Indian Economy - News & Discussion Oct 12 2013

Suraj · Post by **Suraj** » 23 Jul 2014 11:35

The article states there are dozens of countries opposing it. It's just that they lack the individual clout to effectively scuttle the whole thing themselves. By backing us, they achieve collective bargaining behind our leadership role. It won't be easy for us, and it will generate ridiculous farticles like the lovely "Concerns mount about India's stance on global trade pact" article hanumadu posted above. It's a very good article actually - it demonstrates the kind of faux regard the developed world has for the rest of the world.

Prem · Post by **Prem** » 24 Jul 2014 05:19

India's Time For Growth
http://www.forbes.com/sites/richkarlgaa ... or-growth/

I was filled with dread when the giant Airbus 380, which looks like a flying Baby Beluga, dropped me and the other 524 passengers at Mumbai’s Chhatrapati Shivaji International Airport. Welcome to India, the land of dreams and utter dysfunction. Get ready for a one-hour shuffle through customs, I thought. Followed by car confusion and a two-hour drive to the Taj Mahal Palace hotel.Except it didn’t happen. We passed through customs in a breeze. Getting into the car, I looked over my shoulder at the stunning Terminal 2, possibly the most advanced and certainly the most beautiful airport building in the world. The ride to the Taj took 40 minutes.These are surface impressions, of course. But if the India of five years ago made one worry that a country so gifted in software could never do hardware–and infrastructure–well, that image needs a rethink. The ducks are lining up for India. The world’s largest democracy could blow its advantages yet again, but I don’t think so.Narendra Modi is one reason. A Hindu nationalist and leader of the Bharatiya Janata Party, Modi became India’s 15th prime minister in May. He had been chief minister of Gujarat, a small state of 60 million people in India’s northwest. In his four years at the Gujarat wheel Modi cut red tape and taxes, and made Gujarat investor-friendly. The state now leads India in economic growth and employment.
The question is whether Modi’s methods can scale to a country of 1.2 billion. He is, by temperament, strong-willed and not averse to bulldozing his political opposition. A supply-sider, he believes economic growth and investment creates the conditions for shared prosperity, not the other way around. In this he departs from India’s recent leaders and anyone named Gandhi. If you cheer for Modi, you hope he will be like Lee Kuan Yew, the father of modern Singapore. LKY was often criticized for using a strong hand that stretched Western notionsof democracy. Modi will need some luck and a lot of courage. The late monsoon season is likely to cause food shortages that will add to India’s price inflation. Angst over high food prices might have figured in Modi’s first budget, submitted in July. The cuts to deficits and subsidies were less substantial than many reformers had hoped. Nevertheless, the Indian stock market is up 5% since Modi took office. There is more reason to be hopeful than not.
Prosperity, of course, isn’t caused by government. It is caused by entrepreneurs and entrepreneurial companies. Few companies in the world are better at creating shared prosperity than a 146-year-old Indian company with roughly $100 billion in revenue, the Tata Group. But Tata is also in airlines, automotive, steel, electricity, construction, food and beverages, and hotels. Tata has more than 100 lines of business and operates in more than 150 countries. I stayed at a Tata hotel–the luxurious Taj–and was driven around in a beautiful Tata-made car, a Jaguar XJ that looks more like a Bentley than a faux Jag from the Ford Motor F -0.22% ownership era.How does a global conglomerate of Tata’s size stay in top form across industries and not revert to the mean? The good results come from a blend of strategy, execution and strong cultural values. More than most, Tata really puts thought and muscle behind the oft-neglected cultural side.

Neshant · Post by **Neshant** » 24 Jul 2014 09:15

Sounds real dangerous. I read a statistic that the world has a total of only 30 to 40 days of food supplies. If a single global event were to even temporarily shut down food production, millions could starve - the poor first and foremost.

Statistically, its an event that's just waiting to happen.

TSJones · Post by **TSJones** » 24 Jul 2014 09:25

...how much of India's food production is stored in a protective environment? This is a major problem in the US. Even the most basic grain must be monitored for dryness and temp or it will get moldy and rotten. Of course it is not so urgent if it is animal feed or industrial use which is the end use of most US grain production. But human use, it's gotta be monitored and rodent controlled. We had problems with rodents in chicken feed used for chicken egg production with several human deaths reported from the eggs a couple of years ago.

Suraj · Post by **Suraj** » 24 Jul 2014 20:24

That is completely besides the point. Whether or not a nation stores food grains well is it's own imperative. It's not up to a trade organization to decide how much one can subsidize food, or how much one can stockpile. Nations should have the latitude to decide that all by themselves. If the US wants to interfere in Indian farming economics, it better be prepared to have others step in and decide what to do about efforts to prop up domestic agriculture, where there's plenty of distortionary subsidizing of farmers involved in the US, addition to immigration control associated with enabling illegals to work in US farms to keep produce prices down.

TSJones · Post by **TSJones** » 24 Jul 2014 20:35

Suraj wrote:That is completely besides the point. Whether or not a nation stores food grains well is it's own imperative. It's not up to a trade organization to decide how much one can subsidize food, or how much one can stockpile. Nations should have the latitude to decide that all by themselves. If the US wants to interfere in Indian farming economics, it better be prepared to have others step in and decide what to do about efforts to prop up domestic agriculture, where there's plenty of distortionary subsidizing of farmers involved in the US, addition to immigration control associated with enabling illegals to work in US farms to keep produce prices down.

You do realize that the US is being told by the WTC about how much agricultural subsidization that we can do. If we go over limits any one year we have to make payments to Brazil and Argentina farmers. There are regs that we MUST follow or we pay. The problem is that US farmers feel they are limited while everyone else in the world wants exemptions because Culturally (for instance France) or Income (such as India, Brazil, Argentina,etc.). If the US farmers keep feeling that they are continually going to get the short end of the stick then tthese trade agreements eventually won't hold up. The same for countries such as Australia.

Vayutuvan · Post by **Vayutuvan** » 24 Jul 2014 20:55

In Indian rural areas everything was locally organized. Storage was in big bamboo (5' dia and 5' high) baskets sealed with mud and dung placed in wooden platforms 2' high. Al, of these are stored in leanto sheds at home in the backyard. Fresh vegetables are seasonal only. There are some that can be stored over a couple months, eg. Pumpkins both yellow and white, yams, potatoes. Greens are sun dried which are called in telugu "varugulu". People eat whatever is in season fresh fom farmers markets which are held on Sundays. Throughout the week one can buy fresh veggies from small farmers from even smaller farming communities surrounding a 10k people village. Of course there are lot of pickles which to for at least a year if not more and are called "EDAdi kooralu" or year long curries. Water buffalo milk (which is leaner than cow milk and frankly tastes much better) and yoghurt made from this milk after cream is extracted and converted to clarified ghee through the intermediate step of butter. Ghee can stay fresh much longer than butter or cream. All oils were unrefined. Oil was extracted from peanuts, sesame (which are major), and coconuts and mustard in specific regions along with sunflower and safflower in smaller quantities. Cotton seed was used as feed for beasts of burden as well as milch animals but was not used as oil source in any major fashion. Oil extraction was using what are called "gAnugalu" which are built with wood and driven by bullocks. All goats and chicken which are sources of meat were free range. Eggs were farm fresh and usually sold by villagers early morning on the streets. People would not have to go out to the market as these would go around on the streets calling out what they are selling.
Barter was always possible and they would take grain in certain exchange rate. Rice/paddy was exchanged by landlords for vegetables, milk, eggs (and meat? No idea on that one). So not much storage as required. Marriages, festivals etc. are all organized according to seasons and seasonal items will have to be cooked (almost by religious decree, ie through rituals which specify the menu for each different kinds of events - marriage and other sanmskaras which total 16 in number), rituals on death being the final samskara, death anniversaries, and other religious festivals.

Since the seasons are not as pronounced all this worked for a long long time till the population explosion started with the advances on medicine. Also there was need to protect the territory from rapacious expansionist external forces.

Some call it progress.

Suraj · Post by **Suraj** » 24 Jul 2014 21:05

TSJones wrote:You do realize that the US is being told by the WTC about how much agricultural subsidization that we can do. If we go over limits any one year we have to make payments to Brazil and Argentina farmers. There are regs that we MUST follow or we pay.

That is your prerogative to deal with. The fact that you signed up for something voluntarily does not compel any sort of action from us or anyone else to agree to, or abide by, some equally moronic trade legislation.

TSJones · Post by **TSJones** » 24 Jul 2014 21:34

Suraj wrote:
TSJones wrote:You do realize that the US is being told by the WTC about how much agricultural subsidization that we can do. If we go over limits any one year we have to make payments to Brazil and Argentina farmers. There are regs that we MUST follow or we pay.
That is your prerogative to deal with. The fact that you signed up for something voluntarily does not compel any sort of action from us or anyone else to agree to, or abide by, some equally moronic trade legislation.

No India will deal with it too if it wants access to US markets.

Suraj · Post by **Suraj** » 24 Jul 2014 21:45

That's only possible if we sign on an agreement and then refuse to abide by it. The original article clearly describes that India will go so far as to scuttle the whole WTO deal because it does not suit us. While the US may be in a position to coerce agreements from small countries, that does not apply to India, China and the like.

That is the fundamental problem with the whole WTO system. Nation A agrees to something with Nation B . Nation A then goes to Nation C and demands some agreeement in exchange for access to A's market. C tells A to go pound sand. A attempts to apply some arbitrary penalty. C retaliates. Nothing actually happens.

Whatever the US agreed to with Argentina was borne of your own self interest. It may have some costs for you, but your self interest overrode that, because you made a deal with them. India has no self interest in negotiating a subsidy cap / stockpile cut. So it will not do so. The US can ask for one, but we won't agree.

If you treat our refusal to play ball as a reason to retaliate, remember, you are undermining the WTO in the process. You're attempting punishment not for breaching treaty, but for not agreeing to one in the first place. That is stupid. The WTO - if it continues to follow this kind of coercive approach to gain broad agreement - will choke on its own bile and die. Nations will increasingly prefer to circumvent WTO process in preference to regional trade agreements, essentially a throwback to the pre-WTO era.

Vayutuvan · Post by **Vayutuvan** » 24 Jul 2014 22:24

A SAT analogy question.

NPT:UNSC Veto::WTO:_______________

chaanakya · Post by **chaanakya** » 25 Jul 2014 15:11

India blocks WTO deal on customs rules
WTO

Reuters | Jul 25, 2014, 07.57AM IST
GENEVA: India blocked an agreement on new global customs rules on Thursday, angering fellow members of the World Trade Organization who say Delhi's veto could be costly, economically and politically.

At a meeting in Geneva, diplomats from the 160 WTO member countries were supposed to rubber stamp a deal on "trade facilitation" that was agreed at talks in Bali last December. Some estimates say it could add $1 trillion to the world economy and create 21 million jobs. The question here is which economy and where are the jobs getting created. Certainly not the turd world as they see it.

But India said it would veto the agreement until it gets what it wants in a separate area linked to its system of subsidising and stockpiling crops. Now that is of interest to us given the population, and WTO allowed subsidy regime in favour of west although goes by different name

Rest of the item is frothing at the mouth by other and ToiLet faithfully reporting it.

chaanakya · Post by **chaanakya** » 25 Jul 2014 15:13

TSJones wrote:

No India will deal with it too if it wants access to US markets.

TSJ you sure have idea of BOP in India US Trade??

RoyG · Post by **RoyG** » 25 Jul 2014 22:18

Is a UNSC seat worth capitulating on WTO?

Supratik · Post by **Supratik** » 25 Jul 2014 22:27

Not at the cost of food security.

Suraj · Post by **Suraj** » 25 Jul 2014 22:28

Please keep the discussion on track. No discussion of UNSC seat dynamics here.

rsingh · Post by **rsingh** » 26 Jul 2014 20:52

Were are China,Bangladesh and Bakistan on WTO tamasha? Do they agree to not to have food stockpile? And if they agree with India then why are we to be blamed?

Rony · Post by **Rony** » 28 Jul 2014 06:58

Why is India not agreeing to the WTO trade facilitation agreement

India has made its stance clear that it will not easily give in to pressure from the Western world over trade protocols of the World Trade Organisation, as was also discussed during the talks in Bali in December 2013. India fears that agreeing to the trade facilitation agreement (TFA) could compromise its own food security.

What is the TFA?

The TFA aims to fast track any movement of goods among countries by cutting down bureaucratic obligations. The problem with TFA runs in a clause that says farm subsidies cannot be more than 10 percent of the value of agricultural production. If the cap is breached, other members can challenge it and also go on to impose trade sanctions on the country.

The developing countries would have a problem with the solutions offered by the developed countries as without the subsidies the food security of the developing nations could be seriously harmed. India agreed to the TFA in Bali only under the condition that interim relief would be provided to the developing nations. It said no legal actions or sanctions would be imposed on the developing nations till 2017, by which time a solution would be worked out among the nations. However, this interim relief would not be applicable if such subsidies would lead to trade distortions, by which one means, that prices of exports and imports cannot be affected by this.

Why is India opposed to TFA?

India's Food Security Act, which is binding on the government by law now, implies that the government will provide very cheap food to the most vulnerable part of the population at extremely low prices. Apart from providing subsidies to the consumers, through the public distribution system, it also provides subsidies to the producers of food grains. So it buys food grains from farmers at a minimum support price, and subsidises inputs like electricity and fertiliser.

The first problem is with the 10% cap on subsidies which will not be possible for India to achieve. Adding to the woes is the fact that the 10% cap is calculated based on 1986-88 prices when the prices of food grains were much lower. So the cap has to be updated taking into account the present prices of foodgrains.

The second problem is that even for providing subsidised food, India will have to open up its own stockpiling to international monitoring. It will not be able to add protein heavy grains like say, lentils, if it wants to, due to riders in the peace clause.

Third, it might seem unfair to developing countries to not crack down on farm subsidies that the United States provides to its farmers to the tune of more than $20 billion per year. While the WTO is binding the developing countries to protocols, the issue of subsidies by developed giants like US seems to be off the table.

What does India want?

India now wants a permanent solution to the issue of public stock holding of foodgrains. G33 members including China have supported India's stand on the ability to subsidise agricultural production and distribute it to the poor at low cost.

Why does WTO have a problem with high subsidies?

WTO argues that if the developing countries continue to give prices to farmers which are higher than the market prices, it might harm the poor farmers in other parts of the world. It also says the deal could add $1 trillion to global gross domestic product and 21 million jobs, by cutting down red tapes. Also according to media reports, the developed world wants the issue of food security to be delinked from the TFA, and could be discussed later.

Suraj · Post by **Suraj** » 29 Jul 2014 01:36

Jaitley heralds shift to low-tax economy

Finance Minister Arun Jaitley is looking more and more like just the right man for the job. Despite presenting a budget that one critic labelled as essentially P Chidambaram's document but "with saffron lipstick", Jaitley has now begun differentiating his government's approach by enunciating a clearly pro-business, pro-growth direction that sheds some of the UPA's obsession with rights and entitlements.

A few days ago, he defended the government's approach saying being pro-business is necessary to be pro-poor. Yesterday (25 July), while getting the Finance Bill passed in the Lok Sabha, he articulated a lower-tax orientation and rubbished Leftist criticism that the tax concessions to business needed to be withdrawn. He is abandoning soak-the-rich rhetoric.

On taxes, he was crystal clear. "Ours is not a high-tax government. High tax government will not encourage business and industrial activity in India. A high-tax government will never be able to create jobs. A high-tax government will never be able to create a low-cost manufacturing situation....", DNA reports him as saying.

Just in case somebody didn't get it, he emphasised consumer interests while talking low taxes. "What do consumers want to buy? They want to buy products. They don't buy taxes."

Lower taxes hold the key to a more effective and smaller state. More money in private hands is a key element in a rightward shift in policies.

If Narendra Modi wanted the right man to articulate a right-wing economic vision while he himself focuses on governance and managing the NDA's politics, Jaitley seems to be a good enough choice. Clearly, between them Modi and Jaitley plan to marry effective politics with effective economics.
...
Another observation made by Jaitley on taxation showed that he is not afraid to confront the Left on bashing business.

The Left usually wants the rich and businesses taxed more, and this argument is brought up whenever the government talks of limiting subsidies - a key imperative when deficits are high. It is clear that India's subsidy bills - especially in fuel and fertiliser - are simply unsustainable. The Left's usual rejoinder to cutting subsidies is withdraw the subsidies to business.

The budget documents, for example, put out statements on the cost of tax concessions to individuals and businesses. In 2013-14, such concessions were estimated Rs 1,02.606 crore for companies, and Rs 40,414 crore for individuals (through 80C and other benefits). Besides these, there are excise and customs concessions, but those relate to boosting growth and sales in specific sectors and do not land up in corporate bank accounts. If sales grow, the exchequer also gets higher revenues.

Jaitley answered the leftist claptrap effectively when he pointed out that the revenue forgone statement is not the same as taxes due and not collected. There is no tax due from business. These are specific concessions given to promote specific national goals - like higher exports, setting up factories in backward areas, increasing fixed investment, etc.

Vayutuvan · Post by **Vayutuvan** » 29 Jul 2014 02:06

Suraj: One quick question. There is lot of tax avoidance in India, wouldn't lowering taxes lower the tax base and thus cash flows for both operational and capital projects. Are there any steps being proposed to aggressively enforce the existing tax laws, closing loopholes, and pursuing the evaders aggressively?

Gus · Post by **Gus** » 29 Jul 2014 02:12

I guess the idea is to increase consumption that will help domestic production and industrial activity - leading to higher revenue from sales taxes etc? plus more people getting into jobs from this increased activity will push some portion into higher tax brackets?

Theo_Fidel · Post by **Theo_Fidel** » 29 Jul 2014 02:29

So what is the effective Indian Corporate tax rate the article doesn’t say.

I support lowered corporate tax rates within limits but the government as a whole in India raises very little money compared to it GDP. IIRC the effective tax rate in India is only 17% of which GOI takes 12 %. These numbers need to get much higher so government can make the capital/social investments that are required. A decent number to aim for a country like India with a heavy investment backlog should be 25% of GDP. If we can manage the pain maybe even 30% of GDP.

If corporates don’t pay then money has to come from elsewhere, which probably means you & I…

Suraj · Post by **Suraj** » 29 Jul 2014 02:50

It's primarily a change in mindset. The NDA, particularly this administration are focused on developing the supply side. The UPA on the other hand, was characterized by a focus on right and entitlements, as well as welfare spending.

Our corporate and individual tax rates are already fairly high. However, effective rates are much lower due to lack of compliance or the use of various tax benefits.

An absence of supportive environment to businesses, combined with a complex collection of levies and taxes, sets a prime environment for lack of compliance. This administration is correct in understanding business mentality - companies will pay their fair share, provided that they are given freedom to do business without being punitively taxed and regulated. This also applies to individuals.

Both businesses and individuals expect service in return for the tax they pay. UPA, and particularly the Left, approaches taxation as a punitive redistribution exercise, where one side is to be wrung and the largesse used for what they consider worthwhile, i.e. politically driven social schemes. That is an approach ripe for tax avoidance, because people see taxation as punishment as opposed to the charge for effective administration. No wonder effective rates are barely half the stated ones.

When governments impose accountability, good governance and timely execution, the gap between stated and effective rates can be lowered even as effective rates increase due to better compliance. In the process, the government can lower stated rates while simultaneously enhancing effective rates through better compliance.

I disagree that the above is the same as US political scorched earth tactics. This administration had no desire to burn the fields, and US politics are an unnecessary distraction in this thread. They're instead carrying out a mandate to replace entitlement politics with the politics of enabling development, utilizing the economic development as a means towards social welfare.

Theo_Fidel · Post by **Theo_Fidel** » 29 Jul 2014 03:04

Per this article dated from 2011 in Business line the effective tax rate seems to be trending towards 25%.

BTW the article took off into a Tea party screed against government size and taxation, etc which is not what the minister meant IMHO.

muraliravi · Post by **muraliravi** » 29 Jul 2014 18:00

The inflation numbers seem to be dipping. IMHO, this is really key

RoyG · Post by **RoyG** » 30 Jul 2014 07:22

Inflation is dipping but we still are in a lot of debt and fiscal deficit is still too high. Fiscal will go down overtime but something is going to have to be done about this debt. Real estate sector is also too hot. Banking reforms and a national gold vault are both needed.

Supratik · Post by **Supratik** » 30 Jul 2014 14:19

X-post

Privatization of the 6 airports are on track.

https://in.finance.yahoo.com/video/6-ai ... 27756.html

Aditya_V · Post by **Aditya_V** » 30 Jul 2014 14:58

In India there is evasion of tax and avoidance through the NGO route, IT should go after some of these fat cat NGO rather than attacking Industry under UPA.

We should also focus on corruption where settlement is made in foreign countries, Hawala channels and black money to white money conversion fronts like Kingfisher airlines and Spicejets- basically acting as a front to take Black money in India out as Business collections with corresponding payments to foreign vendors.

Prem · Post by **Prem** » 31 Jul 2014 09:22

http://www.internetretailer.com/2014/07 ... lion-india
Amazon will invest $2 billion in India

Today’s announcement follows yesterday’s news of a $1 billion funding round for Indian e-marketplace Flipkart, and recent online investments in India by Wal-Mart and eBay. Though limited to providing an online sales platform for Indian merchants, Amazon is rapidly adding distribution centers in India.
Amazon.com Inc. today announced plans to invest $2 billion in India, following a series of major moves by competitors in a large economy where e-commerce still represents a tiny fraction of retail sales.“After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,” Amazon founder and CEO Jeff Bezos said in a statement. “We see huge potential in the Indian economy and for the growth of e-commerce in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales. A big ‘thank you’ to our customers in India—we’ve never seen anything like this."A big part of Amazon’s investment appears to be earmarked for expanding its distribution network. The company announced earlier this week plans to open five new distribution centers in India, up from two today and one as recently as April. With the new distribution centers, Amazon will have 500,000 square feet of storage capacity, enabling it to deliver goods on behalf of Indian merchants that sell 17 million items on Amazon.in. The new distribution centers will be in Dehli, Chennai, Jaipur, Ahmedabad and Tauru.Amazon began offering next-day delivery to consumers in major Indian cities in December and guarantees next-day delivery on 300,000 items offered by merchants on Amazon’s Indian e-commerce site

Prem · Post by **Prem** » 31 Jul 2014 09:26

India's Tata earmarks $35 billion to ride the Modi express
http://fortune.com/2014/07/30/indias-ta ... i-express/

The Financial Times reported Wednesday that Cyrus Mistry, the chairman of India’s biggest business empire, presented plans at an internal meeting to invest $35 billion in new areas that look likely to benefit from the economic agenda of newly-installed Prime Minister Narendra Modi.Mistry reportedly highlighted four new areas for growth: defense and aerospace, finance, infrastructure and retail.A presence in defense and insurance would make Tata, with its huge political clout in India, a potentially attractive partner for foreign companies looking to exploit the liberalization of those sectors. In its first budget earlier this month, Modi’s government raised the cap on foreign ownership in defense and insurance companies to 49% from 25%.It’s unclear whether the company would aim to build such businesses from scratch or buy in expertise by acquiring foreign companies, as it did with U.K. carmakers Jaguar and Land Rover.The choice of infrastructure, meanwhile, also fits into Modi’s grandiose ambitions to overhaul urban India with the creation of 100 ‘smart cities’ with state-of-the-art communications technology and more efficient use of energy and water. Those ambitions will rely overwhelmingly on private capital to be realized.
Ratan N. Tata, the patriarch who was chairman of the group for 21 years, had already given a hint of the company’s thinking a month ago when he tweeted “we need to stand together to support the new government’s actions to rebuild economic growth and prosperity in India.”Modi’s victory has already added billions to Tata’s value–TCS shares have nearly doubled this year as financial markets looked forward to India adopting a more business-friendly policy after years of being held back by bureaucracy and often-rampant corruption.

disha · Post by **disha** » 01 Aug 2014 02:30

This is very important news and needs to be discussed.,

Pre-discussion before news:

WTO Food Security issue in a nutshell (in simple understandable terms., the details are definitely details and different and devil lies in details).,

Say any nation like India can buy up to 10% of food crops at subsidized rates from the market towards food security. Say there is a dollar figure to that 10% - let us say 100 USD. However the dollar figure was decided in 1986. Now 30 years hence, because of price inflation., that 10% is breached if India continues to buy the same amount of food at subsidized rates. That is 100 USD is not enough to buy food grains at subsidized rates to feed its own poor. Or to remain under 100 USD subsidy, India has to remove/raise MSP.

In effect if India raises MSP for say rice., the Rs. 2 per kilo rice which several poor are getting in C36grh or TN will be gone. Maind eet - in my recent visit to Urban India - I did not see a single - poor begging for food. In some places I saw decent food given out to decently dressed poor people for free - but not a single hungry adult!!! It was a big change. So yes 2 Rs/ Kg rice may not be great, but is good for several hungry people.

Of course, it is unfair for India not to be able to keep up with inflation and/or population.

So what is India asking? It is asking that WTO decide on the food security subsidy now - that is can a formula be arrived where subsidy can keep up with inflation and/or population or inflation/population/nutrition or some such metrics. What Bali agreement was doing is this - let us sign the TFA and later we will discuss the food security. If you sign the TFA now and there is no discussion or decision on food security - who loses? So India is saying before we sign TFA let us decide on Food security (I am not going to call it food subsidy).

And this set the Gir Lion among vultures - it blew the lid on their sly shenanigan (and what was the previous CONgoons doing - they purposely passed the food security act to lay a ticking time bomb for Modi Sarkaar - that is if he adheres to WTO, he cannot buy food and re-distribute it to the poor and thus cannot adhere to FSA - and aam junta cares two hoots about WTO. But they did not expect NaMo to turn the whole thing on the head and make it into an opportunity.

So here you go the URL on how India is twisting both the WTO and the Amerikhans

http://economictimes.indiatimes.com0/ne ... 378979.cms

And here is what the vultures are threatening India with:

Developed countries have sought to put pressure on India saying that other countries could go ahead with the agreement even if New Delhi did not change its stance.

They have also warned that India will lose the 'peace clause' available to it under the Bali agreement that says no member can take action against another on the food subsidy issue till a final agreement is reached on the issue, the deadline for which is the 11th ministerial in 2017.

First one - We will leave you behind (India says it is not even worth writing that threat on toilet paper., we are 20% of humanity with great growth prospects - you cannot ignore us)

Second one - If we say dump food on your shores (and destroy your markets) - your complains to WTO will be ignored (and also other complains)., and this is a serious threat. So what India did - used its brains and said - here is our proposal - if you decide not to agree - why blame us? You do not come up with a proposal, you do not agree with our proposal - what is going on - why the rush to TFA - dal mein kuch kalaa hain? And what will WTO do - declare trade war on India? And NaMo has taken that risk...

Suraj · Post by **Suraj** » 01 Aug 2014 02:59

The west does not have a leg to stand on, and they know it. The problem isn't with subsidies per se. I'm sure GoI would agree that a cap on subsidies is a good thing. The real problem is the poison pill clause of measuring value using 1986-88 prices. That's absolutely not a number chosen in good faith. It has no meaning at all. A 10% cap based on current market prices would have been fine with GoI, but not 1986-88 prices. That clause is meant to cause harm, because it makes the 10% cap meaningless. GoI should stick to its guns and get its way by having that clause removed. Naturally, the previous government did not do its job by having that clause removed during the Dec 2013 talks, but this one is doing its job.

disha · Post by **disha** » 01 Aug 2014 03:39

^^ Agree. And that enunciation should have come vociferously at Bali itself and the MMS govt. should have talked about west abiding to their WTO obligations at all fora. But then I do believe whole-heartedly (and grudgingly) that MMS was a sold out.

Here is a Jet-li kick to the WTO

ndia cannot in any way put at risk the livelihoods of its poor farmers, he tells Kerry

India on Thursday suggested a midway solution out of the impasse at the World Trade Organisation (WTO) talks in Geneva. Union Finance Minister Arun Jaitley told visiting U.S. Secretary of State John Kerry that the WTO unambiguously state that till it found a permanent way to correct its subsidy rules for agriculture, the interim protection for India’s minimum support prices (MSPs) for farmers would last.

Later, on his part, Mr. Kerry said at a press conference that a compromise was still possible at the WTO, but stressed that progress was still to be made. India cannot put to risk the livelihoods of its poor farmers, Mr. Jaitley told the U.S. delegation. India wants the WTO caps that its MSPs risk breaching as they are benchmarked to food prices in the 1980s.

The WTO Ministers last December agreed in Bali to take up a work programme for a permanent solution, provided an interim peace clause and also agreed to sign a Trade Facilitation Agreement by July 31.

disha · Post by **disha** » 01 Aug 2014 04:06

Lots of Gora Rona-Dhona and threats

Ensoi!

http://www.reuters.com/article/2014/07/ ... 4020140731

DEAL WITHOUT INDIA?

Diplomats say India could technically attract a trade dispute if it caused the deal to collapse, although nobody wanted to threaten legal action at this stage. The summer break will give diplomats time to mull options, including moving ahead without India.

Technical details would still have to be ironed out, but there was a "credible core group" that would be ready to start talking about a such a deal in September, a source involved in the discussions said.

"What began as a murmur has become a much more active discussion in Geneva and I think that there are a lot of members in town right now that have reached the reluctant conclusion that that may be the only way to go," he said.

An Australian trade official with knowledge of the talks said a group of countries including the United States, European Union, Australia, Japan, Canada and Norway began discussing the possibility in Geneva on Wednesday afternoon.

New Delhi cannot be deliberately excluded, since that would mean other countries slowing down containers destined for India, but if it becomes a "free-rider" it will add another nail in the coffin of attempts to hammer out global trade reform.

Trade diplomats had previously said they were reluctant to consider the idea of the all-but-India option, but momentum behind the trade facilitation pace means it may be hard to stop.

Many countries, including China and Brazil, have already notified the WTO of steps they plan to take to implement the customs accord immediately.

Other nations have begun bringing the rules into domestic law, and the WTO has set up a funding mechanism to assist. But WTO head Azevedo said he feared that while major economies had options open to them, the poorest would be left behind.

"If the system fails to function properly then the smallest nations will be the biggest losers," he said. "It would be a tragic outcome for those economies - and therefore a tragic outcome for us all."

Suraj · Post by **Suraj** » 01 Aug 2014 04:30

Industrial revival continues as companies see a conducive environment to invest under the new government:
Core sector output soars to nine-month high in June

The core sector index was up 7.3% in June from a year ago, the highest since September 2013, data released by commerce and industry ministry on Thursday showed. It has a 38% weight in the Index of Industrial production (IIP), implying that with more than one third of IIP rising strongly there is a good chance growth could accelerate from the 13-month high of 4.7% recorded in May.

This index captures output trends in eight infrastructure industries - coal, electricity, crude oil, natural gas, steel, cement, fertilisers, and refinery products.

"Double-digit growth in merchandise exports and auto production in conjunction with the sharp improvement in core sector growth suggest that growth of industrial production in June 2014 could be as high as 5-6%," said Aditi Nayar, senior economist, ICRA.

Exports rose 10.2% in June while car sales were up nearly 15% in the month. The purchasing managers' index (PMI) for manufacturing was at a four-month high in June while that for services was at a 17-month record.

Most experts say these are signs the economy is turning around from the slump in the last two years. The Indian economy expanded 4.7% in FY14, just ahead of a decade low 4.5% in the year before.

ramana · Post by **ramana** » 01 Aug 2014 08:47

New ways to smuggle gold into India

~2.36 tonnes out of 250 tonnes smuggled.

Need to get rid of the cess that PC put.

RoyG · Post by **RoyG** » 01 Aug 2014 11:17

I agree. Just scrap the damn thing. Modi is back and confidence is returning. Gold rush will naturally slow down.

Aditya_V · Post by **Aditya_V** » 01 Aug 2014 12:46

I think lowering duty by 5% and removing the reexport restriction will put an end to this. Exporters should be given duty drawback against export of gold.

RoyG · Post by **RoyG** » 01 Aug 2014 12:49

Just remove the duty all together.

Aditya_V · Post by **Aditya_V** » 01 Aug 2014 13:15

Nope, why can't the Goverment make some revenue, 3-4% will make smuggling unviable, at the same time contribute to reduce India's Huge Deficit.