Indian Economy News & Discussion - Aug 26 2015

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JTull
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Re: Indian Economy News & Discussion - Aug 26 2015

Postby JTull » 24 Mar 2016 17:45

Overstaffing, infficiency and corruption is not the fault of guys who were honest and hard-working. Why is it okay to paint them with the same brush?

These guys did their due working for life and paid their taxes in a country where <5% citizens actually pay income tax. Now if >95% wants to live off the infrastructure for free then why should they be penalised?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 24 Mar 2016 17:54

sankum wrote:The problem is pensioners should get minimum survival pension and for welfare state at par with the developed one all citizens of India who cant earn and are in need should also get it and we have in this country overstaffed, inefficient and even currupt employees getting ever increasing fat pensions while street children who are in dire need die on roads.

This fat pensions, inefficient govt/psu sector ties us into this cycle of poverty, naxalism,terrorism and sectarian/ethnic/caste conflict.

The overall concept is loot sake to loot.

check out the salaries and pensions of the public sector employees. Even a retired cabinet secretary or finance secretary, in some ways who could be seen as the CFO/CEOs of India who had overseen around 600B$ every year would be getting around 20K$ per annum as pension, with a max salary/CTC of around 40k$. Is it too high?

The fat kat baboos CTC (including their notional EPF) to Indian govt averages less than 30K at even high levels. Imagine this an average babu works for 30-40 years. Many avenues of investments like stocks/companies are prohibited for babus because of possible conflict of interests.

A non corrupt babu has no chance of half decent survival without his pension.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Naveen » 24 Mar 2016 20:48

Too much generalising regarding government servants in the last few posts. Many ideas for implementation without one proper roadmap which is practical and implementable in Indian political economy.
Who will buy an Air India without it actually posting profits for a few years? Would you as a private investor? But pages and pages written on Air India privatisation but barely a mention on how its turnaround is being implemented as of today. There are enough pointers in the press about this turnaround.
No acknowledgement of how a fiscal deficit of actually 6% has been reduced to below 4% in less than 2 years. No acknowledgement of food inflation within limits in a period of two consecutive droughts.
No acknowledgement of the government actually empowering public sector undertakings to make commercial and not crony decisions after a decade of loot.
Do critique what you think are wrong solutions for improvement but don't ridicule everyone in the system who are contributing to turning around the ship. This includes bureaucrats, bankers and all other easy targets.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 24 Mar 2016 21:25

India Speeds Corporate Registration To One Day Via Centralisation
This is good news for the future vibrancy of the Indian economy. The government has decided that the system of corporate registration is simply too complex and time consuming and has decided to centralise the process. This is expected to bring the time elapsed down to only one day. The economic point here being that of course the number of people setting up new businesses (and perhaps more importantly, setting them up legally) is obviously going to be influenced by the cost in both time and money of setting up a new business legally. Given that we like people setting up such new businesses, that being where the vibrancy and growth of the economy comes from, making this easier is obviously a good idea:

In a significant step towards improving the ease of doing business, the Corporate Affairs Ministry will soon centralise the whole process related to registering a new company and strive to complete the processing within a day.

The Central Registration Centre (CRC) to speed up services for incorporation of companies, set up by the Corporate Affairs Ministry, is already functional.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Kakkaji » 25 Mar 2016 01:03

A lot of good nuggets of information about how better connectivity is shaping the internal migration patterns.

Modi knows what needs to be done. His emphasis on rural infrastructure, connectivity, and income diversification will change the face of India.

If he succeeds, it will arrest the growth of ever larger slums in India's metros.

A different migration: From small villages to big ones

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vina » 25 Mar 2016 09:22

Naveen wrote:Who will buy an Air India without it actually posting profits for a few years? Would you as a private investor? But pages and pages written on Air India privatisation but barely a mention on how its turnaround is being implemented as of today.

Air India is bankrupt and has been for many years. Any "turnaround" whatever is a dog and pony show. It needs to be liquidated and sold off in parts. And oh, btw, this Air India, has a debt of Rs 40,000 crores and also huge outstandings with oil marketing companies. Now those will have to be written off, and guess, who will pick up the tab, the Indian public.

Now out of this 150 crore Indian population, what fraction has flown in an Air India /Indian Airline plane to have the privilege of picking up the Rs 40,000 Cr + accumulated fuel tab ? For the record, I have not flown IA/AI even ONCE in all my extensive travel all over the world and within India, why should I pay for AI and so should also my maid and cook and driver ? Atleast the Railways, all of us have used . IA/AI ?

This turnaround business is the throwing of good money after bad. AI needs to be recognised as 1) Bankrupt 2) The debtors forced to take the write down debt and 3) During bankruptcy, it should either be sold off to whoever is willing to buy it and reorganise it or if no buyer can be found, shut down.

That sounds like a pretty workable plan to me . That is is how it is done the world over (and oh, under he new bankruptcy laws, I hope the Baboons and Politicos dont try putting in any "original" stuff, a sure guarantee to wreck it and make it still born , but just copy and paste US Chapter 9 and Chapter 11 100% without any changes, along with the other case laws and judicial rulings around it atleast that way, it wont be an eyewash and will actually work).

JTull wrote:These guys did their due working for life and paid their taxes in a country where <5% citizens actually pay income tax. Now if >95% wants to live off the infrastructure for free then why should they be penalised?

Now, it is mathemtically impossible that the taxes paid by the govt folks "self financed" their salaries and the pensions. They mooched off the 5% who paid direct taxes and the 100% who paid indirect taxes.

JTull wrote:As for your whine on retirees getting DA, I don't see why they shouldn't get inflation protection. In the end, purchasing power must be maintained otherwise you risk making retirees poorer as time goes by. Even in DC (Defined Contribution) plans (as opposed to DB-Defined Benefit), when you retire you usually get inflation-indexed annuity.

So what you are saying is that it is somehow their "right" to maintain purchasing power and mooch on you not just now, but also mooch on your kids in future and also your grand kids as well, and indeed mooch on them in perpetuity..

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby member_20292 » 25 Mar 2016 10:54

1. I know someone who was part of an old school company and spent his/her entire career there - 39 years of service -retired.

He/She will only get a simple fixed pension from old school private company (not PSU)

It is NOT inflation indexed.

2. I know someone else who retired as a teacher in 1988 from a college. This person gets an inflation indexed pension which is part of the college pension scheme since it is a govt. college. The pension is good and the people of India are paying for its inflation indexing.

Note that the private company does NOT have inflation indexing.

We cannot afford a large government on a low taxbase. Either all of us pay taxes rather than just 5% of us. This could be brought about by increasing taxation on consumption. But the govt is loathe to target the informal sector like that - beedis are not taxed while cigarettes are taxed very heavily.

Vinaji - tell us how taxation should be modified to ensure better coverage on everyone ?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Gus » 26 Mar 2016 08:07

From today's Tamil paper
Rupay credit card to be introduced in September.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Gyan » 26 Mar 2016 16:53

Modi Govt is continuing the policy of Tax and Give away against our expectation of massive Infrastructure push and lower taxes.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby uddu » 26 Mar 2016 17:36

First and foremost is to pull the people of utter poverty. Help them stand on their legs and pull them into the middle class fold. The next years onwards one can expect policies framed for everyone including the middle class.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 29 Mar 2016 20:36

India Wants To Make Everything You Buy
India received $222 billion in investment pledges at the “Make in India Week” in Mumbai last month. Prime Minister Narendra Modi’s signature initiative, to transform his country into a “global manufacturing hub,” is catching fire.

Modi announced his “Make in India” plan in September 2014, shortly after coming to power in a landmark election, and selling the initiative around the world has been the easy part for the reform-minded, charismatic leader.

Foreign direct investment into his country is on the verge of overtaking that of both the United States and China. That’s not too surprising because Modi’s got a great story to tell. India, after all, is by far the most promising of the BRICS.

The countries represented by the first two letters, Brazil and Russia, have contracting economies and face intractable problems across-the board. The “C,” China, is heading into a debt crisis as growth stalls and money flees. South Africa, the “S,” is limping.

The “I,” however, is roaring ahead. India has the highest growth rate of all the BRICS—the IMF predicts 7.3% GDP growth this fiscal year and 7.5% next year—a relatively stable and open political system, and a near-perfect demographic profile.

It is not as if Modi’s plan is novel. In East Asia, it has been tried, with great success, in Japan, South Korea, Taiwan, Singapore and China. Malaysia prospered with its factories, and Vietnam and Bangladesh are now taking that route.

The question the Indian prime minister faces, therefore, is whether he is too late to the manufacturing game.

Next door to his country is the nation often described as “the world’s factory,” and some say no other will ever replace it. Today, however, its manufacturing sector is ailing. Beijing’s National Bureau of Statistics reports that industrial output increases month after month, but other official figures point to a contraction at least a year old. So do purchasing managers’ indexes.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vipul » 29 Mar 2016 21:09

Where might India be 10 years from now?

India 2025 will be the world's most populous nation, with a population of just under 1.5 billion, a little ahead of China. Gandhiji's famous statement that "India lives in her villages" will remain true with under 40% of the population in urban areas. Agriculture will remain the mainstay of employment with over 40% still dependent on it even as its share of economic activity continues to shrink.

Literacy will rise significantly to over 80%, but that will still leave about one in five adults illiterate. At least 2.6% of all children born will die within their first year, but life expectancy will cross 70 for both genders. The fertility rate — the number of children born to a woman — will fall just below two (Really big implications for the dharmic followers), making us a nation of "hum do, hamaare do" decades after the slogan was conceived.

Some of this sounds depressing, but on the economic front, rapid strides would have been made. Gross domestic product (GDP) will touch nearly $8 trillion, almost four times the current level, and the addition to the GDP in the decade will be nearly thrice the amount added in the 68 years since Independence. With population growth slowing down, this will also mean per capita incomes rise about four-fold to $6,000.

India's integration with the global economy will be even higher with trade in goods and services accounting for nearly two-thirds of GDP. The average Indian will consume over four times the power she does today.

Internet users will account for anywhere between 50% and 80% of the populace. The market for passenger cars will be around 7.2 million a year, currently the size of the US market. Over 320 million people will travel by air within the country each year, meaning nearly a million Indians will take to the skies each day.

Where does Bollywood go from here? Well, if we've got this right, the successors to the Khans and their ilk will be competing to release films that rake in more than Rs 1,000 crore.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Austin » 29 Mar 2016 21:47

Rupee's March Rebound Sees Rajan Boost India Reserves to Record

http://www.bloomberg.com/news/articles/ ... -to-record

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vipul » 30 Mar 2016 01:36

Maharashtra, Gujarat accounted for 46 pct of exports in FY15.

Just two states — Maharashtra and Gujarat — accounted for over 46 per cent of merchandise exports from the country in 2014-15, says a study by industry lobby Assocham.

The next three states were Tamil Nadu, Karnataka and Andhra Pradesh. The top five states together claimed over 69 per cent of the country’s total export earnings in the previous fiscal, it added. Export earnings in 2014-15 stood at around USD 310 billion.

While Maharashtra shipped goods worth USD 72.83 billion during the reporting period and continued to remain the best performing state, Gujarat exported goods worth USD 59.58 billion, again retaining the second spot.

Tamil Nadu emerged as the third largest exporter with USD 27.47 billion.

But in growth percentage terms, Uttar Pradesh topped the list with 18.3 per cent, followed by Haryana at 14.4 per cent. Exports from Gujarat and Maharashtra grew 8 per cent and 7.2 per cent, respectively, it added.

Indicating the importance of SEZs in achieving higher exports, the report notes that almost three-fourths of operational SEZs are located in Maharashtra, Gujarat, Andhra Pradesh, Telangana, Karnataka and Tamil Nadu.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby subhamoy.das » 30 Mar 2016 06:16

The key difference between indian manufactuting and Chinese manufacturing is that the former will cater to local consumption first while the later to the foreign consumption first. The first approach has greater chances of doing innovation and drive service consumption.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Karthik S » 30 Mar 2016 06:21

With such big local market, we need not target foreign market initially. A product , unless it's luxury item, that succeeds in India will be good enough for the manufacturing company's standing. For instance, we had good electronics companies such as BPL, Onida etc, if revived can grow rapidly given the present Indian consumer market situation.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby uddu » 30 Mar 2016 07:03

Taking the comfort of the local market and not introducing Indian products globally will be a big setback. If its a good product then it must go global not just stay local.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 07:53

It is not a question of large enough market . It's a question of deliberate state policy . Manufacturing focusing on domestic market means manufacturing grows at the rate at which domestic demand can grow. The East Asians focused on deliberately curtailing domestic consumer demand, instead channeling domestic savings into capital investments to build infrastructure and manufacturing facilities, feeding a much more bigger and developed market in the west, who also pay a larger per unit price for the exported goods than the local industry can . In fact , come countries had draconian taxes discouraging domestic consumption, eg SoKo used to heavily tax beauty goods and luxury items, to prevent people from spending money on them, instead compelling them to save the money, which means banks had more to lend out to chaebols building ships and products for expor . Those gains feed a constant current account surplus, rapidly building national wealth at a rate much faster than what a domestic market can develop . It's a working, oft repeated approach . There's no need to re-invent the wheel . All Modi is doing is trying to develop a similar manufacturing base in India .

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Prem » 30 Mar 2016 09:11

We are entering in the Goldilock economic era, and if all remain same, one decade with usual quadrupling of economy will wash out the economic sins of many centuries. Right at the economic inflection point next year.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby sarang » 30 Mar 2016 09:46

We have seen a great fall in 30 years. 1800 to 1830.
Now We will do the reverse, in may be 15.
May god Bless

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby kmkraoind » 30 Mar 2016 10:50

Flush with Cash - Inside the unofficial plumbing capital of India - Caravanmagazine

Even in Bangalore most of carpenters are from either UP/Bihar with Mastrey being a local Kannadiga or a North Indian.

Actually dedicating some senior babus on this issue will do wonders for India. If we persuade IKEA and other global furniture manufactures to locate their factories in these regions, it will be a boon for employment as well as foreign exchange.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 11:39

RBI calls market players to buy UDAY bonds
With bonds issued under the power distribution companies' (discoms) loan package - Ujwal Discom Assurance Yojana (UDAY) - not scheduled to hit the market, the Reserve Bank of India's (RBI) unusual communique on market participants interested in buying the bonds through private placement almost amounts to the same.

Six state governments - Bihar, Haryana, Jammu & Kashmir, Jharkhand, Punjab and Rajasthan - will issue special securities under UDAY and investors interested will have to get in touch with the central bank by March 30, RBI said on its website on Monday. While the release did not mention when the investments can be done, it is anticipated that the bonds have to be purchased before the end of this financial year. It is not yet clear if RBI will share the details on the pricing, as it is a private placement.

The interest paid on these bonds will be capped at 75 basis points above 10-year government bond yield, which closed at 7.51 per cent on Tuesday, up from 7.50 per cent on Monday. Hence, technically, the bonds can be issued at 8.25 per cent, which is higher than the cut-off of 8.1 per cent witnessed by the state governments on the state development loan auctions last week. Hence, market players say there would be demand for the privately placed bonds. Earlier, the plan was to allow only banks to swap the discom companies' debts into bonds.

The investment will compete with other bond issuances of the government and state governments as the investor base remains the same. However, allowing all kinds of market players in the private placement is good for the discoms as it will help unload the bonds faster.

EPFO to invest more in govt bonds, FinMin hikes limit to 65%
Retirement fund body EPFO can now invest up to 65% of its investible deposits in government bonds, up from 50% currently, a senior official said Tuesday.

A proposal by the Labour Ministry in this regard has been approved by the Finance Ministry, which will pave the way for additional Rs 11,000 crore investment by EPFO in government bonds every year.

"There was a limit of 50% for investments in government securities. We exhausted that limit. Now, we are getting a lot of instruments (bonds), which were getting us very good returns. With this kind of bar, we were unable to invest (more) in G-Secs," Labour Secretary Shankar Aggarwal said after EPFO's trustees met in New Delhi Tuesday.

EPFO has been allowed to invest 5% in equity. Now out of remaining 95%, it can invest up to 65% in government securities, he said.

The retirement fund body is expected to receive about Rs 1.12 lakh crore in incremental deposits during this fiscal ending March 2016. The body manages a corpus of over Rs 8.5 lakh crore and has a subscriber base of more than 5 crore.

RBI may go for a 'measured' cut next week: DBS
Reserve Bank is likely to approach policy easing with caution and go for a measured cut next week amid recent bounce in global oil prices and partial implementation of a public sector wage bill, says a report.

The report by The Development Bank of Singapore Limited said, a 25 bps cut is largely factored in with few quarters also discussing the possibility of a more aggressive 50 bps cut, but there is little scope of a bunched up move.

"Given the recent bounce in global oil prices, partial implementation of a public sector wage bill and indications that the US Fed might resume rate normalisation in April/June, we see little scope of a bunched up move," DBS said in a research note.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby JTull » 30 Mar 2016 17:22



Besides the obvious benefits to the energy sector, this is a noteworthy exercise for the economy. Govt (and RBI) aims to establish alternative access to capital for states and no better way than access to debt capital markets. This higher yielding local state/muni bonds should increase wider availability in the market where most debt is of buy and hold kind with limited secondary market (primary consumers are RBI, pension funds, insurance cos, mutual funds and banks - who all buy it for regulatory reasons).

I see a few short-comings here though:
1. Private placement 1 (Rating) - without credit ratings there cannot be public auctions, so RBI should encourage states to invite rating agencies to look at their books/budgets/debt servicing plans. This will increase transparency and provide more comfort to wider range of investors.
2. Private placement 2 (Listing) - without public auction, there cannot be a secondary market as these aren't listed on any dealing/exchange platform. Encouraging wider range of investors can backfire if these investors cannot exit their investments in secondary market. This could lead to a grey market for distressed sellers, which in-turn will may cause mark-to-market issues for regulated entities such as banks, insurance coos and mutual funds.
3. 75bps cap over 10y govies is not a lot to adequately distinguish between the credit quality of different states.
4. Agency - These state issued securities need an agency back-stop, otherwise there's unlimited liability on the central govt, which may increase the cost of funding for the entire country. Govt. needs to setup a central agency providing insurance for these issuers.

Overall a positive development but lot more needs to be done. RBI needs to get SEBI involved to ensure wider trading is possible in these securities.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 19:58

^^^

RBI and GoI have also sought to increase the limit on foreign ownership of rupee-denominated state and local bonds, in additional to central government bonds. News from hours ago:
RBI raises foreign ownership limits in government bonds
The Reserve Bank of India (RBI) has raised the limits on foreign ownership of Indian government and state bonds by an aggregate of Rs 27,500 crore which could come into force in April and July, a move that could ease pressure on bond yields. The limit on the central government goes up by Rs 20,500 crore, and for state government it is at Rs 7,000 crore in two tranches, it said in a notification on Tuesday. "The move will elicit fresh investments from overseas investors as Indian gsecs are one of the best performing assets globally," Ajay Manglunia, executive vice-president at Edelweiss Securities.

The regulator further opened up opportunities for more fund flows as it eased the purchase of unutilised quota for long-term investors to be utilised by other investors.

RBI provides details for new foreign investment limits in debt
The Reserve Bank of India said foreign investors will be allowed to buy up to 275 billion rupees ($4.13 billion) in additional sovereign debt starting next month, as part of its previously announced plan to allow increased overseas investments.

The RBI said foreign institutional investors will be allowed to buy up to 105 billion rupees in government bonds from April 4 and up to 100 billion from July 5, according to a release on Tuesday.

Foreign investors would also be allowed to buy up to 35 billion rupees in state government debt for each of those two periods, the RBI said.

The planned additional investments are part of the RBI's announcement in September to gradually increase foreign investment in sovereign debt markets by March 2018.

As part of the announcement, the RBI also said it would allow any of the unutilised limits reserved for long-term foreign investors such as central banks by the end of the first half of the fiscal year to be opened up to all investors in the second half.

Currently, 80.51 percent of the limit available for long-term investors is used up, while the limit for foreign institutional investors is almost used up, as per data from National Securities Depository Ltd.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby subhamoy.das » 30 Mar 2016 20:05

Export driven wealth creation is not sustainable for a 1.2b sized country. The whole world combined will not be able to sustain it. So the small economic tiger countries model cannot be repeated in India and I donot think Modi is attempting that. China is a very good example to learn from their mistakes. They have contract manufactured every thing under the earth yet their per capita is only low middle income. They have no where to go from here but to focus on domestic demand to keep their factories running but that is not working yet. There is already a huge domestic demand in India which is causing capital account deficit and Modiji is trying to wipe that out by make in india. I think there is a reason as to why he termed it as "make in india" and not "made in india". The first one is to ask MNC to make in india rather than import into india. The made in india slogan would have made more sense when if it was to be exported to world. Right now the make in india is basically a import substitution program and later it will be used to service world wide customers.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vipins » 30 Mar 2016 20:25

Inoperative EPF accounts to earn interest from 1 April
Move will benefit more than 40 million holders of inoperative accounts; over Rs32,000 crore is parked in such accounts

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 21:03

subhamoy.das wrote:Export driven wealth creation is not sustainable for a 1.2b sized country. The whole world combined will not be able to sustain it.

Define 'sustainable'. There's a 1.3b sized country just to our north that's used the model very well, by the way.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 30 Mar 2016 21:11

The Indian strategy will be to feed the domestic market and export surplus while building global brands. A think this is the best strategy. You have to go to places like Gurgaon to see the effect of entrepreneurship. Companies like Zomato have become trans-national and started to earn profits. All the Indian govt has to do is facilitate the process and build the infra like crazy. A government guided wealth creation like China is not necessary in India.

PS: During NDA1 current account surplus had resulted in the rupee appreciating. I won't be surprised if something similar happens with NDA2. I am seeing signs of that already.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 30 Mar 2016 21:17

From NGO thread.

I consider even 4000 Cr as a reasonable amount. But banks shall press for more and get maybe some 6000 or at least 5000 Cr from him. At 6900 Cr suit amount and two-year-old suit, it shall be a good bargain than a long legal process. My feeling is Malya may settle for somewhere around 5000 Cr.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 21:21

The problem with 'export led growth is not sustainable' is that it was never meant to serve as a perpetual model. Not even all the East Asians use that model the way they once did. It's most important capability is the ability to sustain fast growth for a period of time, to jumpstart the goal of long term GDP growth. It makes a huge difference in mathematical terms that you grow faster at the outset. Say you have an economy growing at 10% in nominal terms, driven mostly by the domestic market. In twenty years, it will grow 6.8x in size. Take another economy that grows a mere 2.5% faster at 12.5% . In twenty years, it will have grown 10.5x . A 2.5% difference annually results in 55% larger economy in 20 years. How do you think China grew so much bigger in such a short time despite 'only growing 2-3% faster than us in many years' ? It's just the compounded growth adding up.

The purpose of export led growth is to rapidly accelerate growth. External demand from mature economies will exceed what an immature economy can generate. Therefore feeding the mature economies generates faster growth. It's not a matter of sustainability, but generating greater initial acceleration at a time when labour is cheap and plentiful but needs to be put to work quickly in order to maximize the demographic dividend. It's a waste of time trying to devise fancy new approaches when a working system has been replicated in multiple countries before. I'm glad GoI is not wasting time trying to reinvent the wheel.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Gus » 30 Mar 2016 21:31

everytime i hear somebody say "factories are not sustainable", i think of the folks who complain about everybody buying AC these days and causing shortages and short circuits. they were fine when only they had the ACs. :lol: that was "sustainable" and everybody buying ACs is "not sustainable"

the solution is to build more power plants from renewable energy sources or as green as you can, and increase afforestation and efficiency of devices and so on..

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Prem » 30 Mar 2016 21:37

If Export can provide extra 1.5-2.25% growth punch in short term, it will add Trillion plus in the economy over decade with overall multiplying effect.Extra 1-2% growth addition is crucial for country like India to handle economic and geopolitical security imperatives to solidify our position in long term.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Singha » 30 Mar 2016 21:39

Yagnasri wrote:From NGO thread.

I consider even 4000 Cr as a reasonable amount. But banks shall press for more and get maybe some 6000 or at least 5000 Cr from him. At 6900 Cr suit amount and two-year-old suit, it shall be a good bargain than a long legal process. My feeling is Malya may settle for somewhere around 5000 Cr.


where is he expected to find 4000cr from? does he have that much wealth parked outside india?

all of his indian assets have been seized by lenders or will be.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 30 Mar 2016 21:43

They are not all attached.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 30 Mar 2016 22:51

Export driven and exporting surplus are two different things. Unless the manufacturing base shifts from China and SE Asia to India I don't see much room for an export-led growth. Except in services. However, if the massive imports of finished goods is replaced by domestic manufacturing, consumption-led growth is met demostically and then the surplus exported it will be a win-win situation.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 30 Mar 2016 23:05

Supratik wrote:Export driven and exporting surplus are two different things. Unless the manufacturing base shifts from China and SE Asia to India I don't see much room for an export-led growth.

'Exporting surplus' implies the manufacturing base is constrained to producing only whatever kind of goods the domestic market can absorb. The problem with leading economic development through organic market development is the chicken and egg problem. An immature market can only absorb certain goods at certain price points, suited to certain activities. Exporting the surplus of that means a surplus of cheap goods suited to similar economies.

Export driven growth focuses on producing what's suited to mature economies. It results in production at a scale higher than what the domestic market can sustain in the short/medium term, producing products at a price/quality point higher than the average per-unit level for the domestic market. It benefits from:
* being able to produce that extra higher standard at a very low marginal cost, arbitraging the price difference abroad vs at home.
* the fact that capital goods are cheap to procure and shift across countries, but labor, once too expensive, cannot be worked around. Robotics etc are esoteric cutting edge technologies that won't over human roles tomorrow.

The Chinese spent decades buying up old machinery from the west. They bought out, dismantled and shipped across entire shipyards, steel mills, car plants etc to China. We have done that too, to a lesser extent. Machinery depreciates rapidly, but can still have significant useful life. Import machinery, build stuff at home, export. It's a proven model.

The discussion about focusing on local market let growth has missed the bus by 10 years at least. Merchandise trade already accounts for 40% of GDP. That's even higher than the current share of trade in the GDP of the pioneer of export led growth - Japan. Add services trade and our total trade accounts for ~50% of GDP. As I said, debating the benefits of local market led growth is largely academic at this point. All Modi is trying to do is eliminate the merchandise trade deficit in favor of a surplus. We already run a ~$80 billion services trade surplus each year. Talking about domestic market driven growth today is like talking about whether dismantling the license-permit-quota raj is a good idea.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 31 Mar 2016 08:27

China has a captive population which can be controlled. India, on the other hand, has a population which is mostly aspirational. Any system which does not cater to the needs of Indian people will not continue for long now. So there will be a huge appetite for goods and services in India for decades to come.

What GOI is doing now is creating a domestic capability to fulfill those needs and at the same time providing employment to large sections of the population.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vina » 31 Mar 2016 09:16

China has a captive population which can be controlled. India, on the other hand, has a population which is mostly aspirational
.

Yawn.. Obviously someone who never lived through the "command and control" days, when you had to "book" a scooter and wait for it for a few years, or even stand in a line for an audience with the "Collector" to get "permission" to buy extra milk for your sister's wedding, had to do without soap or toothpaste because the "quotas" were used up etc, or days when the choice in scooters were two , cars two etc.. etc.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 31 Mar 2016 10:31

I lived in those times and still living in India. I am talking about the present society of India and not the pre 1991 status.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 31 Mar 2016 15:09

I will beg to differ. IMO, India has missed that bus. I think the developed markets are saturated and the Indian market is mature if you consider the 200-300 million middle class and rapidly growing as a mature market. IMO exports will have be a secondary component to economic development. However, there is one caveat due to rising costs it may be become difficult to manufacture cheaply in SE Asia or China and the producers may mover perhaps to India. Even then if per capita GDP in India rises to 6000 by 2025, the window of opportunity is slim. I don't see how it can happen.


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