Indian Economy: News and Discussion (Apr 1 2011)

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Airavat
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Airavat »

India spends more of the GDP on development than Pakistan: Ashok V Desai
India’s population last year was 6.8 times Pakistan’s, which was estimated to be 17.89 crore. Its gross domestic product per head at current market prices was 3.4 times Pakistan’s. In the nine months to last March, the Indian rupee was 1.88 times the Pakistani rupee. The International Monetary Fund estimated India’s income per head in 2010 at $3,339 — 20 per cent more than Pakistan’s. The World Bank placed it at $3,586, 34 per cent more than Pakistan’s. The Central Intelligence Agency of the United States of America placed it at $3,500, 40 per cent higher than Pakistan’s. If these figures are to be consistent with the ones given in the previous paragraph, prices in Pakistan must be 26-47 per cent higher than in India.

India's 2009-10 imports of $300 billion were almost 10 times Pakistan’s $31 billion, and its exports of $182 billion were nine times Pakistan’s. This is odd, for smaller countries are normally more open; Pakistan should have higher trade ratios. Why is its trade so constricted? Three-quarters of Pakistan’s exports were textiles; of India’s manufactured exports, a quarter was machinery, vehicles and metal goods, a fifth was gems and jewellery, an eighth was textiles, and a tenth was chemicals. India’s exports were more diversified; so they found more diverse markets.

Indian governments’ expenditure came to a third of GDP; Pakistani governments’ expenditure came to only a fifth. The ratio of current expenditure to GDP was not very different for the two countries: 14 per cent for India, 17 per cent for Pakistan. India spent 2.3 per cent of GDP on defence as against Pakistan’s 2.5 per cent; on interest India spent 5.3 per cent as against Pakistan’s 4.5 per cent. Thus their expenditure on old-style government as a proportion of GDP was similar. What was different was the volume of development expenditure as a proportion of GDP — three-and-a-half per cent for Pakistan, 19 per cent for India.

The political contract between the queen bee and the worker bees has worked better in India. As a result, the beehive has grown faster. In Pakistan, on the other hand, the queen bee keeps screaming “Kashmir! Kashmir!” and makes her bees go and steal honey from the Indian hive. This gives them a tremendous feeling of self-righteousness; but it does not make them happy or mutually comfortable.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

BJP opposes FDI in multi-brand retail..
http://www.business-standard.com/india/ ... il/442672/
We will oppose the decision of the government both at the Centre and by the state governments. The decision of the government would not only affect our domestic retail sector but would also destroy domestic manufacture because the foreign companies would be able to buy products from other countries and flood our markets with imported goods made available at these retail chains
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Aditya_V »

somnath wrote:BJP opposes FDI in multi-brand retail..
http://www.business-standard.com/india/ ... il/442672/
We will oppose the decision of the government both at the Centre and by the state governments. The decision of the government would not only affect our domestic retail sector but would also destroy domestic manufacture because the foreign companies would be able to buy products from other countries and flood our markets with imported goods made available at these retail chains
I agree with them, we dont need the Carrefour's, Walmarts and Targets, they will only push for Chinese Manufacturing and wipe out our local Industry.

What we need desperately is to exponentialy increase our power production so as it viable to have Chip manufacturing type industries in India. Anther thing where India should develop an attitude to spend on R&D. Take cricket for example, none of Technologies such as Hawk eye or Hotspot are ever developed in India because the Broadcasters in India and BCCI will never spend a Rupee on R&D.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Aditya_V wrote:I agree with them, we dont need the Carrefour's, Walmarts and Targets, they will only push for Chinese Manufacturing and wipe out our local Industry
??What prevents Kishore Biyani and Sunil Mittal from "pushing" only Chinese manufacturing in their stores? Or for that matter, our kirana stores? On the other hand, a Walmart local setup here will ensure investments in the logistics and supply chain, which in turn will result in these guys sourcing more from India, not just for Indian stores...

The BJP's opposition has got nothing to do with any "Chinese threat"..It is about small traders being impacted, a class that is a traditional vote bank...Howveer, the ICRIER study (referenced earlier) conclusively opines that the fears are completely unfounded...Its just cussedness - they did the same thing with the Insurance Bill and FRBM - and promptly piloted them through the Parliament when they were in power!
Aditya_V wrote:Anther thing where India should develop an attitude to spend on R&D. Take cricket for example, none of Technologies such as Hawk eye or Hotspot are ever developed in India because the Broadcasters in India and BCCI will never spend a Rupee on R&D.
India needs to spend lot more on R&D, but the example is moot..Neither ECB nor SkyTV invested in Hawk Eye/Hotspot either...They are consumers of the tech, just as BCCI/Sony are..These are niche firms working specifically in this space..
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

if retail FDI's are permitted would not their be any mechanism to ensure promotion of local goods in these ? (eg making it mandatory to source 70% goods from Indian manufacturers etc) . I partly agree with BJP's apprehension. Ever since imported apples made their way to the indian market I dont see kashmiri or himachal apples on shelves of Indian market. In fact their is a better chance of finding these on Manhattan fruit exchange than the Indian supermarkets . :)

Though if I was in BJP's place I would have silently agreed to let the bill pass . I would have ensured that the provisions to benefit indian manufacturers are in place. (as it will increase Indian growth rate) . When the traders lose their business I would make big noise about congress being evil . That would ensure polarisation of voters in the next elections. BJP has a lot to learn about electoral politics.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

Risk of hardish landing rising in India

Apart from the headline comment, the speaker says -

* Nominal GDP growth last year was more than 20%

* Inflation may be hard to beat given such fast growth

* Therefore a purposeful slowing of the growth rate may be in the cards
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by kmkraoind »

A house for Rs 32,000! Tatas' plan for rural market :eek:

Is it revolution or evolution. Will it withstand harsh Indian conditions, if so, then in future in 4-6 lakhs one can construct a duplex with a flith size of 1200 sqft.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sugriva »

gakakkad wrote: Ever since imported apples made their way to the indian market I dont see kashmiri or himachal apples on shelves of Indian market. In fact their is a better chance of finding these on Manhattan fruit exchange than the Indian supermarkets . :)
And why is that by itself so bad? Himachali fruit owner got paid more for his apples. Country gained foreign exchange. You had imported apples. Net, win-win for everybody.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

thats because the American apples in America are of a far better quality than the one's they sell in India. Even bigger tragedy is that the Indian fruits I buy in new york is of far better quality than what was in the local sabji mandi. You get the point ?
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Neshant »

gakakkad wrote:thats because the American apples in America are of a far better quality than the one's they sell in India. Even bigger tragedy is that the Indian fruits I buy in new york is of far better quality than what was in the local sabji mandi. You get the point ?
perhaps its because they use all kinds of pesticides, herbicides, fungicides and spray the apple with a ton of wax to boot.

certain fungicides prevent appearances of spots on apples... but have a terrible effect on wildlife which consume it when it leaches into the water.

agriculture workers especially those which handle spray pesticides in America have high rates of cancer
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Neshant »

Aditya_V wrote:I agree with them, we dont need the Carrefour's, Walmarts and Targets, they will only push for Chinese Manufacturing and wipe out our local Industry.
I agree. Flooding the market with junk from china will destroy any incentive for manufacturing in India. There's hardly anything manufactured in India that they buy from us. Only raw materials.

And all one gets out of China is mercantilist trade.

Much better to allow smaller store franchises like 7-11 in rather than these mega monopolistic stores that import by the boat load.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Neshant wrote:I agree. Flooding the market with junk from china will destroy any incentive for manufacturing in India. There's hardly anything manufactured in India that they buy from us. Only raw materials.
One has noticed your wide knowledge of international economics...Now it seems you have similar insights into Indian trade policy as well...Care to reveal which aspect of our trade policy makes is especially easier for only Walmart and Carrefour to import manufatured goods from China but not Kishore Biyani or Sunil Mittal?

Also, care to reveal your data source on Walmart/Carrrefour's "sourcing" from India - how you conclude that they only source "raw material" from us? Given that they are retailers, one would think that they have about zero use for any "raw material", they would only be sourcing finished consumables!!! But then, maybe you have solme "special" insights...
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sugriva »

gakakkad wrote:thats because the American apples in America are of a far better quality than the one's they sell in India. Even bigger tragedy is that the Indian fruits I buy in new york is of far better quality than what was in the local sabji mandi. You get the point ?
Oh Hello Sir !!!!. Nobody put a gun to the head to the himachali apple grower and forced him to part with his reddest and juiciest apple. It could also have been yours if you had matched the New Yorker's price.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by devaraj_d »

Neshant wrote:
Aditya_V wrote:I agree with them, we dont need the Carrefour's, Walmarts and Targets, they will only push for Chinese Manufacturing and wipe out our local Industry.
I agree. Flooding the market with junk from china will destroy any incentive for manufacturing in India. There's hardly anything manufactured in India that they buy from us. Only raw materials....
Finally I have got some one to help me here... :)

This is one of the reasons why I am opposed to exporting raw materials. If we do not move up the value chain we do not have the multiplier effect that will greatly increase jobs, knowledge and economy.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

Neshant wrote:Flooding the market with junk from china will destroy any incentive for manufacturing in India.
If its junk we have nothing to worry right! When the cellphone market was opened the big crying was about 'Vellai Thollus' who who take over and sell us junk like cellphones. We can handle panda, no need to live in fear and quaking at the knees.

-------------------------------------------------------------------------------

Meanwhile...
I've spotted several Bullets on massalands roads. They are niche market, esp. for over enthu's who like to work on their own motorcycles. Which unfortunately includes moi and my many Bullets. To my mind the most beautiful production motorcycle in the world.

Heres Leno with several in his garage.

Image

Here's Julio Englisia and blonde chick on one in Miami. Yup made in desh and all.

Image

http://www.ultimatemotorcycling.com/201 ... g-facility
The new Royal Enfield manufacturing plant will be built upon 50 acres in Chennai's SIPCOT Industrial Growth Centre, and is expected to begin operations in the first quarter of 2013.

The India motorcycle company known for its classic Bullet line of motorcycles says "the new plant will more than double RE's current capacity of 70,000 units per year to 150,000 units per year."

"The new plant will be equipped to produce the full range of Royal Enfield motorcycles and allow the company to keep up with the brand's rising popularity, both in the booming Indian domestic market and in fast-growing export markets like the United States, where Royal Enfield's improved engine design and vintage aethetics have been making a big splash with consumers."
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

Do a garage sale - TN Ninan

http://www.business-standard.com/india/ ... le/438639/

Its high time to sell off the loss-making PSUs and use their surplus land to boost valuations on the sell-off..
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by RamaY »

^ and do what with that money, fund next round of checks for politically unemployed Rural INc workers?

What is the urgency to sell a loss making PSU on the basis of land valuations, hainji? Why not just shut down the PSU and absorb the workforce into other growing PSU?

This doesn't look like nation building to me. It looks like a personal transaction. Sell some assets so you can see some cash, even though I don't know what to do with that cash.

Since GoI doesn't cannot spend the annual tax revenues efficiently and effectively there is no use in adding more funds to the coffers by selling govt properties.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Akshut »

Govt to open FDI in retail from April '12
The government is likely to permit foreign direct investment (FDI) in the multi-brand retail sector from April 2012 and is expected to come up with a final draft of a proposal in this regard by the end of July.

India's multi-brand retail sector, which according to a Boston Consulting Group (BCG) study is estimated to be worth $28 billion (Rs 125,000 crore). "The government has already prepared a draft which says 49 per cent FDI in multibrand retail will be allowed in a phased manner. It will be effective from the next financial year," a senior official of the commerce ministry told Mail Today.

"The draft is as per the recommendations by the economic advisor to the Prime Minister, Kaushik Basu. Initially, the proposed cap on FDI will be 49 per cent. Later, it may be extended to 51 per cent," the official added. According to the official, the government will allow FDI in three phases. In the first phase, foreign multi-brand retail chains will be allowed in the metros Delhi, Mumbai, Kolkata and Chennai. In the second phase other metros like Bangalore, Hyderabad and Pune will be included.

The draft has laid out strict norms such as earmarking 40 per cent investment for backend infrastructure, such as cold storage, soil testing labs and seed farming, for prospective entrants.

According to sources, the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industry (CII), have already initiated meetings with leaders from the BJP and CPI in this regard. Opposition parties have made it clear that they will oppose the move inside and outside Parliament.

The BJP said it would oppose the move in every forum. "We're not for FDI retail. We believe that in the long run this move is going to harm self-employment opportunities. FDI in retail will also adversely affect the manufacturing sector. We will oppose it in Parliament and other forums," Opposition leader in the Rajya Sabha Arun Jaitley said.

The Left parties, SP and RJD are also opposed to the decision.

Earlier in 2009, the Parliamentary standing committee on commerce had submitted a report against FDI in retail. It had recommended a blanket ban on domestic corporate heavyweights and foreign retailers from entering the retail trade in grocery, fruits and vegetables, and restrictions imposed on opening large malls by them for selling other consumer products.
Walmart, Carrefour and Tesco have International agreements with suppliers like Unilever, P&G, Kellogg's, Cadbury, etc. on the trade margins to be given to them, which are generally 1.5 to 2 times of what these FMCG companies in India provide to Indian retail chains like Big Bazaar and Reliance Fresh. e.g. HUL might give 13-14% to Big Bazaar, but internationally Unilever in all probability will have 25% trade margin agreement with Walmart. And same agreement will be carried in India as well. Same case with Tesco's current Cash & Carry business in India. So not only Kirana stores, Indian retail chain may also face threat by the entries of these big In'tl players.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

^^^ DOES NOT IT HAVE TO GO THROUGH PARLIAMENT? dont count our chickens before they hatch.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

RamaY wrote:What is the urgency to sell a loss making PSU on the basis of land valuations, hainji? Why not just shut down the PSU and absorb the workforce into other growing PSU?
Most of the loss-making PSUs have negative net worth, thanks to decades of cumulative losses..Therefore, the only way GOI can extract value out of them is by selling off the RE as separate parcels (typically the RE will be valued at historical levels in the balance sheet)...

What can the govt do with the money? A lot - the issue in India (and everywhere) is not of too much money!
gakakkad wrote:^^^ DOES NOT IT HAVE TO GO THROUGH PARLIAMENT? dont count our chickens before they hatch.
It does...And which is why its a pity that BJP is playing politics with it..
Akshut wrote:Same case with Tesco's current Cash & Carry business in India. So not only Kirana stores, Indian retail chain may also face threat by the entries of these big In'tl players.
First of all, those margins are heavily dependent on the state of the logistics in a country...Second, refer to the ICRIER study posted sometime back - the impact on kirana stores of organised retail is miniscule....Third, I will shed no tears if Kishore Biyani loses ground to Walmart - as longas the national economy benefits, it doesnt matter whether the capital is foreign or domestic..
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Akshut »

First of all, those margins are heavily dependent on the state of the logistics in a country
Big Bazaar already had a spat with Cadbury and Kellogg's over this differential margin issue.

http://business.timesonline.co.uk/tol/b ... 072150.ece
http://articles.economictimes.indiatime ... -retailers

Code: Select all

Big Bazaar, which runs large superstores in big cities across India, [b]claims that other retailers operating cash-and-carry outlets in the country, such as Germany's Metro and Shoprite from the US, are being given better deals by the British confectioner.[/b]

Kishore Biyani, the chief executive of Future Group, the biggest publicy traded retailer in India, which owns Big Bazaar, said: "We are taking [Cadbury's] products out of the stores. We are not receiving the same treatment as others. It is giving better prices to other operators."
the impact on kirana stores of organised retail is miniscule
Organized retail kirana stores? Anyway, there are reports stating contrary as well. Going by the general logic, if Walmart, Metro, Carrefour cannot get share of business from Kirana stores, then how would they make money? None of them can increase macro demand. So at constant demand, if Organized Retail stores have to increase their revenue and share, without doubt it would come at the expense of the Kirana Stores.
Third, I will shed no tears if Kishore Biyani loses ground to Walmart - as longas the national economy benefits, it doesnt matter whether the capital is foreign or domestic..
By the same logic, what is the need of any Indian company at all, if foreign ones can bring in capital? :roll:
Only if they source bulk of their stock from Indian manufacturers, would it help Indian economy. But having their own In-store brands, and suppliers for these brands of theirs in China and elsewhere, it's highly likely they will import, unless strict norms are against it.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Arjun »

somnath wrote:First of all, those margins are heavily dependent on the state of the logistics in a country...Second, refer to the ICRIER study posted sometime back - the impact on kirana stores of organised retail is miniscule....Third, I will shed no tears if Kishore Biyani loses ground to Walmart - as longas the national economy benefits, it doesnt matter whether the capital is foreign or domestic..
You were yourself vacillating on this topic a month or so back (ref your earlier post: FDI retail)....so what convinced you about the benefit of FDI in retail? The fact that the UPA government has decided to push for it?
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by sumishi »

somnath wrote:... I will shed no tears if Kishore Biyani loses ground to Walmart - as longas the national economy benefits, it doesnt matter whether the capital is foreign or domestic..
You just keep unfolding like a flower.... :)
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

The differential treatment issue makes me wonder why organised retail doesn't integrate vertically and buy or build FMCG brands.
Theo_Fidel

Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Theo_Fidel »

Sigh! same old same old...

http://www.livemint.com/2011/07/1722311 ... anufa.html
Labour laws will not be relaxed at the national investment and manufacturing zones (NIMZs) that are proposed to be set up to boost the share of manufacturing in India’s gross domestic product (GDP), labour secretary Prabhat Chaturvedi said.

A committee of secretaries has relented on the issue after the labour ministry objected to making labour laws easier for manufacturers, he said.

Relaxing labour laws, along with tax concessions and subsidies at the NIMZ, is part of a national manufacturing policy proposed by the department of industrial policy and promotion (DIPP) in March last year. The policy aims to increase the share of manufacturing in the GDP from 16% to 25% and create 100 million jobs by 2025.
The proposed manufacturing zones will lead to more workers being hired as casual labourers rather than being given permanent jobs, said Pandhe, who has been part of the talks on the new manufacturing policy.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by Akshut »

vera_k wrote:The differential treatment issue makes me wonder why organised retail doesn't integrate vertically and buy or build FMCG brands.
Some of the Retail chains do have Store brands. e.g. Walmart's own brands. So does Big Bazaar.

------------
Labour laws will not be relaxed
to
create 100 million jobs by 2025.
There should be face-palm smilie.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

somnath wrote:
gakakkad wrote:^^^ DOES NOT IT HAVE TO GO THROUGH PARLIAMENT? dont count our chickens before they hatch.
It does...And which is why its a pity that BJP is playing politics with it..

.
I don't want to get into politics but if con gress was serious about reforms they would have passed the bills long time ago. Instead they intend to waste time and money of the country with frivolous bills like communal violence etc. They want to waste taxpayers money on useless schemes like MNREGA and the loan waiver of $ 15 Billion to unproductive farmers .They want to talk about reforms in media yet do nothing on the ground. A duplicity much like the RAPE class. Permitting FDI in education has not yet been passed. Air India is a mess. Nothing has been dis-invested AFAIK since the NDA regime. Apart from low taxes and some sound monetary policies decisions (which were effectively cancelled by host of other populist decisions) nothing extra-ordinary has been achieved by the UPA. We have in fact gone down on the ease of doing business scale over the last 5 years or so. The NDA on the other hand dis invested a good deal and carried forward decent reforms. (nothing breath taking or divine yet fairly decent) Atleast they did not come up with anything socialist.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

gakakkad wrote:I don't want to get into politics but if con gress was serious about reforms they would have passed the bills long time ago.
A lot of the "reforms" need constitutional amendments, ergo, 2/3rd majority - hence the cooperation of the main opposition is a sine qua non..Not sure if the Retail FDI Bill is a constitutional amendment, but a bill does have to be passed..Plus, if state govts say that they are not going to allow outlets, then the purpose is lost..

About the rest of your post, there are some POVs, but data isnt all right..
gakakkad wrote:Nothing has been dis-invested AFAIK since the NDA regime
There was a link posted sometime back here - the average disinvestment realisation every year has been far higher in UPA/INC years than NDA...The NDA in fact made an enormous mockery of the "disinvestment" process by getting PSU companies buy shares into one another, as a part of disinvestment!
Akshut wrote:Anyway, there are reports stating contrary as well. Going by the general logic, if Walmart, Metro, Carrefour cannot get share of business from Kirana stores, then how would they make money? None of them can increase macro demand. So at constant demand, if Organized Retail stores have to increase their revenue and share, without doubt it would come at the expense of the Kirana Stores
Not for India...I had posted this before - once again..The most authoritative study on Indian retail..
http://siadipp.nic.in/policy/icrier_report_27052008.pdf

the fundamental axiom is incorrect - demand IS growing in India..So its not a "dog eat dog" situation, but the pie itself is growing for everyone...And large players tend to expand the pie as well, in a growing market...

Arjun wrote:You were yourself vacillating on this topic a month or so back (ref your earlier post: FDI retail)....so what convinced you about the benefit of FDI in retail? The fact that the UPA government has decided to push for it?
My doubts stemmed really from organised retail and its benefits rather than FDI itself, more so because the "noise" on that has been so high...But having gone through the ICRIER study (and some data that a fried sent me on the existing spread of organised retail), I dont see the reasons for objection...Not until someone shows any data to the contrary..Reasons like "Walmart will import from China and wipe out Indian manufactures" of course is as stupid as it gets...

As for UPA v/s NDA - well, regardless of my "alleged" predilections, INC/UPA have had more "reforms" ideas (and ideas implemented) than the BJP :wink: "Indic" values et al propagated by the likes of Dattopant Thengadi and KS Sudarshan, or policymakers like Yashwant Sinha dont make for good poliy!
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by vera_k »

Are there any studies about the expected job dislocation due to the ramping up of organised retail? As it is, urban unemployment seems to be on the rise with adults and children hawking stuff at traffic stops.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

vera_k wrote:Are there any studies about the expected job dislocation due to the ramping up of organised retail? As it is, urban unemployment seems to be on the rise with adults and children hawking stuff at traffic stops.
Refer to that ICRIER study above - its as exhaustive as it gets....

There is a net addition to jobs...
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

somnath wrote: An interesting perspective of the POSCO saga by Sunita Narain...She can be a bit shrill at times, but often has good insights.

http://www.business-standard.com/india/ ... fe/441387/
There was a bit of spirited discussion on this article here - seems some parts of it reached Ms Narain as well! She ha wriiten a rejoinder to that..
http://business-standard.com/india/news ... et/443021/
The reason is that this money comes on a monthly basis, and comes year after year. The earning of Rs 3,000 to 4,000 every month per household takes people marginally above the wretchedly low poverty line (also called the starvation line). But this earning comes regularly – it is their subsistence – and, more importantly, it gives them economic security year after year.
Its an interesting point..Which is why I think the Haryana model is quite relevant - instead of "upfronting" the whole proceeds, they have split up the compensation into a lumpsum and an annuity...An annuity cash flow gives an optical sense of "security", especially for the less-entrepreneurial communities...
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by putnanja »

Since it has been repeated repeatedly here that RSS etc were behind the economic policies of the BJP government, would like to know the specific policies that the RSS insisted and that BJP implemented, like what the NAC Is doing wrt NREGA, communal bill, land acquisition bill etc. Repeating a lie 1000 times like pakistan does doesn't make a lie a truth though.

The NDA govt did go in for full sale of PSUs like modern bread etc. The UPA govt too has been guilty of cross-holding of PSU shares. In fact, I believe it was started during the Narasimha Rao govt, and successive governments have carried it out.

As regards to the more "reforms" that the UPA govt brought in, I am yet to see the big ticket reforms that they are doing. VAT was in the works earlier too, except that it got finally implemented during UPA-I.

Meanwhile, there are reports that India might agree to reduced/nil zero on auto and wine imports from EU for more agricultural access to EU market. Don't know how much sense it makes given that industry needs to be the major jobs provider in India going forward.

EU for huge duty cuts in its FTA with India
...
The European Union has sought substantial reduction or even elimination of duties in export of its automobiles, wines and spirits to India as a ''must have'' in the free trade agreement being negotiated between the two sides.

While India’s negotiators in the Commerce Ministry have received the necessary mandate from Prime Minister Manmohan Singh-headed Trade and Economic Relations Committee (TERC), they would like to have a trade-off between yielding on automobile sector and gaining extra EU market for Indian agriculture, sources said. India and the EU have been negotiating a comprehensive free trade pact, officially known as Broad-based Bilateral Trade and Investment Agreement (BTIA), since June 2007. For further discussions on the pact, EU officials are coming to India on Monday.

...
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

putnanja wrote:Since it has been repeated repeatedly here that RSS etc were behind the economic policies of the BJP government, would like to know the specific policies that the RSS insisted and that BJP implemented, like what the NAC Is doing wrt NREGA, communal bill, land acquisition bill etc. Repeating a lie 1000 times like pakistan does doesn't make a lie a truth though
As has been discussed many times before, ABV and his core team had the right instincts on policymaking...However, for a large part of his tenure, policymaking was hostage to woolly notions of swadeshi and a third rate policy-articulator who was an open RSS-appointee (and someone clearly not having the PM's confidence)...As result, there were very few good ideas that originated from the NDA govt, till the end of the term (when Jaswant Singh took over, finally)...The landmark reform legislations passed by the NDA - Insurance, FRBM - were legacy of the INC/UF govts, which they were cussed enough to not support when in opposition...They are doing the same thing again with Insurance (hiking the FDI limit) today..The only original idea (with implementation on the ground) during NDA were the highways programme (thankfully run by the PMO then, and required expulsion of the bumbling Rajnath Singh from the surface transport ministry and his replacement by BC Khanduri)...Towards the end, Jaswant Singh took some really "streategic" steps on liberalising the external account - but it was the dusk of the NDA govt by then....

The issue about UPA (esp the UPAII avatar) is that it hasnt done nearly enough, even though it has broadly the right ideas...NREGA's performance is seeing increasing empirical affirmations - including on growth in rural wages according to the latest NSSO numbers, UNDP's performance audit, as well as consumption numbers during the financial crisis...Land Acquisition too, is an act whose time had come a few years back - if anything, UPAII is culpable in not pushing through with it...UPAI comparatively had a better record on policymaking (despite the Left!) - RTI, CENVAT, finalisaiton of the Kelkar recos on GST..UPAII started well - UID, Cash Transfers, impending legislation on GST - but in the last year or so has lost its way...Big time...
putnanja wrote:The NDA govt did go in for full sale of PSUs like modern bread etc. The UPA govt too has been guilty of cross-holding of PSU shares. In fact, I believe it was started during the Narasimha Rao govt, and successive governments have carried it out
Check out "disinvestment proceeds" year-on-year - the data was posted sometime back here...no other govt tried the scale of policy skullduggery with disinvestment as NDA with its forcing of PSU cross-holdings - another legacy of RSS "philosophies" on the economy - with Ram Naik being the proxy..

Anyway, the discussion wasnt about NDA v/s UPA - I was only pointing out the cussedness of BJP opposing the Isnurance amendment and opposing the Retail FDI legislations...
Meanwhile, there are reports that India might agree to reduced/nil zero on auto and wine imports from EU for more agricultural access to EU market. Don't know how much sense it makes given that industry needs to be the major jobs provider in India going forward
This is normal "give and take" negotiations in an FTA - lets wait for the final version...
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

wrt MNREGA. Yes rural wages have increased which lead to increased consumption. But 2 points. What about productivity ? Is not MNREGA akin to giving money for doing nothing ? The productivity is obviously low besides they make it tough for companies in a already tough labour environment. You surely must be aware of corruption in MNREGA besides delay in wage release. A better policy could have been simplifying labour law for temporary workers and distributing the labourers to companies who need them with the wages provided by the company. The company wages will be supplemented by social security benefit from the government. How productive do you suppose digging trenches and planting trees are to the economy? Does it justify Billions ?
as well as consumption numbers during the financial crisis
The target consumer for MnREGA is the poorest of the poor. They were hardly affected by the 'financial crisis' . They had little to begin with.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by putnanja »

somnath wrote:
putnanja wrote:Since it has been repeated repeatedly here that RSS etc were behind the economic policies of the BJP government, would like to know the specific policies that the RSS insisted and that BJP implemented, like what the NAC Is doing wrt NREGA, communal bill, land acquisition bill etc. Repeating a lie 1000 times like pakistan does doesn't make a lie a truth though
As has been discussed many times before, ABV and his core team had the right instincts on policymaking...However, for a large part of his tenure, policymaking was hostage to woolly notions of swadeshi and a third rate policy-articulator who was an open RSS-appointee (and someone clearly not having the PM's confidence)...As result, there were very few good ideas that originated from the NDA govt, till the end of the term (when Jaswant Singh took over, finally)...The landmark reform legislations passed by the NDA - Insurance, FRBM - were legacy of the INC/UF govts, which they were cussed enough to not support when in opposition...They are doing the same thing again with Insurance (hiking the FDI limit) today..The only original idea (with implementation on the ground) during NDA were the highways programme (thankfully run by the PMO then, and required expulsion of the bumbling Rajnath Singh from the surface transport ministry and his replacement by BC Khanduri)...Towards the end, Jaswant Singh took some really "streategic" steps on liberalising the external account - but it was the dusk of the NDA govt by then....

...

So basically, you are saying that you think the "RSS appointee" may have had stalled the good ideas of ABV, which is a big assumption, and doesn't square with the "NDA Govt following RSS policies" assertion that you made. The worst the NDA govt can be accused of is about maintaining status quo of policies made during the previously mostly congress ruled times. However, extending that to say that "NDA followed RSS policies, which is worse compared to following the institutional NAC policies have world renowned economists" is intellectually dishonest. However, given that you are a known UPA supporter, I guess it is par for the course.

The PVN govt and the UF governments had majority of their owns, and didn't need the opposition support to pass the insurance, FRBM acts etc ifthey wanted to. These weren't constitutional bills that needed 2/3rd majority. A simple majority was sufficient and PVN had already bought it, just like MMS did later on in UPA-I :D

If the UPA was so inclined, it could have accepted the BJP's support for the Pension reform bill and the women's reservation bills if it wanted to. At one time, the BJP did indicate its support to raising the limits in insurance. Politics does play a role in economic policy, as shown by the UPA in not taking the BJP's support in deference to its allies, as also allowing the loot under 2G for similar support.

BJP supports FDI in pension, insurance sectors: Gadkari

Budget 2011: Reform bills bring back Cong-BJP reform talks
Last edited by putnanja on 18 Jul 2011 12:34, edited 1 time in total.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by chetak »

gakakkad wrote:wrt MNREGA. Yes rural wages have increased which lead to increased consumption. But 2 points. What about productivity ? Is not MNREGA akin to giving money for doing nothing ? The productivity is obviously low besides they make it tough for companies in a already tough labour environment. You surely must be aware of corruption in MNREGA besides delay in wage release. A better policy could have been simplifying labour law for temporary workers and distributing the labourers to companies who need them with the wages provided by the company. The company wages will be supplemented by social security benefit from the government. How productive do you suppose digging trenches and planting trees are to the economy? Does it justify Billions ?
as well as consumption numbers during the financial crisis
The target consumer for MnREGA is the poorest of the poor. They were hardly affected by the 'financial crisis' . They had little to begin with.
It's a cunningly designed scheme to siphon off money by the ruling party.

The unintended consequences due to the irrational logic and venal ideological bent of the NAC is sky rocketing inflation as well as highly increased rural wage structure preventing farmers from accessing labor at fair rates and this in turn will lead to increase in the mechanization of labor intensive jobs as reported by the now increasing sales of farm equipment to replace expensive manual labor. And the decreased demand for rural labor.

Which is why the NAC has come up with an even more cunning plan to link the MnREGA wages to cost of living increases.

No one can or will open their mouths against the holy cow of the NAC.

After all, no other state wants to import or allow to take root, the feral exploitation of the poor capitalist by the militant labor as is happening in Kerala. :)
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by gakakkad »

^^ Yup . Giving money to low productive labour will surely lead to inflation. Kerala has some of the most beautiful landscapes in the world. Yet look at the per capita income. Because cooy labour policies have prevented anything good from happening there. And CON-Grass wants the whole country to face trouble . In fact MnREGA is an anti reform when we need a reform. They have done opposite of what needs to be done.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by somnath »

putnanja wrote:The PVN govt and the UF governments had majority of their owns, and didn't need the opposition support to pass the insurance, FRBM acts etc ifthey wanted to. These weren't constitutional bills that needed 2/3rd majority. A simple majority was sufficient and PVN had already bought it, just like MMS did later on in UPA-I
Cant be more wrong than that..Both Insurance and FRBM required 2/3rd majority..Both were ideas whose time (and bills) had come in PVNR's time...PVNR's govt (and later PC in the UF setup) tried getting BJP's support for both - BJP made common cause with the Left (!)...When the NDA govt came to power, they got the bills passed with INC support...Something similar is happening with Insurance now...

The PM himself alluded to that in his press conference...
putnanja wrote:However, extending that to say that "NDA followed RSS policies, which is worse compared to following the institutional NAC policies have world renowned economists" is intellectually dishonest.
I didnt say that, but its substantially right...The sheer intellectual output of NAC, even when I disagree with a number of their proposals, is quite of a different level than what the RSS-types could (or can ever) manage on policymaking...

Anyway, I wasnt making a UPA-NDA point, only the fact that politics is jeopardising essential reforms...
gakakkad wrote:The target consumer for MnREGA is the poorest of the poor. They were hardly affected by the 'financial crisis' . They had little to begin with.
There is a long discussion on NREGA out here - I wont repeat the points "in favour" , it would give most a feeling of deja vu and ennui...Just one point on the financial crisis- when 5-6 trillion dolalrs of credit vanish overnight, the macro impact is widespread....Which is when fiscal supprot is required to sustain investment and consumption..NREGA was one such..
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by abhischekcc »

Look, there was another regime that followed the principle of "full employment before productivity gains" - Nazi Germany. And they also faced the problem that is rising up in India now - Hyperinflation. The reason is simple and covered in Economics 101 - that if wages rise faster than production of goods/services, then inflation rate will rise to compensate.

But I guess it takes a bunch of Nehru family-based Fascist economists to forget this simple fact of reason from history.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Post by nandakumar »

[quote="somnath
Cant be more wrong than that..Both Insurance and FRBM required 2/3rd majority..Both were ideas whose time (and bills) had come in PVNR's time...PVNR's govt (and later PC in the UF setup) tried getting BJP's support for both - BJP made common cause with the Left (!)...When the NDA govt came to power, they got the bills passed with INC support...Something similar is happening with Insurance now...

quote]

There is an Insurance Act and then there is a Life insurance Corporation of India which regualtes the activities of the insurnce industry and the LIC. These are straight forward pieces of legislation that required only a simple majority in the Lok Sabha for its passage.
The problem that Narasimha Rao government had was that it had a razor thin majority thanks to the JMM MPs who were bought over -remember the first cash for votes scam? So the majority such as it was, was not a great source of comfort.
Moreover there were sections of the Congress party which had ideological reservations over letting insurance companies from abroad into India. Then there was also the political factor of Sonia Gandhi who had no doubt only temporarily shunned political power in the wake of Rajiv Gandhi's assassination but by no means completely renounced it. This became amply clear when Sitaram Kesari who thought he was the congress boss in the post 1996 situation was literally thrown out of the party headquarters when Sonia Gandhi felt she was ready to take over reins of the party. So PVN couldn't have been unaware of these ambitions and so had to tread cautiously on a contentious reform measure as the insurance industry.
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