Indian Economy - News & Discussion Oct 12 2013

Christopher Sidor · Post by **Christopher Sidor** » 23 Feb 2015 00:11

About my last sentence, one gets judged by one actions and consequences of ones action. Thatcher was a strong, but just go to contemporary UK and see how she is most reviled person in the post WWII UK. Indira too was strong and decisive. Green Revolution, Nationalization of Banks, Birth of Bangladesh all were done on her watch. But Bindrawale, Emergency, Corruption all were her legacy too.

Rajan made Germany/Hitler to make a point because Hitler's led his country to ruin. He remains a poster boy on what not to do. A poster boy for a strong government willingly leading a country to ruin and collapse. And also for his industrial scale mass murder of innocent children, women and pensioners. I believe that he alluded to other leaders too apart from the demagogue, Hitler.

vishvak · Post by **vishvak** » 23 Feb 2015 00:27

Hitler actually carried out a Holocaust of Jews and not a general mass murder of innocent children, women and pensioners. There is no point hiding religious and anti-racial angle during colonial times, and then turn it around blame anyone not connected to it.

By the way, I am not sure if I ever read anything of such sort - ie flipping blame of Holocaust - from any previous RBI governors - Dr. Rangarajan, Dr. Bimal Jalan, Dr. Y. V. Reddy or Dr. D. Subbarao.
List of R.B.I. Governors

Singha · Post by **Singha** » 23 Feb 2015 00:46

I guess they chose not to attend tejpal gsnre fests in Goa.

Singha · Post by **Singha** » 23 Feb 2015 00:53

Msm is crowing over it.

http://indianexpress.com/article/busine ... direction/

Suraj · Post by **Suraj** » 23 Feb 2015 03:12

Christopher Sidor wrote:Rajan made Germany/Hitler to make a point because Hitler's led his country to ruin.

The fact that you continuously ignore is that Rajan is not authorized to 'make a point' on anything related to this subject. Not while he is in office. The level of a central banker's explicit apolitical stance is part of the level of competence he asserts. The only responses in support have been "not that much money is affected by his words", "other central bankers have done so too" and now "there have been other strong leaders". None of this is on the topic.

Rajan purports to be a star of international finance, someone brought in from outside because he brought a different level of competence and professionalism. He demonstrated the opposite of it here, quite spectacularly. For someone of his claimed repute brought in at a difficult time, it's not enough to hide behind 'the damage was not much' or 'it's ok, others make the mistake too' explanations. That means he's not exceptional. Already the financial world questions his hardline position on rates. Now they'll think he is also ideologically motivated. And that implication only hurts him.

Vayutuvan · Post by **Vayutuvan** » 23 Feb 2015 05:17

Christopher Sidor: I am sorry to say this but you are way off the mark to compare IG with AH. WC and AH are on par, in my book. May be Mao, Ayub Khan through Musharraf, Pol Pot or Idi Amin, but IG? Sorry sire, no cigar.

Vayutuvan · Post by **Vayutuvan** » 23 Feb 2015 05:27

Ideology in fiscal matters is fatal - literally - for those whose livelyhood's fate is decided by the economist banker overlords. Dr. RR is in that overlord and should be extremely carefully every word he utters.

Rahul M · Post by **Rahul M** » 23 Feb 2015 07:28

kittigadu wrote:Does anybody know if Mr Rajan's twitter account is genuine. He often retweets political/economic articles critical of Modi and his government. Surprisingly garrulous for a RBI governor.
Don't know of any fed governor who behaves similarly.

you think he will describe himself as "shobhaa de crush" ?

Vayutuvan · Post by **Vayutuvan** » 23 Feb 2015 07:48

garrulous - love the word. It describes most Indian ELM

SaiK · Post by **SaiK** » 23 Feb 2015 08:36

http://www.bloombergview.com/articles/2 ... s-ambition
nice, readable!

Gyan · Post by **Gyan** » 23 Feb 2015 08:44

I think Raghu Ram is subtly black mailing GoI & Modi. Remove me or change my policies then all firangi investors will run away - seems to be the threat.

Pratyush · Post by **Pratyush** » 23 Feb 2015 12:57

The GOI needs to have a quite conversation with the RBI governor. About just what his roles and responsibilities are. Once that is done, give him 6 months to see if his actions are aligned to those of the GOI. If yes, persist with him. If not, sack him.

panduranghari · Post by **panduranghari** » 23 Feb 2015 13:05

sooraj wrote:Rajan disapproves inheritance tax idea
http://www.business-standard.com/budget ... 331_1.html

Rajiv Malhotra has spoken about this BS - West is known for philanthrophy. The idea that philanthrophy is a westernidea is rooted in the Church is patently nonsense.

S GURUMURTHY's lectures prove why we need Indic system with its proponents and practitioners at the helm of affairs. Unfortunately, even now western education is considered better than what we can get in India. Though there are pockets of excellence in West that is also true for India.

Singha · Post by **Singha** » 23 Feb 2015 13:07

actually foreign investors and domestic industry are not happy with the RR's high interest rates as it depresses consumption, housing market, car market.....

panduranghari · Post by **panduranghari** » 23 Feb 2015 13:10

Singha wrote:actually foreign investors and domestic industry are not happy with the RR's high interest rates as it depresses consumption, housing market, car market.....

Dont use the speech to tar his work. If I was RR I would consider raising rates even further as there is too much liquidity.

Singha · Post by **Singha** » 23 Feb 2015 13:20

all this liquidity & stuff is over the heads of common people.

all I can see and feel in the trench is high costs of realty + high interest rate, high cost of car loan(except mercs and bmws due to vendor financing!) and high cost of food items like cooking oil, dal, diary products, rice.

Suraj · Post by **Suraj** » 23 Feb 2015 13:34

That doesn't fully make sense. The RBI just kept the repo rate stable at 7.75% at its Feb 3 meeting. But it cut the SLR by as much as 50bps at the same time, from 22% to 21.5%. The SLR controls credit growth, which means their action feeds credit growth. At one time, the SLR used to have a max and min rate, at 40% and 25% respectively. That floor was removed some years ago, and now at 21.5%, it's pretty much at a historical low.

The SLR is the percentage of deposits a bank must hold in cash, govt securities or gold. Lowering SLR frees up capital the banks can lend. But keeping the repo rate stable means they can't be lent out for lower rates. In other words, in just two weeks, RBI first cut repo rates (from 8% to 7.75% on Jan 16) and then cut SLR from 22% to 21.5% on Feb 3.

This doesn't sound like the actions of a central bank worried about excess liquidity. They want banks to lend more, but seem excessively cautious about the lending rate. Considering the amount of balance sheet liabilities in the Indian corporate sector, lower rates and ease of refinancing their debt down to lower rates is important to feed an investment cycle. In fact, I would not be surprised if Jaitley's upcoming Budget addresses this matter directly.

panduranghari · Post by **panduranghari** » 23 Feb 2015 13:40

Suraj,
They are worried about 'Deflation'. As if Deflation is some kind of bogey man. The rationale is there to see. Stave off deflation to permit gradual inflation. India historically has had high inflation. Deflationary pressures must be celebrated. The money in your pocket is keeping its value. People are not spending as they think prices tomorrow are going to be lower than today.

Alas repo rates cut is necessary to recapitalise the banks. I have stated this before. The NPA's of banks is very high. In event of hot money moving out out India, the balance sheets will be laid bare. To recapitalise the banks, the GOI will step in and then returns the inflation.

panduranghari · Post by **panduranghari** » 23 Feb 2015 13:44

Singha wrote:all this liquidity & stuff is over the heads of common people.

all I can see and feel in the trench is high costs of realty + high interest rate, high cost of car loan(except mercs and bmws due to vendor financing!) and high cost of food items like cooking oil, dal, diary products, rice.

Singha Sir,

I would recommend that you try to not outsource the knowledge of finance to your financial advisor. Spend a hour a day and there are enough resources to keep yourself informed and educated about the system.

The fundamental point to take away is this - 2008 melt down was caused by debt. And debt is coming back to ruin many a plans made. If you are heavily in debt, then if you can try to reduce it. If possible get out of it.

Suraj · Post by **Suraj** » 23 Feb 2015 14:12

panduranghari wrote:Suraj,
They are worried about 'Deflation'. As if Deflation is some kind of bogey man.

But it looks like the RBI is 'treating' it with the approach used to tackle stagflation, not deflation.

panduranghari wrote:The rationale is there to see. Stave off deflation to permit gradual inflation. India historically has had high inflation. Deflationary pressures must be celebrated. The money in your pocket is keeping its value. People are not spending as they think prices tomorrow are going to be lower than today.

Deflation driven by rapid growth in output of the economy is more 'healthy' than deflation that's essentially driven by falling input costs whose prices we've little control over.

panduranghari wrote:Alas repo rates cut is necessary to recapitalise the banks. I have stated this before. The NPA's of banks is very high. In event of hot money moving out out India, the balance sheets will be laid bare. To recapitalise the banks, the GOI will step in and then returns the inflation.

I don't think hot money depends on the rates primarily. The rates were higher for 2 years and hot money was exiting. There's no substitute for confidence in economic growth. Since May 2014, not only has money been pouring into the capital markets, but also into government securities, compelling GoI to twice raise the limit on foreign holdings of govt debt, and now another $5 billion increase from the current $30 billion limit is seen as a possibility in the near future. That's also the driver of the falling SLR, since government doesn't have to depend on requiring banks to hold a fifth of their deposits in gsecs.

panduranghari · Post by **panduranghari** » 23 Feb 2015 18:34

I doubt RBI looks at money supply. They look at CPI or WPI. If they would look at money supply, RBI would not do what they have always done - inflate the money supply.

What matters for money supply, however, is not lending as such but inflationary lending, i.e., lending that was generated through fractional-reserve banking. Decreasing Repo rates and SLR contributes to increase in the inflationary credit.

Now a fall in inflationary credit, if not offset by the RBI's pumping, results in a decline of the money stock and hence in deflation. No sign of falling realty prices or no sign of any falling prices YET. But they sure as hell do not want the inflationary credit to drop. Hence they are cutting repo rates and SLR rates. These perhaps are the last arrows in the quiver.

The money stock is still rising, which I suggest means that for the time being the RBI's monetary pumping via buying of assets is offsetting the decline in inflationary credit. Remember that whenever the central bank buys assets from nonbanks it boosts the demand deposits of the sellers of assets to the central bank. An increase in demand deposits implies an increase in money supply.

When you state -They want banks to lend more, but seem excessively cautious about the lending rate.

I say -Cutting Repo rates and then SLR rates sounds like increasing inflationary credit either way. What difference does it make when they are debasing the value of the numeraire.

So it seems that irrespective of the decline in inflationary credit the RBI can always offset this fall through monetary pumping. (Again, the RBI could offset this fall by an aggressive buying of assets from nonbanks.) So in this sense one could argue that, given the RBI's readiness to pump money on a massive scale, the likelihood of deflation is not very high.

But RBI does not want to pump money that easily. They could in theory reduce the interest rates to increase the money supply. But they wont. All the gains in the exchange rate would be lost in doing that. And what do we at BRF cheer - Rise in Rupee exchange rate against USD.

The increase in the money supply as a result of the RBI's money pumping is likely to result in a further weakening in the process of real-wealth generation, i.e., a weakening in the pool of real savings. A fall in the pool of real savings in turn leads to a fall in economic activity — we cannot fund the production of as many goods as before.

Hence, over time a strong money-supply rate of growth and the production of fewer goods implies a general increase in money per good, i.e., a general increase in prices. In Stagflation, there is a general increase in prices and a fall in economic activity. Building infrastructure should not be confused with this. We need infrastructure but can do without the stupid rise in the asset prices like realty which helps no one. Sacrifice realty and get infrastructure built. That is the only win win for the nation.

In India, prices are not rising as fast as they were even 1 year back. Economic activity is on the rise. Ergo stagflation not seen as of now. Yes they may be worried. But their actions are not helping either.

Personally there will never ever be deflation.

A blogger called Mogambo Guru once said - "...achieving 'sound money’ is the easiest thing in the world! Just stop creating more of it! That’s all you need!"

I remember a quote from FOFOA which I adapt for Indian POV.

My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's Rupee terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless rupees, of course, but no deflation in rupee terms! (bigger smile)

Misra · Post by **Misra** » 23 Feb 2015 19:39

http://www.mckinsey.com/insights/financ ... y_in_india

Article about private equity in India.

"Only $16 billion of the $51 billion of principal capital deployed between 2000 and 2008 has been exited and returned to investors."

What is "dry powder" as in that article?

vera_k · Post by **vera_k** » 23 Feb 2015 22:51

^^

Lots of cash that isn't invested. Essentially, they aren't finding enough opportunities to invest in in India.

negi · Post by **negi** » 24 Feb 2015 09:28

India's problem is moment you talk about investment only two things come to one's mind real estate and gold because demand is high and supply is controlled. It is not that people are not investing in real estate issue is people are making big money in doing so and they are more than happy to park it in a bank . RBI is again a fckn victorian era establishment with only bookish knowledge of things, idiots think that playing around with rates is all there is to controlling the way banking sector handles money. Fact is RBI is completely helpless when it comes to checking if banks are doling out bad loans (perfect example freeloader Vadra or hundreds of such defaulters with influence), to make things worse bright bulbs have made it easier to take a second house loan as against the first one . It is like giving the rich a tax exemption while punishing those who cannot even own a single home and this is being done in the name of promoting investment. Idiots need to realize that if they wish to promote investment they should give such incentives in manufacturing or power sector not real estate which is sitting on a huge pile of black money and is virtually immune to market dynamics.

RBI governor is more than happy to fly at 100,000 feet level and give us sermons on Hitler and trains running in correct direction instead of correct time, someone should tell him trains do not need direction they need tracks and majority of them were laid in British era.

Cain Marko · Post by **Cain Marko** » 24 Feb 2015 09:55

Regarding RRs comment, What is with this Indian fascination with democracy anyway? It is understood that the west is enamored with it since they have sorely lacked any form of enlightened governance, ever. The only possible exception might have been Washington. In any case, iirc, the person who coined the term himself rated it as one of the worst forms of governance, period. Indians s really need to dig into their roots, they run deep.

Vriksh · Post by **Vriksh** » 24 Feb 2015 10:13

That Mckinsey Link is eye opening.

In every segment Chinese private sector appears larger than Indian Private sector in numbers by a scale of 2-30X (15X at the lower valuation 2X at middle valuations 30X+ at the higher end valuations).

What explains these numbers? One thing comes to mind is that there are lots of Indian entrepreneurs in small towns everywhere that are entirely in the cash economy and do not have PAN cards etc. I think the Chinese system enforces registration of businesses effectively and creates bankable/ invest able entities faster than India which has wasted 60 years and has no simple mechanism for creating such bankable/invest able entities. Jan Dhan Yojana is one scheme that is perhaps nudging India towards that goal.

Arjun · Post by **Arjun** » 24 Feb 2015 11:04

Vriksh wrote:That Mckinsey Link is eye opening.

In every segment Chinese private sector appears larger than Indian Private sector in numbers by a scale of 2-30X (15X at the lower valuation 2X at middle valuations 30X+ at the higher end valuations).

What explains these numbers? One thing comes to mind is that there are lots of Indian entrepreneurs in small towns everywhere that are entirely in the cash economy and do not have PAN cards etc. I think the Chinese system enforces registration of businesses effectively and creates bankable/ invest able entities faster than India which has wasted 60 years and has no simple mechanism for creating such bankable/invest able entities. Jan Dhan Yojana is one scheme that is perhaps nudging India towards that goal.

I would discount the numbers for <$2 Million, those numbers out there are probably meaningless. But need to understand how to make sense of the divergence in the rest of the columns. India compares well against China in Columns 2 & 3 (at least in proportion to GDP ratio) but very poorly in Columns 4 & 5. Against Russia, whose GDP is in same ballpark as India's - the divergence is even more remarkable.

The only two possible explanations are that unorganized sector & Public Sectors account for higher percentages of Indian GDP and hence the private organized sector numbers are low.

As per statistics, ~50% of Indian GDP is from unorganized sector & Public Sector percentage is ~22%.

Standalone GDP growth that we track regularly, might not mean much. Perhaps the need is for tracking growth in GDP from organized units having some reasonable size (>$2 Mil ?).

Suraj · Post by **Suraj** » 24 Feb 2015 13:58

Finance Commission recommends 42% devolution of divisible funds to states

The 14th Finance Commission has recommended that the Centre transfer 42% of divisible pool to the states, including taxes and grants.

The previous finance commission had suggested it a 39.5% devolution to the states.

The report, tabled by Finance Minister Arun Jaitley in Parliament on Tuesday, has given recommendations for financial years 2015-16 through 2019-20.

The commission, headed by former Reserve Bank of India governor Y V Reddy, said the states should use this extra fiscal space for productive assets.

The 13th Finance Commission, headed by Vijay Kelkar, had recommended that 32% of Central taxes be devolved to states, which was an increase from the 31.5 per cent suggested by its predecessor. However, the total devolution came in at 39.5%.

Centre takes steps to convert PDS to cash transfers

The food ministry has written to the Union Territories to shift from physical supply of subsidised foodgrain to cash transfers. It is also readying plans to pilot this shift in some states, focusing first on urban areas.

Business Standard reviewed letters written by the Union food ministry to the state and Union Territory governments on the issue. The letter sent on February 10 reads, "Government is looking forward to implement DBT for food grains initially in Union Territories and few districts of the states on pilot basis."

Suraj · Post by **Suraj** » 25 Feb 2015 00:37

More data on the 14th Finance Commission:
Finance Commission: Modi’s federalism gets leg up as states get a bonanza

The report of the Fourteenth Finance Commission, tabled in Parliament today, is the first major test of the sincerity of Prime Minister Narendra Modi’s frequent statements about promoting true federalism and making states equal partners in national development.

With his letter to chief ministers saying his government has "wholeheartedly accepted" the core recommendations, Modi has won this round.

The Commission headed by former Reserve Bank of India governor, YV Reddy, has gone a step further beyond the resource sharing recommendations all Finance Commissions do and outlined a new paradigm of Centre-state relations.

The quantum of tax devolution - 42 percent of the taxes (not including sundry cesses and surcharges) collected by the Centre are to go to the states - is itself quite radical. This is a huge hike over the current 32 percent (though it is a little short of the states’ long-standing demand for a 50 percent share). This is also the largest increase in tax devolution since the Seventh Finance Commission doubled the states’ share of excise duties from 20 percent to 40 percent in the mid-eighties. It is also what the Prime Minister’s letter calls "a compositional shift in transfers from grants to tax devolution".

Along with its other recommendations relating to grants to local bodies — Rs 2,87,436 crore — and grants to states running revenue deficits, the Commission has also asked the Centre to ensure that the prevailing levels of transfers to states remain at around 49 per cent of gross revenue receipts. (The total transfer was 39.5 percent in the case of the Thirteenth Finance Commission.) Ouch. No wonder the Medium Term Fiscal Policy statement, tabled along with the budget in July, had indicated that the awards of the Finance Commission and Pay Commission (which is expected later in the year) could pose "significant downside risk to public finance".

In one stroke, the Fourteenth Finance Commission has done three things. One, it has provided a check to the Centre’s growing encroachment on the fiscal space of states. Two, it has made the states a little more equal vis-à-vis the Centre, leaving them less at the latter’s mercy dispensed in the form of conditional resource transfers. Three, in doing this, it gives them greater fiscal autonomy and policy space to pursue their own development models. After all, the bulk of developmental expenditure is done by the states. Even in the case of financing of disaster management through the funds envisaged under the Disaster Management Act, 2005, the Commission gives greater discretion to states in deciding the disasters these will be used for, even if they are not in the notified list of disasters.

The Commission has done something similar for the local government institutions vis-à-vis the state governments. Its recommendations are designed to increase the flow of resources to the local bodies in "an assured, objective and untied manner". With this huge amount for local bodies, states will have little excuse to deny them funds, something that is often done.

Suraj · Post by **Suraj** » 25 Feb 2015 02:53

A couple of weeks back we debated the Nokia Chennai plant, and it was argued that the plant should be revived as a national priority, even though the state government is primarily responsible for it. Well here you go, Theo:
Revive Nokia's Chennai plant, directs PMO

In a strongly worded letter to the Department of Industrial Policy and Promotion (DIPP) and the Department of Electronics and Information Technology (DeitY), the Prime Minister's Office (PMO) is learnt to have "rebuked" the two for not expediting the revival of the stalled Nokia plant in Sriperumbudur, Chennai. The stalled plant has emerged as a blot on Prime Minister Narendra Modi's pet project, 'Make in India'.

Though the government has been contemplating reviving the plant, which was shut on November 1 last year due to a tax dispute, DIPP and DeitY have been involved in a war of sorts regarding which will take credit for the proposed revival. While DIPP wants to embrace the project under the 'Make in India' programme, DeitY wants to bring it into the ambit of the 'Digital India' campaign. As a result, a resolution on the issue has been delayed, despite the government proposing various solutions to end the deadlock.

In its letter, the PMO said the shutdown of the plant had adversely impacted investor confidence.

The PMO continues to remain on the ball on a range of topics related to the economy, even if ministries themselves are yet to get past the old tradition of inter-departmental conflict.

Prem · Post by **Prem** » 25 Feb 2015 07:39

Suraj wrote:The PMO continues to remain on the ball on a range of topics related to the economy, even if ministries themselves are yet to get past the old tradition of inter-departmental conflict.

Some one was complaining that PMO is involved in Budget preparation and that Jaitley is not given freehand.

Suraj · Post by **Suraj** » 25 Feb 2015 09:51

The following article has a very interesting graph on rural farm and non-farm incomes:
As opposition hardens, Narendra Modi stands firm on land acquisition Bill

The data shows that close to 2/3rds of the income of a marginal farmer is non-farm income. The ones who overwhelmingly earn their incomes from farming are the large farmers. Nationwide, almost half of a farmers' incomes come from non-farm sources.

Singha · Post by **Singha** » 25 Feb 2015 09:52

worrying part is each and every logjam needs the PM to personally step in and slap people around.

there should be a second line of seniors to slap people around leaving Zhukov sir to plan strategy at the "Front" level.

JE Menon · Post by **JE Menon** » 25 Feb 2015 09:57

Jhujar, dont bring politics into this thread again please. Especially highly speculative personal relationship stuff even if "relates to the economy"... The key words being "highly speculative"

Suraj · Post by **Suraj** » 25 Feb 2015 11:45

‘Make in India’ to get a shot in the arm this Budget

An official told The Indian Express that the sectors being considered for fiscal sops include electronic goods, medical devices, capital goods, and textiles machinery among others. It is also working on ironing out the issues through a separate policy for the defence sector, the official said.

The official said that a fund is likely to be created and would be used to acquire state-of-the-art technology in capital goods sector, medical devices and electronic goods. This would help the domestic industry to manufacture these heavy machines in the country itself instead of importing them.

The capital goods sector, as gauged by the index of industrial production (IIP), has been largely in the negative zone beginning 2011-12 barring a few aberrations where it had shown growth.

Further, a major push is being planned for the electronic goods sector as well. According to Manufacturers Association of Information Technology, the country imports electronic products worth $16 billion annually. According to government estimates, by 2020, it is expected to go up to $300 billion to address its overall demand of $400 billion electronic goods. The aim is to bring down the dependence on imports. The centre has already issued guidelines to all ministries to give preference to domestically-manufactured electronic products in government procurement to give impetus to Make in India. “Fiscal incentives are being worked out for the sector while
the government is also looking at correcting the inverted duty structure,” the official said.

The push to manufacturing comes amid the sector, which has a weight of more than 75 per cent in the IIP, growing just 2.1 per cent in December as per the latest figures available. Industrial activity had contracted 4.2 per cent in October.

Finance Commission Panel suggests transfers from grants to tax

The Commission accepted the state governments’ suggestions on states-specific devolution, but arrived at tax devolution of 42 per cent. It said the Centre would have adequate fiscal room even after this much devolution.

According to the Commission’s report, states under the proposed model would receive Rs 5.69 lakh of the tax revenue in the coming financial year. For the complete five-year period, the states would receive nearly Rs 40 lakh crore ($670 billion).

In terms of the tax revenue pie to individual states, the Commission has taken into consideration parameters such as income distance, area, population, demographic change, and forest cover.

Based on these parameters, the winning states in terms of tax revenue are Uttar Pradesh (17.95 per cent); Bihar (9.66 per cent); Madhya Pradesh (7.54 per cent); and West Bengal (7.324 per cent).

In terms of service tax, Uttar Pradesh gets the lion’s share of 18.205 per cent, followed by Bihar at 9.78 per cent.

Income distance is the distance between the per capita income of the state and that of the group of states with the highest per capita incomes.

panduranghari · Post by **panduranghari** » 25 Feb 2015 13:09

Suraj wrote:The following article has a very interesting graph on rural farm and non-farm incomes:
As opposition hardens, Narendra Modi stands firm on land acquisition Bill

The data shows that close to 2/3rds of the income of a marginal farmer is non-farm income. The ones who overwhelmingly earn their incomes from farming are the large farmers. Nationwide, almost half of a farmers' incomes come from non-farm sources.

Thats bad news. The country is doing well as it produces enough food. And with soil card scheme launched recently by PMO it means it will increase. But without enough young farmers taking up farming, we are going to have problems.

Has any one got information, how long did it take for soil card scheme in Gujarat to be fully functional?

Supratik · Post by **Supratik** » 25 Feb 2015 19:04

Thats not how it works. As people move away from farming, farms are going to get consolidated and the yields are going to go up with mechanisation and increased inputs. You will have fewer farmers who are well off. This ofcourse depends on laws that facilitate such a process. But it is to soon to do this as the population doing farming is still very large e.g. in the US only 2% of the population is engaged in farming i.e. about 6 million people. At some point down the road we have to revisit those laws that facilitate consolidation.

hanumadu · Post by **hanumadu** » 26 Feb 2015 00:42

^^+108
Marginal farmers cannot survive on income from small farms while the rest of the country earns more and the cost of living rises. The income from an acre of land is not keeping pace with the rise in income and cost of living of the rest of the economy. And farm work is hard and back breaking. Only when land holdings are consolidated and it becomes cost effective to mechanize, only then a farmer can sustain himself on farm income. Mechanization will also add to productivity gains.

The children of erstwhile well to do farmers with sizable land holdings no longer live in villages and their primary income is not from the land. The grand children are even more removed from land and they are not going to their villages to farm. When the grand parents are unable too old to farm, they will have no option but to sell off their land to some one who is fully dependent on land and is keen to increase his acreage. If they have any sense, they would sell it sooner than later and invest it in some real estate or some other property in urban areas where he lives.

I once asked a colleague in his mid 50s in the US mid west about how many acres a farmer should have to make a decent living. He said that while he was growing up 150 acres would have done, but now (that was 10 years go) it is 600 acres. And we are talking about people making a living off 5 acre holdings in India.

Prem · Post by **Prem** » 26 Feb 2015 07:04

Internet users in India to birth a $200-billion digital economy; challenges of
connectivity and languages need to be cracked
http://economictimes.indiatimes.com/art ... aign=cppst
( This is Mckinsey study)

You could think of India's internet growth as a primed-up athlete finally hitting his full stride. First, there was a gentle warmup. It took 10 years for India to get her first 10 million users and another decade to hit the first 100 million. Then, the pace quickened. The next 100 million users came in three years between 2010 and 2013, and the third 100 million took only 18 months. Internet users crossed 300 million in December 2013. The athlete has hit his full str ..While studies make for a rosy outlook with promises of eliminating poverty as the internet economy expands, there is a lot to consider. At 300 million users, most of the English-speaking population is already covered. The next wave of growth will have to come from vernacular users. Internet access is expensive, and out of reach for most such users. Quality of connectivity could pose a challenge to access bandwidth-heavy apps in healthcare and education or even watching mov ..Data consumption per user, Gopalan says, averages 563 MB a month, close to US rates and higher than in the UK. Data costs are also comparable with similar economies. "It's less about costs and more about educating new users on what they can do with an internet connection. And the good part is that's changing. In fact, in two years, demand won't be a constraint, it will be supply," adds Gopalan. In China telcos have 80 Mhz spectrum, compared to 5 Mhz in India.
ECONOMY & FINANCIAL INCLUSION
10% rise in internet penetration increases GDP by 1.08%. If internet were a sector its
weight in GDP would be greater than that of agriculture or utilities. Increase in net maturity in the West led to rise in GDP per capita of $500 on average in the past 15 years. It took 50 years of industrial revolution to achieve the same. Aadhaar-linked mobile banking and payments will
accelerate spread of bank For every one job lost, 2.6 new jobs are created in an internet economy. In
France, in 15 years, 5 lakh jobs were lost and 1.2. million jobs were created due to the internet Job creation will be both direct — in tech-based enterprises and indirect — to support the internet economy like digital ads, services support for devices. 15-20 lakh new direct jobs will be created by 2018 in
internet sector. Internet economy will enable a shift to highskilled labour .Bandwidth per person per month is around 500 MB. This will grow by 10x in a few years. Internet economy to balloon from $60 billion to $200 billion in the short term. This includes e-commerce to sales of internet devices like
smartphones. Music & book stores have already shut down. Any product that can be bought via a code (like smartphones, TVs etc) will be bought online A network of sensors exchanging information through the internet will cut wastages and help .There will be more internet-driven startups. Cost of starting a company averaged $5 million in pre-internet era and now it's under $50,000, attracting
more people to start companies. The gestation period to test whether an idea works or not is less than 18 months now. This along with low cost to start ventures is increasing risk appetite. Govt's Rs 10,000 crore fund for startups, Nasscom's 10,000 startups initiative, etc, augur well to make access to capita ..Transparency in transactions . Efficiency: Quick turnaround time, like with Passport Seva to issue passports has come down from 12 weeks to four weeks. Will reduce further as enforcement agencies, police use analytics to verify claims. Productivity gains: Cut the queues and save time — pay bills, taxes on smartphones App-driven economy: Learn, play, entertain, work
with apps. End of the middleman: People who thrive on inefficiencies of the system wil ..

suvod · Post by **suvod** » 26 Feb 2015 10:24

Indian Railways is the perfect case study for how to waste a resource / enterprise through mis-management. Today, in a short while from now, the Railway Minister Suresh Prabhu will present the budget. I'm primarily looking for the following from the budget:

1. Plan / Mechanism to revive the freight traffic and resultant revenue. I expect this govt. to finally shift the focus from passenger traffic to freight.
2. Use the increased revenue from freight to invest in safety & security. And have time-bound implementation plans for the same.
3. No new trains. If there is money, invest in track modernization. Invest in new coaches that are safer and offer better comfort.
4. Engage the "Swachh Bharat" campaign in the trains as well as stations. This is one area which is completely under central control.

Bibek Debroy has published a series of notes on the sate of Railways and what can be done in a monthly column in the Swarajya Mag. Very informative and incisive as always. Posting the link to the first in the series: <http://swarajyamag.com/columns/railways ... etition-i/>