Indian Economy - News & Discussion Oct 12 2013

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Arunkumar » 19 May 2014 14:43

>>>Give it a rest Vinaji. We all know you're heartbroken. I got these for you.

'Indian Masculinity' gives a glimpse of the kind of spin we can expect for every action of namo.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 20 May 2014 01:45

China: Biggest Loser In India's "Modislide" Election
http://www.forbes.com/sites/gordonchang ... -election/
Gandhi is not the biggest loser overall, however. That honor belongs to Beijing, because it’s certain that in the coming years direct foreign investment will head to India instead of China. For a Chinese economy needing outside cash, the redirection will not come at a worse time.In India, times could not be better for the BJP. Its win was the most decisive since 1984, when Congress’s Rajiv Gandhi won after the assassination of Prime Minister Indira Gandhi, his mother and Rahul’s grandmother. Modi ran on a platform of fundamental economic reform, promising to do for all of India what he accomplished as chief minister of the western state of Gujarat, where with liberal policies he engineered a boom. “He provided Gujarat with India’s first real free-market economy that led to new infrastructure and job creation,” says Subrata Mukherjee, a retired political science professor at Delhi University.
As the Wall Street Journal’s Geeta Anand and Gordon Fairclough report, voters like Congress Party subsidies and giveaways but voted for Modi because they wanted India to become one big Gujarat. The breath of the BJP victory, therefore, signals a change in the mentality of a country, a clear rejection of the socialism of its founders.Singh, who just stepped down, gets credit as a leading reformer when he was finance minister in the 1990s and kudos for the boom of his first term as prime minister. His second term as leader, however, was a disappointment. His creaky ruling coalition prevented necessary change, and growth rates tumbled, creating nationwide dissatisfaction. At the same time, foreign investors found themselves hemmed in. Perhaps the most notable example of failed reform in Singh’s last years involved big-box retailing, and Walmart’s highly publicized struggles were a deterrent for multinationals. Many other foreign companies also felt New Delhi’s sting.Yet past disappointment has not soured the outlook about the future. Foreign investors did not wait for the electoral results before pouring cash into the country. The Sensex index has jumped 29.5% since last August, partly because of the expectation of a Modi win. Foreigners bought more than $16 billion in equities and bonds in the past half year and now own more than 22% of the stock listed in Mumbai. Also, the rupee has gained on the dollar recently.Who wouldn’t love the Indian story now? Modi’s bigger-than-expected win means he will have the majority, at least in the lower house of Parliament, to accomplish what his predecessor could only dream of. The incoming leader has the power to remake the Indian economy, and the betting is that he will do so. Already, he is being called “SuperModi” and the Margaret Thatcher of India. Indians speak of the “Modi wave.”Modi himself is feeding the extraordinary hype. He is not only talking about “shining India,” a nod to a past BJP slogan, but has also proclaimed our era to be “India’s century.”
This century is already supposed to belong to China, but that pronouncement is not heard as often now. China’s economy, the motor of its rise, is sputtering and on the edge of an historic failure. At the same time, Beijing is intensifying its discriminatory investigations of multinationals. Last week, for instance, authorities accused Mark Reilly, the former head of GlaxoSmithKline’s China unit, of bribery while largely letting domestic corporate malefactors operate unimpeded. In a deteriorating economy, Beijing’s blame-the-outlanders policy may be good politics, but it is very bad economics, especially in the long run. China, unfortunately, is unlearning the wisdom of the Chinese leader who launched reforms at the end of the 1970s, Deng Xiaoping.
Manmohan Singh, once called India’s Deng, has now left office in failure. Among his shortcomings, he was not able to open up his economy. At the moment, the environment for foreign companies in China is still way better than that in the subcontinent. Yet it is trend lines that are important for investment flows. In China, things are getting worse for foreigners, and in India they are going to get a whole lot better. A central tenet of Modinomics, as it is now called, is that large businesses create jobs, prosperity, and a better society.Just ask Walmart. Modi ran on a platform affirming existing rules that keep foreign companies out of India’s retail market, a sector in desperate need of modernization, but the plank is largely thought to be a bow to political expediency. In any event, it did not deter the world’s largest retailer from upping its involvement in India. In anticipation of a Modi win, the Bentonville, Arkansas-based behemoth last month announced plans to open 50 new wholesale stores there as well as grow its e-commerce operations. You can be sure that Walmart did not do this with the expectation that it would forever be kept from participating directly in India’s $500 billion consumer market. Analysts point out that Modi is an “old friend” of China, but he may be the worst thing to happen to that country in a long time. At a moment when the Chinese economy is teetering, he is indirectly giving it a shove in the wrong direction. The “giant sucking sound” you will soon hear is money, once headed for China’s shores, on its way to India’s instead.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby putnanja » 21 May 2014 09:09

Here is an "independent media scholar" claiming that Bengal is on road to economic prosperity, investments/industries moving from Gujarat to WB, and that Modi exaggerates his states development like a true Gujarati, while Mamata is superstitious to flaunt her achievements, as Bengalis are prone to downplay everything. Any Bengalis care to corroborate the economic progress in WB under Mamata?

Bengal model of development

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby jamwal » 21 May 2014 10:26

vina wrote:This SHOULD be the first constitutional amendment. But you know how the frothing in the mouth wallahs think . Mandir first, Ordnance against Valentine's day and wearing jeans second, Article 370 constitutional amendment third. Hopefully Modi sidelines those nut cases (okay make it item # -1 ) first like he did Togadia.


When and where did BJP introduce any ordnance against Valentine's and Jeans ?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 21 May 2014 14:06

putnanja wrote:Here is an "independent media scholar" claiming that Bengal is on road to economic prosperity, investments/industries moving from Gujarat to WB, and that Modi exaggerates his states development like a true Gujarati, while Mamata is superstitious to flaunt her achievements, as Bengalis are prone to downplay everything. Any Bengalis care to corroborate the economic progress in WB under Mamata?

Bengal model of development



The article is based on a mixture of truths, half-truths and lies. The assessment is that part of the Hindu TMC vote migrated to BJP and part of the left vote specially Muslims migrated to TMC to stop Modi. Regarding economy she hasn't produced any evidence that things are better under Mamata. Amit Mitra (FM) has done a good job in improving the financial health of the state. In Kolkata except New Town (which is CPI-M initiative) things are neither here nor there. There are signs of prosperity like in other metros but nothing extraordinary. Except metro (which is moving very slowly for various reasons) there don't seem to be too many infrastructure projects going on. I haven't read about major investments in Bengal post-Mamata. There may be activity in SME sector. There are no extraordinary signs of visible progress in Bengal. I think Bengalies are going to give her at least 10 yrs. If she doesn't deliver it is either back to the left or move to the BJP provided the latter is able to take up the opposition space.

Some Bengalies (usually leftist) are sub-nationalists and hate other Indians specially Hindi speaking ones. I see that in her verbal diarrhea against Modi, Bengal division, SP Mukherjee and on Bangladeshis.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby subhamoy.das » 22 May 2014 14:18

putnanja wrote:Here is an "independent media scholar" claiming that Bengal is on road to economic prosperity, investments/industries moving from Gujarat to WB, and that Modi exaggerates his states development like a true Gujarati, while Mamata is superstitious to flaunt her achievements, as Bengalis are prone to downplay everything. Any Bengalis care to corroborate the economic progress in WB under Mamata?

Bengal model of development


Absolute bs. There are still no jobs in benagal other than setting up earteries on the road side and driving the auto rikshaw and working as domestic help. Just measure the GDP per capita of Bengal and Gujarat. Some TMC folks have started to attack hindi speaking people in Bengal.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 23 May 2014 23:41

http://www.ft.com/cms/s/0/fa07a946-e1a1 ... z32Z8bthS8

Modi Mania’ propels India’s stock market into world’s top 10

“Modi Mania” has propelled India into the world’s 10 biggest stock markets by value for the first time, surpassing Australia amid growing investor exuberance over economic reforms pledged by prime minister-in-waiting Narendra Modi. The total market capitalisation of Indian companies has jumped 25 per cent this year in dollar terms to more than $1.43tn after a string of highs in the run-up to last week’s national polls. More videoA resounding victory for Mr Modi’s Hindu nationalist Bharatiya Janata party pushed the benchmark Sensex index to a further record on election day, in the process surpassing the total market valuations of both Australia and South Korea, according to Bloomberg indices designed to strip out double counting of overseas companies. The move also underlines the eye-catching turnround in India’s economy, which last year suffered a damaging economic crisis marked by capital flight and rapid currency depreciation, earning a reputation as perhaps the most fragile of the so-called “fragile five” emerging economies. Following the appointment of economist Raghuram Rajan at the helm of its central bank, and in anticipation of Mr Modi’s likely election victory, confidence returned, with stocks leaping more than 30 per cent since the start of last September.The incoming administration faces formidable difficulties introducing legislation to push through long-term structural reforms in areas such as labour market regulation and land acquisition, not least the fact that Mr Modi’s party lacks a majority in India’s upper house of parliament.
But hopes that his government will be able to bring in more basic measures, such as reviving stalled investment projects and hastening decision-making in New Delhi, have already led numerous global banks to upgrade their forecasts for Indian stocks.India’s market capitalisation remains below half the $3.18tn total of fifth-ranked China, while the total value of Indian companies is only around three-quarters of the country’s gross domestic product of $1.8tn, a much lower ratio than found in developed economies like the US or UK. But Rashesh Shah, chairman at Edelweiss, a Mumbai-based financial services group, says Indian growth will see it climb further up the global market cap rankings. “India’s markets are going to get much more important globally, and I’d expect them to keep growing faster than the economy as a whole over the next five years,” he says.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 26 May 2014 09:48

http://www.thehindu.com/business/Econom ... 046095.ece

Foreign investment inflows are estimated to more than double and cross the $60-billion level this fiscal as overseas investors repose confidence in the Narendra Modi-led government that is expected to unleash reforms to reboot the economy, says an Assocham study.“Riding on huge expectations from the incoming Modi government, global investors are gung ho on the Indian economy which is expected to witness over 100 per cent increase in foreign investment inflows — both FDI and FIIs — to above $60 billion in the current financial year, as against $29 billion during 2013—14,” the study projected.
The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014—15, are expected to even overtake the figure of $46.17 billion during fiscal 2012—13, one of the best years for overseas investment inflows, it estimated.“The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now,” Assocham President Rana Kapoor said.However, the emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee rate and inflation from the increased liquidity into the system.The new Finance Minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance, Assocham said.In the current fiscal, the FII investment would remain more than the FDI inflows, Assocham said. The expectations are that FII investment in both debt and equity could exceed $35 billion while the FDI money could be above $25 billion.“If the Modi government is able to take some reform-friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things will move on from there,” Mr. Kapoor said.Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, the study found.Besides, as the new government goes about removing obstacles in investment, FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy, the study said.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby RoyG » 27 May 2014 05:50

Arthakranthi scheme unlikely to go through with Jaitely at the helm of affairs. Stream lining of tax code in high order though. GST tax would be a huge boost to our GDP.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Rahul Mehta » 27 May 2014 06:26

SK Mody wrote:Short interview with Modi on GST. Apparently he is not in a hurry to introduce GST but says that the networking infrastructure that is required should be developed first and that states should be given time.
http://www.youtube.com/watch?feature=player_embedded&v=qo8LVYbqD-8


Whether GST subsumes VAT, Excise, SerTax = Service Tax. Whether GST comes or VAT + SerTax stays, the main problem that small business are already facing is that if the seller doesnt pay the VAT collected by him from buyer to the Govt, then the buyer will have to pay VAT again to the Govt !!! This law which came Gujarat in feb-2013 and is coming iin all state govt. This law will also soon come service tax. This is knocking down all small businesses. GST will make it worse, but even without GST , this law in VAT is there.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 27 May 2014 23:05

I have to agree. The GST is not a priority right now. State level VAT eliminated most of the inefficiencies and plucked the low hanging fruit. GST by itself will have less effect in boosting production/efficiency than most folks think.

vina wrote:#0 Make interstate commerce a Federal Subject like in the US . That way you will create a truly pan Indian market. What you have now is the market fragmented into individual states , each with individual barriers and myriad of tax laws and rates and entry barriers to keep "outsiders" out.


While everyone was fulminating on Vina’s button pushing, which worked brilliantly BTW, the real meat of the substance was missed.

I don’t think fully free interstate commerce can be implemented in India. A state like Chattisgarh or Bihar is in no position to compete with a GJ, MH or a TN in terms of jobs, industry, infrastructure, productivity, etc. They are not even on the same planet even. Just as India protects itself from unbridled access from EU/USA so poorer states in India need to protect themselves. Or else no industrialization will ever come to the heartland.

The question you have to ask yourself is what would it take to build say a Hyundai Car Factory in say Ranchi or even Varanasi and then work back from there.

You can see how quickly the DFC rail project becomes priority #1. Skilled folks from the rest of India will then be able to move here as the local population is woeful untrained and educationally unprepared.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby A_Gupta » 28 May 2014 01:08


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Re: Indian Economy - News & Discussion Oct 12 2013

Postby TSJones » 28 May 2014 01:29

this article is too negative but it gives a good financial thumbnail sketch of India.

http://www.ft.com/intl/cms/s/0/a5fc3908 ... z32tl1E7vm

The author has some serious chops and resume. I'm getting his book "traders, guns and money" soonest.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby amit » 28 May 2014 12:04

A_Gupta wrote:Interview with Jagdish Bhagwati:
http://blogs.cfr.org/asia/2014/05/27/fi ... ext-steps/


I think this part of Prof Bhagawati's responses needs to be highlighted:

JB: But this requires amending the labor laws which make it currently costly to hire labor and expand labor-intensive industries.

How much can you do with labor-intensive manufacturing when just as soon as you started growing you get into trouble with the labor regulations? We point out in the book (Why Growth Matters) that Indian growth has indeed been inclusive but could have been even more inclusive if it had included labor-intensive manufacturing. Labor market reform has to be tackled, along with reform of other “factor markets” such as for land acquisition. The Indian reforms since 1991 have been in “product markets,” now the prime minister will have to extend them to the factor markets.

In addition, the new government will have to give up its opposition to the entry of large-scale retail stores. This is going to be an uphill task for the BJP as it has traditionally been a party of small retailers who fear the entry for large retailers like Wal-Mart. The prime minister understands that the large retailers will expand exports of farm products etc. and will therefore benefit the agricultural sector and therewith the small farmers and even landless labor, as the Green Revolution did. But he will have to proceed slowly, since he cannot take on the BJP frontally while he establishes himself.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 28 May 2014 22:11

^^^ What is this pet-peeve with FDI in retail from these guys.

Unless and until, the govt is able to mandate at least 65% domestic sourcing for foreign companies wanting to invest in retail, I see no point in trying to push this through. What do we stand to gain? They can slowly taper off the 65% requirement over a period of 20 years when India manufacturing gets scale and is able to compete well. Otherwise, it is not a very wise move. People should stop looking at this from this narrow angle of BJP being a party of traders etc.. The real issue is if we want our domestic manufacturing to grow or not. The counter argument is that even domestic big scale retailers are importing chinese goods, but that does not mean we should make it worse.

Instead of fdi in retail, the govt of the day is better off helping the private retailers improve their back-end, which is not rocket science by any means.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ashish raval » 29 May 2014 02:46

Can BRICS take steps to create credit rating agency to counter American ones ? Also brics bank ?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby RoyG » 29 May 2014 07:08

Total Indian debt. Something is going to have to be done to restructure our finances and shore up the rupee. Following those Keynsian morons down the toilet isn't something Modi has in mind.

http://www.nationaldebtclocks.org/debtclock/india

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby amit » 29 May 2014 09:24

muraliravi wrote:Unless and until, the govt is able to mandate at least 65% domestic sourcing for foreign companies wanting to invest in retail, I see no point in trying to push this through. What do we stand to gain?


Sigh!

Even after so many years we come back to same knee jerk reaction. 40 per cent of our farm produce is wasted on account of a lack of access to refrigeration and refrigerated transport trucks. Nobody is going to make investments in them piecemeal and it's ridiculous to expect the Food Corporation of India or some other state body to do this investment. We all know what FCI run grain godowns look like.

The whole idea of FDI in multi-brand retail is to get the investment and technical know how for developing a super efficient supply chain for our farm produce to bring it to the shelves and export. A retailer would much rather procure greens from 50 miles outside the city than from China - I think that should have been obvious.

Instead of fdi in retail, the govt of the day is better off helping the private retailers improve their back-end, which is not rocket science by any means.


Why does helping private retailers improve their back-end and FDI in multi brand retail have to be part of a zero sum game?

FDI by its very term implies that the money (and expertise) will come from abroad, while what you are suggesting is money that the government will spend.

Anyway the above arguments are something that I and a few others have been making for quite a number of years on this thread. I pointed out JB's observation because he said essentially the same thing.

I do understand, however, that the experts on this forum are hard task masters and it matter little even if Jagdish Bhagawati says something. After all what does he know?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby RoyG » 29 May 2014 10:00

FDI in retail will happen. 100 smart cities will be coming up. There will be a niche for them. They wont eat up the entire distribution share especially at the village and small to medium town level where there isn't enough space to put them. I just don't see this as a big issue. I don't think Modi does either. It's not something he will jump into right away especially in the first 1-3 years in office. I think he might wait till the next election cycle when the economy is better to announce it.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 29 May 2014 10:52

amit: I have to agree with muraliravi on this. To expand on your post:
amit wrote:The whole idea of FDI in multi-brand retail is to get the investment and technical know how for developing a super efficient supply chain for our farm produce to bring it to the shelves and export. A retailer would much rather procure greens from 50 miles outside the city than from China - I think that should have been obvious.

How are the respective interests aligned such that something general as FDI in retail is directly related to the foreign investor having an incentive to seed all such knowhow ?

For example, FDI in retail doesn't directly translate to retail of fresh groceries, or the development of such a supply chain. I don't see how they're undoubtedly incentivized to invest in the sunk costs of building a significant storage and distribution system. Companies like Walmart or Tesco already have a huge supply chain investment built up. India has a massive demand pent up, without sufficient supply. I do not see an alignment of interests that suggests a foreign retailer has a need to invest in domestic procurement; it could be argued that their only imperative is to have enough of a distribution network built up to connect their existing worldwide supply chain into India.

There's no guarantee that a retailer will not simply resort to a product mix consisting of durables, FMCGs and transportable perishables that they can procure and ship in from abroad cheaper than the sunk costs involved in investing in a backend in India, which may take several years to pay for itself.

Further, there's no reason to believe Indian corporates themselves cannot lead this charge; the likes of Reliance Fresh have already done so in the past, and need an active government support system to expand further. This means they get tax incentives for such backend investments, because some revenue forgone today to provide incentives for investing in supply side development generates far more tomorrow.

If at all FDI in retail occurs, I prefer the Chinese approach of a joint venture, with a requirement that the foreign collaborator share technology and knowhow to the domestic partner, and a legal framework that protects the domestic partner if they later choose to kick out the foreign collaborator once they have their own critical mass through the acquired expertise.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby amit » 29 May 2014 11:47

Suraj,

I have no broad disagreement to what you are saying. Obviously the strategy on FDI in multi-brand retail has to be finely crafted to suit Indian conditions and not done in a half-hearted manner in which the previous government implemented it. My main contention is over this idea that all mom and pop shops will go out of business if a Wal-Mart or Tesco is given a go-ahead to invest in setting up stores in India. The Indian retail market is sufficiently big and growing and has IMO room for three tiers of retailers: Multi-brand MNC retail, local multi-brand retail and Mom and Pop shops (which would include everything from big corner stores to the guy who sells vegetables from a cycle van).

And there's no guarantee that a Wal-Mart would do well in India. In China local brand Sun-Art is creaming up Wal-Mart's business despite generally having higher prices than Wal-Mart stores and that's because they understand customer sentiment better. In Korea - if memory serves me right - Tesco is doing well but Wal-Mart is not. There is no reason to think, for example, a chain like Big Bazzar would not thrive.

The whole point is that allowing multi-brand retail FDI into the country could be the Maruti moment for the retail business. It would open up the $500 billion (or so) business to global best practices and this would bring about change and local companies would become stronger and more lean because of that. The same as happened in the automotive industry.

Bottomline: We cannot escape the fact that 30-40 per cent of our farm produce is wasted. Even in many developing countries (for example Malaysia off the top my head) this figure is below 5 per cent. This is criminal IMO. I firmly believe that FDI in retail would give the necessary jump start to reform our antiquated Mandi system of food procurement and help to modernise the industry.

And that's needed like yesterday. We can't escape the fact that 60 per cent of our population lives off a sector which contributes in the low teen to our GDP. Food exports have shown a welcome upward trend, FDI in retail could give it the boost it deserves IMO. And the government has to stay out of this business as otherwise it would make a hash of it just as FCI has done over the years.

I think Jagdish Bhagawati sir also thinks the same. And I'm heartened by this direct quote from him: "The prime minister understands that the large retailers will expand exports of farm products etc. and will therefore benefit the agricultural sector and therewith the small farmers and even landless labor, as the Green Revolution did." I know that the PM talks/has talked with him on the economy.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Adrija » 29 May 2014 12:47

^^^ Amit, why are you assuming that modernization of the retail chain is ONLY through FDI please?

FDI in retail- even more so than other areas- is a VERY mixed bag.....there is ample evidence of such players engaging in predatory pricing in micro-markets and driving small business owners to bankruptcy..........Thailand and to some extent Malaysia are recent and local proof enough, leave alone US and other countries.

Yes, the same could be true for domestic organized retail as well, but (a) the "learning" curve on such practices is arguably much longer for domestic chains, and hence allows for small retail to learn, adapt and respond much better, and (b) as we saw in the Union Carbide case, the reach of the law to the ultimate decision maker is much more effective for a domestically resident company (and hence a more effective deterrent)

Why the obsession with FDI is something I personally fail to understand fully.........but hey, who me and how does that matter....

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby amit » 29 May 2014 13:14

^^^

Could you give some concrete examples from Thailand and Malaysia please? And yes try to avoid the Leftist hatchet jobs that abound when it comes to Wal-Mart. The fact remains Wal-Mart International has a very dismal revenue record all the way from Mexico to China via Korea etc. And just so that you know Wal-Mart is not present in Malaysia and Thailand.

Also, can you explain the difference between imagined predatory pricing by a MNC retailer and the real kind of short change that farmers today get from big shabzi mandi seths?

And the Union Carbide example compared with what a Wal Mart may or may not do? Please give me a break.

The point is in all this pontification the 800lb gorilla which nobody looks at is the fact that, as I've been pointing out on this forum for quite a few years is the incredible agriculture waste, especially in fruits and vegetables.

Anyway this discussion is moving towards the rhetorical and so it's best to stop it here and now.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Adrija » 29 May 2014 13:25

Amit ji, a few queries if I may:

1. Why the assumption of walMart== organized retail? Where did I say that predatory pricing in Thailand and Malaysia is by Wal Mart? I have lived in the region for a long time so know very well about Walmart's presence (or lack thereof) well.........its Aeon and Big C BTW, previously (largely) Carrefour
2. What is the == between "imagined" predatory pricing by a MNC retailer and sabzi mandi shortchanging? This is a perfect example of hakim sa'abs torn shirt open fly argument.........in deference to you I shall refrain from using the appropriate smileys, but hope you get the fallacy of your construct
3. The UC example was EXACTLY what was written- to illustrate that there is greater perceived deterrence if the ultimate decision makers are within easy reach of the domestic law.........would request you to please read the sentence, and my usage of the words, with care, before responding
4. I never disputed the "incredible agriculture waste" (BTW, care to cite some data?), what I was simply calling attention to was your assumption that FDI is the ONLY way to solve for this

My last post on this one

PS: Sorry for breaking my promise on this being the last post.........theoretically this is still the same one, just adding a post-script :mrgreen:

Thought these articles might interest you

http://www.livemint.com/Opinion/xlXA7xI8oNAJre8pBFXvsN/The-perils-of-retail-therapy-in-India.html

http://www.livemint.com/Opinion/t98IptotshRsGAmj83aS7L/The-ruse-of-FDI-in-retail-sector.html
Last edited by Adrija on 29 May 2014 13:46, edited 1 time in total.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Yogi_G » 29 May 2014 13:43

Expect Indian economy to touch 2 trillion $ with the rupee strengthening. Does nothing to help us but will contribute to the positive aura and MIGHT help with the interest rates for external borrowing.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_20292 » 29 May 2014 16:54

muraliravi wrote:^^^ What is this pet-peeve with FDI in retail from these guys.

Unless and until, the govt is able to mandate at least 65% domestic sourcing for foreign companies wanting to invest in retail, I see no point in trying to push this through. What do we stand to gain? They can slowly taper off the 65% requirement over a period of 20 years when India manufacturing gets scale and is able to compete well. Otherwise, it is not a very wise move. People should stop looking at this from this narrow angle of BJP being a party of traders etc.. The real issue is if we want our domestic manufacturing to grow or not. The counter argument is that even domestic big scale retailers are importing chinese goods, but that does not mean we should make it worse.

Instead of fdi in retail, the govt of the day is better off helping the private retailers improve their back-end, which is not rocket science by any means.


IMO govt. should get out of more sectors and allow private players into more sectors.

Keep defence, roads, large infra. Leave the rest to private people, amongst which all sorts of FDI should be allowed.

We need all the capital from all over the world to get developed. We should not discriminate between the colours of the cat, as long as it helps us to catch mice.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 29 May 2014 18:09

Amit,

Your whole support for FDI is retail has agricultural products as its bedrock. It is quite possible that our agro products waste will reduce and it makes great sense even for foreign companies to source agricultural produce locally.

But my friend, agro based products will make up a very small portion of their offering. How many aisles in big bazaar/wal-mart are agro products. The real worry is dumping of the other products and destruction of local manufacturing which is why the govt should mandate a big chunk of local sourcing.

I dont care for small shops or kiranas, the real issue is our manufacturing. If the govt mandates local sourcing, I am 100% in support of FDI. Let the guy come invest and buy locally.
Last edited by muraliravi on 29 May 2014 18:15, edited 1 time in total.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 29 May 2014 18:14

mahadevbhu wrote:
IMO govt. should get out of more sectors and allow private players into more sectors.

Keep defence, roads, large infra. Leave the rest to private people, amongst which all sorts of FDI should be allowed.

We need all the capital from all over the world to get developed. We should not discriminate between the colours of the cat, as long as it helps us to catch mice.


How developed sir, that capital will be used for making India just a market. Until and unless some protective measures are taken to ensure that we can make most products to scale at reasonable cost, our local manufacturing will be crushed. Why should we not discriminate. Why should I openly give route for a big retailer who in all probability will sell cheap chinese bulbs instead of sourcing them from a factory in lets say indore. Let the guy in indore be back on his feet and get some scale to compete. I will then allow it. IMHO, BJP has taken a very sensible call on this.

People here keep talking about technology and know how on cold storage and supply chain. Hasn't reliance fresh done it, isn't auchan doing it in chennai. It is not top notch rocket science tech that we need walmart to teach us. But even if that is the case, just for agro based waste, I am not ready to make India a market for chinese goods.

If the govt mandates 65% local sourcing and tapers it down over 20 years, I am all for it. Go ahead bring in 100% fdi in retail. But without the safeguards, it will be a unmitigated disaster.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 29 May 2014 20:52

amit, still not getting what you're saying. Especially this part:
amit wrote:The whole point is that allowing multi-brand retail FDI into the country could be the Maruti moment for the retail business. It would open up the $500 billion (or so) business to global best practices and this would bring about change and local companies would become stronger and more lean because of that. The same as happened in the automotive industry.

The 'Maruti moment' of the auto industry took 15 years to evolve. Maruti itself did little. It wasn't until the mid 1990s that we really saw a transformation. Heck, even the Ambassador went out of production only as recently as yesterday (literally!)

My question is why is multibrand retail FDI a priority ? I support enabling logistics and supply chain companies to invest in India, with local partnership. This means companies like Sysco, Aramark or others. Not frontend retail establishments like Walmart or Tesco. I don't think we lack on the retail front. We lack in the backend. Walmart et al overlap our strengths at the frontend without necessarily addressing our weaknesses at the backend. Further, as I asserted previously, they have no incentive to help us address those weaknesses.

There's nothing in it for us to add more foreign expertise in the frontend, where were are already quite innovative and know how to address the Indian consumer in a way Walmart et al themselves desire local expertise to address. On the other hand, they themselves outsource their backend to supply chain companies who are the true masters of the backend.

I don't see X% sourcing alone as the panacea. The nature of the overlap of expertise (or the lack of it) itself makes me question the basis of the whole debate. What we truly need are logistics and supply chain companies to teach us, not the front end retailers. If anything, the frontend retail MNCs look for Indian expertise to tailor their frontend to local tastes.

Further, the mom-pop shop issue is a very real socio-economic one for the government to address. It may be baseless, but the lack of clarity and authority on the government's part ensures people will not support it, and will be swayed by fearmongering. It's the government's business to provide a clear roadmap and set of guidelines that establish what happens to the mom/pop shops with the greater growth of multibrand retail.

In other words, clear information on everything from zoning that establishes where these megastores can come up, to whether the government encourages affected people to be hired by the large stores or receive a share of equity for giving up their business, and more. Not doing so will condemn this to the same political quagmire as the land acquisition issue. The BJP did the smart thing of not taking this up immediately. They don't need to. They can get the needed backend expertise without the hot topic issue of multibrand retail in the form of frontend involvement from retail MNCs.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 29 May 2014 20:59

^^^, well said. Plus it will be interesting to find out how much of the back-end inefficiency is related to the horrible power and road infrastructure situation we have. No amount of FDI or indigenous expertise can fix the back-end if we dont fix the infra mess. Storage areas need power to maintain temperature and good roads are a must to ensure timely delivery of perishable goods.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 29 May 2014 21:30

All of this is missing the bottomline that the big businesses in India are pushing for Wal-Mart so they can sell out at a fat profit to Wal-Mart. That is the only purpose of bringing this up right now. Multi-brand retail is very capital intensive and without China government type support our local retailers will get creamed. Look at Mexico or South Africa where the local retailers were wiped out. We are most definitely not SoKo yet. Mexico has not benefited much from its experiment with Wal-Mart. All the local suppliers were in fact bankrupted by Walmart, low volume goods were eliminated and now supply is mostly from China with mexicans forced to emigrate.

The question to ask is if India is closer to Mexico or China.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 29 May 2014 22:34

Don't put the cart before the horse. You won't significantly benefit from MNC retail unless you become a key supplier. Even at 30% local sourcing none of the MNCs have come in. They expect to get rid of that rule. The intention is to fit the Indian market to their supply chain. There may be some fringe benefits to India. As Muraliravi pointed out backend in retailing doesn't seem to be rocket science and fixing the infra first is important. In the meantime domestic big companies will learn the rope. I see no significant benefit to India in FDI in retail without India becoming a manufacturer and supplier first like China.


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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 29 May 2014 22:50




One reason could be that Indians have been used to buying food from ugly markets and shops and the idea of buying food from a clean, AC retailer is new. The other reason is everyone buys food so it is a price sensitive item. If your local thela-wala gives you Rs 2 discount per kg of potato you are going to buy from him.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 29 May 2014 23:01

My own experience has been that people go to big stores to buy groceries and it is not that they dislike it. It is more of a pain going there. Unlike the west where people stack up for a week or 2 and have their large refrigerators full, Indians usually buy food and groceries on a daily basis. On an average Indian refrigerators are small and can house only so much at a time. It is a royal pain to go to a super-bazaar every day to buy 1/4 kg potato and 3 onions and 2 tomatoes which is how most Indian households buy. They buy veggies for the day. Some items like rice, dal and oil maybe bought for a week or a month. So daily supplies are invariably purchased at the local kirana store which is a walk away. With the poor and slow urban transport system, one would think 10 times before going to a reliance fresh which can be 1-2 kms away. Milk is a regular commodity which is a big cash cow for retailers worldwide, how many indian families buy milk from a retail outlet??? very very few, 95% get it delivered at home or go pick it up at a booth in the street corner.

Retailers are better off focusing on non-food items for the moment, though they may want to focus on monthly grocery items like rice, dhal, oil etc..

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 29 May 2014 23:07

muraliravi wrote:^^^, well said. Plus it will be interesting to find out how much of the back-end inefficiency is related to the horrible power and road infrastructure situation we have. No amount of FDI or indigenous expertise can fix the back-end if we dont fix the infra mess. Storage areas need power to maintain temperature and good roads are a must to ensure timely delivery of perishable goods.

Oh absolutely. The MNCs will just provide that as an excuse to not source locally or build out their own supply chain backend, stating that basic infrastructure is missing. Retail MNCs are not quite the first priority here; the whole 'FDI in retail' presumes that they bring all that expertise in. In reality, they outsource the backend to specialized logistics and supply chain companies. It is those companies who can benefit us, on the back of more reliable electricity, and roads. There are plenty of Indian corporates willing to invest huge sums into retail frontends, but so far, they have been burned by poor government policymaking in support infrastructure. Does anyone remember Reliance's foray into retail petrol outlets ? Here's a refresher:
Reliance shuts down 1,432 petrol pumps
"Reliance has informed that sales at their retail outlets was negligible due to selling price differential between private and public sector ROs, leading to the closure of all their 1,432 pumps in the country with effect from March 15," Petroleum Minister Murli Deora informed the Rajya Sabha on Tuesday.

Public sector currently sells petrol at a loss of Rs 13.97 a litre and diesel at a discount of Rs 20.97 per litre. This revenue loss is made up by the Government through issue of oil bonds and subsidy share from upstream firms like ONGC [Get Quote] and GAIL.

Private firms such as Reliance were not entitled for the subsidy and priced fuel from their pumps at Rs 8-10 a litre higher than public sector competition, leading to fall in market share.

That was in 2008. More than half a decade ago, they had to shutter a huge investment because GoI did not provide supportive policies for the private sector to invest and make money out of this business.

The previous regime was characterized by a continuous lack of ability to plan the details and execute them. The current dispensation is led by a man who is quite the opposite, and places a premium on details. 'FDI in retail' simply does not address the details sufficiently for the matter to be important today; it seeks to bring in those with frontend expertise we already have, without sufficient incentive to address the backend locally. It is not meaningful to argue 'lets bring them in and then work out how to make them build a backend'. That means we are handing out marketshare in what we are already good at (frontend), in exchange for the hope that they will help us with our backend weaknesses. That is poor business sense.

If I was a Walmart type, I'd gleefully buy out local frontend competition, give some lip service to local sourcing and stick to my existing worldwide supply chain instead of bothering to duplicate the backend sunk cost elsewhere in India. We are talking about companies famous for underpaying workers and running extremely lean and efficient businesses. They have NO incentive to sink in more costs into an Indian backend. Bringing them in constitutes a poorly aligned set of incentives between our side and theirs. Enabling FDI by logistics and supply chain companies is what really addresses what we need.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby muraliravi » 29 May 2014 23:24

^^^ Exactly, but even for that we need to essentially shake up India's infra. The next five years should see road construction left, right and center. 24X7 power even in the most remote village in Arunachal. Once these are achieved, I am sure you'll see a bunch of supply chain/logistics advisory companies mushrooming in India. There are already quite a few in gurgaon area. One of my buddies who graduated from IIT-D runs a company called think-link in gurgaon that consults with companies on storage and supply chain.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby TSJones » 29 May 2014 23:31

Far be it from me to stick up for Walmart but FYI Walmart considers itself to be a leader in provding locally sourced food for sale. It has become an issue in the US. For God's sakes people in the US do not want any food sourced from China not even for their pets!

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Gus » 29 May 2014 23:36

muraliravi wrote:My own experience has been that people go to big stores to buy groceries and it is not that they dislike it. It is more of a pain going there. Unlike the west where people stack up for a week or 2 and have their large refrigerators full, Indians usually buy food and groceries on a daily basis. On an average Indian refrigerators are small and can house only so much at a time. It is a royal pain to go to a super-bazaar every day to buy 1/4 kg potato and 3 onions and 2 tomatoes which is how most Indian households buy. They buy veggies for the day. Some items like rice, dal and oil maybe bought for a week or a month. So daily supplies are invariably purchased at the local kirana store which is a walk away. With the poor and slow urban transport system, one would think 10 times before going to a reliance fresh which can be 1-2 kms away. Milk is a regular commodity which is a big cash cow for retailers worldwide, how many indian families buy milk from a retail outlet??? very very few, 95% get it delivered at home or go pick it up at a booth in the street corner.

Retailers are better off focusing on non-food items for the moment, though they may want to focus on monthly grocery items like rice, dhal, oil etc..


in chennai, we did a little bit of everything - buying veggies from handcart guy whose prices cannot be beat, buying from local store who would deliver to home on a phone call and have monthly accounts, buying specialised items and items on sale from big bazaar when we were at phoenix mall, buying at reliance etc if we need stuff and we are in a car and on the way back home.

Theo_Fidel

Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 30 May 2014 10:10

Anyone know what the BJP/NM stance on PSU privatization is?

For sure

Air India
AAI (damn the unions)
GAIL (wound down?)
ONGC
OIL
IOC
CIL & other Coal types (but maybe too imortant to mess with)
BEL & BHEL
BSN
SAIL+bunch of other steel companies

There are a whole host of other companies that should be wound down.
That jute company and those hotel companies for sure for sure.
WTH is GOI running hotels.....


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