Indian Economy News & Discussion - Aug 26 2015

[Prem]

http://economictimes.indiatimes.com/new ... 621136.cms
India second largest fruit producer in world

Annual growth in horticulture has seen fruit production grow faster than vegetables though the latter constitute the largest segment of this sector of agriculture. The stellar performance of fruits has attracted attention of statisticians with the agriculture ministry's 'horticultural statistics at a glance 2015' noting that India was making its presence felt as the second largest producer of vegetables and fruit."Grapes occupy the premier position in exports with 107.3 thousand tonnes .. China tops the list of fruit production with 154.364 million tonnes (MT) in 2013 followed by India (82.631 MT), Brazil (37.774 MT), USA (26.986 MT), Spain (17.699 MT), Mexico (17.553 MT), Italy (16.371 MT) and Indonesia (16.003 MT). Surprisingly, though productivity is a weak spot, India does better than China and Spain.

[hanumadu]

http://indianexpress.com/article/india/ ... ews-india/

Then came a year when Indian companies pooled their efforts and money to lay on a spectacular show that was called ‘India Everywhere’. And India was indeed everywhere that year. There were fashion shows and concerts of Indian music and from the cafes on the promenade came the sound of Bollywood music and the scent of kebabs and Indian spices. That year every Indian in Davos felt exceptionally proud to be Indian. But this euphoric nationalism did not last long. When Dr Manmohan Singh began his second term as prime minister and Sonia Gandhi began to put her personal stamp on economic policies, India’s image changed once more to that of being a country that did not believe in free markets. I remember endless conversations with people who had invested in India only to find themselves tied up in court cases and red tape. They said that whenever they had tried to fight their way out of the tangles they found themselves in, they found goalposts changed and mysterious new taxes to contend with. On top of all this came the retroactive tax as a last nail in the coffin of the economy. Indian investors faced their own problems when a new kind of licence raj was introduced through the Ministry of Environment. A thick gloom descended over the Indian contingent in Davos that has only just begun to lift.

[A_Gupta]

http://www.thehindubusinessline.com/new ... 123952.ece
India slips to 89th rank in global talent competitiveness: Report

[A_Gupta]

http://www.asianage.com/business/india- ... region-925
India home to 2.36 lakh millionaires, fourth-largest in Asia Pacific region

[Suraj]

IMF retains FY17 India GDP forecast at 7.5%, cuts world growth

The International Monetary Fund (IMF) today kept India's growth projection unchanged at 7.3% in the current fiscal and 7.5% in the next, even as it cut world economic outlook to 3.4% for 2016.

In its update on World Economic Outlook (WEO), IMF said China's growth would slow to 6.3% in 2016 and further to 6% in 2017, but India would continue to grow at a "robust pace".

"India and the rest of emerging Asia are generally projected to continue growing at a robust pace, with some countries facing strong headwinds from China's economic rebalancing and global manufacturing weakness," IMF said.

As for the world growth, IMF today forecast 3.4% for 2016 and 3.6% for 2017.

For India, it retained the growth forecast at 7.3% for the current fiscal and 7.5% for 2016-17 and 2017-18.

With an eye on job creation, MSMEs set to get a boost in Budget

With recognition of micro, small and medium enterprises (MSMEs) as major employment providers, finance minister Arun Jaitley is said to be considering a number of proposals to provide boost to MSME businesses in his upcoming Union Budget 2016-17.

These proposals include providing monetary incentives under Skill India to small scale entrepreneurs to help them impart specific training to unskilled labour and a flush of capital into the Technology Acquisition and Development Fund (TADF), which is meant to help business the requisite machinery and technology to expand their operations.

Any such steps would be in addition to the big-ticket initiatives already announced by the Narendra Modi government including Start-Up India, MUDRA, and Stand-Up India for women and scheduled caste/scheduled tribe (SC/ST) entrepreneurs.

[Suraj]

‘Consensus-based system’ better for policy rates: Arvind Panagariya

Backing the proposed monetary policy committee for deciding the key interest rates, NITI Aayog Vice-Chairman Arvind Panagariya today said “consensus-based system” works better.

“I think Federal Reserve System is a good one. Generally the studies quoted say that Veto system does not work, the consensus-based system works better,” Panagariya told PTI in an interview when asked about his views on the proposal of setting up a MPC.

When asked about his take on the structure and role of the MPC, the noted economist again stressed: “I prefer a consensus-based system.”

The government has proposed to set up a MPC, which will consist of representatives from the Finance Ministry and RBI, to decide on interest rate.

The revised draft of the Indian Financial Code (IFC), released by the ministry in July, had suggested doing away with RBI Governor’s veto power and proposed a 7-member MPC to take rate decisions by a majority vote.

As per the draft, of the seven members, four would be government nominees and the rest from RBI.

[Austin]

India must prepare for global recession and stick to fiscal consolidation targets By Swaminathan S Anklesaria Aiyar

[Austin]

Rupee crossed 68 Today , Last Feb Rupee was at 61.68

http://www.bloomberg.com/quote/USDINR:CUR

[Austin]

These Are the World's Most Innovative Economies , India Ranks 45th

http://www.bloomberg.com/news/articles/ ... -economies

[Prem]

http://finance.yahoo.com/news/rise-gold ... RzZWMDc2M-

Rise in Gold Imports Increased India’s Trade Deficit in December

With the rise in India’s trade deficit, the WisdomTree India Earnings ETF (EPI) and the Direxion Daily India Bull 3X Shares ETF (INDL) have fallen 6.7% and 18.0%, respectively, over the past month as of January 18, 2016.dia trade deficit increased to $11.7 billion in December
According to the Indian Ministry of Commerce and Industry, the goods and services deficit rose to $11.7 billion in December 2015 against $9.4 billion a year ago.Imports fell 3.9% in December over last 12 monthsYear-over-year, India’s imports fell 3.9% in December 2015 to $34.0 billion against $35.3 billion in December 2014. India is a major importer of petroleum crude. With the fall in crude prices, the value of oil imports fell 33.2% in December 2015. However, a rise in gold imports by 179.1% made positive contributions toward import bills in December.

[disha]

^^ India's bug with gold is wrong and a major impediment. Gold is an asset against hedge but its utility is going further down unless it finds a place in an industrial use.

The item for the future is not Gold., but carbon. Or rather carbon fibre and graphenes.

[Suraj]

Government plans easier layoff, minimum wage and severance laws

KEY PROPOSALS
* Companies with up to 300 employees to be allowed to retrench staff without government's permission. Earlier, the ceiling was 100
* If an employee is retrenched, they would be given salary of 45 days for each year in series. If they have worked for five years, compensation would be five times the 45 days salary.
* Labour ministry is proposing to increase minimum wage

The Finance Minister correctly asserts that the GST bill cannot contain tariff limits, since the constitutional amendment only specifies the framework and not the actual rates. Frankly, this demand is simply a means to scuttle the bill by playing out meaningless demands.
Jaitley says rates cannot be mentioned in GST bill

In signs of no thaw with Congress on Goods and Services Tax (GST), finance minister Arun Jaitley on Wednesday described as preposterous the opposition party's demand for putting a cap on tax rate in the constitution amendment Bill saying nowhere in the world tariffs are mentioned in the statute.

"Three new propositions are now raised (by Congress) including a preposterous one that tariff must be mentioned in Constitution of India. Now if they can tell me that anywhere else in the world this happens that tariffs are mentioned in Constitution… So every time there is a drought, flood and you need to increase the tax rate, you have to first go to all states in India to change the tax rate. This is something which is just not possible," he said.

"GST is certainly going to come. I have already conveyed to Congress leaders that I am willing to go to the states for the one per cent thing. I have privately conveyed that and I have no hesitation in admitting that publicly," Jaitley said at a discussion organised by NDTV at the World Economic Forum in Davos.

[member_23365]

Suraj sir and other gurus here I request you to present your thought too.
I was thinking over the GST bill and start up India. I feel its good that GST hadnt happened and we have start up India before it.
In my view GST would have been most beneficial to coorporates with deep pockets as they would have easily established market through out India without much competition from small traders. I feel with start-up India Micro, Small and Medium businesses will get a good start if they avial the opportunity as soon as possible. Now if GST happens after year or so there will be competition from new players in market as well.

[Suraj]

What does GST have to do with "coorporates with deep pockets as they would have easily established market through out India without much competition from small traders" ?

[Austin]

FDI in India for 2015 stands at $59 Billion

http://unctad.org/en/PublicationsLibrar ... 6d1_en.pdf

[member_23365]

What does GST have to do with "coorporates with deep pockets as they would have easily established market through out India without much competition from small traders" ?

Suraj Sir,
GST will make India more or less a uniform or single market.Small guys are more adapt to local settings and their planning is based on the local environment and taxes. Now this small guy has to compete with big boys who have better efficiency b'cos of economies of scale.
It may or may not be applicable in Indian market but what I have noticed in last 15 years in Canada, lot of small mom and pop hardware stores have closed and are being replaced by Home-depot, Rona and Lowes etc.
Earlier we were hearing only about GST bill but now govt starting Mudra Bank and start-up India, so small and medium businesses will also be getting some added benefits from govt.

[Supratik]

My 2 cents. It will be the opposite. Big guys have the resources to overcome blockages in the markets. Small guys will benefit from unified market as they will be able to scale up faster. As for Walmarts - right now they are effectively blocked from the Indian market. I think the present layout of India is not amenable to such sweeping changes. May happen in future but by then India will have moved on and will absorb it.

[Suraj]

I do not think small stores will go away in India. We are not the US or Canada, of wide open towns with easy drives to the nearest big box store. As such, like dense European towns, there will remain many small shops that are more accessible. The cost burden of the lack of a national common market hurts everyone, small or big.

[KrishnaK]

It's probably not exactly the same thing, but in response to giants like amazon a lot of artsy individual businesses have also cropped up, like individuals selling via amazon using their fulfillment infrastructure, thus lowering the barrier of entry. Etsy is another example. People adapt.

[KrishnaK]

Why Raghuram Rajan feels market jitters are just jitters about jitters

[Prem]

Manufacturing to move into 'zero defect, zero effect' category

http://economictimes.indiatimes.com/art ... aign=cppst

NEW DELHI: Just weeks after the high-profile launch of Startup India, the Centre is looking at rolling out yet another major initiative, dubbed ZED, which was first mentioned by Prime Minister Narendra Modi in his 2014 Independence Day speech and yet again last week. The acronym stands for zero defect, zero effect (on the environment) — high quality manufacturing that's also green. Expected to be launched in March, the programme is to be widely discussed at Make in India week next month. Officials said the initiative is meant to raise quality levels in the unregulated micro small and medium enterprises (MSME) sector, the engine of growth for the Indian economy, driving almost 38% of the
nation's GDP and employing 110 million Indians. It's thereby seen as a cornerstone of the flagship Make in India programme, which is aimed at turning India into a global manufacturing hub, generating jobs, lifting incomes and boosting growth. Officials said ZED will handhold MSMEs across the country in all Make in India sectors, through government-constituted quality control cells, which will also rate them, depending on yearly assessments of their products. Under the rollout plan, as detailed by officials, the focus states that will drive ZED initially are Maharashtra, Uttar PradesAcademic institutions such as the Indian Institutes of Technology at Kanpur and Delhi are also likely to function as ZED cells across the country. As of now, Maruti Suzuki, Tata Chemicals, Ashok Leyland, Indian Industries Association (Uttar Pradesh), Federation of Indian Chambers of Commerce and Industry,
National Institution for Quality & Reliability, Chennai, PEC University, Chandigarh, Chitkara University, Thiagarajar University and Amity University are already on board to pro ..

[Austin]

Raghuram Rajan rejects Arvind Panagariya’s suggestion to ease inflation target; says central banks' easy money policy roiling world markets

http://economictimes.indiatimes.com/art ... aign=cppst

[A_Gupta]

DAVOS: Economic reforms in India are going in the right direction, but the level is "wrong", RBI Governor Raghuram Rajan has said, referring to some of the outdated regulations that are currently in place.

"Well let me put it this way, the direction is the right one. The level is wrong. We have too much of the wrong kind of regulation and too little of the right kind of regulation," Rajan told a news channel in an interview yesterday.

"So we do need to hack away at this, and ..

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

[Suraj]

Raghuram Rajan rejects Arvind Panagariya’s suggestion to ease inflation target; says central banks' easy money policy roiling world markets

It's the other way around - it's the lack of liquidity driven by Fed raising rates that's roiling markets.

[Melwyn]

There is already an incredible eco-system for start-ups in India: @TVMohandasPai

Mohandas Pai uses data to explain the situation on the ground for startups in India and the need for nurturing startups in India.

* Absent seed funding or series funding
* Tough regulations and labour laws
* Forced to migrate from India to other countries taking with them all the IP and capital.

https://twitter.com/IndiaToday/status/6 ... 5562731522

[member_22733]

So the title is misleading then? Prestitution at work?

[member_29172]

So the title is misleading then? Prestitution at work?

Yeah the presstitutes were showing off, some people in the retweets have called out the morons on this. Some credible points made, but Pai is another wannabe so whatever. Some commenters/retweeters also pointed that the deals for angel investors can be made more friendly but the environment has improved a lot since Modi.

[Suraj]

Deposits in Jan Dhan accounts cross Rs 30,000 cr

Deposits in accounts opened under the government's flagship financial inclusion programme — Pradhan Mantri Jan-Dhan Yojana (PMJDY) —have crossed the Rs 30,000 crore mark. As many as 20.38 crore bank accounts were opened under the PMJDY as on the January 20, as per the latest data available.

These bank accounts had deposits of Rs 30,638.29 crore (about $4.5 billion).

The accounts that can be opened under PMJDY are Basic Savings Bank Deposit Accounts (BSBDA) which can be of zero balance, as per RBI guidelines.

According to the trends available, the percentage of accounts with 'Zero Balance' have actually shown a significant decline.

Accounts with no balance in them were as high as 76.81 per cent of the total opened under the scheme as on September 30, 2015. They have come down to just about 32 per cent at the end of December.

The Finance Ministry data further showed that 8.74 crore of the accounts were seeded with Aadhaar and 17.14 crore account holders were issued RuPay cards. The data further revealed that as on January 15, banks had offered 53.54 lakh account holders over-draft facility of which the sanction was issued for 27.56 lakh cases and 12.32 lakh account holders availed it. The total amount availed was Rs 166.7 crore.

[Austin]

Raghuram Rajan rejects Arvind Panagariya’s suggestion to ease inflation target; says central banks' easy money policy roiling world markets

It's the other way around - it's the lack of liquidity driven by Fed raising rates that's roiling markets.

Well you forget the 6 years of QE there is enough liquidity and Fed has barely raised interest rates on 0.25 point plus ECB own QE.

We dont have a market now just speculation thats what causing it to go down and thats what is causing to go up.

[A_Gupta]

http://www.ndtv.com/india-news/indias-r ... ey-1269229
India's Ranking Has Improved On Ease Of Doing Business, Says Arun Jaitley

[Suraj]

It's the other way around - it's the lack of liquidity driven by Fed raising rates that's roiling markets.

Well you forget the 6 years of QE there is enough liquidity and Fed has barely raised interest rates on 0.25 point plus ECB own QE.

The present day depends on present circumstances. Despite 6 years of QE stimulus, oil is <$30/bbl, indicating global deflationary conditions. The first attempt to raise rates by Fed triggered the margin calls that are roiling the market. Oil prices - particularly when the US fracking industry is being priced out and production is falling - indicates deflation. And in the midst of that Rajan talks of inflationary concerns. That is what I called out.

[Kakkaji]

Some people were whining that the Gold Monetization Scheme has failed:

Government mobilises 900 kg of gold under monetisation scheme

[RoyG]

Some people were whining that the Gold Monetization Scheme has failed:

Government mobilises 900 kg of gold under monetisation scheme

Gov wants to accumulate some 1000-2000 tons in the near term.

[Austin]

The present day depends on present circumstances. Despite 6 years of QE stimulus, oil is <$30/bbl, indicating global deflationary conditions. The first attempt to raise rates by Fed triggered the margin calls that are roiling the market. Oil prices - particularly when the US fracking industry is being priced out and production is falling - indicates deflation. And in the midst of that Rajan talks of inflationary concerns. That is what I called out.

If you see the oil price chart fall , it began to go down drastically when fed raise interest rates but it began to go down by October albeit slowly since October when it was certain fed would raise rates , neither excess demand or supply played any role in short span.

It went up only when ECB mentioned extra of stimulus measure in March and Chinese support to stocks

This shows we have no real price discovery mechanism left in market based on demand supply but jst stimulus. Oil price and stocks were the best recent example of this much like a screenshot of the issue we face now.

I am convinced we are now condemned to live by QE be it by ECB or fed or pboc and indeed Die by It.

I doubt now fed will raise interest rate this year and ECB will boost its own QE after recent stock/oil fiasco let's wait and see , that's for me is the snapshot of problem no real market left and no real price discovery mechanism left

The other things like deflationary trend to me is effect of this QE /ZIRP or lack of it

[Arjun]

Supply-demand conditions determine all pricing - there is no getting away from the dharma of markets !

Only difference is we now have more than two variables - supply of underlying commodity, demand for underlying commodity, demand / supply of currency to buy into the commodity.

If the last is kept constant - then oil would surely move as per mathematical demand/supply graph of the underlying commodity...

In any case all three variables have moved in tandem in the recent past: demand for oil dropped somewhat due to China demand slowdown, supply increase due to Iran & fracking, money supply decrease due to rollback of QE. So the results are easy to predict.

What would happen if say QE points to one direction - and demand / supply of oil points in another...not so easy to forecast.

[Austin]

Supply-demand conditions determine all pricing - there is no getting away from the dharma of markets !

There is no market these days and hence no dharma , Oil prices and indeed commodity prices are left to speculators and Stimulus by CB , No real honest price discovery mechanism left.

The best way to describe the market today is the pics

[nawabs]

Navigating the fourth industrial revolution

http://www.livemint.com/Opinion/rpHD24R ... ution.html

[A_Gupta]

Opinion: "Listen To Hernando de Soto, Not Piketty, To Address the Inequality Issue"
http://swarajyamag.com/economy/listen-t ... ity-issue/

[Suraj]

If you see the oil price chart fall...

Again, I want to bring this topic back on track. This is the *Indian* economy thread. We're not discussing why oil is down due to worldwide economic policies. We're only concerned with what *we* are to be doing right now. Oil prices are currently subdued, and inflation driven by oil is essentially not an issue right now. Food price inflation driven by supply depends on which particular item you're talking about.

Rajan's prescriptions for the world economy should be discussed in the appropriate thread and not here. India is moving countercyclical to the ROW. The US is facing recession, Chinese are already facing a big slowdown, EU is trying to run through quicksand while our GDP growth rate is picking up but faces liquidity constraints and Panagariya therefore argues in favor of looser monetary policy.

[amritk]

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