Indian Economy - News & Discussion Oct 12 2013

[Virupaksha]

http://firstbiz.firstpost.com/economy/p ... 93267.html

that link and the subsequent links can give a decent idea.

[chaanakya]

no, the graph shows the jumpoff started for china in 1980 and from 1990 it was bulldozing.
whereas the jumpoff for india started in 1990 with 2000 as the start of bulldozing. It also shows a plateauing for India at 2010.

the 1970-90 were the lost decades to india.

actually if you see the graph 60-90 are nothing but plateau and it took off only after 1995. And that too jump was punny when compared to China. For China actual jump started after 1990 till that time it was just catching up with Indian growth. An it was largely due to Deng Xiao Ping's Reforms in Chinese Economy. While Indian efforts were led by PV Narasimha Rao and he had to contend with the anachists like VP Singh and Chandrasekhar singh and Gawda and Gujaral who had run India into ground by the time they left and any positive efforts of RG were lost. Indian growth rate also reflects the prowess of mostly one sector i.e. IT sector. Many would remember Y2K code changes. Other than that rest of the sector were lagging behind. The growth picked up and impact of PVNR reforms showed up in ABV regime coupled with boost in infrastructure spending. That momentum continued beyond 2005 but lost its steam by policies of UPA-1 and UPA 2 thanks to MMS and his cronies and misdeeds of SG+RG+DMK+RJD+LEFT....

[Theo_Fidel]

Please keep in mind the chart is comparing to USA GDP. So it is not a straight linear projection. If the USA is growing very fast and we are keeping pace/plateau, we too are actually growing although on a much smaller base. That spike from 2000-2008 is probably from the low productivity growth during the Bush years. See below.

At least in part the spike for India & China is linked to the catastrophic Bush years.

[Singha]

word on the street in blr is this:
the Mandur garbage landfill situation is becoming a political and media liability. a permanent soln to this mess has been proposed in the form a huge garbage incineration project. some british co has come fwd to build one at a reasonable rate, but local spiders suspect it is by cutting corners on some pollution control measure that is mandated by developed countries. and being 2000 cr project every big shot out there wants a piece of it.

not sure whats the truth in all these allegations.

[negi]

^ It is also getting a push because both Prestige and Brigade have huge development projects coming up or already underway in nearby areas.

[svinayak]

Modi’s I-day speech: What the PM needs to do for his ‘Make in India’ plan to be a success

In an Independence Day speech replete with messages – no bullet proof glass enclosure, telling parents to control their sons, speaking extempore – here was one more. Clearly, Modi wants India to follow the Chinese model of export-led growth and become a manufacturing hub for the world. This is, undoubtedly, a far superior way of tackling the unemployment and poverty problem than legislating rights to doles.

He did not mention it – and so it is not clear whether that was at the back of his mind – but, as Saumya Kanti Ghosh, chief economic advisor of State Bank of India points out, this is perhaps the right time to follow this strategy, with the global economy getting out of the downswing years.

This is also the right time for another reason, which has to do with China. According to SS Bhandare, advisor Tata Strategic Management Group, China’s attractiveness is waning on four counts.
One, manufacturing costs – especially labour costs - are increasing there.
Two, the Chinese currency has been steadily appreciating and the advantages of currency manipulation are declining.
Three, some of the huge investments that China has made may turn out to be bad and impose a burden on its financial system, leading to a mothballing of capacities.
Four, on account of these factors, foreign investors are a bit reluctant to put all their eggs in the China basket.
They are looking at other baskets as well.

[Hari Seldon]

Five-member think tank likely to replace Planning Commission

NEW DELHI: A small, handpicked, five-member think tank, which will draw its power and prestige from Prime Minister Narendra Modi's clear backing, is likely to replace the Planning Commission.

The new panel will most likely be led in an executive capacity by former union minister Suresh Prabhu, with free market economists Arvind Panagariya and Bibek Debroy as two more likely members. It will be formally chaired by the prime minister and the announcement can come as early as Monday or ..

[Suraj]

Business Standard has a nice set of stats infographics on how various socio-economic indicators have evolved in the last 6 decades.
StatsGuru: How India has changed since independence

[nawabs]

At Greater Noida, UP govt begins work on creation of industrial township

http://www.financialexpress.com/news/at ... ip/1280253

The government of Uttar Pradesh has signed an agreement with the Delhi-Mumbai Industrial Corridor (DMIC) Development Corporation for the creation of a Special Purpose Vehicle (SPV), which will oversee the creation of an integrated industrial township spread over 750 acres in the Greater Noida region.

The DMIC spans around 1,500 km and Uttar Pradesh is one of the states involved in the project. The township would be fully developed over 30 years, in six phases of five years each. The master plan for the township is ready and awaiting approval.

An official of the UP government said that the township, located at the border of Greater Noida, towards the south east, will have over 50 per cent of land dedicated to industries with an emphasis on IT parks, biotechnology and R&D. “This is one of the projects which are coming up along the DMIC and is a precursor to a larger investment region, or a smart city, located close to it, called the Dadri-Noida-Ghaziabad Investment Region (DNGIR) which will be developed on similar lines as the township,” the official said.

Under the agreement for the township, the state government has allotted land to the DMIC Development Corporation. The DMIC Trust, which is the funding agency for the project, has contributed around Rs 620 crore for the development of the trunk infrastructure. “Since it is a 50:50 partnership between the two agencies, the acquisition value of the land equals around Rs 620 crore and no development charges have been added,” the official added.

Sources say that the DNGIR, is only one of the approximately 25 smart cities that have been planned over multiple phases from Dadri to Mumbai within a parallel stretch spanning 300 kms around the DMIC and running along it. The DNGIR will be spread over 50,000 acres.

A source said that in the first phase, seven smart cities have been planned. There would be one each in UP, Haryana, Rajasthan, Maharashtra, Madhya Pradesh and two in Gujarat. “SPVs will be created for all of them in the future to oversee their construction. But right now, consultants are working on plans of these cities that concern development of trunk infrastructure. No strict timelines have been attached to these projects,” the source said.

Another official explained that since the DMIC is intersecting with Eastern Dedicated Freight Corridor at Dadri in UP, a multimodal logistics hub was being planned there along with a multimodal transport hub planned near Bodaki, only around 10 km away. The aim was to remove the bottleneck at Jawaharlal Nehru Port near Mumbai and expedite the movement of goods within the country.

“An Inland Container Depot spread over 250 acres is being planned at Dadri, along with the facility for imported and exported material to complete their formalities in Dadri itself. To boost the movement of goods and people, an Inter State Bus Terminal is coming up in Bodaki along with a 65 km long metro link from Greater Noida to Delhi Airport,” the official said.

The Delhi Metro Rail Corporation (DMRC) would conduct a feasibility study for the metro link. “In the long run, this metro link should be integrated seamlessly with the rest of Delhi Metro network and the Rapid Rail Transit System network being planned in NCR,” said a DMRC official.

[Prem]

India: Investing Beyond The Obvious

http://www.forbes.com/sites/jamescahn/2 ... e-obvious/

Lately I’ve been diving into the so-called BRIC countries, Brazil, Russia, India and China, and now I’m turning my focus on India. Just as Brazil is not as bad as it’s been painted and China’s debt situation is worse than reported, there are deeper layers to consider when investing in India.
There’s been a renewed focus on investing in India for reasons which I totally agree are positive developments. They’re doing all the “right” things on a macro scale as evidenced in particular by the election of the new Prime Minister, Narendra Modi, and the central bank chief, Raguram Rajan.
Modi’s election marked a turning point in India’s politics as the politically active middle class finally exerted its muscle and backed a business-friendly, anti-bureaucratic Prime Minister. Rajan, the Governor of the Reserve Bank of India (RBI), is a former University of Chicago professor who has already made a dramatic impact by enacting policies that brought India’s current account deficit for the fiscal year in at $56 billion, well below estimates of $70 billion, and certainly less than the $88 billion the previous year.
Furthermore, he has made it his mandate to reduce inflation in India. Although he’s been criticized for not focusing on growth, I say you cannot have growth with high inflation. It must be brought down: The prime lending rate is very high and small- and medium-sized enterprises cannot afford to borrow and invest.So, what’s not to like?India is on a positive path, but there are many obstacles still in its way. In particular, the issue of transportation has been tempting investor interest, but I believe will not and cannot be the first place we see major growth.In a nutshell, even though India already spends more on transportation per GDP than any other country with a comparably-sized economy, the transportation infrastructure is somewhere between virtually non-existent and a mess.The problem is, when you want to take goods from one part of the country to another part, you have to forge rivers, carry things on your head, there’s no (major) infrastructure in place. So, while they can make goods cheaply, they can’t get them to market, which is India’s problemWhile I’ve seen many articles pointing to the fact that India’s government has pledged $10 billion to improve its infrastructure and implying investors should follow the money and invest in infrastructure-related corporations, I have three reactions.
First, $10 billion is not enough. It’s a $2.5 trillion/year economy with no infrastructure. I’d say $500 billion would be closer to a number that would make a significant difference.
Why the financial services sector is of interest
If I were going to put a bet more narrowly in India I’d do it in financial services, which is directly tied to the growth of the middle class and indirectly tied to better transportation allocations.Here’s what I mean: Over time, the middle class is going to need more complex financial savings vehicles than they have available. Right now they either keep their cash under their mattress or wear it on their wrists in the form of gold.Eventually, that’s not going to be enough. They’re going to have to have banks, investment products, and other investment mechanisms. Technically, they have some of those things, but they’re in a state of relative infancy compared to the rest of the developing world, like Brazil for example.You have a huge percentage of Indians avoiding banks, preferring to carry their assets out into the fields with them where they’re working.If you can increase savings, and get the money out from under the mattress and off the wrists of women, then what that will do is drive down interest rates. Don’t forget the willing RBI. Such deposits will be huge and they will be used to supply credit and/or to buy government bonds.This will in turn drive down the borrowing costs and increase the government’s ability to borrow which can then be used as a way to grow their infrastructure.
What’s my proof? That’s what China did. China artificially depressed spending to encourage savings, which lowered internal interest rates (they didn’t match the pace at which the economy was growing in the 2000s). Then they dramatically expanded infrastructure, largely on the backs of citizens’ savings.With India, I believe the horse (financials) has to come before the cart (infrastructure) in order for the economy to reach its true potential.

[deejay]

^^^ I found the above to be a pragmatic assessment. There are so many of us Indians out of banking benefits and so much of traditional business happening in cash out side the banking environment that (a) it impacts tax collections (b) does not get reflected correctly in GDP. The infrastructural growth will need the thrust in (a) Railways - specially freight corridors (b) Roads - more bridges, less choke points and better inter state movement (c) Power Generation & Transmission - in areas where the development is below par but traditional enterprise and large population lives and (d) IT - because that will be critical in marrying the traditional economy with the national bank based economy.

As I see from personal experience, there are large swathes of the country like Eastern UP, Bihar, most of WB, Jharkhand, Orissa, entire NE with huge population and low integration with National Economic activities. We need to get this area to shrug its slumber and join the Indian ambition.

[muraliravi]

^^^, well but his assessment that we need $500 BN investment is wrong. He is also wrong when he says we spend $10 BN on infra.

We spend approx $100 BN per year on infra. What i mean by infra is Construction, Energy, Power, Transport, Logistics, Water, Environment and Housing.

Our investment needs to be to the tune of $1000 BN or a trillion per year to get things to world class levels. A govt that is pledged to growth and not doles can at best pull up to about $200 BN in infra spending per year. The remaining $800 BN has to flow in from private parties or abroad.

[Suraj]

The larger point the article attempts to make clumsily is that rapid infrastructure development (not maintenance) cannot be funded out of operational income. Only maintenance can be realistically expected to be funded out of operational income assuming break-even performance. Otherwise the system is running at an operational loss, with the balance made out of subsidies.

Any capital investment requires monetization of assets, or any other means to generate investment. For example, the railways has a huge amount of prime real estate in metros, which can be sold/leased for conversion to multipurpose station+malls by private developers, with the railways earning income from them, in addition to the lumpsum lease/purchase price. Bogies can be used to show advertising. Essentially, railway operational income cannot fund their investments. It has to come from elsewhere. The same applies to roads and other infrastructure. All that requires more creative financial instruments to fund.

[panduranghari]

What about this bit?

Here’s what I mean: Over time, the middle class is going to need more complex financial savings vehicles than they have available. Right now they either keep their cash under their mattress or wear it on their wrists in the form of gold.

Eventually, that’s not going to be enough. They’re going to have to have banks, investment products, and other investment mechanisms.

He wants more derivatives, isn't that what the quoted bit means?

[Suraj]

The author doesn't seem to get why Indians buy gold. It is an inflation ad wealth protrction hedge for prople used a low growth and high inflation environment. A low inflation ,high growth environment will lower gold consumption due to other better performing asset classes .

The reference to derivatives is just a plug for western banking entry . That's just a self serving suggestion on his part . The railways for example, already sits on enormous amounts of dormant assets that can be monetised to fund its capital investments .

[Ranjani Brow]

Arvind Subramanian, US-based economist poised to become chief economic adviser

[kmkraoind]

Sebi asks PACL to refund Rs 49,000 cr to investors

This is the biggest-ever crackdown on a large-scale illicit money pooling scheme. At Rs 49,100 crore, it is twice the amount collected by the Sahara group which is said to have mobilised Rs 24,000 crore.
........
The company claimed that it was in the business of purchasing and developing land. The developed land is transferred to investors who can sell it for gains. The company is said to have paid commission of Rs 7,893.80 crores up to March 2012. It had 5.85 crore customers, or more than twice the number of 2.2 crore demat accounts in the entire country. Of these, the company was yet to allot land to 4.63 crore investors.

The numbers are really mind boggling. I bet this is also an SPV, just to park corruption money.

[Prem]

Meet Arvind Subramanian, the Man Who Could Be India’s Next Chief Economic Adviser
http://blogs.wsj.com/economics/2014/08/ ... c-adviser/
( He favors Manufacturing)

Economist Arvind Subramanian is the front-runner to become chief economic adviser to India’s finance ministry, a hotly anticipated appointment for the country’s new government given its pledges to tame inflation and kickstart the economy.He isn’t likely to harbor any illusions about the profound obstacles that stand in the government’s way. Early in his career, he worked at the General Agreement on Tariffs and Trade, during the Uruguay Round of trade talks in the late 1980s and early ’90s. (That particular experience could come in handy amid India’s current tussle with the GATT’s successor body, the World Trade Organization.)
As the Indian economy sputtered in 2012 after nearly a decade of rapid growth, Mr. Subramanian participated in an online debate with Congress-party lawmaker Shashi Tharoor on the question of whether the country was losing its way. Mr. Subramanian argued it was.“For every cheery statistic that Shashi Tharoor invokes,” he wrote, “at least as many gloomy ones are there to be counter-invoked.” He argued that for the Indian government, there are limited returns in merely letting go, in leaving more to markets and the private sector. The really crucial task for the government, he said, is to do what it does better.“There is a race between rot and regeneration in [the] underlying institutions of the state and politics. And it is far from obvious that the forces of regeneration are winning.”By the end of the debate, which was hosted on the Economist magazine’s website, two-thirds of online readers had voted with Mr. Subramanian’s side.In an essay published last year in the volume “Reimagining India,” Mr. Subramanian highlights the country’s economic and political “precocity”: India’s economy manifests traits more often found in the rich world, for instance its reliance on services rather than manufacturing to power growth. And democracy has been sustained for decades despite low levels of income, education and industrialization.
India’s historical uniqueness explains much of its potential, he writes. But it also makes the country’s future singularly peril-filled: “In the long run, growth is determined by effective state capacity—and that is India’s weakness compared with China.”In that essay, he specifically highlighted Narendra Modi’s potential to “deliver good governance and reforms.” But he hasn’t turned cheerleader since Mr. Modi’s election as prime minister this spring.At the end of June, he published a “provisional scorecard” for the Modi government on the Peterson Institute’s website: Three As and one A- for the new administration’s efforts to curb grain and vegetable prices and ease labor laws. But a D for threatening to raise import duties on sugar—an effort, he said, to appease local sugar lobbies.In another article on the Peterson Institute’s website, Mr. Subramanian criticized the government’s first budget, which was unveiled last month, as “disappointing but retrievable.”Observers and critics shouldn’t overlook the budget’s failure to roll back subsidies, he wrote, or its implausibly optimistic assessments of tax revenue and deficit reduction. “But they should also give this government the benefit of the doubt and time to translate its laudable vision into recognizable reality.”

[anupmisra]

What i mean by infra is Construction, Energy, Power, Transport, Logistics, Water, Environment and Housing.

MuraliRavi, do you live in India and if so, is it a large city or a major town? Thanks.

[RoyG]

Starting at 15:00 makes me shudder. We're headed for a banking crisis and it will make 1991 look like a firecracker if we don't take steps to structure the collapse.

[muraliravi]

What i mean by infra is Construction, Energy, Power, Transport, Logistics, Water, Environment and Housing.

MuraliRavi, do you live in India and if so, is it a large city or a major town? Thanks.

No sir, I spend 3 months every year in india as part of my company work in chennai which also happens to be the city where i was born and brought up.

[Klaus]

The reference to derivatives is just a plug for western banking entry . That's just a self serving suggestion on his part .

Either that or Asian Banks. Perhaps India's entry into SCO is designed to mitigate any regional fallout of the coming self-made domestic banking crisis.

[Manish_Sharma]

Starting at 15:00 makes me shudder. We're headed for a banking crisis and it will make 1991 look like a firecracker if we don't take steps to structure the collapse.

I typed some of the video here,

24:00 to 29:55 =

"Look at our sme balance sheets, we've closed smes in the last 5-10 years, there is no power, Vinayak Chaturthi Vinayak comes from china of course its nose is flattened, on Holi the holi powder comes from china, everything comes from china, why is it that we have not made? The planning commission comes with an answer that 60 million jobs were added between '98 to 2004 WHILE ONLY 2 MILLION JOBS WERE ADDED FROM 2004 TO 2010, why because smes(what?) we wanted them to be closed. Credit to Smes is not there. So what happens china get 249 billion dollars worth of goods into india in the last 4 years. 50 to 60 billion dollars every year and what r they giving you, they're not giving you jets to fight, they're giving to supercomputers, not arms not armaments nothing!

WE MUST STOP CHINESE IMPORTS! But how to stop chinese imports we have signed FTAs all over the place. It'll come via thailand via asean route and we'll say, oh wow fdi so good!"
----------------------------------------------------------

Roy ji, does it match with this post of Shri Kmkraoind ji?

http://forums.bharat-rakshak.com/viewto ... 7#p1705609

I don't know if this post is ok to be presented here, so just providing the link.

[RoyG]

Yes, it very well could be the list of scams that kmkraoindji has presented. We are headed for quite a depression. We lost about a decade of growth and we indulged in reckless spending.

[Manish_Sharma]

Here:

http://forums.bharat-rakshak.com/viewto ... 7#p1705609

From Twitter, @pmfor2014. I am posting all his tweets without any alterations. I cannot vouch whether its complete rumor or initial smokes of big fire (నిప్పు లేనిదే పొగ రాదు). Cong only hope is JaiItaly.

- BIG BANKING PSU SCAM TO HIT INDIA SOON-- WILL UPDATE ON THIS MATTER SOON.. GETTING DETAILS NOW... SCAM DONE BY CHIDU/SG/ AJ TRYING TO SAVE

- Should this PSU Loan scam surface, we see SUBPRIME Like Crisis in India, drying up of capital,big Defaults & many PSU banks will go belly up

- SOS to @narendramodi @PMOIndia ring Fence SBI,Coal India,ONGC. In month of May i have said that BIG SCAM & balance sheet dressup in ONGC

- Why strong reforms were not done?Because there is big gaping hole in Finances of most of small PSU banks.Fears of big NPAs in SBI too.

- LIC Insurance - bought Shares of dubious companies & Loss making PSUS on behest of CHIDU.. BOth LIC insurance & PSU banks are in bad shape.

- When @narendramodi was informed about this,he said we must bring it out in open to the people but AJ said that Stock market will crash.

- When @narendramodi was to unravel the Big ticket reforms, He was informed by AJ about PSU bank scam,AJ said that Rupee may head back to 70.

- Very tough days ahead for @narendramodi .. RBI govt RR & @narendramodi are devising plan to come out of this crisis.Will update more info ..

- Unlike 2gscam & coalscam, The PSU bank Loan scam will impact savings of Common man & create havoc.NPAs amount equals to 2gscam!!!

- Unknown companies were given Loans by these PSU banks, later some of these companies went belly up.Some of them acted as front of Cong pol

- OBC & dena bank fiasco , Bhusan steel & Syndicate bank bribery case just tip of iceberg.

- Fear of Rupee heading to 70/73,mass exodus of Fiis money frm Stock market,Psu banks going belly up & chaos in inter bank lending market..

- Culprits -- MDs of PSU banks,Chidu,SG,Real estate companies,fictitious companies getting loans for building power plants/infra project.

- Some of these fictitious companies r shell companies or front of cong poli.AJ if of the view :no point to blow the lid off.Lets buy time

- RBI gov RR , @narendramodi & PMO team r our best hope.RBI gov briefed NaMO & AJ about fictitious companies & handed over list of such comp

- Very Important to Ring fence SBI, Lic Insurance,ONGC,COAL India & OMC PSUS.CMDs of all PSU banks must be replaced if need be.

[panduranghari]

Either that or Asian Banks. Perhaps India's entry into SCO is designed to mitigate any regional fallout of the coming self-made domestic banking crisis.

Klaus saar,
Please elaborate. I have not connected these 2 dots yet. Your opinion will be Much appreciated.

[Rahul Mehta]

http://economictimes.indiatimes.com/mar ... aign=cppst

PPF investment can beat Sensex returns over 20-year period

MUMBAI: Equity investors are laughing their way to the bank because Sensex has generated 44% returns during the past one year. While the benchmark index has generated this return, there are several stocks that have risen by more than 100% during the same period.

So, it's natural for investors to get carried away when Dalal Street is on a roll, and the Sensex is making a habit of hitting record highs almost every other day. Suddenly, retail investors are flocking back to the market if inflows into equity schemes and the number of demat accounts opened recently are any indication. ....... The Sensex closed at 4,588 in August 1994 and despite being at a lifetime high of 26,420 now, it has only generated a mediocre annualised return of 9.15% during this 20-year holding period. Several debt products, like the Public Provident Fund (PPF), have generated better annualised returns of 10.46% in this period. .....

==========================

I never invested a dime share market in whole my life. I know that share market is NOTHING but insider scam.

Bulls make money, bear make money, pigs get slaughtered.

And oig is someone who doesnt have insider info and yet tries to to copy a bull or bear.

[pankajs]

http://www.ndtv.com/article/india/coal- ... urt-581341

Coal-Gate: All Coal Licenses Issued Since 1993 Are Illegal, Says Supreme Court

This will certainly lead to further delays in rampingup power production in the near-term though will lead to transparency in allotment of scarce national resources in the long term.

http://www.mid-day.com/articles/coal-bl ... t/15555169

New Delhi: The Supreme Court Monday held that the coal blocks allocated from 1993 onwards were illegal, arbitrary, non-transparent and were devoid of any procedure.

The apex court bench comprising Chief Justice R.M. Lodha, Justice Madan B. Lokur, and Justice Kurian Joseph, however, stopped short of pronouncing instant cancellation of the coal blocks as it may have serious repercussions.

The court suggested to set up a committee headed by a retired apex court judge to examine what should be done for the re-allocation of these coal blocks.

The court made it clear that it was just a suggestion and it was open to a better option.

The next hearing will be held Sep 1 to consider the question of setting up a committee that will go into the allocation of coal blocks and how it should be done.

[pankajs]

http://firstbiz.firstpost.com/economy/s ... 94854.html

SC coal blocks verdict will ruin Manmohan’s reputation – and the power sector

The Supreme Court’s order in the coal blocks allocation case today (25 August) will have far-reaching implications for policy-making and economic growth. In fact, it is even more damaging to the economy than the cancellation of 2G licences in February 2012.

The larger implications of the Supreme Court’s decisions will, however, go beyond just embarrassing Manmohan Singh. It will singe the economy for three reasons.

One, all power plants operators will now have to pay penalties, and this has implications for power prices.

Two, the reallocation process, which the Supreme Court will take some time to decide, will lead to delays and more policy uncertainties.

Three, at a time when global coal prices are falling, domestic prices are likely to rise due to this whole process.

Four, the banks which lent money to power producers will find many more loan accounts turning sticky. They will have to rework their bad loan balances.

Five, the government may want a say in how coal blocks are allocated, since this is a policy decision that can’t be left just to the courts. This can lead to more delays if executive and courts are fighting over the issue.

The Supreme Court was right to blackball the process, but the government will now have to wrest the policy-making process back from it by presenting a transparent policy.

http://www.ndtv.com/article/cheat-sheet ... nts-581401
Coal Allotments 'Arbitrary, Illegal, Casual': Top 5 Supreme Court Comments

1. ...the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal. What should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing.
2. The entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws.
3. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it.
4. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth.
5. Common good and public interest have suffered heavily.

It will take more than a year to sort out the mess and put power sector back on track of growth. While it presents a challenge to the Modi government in terms of his agenda to provide 24X7 power to all at the earliest it is also gives him an opportunity to clean up the critical sectors of mining and power production once for all.

[Suraj]

Nomura raises India growth estimate

India’s bull market has room to run, says international investment bank Nomura Securities in Mumbai on Monday. They forecast the Sensex to rise another 15% in the next 12 months and year ending GDP growth to come in at 6.8% for next fiscal year.

Meanwhile in the near term, Nomura pegged India’s second quarter GDP growth at 5.9% year over year, up from their previous estimate of 4.7%. India is on a tear. And investors holding the Wisdom Tree India (EPI) exchange traded fund are loving the dynamic duo of Narendra Modi at the Prime Minister position and Rajan Raghuram running the Reserve Bank of India. The Wisdom Tree India ETF is up over 30% year-to-date, making it the best of the BRICs.

India will release second quarter GDP numbers on Thursday.

Nomura analysts said India was on the cusp of a multi-year growth recovery cycle. Reflecting their positive view on growth, Nomura upgraded their ‘underweight’ stance on autos and industrials to ‘overweight’.

[Prem]

http://online.wsj.com/articles/india-ce ... 1409142121
India Central Bank Seen Intervening to Weaken Rupee

nvestors pouring billions of dollars into India's rallying stock and bond markets are encountering a surprise: a weak currency.The rupee has slumped 3% since the business-friendly Bharatiya Janata Party took power in May, in sharp contrast to the nation's stocks, which have risen 9.6% to record highs and are up 25% for the year, ranking as Asia's best performers.The unusual divergence is the result of the central bank's intervention in foreign-exchange markets, investors and analysts say, which is meant to prevent gains in the rupee that would make exports more expensive, put pressure on India's fragile finances and potentially derail the country's economic recovery.It is also a sharp reversal from last summer's emerging-market rout, when investors fled India. Now the central bank is struggling with the opposite problem—how to cope with outsize pools of cash flowing in."The weakness in the rupee doesn't reflect disappointment over the new government's performance. On the contrary, foreign investor flows into debt and equity markets have been strong," said Suvir Mukhi, senior portfolio manager at Income Partners Asset Management in Hong Kong, which has $1.3 billion under management."The weakness reflects the [Reserve Bank of India's] intervention," as the central bank buys U.S. dollars and sells rupees to build its war chest, he said.Mr. Mukhi said his fund recently added positions in Indian local currency bonds.India's foreign-exchange reserves have grown by $26 billion this year to a record $320 billion. Analysts from Morgan Stanley MS -0.78% estimate the central bank has bought $59.5 billion of dollars in the currency markets since last November.In an interview with The Wall Street Journal on Wednesday, Reserve Bank of India Governor Raghuram Rajan said he thinks the currency is fairly valued and that the central bank is refraining from direct market intervention."We…recognize our inability to manipulate the long-run value of the rupee, and we don't try," Mr. Rajan said. "It goes in the direction it wants to go.""We have $320 billion in reserves—we can weather a lot of stuff with that. But I don't see the reserves as being the first line of defense. The first line of defense is our macroeconomic picture," he added.Mitul Kotecha, head of foreign-exchange strategy in Asia-Pacific at Barclays, BARC.LN +0.29% said the normally positive correlation between the Indian stock market and currency over the past year has flipped in the past three months. He forecasts the rupee strengthening 1.6% with the dollar falling to 59.5 rupees in the next three months, from 60.45 on Wednesday."The move in the equity and bond markets is inconsistent with the currency," Mr. Kotecha said. "If it wasn't for the Reserve Bank of India buying dollars, we would see a stronger currency and the reason is very much that they are preventing it from strengthening. That's why you've seen a divergence in the performance of equities and bonds, and the currency."The inflows this year have been particularly heavy, and the rupee's slump isn't deterring money managers who continue to turn to India. This month, investors have put $3.2 billion into the country's markets, bringing the total for the year to $29.6 billion, the most year-to-date in the past five years.

[RoyG]

This is the problem with the current international oil invoicing system based in the NYMEX. We have to cheapen our currency and keep giving to the West in return for dollars to buy oil and industrialize. This has really become a bane on our economy. Good news is the SCO is now challenging this system and hopefully in the next 5-10 years we will see a more equitable solution. Our currency has to rise sometime in the near future to 40/dollar so that our people can better enjoy the fruits of their labor.

[Suraj]

Modi’s Faster Green Permits Seen Fueling India GDP Growth

Indian Prime Minister Narendra Modi gave Hindustan Copper Ltd. (HCP) environmental clearance to expand mining in Jharkhand state less than three months after taking power in May, ending the company’s three-year wait.

The approval is part of faster decision-making that’s eliminated a backlog of applications for federal green permits, according to Environment Minister Prakash Javadekar. That implies 298 projects from mining to construction under ministry evaluation as recently as June have been sanctioned, a sign of Modi’s push to cut red tape that stifled investment.

“After the new government came to power the process got expedited and within three months we got the environment approval,” K. D. Diwan, managing director of Kolkata-based Hindustan Copper, the only miner of the metal in India, said in an interview yesterday. “We still need forest clearances. Given the speed of approvals, we hope to get them in a month’s time.”

India’s economy probably grew 5.5 percent last quarter from a year earlier, the fastest since 2012 as Modi seeks to spur spending on everything from roads to factories, the median estimate in a Bloomberg News survey shows before a release tomorrow. The government is trying to overcome hurdles such as slow land acquisition and coal shortages that are stalling $182 billion of projects, even as activists flag environmental risks.

Modi’s Bharatiya Janata Party swept to the first single-party majority in the lower house of parliament in 30 years after vowing to fight graft and revive the $1.9 trillion economy.

The Sensex has climbed 26 percent this year and the rupee has strengthened 2.1 percent against the dollar, buoyed by the prospect of a growth revival under a more stable government.

Economic Agenda

A 5.5 percent expansion in gross domestic product in April through June would exceed 4.6 percent in the prior quarter and be the fastest since 5.8 percent in January through March 2012.

Steps to unclog the investment pipeline are kick-starting a “broad-based pickup,” offsetting below-average monsoon rains that will curb agricultural growth, said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai.

Modi has eased curbs on foreign investment in the defense and railway industries to woo inflows, and released some rice and wheat stocks to curb a consumer-price inflation rate of almost 8 percent.

At the same time, he’s encountered setbacks, including failure to get rapid assent in parliament for more foreign-direct investment in the insurance industry. India last month also contributed to the collapse of the biggest trade deal in the World Trade Organization’s 19-year history.

Among larger investments, 210 projects worth 11 trillion rupees -- $182 billion -- remain stalled, according to the government. While that’s down from $255 billion in May, it’s still equivalent to the size of New Zealand’s economy.

Therefore, since Modi came to power, $73 billion worth of projects have been cleared, with a further $182 billion pending. All in 3 months.

[Suraj]

WSJ weighs in on that popular topic - how reliable are India's GDP numbers, on the same day the latest quarterly numbers are due:
Just How Bad Are India’s Official GDP Numbers?

India is scheduled to release its latest quarterly data on economic growth on Friday, and investors, executives and economists will be looking for clues as to whether the election of a reform-oriented government in May has buoyed the economy.

They’d do well to keep in mind the key word contained in each quarter’s official data release: “estimated.”

Whatever else the ascent of Prime Minister Narendra Modi has done for India in the last three months, it hasn’t changed one basic fact about the country’s economy, which is that we often know very little about how it is doing, at least not in real time.

Official figures on gross domestic product in India are released with significant delay—Friday’s numbers will describe the quarter that ended two months ago—and are revised, often dramatically, for years following the initial release. The data don’t get seasonally adjusted, which means longer-term trends can be obscured by things like festivals and harvests. The result is that banks and analysts each end up following their own favorite nontraditional indicators—rail freight, steel production, auto sales, activity on job-hunting websites—to get a better, timelier sense of the economy’s direction than the one provided by the official stats.

In fact, the challenges of measuring economic activity are so profound in a country like India—where the average firm employs just a handful of people and the overwhelming majority of the adult population works off the books and far from major cities—that even final data that has been revised and revised again should still be taken as only a rough approximation of the true size and composition of the Indian economy.

But just how bad are the government numbers, really? One way to find out would be to see how easy it is to recreate them using other widely available data. The precise way in which India’s Central Statistical Organization calculates GDP isn’t public. But if a relatively small subset of indicators that go into the official calculations can explain most of the movement in the resulting GDP estimates, then we all might as well be looking directly at those figures instead of waiting months for India’s statisticians to crunch them and hand them down as a magical official GDP number.

Economists Rudrani Bhattacharya, Radhika Pandey and Giovanni Veronese tried exactly this in a 2011 paper. Their results aren’t comforting.

The set of monthly indicators they alight upon includes components of the government-collected Index of Industrial Production—mining, manufacturing, electricity—as well as firm-level production data from various sectors—cement, coal, banking, vehicles—that are collected by the Centre for Monitoring Indian Economy, a private research firm. (The economists justify using private data by noting that not all of the data used by the Statistical Office are public, either.)

Agriculture, which is volatile and seasonal, gets stripped out of the official GDP numbers the economists try to reconstruct. Government spending is excluded, too. Ms. Pandey says it’s not clear how the Statistical Office factors public expenditure into its GDP estimates. “If we try to reconstruct it, it is very difficult.”

And the results: You do pretty well just looking at a bunch of monthly indicators instead of waiting for official GDP. Or, as the economists put it, the techniques India’s official statisticians use to estimate GDP are “largely dependent on a rather narrow information set.”

Interestingly, HSBC HSBA.LN -0.35%’s widely monitored Purchasing Managers’ Index for India, a survey of business conditions, doesn’t add to the predictive power of the economists’ basic model. Other Indian surveys, including the central bank’s, aren’t much more useful. Manufacturing output, as measured by the Index of Industrial Production, turns out to be a very good GDP proxy all-around.

Of course, the really helpful tool for investors and policy makers would be a set of alternative indicators that do “better,” by some criterion, at describing the Indian business cycle than the official measures do—not simply a set of indicators that does well at recreating those official measures. But for now, what seems clear is that the Indian government’s GDP data have a lot of improving to do if they’re going to justify the resources and attention lavished upon them, including by news outlets like this one.

Here's the paper referenced: http://www.nipfp.org.in/media/medialibr ... 1_90_0.pdf
And the CSO's methodology as described online: http://mospi.nic.in/mospi_new/upload/nas_13.html

[Suraj]

Jan Dhan Yojana is a Modi megahit on day 1:
Jan Dhan Yojana gets off to strong start, beats targets on Day 1 with 15 million new accounts, compared to 10 million target

Banks opened a record 15 million accounts on Thursday, against a target of 10 million, as Prime Minister Narendra Modi launched his government's massive financial inclusion programme, the Pradhan Mantri Jan Dhan Yojana. The scheme aims to take banking facilities to 75 million households by January 26, 2015, against the earlier deadline of August 15, 2015.

For this, banks have to open another 60 million accounts in five months. To help lenders meet the target, the prime minister announced a life cover of Rs 30,000 for all those opening bank accounts by January 26. Under the scheme, each customer will also get a RuPay debit card, with an in-built accident insurance cover of Rs 1 lakh and an overdraft facility of Rs 5,000, subject to satisfactory operations of the account for at least six months.

"Never before had insurance companies issued 15 million accident insurance policies in a single day. Never before in economic history were 15 million bank accounts opened on a single day," Modi said at the packed Vigyan Bhawan here.

Officials said the life cover would be free for the scheme's beneficiaries. For the debit card, a fee of 50 paise will be charged per transaction. "The insurance cover is free for account holders," said Vijayalakshmi Iyer, chairperson & managing director, Bank of India. She added the bank had received a good response at its camps, easily helping it exceed its target of 600,000 accounts on the first day. Asked whether lenders had concerns with regard to the administrative costs of such low-cost accounts, she said the government would reimburse banks.

[panduranghari]

Modi ji took out the micro finance entities out of this loop all together by his jan-dhan yojana.

I am sure an micro-finance industry which started in Bangladesh, which now is dominated by the big western bank players under very Indic names hiding their origins, which has been growing annually for past 10 years at 25% will be screwed.

We will expect shrill cries from these people in the coming days.

I hope in a couple of years, we ban micro-finance industries in India. As The jan-dhan yojana is controlled by GOI there should be no Evan-jihadi funding coming through these micro finance chaps.

[Picklu]

^^ I regularly use RangDe.org to fund small scale businesses in rural areas. Havn't heard anything bad about it so far. In fact I came to know about it in BRF itself and starting giving as social contribution. Should I be worried that my contributions are being misused?

[anmol]

Q1 GDP growth at 5.7% versus 4.6% QoQ; hits two-year high

by ECONOMICTIMES.COM, economictimes.indiatimes.com
August 29th 2014 8:14 PM

NEW DELHI: India's Gross Domestic Product (GDP) for the first quarter of the current financial year grew at a 2-year high rate of 5.7%. GDP in the last quarter grew at 4.6%. An ET Now poll had predicted that GDP grew at 5.8%. The consensus estimates of the poll ranged from 4.9% to 6.3%.

While the manufacturing sector grew at 3.5% versus (-)1.4% QoQ, the agricultural sector growth dipped to 3.8% versus 6.3% QoQ. The services sector grew at 6.8% versus 6.4% QoQ. The industrial sector grew at 4.2% versus (-)0.2% QoQ.

Economists polled by ET Now see the FY15 GDP growth at above 5.5%. "The impact of weak monsoon on overall demand is yet to be seen. But, stable government and better policy framework will aid revival," economists feel.

Discussing high prices, economists say that the headline inflation is likely to ease in near term, but food inflation is still a concern. Most analysts see the Reserve Bank of India (RBI) maintaining a status quo on interest rates in the near term.

Months before Prime Minister Narendra Modi's victory, investors poured money into India confident that the business focused leader would win.

Since taking office, Modi has initiated measures to minimise tax litigation, loosened caps on foreign investment in railway infrastructure and defence manufacturing, speeded up regulatory approvals and reduced bureaucratic discretion.

Foreign capital inflows to India have risen markedly, making Indian shares the best performers in Asia this year.

[Suraj]

Official CSO/MOSPI Press Release on Q1 GDP Data
Notes
* Q1 GDP was Rs.2842596 cr, or about $490 billion. Q1 is typically the smallest seasonal quarter, with the typical distribution being Q1 < Q2 < Q4 < Q3 , or Q1 < Q2 < Q3 < Q4 , depending on how the domestic festival season (mostly in Q3 between Oct-Dec) compares to the external holiday season for trade (mostly reflected in Q4 between Jan-Mar).
* Q2 data would provide a strong indication of whether full year GDP growth data will exceed 6-7% or not. Even in the boom years of the mid 2000s, Q1 used to be 5-6.5% , with most of the gains seen in Q3 and Q4 .
* Agriculture grew at 3.8% in Q1 compared to 4% in Q1 last year.
* Manufacturing grew at 3.5% , compared to -1.2% last year.
* Electricity/gas/water grew 10.2% compared to 3.8% last year
* Construction grew 4.8%, compared to 1.1% last year
* General services sector growth is mostly unchanged from last year.
* Therefore the change is mostly in industrial output and construction, which indicates the start of a new business cycle.

[SaiK]

if we make every person buy and sell, then GDP will shoot big times! have tax benefits below certain depreciation point by donating items to poor. This will make the rich keep donating and buying things. depreciate value of goods at faster rate by tax structures.