Indian Economy News & Discussion - Aug 26 2015

Suraj · Post by **Suraj** » 13 Oct 2016 00:46

The monsoon effect on the economy this year is likely to be strongly positive:
Good monsoon fills reservoirs, heralds bumper harvest

The southwest monsoon season (June to September) across the country in 2016 was 97 per cent of the long period average (LPA). Although it fell short of predictions by the weather office, this was the first normal monsoon in the country since 2013.

If the rainfall is between 96 and 104 per cent of the LPA, it is considered normal. LPA is the average rainfall the country has received since the past 50 years starting from 1951, which is estimated to be 887 cm. Around 85 per cent of the country’s geographical area received normal or excess rains this season. The deficient 15 per cent area fell in Karnataka, Kerala, Punjab and also parts of Gujarat.

Govt issues more draft norms under Bankruptcy Code

The government on Tuesday came out with another set of draft rules, including for liquidation of insolvent corporate persons, under the Insolvency and Bankruptcy Code.

As part of implementing the Code, the government has already constituted the Insolvency and Bankruptcy Board of India (IBBI), while the draft norms will be finalised after taking into consideration the views of the stakeholders.

Notified by the government in May, the Code seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.

The latest set of draft regulations relate to liquidation of insolvent corporate persons, insolvency resolution process for corporate persons and application to judicial authority. Views of stakeholders have been sought till October 31 on these draft norms, according to a public notice issued by the corporate affairs ministry.

Last week, the ministry issued draft regulations pertaining to registration of insolvency professionals, agencies and model bye-laws. A working group of experts, set up by the ministry, has prepared these regulations.

Inflation seen cooling to one-year low in September

Inflation in India is expected to have cooled to a one-year low in September as good monsoon rains kept a lid on food prices, a Reuters poll showed, possibly giving more room to the central bank to cut rates again by the end of this year.

The recently formed Reserve Bank of India Monetary Policy Committee, under new Governor Urjit Patel, cut rates by 25 basis points to 6.25 per cent in a surprise move earlier this month, after inflation hit a five-month low in August.

The latest poll of over 30 economists showed retail inflation probably eased further last month to 4.80 per cent, the lowest since September 2015, from 5.05 per cent in August.

GST lends more weight to India’s 8 per cent growth projection: S&P

Calling GST as the most important structural reform till date by the Modi government, S&P Global Ratings today said the passage of the indirect tax law gives it additional conviction of India clocking 8 per cent growth in the next few years.

“India’s GST passage gives us additional conviction around our 8%-ish GDP growth forecast over the next few years,” it said in a report titled ‘Asia-Pacific steadies while China goes silent’.

The rating agency had last month projected India to clock a “steroid-free” growth of 8 per cent in coming years.

“The GST passage is arguably the most important structural reform to date by the Modi government and will improve efficiency, cross-state trade and tax buoyancy,” it said today.

Atmavik · Post by **Atmavik** » 13 Oct 2016 20:44

Naidu wants Centre to withdraw Rs. 1,000 and Rs. 500 notes

http://www.thehindu.com/news/national/t ... ref=tpnews

what do the gurus think of this. will this curb corruption or create more problem for the common man? the Chinese have only one denomination and this is what happened.

http://www.slate.com/blogs/moneybox/201 ... e_hid.html

It Took 12 Trucks to Haul Away All the Cash This Corrupt Chinese General Hid in His Home

GShankar · Post by **GShankar** » 13 Oct 2016 22:04

http://scroll.in/article/818854/indian- ... nt-helping

Seems like a hit job, but IIP data does point to a slowdown in July 2016. Source - IIP October, 2016. Rest யாமரியேன் பராபரமே (no idea till almighty shines a light)

Prime Minister Narendra Modi, riding to power on the promise of economic growth, launched his Make in India pet project in September 2014 to boost manufacturing and reduce dependence on imports.

The project aimed to create more jobs by enhancing India’s potential of becoming a manufacturing hub, specially for electronics, in the next three years.

Two years on, however, the results of the government’s push to industry have been lacklustre.

The numbers talk
In the last year, the index of industrial production – which measures the growth in various sectors such as mining, electricity and manufacturing by surveying data provided by companies – has declined steeply. As compared to 9.9% month-on-month growth in October 2015, there was a contraction of 0.7% in August (from July). This was the second consecutive decline in the index, which fell by 2.5% in July.

Though the representativeness of the index of industrial production has been questioned, a Mint report on Wednesday said that the April-August performance is the worst in a decade – something the government cannot afford to ignore.

Optimistic government
Despite these signs of a slowdown in industry, the commerce and finance ministries remain optimistic about India’s growth potential. They claim that the falling exports and slowing industry data are going to stabilise in the near-term.

“At the moment, the fall is arrested,” Commerce Minister Nirmala Sitharaman said on Monday after two consecutive months of falling exports. “We will only be looking at steady growth. It may be slow but steady.”

Before this, exports had declined for 17 consecutive months before picking up in June.

In September, Finance Minister Arun Jaitley insisted that the steel industry, reportedly the biggest contributor to non-performing assets of public-sector banks, was showing signs of a turnaround. The month before that, he said India had defied the global slowdown and seemed poised for high-growth on the back of services sector.

However, recent data – including that from the Reserve Bank of India – contradicts these statements.

The latest RBI data points to a slowdown in the manufacturing sector as its order books (where orders are registered) have declined year-on-year. A negative growth of 2.6% is projected for the last quarter of the 2016-'17 financial year from the last quarter of the previous fiscal year. In comparison, the 2015-'16 financial year had started on a high, with 10.2% growth in the first quarter of that year.

“The demand conditions in the Indian manufacturing sector continued to remain subdued, as can be reflected from the trajectory of capacity utilisation,” the RBI said in its monthly statement in September. “Overall, Indian manufacturing sector did not appear to witness any turnaround, as indicated by the survey results.”

Outlook grim
A closer look at the index of industrial production numbers for the manufacturing sector paints an even grimmer picture. The manufacturing index of industrial production has been declining steadily and saw a negative growth of 4.7% growth in the first quarter of financial year 2016-2017.

A report in the Indian Express on Wednesday said that bank credit or loans to the industrial sector had decreased by 0.2% year-on-year in August – slipping into negative for the first time in a decade.

An examination of the gross bank credit to the industry based on data from RBI’s September monthly review (in the chart above) showed that credit to sectors like textiles, construction, petroleum and beverages declined between 1-7% in the current financial year.

A massive 13.3% decrease in credit was recorded in the food processing industry, while chemicals, gems and vehicle industry received marginally more credit.

While Jaitley has repeatedly sought a reduction in interest rates to boost the Indian economy and new RBI Governor Urjit aPatel cut repo rates by 25 basis points earlier this month, economists do not think this will fix the manufacturing sector. The repo rate is the rate at which the RBI lends to banks. A lower repo rate increases banks’ access to credit and so should result in lower interest rates for customers.

“The demand in the economy over the last couple of years has come down to a level that capacity utilisations are at around 75%,” DK Pant, chief economist at India Ratings was quoted as saying by Indian Express. “In such a scenario, no investor will invest and I don’t think a cut in interest rate can fuel investment.”

No jobs
Another objective of the Make In India program was to create more jobs for the burgeoning labour market in India (by creating a thriving industry), but that has not happened yet either. The annual report by the Ministry of Labour and Employment showed that unemployment in India rose to a five-year-high at 5% in the 2015-'16, while the female unemployment rate was 8.7%.

“In the manufacturing sector, growth has come predominantly from improvement in efficiency and not too much due to a rise in output, so the growth in employment is much slower,” Proban Sen, former chairman, National Statistical Commission told the Hindu. "Second, the pattern of employment in the corporate sector is changing. Companies are looking to hire productive workers so there is a reduction in absorption of labour.”

All this points to a difficult time ahead for the Indian industry and the Modi government would do well to acknowledge the problem rather than arguing over numbers, as Dinesh Unnikrishnan summed up in this Firstpost article:

Clearly, there is no magic wand with finance minister Arun Jaitley to make the problems vanish in a moment. But, he could engage with the private sector more actively to put money on the table. Also, the public spending that acted as a major catalyst needs to continue with pace. Despite the hype over the Modi government’s investment focus, the fact remains that there has not been a substantial jump in private investment to support growth. The government needs to acknowledge the problem and see what can be done to crack it.

JayS · Post by **JayS** » 13 Oct 2016 23:34

There are some doubts being cast over IIP data and its significance. While it shows decline the tax collections are showing increase.

Can any learned maulana throw some light on this aspect??

Suraj · Post by **Suraj** » 14 Oct 2016 00:18

IIP is a statistical metric and therefore impacted by any statistical anomaly within its representation. Remember, it's a number constructed out of potentially incomplete or misleading data collected in the real world. Tax revenues are cold hard cash coming in. Further, it constitutes both services and manufacturing tax revenues. IIP data also seems to be impacted by high base effect, and a deceleration in production of electrical machinery, furniture and fabrics. It should pick up in the second half of the year as monsoon income boosts demand.

chaitanya · Post by **chaitanya** » 14 Oct 2016 02:24

RBI also identified certain components in the IIP calculation distort the metric. I had posted this two months ago:

72% hike, 84% fall: Rubber insulated cables play havoc with IIP despite 0.12% weightage

Don't know if they have corrected for this yet, but it is something that should be corrected for - GoI shooting itself in the foot!

Rahul M · Post by **Rahul M** » 14 Oct 2016 19:34

thanks chaitanya, I remembered this article when I saw the discussion on IIP.

Gus · Post by **Gus** » 14 Oct 2016 20:33

I am fully expecting this to be picked up as a failure of 'make in india' and bash on foreign trips.

Prem · Post by **Prem** » 14 Oct 2016 21:49

India exports back in positive zone in September, imports down
http://btvi.in/m/article/read/news/7561 ... orts-down-
( Little positive Beacon on Econ front)

New Delhi: India's exports surprisingly got back to positive zone in September even though imports fell and helped in narrowing the trade deficit, government data showed Friday indicating a recovery in shipment amid a tumultuous global economic situation.In September, exports grew 4.6 per cent to $22.88 billion while imports declined 2.5 per cent fell 2.5 per cent to $31.22 billion resulting in narrowing of the trade gap to $8.34 billion as compared with $10.18 billion a year ago. During April-September or H1 of FY17, exports were down 1.7 per cent at $131.4 billion while imports were down 13.8 per cent at $174.4 billion leaving a trade deficit of $43 billion as compared to $68.55 billion.The September data comes as a surprise as exports fell 0.3 per cent in August and 6.8 per cent in July, reversing the growth registered in June, as global demand slackened and economic uncertainties increased after Brexit referendum.India's exports turned positive in June growing 1.3 per cent to $22.57 billion after remaining in the red for 18 months, buoyed by higher shipments of agri commodities, pharmaceuticals and engineering goods. Exports have been falling since December 2014 due to weak global demand and slide in oil prices.In September, non-petroleum exports rose 5.4 per cent to $19.28 billion. Non-petroleum exports during H1 were up 0.47 per cent to $117.31 billion.In September, oil imports rose 3.1 per cent to $6.89 billion while non-oil imports fell 4 per cent to $24.33 billion.During H1, oil imports were down 18.6 per cent to $39.2 billion while non-oil imports declined 12.3 per cent to $135.11 billion.Modest global oil prices have helped India rein the oil import bill even though the petroleum exports also suffered.
With a steeper fall in imports and shrinking of trade deficit, chances have brightened the current account deficit could be narrowed to close to zero or even end up in surplus in Q2.

Austin · Post by **Austin** » 14 Oct 2016 23:52

Bubble building up! Global bond markets headed for a crash: Swaminathan Aiyar

http://economictimes.indiatimes.com/art ... 808646.cms

vijayk · Post by **vijayk** » 17 Oct 2016 01:36

Rishirishi · Post by **Rishirishi** » 17 Oct 2016 04:40

Has anyone flown AI lately?? the company needs to be re-branded and come under new management.

Suraj · Post by **Suraj** » 19 Oct 2016 01:00

GST council decides on compensation for states

The Goods and Service Tax (GST) Council, on Tuesday, decided on a compensation of 14 per cent for states, which will face loss of revenue and will now decide on four-slab GST rate proposal over the next two days.

The Council, which is headed by Finance Minister Arun Jaitley and comprises of the finance ministers of states, made a proposal of a two-tier standard GST rate of 12 per cent and 18 per cent under which about 70 per cent of taxable goods will be covered.

As per the proposal , the highest slab will be 26 percent, which will cover some 25 per cent of the taxable goods including consumer durables and vehicles. For ultra-luxury items, like high-end cars, and for items such a tobacco, cess above the 26 per cent rate will apply, Revenue Secretary Hasmukh Adhia said after the meeting. The proceeds from such cess, estimated to be around Rs 50,000 crore if this proposal is accepted, will be exclusively used by the centre to compensate states, he added.

Items which are currently exempt but attract a 5 per cent value-added tax will come under the lowest bracket of 6 per cent, Adhia said and added that services will be either in the 12 per cent and 18 per cent. 4% GST rate was suggested on gold

Jaitley told reporters after the meeting of the all-powerful council that it had reached a consensus on the way states would be compensated for any loss of revenue from implementation of the new indirect tax regime from April 1, 2017.

Additional rain to boost paddy output

The untimely rainfall over past three weeks has come as a blessing for paddy farmers with output likely to be higher than the FY17 target of 108.50 million tonnes (mt).

The government had set a target of 93-mt output in kharif season and 15.50-mt in rabi. The kharif output is now likely to be 100 mt — 7.5 per cent more than the target.

Sanket Thakur, director, Chhattisgarh Agricon Samiti — a non-government organisation working on agriculture in Central India — said the recent rainfall has compensated for the initial dry season.

“A major part of Madhya Pradesh was hit by flood but still the state is set for a record paddy production. The state is set to produce about 25 per cent more than last year,” said Karamchand Asrani, president, Madhya Pradesh Chawal Udyog Mahasangh.

Late rains also created sufficient moisture in the soil. The untimely rainfall has helped the medium-and long-duration crops. The good output of paddy is likely to keep prices of rice stable, said G K Agrawal, a Raipur-based trader.

Modi govt's clampdown on black money curbing gold appetite in India, say bankers

India's crackdown on undisclosed foreign assets and income is curbing demand for gold in the world's second-biggest consumer, while rising real interest rates and better returns from other financial markets are also hurting purchases, a banker said.

Although consumption should pick up from now until the end of the financial year, when India buys more for gifting during festivals and weddings, weak demand so far has dragged on the global gold price that has shed nearly 9 percent from a two-year high in July to $1,258 an ounce on Tuesday.

"There is a crackdown on black money in India and many people who were looking at gold as an investment for unaccounted income are no longer investing in gold at all," Shekhar Bhandari, executive vice-president of Kotak Mahindra Bank, told Reuters on the fringes of an industry meet.

Unofficial estimates suggest funds illegally deposited in banks outside the country to avoid tax, known as "black money" in India, account for about 10-30 percent of the country's gold demand, said Bhandari.

A tax evasion amnesty scheme, led by Prime Minister Narendra Modi, that closed in September disclosed nearly $10 billion in undeclared income.

India's gold demand has also been hit by higher returns from other asset classes, Bhandari said, with returns on equities and bonds at 12-13 percent dwarfing gold's 0.9 percent in terms of rupees since 2013. Rising real interest rate due to declining inflation is dimming gold's draw as well.

An example of what constant improvement in processes and execution does:
Reforms cut risk, drive up highway construction: CRISIL

Thanks to a healthy growth in traffic and reforms allowing developers to divest 100 per cent equity in projects two years after completion of construction, high-risk road projects in the sector came down by 13 per cent in FY16, compared to the previous year, an analysis showed.

According to the analysis -– done by CRISIL on 85 under-construction and 104 operational build-operate-transfer (BOT) and annuity projects awarded by the National Highways Authority of India (NHAI), spanning 16,600 km -– refinancing of debt by low-cost, longer-tenure loans played a big role in credit improvement of these projects.

The risks pertain to completion of under-construction projects and the debt-servicing ability of operational ones. The pace of construction also improved from an average 4.3 km a day in FY15 to six km in FY16.

Of the 104 operational projects, there was an 18 per cent reduction in both length (to 2,700 km) and outstanding debt (to Rs 19,650 crore) of high-risk operational BOT projects, compared with FY15. Consequently, 65 per cent of the operational portfolio had a debt service coverage ratio of 1x, compared with 55 per cent a year ago.

Big positive for Narendra Modi government: Powered by shipping, India’s exports show hints of recovery

Container shipping companies, which handle about 55 percent of the country’s merchandise trade, say exports volumes are picking up. The improvement they have witnessed on the ground is starting to show in official exports numbers, which in September rose at the fastest pace in almost two years, according to figures released by the Commerce Ministry.

Data gathered in 17 ports by Maersk Line show overseas shipments grew 11 percent in the first half of the year, putting containerized trade on track to expand as much as 9 percent this year, five times the global pace forecast by the World Trade Organization. The data, along with government numbers released Friday, could be an early sign of a turnaround in trade, which has held back India’s economy and left growth dependent on government and private consumption.

“The container industry is really the indicator of where the new markets are, the strength of the economy — you see the trends quickly,” said Franck Dedenis, the manager director of the shipping line’s South Asia unit. “This year we have seen strong growth for exports, so that’s a massive change.”

NRao · Post by **NRao** » 19 Oct 2016 07:10

To restore credibility of GDP, inflation and IIP data, Modi government sets up five committees

vijayk · Post by **vijayk** » 20 Oct 2016 00:02

What about jobless growth?

Suraj · Post by **Suraj** » 20 Oct 2016 00:09

Please don't post such open-ended rhetorical questions here expecting others to give you a detailed answer. There's no answer to your question other than 'what about it ?', to match the brevity of what you ask.

disha · Post by **disha** » 20 Oct 2016 01:40

vijayk wrote:What about jobless growth?

The term "jobless" growth comes generally from developed economies where there is no further boost from manufacturing and there is no way to capture productivity growth from knowledge economy. In context for developing economies., that term is a rhetorical tool employed by persons with an agenda and no real economic sense in place.

Basically in this case 'manufacturing' economy has hit a hurdle. For example., there is no further large scale infrastructure put in place (like additional tens of thousands of kms of road and rail and new transmission lines etc) and neither there is new manufacturing (like additional sofa sets and cars and trucks and TVs). What is to be built is already built. This is true for developed economies., since the a household can take only so many cars and tv sets and sofa sets and drive only so many miles and travel in only limited ways. Yes they can absorb additional computers or phones and keep some manufacturing lines humming.

Given the above hurdle in manufacturing economies., the productivity growth comes in knowledge economy. Sometimes the productivity growth in knowledge economy hurts the manufacturing economy. For example., a piles surgeon can eliminate additional stitches and save time., thus processing more patients. If you are the patient, you may end up spending less time in the hospital and thus eliminating the need to manufacture additional thread and needles and resources. Of course more patients are processed but it does not lead to a concomitant rise in number of hospitals, doctors and nurses.

In this case, there is growth - because there is growth in productivity measured indirectly (your piles surgeon and nurses get additional payouts which they spend to spruce up their homes) but no net employment is generated leading to what is termed as 'jobless growth'.

In developing economies., it basically means that the growth is uneven and until the growth catches up evenly., there is going to be lop-sided growth. Such an imbalance does not exist for long., since for growth to catch up evenly - areas with stunted infrastructure get attention which first leads to infrastructure growth. That is number of Kms of roads laid, rail lines laid, new electrification etc. And till the entire economy develops., there will be concomitant growth in employment. This is not a jobless growth. However jobs will be moving along (like more jobs in Bihar & less in Gujarat)

For example., newspapers were screaming about fall in Industrial Productivity numbers but were silent in a 30% increase in indirect tax collections. If the IIP data is correct then it appears that there was serious under recovery of indirect taxes. If that was not the case and the indirect tax collections was always recovered (if not all, most) then the IIP numbers are wrong. So what gives?

Now here is the quote from the article:

The new series of national accounts, which changed the methodology of estimating output from the internationally followed factor cost to market prices, bumped up growth for FY14 to 6.9% from 5% estimated under the earlier methodology.

The new series continues to be questioned even now for the over 7% growth being out of sync with industrial production, among other indicators.

The Index of Industrial Production reported a 2.4% expansion in FY16, while GDP grew 7.6%, inviting many questions ...

Interestingly why is not the Index of Industrial Production data not questioned?

---
Hence to just state "what about jobless growth" - as pointed out earlier is a rhetorical question betraying ones understanding of economics. Or points to an agenda driven question.

vijayk · Post by **vijayk** » 20 Oct 2016 04:35

Deleted

csaurabh · Post by **csaurabh** » 20 Oct 2016 11:09

disha ji,

you forgot to take into account increasing automation in every sector, which reduces the need for workers. Hence jobless growth.

rahulm · Post by **rahulm** » 20 Oct 2016 14:29

The proposed 4 tiered GST with additional cess's thrown in, at first glance seems odd when the aim was to simplify. Canada, Singapore, Australia and NZ have a single tax rate with exemptions.

It would be cumbersome to administer 4 tax rates and various cess's. However, the GST would increase compliance due to input tax credits.

Maybe, these multiple GST rates Is a sweet pill to swallow politically in the interest of a timely implementation. Simplification, towards a single GST might happen over a period of time or at worst items keep getting juggled and shuffled across different tiers.

Suraj · Post by **Suraj** » 20 Oct 2016 21:59

Singapore, NZ etc are small economies. Canada and Australia, while geographically large, are demographically small with corresponding sized economies, little wealth or regional disparity, in addition to being vastly more developed. We are a way more heterogeneous economy within a diverse federal republic that also has a substantial informal economy. A comparable economy with GST is China, which also has lots of exceptions to the standard rate.

Our focus should be solely on making it work efficiently within our circumstances. Remember, the GST rates themselves are merely a matter of a money bill upon agreement. The amendment itself says nothing about rates. In other words, the rates are political constructs to ensure the framework comes into force quickly.

There will be at least an initial surge in inflation due to the effect of the law coming into force, but GST is more self regulating in nature because of the need to report input tax to receive upstream credit in order to ensure taxes are only paid on the value add.

Mort Walker · Post by **Mort Walker** » 20 Oct 2016 23:19

Rishirishi wrote:Has anyone flown AI lately?? the company needs to be re-branded and come under new management.

Yes. As of last June 2016. It was OK. From Delhi to MP. Plane needs to be cleaner as the seat tray and handles were dirty with food stains. There is no reason to serve food on a flight of two hours or less. A simple snack will do.

Austin · Post by **Austin** » 21 Oct 2016 15:54

What's amazing is an Indian named Gaurav Tyagi has written this scathing piece, no doubt delighting the Global Times
https://twitter.com/ananthkrishnan/stat ... 7939523585

Chinese companies should focus on domestic resources rather than investing in India
http://www.globaltimes.cn/content/1012145.shtml

disha · Post by **disha** » 21 Oct 2016 23:40

csaurabh wrote:disha ji,

you forgot to take into account increasing automation in every sector, which reduces the need for workers. Hence jobless growth.

Increasing automation in one sector leads to job creation in another sector. For example., automation in chip industry to produce large computation power led to an entire industry called software which employs lots of it-vity people.

Early semi-conductor industries employed people to wire the diodes and transistors - check this out http://www.computerhistory.org/silicone ... rs-emerge/ and http://www.computerhistory.org/silicone ... g-process/., this level of automation took out several thousand jobs where the job was to interconnect various components using fine wire. But look what it led to.

In general, automation boosts productivity and that leads to gain in employment elsewhere. For example Indian Railways used to take 4 days to wash and iron bed sheets per coach from its AC I & II coaches. With an industrial washer and presser and electronic counter., it is doing it in 4 hours. The complains of dirty sheets fell by 77%. Of course an entire job market of washerman/washerwoman were eliminated., but does one want to do a lifetime of washing cloths?

Again in a developing economy., the concept of 'jobless' growth is a myth. It basically means that there are severe distortions in the economy and the labour force is not flexible (or is not moving around enough) to balance those distortions.

Suraj · Post by **Suraj** » 21 Oct 2016 23:46

My first questiona about any job growth discussion would be - who's collecting the data ? What sectors ? I'm not interested in the political polemics, media bias concerns etc. 'ToI says...' is not enough. They're just a tabloid and not of any relevance in the matter. Employment data collection is serious macroeconomic business to be handled by a statistical bureau. So where's the original data and who generated it ? This is a particularly loaded question because formal employment is smaller than informal employment.

disha · Post by **disha** » 22 Oct 2016 01:19

+72000 to that. It is the data and the quality of the data that matters. Garbage In Garbage Out is a classic metaphor to explain it.

Even serious publishers like Businessweek/WSJ make cardinal mistakes in getting what they consider as subject matter experts who go on and build a false theory based on flawed assumptions and scanty data. If this is the case with what are considered premier mass business news publishers., the quality or rather lack of it in tabloid equivalents like TOI is (un)imaginable!

Collecting data is hard problem. Even in developed nations like US., the numbers are corrected after first published as new information emerges. Hence to give credence to single page reports from the likes of TOI is to be avoided or rather taken with a huge sack of salt.

---

Interestingly, I have been lately and steadily discounting the naysayers that India missed the manufacturing bus. And with increased automation and robotization of the manufacturing floor, India may not be able to generate any new employment in manufacturing. And here data from China is brought forth if not from developed economies of Europe or micro-sized economies of Aus or NZ or even Canada.

I am starting to form a contrarian opinion on the statement that India has missed the manufacturing bus due to automation. I am thinking that the manufacturing bus has arrived in India because of more automation!

Karthik S · Post by **Karthik S** » 22 Oct 2016 01:58

Based on my understanding, I believe for non hi-tech manufacturing, we still have enough capabilities to improve automation. From handlooms to small metal products such as locks, furniture etc. Even though automation may be possible, the Indian SMEs may not able be able to make investments based on few of my own contacts and friends who own such businesses. What we really need to do is to assist Indian SMEs and I welcome if our government plays a protectionist role for that.

csaurabh · Post by **csaurabh** » 22 Oct 2016 08:12

disha wrote:Increasing automation in one sector leads to job creation in another sector. For example., automation in chip industry to produce large computation power led to an entire industry called software which employs lots of it-vity people.

This is the luddite fallacy. The idea that because new jobs were created in the past to replace those lost to automation, it will be the same way in the future. Reality check: Automation is killing jobs all over the world. Software, manufacturing, everything.

disha wrote:I am starting to form a contrarian opinion on the statement that India has missed the manufacturing bus due to automation. I am thinking that the manufacturing bus has arrived in India because of more automation!

this is exactly the point. Manufacturing is about making stuff, it is not about employing people. Automation means that you can make stuff with just a small handful of people rather than needing a large army of 'workers'.

India 'missed' the OLD manufacturing bus - due to missing 150 years of industrial revolution and then Nehruvian socialist era which did not want 'workers' to be exploited by 'capitalists'. MNCs outsourced their manufacturing mostly to China instead.

India will miss the NEW manufacturing bus, because it has poor knowledge of automation technology such as robotics and computer science. The old model - asking MNCs to set up manufacturing in India because of low labour cost, will not work any more (because no labour is required). Automated manufacturing will require costly imported equipment, making it non viable for Indian manufacturers.

Just think about it, we still have handlooms in India- why, exactly? If they could be automated and the workers could find exciting new jobs ( rather than turn wheels all day ), why don't they do that?

tandav · Post by **tandav** » 22 Oct 2016 13:29

The only way to employ people is to make machines which are operated/supervised by people to create infrastructure, goods and services. Think tractors, Earth movers, Bridge laying equipment. Human will do the supervision while machines will do most of the heavy lifting and repetitive works. The work of the human becomes more of a planning exercise to ensure outcomes are acheived

disha · Post by **disha** » 23 Oct 2016 04:44

csaurabh wrote: This is the luddite fallacy. The idea that because new jobs were created in the past to replace those lost to automation, it will be the same way in the future. Reality check: Automation is killing jobs all over the world. Software, manufacturing, everything.

Calling me a luddite does not make your rona-dhona about automation correct!

In fact., automation in manufacturing and software has led to more job creation. If not., just look at the links above and ask yourself how.

In H/W remember PCBs? Well with chip design and automation and better lithograph techniques., PCBs the kind one used to see just 10 yrs back has been eliminated. Leading to cheaper products and expansion of markets leading to more jobs. In the Indian context that is very much true.

Banking sector becomes more affordable and reaches a broader mass generating more employment just because computers are introduced and automated transactions can scale for the increased demand without a concomitant rise in costs. In other words, measurable productivity.

Just think about it, we still have handlooms in India- why, exactly? If they could be automated and the workers could find exciting new jobs ( rather than turn wheels all day ), why don't they do that?

Interesting. Handlooms are costly & losing jobs precisely because of the luddite thinking of "saving jobs" and not allowing automation where needed to produce the same quality/look & feel of Handlooms and decreasing the costs of production to make it stay competitive.

Reminds me of the Bank strikes in India on the introduction of computers. Those were the days when productivity was given short shrift to ensure that the bank employment remains. Example given above.

Here is the thing., automation increases productivity. The gains of productivity is felt throughout the economy and the human enterprise takes advantage of that productivity to create new services which further enhances their economic throughput. If the productivity is broad based, the economic advantage is taken by everybody. Point is productivity has to be broad based.

In a socialist system (or crony-capitalistic system of India) or winner-takes-all capitalistic societies (US)., advantages of productivity is NOT broad based., only few individuals can end up controlling the accrued benefit of the productivity and enriching themselves. This does not distribute wealth through the system which causes inequality and its associated problems.

Here automation is not the problem (even though it appears so)., it is the unfair distribution of wealth that is the issue.

Rammpal · Post by **Rammpal** » 23 Oct 2016 05:49

"...Here automation is not the problem (even though it appears so)., it is the unfair distribution of wealth that is the issue.[/quote]>>"

http://thefederalist.com/2016/09/09/deb ... y-fallacy/

Kakkaji · Post by **Kakkaji** » 23 Oct 2016 07:13

ICICI, Axis, StanChart get back $2.5 bn of Essar loans

MUMBAI, OCT 22:
Within days of Essar Group signing a mega USD 12.9-billion asset sale in its oil business, three top lenders — ICICI Bank, Axis Bank and StanChart — have got back an estimated USD 2.5 billion as part of the first payment for their debt exposure to the Ruias-led conglomerate.

disha · Post by **disha** » 23 Oct 2016 10:44

Gov wrote:http://thefederalist.com/2016/09/09/deb ... y-fallacy/

Interestingly from the above:

President of the Ayn Rand Institute Yaron Brook and fellow Don Watkins work methodically to refute the mainstream notion that income inequality is one of the greatest threats facing American society.

But looking at the article., I did not find any reference to quantitative analysis other than references to the references in the book about comparison with socialist economy. I did find drivel like

By the end of the book, they have not only succeeded in extolling individual effort, but in freeing readers’ minds to consider the possibilities of free markets.

Funnily., "protecting employment with less of automation" is as much socialist as you can get and I was extolling against it and I am being now pointed out that income inequality is not the root cause., but asking for "income equality" is a socialist thinking.

Read my words - I said "Unfair distribution of wealth"., solution to it is not necessarily equalizing income by more taxes. Unfair distribution of wealth is just that. An unfair distribution where very few end up controlling the wealth and thus the destiny of the many. Look no further than Bakistan or Barbaria. Or even in India, the crony capitalism led to unfair distribution of wealth and hence the rise of associated cabal including what we call lootyens delhi.

Rammpal · Post by **Rammpal** » 24 Oct 2016 03:53

"...Funnily., "protecting employment with less of automation" is as much socialist as you can get and I was extolling against it and I am being now pointed out that income inequality is not the root cause., but asking for "income equality" is a socialist thinking...."

1. Isn't asking for income equality one of the core tenets of extreme comm/social -ism?
And it failed miserably, including India.
2. We need gazillions more spent on automation. In fact, with more automation in agri., TN won't even need Cauvery supply - at all.

"Unfair distribution of wealth".

Don't mean to be pedantic, but how do you even define that, much less executing such a concept at Modi level ?!!

"..Solution to it is not necessarily equalizing income by more taxes. Unfair distribution of wealth is just that. An unfair distribution where very few end up controlling the wealth and thus the destiny of the many. Look no further than Bakistan or Barbaria. Or even in India, the crony capitalism led to unfair distribution of wealth and hence the rise of associated cabal including what we call lootyens delhi...."

Wealth distribution is no less neutral than the air we breath.
Bakis - their value system is messed up, and they're done for.
Barbaria - contentment, i.e.: gravy train has been on time, as per schedule, why bother about anything at all.
I don't see citizens of barbaria concerned about 'unequal wealth distribution'. Womenfolks in there just want to drive around on their own, FGS

panduranghari · Post by **panduranghari** » 24 Oct 2016 18:29

A western perspective on Indian market.

https://newsletters.briefs.bloomberg.co ... zgi9omn/ad

Manish_Sharma · Post by **Manish_Sharma** » 24 Oct 2016 19:50

Kindly post the article here, link is taking forever...

Suraj · Post by **Suraj** » 24 Oct 2016 22:38

I've been looking for a breakdown of employment in various sectors for PRC, to get an idea of what theirs looks like. The latest I could see is from 2000: BLS: Manufacturing employment in China
Table 3 is the most useful data. While manufacturing does account for the largest secondary/tertiary employment share, as I suspected, construction also consumes a very large workforce. In fact, we should be ramping up fixed asset investment to MUCH more than our current level. It's a huge employment generator. At least for a couple of decades, we need to be producing a lot more steel, cement and other core industry outputs to drive a long construction boom so we have meaningful urban and industrial infrastructure for the long term.

disha · Post by **disha** » 25 Oct 2016 00:11

Rammpal wrote:
"Unfair distribution of wealth".

Don't mean to be pedantic, but how do you even define that, much less executing such a concept at Modi level ?!!

Before we define what is "unfair distribution of wealth"., we need to first define what exactly is wealth.

IMHO., wealth is always contextual:

1. For the Mayans., wealth was obsidian since they could make tools out of it. They did not have iron ore to make steel and hence obsidian was valued.
2. For some sub-saharan tribes., Salt is still considered wealth.
3. For the Masai (and some of our own communities)., the number of heads of cow is considered wealth.
4. For the Hawaiians, any land with ample water was considered wealth.
5. For an industrial/knowledge economy, energy and transportation and communication and sciences and entrepreneal and managerial/leadership skills/talents and its environment (air/water/land) is wealth.

An unfair distribution will be when all of the above or most of the above is locked up. For example, in underdeveloped and undeveloped parts of E.India (incl. NE India)., the transportation and communication infrastructure is dismal. So is reliable supply of electricity. And so are educational colleges. And avenues to break out of such a hell hole (entrepreneual).

Bringing electricity or rather energy (via lpg/cng/coal), roads, education and a foundation for entrepreneur skills will bring them out of inequality. "Income" in that sense is just a math figure of accounting their wealth/assets.

Now you see why Modi is working hard on electrifying villages, extending road and rail and port infrastructure and starting all kinds of skill development initiatives.

Wealth distribution is no less neutral than the air we breath.

Quality of the air we breath., the quality of water we drink is very very important. In that sense wealth distribution does not happen in serendipity , it has to be fostered. Just like one has to foster clean air and clean water and its distribution (yes, "quality air" distribution means making sure weather patterns are analyzed and factored into setting up "polluting" industries or its mitigations planned).

So Modi's swach bharat campaign and open-defecation free cities is an important step in the right direction.

V_Raman · Post by **V_Raman** » 25 Oct 2016 01:10

Manufacturing portable potty for public toilets in all religious institutions under swach bharat is one: we can have multiple factories all over India as we will need millions of them! We will also need more manufacturing units for allied chemicals, sewage trucks, sewage plants, etc.

Similar for water - imagine installing water meter for every household - big manufacturing by itself. Again under swach bharat.

IMO, the only large sector left for India to grab is military related manufacturing.

Maybe exports of fighter jets, tanks, ships etc. and use that to double down on internal Infrastructure development to generate mass employment.

Suraj · Post by **Suraj** » 25 Oct 2016 02:06

Land acquisition: If you can't buy it, lease it -
Ten states could amend land lease laws by end-March

Ten-odd states appear to be in the process of changing their land-lease laws. They’re expected to complete the process by the end of this financial year.

Officials here said Madhya Pradesh has already passed a new leasing law, one that protects the rights of tenants in the event of a natural calamity. Uttar Pradesh has allowed all those who cannot cultivate their land or are not in the business of agriculture to lease out through a written document.

Odisha, Andhra Pradesh and Telangana are also in the process of amending the decades-old land lease laws.

“We are hopeful that many more states would soon join the list,” said T Haque, former chairman of the Commission for Agricultural Costs and Prices, who is spearheading the initiative on behalf of NITI Aayog. He heads the land policy cell in the Aayog.

Haque said many states had shown interest in changing these laws but have to be mindful of political compulsions.

A copy of the new Madhya Pradesh law was recently circulated among states at a recent meeting between the Aayog and state representatives, on reforming of agriculture.

Banks eye ‘resolution’ of Rs 1.5 lakh cr worth stressed assets

Enthused by speedy recovery of loans worth USD 2.5 billion by three lenders including ICICI Bank within days of mega USD 13-billion Essar deal, banks are now looking at resolution of stressed assets totalling Rs 1.25-1.50 lakh crore (nearly USD 20 billion) in coming months.

Having broadly completed the first two stages of ‘recognising’ the stressed assets and of ‘reserving’ or provisioning for such loans in their accounts, the banks are now betting big on ‘resolution’ part of what is being billed by some top bankers as ‘3Rs’ formula to recover their dues.

With the Essar deal coming in as a major catalyst, the banks are prioritising the resolution process by focussing on helping in sale of businesses by corporate borrowers and by converting debt into equity at operating profit-generating companies, according to some top bankers.