Indian Economy News & Discussion - Aug 26 2015

[Theo_Fidel]

snapshot of the UPA2 dole based economic model...the capital expenditure as a % of GDP fell off a cliff in UPA1 itself...there was one year of overhang from NDA1 to UPA2 in 2005 where it was high, as projects and payments were likely approved....by 2006 the NAC/NGO/EJ complex properly got their claws into the whole thing and ripped it apart.

I think there is more going onhere. If you look CAPEX+Subsidies was 8%-9% of GDP all the way to about 2005. Then in 2005 suddenly it becomes under 5% of GDP. Subsidies only rose just about 2%. So money must have been leaking somewhere else. Unless things like MREGA got classified as non-subsidy, etc.

[A_Gupta]

Sorry if this brings this thread back into politics, but the capex, subsidy stuff was noted even in 2013:
http://articles.economictimes.indiatime ... ajan-pmeac
January 4, 2013: "Reduce subsidies, raise capital expenditure for economic revival: C Rangarajan, chairman of PMEAC"

[Austin]

Sensex Sinks 3,000 Points in 3 Weeks, But No End to Carnage in Sight

The slump in domestic equities comes amid increasing fears of a hard-landing in China and worries about the possibility of a rate hike in the US. Global concerns, coupled with a 4 per cent depreciation in the rupee, has led foreign investors to pull out a net Rs 30,000 crore from domestic markets in the last four months.

More than half of the selling by foreign investors has come in August, which shows that the momentum of foreign selling is on the rise. FIIs sold a record net Rs 16,877 crore in Indian shares in August, pushing the Nifty down 6.6 per cent last month, its worst monthly performance since November 2011.

"The Indian economy has low global linkages, with largely intrinsic growth. However, the markets are linked: 51 per cent of Nifty revenues are not in rupee, and of the rest banks still have risky metal exposure. As flows reverse, stocks with highest rise in FII ownership of late could have an overhang," said Neelkanth Mishra of Credit Suisse.

The absence of domestic speed-breakers - structural reforms, strong economy and robust corporate earnings - has also aided foreign selling, analysts say.

None of the big reforms pertaining to land, labour or tax have fructified in the 15 months of Narendra Modi government, analysts say. The slow pace of reforms in the country was highlighted by high-profile investor Jim Rogers, who said on Wednesday that he had sold all his holdings in the country.

Doubts about the economy persist, as established by the slowdown in GDP growth from 7.5 per cent in the March quarter to 7 per cent in the June quarter. The continued pressure on corporate earnings is another factor that investors are worried about as far as investment in India is concerned.

"The last time corporate India had such a poor performance in terms of revenue and profit growth was during the 2008 financial crisis, the year that had seen the Sensex drop by more than half of its peak," said Ambit Capital's Saurabh Mukherjea.

[somnath]

I think there is more going onhere. If you look CAPEX+Subsidies was 8%-9% of GDP all the way to about 2005. Then in 2005 suddenly it becomes under 5% of GDP. Subsidies only rose just about 2%. So money must have been leaking somewhere else. Unless things like MREGA got classified as non-subsidy, etc.

Good catch! 2 big reasons:
1.. FRBM Act, that kicked in in 2003. It gave a roadmap for fiscal consolidation. The roadmap isnt ironclad by law - there are loopholes to avoid the targets, but all FMs took it seriously initially. Since a lot of expenditure in the budget is virtually non-discretionary (salaries, interest, pension, subsidies), capital expenditure took the hit as it is the only discretioanry head that was politically viable. As a result of this, capex spends came off as % of GDP, and fiscal deficit came down to 2.7% of GDP in FY2008.
The govt suspended the act in light of the Financial crisis thereafter.
2. Increasing devolution of central taxes to states - so the Union Budget has comparatively less revenues (as % of GDP) to allocate today than it had in the early '2000s and in the '90s. A lot of spends, including capex, has been shifted to the states as a result.

NREGA wont be counted as a subsidy, but its only ~0.2-0.3% of GDP.

[Suraj]

While the letter of the FRBM act may have been met for a while before the 2008 global crisis, I don't think it was met in spirit. The act strove to drive capex spending by pushing better fiscal responsibility, which shows up as the rising capex/GDP percentage in the early 2000s in the image quoted earlier.

However, the subsequent years until 2008 show a breakdown in capex spending and a rise in subsidies, that really takes off after 2008. What replaced capex between say, 2005-08 such that it fell from 4% of GDP to <2% ? Welfare spending that was not classified formally as subsidies, resulting in the subdidy/GDP figure looking subdued those three years, and yet capex taking a huge hit ?

The actions following the 2008 crisis are worse. With the suspension of the FRBM act then, one should have expected high deficit spending on capex stimulus measures. Instead, it's the subsidies and welfare spending that gets a major boost, while capex/GDP falls further. Subsequently, the stagflation driven by the commodity and crude prices just pushes up the interest payments header between 2011-2014, crimping both the subsidies and capex.

[Arjun]

Somnath and Theo seem to be looking at a different graph from the one I am seeing. Ever since 1993 capex + subsidies has been in the range of 5% or less... not sure where they are getting their figures from.

Secondly, tax devolution to states has been consistent and in the region of 30% or so for the last 2 decades. Not much change on that parameter.

Lastly, given that stuff like NREGA was not counted under subsidies, the picture in UPA regime seems to be even worse than what the graph portrays.

[SaiK]

What is the significant most important point to read from that capex-subsidy graph posted by Suraj is from Year 2008 till 2014, the subsidies went north and heading sky. It is now, brought to levels matching year 95/96 -> 2008.

[Theo_Fidel]

I dunno. 4% of GDP is a loooot of money, pun intended… ..even MNREGA is not enough to explain. That is like $80 Billion per year… .. this is 1/4 of the GOI budget. India technically does not spend a lot on welfare. One of the reasons our HDI is so abysmal. We have no universal unemployment payments, no social security, no universal old age pensions, no disability programs, no income support for children, no Medicare/Medicaid program, no prescription drug support, I could go on and on…

From charts below looks like 5% of GDP consistently on social welfare, which is a horrendously low number if you ask me, esp. since it includes education and healthcare which are basic rights not welfare. Also there is no sign anything else perked up by 4% of GDP. That little perk-up in rural development from 0.8% in 2001 to 1.2% in 2006 is probably the MNREGA right there.

I always get a little squirmy when people attack welfare spending in India, esp. since we do so little of it and do it poorly as well. Even China spends 10% on social welfare and the west of course is not a comparison at all. Sure we can re-direct money from things like MNREGA but it doesn’t look like CAPEX went there entirely…

[Theo_Fidel]

Somnath and Theo seem to be looking at a different graph from the one I am seeing. Ever since 1993 capex + subsidies has been in the range of 5% or less... not sure where they are getting their figures from.

No go all the way back to 1991. Combined it is 8%.
Projection for 2016. combined looks like 3.5%. Where did that 4% of GDP go?
MNREGA is a nice chunk but not all of it...

[Arjun]

^ into other Revenue expenditure, like salaries of govt employees.

[SaiK]

I dunno. 4% of GDP is a loooot of money, pun intended… ..even MNREGA is not enough to explain. That is like $80 Billion per year… .. this is 1/4 of the GOI budget. India technically does not spend a lot on welfare. One of the reasons our HDI is so abysmal. We have no universal unemployment payments, no social security, no universal old age pensions, no disability programs, no income support for children, no Medicare/Medicaid program, no prescription drug support, I could go on and on…

Yes, one of the reasons why we started a separate politics thread covering this as core issue. This is significant understanding and reality!

JMT

[somnath]

Much as we would like more capital expenditure from the govt, what's important is the total Investments being done in the economy. The multiplier impact of investments in, say a power plant doesn't change if it's from the govt or from the public sector or from the private sector.

The fact is that there was a sharp acceleration of "I", or investment, component of GDP in the decade of the 2000s. It went up to the late 30s in the second half of the decade, nearly 50% more than the sort of rates we used to see in the previous decade. It tapered of just a little in the last 2-3 years, but it's still well above the 30% of GDP mark.

Unlike what the general impression in the popular press is, the issue today, or in 2013, is not availability of capital for I, but a declining efficiency of the same. Some of it was global - a commodity super cycle globally. Some of it was internal - policy related.

Which is why the point today is not of aggregate quantum of govt spend in capex, but smart spends backed by smart policy making.

[Arjun]

After one excuse (devolution to states) is conclusively demolished, comes another. Rather predictable...

Key takeaway re external handling of economy, remains the following: NDA stress on fiscal prudence combined with growth-oriented Investments vs UPA lack of prudence on fiscal deficit; Growth secondary in importance to redistribution in UPA regime

Takeaway re Internal handling of government revenue: NDA spend on capex vs UPA spend on subsidies

[somnath]

Key takeaway re external handling of economy, remains the following: NDA stress on fiscal prudence combined with growth-oriented Investments vs UPA lack of prudence on fiscal deficit; Growth secondary in importance to redistribution in UPA regime

This is the "I have a view dont bother me with data" style of economic hypothesizing.

Lets see the data (1998 to 2013):

GDP Growth
NDA years: 5.9%
UPA years: 7.6%

Fiscal Deficit
NDA years: 5.5%
UPA years: 4.6%

Investments (Gross Fixed Capital Formation as % of GDP)
NDA years: ~25%
UPA years: ~36%

Public Debt (as % of GDP)
NDA years: grew from 50% to 61%
UPa years: declined from 61% to 48%

One can add the numbers of 2014 and 2015 - I havent because of the new GDP series data. We can add in, 2014 numbers to UPA and 2015 to NDA - the averages wont change a whole lot (for illustration, GDP in 2014 is estimated to be 6.9%, 2015 is 7.5%. Fiscal deficit: 4.4%(2014), 4.1% (2015). Investment numbers are not available for 2015 yet).

So a govt with a "stress on fiscal prudence" incurred fiscal deficits @ 90 bps more as % of GDP, and grew public debt. A govt with focus on "growth" lagged one that put "growth as secondary" by 170 bps p.a! And a govt focussed on investments lagged one thats focussed on "redistribution" by 10% of GDP.

Guess what? Most of these data points can be critiqued and analysed. Conclusions are not black and white - there would be issues around both NDA and UPA periods. But for that, people need to get out of what Kaushik Basu recently described as "wholesale politics" of India.

[member_29058]

Rajan urges strong world economies to hike rates
http://timesofindia.indiatimes.com/busi ... 831680.cms …

[member_29058]

http://giffenman-miscellania.blogspot.c ... facts.html
NDA v UPA: Close encounters with facts

1.GDP growth: Average GDP growth in 1998-2004 (NDA) was 6% a year. Average annual GDP growth in 2004-13 (UPA), up to June 30, 2013, was 7.9%.

Caveat 1: The Vajpayee-led NDA battled US-led economic sanctions following the Pokhran-II nuclear test in May 1998. It faced a short but expensive Kargil war in 1999 and the dotcom bust in 2000. When it took office, it had the lag effect of the East Asian financial crisis of 1997-98 to contend with.

Caveat 2: The UPA government, in contrast, benefitted from the economic momentum of the high (8.1%) GDP growth rate of 2003-04 – the NDA government’s final year – and rode that wave. The global liquidity bubble in 2004-08 bouyed foreign mflows, helping UPA-I achieve a high GDP growth rate in its first term. The Lehman Brothers collapse in September 2008 did hurt the Indian economy but the ensuing US Federal Reserve asset buying programme attracted a steady flow of near-zero interest dollars into India from 2009.
Despite these caveats, the UPA government’s average annual GDP growth rate of 7.9% in 2004-13 clearly scores over the NDA government’s average annual growth rate of 6% (though high inflation boosted the former significantly). First strike to UPA.

2. Current Account Deficit:
2004: (+) $7.36 billion (surplus).
2013: (-) $80 billion.
The winner here is clearly NDA. It ran a current account surplus in 2002, 2003 and 2004. Under UPA this dipped into deficit from 2006 and has spun downwards since.

3. Trade deficit:
2004: (-) $13.16 billion.
2013: (-) $180 billion.
Again, advantage NDA.

4. Fiscal deficit:
2004: 4.7% of GDP.
2013: 4.8% of GDP.
Not much to choose between the two.
Caveat: This extract from the Asian Development Bank Institute (ADBI) report, published in 2010, explains why and when the UPA government’s fiscal defict began to spiral out of control.
“The central budget in 2008–2009, announced in February 2008, seemed to continue the progress towards FRBM targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008–2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission award and subsidies for food, fertilizer, and petroleum.”
“These together pushed up the fiscal deficit sharply to higher levels. There were also off-budget items like the issue of oil and fertilizer bonds, which should be added to give a true picture of fiscal deficit in 2008–2009. The fiscal deficit shot up to 8.9% of GDP (10.7% including off-budget bonds) against 5.0% in 2007–2008 and the primary surplus turned into a deficit of 3.5% of GDP.
“The huge increase in public expenditure in 2008–2009 of 31.2% that followed a 27.4% increase in 2007–2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget.”
The recent announcement of the Seventh Pay Commission comes again, not unexpectedly, at the end of an electoral cycle.

5. Inflation:
1998-2004: 5%.
2004-2013: 9% (Both figures are averaged out over their respective tenures).
Advantage again to NDA. Inflation under NDA was on average half that under UPA, leading to the RBI’s controversial tight money policy, high interest rates and rising EMIs.

6. External Debt:
March 2004: $111.6 billion.
March 2013: $390 billion.
The UPA suffers badly in this comparision, a result of lack of confidence in India’s economy and currency following retrospective tax legislation and other regressive policies, especially during UPA-2.

7. Jobs:
1999-2004: 60 million new jobs created.
2004-11: 14.6 million jobs created.
Clearly, the UPA’s big failure has been jobless growth – a bad electoral omen.

8. Rupee:
1998-2004: Variation: Rs. 39 to 49 per $.
2004-13: Variation: Rs. 39 to 68 per $.
(Rupee rose from 40-plus to 39 between October 2007 and April 2008.)
The NDA government’s economic and fiscal policies, despite the various crises of 1998-2000 pointed out earlier, evoked more global confidence, leading to a relatively stable rupee (Rs. 10 variation) compared to the Rs. 29 variation during UPA’s tenure.

9. HDI:
2004: India was ranked 123rd globally on the human development index (HDI) in 2004, with a score of 0.453.
2013: India has slipped 13 places to 136th globally on the HDI in 2013 with a score of 0.554.

10. Subsidies:
2004: Rs. 44,327 crore.
2013: Rs. 2,31,584 crore.
Here again, profligate welfarism, as the ADBI report quoted earlier shows, has led to a rising subsidy bill. Worse, a significant amount is siphoned off by a corrupt nexus of politicians, officials and middlemen.

[A_Gupta]

What do the GDP and TFP growth figures suggest about the periods 1998-2004 and 2004-2011? Annual growth during 2004-2011 under the UPA regime was 8.1%, which was 2 percentage points higher than during the NDA government that preceded it. The difference between the two regimes though is the share of TFP growth in total GDP growth. Under the NDA regime during 1998-2004, this share was 21%. Under the UPA dispensation during 2004-2011, TFP's share of growth declined to 17.5%.

Looking under the surface of these numbers provides even greater perspective on the efficiency of the two regimes. During the UPA-1 regime of 2004-2009, TFP's share of growth was 15.4% which was exactly the contribution of TFP to growth during the low-growth period of 1960-1991, a period riddled with economic inefficiencies. Moreover, the source of the current disaffection of many voters with the UPA-2 can be seen in the figures for 2011 (the last year of the sample in PWT 8.0). Growth declined sharply as did TFP. What is perhaps most disconcerting is that TFP's share of GDP growth went below 14% in 2011. This is a historic low in TFP's contribution to economic growth in India. One can only imagine how much worse the figures for the period 2011-2014 are going to be given the economic slowdown and policy paralysis that has epitomized this phase.

Why might growth remain strong despite tepid TFP growth? The typical reason is a high investment rate which, in turn, indicates that investors perceive high returns in the economy. Low TFP growth, however, indicates that some of this potential may have been squandered through management inefficiencies and resource misallocations. The growth and TFP numbers in India over the past few years suggest that the potential remains high but management and governance continues to be a major worry.

Sometimes, a single number is more informative than multiple indicators. The behaviour of TFP for judging the quality of governance may be an example of this even though voting decisions depend on much more than just economic efficiency.

http://timesofindia.indiatimes.com/news ... 700670.cms

[Arjun]

Somnath, you are really torturing the data to say what you want it to say

The UPA performance on fiscal deficit was purely and solely because of the FRBM Act - an Act passed by the NDA govt in 2003 that imposed targets on fiscal deficit performance on the government. The UPA as well as you, in most of your posts, have been vocal in criticism of the FRBM - and in fact the fiscal performance of UPA2 went down dramatically precisely because the government suspended the provisions of FRBM. So on the one hand you have a govt that brought in FRBM that resulted in the fiscal performance of 2004 - 2010 and on the other, you have a govt that suspended the same Act that resulted in the disaster of early UPA-II !! Is there any comparison whatsoever ?!

Regarding GFCF, I would like GFCF data specific to Infrastructure. But no matter - lets look at the broader GFCF data directionally, shall we?? The NDA govt growth in GFCF was 10%+ in its final year. For UPA-II this growth was all of 0.5% !! There is no doubt that UPA-1 had a good track-record, assisted immensely by global headwinds - but UPA-II average growth in GFCF was about the same as NDA's - which given the intervening time period and massive decline compared to UPA-1 shows how government measures royally screwed the economy over the last 5 years.

[somnath]

{Deleted}

The UPA performance on fiscal deficit was purely and solely because of the FRBM Act - an Act passed by the NDA govt in 2003 that imposed targets on fiscal deficit performance on the government. The UPA as well as you, in most of your posts, have been vocal in criticism of the FRBM

Really!?!! You mean that the UPA govt didnt like the law, the law wasnt iron-clad in terms of the targets and could be easily suspended, but went on to voluntarily adhere to fiscal prudence principles?! Well, then what happens to your assertion that the UPA was "fiscally profligate"?

Facts are rather more complicated. FRBM was suspended in light of the global financial crisis. India joined the whole world in ushering in accomodative fiscal and monetary policies to combat the crisis. Now whether that counter-cyclical policy stance was reversed in time is an interesting discussion - but that wouldnt give rise to "BJP great , UPA bad" storylines!

The other indicator is public debt - NDA grew the level of public debt in its tenure (50 to 61) - UPA reduced it (61 to 48). Who is "fiscally prudent"?

The NDA govt growth in GFCF was 10%+ in its final year. For UPA-II this growth was all of 0.5%

What does this mean? GCFC/GDP grew from 25.6% to 26.8% in NDA years. It grew from 26.8 to 32.3 in UPA, hitting a peak of 38.2 (in 2012, UPAII). But single year data make little sense in these things - averages need to be examined. The average of UPA was higher by 10% of GDP compared to nda, or around 40% relatively more. This is the biggest binge in investment demand in the economy that India has ever seen.

So the numbers as they are:
1. Better GDP growth
2. Lower fiscal deficit
3. Better record on public debt
4. Better data on Investments

the interesting discussion beyond the topline numbers is, therefore, what went wrong?

[arshyam]

So a govt with a "stress on fiscal prudence" incurred fiscal deficits @ 90 bps more as % of GDP, and grew public debt.

Just curious - what did they spend on when they grew public debt? Any reliable data on that?

[Edit: removed remainder of the quote for clarity]

[Supratik]

TN becomes the first state to amend state LAB according to Panagariya. Others to follow.

[arshyam]

Thanks for the pointer, Supratik-ji. I found the following interview where he provides some details. Hopefully, other states follow suit soon.

'Law reforms feasible through executive action’ - Arvind Panagariya interview to The Hindu.

If the Union government dilutes the provisions of its land acquisition Bill, and with the ordinance on it having lapsed, industry is likely to feel let down. What would be your recommen-dation to the Centre and the States on the way forward?

The issue is not industry being let down, but setback to job creation and poverty alleviation. Rapid growth during the 2000s has given rise to an aspirational India. Many among the poor, including marginal farmers and landless agricultural workers, now seek superior economic opportunities. Job creation at decent wages for these groups requires rapid growth in not just agriculture but also industry and services. The 2013 Act undermines such growth.

One way to make land acquisition less time-consuming is for the States to proceed with their own amendments to the 2013 Act under Section 254(2) of the Constitution. Tamil Nadu has already done this; its amended law has been in force since January 5, 2015. The amendment inserts a State-specific schedule, Fifth Schedule, into the 2013 Act as it applies to Tamil Nadu. State legislation listed in this schedule is exempt from the Act. Other States could follow Tamil Nadu or adopt an alternative amendment along the lines of the Central Ordinance with good prospects for Central approval.

What should be a pro-reforms government’s strategy in the face of disruptions in Parliament? Are non-legislative decisions an option that can deliver more than incremental results, especially for achieving double-digit growth rates?

A variety of avenues to reforms exist. First, with rare exceptions, parties would ultimately come together to pass legislation critical to national interest. Politics may reinforce the good intentions since Chief Ministers from Opposition parties must also want development-friendly reforms so as to win their elections. Second, in cases such as the GST [Goods & Services Tax], perceptions and interests of States differ, making consensus more difficult. But progress can still be made through compromises. Third, there are subjects such as land leasing and marketing of agricultural produce on which State Assemblies can pass legislation on their own. Fourth, subjects such as land acquisition and labour laws are on the Concurrent List, where the States can amend the laws as long as the Central government approves them. Finally, reforms to some important laws such as the Mahatma Gandhi National Rural Employment Guarantee Act are feasible through executive action.

How is the NITI Aayog developing as an organisation and moving away from the Planning Commission way of doing things? What changes are this bringing about on the ground?

The Planning Commission as we remember was a 64-year-old organisation while we are barely seven months old. So we are still in our infancy and must go through our share of teething pain. This being said, within the short period of our existence, we have made considerable progress along multiple dimensions.

We are on the last lap of completing the draft of the mid-term appraisal of the 12th Plan. This is a large-scale exercise. We are at a similar stage in completing the drafts of two task forces, one on poverty elimination and the other on agricultural development. Three sub-groups of Chief Ministers on Centrally sponsored schemes, Swachch Bharat, and skill development would soon wind up their reports. An expert committee on innovation and entrepreneurship will shortly be submitting its report to guide our work on AIM and SETU [Atal innovation Mission and Self-employment Talent Utilisation]. Work on the National Energy Policy, electronics industry and harmonisation of regulatory policies across different infrastructure sectors is moving apace. We have launched a new website as also a very exciting web utility called Indian Energy Security Scenarios (IESS) 2047 Version 2.0.

A key initiative of Prime Minister Modi is cooperative, competitive federalism. Accordingly, we are working with the States both proactively and in response to requests from them. We have suggested to the States reforms such as repeal of myriad redundant state laws; streamlining laws and associated rules and regulations; modernising land leasing laws; and updating and digitising land records. We have also kicked off a major study to assess the ease of doing business in different States as perceived by enterprises.

We are also in the process of restructuring the institution. One aspect of this exercise has involved the movement of extra staff from the NITI Aayog to other parts of the government and is nearly complete. The other aspect, building the NITI Aayog into a think tank, is a more daunting task. It requires bringing new talent into the institution. Spotting and recruiting this talent within the existing rules and regulations of the government has its challenges.

Remember that we still have only two Members — an economist and a scientist — compared with eight in the Planning Commission at the time the Prime Minister announced its closure.

What is your view on whether India should give up on insisting that rich countries should pay for climate change mitigation or instead share some of the burden? If it is ok to ask for reparations for past colonial crimes, surely paying for past carbon sins is also ok? What would be your advice for India’s stance in Paris?

Let me first mention our contribution to cutting carbon emissions: we heavily tax petrol, diesel and coal; we have successfully expanded our forest cover and continue to do so despite land shortage; we have invested heavily in public transportation; and we are committed to an ambitious renewable energy programme. Add to this the fact that our lifestyle is far less energy-intensive than most other countries.

The next point is that we have made these efforts notwithstanding the fact that we are a low fourth emitter in terms of total emissions. On the basis of 2012 data, our carbon emissions are just one-fifth of the largest emitter, China, and one-third of the second-largest emitter, the U.S. In per-capita terms, our emissions are tiny and we do not even appear on the top one hundred list.

Coming to your main question, morally and intellectually, there is something very wrong with the argument that developed countries, which have been historically the largest emitters, should not only be exempt from having to pay for the past damage but also be rewarded for it by being allowed a larger share of the carbon space instead of having to share it equally with the rest of the humanity.

Quite apart from the moral case, there is ample legal precedence within the United States domestic laws for compensation for the damage caused by past actions even when the connection between the actions and the damage was not known at the time the actions were taken, as illustrated by the United States Superfund Act of 1980. So, in my personal view, while we must make every possible contribution to the greening of the planet, especially when these contributions are also consistent with our national objectives, there is no reason to shy away from seeking greater carbon space to facilitate our growth and development or from seeking redress for the past damage in the form of finance for, say, adaptation, mitigation and access to patented green technologies.

[A_Gupta]

-- deleted --

[Vayutuvan]

I am always impressed with TN. Except for the popular schemes of the artiste and amma, the state seems to be one of the most progressive business friendly states of the country. They also try to do all round development - not a few pockets like Hyderabad of combined A P and Blur in Ktk.

[nawabs]

India risks deflation: Arvind Subramanian

http://www.livemint.com/Politics/fIfrgT ... ind-S.html

http://www.thehindubusinessline.com/opi ... yndication

Suddenly, the rift between the Reserve Bank of India and the finance ministry on managing growth and prices has taken an egregious turn. Chief Economic Advisor Arvind Subramanian, referring to the wholesale price index trend (WPI) since November 2014 as well as the GDP deflator, has said that we have a problem of deflation — not inflation — on our hands. This comes barely a week after the RBI’s annual report saying that “inflation projections for January 2016 are still at the upper limit of RBI’s inflation objective”. Days after the release of the report, Governor Raghuram Rajan recanted by hinting that a rate cut was on the cards.

[Hari Seldon]

^This deflation business finds no resonance at the ground level in the B2C marketplace.

No sign of any deflation in bijli bills, rent, groceries, services prices (whether in school fees or med bills etc) and so on etc. Only petrol has dropped somewhat due to global commodity crash but thats about it.

I'd still go with Rajan saab n this one. Inflation expectations are so anchored that people tend to believe prices have nowhere to go but up and thereafter work a self-fulfilling prophecy. Only.

[gakakkad]

deflation's unlikely in yindia...that would require greater supply than demand...an impossibility in near and mid term...

[SaiK]

okay, let me get the topic back to track by this question.

Is India in Deflation?

http://blogs.wsj.com/indiarealtime/2015 ... deflation/

[Altair]

India looks bad on No of Coalition partners and Govt Debt % GDP

[Suraj]

Mod Note

This thread has been cleaned up. This is the second time in a week that the thread has needed a cleanup, along with one warning and one ban so far. Please consider whether your post is on topic before you post.

[Yagnasri]

Special session on GST is suppose to be this week. Now there is no news. What is happening.

[SaiK]

http://www.thehindu.com/opinion/intervi ... epage=true

India set for take-off, says economist Kaushik Basu

The fundamental problem in the world is the total wage bill as a fraction of GDP is declining. In other words, with the advance of technology and automation, labor as a factor of production is becoming steadily less important. The big challenge of our time is to think of innovative ways in which we can bolster the incomes of labourers. If we fail to do this, this seemingly purely economic problem will no doubt spill over into political instability. This is indeed a root cause of some of the political turmoil around the world that we see today.

It is clearly in the self-interest of those who do well by the status quo to say growth is enough and that the poor should just wait for the benefits to trickle down. That's clever advice for guarding your own pocket. Fortunately, there are prominent voices, including from some very rich people, who have done well by the system but are honest enough to point out that there is something wrong with a system that leaves so many people out in the cold. We need direct government interventions in favour of the poor to make amends for this.

[gakakkad]

okay, let me get the topic back to track by this question.

Is India in Deflation?

http://blogs.wsj.com/indiarealtime/2015 ... deflation/

one thing which is common between doctors and economic commentators is that they incorrectly assume statistical indicators to be the reality and often fail to understand what the particular quantity or index (or test in case of doctors) , is supposed to measure.

But the problem is that reality is often hard to measure. So we have surrogate markers which estimate reality ...

A negative WPI just indicates , that the prices in the basket have gone down.. It does not by any means depict prices in reality ... Indian economy is still pretty much inflationary like any growing economy is expected to... Some prices which are artificially high due to various socio-political reasons (like onions and homes) can be brought down by correction of those factors...but that will not make the economy deflationary ..

[vina]

one thing which is common between doctors and economic commentators

Believe me, there is nothing common between the two. A doctor makes decisions based on facts,experience and science that is based on empiricism.

Economists are pseudo scientists who hide behind the math to justify something that is based on make believe and ideology. As a doctor if you make a wrong diagonsis or do some voodoo practice and harm a patient, you can go to jail . An economic commentator pushes voodoo all the time and consigns vast countries and entire continents to mass misery and hell for multiple decades and get away scott free and even be rewarded with Nobel prices.

You are equating science and some a sham-make believe stuff masquerading as science and the practitioners of them.

[gakakkad]

don't want to make it to OT , but lot of medicine depends upon statistics and doctors often have poor understanding of it... For instance there is a quantity called "sensitivity" of a test.. A common mistake made is when a patient of age 55 gets results of a PSA test positive , many docs often thing he has a high chance since the test has a high sensitivity ...but turns out , that since the prevalence of the disease is low in the age group of 55 , even a positive test has a predictive value of about 50% for that age group...which is as good as tossing a coin... While statistics and probability are taught in med schools , it is easily forgotten after exams ...

Likewise , many economists end up having a distorted picture of reality ...

[A_Gupta]

India is allegedly very, very unfriendly to small businesses, ranking lower than Mongolia, Tunisia and Pakistan.
http://qz.com/496412/india-ranks-lower- ... usinesses/

[SaiK]

vina is generally right, but gakakkad++. from math perspective, we can only do a derivative and slope in the direction of data inputs. so, the matter lies in the data, source of truth, and accuracy&precision. it is okay to do a standard deviation i guess for projections [+ve/-ve].

we should be concerned if there are wrong inputs for -ves or false positives.

on the long term, i think inclusive growth matters (what modi ji said during elections) - 1.2billion compared to china is a reality indicator.
- labor & productivity
- health care
- high robust middle class size (>70%)
- gini index income equality
- play well on gdp charts

[gakakkad]

>>- gini index income equality

again somewhat OT... But since u mentioned it , this is one more similarity between statistics used by economist and doctors... some Pathologist use GINI index to quantify variations in cell size...it is even used by geneticist ...I have even seen it been used by biochemist working on enzyme inhibitors...since it is closely related to area under the curve , (which in itself was derived from a concept that was developed by radar operators in ww2 popularly referred to as ROC , receiver operator characteristics) ..one can see how related is everything to each other...

[vinod]

Gurus, any study available on the impact of recent #OROP implementation? I hope it doesn't turn out to be another #MNREGA.

In good hands, economy is always safe but in future, in worse hands, can #OROP be too much of burden which we cannot wriggle out easily?

[A_Gupta]

If there are 12 million new entrants to the job market each year, and if they get work at the per capita of a nominal US $1600, that is $192 billion (almost 9%) in economic growth right there, without anyone else in the economy getting a raise!