryIndia’s latest run of strong economic growth and continuing macroeconomic stability is a tribute the important progress made in recent years in macroeconomic management techniques as well as to an earlier generation of structural reforms. India’s economy has now expanded at an average rate of about 8½ percent for four years running, on the back of rising productivity and sustained investment. Inflation after ebbing in the second half of 2007 has now returned in full force and become one of the most pressing macro problems facing the Indian economy. In fact the record capital inflows which have followed the bout of global financial turbulance and a slowing U.S. economy, while in the long run beneficial, have only served to complicate the application of sound monetary policy. The current account deficit, which had remained modest, is now – on the back of high oil

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India's inflation accelerated again in mid July, and hit it highest level since 1995, providing additional evidence to support last week's central bank decision to raise borrowing costs for the third time in two months. Wholesale prices were up 11.98 percent in the week to July 19, after rising 11.89 percent in the previous week, according to data from the commerce ministry released in New Delhi on Friday.

The Reserve Bank of India raised its repurchase rate by a half-percentage point to 9 percent on 29 July, giving priority to the inflation fight over India's short term growth rate. Indeed many economists consider that the bank may well increase the benchmark rate again in the next three months. The cash reserve ratio was also raised 8.75 to 9 percent and in the statement which followed the decision the bank said it

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