Indian Economy - News & Discussion Oct 12 2013

[Arjun]

Now consider the fact if there had been a single entity which was responsible for generating the power and then distributing the power. In that case the input would be the power generation inputs like coal/gas/hydro/etc. While the selling price would be what it would give to the end consumers. It would not seek to eek out a profit out of each and every step of the electricity setup.

I don't know of too many market economies that do not have the segregation between generation, transmission and distribution. Fundamentally these are three quite different businesses at the end of the day....Also, while you are right that the breaking up leads to additional costs - theoretically the additional costs should be counterbalanced by greater innovation and competition in each step of the process. If that is not happening, one needs to look into why that is not. Also there is nothing stopping mergers between these three segments to create vertically integrated firms that should in theory be able to supply at a lower price to the end consumer.

Also our power sector reforms should have been meant as a force multiplier. It should have let us the create industries which would manufacture power equipments from smart meters, to ceramic transformers, to HVDC lines, etc. What has happened is that power sector reforms went down the path of the telecom industry. All the capital expenditure done and the capacity building was done for outsiders who benefitted. Majority of the IT infrastructure spend for Airtel, Vodafone, etc was done by foreign firms like IBM which is not an Indian company but a subsidiary of an American company. All the value that was added was done on the stock markets of US or Europe.

Agreed

Added to this there has not been any significant regulation of the power distribution companies or any competition introduced in the power distribution. This has led to these companies acting as monopolies like BSNL operated prior to opening up of Indian Telecom sector. Arrogant and dismissive of the end consumers. Basically all the monopolies are like that, irrespective of whether they are public sector monopolies or private sector one.

Distribution is inherently about rights to a particular geography and not sure if there are models in other parts of the world where monopoly over a particular region is not awarded for electricity utilities.

In case of private sector they are more insidious than the public sector as they tend the subvert the system.

Which is why one needs audit firms and the like....but once you bring in the element of regulation and audit - privatization and competition is the better long-term model.

[Christopher Sidor]

Now consider the fact if there had been a single entity which was responsible for generating the power and then distributing the power. In that case the input would be the power generation inputs like coal/gas/hydro/etc. While the selling price would be what it would give to the end consumers. It would not seek to eek out a profit out of each and every step of the electricity setup.

I don't know of too many market economies that do not have the segregation between generation, transmission and distribution. Fundamentally these are three quite different businesses at the end of the day....Also, while you are right that the breaking up leads to additional costs - theoretically the additional costs should be counterbalanced by greater innovation and competition in each step of the process. If that is not happening, one needs to look into why that is not. Also there is nothing stopping mergers between these three segments to create vertically integrated firms that should in theory be able to supply at a lower price to the end consumer.

Innovation happens when in a market there are competitors trying to get market share. It never happens when a captive market, without any competition, is handed over to any entity. Consider the case when Microsoft's IE had to compete with Netscape Navigator. We saw innovation happen then, till IE reached ver 6. Once Microsoft had managed to defeat Netscape, the innovation stopped. It then took close to a decade till Firefox became stable and Google's Chrome came to the scene for innovation to happen again. In current case of Electricity Distribution there are regulatory constraints that limit new entrants coming into the market.

If mergers are to be supported then the question arises why were the generation, transmission and distribution sectors broken up in the first place? It seems like a half baked idea was fostered without thinking through. And even now after seeing years of failure in this so called electricity distribution the same is sought to be fostered upon based on some dubious reasons. It is like failure is right in front of our eyes and yet there is unwillingness to carry out course corrections.

[Arjun]

If mergers are to be supported then the question arises why were the generation, transmission and distribution sectors broken up in the first place?

The difference is that in the current scenario - any mergers would be market-led and driven by market needs to reduce costs or provide greater service. So the choice would remain in the hands of individual businesses - whereas earlier it was a non-competitive diktat that did not provide room for innovation in business models of the businesses.

It seems like a half baked idea was fostered without thinking through. And even now after seeing years of failure in this so called electricity distribution the same is sought to be fostered upon based on some dubious reasons. It is like failure is right in front of our eyes and yet there is unwillingness to carry out course corrections.

The government needs to constantly monitor the evolution of every industry and put in regulation to nudge industry in the right direction. So if there is a failure of the electricity industry in meeting the country's needs - I would blame the government and regulators for not providing the right incentives and regulatory measures. Privatization and competition per se are not concepts that I would seek to put the blame on.

[Christopher Sidor]

^^^^^
I think that this so called emphasis on market is a bit misplaced. What has happened is that a few private entities have managed to corner the market. There never has been an element of competition which has been introduced. There has been an active policy of discouraging failures and bankruptcy. If a company promises to supply gas at 2.40 usd and refuses to then supply it at that specified rate it should be punished and banned. That does not happen rather GoI goes out of the way to sustain the company and then rewards it too.

What has happened is that under the guise of markets or privatisation, corny capitalism is being practised. Especially in the case of Delhi Electricity Distribution privatisation.

[Austin]

India's forex reserves up at $295.71 billion as on December 27

India's foreign exchange reserves rose to $295.71 billion as of December 27, compared with $295.50 billion in the previous week, the Reserve Bank of India (RBI) said on Friday.

Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves, the RBI said in its weekly statistical supplement.

Forex reserves include India's Reserve Tranche position in the International Monetary Fund (IMF).

[Austin]

Can be use some % of Forex say $50 billion for Infra projects to boost GDP Growth and Generate Employment ?

Are these Forex reserves Hot Money that can be taken away any time by FII or similar Foreign entity , so do they represent the money we have and own without any risk of loosing it ? Thanks

[nachiket]

Can be use some % of Forex say $50 billion for Infra projects to boost GDP Growth and Generate Employment ?

Are these Forex reserves Hot Money that can be taken away any time by FII or similar Foreign entity , so do they represent the money we have and own without any risk of loosing it ? Thanks

Forex reserves are what finance our imports. A sudden drop by 50 billion would cause chaos and leave us unable to cover our import bill.

[subhamoy.das]

Exchange rates does not reflect true value of the goods and services produced in a country. Use GDP PPP model. India should be word's 3rd largest economy, ahead of japan, at this time.

PPP does give us better ivory tower results when measuring lun-size against the likes of Japan and Europe. But it is less than worthless when it comes helping people and companies who are actually trading and making money.

There is no CEO who would consider India a bigger economy than Japan. PPP is a product of leftist academia and is nowhere near a true reflection of goods and values. In fact, something that cannot be sold through a convertible currency does nothing for the country in the global hierarchy so converting to PPP is moot.

Insisting that we have the world's 3 largest economy by PPP actually harms us by lying to our baboos that they are doing better than they really are. More importantly, it does not reflect our ability to buy on the world's stage. We cannot buy anything on the scale of Canada never mind Japan so insisting that we can do so creates dangerous financial miscalculations.

PPP is a good measure when evaluating the purchasing power of a currency in domestic market. What I used to make in US before RTI, I can easily have similar life style with a 20X mark up instead of a 60X markup in Indian rupees in my wages. In a way it is a good indicator of the value of the currency at the hand of the common man in the country.

You said that no CEO will consider India bigger economy than Japan. Well that is true because we have a much lower PPP per capita than Japan. But certain items - cell phones, tvs, computers, small cars - which are below a certain cost - I am sure the CEO of Samsumg, Suzuki, LG, Sony - will consider India a bigger market than Japan.

[Theo_Fidel]

There has been an active policy of discouraging failures and bankruptcy.

This is correct and creates a distortion in the Indian economy. Why a few months back folks roundly panned mallya for taking a risk and failing with his airline. A certain level of bankruptcy is necessary for the economy to remain healthy. In USA 90% of business enterprises are expected to fail. There is a capital/human cost to this but the capital/human cost of not allowing these business to fail is higher.

[pradeepe]

A better way to explain allowing businesses to fail is being afforded the opportunity to stand up again after failing. A huge part of US dominance in leading technology innovation rests on this.

[Singha]

once jayanthi natarajan resigned, wheels seem to move again...

Odisha: Posco steel plant, India's biggest FDI, gets environmental approval

South Korean steel maker Posco has received environment clearance for its Rs 52,000 crore steel plant in Odisha, ending an eight-year wait for the project to get off the ground.

[hanumadu]

Singha Sir,
It is just dikhawa before the elections. The PM or the cabinet could have easily prevailed over Jayanthi Natarajan for such big ticket investments if they wanted. She was environment minister for only 2.5 years and she was preceded by Jairam Ramesh and MMS and they were the ones who sat on a lot of infra structure projects and industries. The Congress as a policy denied environment clearance to every thing and anything that has even a remote chance of propelling India forward. UPA's unstated policy is to keep India down. Congress is a be****d party. If congress comes back to power in 2014, things will be back to normal again. Low growth, no new infrastructure and no new industry. Ack thoo.

[satya]

Arre baba

election time , paisa chahiye woh bhi big time . Jayanti wayanti come & go who cares . All these projects waiting for xyz/ environmental clearance = cashier's check for ruling party in very simple words . Now as planned they are being cashed for election purpose & one last loot before exiting who knows kal ho na ho . Who knows we might hear about Rafale as well .

[Christopher Sidor]

When the burden falls on the poor --- The Hindu Dated 13-Jan-2014

AAP will also check malpractices by the electricity companies which were yielding them undue profits at the expense of the citizens of Delhi. Earlier, some citizens and businesses were found to be stealing power, causing losses to Delhi Electric Supply Board, but after privatisation, it is the electricity companies who have been stealing from the citizens. It is well-known that regulation is hamstrung by the famous Averch-Johnson effect. It implies that the private regulated companies show higher capital and other expenditures to get a higher price from the regulator for the product/service they provide. The regulator does not have an independent source of determining the cost of production and depends on the private companies to supply them with data and this is manipulated to show higher costs. This is achieved by showing higher capital costs, higher overhead costs, and so on. Past examples of such manipulation are Enron and fertilizer subsidy.
....
....
Thus, the issue is not robbing Peter to pay Paul but the returning of what was robbed by Peter from Paul.
....
....
The issue is macro and not micro as the opponents make it out to be. In brief, the honest Paul and Peter would gain together while only the dishonest Peter would lose. It is the latter who is shedding crocodile tears at the actions of AAP.

It is a pity that the author has not considered how the privatization in the Transport sector in Delhi. But in a nutshell, just as Britain/UK became the worst examples of how not to do privatization, we in India and especially in Delhi have surpassed Britain/UK. It is a high time that certain policies which were ushered under the umbrella or privatization and introduced with a view to increase efficiency have actually fostered corny capitalization.

[Supratik]

No one knows what the so-called malpractices of the power companies are YET. These are all claims and allegations. Unless CAG indicts the power companies or an independent audit establishes so you are only promoting AAP propaganda. Everyone knows what the power situation was in the socialist era.

[Adrija]

No one knows what the so-called malpractices of the power companies are YET. These are all claims and allegations. Unless CAG indicts the power companies or an independent audit establishes so you are only promoting AAP propaganda

That may well be true, so we should wait till the CAG comes out with its report. However, even while being in the private sector, I do believe that the current policy we are following- of completely handing over electricity distribution to private utilities- is fundamentally flawed and will come to a sorry end. There is an inherent conflict of interest if the private operator is incentivized the way they are in the current model, as then there will be hike in costs and regulatory capture, leading to private monopolies and windfall profits at the expense of the consumer

There are models wherein we can harness private sector in enhancing efficiency and operations in distribution while insulating them from charges, not sure why we are not doing that...

I supose we must all go through the learning curve each time and every time ....

[Supratik]

Yes, let us wait for the audit although I am not sure of the truth coming out as it was ordered by the AAP Govt. But one thing is clear that the socialist era policies were failures. So no going back. We can argue about how it can be made better but to keep haranguing about privatization is silly.

The power sector bill of Delhi is Rs 15000 crore. If you want to give 50% subsidy you will have to shell out Rs 7500 crore. Now multiply that for the whole of India. Or you have to kick out pvt companies and give subsidized power through Govt sector. A subsidy based power distribution model has been an all-India failure. If you have evidence to the contrary kindly point it out. Kindly don't propagate leftist drivel and test our IQ.

[Adrija]

We can argue about how it can be made better but to keep haranguing about privatization is silly.

A subsidy based power distribution model has been an all-India failure. If you have evidence to the contrary kindly point it out. Kindly don't propagate leftist drivel and test our IQ.

Oh well, I see lack of both knowledge and reading ability does not stop you from frothing at the mouth

1. I did NOT talk about the "privatization" model
2. I did NOT talk about "subsidy based model"
3. If you feel so strongly about it, then please DO take the trouble of reading up on the various operational models around the world. So, while I can also rant and rave, let me take one last chance of trying to make things a bit simple here so that hopefully we can have a civilized conversation:


1. What I said was that there is a conflict of interest if the private sector is incentivized THE WAY THEY CURRENTLY ARE
2. Electricity distribution is a "natural" monopoly, so it is better that is be a public monopoly instead of a private one. Again, this is largely held true, except in cases where the state oversight and monitoring functions are strong enough to avoid regulatory capture...........would you like to guess where India stands on that score? And, BTW, the US is a prime example of regulatory capture in areas such as pharma, food, and telecoms, to name only three
3. Please do read up on "regulatory capture" - it is a reality the world over. I am not saying it has happened in Delhi, but it DOES happen, and yes, if you incent the power distribution companies the way they are in Delhi, then - sooner or later- regulatory capture is likely
4. I DID say you should harness the efficiency gains which the private sector brings to the table


What would be better is if the private party is handed over only the O&M part of it, and their performance incentives are structured NOT around the revenue realization- which gives them an incentive to inflate prices and is a classic conflict of interest structure- but to incent them on (Units billed/Units purchased), and outage performance metrics.

Pricing decisions and operational oversight should be retained by ideally the closest/ most local political framework (ideally the local self-government body such as the Municipality or at the very least the Zilla Parishad). That will achieve two things:

1. Depoliticize the whole "price of power" from both the Central and state levels- this will become effectively a self-governed decision and each local body will decide what they can purchase and how much they sell it at
2. There need be no loss of pricing power if the decision is made to buy from the National Grid, which should be a single national, autonomous body incharge o the national transmission grid and is mandated for reducing the real price of base power on a yearly basis
3. This structure will also allow for each of these self- managed district power distribution companies to tie up with either the national grid for their entire power requirements, and/ or with private generation players, and source it after paying wheeling charges to the grid (or even build their own TX infrastructure, even though that is not really recommended)

Guess what- this, or close variations of the central point about avoiding such conflict of interest situations (not necessarily the entire structure as I have described above)- has also been recommended by various GoI committees such as the Shunglu Committee, but I guess you are to busy drinking the "undiluted markets is best, rah rah rah..." cool aid peddled by the Western FIs to let you brain do some real work

And oh, just as an aside- even thought I did not mention about subsidies in my original post- it is the right of the political executive to decide on subsidy or not........if you don't agree (which I don't, just to be clear), then don't vote for the party which EXPLICITLY said it would reduce power rates...........I didn't BTW. But they did come to power, and here we are.......

And to make things more complicated- we ALL enjoy subsidies, the richer people even more so, and have disproportionately so, just for the record. So the talk is not about subsidies, but who gets to enjoy what......and guess what- in a democracy that is exactly it gets resolved

I can write quite a bit on the whole power scenario in India, and what the Electricity Act means and where I think we are headed for an even greater mess than what we are in currently, but that may clearly go beyond your two second perspective, so my last post on this

[Supratik]

Oh well, I see lack of both knowledge and reading ability does not stop you from frothing at the mouth

1. I did NOT talk about either the "privatization" model
2. I did NOT talk about "subsidy based model"
3. If you feel so strongly about it, the please DO take the trouble of reading up on the various operational models around the world. So, while I can also rant and rave, let me take one last chance of trying to make things a bit simple here so that hopefully we can have a civilized conversation:


1. What I said was that there is a conflict of interest if the private sector is incentivized THE WAY THEY CURRENTLY ARE
2. Electricity distribution is a "natural" monopoly, so it is better that is be a public monopoly instead of a private one. Again, this is largely held true, except in cases where the state oversight and monitoring functions are strong enough to avoid regulatory capture...........would you like to guess where India stands on that score? And, BTW, the US is a prime example of regulatory capture in areas such as pharma, food, and telecoms, to name only three
3. Please do read up on "regulatory capture" - it is a reality the world over. I am not saying it has happened in Delhi, but it DOES happen, and yes, if you incent the power distribution companies the way they are in Delhi, then - sooner or later- regulatory capture is likely
4. I DID say you should harness the efficiency gains which the private sector brings to the table


What would be better is if the private party is handed over only the O&M part of it, and their performance incentives are structured NOT around the revenue realization- which gives them an incentive to inflate prices and is a classic conflict of interest structure- but to incent them on (Units billed/Units purchased), and the local political oversight (ideally the local self-government body such as the Municipality or at the very least the Zilla Parishad) retains both oversight and the pricing power

Guess what- this, or close variations of this central point about avoiding scuh conflict of interest situations- has also been recommended by various GoI committees such as the Shunglu Committee, but I guess you are to busy drinking the "undiluted markets is best, rah rah rah..." cool aid peddled by the Western FIs to let you brain do some real work

And oh, just as an aside- even thought I did not mention about subsidies in my original post- it is the right of the political executive to decide on subsidy or not........if you don't agree (which I don't, just to be clear), then don't vote for the party which EXPLICITLY said it would reduce power rates...........I didn't BTW. But they did come to power, and here we are.......

And to make things more complicated- we ALL enjoy subsidies, the richer people even more so, and have disproportionately so, just for the record. So the talk is not about subsidies, but who gets to enjoy what......and guess what- in a democracy that is exactly it gets resolved

I can write quite a bit on the whole power scenario in India, and what the Electricity Act means and where I think we are headed for an even greater mess than what we are in currently, but that may clearly go beyond your two second perspective, so my last post on this

You are taking it personally. I am questioning the assumption by some against privatization. I am not saying that there cannot be a better solution. In the Communist world everything will be free and all will be happy. Unnecessary subsidies to a state city which has one of the highest per capita income distorts the economics of development. If the subsidies were given to say the agriculture sector where income is low and returns poor then it will make more sense. If subsidies were given to BPL families it will make sense.

Please do write about your criticism of electricity reforms. I will be happy to learn.

Electricity generation, distribution, transmission were Govt. monopolies till recently. Do you think that it was a happy picture? There are already regulatory bodies in place.

[Christopher Sidor]

Cross posting from Re: Kaveri & aero-engine discussion

Low payment to farmers is not a political directive, it just stupid bureaucratic inertia and petty fogging. The requirement of 4 times the market price for rural areas will now bring land acquisition price "near to" real market price. I recently personally did a case, in which Supreme Court directed payment of market price and the bureaucracy calculated the market price at 5 lakhs for that land while the real market price was around Rs. 50 crores. The land owner offered to pay the Govt Rs 5 crores to release the land which was his own, which was refused. No wonder the case went back to Courts.

In Gurgaon farmers are paid Rs 80 lakhs per acre for super prime land, and the same land after Group housing license becomes worth Rs 30 crores per acre. Why should only builders, politicians, bureaucracy pocket the difference? Let the farmers also share some benefits for the land which his family is holding for tens of Generations. Give him say, 10% of benefit like say Rs. 3 crores or so per acre.

The problem in land acquisition unlike other agitations is simply about market value genuine compense. I have seen dozens of such cases and the only issue is "genuine compensation" which is fraction of the cost of the project.

In Greater Noida, I am led to believe that Judges personally know how much bribe Dalit Auntie was taking per acre, so they struck down the acquisition. If FAR is improved from 3 to 5 then again farmers can be given around Rs 2 crores per acre instead of Rs 40 lakhs now. The good thing would be that politicians, bureaucracy can even keep on taking their bribes without raping the farmers and end consumers alike.

The dispute in land acquisition is rape of farmer and end customer for benefit of politicians and bureaucracy. Therefore, we should learn to look at other side of the coin.

It is not that simple. When land is bought it has nothing, no infrastructure to support a building, residential or commercial or institutional or industrial. Water lines, Sewage pipes, Storm Water drains, Electricity wires, telecommunication cables have to be laid. Further roads have to be paved and laid. All of this takes money. If we increase the land acquisition costs then what happens is that consequently the end price of the house, building, shops, etc goes up.

Moreover in many cities like Gurgaon, if a builder is building say 100 Flats he has to build a similar percentage of flats for EWS families. Also most of the people in Gurgaon who give their land get flats and penthouses in the flats being constructed. This gives them an incentive to get the building completed and enjoy their benefits. So increasing the land prices is one thing. It looks noble. But it is not the solution. What is needed is that people who have their lands taken away ought to be trained or upskilled. These people have to be given a revenue stream which is part of the structure coming on their land.

Giving high prices for the land may lead to wastage. People getting 10-50 cores will automatically go and buy 2-3 scorpios or go on a spending binge. After a few years the money is gone and people are without money, without means to earn money and without a piece of land. And then they start to look at the houses or building on their erstwhile land and get envious. You will find a lot of people complaining that they got nothing, once the initial money given to them has been spent. Some of them turn to crime and some to Maoist or other dangerous organizations.

Giving a high price for the land does not give people a stake in the progress. Rather it is a way to avoid hard and painful choices. A means of getting out of their obligations without taking the difficult and more sustainable long term path.

[govardhanks]

Here are few links debating for land acquisition model practiced in India.

1. http://en.wikipedia.org/wiki/Land_acquisition_in_India Detailed link highlighting controversies.

2. http://www.ideasforindia.in/article.aspx?article_id=41 2012 report

3.http://www.newindianexpress.com/states/ ... 89793.ece1 CLT model

4. http://www.dnaindia.com/india/report-ch ... on-1944091 New land acquisition bill to be in effect from Jan 1 2014.

My opinion is, there needs to be detailed study conducted(say all decade old land acquisition) on all these possible reforms before passing the act or bill, most importantly such study should be made available to everyone.

[Supratik]

Land acquisition will be smooth and desirable only when the person giving away land makes significant improvement in his situation. It should not lead to impoverishment as used to happen in the past specially where Govt is involved. What he does with the money is his business. I think developers should also incorporate the villages into their schemes and give property owners a good deal in exchange. Otherwise you will have post colonies next to ghettos (villages) which I have seen in NCR.

[Virupaksha]

Perhaps people here are confusing between acquisition and sale.

Acquisition is forcible takeover of land by the govt. If you want to forcibly takeover the land, dont tell me that you will have to lay down this and that. The land owner is not being given a choice in this matter.

if you want that land to give to a electricity generation company, let the govt subsidize it. Why should the landowner whose land is being forcibly acquired subsidize all the states electricity?

I have read the land acquisition bill, suffice it to say that the only problem that too only in principle, I found was that even private to private sale comes under it if the land exceeds 50-100 acres. But I know that it is rare, 99.99% of industries are on lands which are originally govt forcibly acquired and more than 50% of them have become real estates. So in reality, I dont have a problem with that. Infact the amount in rural areas is on the lower side.

and that law doesnt even apply to roads, railways, atomic energy or defence. So it mostly applies to the nandigram type industries. Why should a nandigram villager subsidize the nano? Let the govt subsidize it. Pay full price and more for the forcible acquisition, then let the govt subsidize it if it wants to develop the industry.

To expect a nandigram villager to subsidize the nano is inhuman, especially after you have taken away his original means of livelihood.

All those stories of farmers buying cars and then showing off are private sales, when the lands have been acquired, those farmers are destitute.

[Theo_Fidel]

All those stories of farmers buying cars and then showing off are private sales, when the lands have been acquired, those farmers are destitute.

The farmers are destitute anyway. Think of it this way. 1000 Acres at an annual productivity of 4 tonnes per acre will produce 4000 tons of grain. A GOI procurement price of Rs 16,000 to Rs 22,000 a ton this will produce Rs 20,000 x 4000 that is about Rs 80 lakh of revenue per year. After paying for seed, labor, domestic consumption only about Rs 40 lakh is profit. This is not enough to sustain even 40 jobs at a paltry pay of Rs 1 lakh per annum. And this is in a good year. And yet there a 5000+ people dependent on this. Even a half decent road side dhabha produces more wealth than this. And more jobs too. The state agreed to a compensation of somewhere between 8 lakhs to 12 lakhs per acre. So total payout was about Rs 100 crore. This is ~200 years of ROI based on agriculture! Some farmers demanded 10 times as much meaning Rs 1000 crore, which the broke WB government clearly did not have and does not have even now. But the majority of farmers, some 60% IIRC, listened to MB types and refused to sell at any price. Which is when the CPI thug folk went stupidly mental on them.

A nano factory would have produced Rs 10,000 crore turnover, with 5000 direct jobs and another 25,000 ancillary jobs in the area. Good jobs too. This is a 1:1000 type wealth generation ratio. The farmer position is indefensible IMO. Like I have said before 90% of India’s farmers will go the way of the dodo and go bankrupt. At most 5% of Indians population will be left in agriculture. Down from the present 50%, which in turn is down from the 80%-90% of the 50’s to 80’s. Already, Indias agriculture product is down to 13%-14% of GDP. Down from 60%+ in the 50’s. And on its way to an eventual 2% of GDP. Yes really, in our lifetimes agriculture in India will dwindle to low single digits as percentage of GDP even if the actual number rises marginally every year. Right now agriculture is worth about $250 billion per year. When India hits $10 Trillion in 2030 or so, it will be about $500 Billion per year or 5%.

[Virupaksha]

Yes, yes, yes and so for that one should forcibly take away even that morsel of food from their mouth of the destitute and the bankrupt and give them peanuts to live on for ever.

Pay full price and more for the forcible acquisition of land. Then build the tallest building on that land.

[Virupaksha]

PS: There is a subtlety in which I am saying, which I do not know whether it is coming out or not. I am not against forcible acquisition of land, I am against forcible acquisition without proper compensation and rehabilitation.

Let those nanos be built, but let the subsidies be out in the open. Let the farmer not pay the hidden subsidies, who is already forcibly thrown out of the land. Let the state pay it so that people can decide and comment in the open, whether a total of 5 crores was given as subsidy or 5000000 crores and then calculations can be made whether the nano plant or electricity plant is right.

[Picklu]

I do not think the farmer's in singur were paying any subsidy. it was the WB state govt which was paying in the form of price of the land. TATA's were paying the token rent of 1 rupee per acre per year where as the Govt was paying nearly 16 lakh per acre to the farmers.

[Theo_Fidel]

Well back when the land was notified Rs 8 lakh per acre (Edit - or 16 lakhs per acre as posted above) of completely undeveloped land was a good price. Over compensating the farmer will result in him turning around and trying to buy 10 times the land in the area causing even more displacement if possible. And causing the price of land to spiral making it impossible to build affordable housing and cities.

[Picklu]

If my friends and relatives living in the nearby areas to be believed, singur is completely ruined now with prostitution and destitution as the only future. Take this fwiw.

[Virupaksha]

Theo,

I have seen in andhra, how the thing turns into a real estate game. The whole coast of andhra was supposed to turned into that. Imagine the size of two large districts to be acquired by this game.
http://archive.indianexpress.com/news/w ... ct/383235/

To develop the corridor the state Government wanted to acquire 50 lakh acres of land along the coast which would have displaced over 20 million people.

Andhra's population is 80 million, and the coastal andhra population of ten districts is around 30 million

http://en.wikipedia.org/wiki/VANPIC

16000 acres of land, were to be "acquired", and before the acquisition was complete, papers were already made to turn them into real estate. This game was used many times in Andhra.

This only worked because, the forcible acquisition price was much much lower than the market price.

So I would never cry a tear of the old act. Now atleast the farmers will get a decent price.

Let the project cost reflect the true cost of it, if required subsidized by the state - not from the hidden subsidies by the farmers.

[Virupaksha]

Well back when the land was notified Rs 8 lakh per acre (Edit - or 16 lakhs per acre as posted above) of completely undeveloped land was a good price. Over compensating the farmer will result in him turning around and trying to buy 10 times the land in the area causing even more displacement if possible. And causing the price of land to spiral making it impossible to build affordable housing and cities.

so what?

The rest of the population's land hasnt been forcibly taken away from them. If the people from whom land was forcibly taken away are compensated higher than those who do it willingly, I do not see anything wrong in that.

[Virupaksha]

By the way, at the start the land price was supposed to be 2 lakh acres, only increased on agitation.

[Theo_Fidel]

..And they still refused to sell. Thanx for the update on the original land compensation. Seems low but no one accepts the first offer. I think we should drop the destitution and livelihood argument then. Overcompensation will result in more destitution.

Such land acquisitions are very common in SI BTW. Occasionally there is some dishum-dishum and some porratams. But on the whole the government compensates and farmers move on. So now folks from WB, Bihar and odisha who resist land acquisition violently, swarm south in search of jobs in their 100,000's. . Can we tell them to go back?

[chaanakya]

No wonder Hindi is understood by everybody there.

[govardhanks]

Perhaps people here are confusing between acquisition and sale.

The case in chitradurga is, the land is mainly forest with few agri lands as well, but the people there are more like dependent on the forest for their livelihood, which prompts us to think there is not much harm. So it is both acquisition and sale.
I think that is the reason why DRDO is already going ahead with constructions since the project is for protection of whole nation. But, people are frightened with no awareness of what is happening, they are worried about large scale projects and feel they will be eventually thrown out.

[Austin]

Fiscal deficit to be contained at 4.8 per cent of GDP: Chidambaram

New Delhi: India's fiscal deficit will be contained at 4.8 per cent of the gross domestic product in the current fiscal year that ends in March, Finance Minister P Chidambaram said, hinting at possible cuts in government spending.

Mr Chidambaram expressed on Wednesday his "unflinching commitment" to contain the fiscal deficit, at a time when the deficit in the first eight months of the fiscal year has touched 93.9 per cent of the full-year target.

The government is facing a fall in tax collections and lower receipts from share sale in state-run companies on account of the worst economic slowdown in a decade.

[Austin]

First create a policy that encourages smuggling and then seek information on its rise

Government seeks gold purchase information from jewellers as smuggling rises

[Christopher Sidor]

..And they still refused to sell. Thanx for the update on the original land compensation. Seems low but no one accepts the first offer. I think we should drop the destitution and livelihood argument then. Overcompensation will result in more destitution.

Such land acquisitions are very common in SI BTW. Occasionally there is some dishum-dishum and some porratams. But on the whole the government compensates and farmers move on. So now folks from WB, Bihar and odisha who resist land acquisition violently, swarm south in search of jobs in their 100,000's. . Can we tell them to go back?

If there is truth that people in Eastern half of India are not willing to give their land away, then GoI and rest of the Eastern State governments should try to do a Green Revolution 2.0 there. Bring all the infrastructure which is present in north-western India along with organic farming in a big way to this area. Encourage more agri-business in these states. For example there was a proposal long-long-long time ago to transport cement in jute bags instead of plastic bags. That would be good for the environment and also give flip to the jute growers in Eastern Part of India. Eventually we could rope in Bangladesh too into this and make it a part of the greater Indian supply chain.

[Supratik]

Theo, you missed on two problems in WB. The first is becoz of land reforms there are many people (tenants) who have a stake in the land. So what you think as Rs 16 lakh per acre will actually translate to 1-2 lakh or even less per head. So industrialization requiring hundreds/thousands of acres is not possible in WB. The TMC Govt is pursuing small and medium industries. The other problem is as there is not much of an economy in WB - what will people do with the Rs 1-2 lakhs they are getting from land acquisition and loose their only means of livelihood.

[Singha]

in assam also land holdings are traditionally very small. also under congi patronage whatever little number of landed zamindars used to be there in past, had their land nibbled and taken away permanently by BD immigrant sharecroppers as they grew in number and power. the landed class is now like bahadur shah zafar with only a few rich tea planter holdouts in the east.