Indian Economy News & Discussion - Aug 26 2015

Karthik S · Post by **Karthik S** » 07 Apr 2017 12:40

If it can be easily done. If not, banks will have to write off huge loan amounts and it will have cascading effect onto general borrowing public.

Chinmay · Post by **Chinmay** » 07 Apr 2017 12:52

Austin wrote:How much is 7 lakh crore in USD ?

BTW these are Private Debt and this is not GOI responsibility AFAIK , Banks can always sell the mortgage and get their loans

Assuming an exchange rate of 65 rupees per 1 USD, that's around 107 billion USD

Suraj · Post by **Suraj** » 07 Apr 2017 13:03

The Rs.7.8 lakh crore figure was in 2013. It's grown since then, as the debt trap takes time to get out of.

Austin · Post by **Austin** » 07 Apr 2017 15:21

Karthik S wrote:If it can be easily done. If not, banks will have to write off huge loan amounts and it will have cascading effect onto general borrowing public.

For an economy that is growing at 8 % almost these private debt owner has to do something silly and stupid not to grow along and pay of their debt .....I dont think the companies mentioned in the list are lame and lazy enough to do nothing at all.

Private sector would have more debt any ways , they have to borrow somewhere , Though perhaps their external borrowing may be higher due to low interest rates in US and EU , though I am not sure that is the case.

hanumadu · Post by **hanumadu** » 07 Apr 2017 16:30

The promoters are refusing to take a hair cut (reduction in stake) in the said companies so that some of the debt could be converted to equity by the banks. Probably they are hopeful of a turnaround or plain stupid. Steel and power are the two sectors which are most affected. There is a glut in steel and surprise, surprise there seems to be a glut in power. The power companies are finding it tough to sign PPAs with the states.

Some of them are plain bad investments like a few Indian companies bought coal assets in australia when termal coal was 110$/tonne while it went down to 50$/tonne after the crash and now its at 80$/tonne. Those coal assets will never come back up to be able to exploit them and recover the investment.

Some are gas power plants sitting idle because of lack of availability of gas. The gas deal with Iran broke down adding further uncertainty to their status.

A_Gupta · Post by **A_Gupta** » 07 Apr 2017 17:08

Austin wrote:How much is 7 lakh crore in USD ?

BTW these are Private Debt and this is not GOI responsibility AFAIK , Banks can always sell the mortgage and get their loans

https://swarajyamag.com/business/crony- ... price-cuts
Crony Power? Why Mallya’s Mortgaged Assets Don’t Sell Even With Price-Cuts

Bankers stuck with absconding businessman Vijay Mallya’s properties are finding that the collateral is simply not encashable. Repeated attempts to sell his mortgaged assets, including Kingfisher House in Mumbai and Kingfisher Villa in Goa, have found no takers. And this despite lowering the reserve prices.

An Economic Times story today (31 March) says that potential buyers are staying away from auctions fearing prolonged litigation in case the properties they bid for are claimed by other litigants. Mallya, who fled to London in February 2016 fearing arrest after his default on Kingfisher Airlines loans worth Rs 9,000 crore, is now facing an extradition request from India.

What the Mallya experience shows is that even with collateral, the problems involving wilful defaulters may not be easy to resolve. The bankruptcy code, still untested in courts, will not be useful if collateral cannot be easily disposed of despite bankers holding clear titles.

However, there may be an unstated reason why the properties of high profile businessmen like Vijay Mallya or Subrata Roy (of Sahara) do not attract buyers: the ties of crony capitalism run deep, and it is unlikely that bidders who know Mallya or Roy will be eager to buy their properties and court their displeasure, if not enmity.

A_Gupta · Post by **A_Gupta** » 07 Apr 2017 17:16

Austin wrote: For an economy that is growing at 8 % almost these private debt owner has to do something silly and stupid not to grow along and pay of their debt .....I dont think the companies mentioned in the list are lame and lazy enough to do nothing at all.

March 31st article:
Rating agencies rain downgrades on India Inc; 3,500 companies marked down vs 1,800 upgrades
http://www.financialexpress.com/industr ... es/609220/

It is a good question of why the rising tide of an economy growing at 7.5+% does not raise the boats of these companies. It would seem that most of the Indian growth is coming from the medium/small/unorganized sectors????

Singha · Post by **Singha** » 08 Apr 2017 08:32

Kingfisher villa next to fort aguada in goa has been sold for 73 crore in a pvt deal. As per ET today

Singha · Post by **Singha** » 08 Apr 2017 08:35

Btw when you from miramar beach to the mouth of river for dolphin watching ...they show a gigantic castle type villa on a hill overlookimg the bay. Said to be that of a criminal overlord who is absconding since 80s iirc. Anyone remember?

The pontoon boats plays a alarmingly loud music and half the pax are drunk and dancing at the bow ... i was worried dolphins would flee from the noise but looks like they are deaf or got used to it

Paul · Post by **Paul** » 08 Apr 2017 14:53

Per twitter Indian GDP is at $2.6T.

Suraj · Post by **Suraj** » 08 Apr 2017 20:39

That means we've overtaken France and are in a dead heat with UK for the #5-6 spots in the ranking list by nominal GDP. With the pound weakening and the rupee appreciating lately, we should be building a gap with them this year.

On the PPP GDP front, we're estimated at $9.5 trillion for 2017, in #3 spot behind PRC ($20.5 trillion) and USA ($19.3 trillion), and up strongly from $7.9 trillion just 2 years ago. IMF data estimates that we'll hit $3.7-4.0 trillion nominal GDP and $14.5-15.5 trillion PPP GDP by 2020-21.

None of these take into account the informal economy entering the formal one due to demonetisation. Accounting for that will boost our numbers by maybe 20-40% across the board, but I think CSO won't manage to report that new information for at least a year or two.

The sooner we make it back to our historical position as one of the two biggest economies on the planet, the better. We live in privileged times seeing that progressively happen in front of our eyes, after our parents and last several generations watched their land being plundered of its wealth and enterprise.

vijayk · Post by **vijayk** » 09 Apr 2017 02:26

2017 MIT India Conference
MIT India Conference
Sunday, April 9, 2017 from 8:00 AM to 6:00 PM (EDT)
Cambridge, MA

http://www.mitindiaconference.com/

Singha · Post by **Singha** » 09 Apr 2017 04:09

GDP is nice to browbeat people with, but what matters more in day to day life and future prospects of retaining people in india is creation of organized sector jobs from low end manufacturing , through high tech manufacturing and then white collar jobs. so far signs were never encouraging in last 15 years

its a election winning / losing issue not just emigration.

sanjaykumar · Post by **sanjaykumar** » 09 Apr 2017 04:28

Suraj wrote:That means we've overtaken France and are in a dead heat with UK for the #5-6 spots in the ranking list by nominal GDP. With the pound weakening and the rupee appreciating lately, we should be building a gap with them this year.

On the PPP GDP front, we're estimated at $9.5 trillion for 2017, in #3 spot behind PRC ($20.5 trillion) and USA ($19.3 trillion), and up strongly from $7.9 trillion just 2 years ago. IMF data estimates that we'll hit $3.7-4.0 trillion nominal GDP and $14.5-15.5 trillion PPP GDP by 2020-21.

None of these take into account the informal economy entering the formal one due to demonetisation. Accounting for that will boost our numbers by maybe 20-40% across the board, but I think CSO won't manage to report that new information for at least a year or two.

The sooner we make it back to our historical position as one of the two biggest economies on the planet, the better. We live in privileged times seeing that progressively happen in front of our eyes, after our parents and last several generations watched their land being plundered of its wealth and enterprise.

Waheguru ka Khalsa waheguru ki fateh!

Yagnasri · Post by **Yagnasri** » 09 Apr 2017 05:55

Singha wrote:Kingfisher villa next to fort aguada in goa has been sold for 73 crore in a pvt deal. As per ET today

73.01 Cr. Costly buy for the purchaser if you ask me.

Prem · Post by **Prem** » 09 Apr 2017 06:00

GDP was about 2.3 T last year. Does it mean we are back to 13-14% Nominal growth an quadrruuuuuupling the GDP every 10 years?
The Hard Currency reserves have been growing steadily and now 370 Billion.

Suraj · Post by **Suraj** » 09 Apr 2017 10:14

Yes, nominal GDP growth rate is back into double digits now. It was just over 10% for 2015-16, and increased to 11.6% for the first 3 quarters of 2016-17 . Th Q4 (Jan-Mar 2017) data for 2016-17 is not available yet, but overall should stlil be close to 12%. With the appreciation of the rupee as well, this generated the estimated ~$300B increase in nominal GDP for the year.

Santosh · Post by **Santosh** » 09 Apr 2017 10:37

I was excited 5-6 years ago when we passed Russia and Canada in terms on nominal GDP and were looking to pass Italy next. Brazil seemed far away because they were still going strong at that time and I thought maybe we would pass France and UK before Brazil. But we are number 6 now and would be number 5 in next year or two behind Germany. Nice stick to beat up rest of the world saying we are top 5 economy.

A Nandy · Post by **A Nandy** » 09 Apr 2017 10:56

Beyond IT: It’s Time We Turned Our Focus Towards High Value Added Emerging Services

Electronics may finally be coming into its own in India. Even though the concerned Indian ministry is MeitY, the Ministry of Electronics and Information Technology, the focus has been on software, given its status as a national champion over the last 20 years. And manufacturing is not one of India’s core competencies, many feel.

Apart from all this, there are social reasons too: the tradition in engineering in India has been to do theoretical things; the whole idea of doing things with one’s hands (the “Maker Movement”) is somewhat alien.

But things have changed recently, based on three interrelated things: the spread of gadgets such as mobile phones, tablets and computers, the growth in internet usage, and increasing levels of prosperity. MeitY suggests that India’s electronics marketplace was about $80 billion in 2015, of which half was produced locally. But demand is expected to skyrocket to $400 billion by 2022 or so, and that would make India’s electronic import bill greater than its oil import bill! The large market is a clear pull factor.

Just as China excels at large-scale manufacturing because they have set up the capabilities for it, India’s core competence is design. The move towards open source is a boon as well. Just as UNIX-derived open source software helped the emergence of innovative product and service companies once they could depend on a well-defined system software interface or Application Programming Interface (API), the emergence of open hardware is a game changer.

https://swarajyamag.com/magazine/beyond ... g-services

Supratik · Post by **Supratik** » 09 Apr 2017 19:16

According to RS Prasad electronics investment has increased IIRC 3 times since 2014. This was last year. We need to scale up 10X or 20X in the next 5 yrs to supply the coming demand. This is our chance to leapfrog in electronics just like 90s was for IT.

Karthik S · Post by **Karthik S** » 09 Apr 2017 19:24

Suraj wrote:Yes, nominal GDP growth rate is back into double digits now. It was just over 10% for 2015-16, and increased to 11.6% for the first 3 quarters of 2016-17 . Th Q4 (Jan-Mar 2017) data for 2016-17 is not available yet, but overall should stlil be close to 12%. With the appreciation of the rupee as well, this generated the estimated ~$300B increase in nominal GDP for the year.

It'd mean we'll overtake France this year. And will have a considerable lead over both France and UK by next years. Also, $1 nominal corresponds to $4 in PPP terms. So we will be a ~$10T economy in PPP terms by the end of the year.

Karthik S · Post by **Karthik S** » 09 Apr 2017 19:25

Supratik wrote:According to RS Prasad electronics investment has increased IIRC 3 times since 2014. This was last year. We need to scale up 10X or 20X in the next 5 yrs to supply the coming demand. This is our chance to leapfrog in electronics just like 90s was for IT.

+1, we need to bring chip manufacturing from China. It's a huge employment generator and all those electronics engineers who have been moving to IT all this while can work in their field of study.

Supratik · Post by **Supratik** » 09 Apr 2017 20:57

IMF calculation is pretty accurate. At 8% real growth and 5% inflation on average India should cross 4 trllion nominal in fin 20-21. At that rate it should cross nominal GDP of 10 trllion before 2030. Ofcourse without any major internal or external shocks.

Suraj · Post by **Suraj** » 09 Apr 2017 22:52

I'm guessing that unless we have a really bad monsoon, we'll hit $3 trillion this fiscal year (2017-18) itself, from the $2.6 trillion for 2016-17 fiscal year (and $2.3 trillion for fiscal 2015-16). A lot of new things fall into place this year, most importantly the formal counting of many informal economic activities on a full year basis post demonetization, and of course the broadening of tax base through GST. Just those two combined 'broadens the picture', on top of organic growth.

Growth comes not just from producing more but counting more of what wasn't counted before. Technically yeah they should be counted back onto past numbers too, but regardless of when they initiate the counting of informal into formal activity, the aggregate size of economy increases.

At $3 trillion, we'd be well clear of UK/France (both of which are $2.5-2.6 trillion) and close to #4 Germany at $3.5 trillion, and subsequently #3 Japan ($4.4 trillion).

Austin · Post by **Austin** » 09 Apr 2017 23:34

Growing US-China Trade Rift Could Be to India’s Advantage

https://sputniknews.com/business/201704 ... -trade-us/

A_Gupta · Post by **A_Gupta** » 12 Apr 2017 00:46

https://www.bloomberg.com/politics/arti ... ucture-gap
India Considers Private Banks to Plug $1.5 Trillion Infrastructure Gap

India is considering turning to the private sector to help plug a chronic shortage of capital for infrastructure projects.

The Reserve Bank of India is proposing Asia’s third-largest economy offer licenses to private companies to set up infrastructure banks. That could help finance $1.5 trillion in roads, ports, power and other projects over the next 10 years and bridge a gap that ratings agency Standard & Poor’s says is shaving off almost 5 percent of the country’s gross domestic product.

“Specialized banks could cater to the wholesale and long-term financing needs of the growing economy and possibly fill the gap in long-term financing,” the RBI said in a discussion paper released from Mumbai on April 7.

tandav · Post by **tandav** » 12 Apr 2017 07:52

I don't think it is the money that is the issue, it is the time. Any major infrastructure activity in India take nearly 5-6 times the amount of time that an equivalent activity in China takes. For example an average ~(10 million pax/yr) airport in China gets setup in 20 months in India it takes 10 years. Part of it is the land acquisition and post project launch progress typically takes place at speed of money disbursal which I think should be automatic and assured. Also the local political an bureaucracy should be given direct equity stake incentive to sit on the board of the project to ensure that local issues are addressed as the project progresses.

As of today system is designed to make contractors run to the bureaucrats to get payments released after every stage of completion with attendant issues in corruption etc. I think the process should be setup such that work and payments are linked to a deadline based system where money will assuredly be paid with the bureaucracy only ensuring that payments can be stopped if egregious quality issues crop up.

Austin · Post by **Austin** » 12 Apr 2017 10:49

Undisclosed Income Of 5,400 Crore Detected Post-Demonetisation: Finance Minister Arun Jaitley

http://www.ndtv.com/india-news/undisclo ... eststories

NEW DELHI: The Income Tax department carried out over 1,100 searches and surveys immediately after demonetisation and detected undisclosed income of over Rs. 5,400 crore, Finance Minister Arun Jaitley told the Rajya Sabha today.

He added that more follow-up action was taken and 18 lakh people were identified whose tax profiles were not in line with the cash deposits made by them in the demonetisation period and online responses were sought.

Mr Jaitley gave these details during the Question Hour, where he claimed that no other government had taken so much action against black money as the present regime.

He said the Reserve Bank was verifying the exact amount that was deposited during the demonetisation period and the precise figure would be presented before the nation.

He also said that there is no official estimation of black money parked abroad but added that information is received from different channels and action including criminal proceedings where required is taken accordingly.

Samajwadi Party member Naresh Agarwal had raised the matter related to action against black money and said people had been promised that they would get Rs. 15 lakh in their accounts.

In his reply, Mr Jaitley said, "Post-demonetisation, during the period November 9, 2016 to January 10, 2017, more than 1,100 searches and surveys were conducted by the Income Tax Department, apart from issuing more than 5,100 verification notices in the cases of suspicious high value cash deposits or related activities."

These actions led to seizure of valuables of more than Rs. 610 crore which includes cash of Rs. 513 crore, he said.

"Seizure in cash in new currency was about Rs. 110 crore. The undisclosed income detected in these actions was more than Rs. 5400 crore," Mr Jaitley said.

He said that the IT Department had undertaken "Operation Clean Money" to leverage Technology and data analytics for verification of deposits during the demonetisation period.

Under this about 18 lakh persons have been identified whose tax profiles were prima facie not in line with the cash deposits made by them in the demonetisation period.

Suraj · Post by **Suraj** » 12 Apr 2017 11:35

Undisclosed black money raids are always going to have limited returns. The reason is that a significant amount of the demonetized Rs.500 and 1000 were never deposited, per RBI data. Those who came clean, generally don't have an incentive to lie further, because they risk even greater losses. Those who got rid of useless paper will want no trail leading back to them. So what remains is a small subset of people who declared but lied, and these are the ones being caught.

Akshay Kapoor · Post by **Akshay Kapoor** » 12 Apr 2017 15:21

Hi Suraj, from what I read a pretty high pct of banned notes were deposited - about 95 pct and only about 50 k crs was not. What is your estimate and what is it based on pls ?

SaraLax · Post by **SaraLax** » 12 Apr 2017 16:18

Akshay Kapoor wrote:Hi Suraj, from what I read a pretty high pct of banned notes were deposited - about 95 pct and only about 50 k crs was not. What is your estimate and what is it based on pls ?

April-3-2017 - Demonetisation to permanently erode cash worth Rs 1.7 lakh crore: SBI research

MUMBAI: Demonetisation exercise by the government may permanently erode about Rs 1.7 lakh crore worth cash from the system translating into liquidity, according to a report by SBI Research. This would be equivalent to about 1.1% of GDP. It may be difficult to ascribe a reason. “ Our estimates indicate that there would be a permanent liquidity injection of least Rs 1.7 lakh crore or about 1.1% of GDP post demonetization” said S K Ghosh, group chief economic advisor at SBI “ This data is a reflection of the extent of formalization of the economy post demonetization.“

After the December 30, 2016 deadline of depositing banned Rs 500 and Rs 1000 notes with the banks, cash withdrawal has been declining rapidly from a peak of Rs 52800 crore for the week ended January 13,’17 to Rs 32500 crore during the week ended March 24’17. Even in the span of one week between March 7 and March 24, cash withdrawal has declined by Rs 2000 crore, the SBI report said.

The decline in cash withdrawals is intriguing even as limits on withdrawals have been removed completely from March 13, according to SBI’s research team.

Historically average withdrawals are generally higher in the first fortnight of a month because people tend to spend more in first fortnight.
However, even that peak has been declining since January (a decline of Rs 54 billion as on March 24). It may be noted that the average withdrawal in the predemonetisation levels period in FY17 in the first fortnight was only around Rs 21000 crore.

The report does not attribute any firm reason for the trend. “Are people now averse to cash withdrawals because of strict monitoring? Or, there is indeed a shift to digital transactions? We are indeed not sure.” The report said. “ It may be also noted that with the implementation of ban on cash transactions of over Rs 2 lakh from April 1, further decline in cash withdrawals may be a possibility.” This declining trend in cash withdrawals will also have repercussions on RBI liquidity management policy, it said.

Gus · Post by **Gus** » 12 Apr 2017 18:55

^ that article talks about 'permanent liquidity' - like people deposited money and are not taking it back, so there's less cash rotation in the streets (presumably because digital etc).

I don't think there are numbers yet from RBI after all deposited old money is counted and tallied etc.

Austin · Post by **Austin** » 12 Apr 2017 22:51

Interview with Raghuram Rajan

Rajan Warns "The Fundamental Problems Of The Financial Crisis Are Still With Us

hanumadu · Post by **hanumadu** » 12 Apr 2017 22:53

Doordarshan Kisan‏ @DDKisanChannel 4h4 hours ago
More
RT @DG_PIB:

#Cabinet approves measures to increase oil palm area & production in India.

@PIB_India @pibhindi @PIBHomeAffairs @AgriGoI pic.twitter.com/LaEzrtjAjO

About time. What took so long after first saying to encourage palm oil production in India to curb imports.

Sicanta · Post by **Sicanta** » 13 Apr 2017 01:05

FRBM panel recommends 3% fiscal deficit target for FY18-FY20

http://www.business-standard.com/articl ... 863_1.html

It recommended fiscal deficit to be cut to 2.8% in 2020-21 fiscal and to 2.5% by FY23

War of words breaks out between CEA, other members of FRBM panel

http://www.business-standard.com/articl ... 326_1.html

Suraj · Post by **Suraj** » 13 Apr 2017 01:26

I support Arvind Subramanian's position here. The FRBM act originally only dealt with the primary deficit. This new mission creep into many different goals looks like nothing more than a 'make work' monitoring goal from the panel for themselves .

Sicanta · Post by **Sicanta** » 13 Apr 2017 02:49

Suraj wrote:I support Arvind Subramanian's position here. The FRBM act originally only dealt with the primary deficit. This new mission creep into many different goals looks like nothing more than a 'make work' monitoring goal from the panel for themselves .

Can you please elaborate more on this issue?

Suraj · Post by **Suraj** » 13 Apr 2017 02:56

FRBM Act

The main purpose was to eliminate revenue deficit[Note 1] of the country (building revenue surplus thereafter) and bring down the fiscal deficit to a manageable 3% of the GDP

IMHO, adding additional targeting goals turns the FRBM panel into an uber oversight organization. Such a mandate should only be defined by legislative action as a formal act, and not by executive appropriation in this manner.

SaraLax · Post by **SaraLax** » 13 Apr 2017 08:28

hanumadu wrote:
Doordarshan Kisan‏ @DDKisanChannel 4h4 hours ago
More
RT @DG_PIB:

#Cabinet approves measures to increase oil palm area & production in India.

@PIB_India @pibhindi @PIBHomeAffairs @AgriGoI pic.twitter.com/LaEzrtjAjO
About time. What took so long after first saying to encourage palm oil production in India to curb imports.

Maybe they wanted to see off the Malaysian PM who was recently visiting India and then come out with the above indicated approval. Possible ... right ?.

pandyan · Post by **pandyan** » 13 Apr 2017 10:11

It will take 5-10 years for the plants to produce. So long term planning with no immediate change