Theo_Fidel wrote:Little OT, but there have been many many ponzi schemes in India the created flats, car ownership, bike ownership, chit funds, teak, emu farmers, coconut farms, etc but all of it proved to be uneconomic and waste of capital.
What you described is plain old fraudulent or just bad investment, not a ponzi scheme.
A ponzi or pyramid scheme is this: you tell 5 people to give you money to invest but instead of investing you pocket a share and then ask another 10 contributors to hand you money so you hand out "interest" to the first 5 (pocketing more for yourself.) You would then ask another group of "investors" to hand you money so you can pay interest to the second group of 10 (of course, pocketing yet more for yourself.) This will continue as long as you can convince more investors or someone finds out. There is no real investment and no return except for more unsuspecting contributors.
Now a waste of capital is exactly that. It is actual investment (unlike a ponzi scheme) in real things, i.e. coconut farms that simply provided no return.
I don't think India & Indians as a whole can afford this sort of waste. Doubt even PRC can afford it.
No nation outside the West and Japan should be able to even build this sort of infrastructure at all never mind just the wasteful part. For every developing country sans the PRC, there is no way to raise the initial capital to get started even on the perfectly feasible parts.
For example, take the National Highway network, the GOI had been talking about expanding and upgrading it for ages. Same with Indian Railways. These are upgrades and expansions will bring us return the same way the US highway systems had for the US. Everyone knows this but there simply isn't the money to actually do the work on the same scale. Obviously, the RBI can print more money but it doesn't because the rupee will end up the same way as Zimbabwe's dollar which is why neither us nor the Zimbabweans have even adequate infrastructure never mind an excess.
That is the real question. How is China able to build all this crap while still maintaining an ever-appreciating currency (which means it can still build even more infrastructure.) Part of the reason, we suspect is the $3T forex and their account surplus but even that can't account for the amount of infrastructure.
There is no private ownership of land, property, flat, business, etc in China. That is how they can afford this.
If Indians are willing to give up their ownership of their flat, house, land, etc we too could pull it off. Any volunteers.
That brings up even more questions. There is no private ownership or business in China. But that kind of governance usually means a decrepit underdeveloped economic hellhole like N. Korea or Albania.
Imagine if the GOI had gone socialist. Wait, we already saw that under Congress and the Nehru clan. It mean poverty and underdevelopment until the BJP flipped us around.
I, and any reasonable economist out there, would never think that the ability of the PRC to finance infrastructure comes from government ownership. The chinis had that under Mao and they were dirt poor then with even less infrastructure than India at the time. So giving up ownership will actually weaken your economy and make it even less possible to build infrastructure.
The real key is figuring, very simply, how they are able to keep printing Yuans to pay for the highways, powerplants, etc. and not have their national currency go the way of Zimbabwe's. If we figure that out, then we can do the same.